CHICAGO (AP) -- Hospital revenue management company Accretive Health Inc. on Wednesday reported a loss for the second quarter after it settled a legal dispute with the state of Minnesota.
The Chicago company also cut its annual income and revenue estimates.
In late July, Accretive agreed to pay $2.5 million in restitution for patients in Minnesota, and agreed not to do business in the state for at least two years. The attorney general of Minnesota had accused the company of using high-pressure tactics to get patients at hospitals to pay before treatment was given, and said the company misused private patient information and created an atmosphere in which employees were coached to aggressively collect debt.
Accretive settled the dispute after the quarter ended, but the costs were included in its second-quarter results. The company reported $12.7 million in lost operating margin and personnel costs associated with the settlement, which it said will result in the loss of more than 100 jobs in Minnesota, along with $1.9 million in legal defense and crisis management costs.
Accretive helps hospital systems manage their revenue cycles, works on bill preparation, and tracks medical treatments. The company has not acknowledged any liability or wrongdoing, and said Wednesday that it believes it would have won in court. However it said settling the lawsuit filed by Attorney General Lori Swanson was the wiser choice, and ends a "costly distraction."
The company said it lost $578,000, or a penny per share, for the quarter ended June 30. In the 2011 second quarter, Accretive posted net income of $8.6 million, or 8 cents per share. Excluding costs related to the settlement, Accretive Health said it earned 3 cents per share. Revenue rose 29 percent, to $236.7 million from $183.6 million.
Analysts, who typically exclude one-time costs, were expecting net income of 8 cents per share, on average, and $235.1 million in revenue, according to FactSet.
Accretive said it now expects adjusted net income of 23 to 27 cents per share in 2012, and net service revenue $948 million to $980 million In May the company lowered its estimates to 42 cents to 50 cents per share in net income and $960 million to $992 million in revenue.
Analysts were projecting adjusted net income of 41 cents per share, on average, with estimates ranging from 34 cents to 48 cents. Wall Street forecast $977.2 million in revenue, on average, with estimates ranging from $948 million to $1 billion.
Shares of Accretive Health lost $.22, or 9.5 percent, to $11.63 in morning trading.
