As part of the transition, two directors on Amedisys' board, Donald Washburn and David Pitts, have been named non-executive board co-chairmen and will take on a greater oversight role.
“This is course correction for us,” Pitts said. “A lot of things have caught up with us and we needed a change of leadership at the top.”
Amedisys' board tapped Boston Consulting Group this year after several quarters of missed earnings targets. “That's always a sign that things are not working well,” Pitts said.
The consulting firm agreed that Amedisys needed to pursue a leadership change, and will continue to advise the company over the next 12 weeks.
Amedisys' shares briefly popped about 3% this morning, as analysts such as Deutsche Bank's Darren Lehrich categorized the news as a signal that “bigger change is afoot, ” an implication a sale of the company was possible.
Pitts, however, downplayed the potential for a takeover.
“Those things are always on the table but … we're going forward as a freestanding operation,” he said. “Many of the people who would be interested in us are facing the same issues.”
Throughout 2013, Amedisys struggled with falling patient volume as well as payment cuts under sequestration. In the third quarter, it also announced it would pay $150 million and enter into a corporate integrity agreement under a tentative deal with the Department of Justice to settle allegations of Medicare overbilling and improper self-referrals.
The company amended its credit facility to finance the potential settlement.
The healthcare reform law also calls on the CMS to “rebase” home health rates, and last year, the agency proposed cutting reimbursement by the 14% maximum, phased in over four years.
While many of its peers have been consolidating in the face of industry pressure, Amedisys has been divesting care centers.
In August, the company's largest shareholder, Kohlberg Kravis Roberts & Co., which held 14.9% of shares as of Dec. 31, disclosed its intention to take a more activist role in the company.
Last month, KKR requested that an executive at one its affiliates be added to Amedisys' board of directors.
“The board believes strongly in the company,” Pitts said, adding that interim CEO LaBorde is “solid as a rock.”
Follow Beth Kutscher on Twitter: @MHbkutscher
