| Document and Entity Information | ||
| 3 Months Ended
Mar. 31, 2010 | Apr. 22, 2010
| |
| Document Type | 10-Q | |
| Amendment Flag | false | |
| Document Period End Date | 2010-03-31 | |
| Document Fiscal Year Focus | 2,010 | |
| Document Fiscal Period Focus | Q1 | |
| Trading Symbol | AMED | |
| Entity Registrant Name | AMEDISYS INC | |
| Entity Central Index Key | 0000896262 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Filer Category | Large Accelerated Filer | |
| Entity Common Stock, Shares Outstanding | 28,559,614 |
| CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | ||
| In Thousands | 3 Months Ended
Mar. 31, 2010 | 12 Months Ended
Dec. 31, 2009 |
| Current assets: | ||
| Cash and cash equivalents | $81,980 | $34,485 |
| Patient accounts receivable, net of allowance for doubtful accounts of $25,806 and $26,371 | 150,572 | 150,269 |
| Prepaid expenses | 12,651 | 10,279 |
| Other current assets | 15,905 | 23,003 |
| Total current assets | 261,108 | 218,036 |
| Property and equipment, net of accumulated depreciation of $65,658 and $59,780 | 95,440 | 91,919 |
| Goodwill | 789,054 | 786,923 |
| Intangible assets, net of accumulated amortization of $13,337 and $11,824 | 59,093 | 57,608 |
| Other assets, net | 17,750 | 17,865 |
| Total assets | 1,222,445 | 1,172,351 |
| Current liabilities: | ||
| Accounts payable | 21,554 | 16,535 |
| Payroll and employee benefits | 124,832 | 119,619 |
| Accrued expenses | 35,592 | 33,035 |
| Obligations due Medicare | 4,618 | 4,618 |
| Current portion of long-term obligations | 40,581 | 44,254 |
| Current portion of deferred income taxes | 11,446 | 11,245 |
| Total current liabilities | 238,623 | 229,306 |
| Long-term obligations, less current portion | 162,799 | 170,899 |
| Deferred income taxes | 30,821 | 29,399 |
| Other long-term obligations | 5,787 | 6,412 |
| Total liabilities | 438,030 | 436,016 |
| Commitments and Contingencies - Note 6 | ||
| Equity: | ||
| Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued or outstanding | ||
| Common stock, $0.001 par value, 60,000,000 shares authorized; 28,548,967 and 28,303,216 shares issued; and 28,435,994 and 28,191,174 shares outstanding | 29 | 28 |
| Additional paid-in capital | 374,981 | 363,670 |
| Treasury stock at cost, 112,973 and 112,042 shares of common stock | (791) | (735) |
| Accumulated other comprehensive income | 108 | 114 |
| Retained earnings | 408,735 | 372,089 |
| Total Amedisys, Inc. stockholders' equity | 783,062 | 735,166 |
| Noncontrolling interests | 1,353 | 1,169 |
| Total equity | 784,415 | 736,335 |
| Total liabilities and equity | $1,222,445 | $1,172,351 |
| CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
| In Thousands, except Share data | Mar. 31, 2010
| Dec. 31, 2009
|
| Patient accounts receivable, allowance for doubtful accounts | $25,806 | $26,371 |
| Property and equipment, accumulated depreciation | 65,658 | 59,780 |
| Intangible assets, accumulated amortization | $13,337 | $11,824 |
| Preferred stock, par value | 0.001 | 0.001 |
| Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
| Preferred stock, issued | 0 | 0 |
| Preferred stock, outstanding | 0 | 0 |
| Common stock, par value | 0.001 | 0.001 |
| Common stock, shares authorized | 60,000,000 | 60,000,000 |
| Common stock, shares issued | 28,548,967 | 28,303,216 |
| Common stock, shares outstanding | 28,435,994 | 28,191,174 |
| Treasury stock at cost, shares | 112,973 | 112,042 |
| CONDENSED CONSOLIDATED INCOME STATEMENTS (USD $) | ||
| In Thousands, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
| Net service revenue | $412,967 | $341,838 |
| Cost of service, excluding depreciation and amortization | 204,062 | 165,039 |
| General and administrative expenses: | ||
| Salaries and benefits | 87,499 | 73,025 |
| Non-cash compensation | 2,513 | 2,141 |
| Other | 44,648 | 42,266 |
| Provision for doubtful accounts | 4,345 | 6,166 |
| Depreciation and amortization | 8,186 | 6,282 |
| Operating expenses | 351,253 | 294,919 |
| Operating income | 61,714 | 46,919 |
| Other (expense) income: | ||
| Interest income | 85 | 81 |
| Interest expense | (2,411) | (3,455) |
| Equity in earnings from unconsolidated joint ventures | 788 | 424 |
| Miscellaneous, net | 201 | 354 |
| Total other expense | (1,337) | (2,596) |
| Income before income taxes | 60,377 | 44,323 |
| Income tax expense | (23,547) | (17,286) |
| Net income | 36,830 | 27,037 |
| Net income attributable to noncontrolling interests | (184) | (15) |
| Net income attributable to Amedisys, Inc. | $36,646 | $27,022 |
| Net income per share attributable to Amedisys, Inc. common stockholders: | ||
| Basic | 1.32 | 1.01 |
| Diluted | 1.29 | 0.99 |
| Weighted average shares outstanding: | ||
| Basic | 27,821 | 26,854 |
| Diluted | 28,359 | 27,293 |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | ||
| In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
| Cash Flows from Operating Activities: | ||
| Net income | $36,830 | $27,037 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 8,186 | 6,282 |
| Provision for doubtful accounts | 4,345 | 6,166 |
| Non-cash compensation | 2,513 | 2,141 |
| 401(k) employer match | 5,705 | 4,530 |
| Loss on disposal of property and equipment | 171 | 98 |
| Deferred income taxes | 1,623 | 1,141 |
| Equity in earnings of unconsolidated joint ventures | (788) | (424) |
| Amortization of deferred debt issuance costs | 394 | 394 |
| Return on equity investment | 90 | |
| Changes in operating assets and liabilities, net of impact of acquisitions: | ||
| Patient accounts receivable | (4,648) | 15,112 |
| Other current assets | 4,885 | (2,981) |
| Other assets | 295 | 507 |
| Accounts payable | 4,636 | (99) |
| Accrued expenses | 7,425 | (5,252) |
| Other long-term obligations | (625) | (167) |
| Net cash provided by operating activities | 71,037 | 54,485 |
| Cash Flows from Investing Activities: | ||
| Proceeds from sale of deferred compensation plan assets | 356 | |
| Purchases of deferred compensation plan assets | (54) | (454) |
| Purchases of property and equipment | (9,966) | (7,478) |
| Acquisitions of businesses, net of cash acquired | (1,969) | (7,490) |
| Acquisitions of reacquired franchise rights | (2,377) | |
| Net cash (used in) investing activities | (14,366) | (15,066) |
| Cash Flows from Financing Activities: | ||
| Outstanding checks in excess of bank balance | 313 | |
| Proceeds from issuance of stock upon exercise of stock options and warrants | 939 | 425 |
| Proceeds from issuance of stock to employee stock purchase plan | 1,445 | 1,222 |
| Tax benefit from stock option exercises | 714 | 672 |
| Proceeds from Revolving Line of Credit | 24,200 | |
| Repayments of Revolving Line of Credit | (31,200) | |
| Principal payments of long-term obligations | (12,274) | (12,250) |
| Net cash (used in) financing activities | (9,176) | (16,618) |
| Net increase in cash and cash equivalents | 47,495 | 22,801 |
| Cash and cash equivalents at beginning of period | 34,485 | 2,847 |
| Cash and cash equivalents at end of period | 81,980 | 25,648 |
| Supplemental Disclosures of Cash Flow Information: | ||
| Cash paid for interest | 3,735 | 5,034 |
| Cash paid for income taxes, net of refunds received | 14,620 | 16,565 |
| Supplemental Disclosures of Non-Cash Financing and Investing Activities: | ||
| Notes payable issued for acquisitions | $500 | $1,534 |
| NATURE OF OPERATIONS, CONSOLIDATION AND PRESENTATION OF FINANCIAL STATEMENTS | |
| 3 Months Ended
Mar. 31, 2010 | |
| NATURE OF OPERATIONS, CONSOLIDATION AND PRESENTATION OF FINANCIAL STATEMENTS | 1. NATURE OF OPERATIONS, CONSOLIDATION AND PRESENTATION OF FINANCIAL STATEMENTS Amedisys, Inc., a Delaware corporation, and its consolidated subsidiaries (Amedisys, we, us, or our) are a multi-state provider of home health and hospice services with approximately 87% of our net service revenue derived from Medicare for the three-month periods ended March31, 2010 and 2009. As of March31, 2010, we had 532 Medicare-certified home health and 68 Medicare-certified hospice agencies in 42 states within the United States, the District of Columbia and Puerto Rico. Basis of Presentation In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly our financial position, our results of operations and our cash flows in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Our results of operations for the interim periods presented are not necessarily indicative of results of our operations for the entire year and have not been audited by our independent auditors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from the interim financial information presented. This report should be read in conjunction with our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December31, 2009 as filed with the Securities and Exchange Commission (SEC) on February23, 2010 (the Form 10-K), which includes information and disclosures not included herein. Use of Estimates Our accounting and reporting policies conform with U.S. GAAP. In preparing the unaudited condensed consolidated financial statements, we are required to make estimates and assumptions that impact the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. Reclassifications and Comparability Certain reclassifications have been made to prior periods financial statements in order to conform them to the current periods presentation. As a result of our rapid growth through acquisition and start-up activities, our operating results may not be comparable for the periods that are presented. Principles of Consolidation These unaudited condensed consolidated financial statements include the accounts of Amedisys, Inc. and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in our accompanying unaudited condensed consolidated financial statements, and business combinations accounted for as purchases have been included in our unaudited condensed consolidated financial statements from their respective dates of acquisition. In addition to our wholly owned subsidiaries, we also have certain equity investments that are accounted for as set forth below. Equity Investments We consolidate subsidiaries and/or joint ventures when the entity is a variable interest entity and we are the primary beneficiary or if we have controlling i |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
| 3 Months Ended
Mar. 31, 2010 | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition We earn net service revenue through our home health and hospice agencies by providing a variety of services almost exclusively in the homes of our patients. This net service revenue is earned and billed either on an episode of care basis (on a 60-day episode of care basis for home health services and on a 90-day episode of care basis for the first two hospice episodes of care and on a 60-day episode of care basis for any subsequent hospice episodes), on a per visit basis or on a daily basis depending upon the payment terms and conditions established with each payor for services provided. We refer to home health revenue earned and billed on a 60-day episode of care as episodic-based revenue. For the services we provide, Medicare is our largest payor. When we record our service revenue, we record it net of estimated revenue adjustments and contractual adjustments to reflect amounts we estimate to be realizable for services provided, as discussed below. We believe, based on information currently available to us and based on our judgment, that changes to one or more factors that impact the accounting estimates (such as our estimates related to revenue adjustments, contractual adjustments and episodes in progress) we make in determining net service revenue, which changes are likely to occur from period to period, will not materially impact our reported consolidated financial condition, results of operations, cash flows or our future financial results. Home Health Revenue Recognition Medicare Revenue Net service revenue is recorded under the Medicare payment program (PPS) based on a 60-day episode payment rate that is subject to adjustment based on certain variables including, but not limited to: (a)an outlier payment if our patients care was unusually costly; (b)a low utilization adjustment (LUPA) if the number of visits was fewer than five; (c)a partial payment if our patient transferred to another provider or we received a patient from another provider before completing the episode; (d)a payment adjustment based upon the level of therapy services required (thresholds set at 6, 14 and 20 visits); (e)the number of episodes of care provided to a patient, regardless of whether the same home health provider provided care for the entire series of episodes; (f)changes in the base episode payments established by the Medicare Program; (g)adjustments to the base episode payments for case mix and geographic wages; and (h)recoveries of overpayments. We make adjustments to Medicare revenue on completed episodes to reflect differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk. We estimate the impact of such payment adjustments based on our historical experience, which primarily includes a historical collection rate of over 99% on Medicare claims, and record this estimate during the period in which services are rendered as an estimated revenue adjustment and a corresponding reduction to patient accounts receivable. Therefore, we be |
| ACQUISITIONS | |
| 3 Months Ended
Mar. 31, 2010 | |
| ACQUISITIONS | 3. ACQUISITIONS We complete acquisitions from time to time in order to pursue our strategy of increasing our market presence by expanding our service base and enhancing our position in certain geographic areas as a leading provider of home health and hospice services. The purchase price paid for acquisitions is negotiated through arms length transactions, with consideration based on our analysis of, among other things, comparable acquisitions and expected cash flows for each transaction. Acquisitions are accounted for as purchases and are included in our condensed consolidated financial statements from their respective acquisition dates. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets because of the expected contributions of the acquisitions to our overall corporate strategy. 2010 Acquisitions On February1, 2010, we acquired certain assets and liabilities of a home health agency in DeQueen, Arkansas for a total purchase price of $2.5 million ($2.0 million in cash and a $0.5 million promissory note). In connection with the acquisition, we recorded substantially the entire purchase price as goodwill ($2.1 million) and other intangibles ($0.4 million). |
| GOODWILL AND OTHER INTANGIBLE ASSETS, NET | |
| 3 Months Ended
Mar. 31, 2010 | |
| GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 4. GOODWILL AND OTHER INTANGIBLE ASSETS, NET The following table summarizes the activity related to our goodwill and our other intangible assets, net, as of and for the three-month period ended March31, 2010 (amounts in millions): Goodwill HomeHealth Hospice Total Balances at December 31, 2009 $ 719.9 $ 67.0 $ 786.9 Additions 2.1 - 2.1 Balances at March 31, 2010 $ 722.0 $ 67.0 $ 789.0 Other Intangible Assets, Net Certificates OfNeedand Licenses Acquired Nameof Business (1) Non-Compete Agreements Reacquired Franchise Rights (2) Total Balances at December 31, 2009 43.4 4.7 9.5 57.6 Additions 0.2 0.1 2.7 3.0 Amortization - - (1.5 ) (1.5 ) Balances at March 31, 2010 $ 43.6 $ 4.8 $ 10.7 $ 59.1 (1) Acquired Names of Business includes $4.4 million of unamortized acquired names and $0.4 million of amortized acquired names which have a weighted-average amortization period of 3.1 years. (2) The weighted-average amortization period of our non-compete agreements and reacquired franchise rights is 3.2 and 2.6 years, respectively. |
| LONG-TERM OBLIGATIONS | |
| 3 Months Ended
Mar. 31, 2010 | |
| LONG-TERM OBLIGATIONS | 5. LONG-TERM OBLIGATIONS Long-term debt, including capital lease obligations, consisted of the following for the periods indicated (amounts in millions): March31,2010 December31,2009 Senior Notes: $35.0 million Series A Notes; semi-annual interest only payments; interest rate at 6.07%per annum; due March25, 2013 $ 35.0 $ 35.0 $30.0 million Series B Notes; semi-annual interest only payments; interest rate at 6.28%per annum; due March25, 2014 30.0 30.0 $35.0 million Series C Notes; semi-annual interest only payments; interest rate at 6.49%per annum; due March25, 2015 35.0 35.0 $150.0 million Term Loan; $7.5 million principal payments plus accrued interest payable quarterly; interest rate at ABR Rate plus applicable percentage or Eurodollar Rate plus the applicable percentage (1.01% at March31, 2010); due March26, 2013 90.0 97.5 Promissory notes 13.3 17.6 Capital leases - 0.1 203.3 215.2 Current portion of long-term obligations (40.5 ) (44.3 ) Total $ 162.8 $ 170.9 Our weighted-average interest rate for our five year Term Loan for the quarters ended March31, 2010 and 2009 was 1.0% and 2.6%, respectively. As of March31, 2010, our total leverage ratio (used to compute the margin and commitment fees, described in more detail in Note 6 of the financial statements included in our Form 10-K) was 0.7 and our fixed charge coverage ratio was 2.6. As of March31, 2010, our availability under our $250.0 million Revolving Credit Facility was $234.6 million as we had $15.4 million outstanding in letters of credit. See Note 6 of the financial statements included in our Form 10-K for additional details on our outstanding long-term obligations. |
| COMMITMENTS AND CONTINGENCIES | |
| 3 Months Ended
Mar. 31, 2010 | |
| COMMITMENTS AND CONTINGENCIES | 6. COMMITMENTS AND CONTINGENCIES Legal Proceedings We are involved in legal actions in the normal course of business, some of which seek monetary damages, including claims for punitive damages. We do not believe that these actions, when finally concluded and determined, will have a material impact on our consolidated financial condition, results of operations or cash flows. Insurance We are obligated for certain costs associated with our insurance programs, including employee health, workers compensation and professional liability. While we maintain various insurance programs to cover these risks, we are self-insured for a substantial portion of our potential claims. We recognize our obligations associated with these costs in the period in which a claim is incurred, including with respect to both reported claims and claims incurred but not reported, up to specified deductible limits. These costs have generally been estimated based on historical data of our claims experience. Such estimates, and the resulting reserves, are reviewed and updated by us on a quarterly basis. Our health insurance has a retention limit of $0.5 million, our workers compensation insurance has a retention limit of $0.4 million and our professional liability insurance has a retention limit of $0.3 million. |
| SEGMENT INFORMATION | |
| 3 Months Ended
Mar. 31, 2010 | |
| SEGMENT INFORMATION | 7. SEGMENT INFORMATION Our operations involve servicing patients through our two reportable business segments: home health and hospice. Our home health segment delivers a wide range of services in the home of individuals who may be recovering from surgery, have a chronic disability or terminal illness or need assistance with the essential activities of daily living. Our hospice segment provides palliative care and comfort to terminally ill patients and their families. The other column in the following tables consists of costs relating to corporate support functions that are not directly attributable to a specific segment. Management evaluates performance and allocates resources based on the operating income of the reportable segments, which exclude corporate expenses, but includes revenues and all other costs directly attributable to the specific segment. Segment assets are not reviewed by the companys chief operating decision maker and therefore are not disclosed below. The following table summarizes our segment information for the periods indicated (amounts in millions): FortheThree-MonthPeriodEndedMarch31,2010 HomeHealth Hospice Other Total Net service revenue $ 380.5 $ 32.5 $ - $ 413.0 Cost of service, excluding depreciation and amortization 187.0 17.1 - 204.1 General and administrative expenses 86.3 7.8 40.6 134.7 Provision for doubtful accounts 3.8 0.5 - 4.3 Depreciation and amortization 3.6 0.1 4.5 8.2 Operating expenses 280.7 25.5 45.1 351.3 Operating income $ 99.8 $ 7.0 $ (45.1 ) $ 61.7 FortheThree-MonthPeriodEndedMarch31, 2009 Home Health Hospice Other Total Net service revenue $ 321.5 $ 20.3 $ - $ 341.8 Cost of service, excluding depreciation and amortization 153.5 11.5 - 165.0 General and administrative expenses 71.5 5.2 40.7 117.4 Provision for doubtful accounts 5.9 0.3 - 6.2 Depreciation and amortization 3.2 0.2 2.9 6.3 Operating expenses 234.1 17.2 43.6 294.9 Operating income $ 87.4 $ 3.1 $ (43.6 ) $ 46.9 |
