Gentiva Downsizes After Medicare Reimbursement Cuts, Net Income Tanks

Gentiva Health Services, Inc. (NASDAQ:GTIV), the the largest provider of home health and hospice services in the U.S. based on revenue, reported its fourth quarter and 2011 results on Feb. 7, showing losses of more than $449.8 million in the full fiscal year for a net loss attributable to shareholders of $450.5 million, or ($14.85) per diluted share.

In comparison, last year Gentiva had a net income attributable to shareholders of $52.2 million, or $1.71 per diluted share.

However, the company’s net revenue rose 27% to $1.79 billion for the year, compared to $1.4 billion in 2010. For the fourth quarter ending on Dec. 31, 2011, Gentiva’s total net revenues were $449.2 million, down 2% from the same period in 2010.

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These revenues include home health episodic revenues of $217.1 million, down 3% from Q4 2010, and hospice revenues of $200.3 million, up 3% from the previous year. Hospice represented 45% of the company’s total net revenue in the fourth quarter, compared to 43% in 2010.

The company’s fourth quarter was marked by downsizing after a “comprehensive review of its branch structure, support infrastructure and other significant spend areas” in Q3 following the implementation of reduced Medicare reimbursement rates and the possibility of further cuts.

As a result of this assessment, the Company closed 34 locations (25 home health and 9 hospice) and sold 9 home health locations in the fourth quarter of 2011.  The financial results of the impacted locations were included in the Company’s results from continuing operations.  Related to the cost savings and branch reduction initiatives, the Company recorded a pre-tax charge of $12.4 million in the fourth quarter of 2011 for severance, lease terminations and other items.  Subsequent to year-end, the Company entered into agreements to sell 8 additional home health branches and 2 hospice branches as part of its branch assessment.

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Adjusted income from continuing operations attributable to Gentiva shareholders in the fourth quarter stood at $11.3 million, or $0.37 per diluted share, down significantly from the previous year’s $20.9 million and $0.69 per diluted share.

In 2012, Gentiva expects full-year net revenues to be in the range of $1.7 billion to $1.76 billion.

View Gentiva Health Services’ Fourth Quarter and Full-Year 2011 Results here.

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Written by Alyssa Gerace

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