Gentiva Health Services (GTIV) shares fell Thursday after the company was subpoenaed by the Dept. of Health and Human Services. Legg Mason cut its rating on the shares to hold from buy.
Analyst Jerry Doctrow says the subpoena seeks information regarding the company's implementations of prior settlements with the U.S. government and corporate integrity agreements; and treatment on cost reports of employees engaged in sales and marketing efforts. Doctow says he still likes Gentiva's fundamental business and management, but uncertainty regarding the government subpoena precludes him from continuing to recommend the shares.
Also, the analyst thinks the company's management should have discussed this item on its first-quarter 2003 conference call. He would hold GTIV shares pending additional clarification on where the government subpoenas might lead.