July 13 (Bloomberg) -- Amedisys Inc., the largest U.S. home-nursing provider, fell the most in more than four years in Nasdaq trading after announcing preliminary results for the second quarter that missed analysts’ estimates.
Amedisys fell $8.45, or 24 percent, to $26.57 at 4 p.m. New York time in Nasdaq Stock Market composite trading, making the stock the biggest decliner today in the Russell 2000 Index. The drop was the largest single-day decline since Feb. 23, 2006, when the Baton Rouge, Louisiana-based company missed earnings forecasts and its chief financial officer quit. The company yesterday said second-quarter net income was about $1.12 a share, compared with the $1.40 a share average estimate of 9 analysts surveyed by Bloomberg.
The results included a one-time cost of 17 cents per share due to “realignment of operations” and ongoing investigations by the U.S. Securities and Exchange Commission and the U.S. Senate Finance Committee into whether the company manipulated Medicare payments. In May, the government said it was reviewing whether the home-nursing industry manipulated the number of visits made to patients to boost reimbursements.
“We are very disappointed with these results,” said William Borne, Amedisys’s chairman and chief executive officer, in a conference call with investors today. “We want you to know that our team is focused on taking swift actions to streamline our operations and return to a growth trajectory.”
Gentiva Health Services Inc., the second-biggest company in the category, also is being investigated by the SEC as part of the commission’s Medicare inquiry, the company said today in a statement released after the close of trading.
SEC investigators told the Atlanta-based home health services provider to preserve documents about Medicare payments dating to Jan. 1, 2000, and a subpoena soon would be issued. “The company plans to comply with the document request and cooperate with the investigation,” Gentiva said in its statement.
LHC Group Inc., based in Lafayette, Louisiana, also said it received a similar request for documents from the SEC as part of the Medicare payments investigation. The company will cooperate with the commission, LHC said in a statement released after the close of trading.
Amedisys led shares of home-nursing companies down in trading. Gentiva dropped $1.87, or 7.7 percent, to $22.30. Almost Family Inc., based in Louisville, Kentucky, fell $2.36, or 8.2 percent, to $26.36, while LHC declined $1.23, or 5.1 percent, to $23.02.
Amedisys was downgraded today to “sector perform” from “outperform” by Kevin Ellich, an analyst at RBC Capital Markets in Minneapolis. The 12-month target price was lowered to $37 per share from $50. David Macdonald, an analyst at SunTrust Robinson Humphrey Capital Markets in Boston, downgraded the company to “neutral” from “buy,” while Andreas Dirnagl at Stephens Inc. in New York cut his rating to “equal-weight” from “overweight.”
The company incurred costs by reorganizing into two distinct business units, home health and hospitals, and by reassigning corporate-support personnel such as human resources and marketing into the business units to decentralize management. Amedisys said more information on operational costs and income will be provided when the final results for the quarter are released on Aug. 9.
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