AMED Misses 3Q Earnings After Tax Credit, Estimates Still To Come Down

Amedisys, Inc. (NASDAQ:AMED) reported 3Q 2012 earnings per share (EPS) of $0.33. The results appear to be better-than-expected given the $0.27 Consensus estimate, however, excluding an $0.08 per share job tax credit, the company actually missed EPS estimates. Revenues for the period came in light ($375.6M reported vs. the Consensus at $380M) and margins continued to contract. Importantly, EBITDA in 3Q of $24.9M was below Street expectations for $26.1M, and the company guided for 2012 revenues in the range of $1.485B-$1.505B, down from prior guidance of between $1.490B-$1.525B. The $0.33 reported EPS is down 21.4% from last year’s period, and off over 40% excluding the job tax credit, highlighting worsening fundamentals even before additional headwinds expected next year have begun to impact the business. Pricing pressures from Medicare and the recently restructured home health services agreement with Humana (NYSE:HUM) are expected to pressure fundamentals further in 2013 (see our prior story here).

Given the lowered 2012 guidance, analysts are likely to reduce 4Q 2012 estimates (Consensus has to come down by ~10% to fit the new company expectations). Notably, AMED did not give any metrics around 2013 expectations, which we believe is a bad sign given all the uncertainties that analysts have to prognosticate. This morning’s conference call is likely to feature many questions around the rough waters in 2013, and as a result, longer-term estimates are expected to come down. In fact, more analysts could throw in the towel on this name, given the poor results today compounded by approaching business pressures next year. We believe shares of AMED could dip down below their 52-week lows, and if the Bears are correct that 2013 EPS could be as low as $0.60-$0.70, a 10x multiple on these earnings mean that AMED could trade down to the $6.00-$7.00 range. AMED’s 3Q 2012 Earnings Call is scheduled for 10am, and can be accessed at: