Gentiva Q2 Earnings Beat Estimates, Up Y/Y; Outlook Revised
Gentiva Health Services, Inc. (GTIV) reported second-quarter 2014 adjusted earnings of 38 cents per share, surpassing the Zacks Consensus Estimate of 24 cents. Earnings also improved from the year-ago quarter earnings of 22 cents per share.
Revenue and margin growth across the company’s business and success of the One Gentiva initiative mainly aided the upside. The second quarter’s improvement also reflects the results of the strategic investments made by Gentiva over the past one year.
Including cost saving initiatives, along with acquisition and integration activities, goodwill and other long-lived asset impairments, impact of closed locations and impact of merger related expenses, Gentiva posted net income of 27 cents per share, comparing favorably with a net income of 21 cents in the year-ago quarter.
Gentiva’s net revenue increased 20% year over year to $498 million. The figure also surpassed the Zacks Consensus Estimate of $490 million. The year-over-year improvement was largely driven by the Community Care revenues and increase in home health episodic revenues.
The Home Health segment’s revenues rose 14.4% year over year to $269.1 million.
The Hospice segment’s revenues, on the other hand, fell 3.8% year over year to $172.3 million. This segment has been grappling with lower volumes.
The Community Care segment posted revenues of $56.7 million in the quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (:EBITDA) increased 39.4% year over year to $54.3 million.
Financial Update
As of Jun 30, 2014, cash and cash equivalents of Gentiva was $106.2 million, up from $86.96 million as of Dec 31, 2013. As of Jun 30, 2014, the company’s long-term debt was $1.11 billion, slightly down from $1.12 billion at year-end 2013.
Net cash from operating activities amounted to $50.4 million in the second quarter of 2014, compared with $30.7 million in the second quarter of 2013. For the second quarter of 2014, free cash flow was $47.5 million as against $25.9 million in the year-ago quarter.
As of Jun 30, 2014, Gentiva had total assets of $1.25 billion, slightly lower than $1.26 billion as of Dec 31, 2013 and shareholder equity of ($285.7) million compared with ($300.2) million as of Dec 31, 2013.
2014 Outlook
Gentiva lowered the upper end of its 2014 net revenue guidance range to $2 billion from $2.1 billion. Thus, the new net revenue guidance stands at $1.9–$2 billion from $1.9–$2.1 billion guided earlier.
The company raised the lower end of the adjusted income range outlook to 95 cents from 85 cents. The new guidance now stands at 95 cents–$1.15 per share compared with 85 cents–$1.15 per share projected earlier. The tightening of the guidance was mainly driven by the robust year-to-date results of Gentiva. The 2014 outlook takes into account the full-year effect of the Harden acquisition and the CMS issued 2014 Medicare home health and hospice reimbursement rates.
Gentiva expects adjusted EBITDA in the range of $183–$193 million.
Others
Humana Inc. (HUM) posted second-quarter 2014 operating earnings of $2.19 per share, which was in line with the Zacks Consensus Estimate.
WellPoint Inc. (WLP) reported second-quarter 2014 adjusted income of $2.44 per share, beating the Zacks Consensus Estimate of $2.28.
Molina Healthcare Inc.’s (MOH) second-quarter 2014 operating earnings of 62 cents per share cruised ahead of the Zacks Consensus Estimate of 43 cents per share.
Zacks Rank
Gentiva currently carries a Zacks Rank #2 (Buy).
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