The accompanying notes are an integral part of these condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 78% of our revenue derived from Medicare for the three and six-month periods ended
June 30, 2016 and approximately 80% of our revenue derived from Medicare for the three and six-month periods ended June 30, 2015. As of June 30, 2016, we owned and operated 328 Medicare-certified home health care centers, 79
Medicare-certified hospice care centers and nine personal-care care centers in 34 states within the United States and the District of Columbia.
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 December 31, 2015, as filed with the Securities and Exchange Commission (SEC) on March 10, 2016 (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 to the current periods presentation. In
compliance with Accounting Standards Update (ASU) 2015-03,
Interest Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,
we have reclassified 2015 amounts related to unamortized
debt issuance costs from other assets, net to long-term obligations, less current portion.
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 investments
when the entity is a variable interest entity and we are the primary beneficiary or if we have controlling interests in the entity, which is generally ownership in excess of 50%. Third party equity interests in our consolidated joint ventures are
reflected as noncontrolling interests in our condensed consolidated financial statements.
We account for investments in entities in which we have the
ability to exercise significant influence under the equity method if we hold 50% or less of the voting stock and the entity is not a variable interest entity in which we are the primary beneficiary. The book value of investments that we accounted
for under the equity method of accounting was $26.2 million as of June 30, 2016, and $25.7 million as of December 31, 2015. We account for investments in entities in which we have less than a 20% ownership interest under the cost method of
accounting if we do not have the ability to exercise significant influence over the investee.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
We earn net service revenue
through our home health and hospice care centers 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 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.
5
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 prospective payment system (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 (capped at 10% of total reimbursement per provider number); (b) a low utilization payment 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 (with various incremental adjustments made for
additional visits, with larger payment increases associated with the sixth, fourteenth and twentieth visit thresholds); (e) adjustments to payments if we are unable to perform periodic therapy assessments; (f) 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; (g) changes in the base episode payments established by the Medicare Program; (h) adjustments to the base
episode payments for case mix and geographic wages; and (i) recoveries of overpayments. In addition, we make adjustments to Medicare revenue if we find that we are unable to produce appropriate documentation of a face to face encounter between
the patient and physician.
We make adjustments to Medicare revenue to reflect differences between estimated and actual payment amounts, our discovered
inability to obtain appropriate billing documentation or authorizations and other reasons unrelated to credit risk. We estimate the impact of such 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 believe that our reported net
service revenue and patient accounts receivable will be the net amounts to be realized from Medicare for services rendered.
In addition to revenue
recognized on completed episodes, we also recognize a portion of revenue associated with episodes in progress. Episodes in progress are 60-day episodes of care that begin during the reporting period, but were not completed as of the end of the
period. We estimate this revenue on a monthly basis based upon historical trends. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per episode and our
estimate of the average percentage complete based on visits performed. As of June 30, 2016 and 2015, the difference between the cash received from Medicare for a request for anticipated payment (RAP) on episodes in progress and the
associated estimated revenue was immaterial and, therefore, the resulting credits were recorded as a reduction to our outstanding patient accounts receivable in our condensed consolidated balance sheets for such periods.
Non-Medicare Revenue
Episodic-based Revenue.
We
recognize revenue in a similar manner as we recognize Medicare revenue for episodic-based rates that are paid by other insurance carriers, including Medicare Advantage programs; however, these rates can vary based upon the negotiated terms.
Non-episodic based Revenue.
Gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to our established or
estimated per-visit rates, as applicable. Contractual adjustments are recorded for the difference between our standard rates and the contracted rates to be realized from patients, third parties and others for services provided and are deducted from
gross revenue to determine net service revenue and are also recorded as a reduction to our outstanding patient accounts receivable. In addition, we receive a minimal amount of our net service revenue from patients who are either self-insured or are
obligated for an insurance co-payment.
6
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Hospice Revenue Recognition
Hospice Medicare Revenue
Gross revenue is recorded on an
accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are daily or hourly rates for each of the four levels of care we deliver. The four levels of care are routine care, general
inpatient care, continuous home care and respite care. Routine care accounts for 99% and 98% of our total net Medicare hospice service revenue for each of the three and six-month periods ended June 30, 2016, and 98% of our total net Medicare hospice
service revenue for each of the three and six-month periods ended June 30, 2015. We make adjustments to Medicare revenue for an inability to obtain appropriate billing documentation or acceptable authorizations and other reasons unrelated to credit
risk. We estimate the impact of these adjustments based on our historical experience, which primarily includes our historical collection rate on Medicare claims, and record it during the period services are rendered as an estimated revenue
adjustment and as a reduction to our outstanding patient accounts receivable.
Additionally, as Medicare hospice revenue is subject to an inpatient cap
limit and an overall payment cap for each provider number, we monitor these caps and estimate amounts due back to Medicare if we estimate a cap has been exceeded. We record these adjustments as a reduction to revenue and an increase in other
accrued liabilities. Beginning for the cap year ending October 31, 2014, providers are required to self-report and pay their estimated cap liability by March 31
st
of the following year.
As of June 30, 2016, we have settled our Medicare hospice reimbursements for all fiscal years through October 31, 2012. As of June 30, 2016 and December 31, 2015, we have recorded $1.4 million, for estimated amounts due back to
Medicare in other accrued liabilities for the Federal cap years ended October 31, 2013 through October 31, 2016.
Hospice Non-Medicare
Revenue
We record gross revenue on an accrual basis based upon the date of service at amounts equal to our established rates or estimated per day
rates, as applicable. Contractual adjustments are recorded for the difference between our established rates and the amounts estimated to be realizable from patients, third parties and others for services provided and are deducted from gross revenue
to determine our net service revenue and patient accounts receivable.
Personal Care Revenue Recognition
Personal Care Non-Medicare Revenue
We generate net
service revenues by providing our services directly to patients primarily on a per hour, visit or unit basis. We receive payment for providing such services from our payor clients, including state and local governmental agencies, managed care
organizations, commercial insurers and private consumers. Net service revenues are principally provided based on authorized hours, visits or units determined by the relevant agency, at a rate that is either contractual or fixed by legislation or
contract which are recognized as net service revenue at the time services are rendered.
Patient Accounts Receivable
Our patient accounts receivable are uncollateralized and consist of amounts due from Medicare, Medicaid, other third-party payors and patients. As of
June 30, 2016 there is one single payor, other than Medicare, that accounts for more than 10% of our total outstanding patient receivables (approximately 10.9%). Thus, we believe there are no other significant concentrations of receivables that
would subject us to any significant credit risk in the collection of our patient accounts receivable. We fully reserve for accounts which are aged at 365 days or greater. We write off accounts on a monthly basis once we have exhausted our collection
efforts and deem an account to be uncollectible.
We believe the credit risk associated with our Medicare accounts, which represent 59% and 64% of our net
patient accounts receivable at June 30, 2016 and December 31, 2015, respectively, is limited due to our historical collection rate of over 99% from Medicare and the fact that Medicare is a U.S. government payor. Accordingly, we do not
record an allowance for doubtful accounts for our Medicare patient accounts receivable, which are recorded at their net realizable value after recording estimated revenue adjustments as discussed above. During the three and six-month periods ended
June 30, 2016, we recorded $2.6 million and $4.3 million, respectively, in estimated revenue adjustments to Medicare revenue as compared to $1.1 million and $2.6 million during the three and six-month periods ended June 30, 2015,
respectively.
We believe there is a certain level of credit risk associated with non-Medicare payors. To provide for our non-Medicare patient accounts
receivable that could become uncollectible in the future, we establish an allowance for doubtful accounts to reduce the carrying amount to its estimated net realizable value.
Medicare Home Health
For our home health patients, our
pre-billing process includes verifying that we are eligible for payment from Medicare for the services that we provide to our patients. Our Medicare billing begins with a process to ensure that our billings are accurate through
7
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
the utilization of an electronic Medicare claim review. We submit a RAP for 60% of our estimated payment for the initial episode at the start of care or 50% of the estimated payment for any
subsequent episodes of care contiguous with the first episode for a particular patient. The full amount of the episode is billed after the episode has been completed (final billed). The RAP received for that particular episode is then
deducted from our final payment. If a final bill is not submitted within the greater of 120 days from the start of the episode, or 60 days from the date the RAP was paid, any RAPs received for that episode will be recouped by Medicare from any other
claims in process for that particular provider number. The RAP and final claim must then be re-submitted.
Medicare Hospice
For our hospice patients, our pre-billing process includes verifying that we are eligible for payment from Medicare for the services that we provide to our
patients. Our Medicare billing begins with a process to ensure that our billings are accurate through the utilization of an electronic Medicare claim review. Once each patient has been confirmed for eligibility, we will bill Medicare on a monthly
basis for the services provided to the patient.
Non-Medicare Home Health, Hospice and Personal Care
For our non-Medicare patients, our pre-billing process primarily begins with verifying a patients eligibility for services with the applicable payor.
Once the patient has been confirmed for eligibility, we will provide services to the patient and bill the applicable payor. Our review and evaluation of non-Medicare accounts receivable includes a detailed review of outstanding balances and special
consideration to concentrations of receivables from particular payors or groups of payors with similar characteristics that would subject us to any significant credit risk. We estimate an allowance for doubtful accounts based upon our assessment of
historical and expected net collections, business and economic conditions, trends in payment and an evaluation of collectability based upon the date that the service was provided. Based upon our best judgment, we believe the allowance for doubtful
accounts adequately provides for accounts that will not be collected due to credit risk.
Property and Equipment
Property and equipment is stated at cost and we depreciate it on a straight-line basis over the estimated useful lives of the assets. Additionally, we have
internally developed computer software for our own use. Additions and improvements (including interest costs for construction of qualifying long-lived assets) are capitalized. Maintenance and repair expenses are charged to expense as incurred. The
cost of property and equipment sold or disposed of and the related accumulated depreciation are eliminated from the property and related accumulated depreciation accounts, and any gain or loss is credited or charged to other general and
administrative expenses.
As of December 31, 2014, we had $75.8 million of internally developed software costs related to the development of AMS3
Home Health and Hospice. Expanded beta testing to additional sites in February of 2015 demonstrated that AMS3 was disruptive to operations. Additional analysis of the system determined that the system was not ready to be fully implemented and would
require significant time and investment to redesign. Therefore, during the three-month period ended March 31, 2015, we made the decision to discontinue AMS3 and recorded a non-cash asset impairment charge of $75.2 to write off the software
costs incurred related to the development of AMS3 Home Health and Hospice.
The following table summarizes the balances related to our property and
equipment for the periods indicated (amounts in millions):
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
December 31, 2015
|
|
Building and leasehold improvements
|
|
$
|
6.4
|
|
|
$
|
2.3
|
|
Equipment and furniture
|
|
|
80.6
|
|
|
|
89.6
|
|
Computer software
|
|
|
97.0
|
|
|
|
92.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184.0
|
|
|
|
184.5
|
|
Less: accumulated depreciation
|
|
|
(139.4
|
)
|
|
|
(141.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
44.6
|
|
|
$
|
42.7
|
|
|
|
|
|
|
|
|
|
|
Fair Value of Financial Instruments
The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to
measure fair value. The three levels of inputs are as follows:
|
|
|
Level 1 Quoted prices in active markets for identical assets and liabilities.
|
|
|
|
Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
|
|
Level 3 Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.
|
8
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Our deferred compensation plan assets are recorded at fair value and are considered a level 2 measurement.
The carrying amount of our other financial instruments, including cash and cash equivalents, patient accounts receivable, accounts payable, payroll and employee benefits and accrued expenses approximate fair value due to the short maturities of
these instruments. As of June 30, 2016, the carrying value of our long-term debt is subject to a variable rate of interest based on current market rates, and as such, the carrying value approximates fair value.
Weighted-Average Shares Outstanding
Net income
(loss) per share attributable to Amedisys, Inc. common stockholders, calculated on the treasury stock method, is based on the weighted average number of shares outstanding during the period. The following table sets forth, for the periods indicated,
shares used in our computation of the weighted-average shares outstanding, which are used to calculate our basic and diluted net income (loss) attributable to Amedisys, Inc. common stockholders (amounts in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three-Month Periods
Ended June 30,
|
|
|
For the Six-Month Periods
Ended June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Weighted average number of shares outstanding - basic
|
|
|
33,197
|
|
|
|
33,004
|
|
|
|
33,059
|
|
|
|
32,871
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
181
|
|
|
|
1
|
|
|
|
134
|
|
|
|
|
|
Non-vested stock and stock units
|
|
|
330
|
|
|
|
454
|
|
|
|
448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding - diluted
|
|
|
33,708
|
|
|
|
33,459
|
|
|
|
33,641
|
|
|
|
32,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive securities
|
|
|
199
|
|
|
|
514
|
|
|
|
240
|
|
|
|
957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09,
Revenue from
Contracts with Customers (Topic 606)
, which requires an entity to recognize the amount of revenue for which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue
recognition guidance in U.S. GAAP. In August 2015, the FASB issued ASU 2015-14,
Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date
, to defer the effective date of the standard from January 1, 2017, to
January 1, 2018, with an option that permits companies to adopt the standard as early as the original effective date. The new ASU reflects the decisions reached by the FASB at its meeting in July 2015. Early application prior to the original
effective date is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 and ASU 2015-14 will have on its consolidated financial
statements and related disclosures, its transition method and the effect of the standard on its ongoing financial reporting.
In April 2015, the FASB
issued ASU 2015-03,
Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs
. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented
in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. ASU 2015-03
is effective for annual and interim periods beginning on or after December 15, 2015. We adopted this ASU during the three-month period ended March 31, 2016, and applied the change retrospectively for prior period balances of unamortized
debt issuance costs, resulting in a $3.4 million reduction in other assets, net and long-term obligations, less current portion, on our condensed consolidated balance sheet as of December 31, 2015.
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842),
which will require lessees to recognize a lease liability and right-of-use asset for
all leases (with the exception of short-term leases) at the commencement date. The ASU is effective for annual and interim periods beginning on or after December 15, 2018. Early adoption is permitted. The standard requires a modified
retrospective transition method which requires application of the new guidance for all periods presented. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures and the effect
of the standard on its ongoing financial reporting.
In March 2016, the FASB issued ASU 2016-09,
Compensation Stock Compensation (Topic 718):
Improvement to Employee Share-Based Payment Accounting
, which will simplify the accounting for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liability, and classification
on the statement of cash flows. The ASU is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company is evaluating the effect that ASU 2016-09 will have on its consolidated financial
statements and related disclosures and the effect of the standard on its ongoing financial reporting.
9
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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. Acquisitions are accounted for as purchases and are included in our 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. We typically engage outside appraisal firms to assist in
the fair value determination of identifiable intangible assets. Preliminary purchase price allocation is adjusted, as necessary, up to one year after the acquisition closing date if management obtains more information regarding asset valuation and
liabilities assumed.
On March 1, 2016, we acquired Associated Home Care which owns and operates 9 personal-care care centers servicing the state of
Massachusetts for a total purchase price of $27.7 million, net of cash acquired (subject to certain adjustments), of which $0.5 million was placed in escrow for indemnification purposes and working capital price adjustments. The purchase price was
paid with cash on hand on the date of the transaction. Based on our preliminary purchase price allocation, in connection with the acquisition, we recorded goodwill ($23.5 million) and other assets and liabilities, net ($4.2 million) during the
three-month period ended March 31, 2016. During the three-month period ended June 30, 2016, we received the final report from our outside appraisal firm. As a result, we reduced our preliminary goodwill by $5.0 million and recorded
corresponding increases in the fair value of assets acquired ($0.2 million), other intangibles - acquired names of business ($3.5 million) and other intangibles - non-compete agreements ($1.3 million). The non-compete agreements will be amortized
over a weighted-average period of 2.1 years.
4. LONG-TERM OBLIGATIONS
Long-term debt consisted of the following for the periods indicated (amounts in millions):
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
|
December 31, 2015
|
|
$100.0 million Term Loan; principal payments plus accrued interest payable quarterly; interest
rate at ABR Rate plus applicable percentage or Eurodollar Rate plus the applicable percentage (2.46% at June 30, 2016); due August 28, 2020
|
|
$
|
97.5
|
|
|
$
|
100.0
|
|
$200.0 million Revolving Credit Facility; interest only payments; interest rate at ABR Rate plus
applicable percentage or Eurodollar Rate plus the applicable percentage; due August 28, 2020
|
|
|
|
|
|
|
|
|
Deferred debt issuance costs
|
|
|
(3.0
|
)
|
|
|
(3.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
94.5
|
|
|
|
96.6
|
|
Current portion of long-term obligations
|
|
|
(5.0
|
)
|
|
|
(5.0
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
89.5
|
|
|
$
|
91.6
|
|
|
|
|
|
|
|
|
|
|
Our weighted average interest rate for our $100.0 million Term Loan, under our Credit Agreement, was 2.4% for the three and
six-month periods ended June 30, 2016, respectively. Our weighted average interest rate for our $200.0 million Revolving Credit Facility was 3.3% and 3.2% for the three and six-month periods ended June 30, 2016, respectively.
As of June 30, 2016, our consolidated leverage ratio was 1.0, our consolidated fixed charge coverage ratio was 4.1 and we are in compliance with our
Credit Agreement. In the event we are not in compliance with our debt covenants in the future, we would pursue various alternatives in an attempt to successfully resolve the non-compliance, which might include, among other things, seeking debt
covenant waivers or amendments.
As of June 30, 2016, our availability under our $200.0 million Revolving Credit Facility was $176.1 million as we
had $23.9 million outstanding in letters of credit.
5. COMMITMENTS AND CONTINGENCIES
Legal Proceedings - Ongoing
We are involved in the
following legal actions:
10
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Securities Class Action Lawsuits
On June 10, 2010, a putative securities class action complaint was filed in the United States District Court for the Middle District of Louisiana (the
District Court) against the Company and certain of our current and former senior executives. Additional putative securities class actions were filed in the District Court on July 14, July 16, and July 28, 2010.
On January 18, 2011, the Co-Lead Plaintiffs filed an amended, consolidated class action complaint (the Securities Complaint) which
supersedes the earlier-filed securities class action complaints. The Securities Complaint alleges that the defendants made false and/or misleading statements and failed to disclose material facts about our business, financial condition,
operations and prospects, particularly relating to our policies and practices regarding home therapy visits under the Medicare home health prospective payment system and the related alleged impact on our business, financial condition, operations and
prospects. The Securities Complaint seeks a determination that the action may be maintained as a class action on behalf of all persons who purchased the Companys securities between August 2, 2005 and September 28, 2010 and an
unspecified amount of damages.
All defendants moved to dismiss the Securities Complaint. On June 28, 2012, the District Court granted the
defendants motion to dismiss the Securities Complaint. On July 26, 2012, the Co-Lead Plaintiffs filed a motion for reconsideration, which the District Court denied on April 9, 2013.
On May 3, 2013, the Co-Lead Plaintiffs appealed the dismissal of the Securities Complaint to the United States Court of Appeals for the Fifth Circuit
(the Fifth Circuit). On October 2, 2014, a three-judge panel of the Fifth Circuit issued a decision reversing the District Courts dismissal of the Securities Complaint. On October 16, 2014, all defendants filed a petition
with the Fifth Circuit to review the three-judge panels decision
en banc
, or as a whole court. On December 29, 2014, the Fifth Circuit denied the defendants motion for
en banc
review of the Fifth Circuit panels
decision reversing the District Courts dismissal of the Securities Complaint. The case then returned to the District Court for further proceedings. On March 30, 2015, the defendants filed a Petition for Writ of Certiorari (the
Petition) with the United States Supreme Court asking the Supreme Court to consider whether the Fifth Circuit erred in reversing the District Courts dismissal of the Securities Complaint. The Supreme Court denied the Petition on
June 29, 2015, which did not affect the ongoing proceedings before the District Court, including the District Courts consideration of a motion filed on April 3, 2015, by the Co-Lead Plaintiffs for leave to amend the Securities
Complaint, which motion was granted by the District Court. On December 15, 2015, the defendants filed a motion to dismiss the Co-Lead Plaintiffs First Amended Consolidated Complaint. All discovery in the case is currently stayed pursuant
to federal law. The parties agreed to explore the possibility of a mediated settlement of this matter, and a mediation was held on June 21, 2016. The parties were unable to resolve this matter during the mediation.
We are unable to assess the probable outcome or reasonably estimate the potential liability, if any, arising from the securities litigation described
above. The Company intends to continue to vigorously defend itself in the securities litigation matter but, if decided adverse to the Company, its impact could be material. No assurances can be given as to the timing or outcome of the
securities matter described above or the impact of any of the inquiry or litigation matters on the Company, its consolidated financial condition, results of operations or cash flows, which could be material, individually or in the aggregate.
Wage and Hour Litigation
On September 13, 2012, a
putative collective and class action complaint was filed in the United States District Court for the Northern District of Illinois against us in which a former employee alleges wage and hour law violations. The former employee claims she was
paid on both a per-visit and an hourly basis, and that such a pay scheme resulted in her misclassification as an exempt employee, thereby denying her overtime. The plaintiff alleges violations of federal and state law and seeks damages under the
Federal Fair Labor Standards Act (FLSA) and the Illinois Minimum Wage Law. Plaintiff seeks class certification of similar employees who were or are employed in Illinois and seeks attorneys fees, back wages and liquidated damages
going back three years under the FLSA and three years under the Illinois statute. On May 28, 2013, the Court granted the Companys motion to stay the case pending resolution of class certification issues and dispositive motions in the
earlier-filed Connecticut case. On December 23, 2015, the parties agreed to explore the possibility of a mediated settlement of the Illinois case, and a mediation occurred on April 18, 2016. The parties agreed to settle the case for $0.8
million, subject to court approval, which the Company has accrued as of June 30, 2016.
Frontier Litigation
On April 2, 2015, Frontier Home Health and Hospice, L.L.C. (Frontier) filed a complaint against the Company in the United States District
Court for the District of Connecticut alleging breach of contract, negligent misrepresentation and unfair and deceptive trade practices under Conn. Gen. Stat. §42-110b. Frontier acquired our interest in five home health and four hospice
care centers in Wyoming and Idaho in April 2014. The complaint alleges that certain of the hospice patients on service at the time of the acquisition did not meet Medicare eligibility requirements and that we breached certain of the
representations and warranties under the purchase agreement and therefore, the businesses were worth less than the purchase price. Under the complaint, Frontier seeks declaratory judgment from the District Court that, under the terms of the purchase
agreement with Frontier, we are obligated to determine the amount of the alleged Medicare overpayments and reimburse the government for the same in a timely manner, as well as unspecified compensatory and punitive damages, attorneys fees and
pre- and post-judgment interest.
11
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We are unable to assess the probable outcome arising from the Frontier litigation described above. The
Company has engaged an independent auditing firm to perform a clinical audit of the hospice locations in question and intends to defend itself in the Frontier litigation matter. No assurances can be given as to the timing or outcome of the
audit, the Frontier litigation matter described above or the impact of any of the audit or litigation matters on the Company, its consolidated financial condition, results of operations or cash flows, which could be material, individually or in the
aggregate. In accordance with our corporate integrity agreement (CIA) with the Office of Inspector General-HHS (OIG) as discussed below under Other Investigative Matters Corporate Integrity Agreement, we
have notified the OIG of this matter.
Subpoena Duces Tecum Issued by the U.S. Department of Justice
On May 21, 2015, we received a Subpoena Duces Tecum (Subpoena) issued by the U.S. Department of Justice. The Subpoena requests the delivery of
information regarding 53 identified hospice patients to the United States Attorneys Office for the District of Massachusetts. It also requests the delivery of documents relating to our hospice clinical and business operations and related
compliance activities. The Subpoena generally covers the period from January 1, 2011, through the present. We are fully cooperating with the U.S. Department of Justice with respect to this investigation. Based on the information currently
available to us, we cannot predict the timing or outcome of this investigation or reasonably estimate the amount or range of potential losses, if any, which may arise from this matter.
Civil Investigative Demands Issued by the U.S. Department of Justice
On November 3, 2015, we received a civil investigative demand (CID) issued by the U.S. Department of Justice pursuant to the federal False
Claims Act relating to claims submitted to Medicare and/or Medicaid for hospice services provided through designated facilities in the Morgantown, West Virginia area. The CID requests the delivery of information to the United States Attorneys
Office for the Northern District of West Virginia regarding 66 identified hospice patients, as well as documents relating to our hospice clinical and business operations in the Morgantown area. The CID generally covers the period from
January 1, 2009 through August 31, 2015. We are fully cooperating with the U.S. Department of Justice with respect to this investigation. Based on the information currently available to us, we cannot predict the timing or outcome of this
investigation or reasonably estimate the amount or range of potential losses, if any, which may arise from this matter.
On June 27, 2016, we
received a CID issued by the U.S. Department of Justice pursuant to the federal False Claims Act relating to claims submitted to Medicare and/or Medicaid for hospice services provided through designated facilities in the Parkersburg, West Virginia
area. The CID requests the delivery of information to the United States Attorneys Office for the Southern District of West Virginia regarding 68 identified hospice patients, as well as documents relating to our hospice clinical and business
operations in the Parkersburg area. The CID generally covers the period from January 1, 2011 through June 20, 2016. We are fully cooperating with the U.S. Department of Justice with respect to this investigation. Based on the information
currently available to us, we cannot predict the timing or outcome of this investigation or reasonably estimate the amount or range of potential losses, if any, which may arise from this matter.
In addition to the matters referenced in this note, 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 normal course actions, when finally concluded and determined, will have a material impact on our consolidated financial condition, results of operations or cash flows.
Legal Proceedings Settled
Wage and Hour
Litigation
On July 25, 2012, a putative collective and class action complaint was filed in the United States District Court for the District of
Connecticut against us in which three former employees allege wage and hour law violations. The former employees claim that they were not paid overtime for all hours worked over 40 hours in violation of the FLSA, as well as the Pennsylvania
Minimum Wage Act. More specifically, they allege they were paid on both a per-visit and an hourly basis, and that such a pay scheme resulted in their misclassification as exempt employees, thereby denying them overtime pay. Moreover, in response to
a Company motion arguing that plaintiffs complaint was deficient in that it was ambiguous and failed to provide fair notice of the claims asserted and plaintiffs opposition thereto, the Court, on April 8, 2013, held that the
complaint adequately raises general allegations that the plaintiffs were not paid overtime for all hours worked in a week over 40, which may include claims for unpaid overtime under other theories of liability, such as alleged off-the-clock work, in
addition to plaintiffs more clearly stated allegations based on misclassification. On behalf of themselves and a class of current and former employees they allege are similarly situated, plaintiffs seek attorneys fees, back wages and
liquidated damages going back three years under the FLSA and three years under the Pennsylvania statute. On October 8, 2013, the Court granted plaintiffs motion for equitable tolling requesting that the statute of limitations for claims
under the FLSA for plaintiffs who opt-in to the lawsuit be tolled from September 24, 2012, the date upon which plaintiffs filed their original motion for
12
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
conditional certification, until 90 days after any notice of this lawsuit is issued following conditional certification. Following a motion for reconsideration filed by the Company, on
December 3, 2013, the Court modified this order, holding that putative class members FLSA claims are tolled from October 29, 2012 through the date of the Courts order on plaintiffs motion for conditional certification. On
January 13, 2014, the Court granted plaintiffs July 10, 2013 motion for conditional certification of their FLSA claims and authorized issuance of notice to putative class members to provide them an opportunity to opt in to the
action. On April 17, 2014, that notice was mailed to putative class members. The period within which putative class members were permitted to opt into the action expired on July 16, 2014.
On September 10, 2014, the plaintiffs in the Connecticut case filed a motion for leave to amend their complaint to add a new claim under the Kentucky
Wage and Hour Act (KWHA) alleging that the Company did not pay certain home health clinicians working in the Commonwealth of Kentucky all of the overtime wages they were owed, either because the Company misclassified them as exempt from
overtime or, while treating them as overtime eligible, did not properly pay them overtime for all hours worked over 40 in a week. On behalf of themselves and a class of current and former employees they allege are similarly situated, plaintiffs seek
attorneys fees, back wages and liquidated damages going back five years before the filing of their original complaint under the KWHA. On October 1, 2014, the Company filed an opposition to the plaintiffs motion to amend. On
October 15, 2014, plaintiffs filed a reply brief in support of their motion. On December 12, 2014, the Court granted the plaintiffs motion to amend the complaint to add the claims under the KWHA. The Company and the plaintiffs agreed
to explore the possibility of a mediated settlement of the Connecticut case, and on February 23, 2015 filed a joint motion to stay proceedings for six months to pursue that process, which was granted by the Court on February 24, 2015.
On June 10, 2015, the Company and plaintiffs participated in a mediation whereby they agreed to fully resolve all of plaintiffs claims in the
lawsuit for $8.0 million, subject to approval by the Court. The settlement agreement was submitted to the Court for preliminary approval and plaintiffs requested certification of Pennsylvania and Kentucky classes for the sole purpose of this
proposed settlement. The Court granted preliminary approval, notice was issued to members of the settlement classes to provide them with an opportunity to object to the settlement and, in the case of members of the Pennsylvania and Kentucky
classes, opt out of the settlement. Following this notice period, the Court held a final fairness hearing for the purpose of considering objections and deciding whether to grant final approval of the settlement. As of September 30,
2015, we had an accrual of $8.0 million for this matter. On January 29, 2016, the Court approved the final settlement of this case. The settlement became effective on February 26, 2016. As a result of the final amount calculated by the
settlement administrator based on claims timely submitted, we reduced our accrual to $5.3 million as of December 31, 2015; this amount was paid during the three-month period ended March 31, 2016.
Other Investigative Matters
Corporate
Integrity Agreement
On April 23, 2014, with no admissions of liability on our part, we entered into a settlement agreement with the U.S.
Department of Justice relating to certain of our clinical and business operations. Concurrently with our entry into this agreement, we entered into a corporate integrity agreement (CIA) with the Office of Inspector General-HHS
(OIG). The CIA formalizes various aspects of our already existing ethics and compliance programs and contains other requirements designed to help ensure our ongoing compliance with federal health care program requirements. Among other
things, the CIA requires us to maintain our existing compliance program, executive compliance committee and compliance committee of the Board of Directors; provide certain compliance training; continue screening new and current employees to ensure
they are eligible to participate in federal health care programs; engage an independent review organization to perform certain auditing and reviews and prepare certain reports regarding our compliance with federal health care programs, our billing
submissions to federal health care programs and our compliance and risk mitigation programs; and provide certain reports and management certifications to the OIG. Additionally, the CIA specifically requires that we report substantial overpayments
that we discover we have received from federal health care programs, as well as probable violations of federal health care laws. Upon breach of the CIA, we could become liable for payment of certain stipulated penalties, or could be excluded from
participation in federal health care programs. The corporate integrity agreement has a term of five years.
During the course of our compliance with the
CIA we identified several such reportable events and notified the OIG as required. As of December 31, 2015, we had an accrual of $4.7 million for these matters. On May 5, 2016, the company entered into a settlement agreement with the OIG
and the matters were fully resolved for $4.7 million; this amount was paid during the three-month period ended June 30, 2016.
Computer Inventory
and Data Security Reporting
On March 1 and March 2, 2015, we provided official notice under federal and state data privacy laws concerning
the outcome of an extensive risk management process to locate and verify our large computer inventory. The process identified approximately 142 encrypted computers and laptops for which reports were required under federal and state data privacy
laws. The devices at issue were originally assigned to Company clinicians and other team members who left the Company between 2011 and 2014. We reported these devices to the U.S. Department of Health and Human Services, state agencies, and
individuals whose information may be involved, as
13
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
required under applicable law because we could not rule out unauthorized access to patient data on the devices. The Office of Civil Rights, U.S. Department of Health and Human Services
(OCR) is reviewing our compliance with applicable laws, as is typical for any data breach involving more than 500 individuals. We are cooperating with OCR in its review and if any other regulatory reviews are formally commenced, will
cooperate with applicable regulatory authorities. In accordance with our CIA, we have notified the OIG of this matter.
Third Party Audits - Ongoing
From time to time, in the ordinary course of business, we are subject to audits under various governmental programs in which third party firms
engaged by the Centers for Medicare and Medicaid Services (CMS) conduct extensive review of claims data to identify potential improper payments under the Medicare program.
In July 2010, our subsidiary that provides hospice services in Florence, South Carolina received from a Zone Program Integrity Contractor (ZPIC) a
request for records regarding a sample of 30 beneficiaries who received services from the subsidiary during the period of January 1, 2008 through March 31, 2010 (the Review Period) to determine whether the underlying services
met pertinent Medicare payment requirements. We acquired the hospice operations subject to this review on August 1, 2009; the Review Period covers time periods both before and after our ownership of these hospice operations. Based on
the ZPICs findings for 16 beneficiaries, which were extrapolated to all claims for hospice services provided by the Florence subsidiary billed during the Review Period, on June 6, 2011, the MAC for the subsidiary issued a notice of
overpayment seeking recovery from our subsidiary of an alleged overpayment. We dispute these findings, and our Florence subsidiary has filed appeals through the Original Medicare Standard Appeals Process, in which we are seeking to have those
findings overturned. An ALJ hearing was held in early January 2015. On January 18, 2016 we received a letter dated January 6, 2016 referencing the ALJ hearing decision for the overpayment issued on June 6, 2011. The decision was
partially favorable with a new overpayment amount of $3.7 million with a balance owed of $5.6 million including interest based on 9 disputed claims (originally 16). We filed an appeal to the Medicare Appeals Council on the remaining 9 disputed
claims and also argued that the statistical method used to select the sample was not valid. No assurances can be given as to the timing or outcome of the Medicare Appeals Council decision. As of June 30, 2016, Medicare has withheld
payments of $5.7 million (including additional interest) as part of their standard procedures once this level of the appeal process has been reached. In the event we are not able to recoup this alleged overpayment, we are indemnified by the prior
owners of the hospice operations for amounts relating to the period prior to August 1, 2009. As of June 30, 2016, we have an indemnity receivable for the amount withheld related to the period prior to August 1, 2009.
Third Party Audits Settled
In January
2010, our subsidiary that provides home health services in Dayton, Ohio received from a Medicare Program Safeguard Contractor (PSC) a request for records regarding 137 claims submitted by the subsidiary paid from January 2, 2008
through November 10, 2009 (the Claim Period) to determine whether the underlying services met pertinent Medicare payment requirements. Based on the PSCs findings for 114 of the claims, which were extrapolated to all claims for
home health services provided by the Dayton subsidiary paid during the Claim Period, on March 9, 2011, the Medicare Administrative Contractor (MAC) for the subsidiary issued a notice of overpayment seeking recovery from our
subsidiary of an alleged overpayment of approximately $5.6 million. We dispute these findings, and our Dayton subsidiary has filed appeals through the Original Medicare Standard Appeals Process, in which we are seeking to have those findings
overturned. A consolidated administrative law judge (ALJ) hearing was held in late March 2013. In January 2014, the ALJ found fully in favor of our Dayton subsidiary on 74 appeals and partially in favor of our Dayton subsidiary on eight
appeals. Taking into account the ALJs decision, certain determinations that our Dayton subsidiary decided not to appeal as well as certain determinations made by the MAC, of the 114 claims that were originally extrapolated by the MAC, 76
claims have now been decided in favor of our Dayton subsidiary in full, 10 claims have been decided in favor of our Dayton subsidiary in part, and 28 claims have been decided against or not appealed by our Dayton subsidiary. The ALJ has ordered the
MAC to recalculate the extrapolation amount based on the ALJs decision. The Medicare Appeals Council can decide on its own motion to review the ALJs decisions. As of July 13, 2016, we were notified that the PSC elected not to
re-extrapolate the overpayment and instead issued a new calculated overpayment in the amount of $0.2 million. The overpayment has been paid in full and the matter is fully resolved.
14
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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, up to specified deductible limits in the period in
which a claim is incurred, including with respect to both reported claims and claims incurred but not reported. 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 $0.9 million, our workers compensation insurance
has a retention limit of $0.5 million and our professional liability insurance has a retention limit of $0.3 million.
6. SEGMENT INFORMATION
Our operations involve servicing patients through our three reportable business segments: home health, hospice and personal care. Our home health segment
delivers a wide range of services in the homes of individuals who may be recovering from surgery, have a chronic disability or terminal illness or need assistance with completing important personal tasks. Our hospice segment provides palliative care
and comfort to terminally ill patients and their families. Our personal care segment, which was established with the acquisition of Associated Home Care during the three-month period ended March 31, 2016, provides patients with assistance with
the essential activities of daily living. The other column in the following tables consists of costs relating to executive management and administrative support functions, primarily information services, accounting, finance, billing and
collections, legal, compliance, risk management, procurement, marketing, clinical administration, training, human resources and administration.
Management evaluates performance and allocates resources based on the operating income of the reportable segments, which includes an allocation of corporate
expenses directly attributable to the specific segment and 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 (amounts in millions).
15
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three-Month Period Ended June 30, 2016
|
|
|
|
Home Health
|
|
|
Hospice
|
|
|
Personal
Care
|
|
|
Other
|
|
|
Total
|
|
Net service revenue
|
|
$
|
275.5
|
|
|
$
|
75.8
|
|
|
$
|
9.4
|
|
|
$
|
|
|
|
$
|
360.7
|
|
Cost of service, excluding depreciation and amortization
|
|
|
160.3
|
|
|
|
39.4
|
|
|
|
6.8
|
|
|
|
|
|
|
|
206.5
|
|
General and administrative expenses
|
|
|
72.3
|
|
|
|
17.4
|
|
|
|
2.3
|
|
|
|
34.7
|
|
|
|
126.7
|
|
Provision for doubtful accounts
|
|
|
3.5
|
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
Depreciation and amortization
|
|
|
1.6
|
|
|
|
0.3
|
|
|
|
|
|
|
|
3.1
|
|
|
|
5.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
237.7
|
|
|
|
57.8
|
|
|
|
9.1
|
|
|
|
37.8
|
|
|
|
342.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
37.8
|
|
|
$
|
18.0
|
|
|
$
|
0.3
|
|
|
$
|
(37.8
|
)
|
|
$
|
18.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three-Month Period Ended June 30, 2015
|
|
|
|
Home Health
|
|
|
Hospice
|
|
|
Personal
Care
|
|
|
Other
|
|
|
Total
|
|
Net service revenue
|
|
$
|
247.8
|
|
|
$
|
66.3
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
314.1
|
|
Cost of service, excluding depreciation and amortization
|
|
|
142.3
|
|
|
|
33.4
|
|
|
|
|
|
|
|
|
|
|
|
175.7
|
|
General and administrative expenses
|
|
|
63.5
|
|
|
|
15.3
|
|
|
|
|
|
|
|
36.8
|
|
|
|
115.6
|
|
Provision for doubtful accounts
|
|
|
2.3
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
2.7
|
|
Depreciation and amortization
|
|
|
1.3
|
|
|
|
0.3
|
|
|
|
|
|
|
|
3.0
|
|
|
|
4.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
209.4
|
|
|
|
49.4
|
|
|
|
|
|
|
|
39.8
|
|
|
|
298.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
38.4
|
|
|
$
|
16.9
|
|
|
$
|
|
|
|
$
|
(39.8
|
)
|
|
$
|
15.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six-Month Period Ended June 30, 2016
|
|
|
|
Home Health
|
|
|
Hospice
|
|
|
Personal
Care
|
|
|
Other
|
|
|
Total
|
|
Net service revenue
|
|
$
|
548.2
|
|
|
$
|
148.8
|
|
|
$
|
12.5
|
|
|
$
|
|
|
|
$
|
709.5
|
|
Cost of service, excluding depreciation and amortization
|
|
|
321.1
|
|
|
|
78.2
|
|
|
|
9.0
|
|
|
|
|
|
|
|
408.3
|
|
General and administrative expenses
|
|
|
143.5
|
|
|
|
34.3
|
|
|
|
2.7
|
|
|
|
73.7
|
|
|
|
254.2
|
|
Provision for doubtful accounts
|
|
|
6.8
|
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
8.2
|
|
Depreciation and amortization
|
|
|
2.8
|
|
|
|
0.6
|
|
|
|
|
|
|
|
6.0
|
|
|
|
9.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
474.2
|
|
|
|
114.5
|
|
|
|
11.7
|
|
|
|
79.7
|
|
|
|
680.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
74.0
|
|
|
$
|
34.3
|
|
|
$
|
0.8
|
|
|
$
|
(79.7
|
)
|
|
$
|
29.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six-Month Period Ended June 30, 2015
|
|
|
|
Home Health
|
|
|
Hospice
|
|
|
Personal
Care
|
|
|
Other
|
|
|
Total
|
|
Net service revenue
|
|
$
|
489.2
|
|
|
$
|
126.5
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
615.7
|
|
Cost of service, excluding depreciation and amortization
|
|
|
281.0
|
|
|
|
65.7
|
|
|
|
|
|
|
|
|
|
|
|
346.7
|
|
General and administrative expenses
|
|
|
126.3
|
|
|
|
29.7
|
|
|
|
|
|
|
|
63.6
|
|
|
|
219.6
|
|
Provision for doubtful accounts
|
|
|
4.9
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
5.7
|
|
Depreciation and amortization
|
|
|
2.8
|
|
|
|
0.7
|
|
|
|
|
|
|
|
7.6
|
|
|
|
11.1
|
|
Asset impairment charge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75.2
|
|
|
|
75.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
415.0
|
|
|
|
96.9
|
|
|
|
|
|
|
|
146.4
|
|
|
|
658.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
74.2
|
|
|
$
|
29.6
|
|
|
$
|
|
|
|
$
|
(146.4
|
)
|
|
$
|
(42.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. STOCK REPURCHASE PROGRAM
On September 9, 2015, we announced that our Board of Directors authorized a stock repurchase program, under which we may repurchase up to $75 million of
our outstanding common stock on or before September 6, 2016.
Under the terms of the program, we may repurchase shares from time to time in open
market transactions, block purchases or in private transactions in accordance with applicable federal securities laws and other legal requirements. We may enter into Rule 10b5-1 plans to effect some or all of the repurchases. The timing and the
amount of the repurchases, if any, will be determined by management based on a number of factors, including but not limited to share price, trading volume and general market conditions, as well as on working capital requirements, general business
conditions and other factors.
16
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
During the three-month period ended March 31, 2016, pursuant to this program, we repurchased 324,141
shares of our common stock at a weighted average price of $37.96 per share and a total cost of approximately $12.3 million. The repurchased shares are classified as treasury shares. We did not repurchase any shares pursuant to this stock repurchase
program during the three-month period ended June 30, 2016.
8. RELATED PARTY TRANSACTIONS
On November 20, 2015, we engaged KKR Consulting, LLC (KKR Capstone), a consulting company of operational professionals that works exclusively
with portfolio companies of Kohlberg Kravis Roberts & Co. Nathaniel M. Zilkha, a member of our Board of Directors, is a member of KKR Management, LLC, which is an affiliate of KKR Asset Management LLC (KAM), a substantial
stockholder of our Company, and an affiliate of Kohlberg Kravis Roberts & Co. KKR Capstone will receive a fee in connection with providing consulting services to the Company in the ordinary course of business. Mr. Zilkha will not
receive any direct compensation or direct financial benefit from the engagement of KKR Capstone. During the three and six-month periods ended June 30, 2016, we incurred costs of approximately $0.6 million and $1.2 million, respectively, related
to this related party engagement.
Effective October 22, 2015, we entered into a contract for telemonitoring services with Care Innovations, LLC
(Care Innovations). Paul Kusserow, our President and Chief Executive Officer, is a member of the Advisory Board to Care Innovations. Care Innovations will receive an annual fee of approximately $1.8 million in connection with our
contract for telemonitoring services for the Company. Care Innovations has confirmed to us that Mr. Kusserow will not receive any direct compensation or direct financial benefit from the engagement of Care Innovations as our telemonitoring
partner. During the three and six-month period ended June 30, 2016, we incurred costs of approximately $0.6 million related to this related party engagement.
9. SUBSEQUENT EVENT
On August 1, 2016, we entered
into a definitive agreement to acquire Professional Profiles Inc., a personal care company, for a purchase price of $4.4 million.
17