Home Health & Hospice Week

After two Medicare reimbursement cuts in six months, Amedisys Inc. has kept its head above water and beat analysts' earnings forecasts, although its profits plummeted and its revenues sagged in the most recent quarter.

The Baton Rouge, LA-based regional home care provider reported net income of $1.1 million on revenues of $31.1 million for the quarter ended March 31, compared to net income of $4 million on revenues of $31.9 million for the same period in 2002. The 2002 income figure included a tax benefit, the company points out in a press release.

The 15 percent cut implemented last October cost Amedisys about $1.5 million in revenues in the quarter, and the elimination of the rural add-on April 1 reached back to affect some episodes and cut $200,000, chief financial officer Greg Browne said in a May 13 conference call with investors and analysts.

The company cut its days' sales outstanding for the quarter significantly, from 44 days in December to 36 days in March, Browne added.

And Amedisys whittled its utilization to 17.5 visits per episode, chief operating officer Larry Graham said in the call. Last year, the company reported utilization of 20.69 visits per episode (see Eli's HCW, Vol. XI, No. 17, p. 137).

With $8.5 million in cash at the end of the quarter, a $3.5 million increase over the previous quarter, Amedisys is in a strong acquisition position, said CEO Bill Borne. "Our acquisition pipeline is nearly full," Borne said in the call.

Timing is good since more hospitals than ever are looking to divest their home care operations, and other owners have more "realistic" expectations for valuations, Borne said. The company is eyeing acquisition targets with revenues ranging from $3 million to $20 million, although most are in the $8 to $10 million group.

If Amedisys wants to proceed with a larger acquisition, it will obtain outside financing and has proposals from asset-based lenders, Borne said.

The company continues to try to collect funds related to the National Century Financing Corp. meltdown, Borne added. Although Amedi-sys has written off the funds lost when its financer failed, it's pursuing recovery through NCFE's bankruptcy litigation and has filed suit against JP Morgan Chase, he said.

And Amedisys is close to a final settlement with the HHS Office of Inspector General and has agreed on an undisclosed settlement amount, he said (see Eli's HCW, Vol. XII, No. 11, article "Finance").