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Amedisys slumps on $150M settlement, lower outlook

NEW YORK (AP) -- Shares of Amedisys slumped Tuesday after the home health provider said it will pay $150 million to resolve a federal investigation, and cut its guidance for the year.

THE SPARK: In 2010 the U.S. Department of Justice asked Amedisys to company to turn over clinical and business operation documents under a civil investigative demand linked to the federal False Claims Act. The agency wanted documents including reimbursement and billing claims for home health services submitted to Medicare going back to Jan. 1, 2003. Several of Amedisys' competitors were also investigated.

The company said it is not acknowledging and wrongdoing and wants to avoid the expense of drawn-out litigation.

Excluding charges related to the settlement and other special items, Amedisys said it took a loss in the third quarter. Analysts hadn't expected that outcome.

THE BIG PICTURE: The company reported a third-quarter loss of $91.1 million, or $2.89 per share. It earned $9.9 million, or 33 cents per share, a year ago. Excluding one-time charges, the Baton Rouge, La., company said it lost a penny per share, compared with a year-earlier profit of 28 cents per share. Revenue fell 17 percent, to $301.6 million from $364.3 million.

FactSet says analysts expected net income of 12 cents per share and $311 million in revenue.

Amedisys now expects net income of 20 to 25 cents per share and $1.24 billion to $1.25 billion in revenue in 2013, below its previous estimates of 45 to 55 cents per share in net income and $1.24 billion to $1.28 billion in revenue.

Analysts are forecasting 43 cents per share in net income and $1.27 billion in revenue on average.

THE ANALYSIS: Jefferies & Co. analyst Brian Tanquilut said the company's third-quarter results were "very weak" and said the debt the company is taking on to fund the settlement will change its valuation and capital structure.

Tanquilut has a "Hold" rating on Amedisys stock with a price target of $10 per share.

SHARE ACTION: Amedisys shares sank $3.03, or 18 percent, to $14.32. The stock had climbed 51 percent since the company reported its second-quarter results on July 30.