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Post-acute care companies see earnings dive, operation challenges


By Beth Kutscher
Posted: May 9, 2014 - 3:30 pm ET
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Three post-acute care companies posted lower earnings to start the year as they dealt with the same volume issues as acute-care hospitals, while also struggling with two types of reimbursement cuts.

In addition to sequestration, home-health rates will be cut 14% over four years under a rate-rebasing. The cuts went into effect this year.

Severe winter weather also affected post-acute care operations.

National HealthCare Corp. on Friday reported a 4.9% decrease in net income, which fell to $11.1 million in the first quarter, from $11.6 million in the prior-year period. Revenue, however, increased to $210.5 million, an 8.3% increase over the $194.4 million in the first quarter of last year.

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The Murfreesboro, Tenn.-based company also announced a $0.34 quarterly dividend payable Sept. 2.

At LHC Group, Chairman and CEO Keith Myers called the unusually harsh winter “the most significant factor by far” in driving down the company's performance. The Lafayette, La.-based company reported $4.1 million in net income on revenue of $163.7 million in the first quarter, compared with $6.3 million in income on revenue of $162 million at the beginning of last year.

About 48% of the company's agencies were impacted by sub-freezing winter temperatures and storms, which caused 268 closures and resulted in 4,000 missed sales calls, executives said on an earnings call.

However, the integration of Deaconess HomeCare and Elk Valley Health Services, which closed April 1, is proceeding better than expected, Myers said, and the company is looking for future buys.

Home health multiples are at the lowest they've been in more than a decade and financing rates remain attractive, he added.

Amedisys, which is undergoing a corporate shake-up to turn around its results, reported a $12.4 million first-quarter net loss from continuing operations compared with a $3.4 million loss during the same period in 2013. Net service revenue also declined to $298.7 million, or 9% lower than the $328.6 million in the first quarter of last year.

The Baton Rouge, La.-based home-health and hospice operator in February replaced company founder William Borne as CEO and hired a consulting firm to help improve its operating performance.

It is reviewing its operating models and rationalizing its portfolio, Interim CEO Ronald LaBorde said on an earnings call.

At the end of the first quarter, it identified 54 care centers that will be closed or consolidated and plans to complete those actions by the end of this month. Amedisys also exited the Idaho and Wyoming markets.

Follow Beth Kutscher on Twitter: @MHbkutscher


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