Adeptus Health made a huge splash on Wall Street Thursday as the free-standing emergency room operator posted substantial first-quarter gains in revenue and profit.
Shares of Adeptus, the parent company of First Choice Emergency Room, jumped more than 18% on the rosy financial news, ending the day at $61.65. Adeptus went public last summer, and its stock price has more than doubled since then.
Adeptus operates more than 60 ERs in affluent areas of Arizona, Colorado and Texas. The company's business model revolves around treating patients who have commercial insurance and want convenient access to care closer to their homes. About 85% of Adeptus' revenue comes from Aetna, Blue Cross and Blue Shield, Cigna and UnitedHealthcare health plans.
Controversially, free-standing ERs in many states don't have to accept Medicare and Medicaid. Their ability to cherry-pick patients would essentially divert older and lower-income patients toward traditional hospital ERs. Also, building a free-standing ER often doesn't require a certificate of need.
Adeptus partners with hospitals and health systems by signing transfer agreements. More recently, it has been giving providers equity ownership in its facilities. Adeptus and University of Colorado Health signed a deal this week giving UC Health a majority stake in the company's 14 ERs in the state. Adeptus also manages a joint-venture hospital in Arizona with Dignity Health.
Profit from Adeptus' day-to-day operations totaled $5.4 million in the first three months of 2015, compared with a loss of $341,000 in the same period last year. Net profit was $594,000.
Revenue more than doubled from $38.8 million in the first quarter of 2014 to $81.5 million this year. Adeptus added 30 ERs in the past year alone, and the resulting patient volumes were the primary reason for the higher top line.
Adeptus executives predict full-year revenue in 2015 could hit upwards of $393 million, which would be 87% higher than what was recorded in 2014. Adjusted profit per share is expected to be between 82 cents and 91 cents.
Executives have also raised the caveat that the company's patient volumes could vary greatly every quarter. For example, Adeptus operates several ERs in the Dallas area. When Texas Health Resources' hospital in Dallas became the site of the first U.S. Ebola case, Adeptus suffered because patients avoided healthcare services in the area.
Ebola “really affected our volumes as people just stayed home,” Adeptus CEO Thomas Hall said in February. “They didn't go anywhere. We ended the (fourth) quarter with good numbers, but the impact was definitely slow. Our point here is that we're not a quarter-by-quarter company.”
