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| AMED > SEC Filings for AMED > Form 10-Q on 28-Jul-2009 | All Recent SEC Filings |
28-Jul-2009
Quarterly Report
The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our results of operations and financial condition for the three and six-month periods ended June 30, 2009. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included herein, the consolidated financial statements and notes and the related Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission ("SEC") on February 17, 2009 (the "Form 10-K"), which are incorporated herein by this reference.
Unless otherwise provided, "Amedisys," "we," "us," "our" and the "Company" refer to Amedisys, Inc. and our consolidated subsidiaries.
Overview
We are a leading provider of high-quality, low-cost home health services to the chronic, co-morbid, aging American population. Our services include home health and hospice services and approximately 87% of our revenue was derived from Medicare for the three and six-month periods ended June 30, 2009 and 2008. During the three and six-month period ended June 30, 2009, our net service revenue increased 20.9% or $65.2 and 36.9% or $193.9 million over the same periods in 2008; our diluted earnings per share increased 67.1% or by $0.51 per share and 63.8% or by $0.88 per share; and our cash flow from operations more than doubled to $130.3 million compared to $57.5 million during 2008. The following details our owned Medicare-certified agencies, which are located in 38 states within the United States, the District of Columbia and Puerto Rico. The agencies closed were consolidated with agencies servicing the same areas. See below for a more detailed description of what caused our results for the three and six-month periods to increase compared to the same periods in 2008.
Owned and Operated Agencies
Home health Hospice
At December 31, 2008 480 48
Acquisitions 7 2
Start-ups 18 1
Closed (7 ) -
At June 30, 2009 498 51
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Recent Developments
The United States Congress is currently working on legislation as part of the 2010 fiscal budget that could impact the amounts that we are paid by Medicare for services provided to Medicare eligible patients. As of the date of this filing, the legislation has not been finalized and thus we cannot estimate the impact of such potential changes but continue to monitor these actions closely.
Results of Operations
Our operating results may not be comparable for the periods presented, primarily as a result of our acquisition and start-up agencies.
When we refer to "base business," we mean home health and hospice agencies that we have operated for at least the last twelve months; when we refer to "acquisitions," we mean home health and hospice agencies that we acquired within the last twelve months; and when we refer to "start-ups," we mean any home health or hospice agency opened by us in the last twelve months. Once an agency has been in operation for a twelve month period, the results for that particular agency are included as part of our base business from that date forward. When we refer to episodic-based revenue, admissions, recertifications or completed episodes, we mean home health revenue, admissions, recertifications or completed episodes of care for those payors that pay on an episodic-basis, which includes Medicare and other insurance carriers, including Medicare Advantage programs.
Three-Month Period Ended June 30, 2009 Compared to the Three-Month Period Ended
June 30, 2008
Net Service Revenue
The following table summarizes our net service revenue growth (amounts in
millions):
For the three-month period ended June 30, 2009
For the three-month
period ended
Base/Start-ups (2) Acquisitions Total June 30, 2008
Home health revenue:
Medicare revenue $ 299.3 $ 9.3 $ 308.6 $ 255.1
Non-Medicare, episodic-based
revenue 28.7 0.4 29.1 21.1
Total episodic-based revenue 328.0 9.7 337.7 276.2
Non-Medicare revenue 16.4 0.6 17.0 18.6
344.4 10.3 354.7 294.8
Hospice revenue:
Medicare revenue 21.1 0.9 22.0 16.5
Non-Medicare revenue 1.2 - 1.2 1.4
22.3 0.9 23.2 17.9
Total revenue:
Medicare revenue 320.4 10.2 330.6 271.6
Non-Medicare revenue 46.3 1.0 47.3 41.1
$ 366.7 $ 11.2 $ 377.9 $ 312.7
Internal episodic-based revenue
growth (1) 19% 28%
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(1) Internal episodic-based revenue growth is the percent increase in our base/start-up episodic-based revenue for the period as a percent of the total episodic-based revenue of the prior period.
(2) Our net service revenue for our base/start-up agencies of $366.7 million included $356.8 million from our base agencies and $9.9 million from our start-up agencies.
Our net service revenue increased $65.2 million from 2008 to 2009 and consisted of an increase of $54.0 million in our base/start-up agencies and $11.2 million from our acquisition agencies. The $54.0 million increase in our base/start-up agencies was primarily related to our internal episodic-based revenue, which increased by $51.8 million or 19% from 2008 to 2009, with 7% related to volume and 12% related to rate.
Our average episodic-based revenue per completed episode increased from $2,841 to $3,166 from 2008 to 2009 and was due primarily to the continued deployment of our therapy intensive specialty programs to more of our home health agencies, which are provided to our patients when medically necessary to achieve their desired outcomes.
Home Health Statistics
The following table summarizes our growth in total home health patient
admissions:
For the three-month period ended June 30, 2009
For the three-month
period ended
Base/Start-ups Acquisitions Total June 30, 2008
Admissions:
Medicare 49,947 2,594 52,541 48,745
Non-Medicare, episodic-based 5,596 72 5,668 4,816
Total episodic-based 55,543 2,666 58,209 53,561
Non-Medicare 8,530 413 8,943 9,865
64,073 3,079 67,152 63,426
Internal episodic-based
admission growth (1) 4% 13%
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(1) Internal episodic-based admission growth is the percent increase in our base/start-up episodic-based admissions for the period as a percent of the total episodic-based admissions of the prior period.
The following table summarizes our growth in total home health patient recertifications:
For the three-month period ended June 30, 2009
For the three-month
period ended
Base/Start-ups Acquisitions Total June 30, 2008
Recertifications:
Medicare 46,551 839 47,390 43,065
Non-Medicare, episodic-based 4,084 33 4,117 3,171
Total episodic-based 50,635 872 51,507 46,236
Non-Medicare 5,398 128 5,526 5,803
56,033 1,000 57,033 52,039
Internal episodic-based
recertification growth (1) 10% 26%
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(1) Internal episodic-based recertification growth is the percent increase in our base/start-up episodic-based recertifications for the period as a percent of the total episodic-based recertifications of the prior period.
The following table summarizes our home health completed episodes:
For the three-month period ended June 30, 2009
For the three-month
period ended
Base/Start-ups Acquisitions Total June 30, 2008
Completed Episodes:
Medicare 90,323 3,029 93,352 87,055
Non-Medicare, episodic-based 8,753 104 8,857 7,148
99,076 3,133 102,209 94,203
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Cost of Service, Excluding Depreciation and Amortization
Our cost of service consists of the following expenses incurred by our clinical and clerical personnel in our agencies:
• salaries and related benefits (including health care insurance and workers' compensation insurance);
• transportation expenses (primarily reimbursed mileage at a standard rate); and
• supplies and services expenses (including payments to contract therapists).
The following summarizes our cost of service, visit and cost per visit information:
For the three-month period ended June 30, 2009
For the three-month
period ended
Base/Start-ups Acquisitions Total June 30, 2008
Cost of service (amounts in
millions):
Home health $ 160.7 $ 5.6 $ 166.3 $ 138.7
Hospice 11.5 0.6 12.1 10.1
$ 172.2 $ 6.2 $ 178.4 $ 148.8
Home health:
Visits during the period:
Medicare 1,746,580 55,915 1,802,495 1,540,997
Non-Medicare, episodic-based 163,426 1,880 165,306 123,902
Total episodic-based 1,910,006 57,795 1,967,801 1,664,899
Non-Medicare 210,741 6,973 217,714 187,364
2,120,747 64,768 2,185,515 1,852,263
Home health cost per visit (1) $ 75.75 $ 87.54 $ 76.10 $ 74.91
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(1) We calculate home health cost per visit as home health cost of service divided by total home health visits during the period.
Of the $29.6 million increase in cost of service, $23.4 million is related to increased costs in our base/start-up agencies and $6.2 million is related to acquisitions. The $23.4 million in base/start-up business expenses consisted primarily of $23.0 million related to salaries, taxes and benefits. Typically, acquired agencies take up to 18 to 24 months to reach the labor efficiencies of existing operations.
General and Administrative Expenses, Provision for Doubtful Accounts, Depreciation and Amortization and Other Expense, net
The following table summarizes our general and administrative expenses, provision for doubtful accounts, depreciation and amortization expense and other expense, net (amounts in millions):
For the three-month periods
ended June 30,
2009 2008
General and administrative expenses:
Salaries and benefits $ 82.1 $ 72.8
Non-cash compensation 2.8 1.3
Other 42.4 40.0
Provision for doubtful accounts 5.7 5.7
Depreciation and amortization 6.9 5.4
Other expense, net (2.0 ) (5.0 )
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Salaries and benefits increased $9.3 million, which consisted of an increase of $7.3 million in base/start-up agency expenses and the inclusion of $2.0 million in acquisition agency expenses. These expenses primarily increased due to increased personnel costs for our field administrative staff necessitated by our internal growth and acquisitions.
Other expense, net changed $3.0 million primarily as a result of a decrease in interest expense of $2.5 million as we have reduced our outstanding debt by $137.5 million from June 30, 2008 to June 30, 2009 and our interest rate decreased.
Income Tax Expense
The following table summarizes our income tax expense and estimated income tax
rate (amounts in millions, except for estimated income tax rate):
For the three-month periods
ended June 30,
2009 2008
Income before income taxes $ 57.6 $ 33.7
Income tax (expense) (22.5 ) (13.3 )
Estimated income tax rate 39.0% 39.6%
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The increase in income tax expense of $9.2 million is attributable to an increase in income before income taxes, which was offset by a decrease in the estimated income tax rate. The decrease in the estimated income tax rate was primarily attributable to the extension of Federal income tax credits created as a result of Hurricanes Katrina, Rita and Wilma by The Emergency Economic Stabilization Act of 2008.
Six-Month Period Ended June 30, 2009 Compared to the Six-Month Period Ended
June 30, 2008
Net Service Revenue
The following table summarizes our net service revenue growth (amounts in
millions):
For the six-month period ended June 30, 2009
For the six-month
period ended
Base/Start-ups Acquisitions Total June 30, 2008
Home health revenue:
Medicare revenue $ 513.1 $ 75.3 $ 588.4 $ 430.4
Non-Medicare, episodic-based
revenue 49.7 4.2 53.9 36.0
Total episodic-based revenue 562.8 79.5 642.3 466.4
Non-Medicare revenue 26.0 7.9 33.9 28.6
588.8 87.4 676.2 495.0
Hospice revenue:
Medicare revenue 34.8 6.3 41.1 28.6
Non-Medicare revenue 2.2 0.2 2.4 2.2
37.0 6.5 43.5 30.8
Total revenue:
Medicare revenue (1) 547.9 81.6 629.5 459.0
Non-Medicare revenue 77.9 12.3 90.2 66.8
$ 625.8 $ 93.9 $ 719.7 $ 525.8
Internal episodic-based revenue
growth (1) 21% 27%
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(1) Internal episodic-based revenue growth is the percent increase in our base/start-up episodic-based revenue for the period as a percent of the total episodic-based revenue of the prior period. We expect this growth rate to be in the 15% range for the remainder of the year primarily due to our TLC Health Care Services, Inc. ("TLC") agencies converting to base agencies beginning in the three-month period ended June 30, 2009. It is not unusual for acquired agencies to experience a slower revenue growth, even in the second year after converting to our operating systems and Point of Care network.
(2) Our net service revenue for our base/start-up agencies of $625.8 million included $608.8 million from our base agencies and $17.0 million from our start-up agencies.
Our net service revenue increased $193.9 million from 2008 to 2009 and consisted of an increase of $100.0 million in our base/start-up agencies and $93.9 million from our acquisition agencies. The $100.0 million increase in our base/start-up agencies was primarily related to our internal episodic-based revenue, which increased by $96.4 million or 21% from 2008 to 2009, with 8% related to volume and 13% related to rate.
Our average episodic-based revenue per completed episode increased from $2,772 to $3,102 from 2008 to 2009 and was due primarily to the continued deployment of our therapy intensive specialty programs to more of our home health agencies and the inclusion of the TLC agencies, which have had historically higher average revenue per completed episode primarily due to their presence in higher wage index areas (i.e. the Western and Northeastern parts of the United States).
Home Health Statistics
The following table summarizes our growth in total home health patient
admissions:
For the six-month period ended June 30, 2009
For the six-month
period ended
Base/Start-ups Acquisitions Total June 30, 2008
Admissions:
Medicare 87,337 15,647 102,984 83,625
Non-Medicare, episodic-based 10,342 995 11,337 8,795
Total episodic-based 97,679 16,642 114,321 92,420
Non-Medicare 15,076 3,358 18,434 16,012
112,755 20,000 132,755 108,432
Internal episodic-based admission
growth (1) 6% 10%
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(1) Internal episodic-based admission growth is the percent increase in our base/start-up episodic-based admissions for the period as a percent of the total episodic-based admissions of the prior period.
The following table summarizes our growth in total home health patient recertifications:
For the six-month period ended June 30, 2009
For the six-month
period ended
Base/Start-ups Acquisitions Total June 30, 2008
Recertifications:
Medicare 82,845 9,570 92,415 75,274
Non-Medicare, episodic-based 7,323 533 7,856 5,426
Total episodic-based 90,168 10,103 100,271 80,700
Non-Medicare 8,913 2,382 11,295 9,939
99,081 12,485 111,566 90,639
Internal episodic-based
recertification growth (1) 12% 29%
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(1) Internal episodic-based recertification growth is the percent increase in our base/start-up episodic-based recertifications for the period as a percent of the total episodic-based recertifications of the prior period.
The following table summarizes our home health completed episodes:
For the six-month period ended June 30, 2009
For the six-month
period ended
Base/Start-ups Acquisitions Total June 30, 2008
Completed Episodes:
Medicare 157,546 23,896 181,442 147,394
Non-Medicare, episodic-based 15,684 1,382 17,066 12,104
Total episodic-based 173,230 25,278 198,508 159,498
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Cost of Service, Excluding Depreciation and Amortization
The following summarizes our cost of service, visit and cost per visit
information:
For the six-month period ended June 30, 2009
For the six-month
period ended
Base/Start-ups Acquisitions Total June 30, 2008
Cost of service (amounts in
millions):
Home health $ 274.9 $ 45.0 $ 319.9 $ 231.2
Hospice 20.4 3.2 23.6 18.3
$ 295.3 $ 48.2 $ 343.5 $ 249.5
Home health:
Visits during the period:
Medicare 3,031,037 444,135 3,475,172 2,624,307
Non-Medicare, episodic-based 291,207 23,987 315,194 214,778
Total episodic-based 3,322,244 468,122 3,790,366 2,839,085
Non-Medicare 331,951 82,118 414,069 294,135
3,654,195 550,240 4,204,435 3,133,220
Home health cost per visit (1) $ 75.21 $ 81.86 $ 76.08 $ 73.81
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(1) We calculate home health cost per visit as home health cost of service divided by total home health visits during the period.
Of the $94.0 million increase in cost of service, $45.8 million is related to increased costs in our base/start-up agencies and $48.2 million is related to acquisitions. The $45.8 million in base/start-up business expenses consisted primarily of $43.9 million related to salaries, taxes and benefits and $2.0 million related to travel and training.
Our cost per visit increased from $73.81 in 2008 to $76.08 in 2009. The primary reason for the increase relates to our 2008 acquired agencies, which have higher wage indexes compared to our base agencies. Our 2008 acquired agencies are generally located in states that have higher labor costs and have higher numbers of visiting staff, who typically are paid on a salary basis compared to a per visit basis. Our cost per visit associated with our base/start-up agencies has . . .
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