Declining volumes and increasing regulatory pressures took their toll on Gentiva Health Services, Inc. (NASDAQ: GTIV) in 2013.
The largest home health and hospice services provider in the United States based on revenue, Gentiva reported a loss attributable to shareholders per diluted share of $18.75 per diluted share for the full-year of 2013.
Total net revenues for the company increased 1% in 2013 to $1.73 billion, compared to $1.71 billion for the prior year period.
Gentiva’s portfolio showed disparity between the performance of its home health and hospice business segments.
“Overall, our volume trends this quarter are similar to recent quarters as Gentiva’s home health business continues to perform well with steady growth and our hospice business continues to struggle with volume,” said Gentiva President and CEO Tony Strange during an earnings call Tuesday.
In 2013, the company’s home health episodic revenues totaled $846.9 million, an increase of 2% compared to 2012, whereas hospice revenues declined 6% to $715.2 million.
The results, which are below the company’s expectations, were driven largely by the shortfall in hospice volumes, according to Strange.
“The hospice industry continues to be hammered by regulatory pressures and negative publicity, making growth in this segment extremely difficult,” he said.
In February, Gentiva announced that it planned to close 46 branch locations across the country—28 of which comprised hospice agencies, while the remaining 18 were home health.
This shuttering of nearly 50 branches is part of the company’s strategy as it moves toward a “market cluster approach” as it strives to increase focus on growing its more profitable markets.
Gentiva also believes this strategy will assist the company as it operates under regulatory pressures, such as the annual Medicare rebasing cuts of 3.5% each over the next four years.
“While the elimination of jobs and the abandoning of underserved markets is always painful for an organization, we enter 2014 much better aligned across our platform with the added value of an improved cost structure to help offset some of the impact of the rate cuts,” said Strange.
Looking forward, Gentiva expects full-year net revenues to be in the range of $1.9 billion to $2.1 billion, and adjusted income attributable to shareholders to be in the range of $0.85 to $1.15 on a diluted per share basis.
The company also anticipates to gain leverage from the benefits of synergies resulting from its $409 million acquisition of Austin, Texas-based Harden Healthcare during the fourth quarter of 2013.
“These continue to be challenging times for healthcare service providers, given the muted levels of hospital and physician volumes, as well as negative headwinds created by regulatory pressures,” Strange said. “Longer term, home health, hospice and community care continue to be exceptionally well-positioned given the aging population and the need to take care of patients in the most appropriate and lowest cost setting.”
Written by Jason Oliva
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