A weak second quarter combined with sharply reduced profit expectations for all of 2011 dropped medisys Inc.’s stock Tuesday to the lowest level in more than five years.

The Baton Rouge home health giant’s shares plunged 18.5 percent to $20.11 per share in early trading before rebounding to close at $22.60 per share, down $2.06, or 8.4 percent.

Some 2.9 million shares changed hands, more than eight times the normal volume.

Amedisys reported its adjusted second-quarter earnings fell more than 40 percent to $19.5 million, or 67 cents per share, compared to $32.9 million, or $1.15 per share, a year earlier.

Amedisys also slashed its earnings guidance for all of 2011. Amedisys now expects earnings in the range of $2.20 to $2.40 per share on revenue of $1.475 billion to $1.5 billion.

The company’s earlier forecast placed earnings per share in the range of $3 to $3.30 on revenue of $1.6 billion to $1.65 billion.

Sheryl Skolnick, managing director at CRT Capital Group LLC, said she expected Amedisys’ second-quarter earnings would be even lower than they were.

Skolnick had forecast earnings of 56 cents per share. Stock analysts surveyed by Thomson Reuters estimated earnings of 68 cents per share.

However, Skolnick said she was not surprised that Amedisys cut its 2011 earnings estimate, just the depth of the cut.

“I thought that guidance was too aggressive. I didn’t really think they would do $2.20 to $2.40. I thought they would do $2.50 to $2.60,” Skolnick said.

“This was a mixed quarter for the company with home health performance lower than our expectations, but strong hospice results. Regulatory changes mainly in our home health division have had a dampening impact on volume and pricing resulting in our downward adjustment to guidance for the year,” Chief Executive Officer William F. Borne said in a news release.

Same-location hospice admissions increased by more than 17 percent to 3,140 admissions during the second quarter.

Meanwhile, one of the major regulatory changes Amedisys and other home health firms face is a requirement that doctors or nurse practitioners see a patient “face-to-face” in order for the patient to receive treatment under Medicare. Home health and hospice industry members have complained that the rule places an additional burden on their patients, who are elderly, disabled and confined to their homes or hospice facilities, and on physicians.

The face-to-face requirement reduced Amedisys’ same-agency home health patient admissions by 4 percent.

Skolnick expects the regulation will continue to be an issue for physicians.

Amedisys claims roughly 6 percent of its patients have seen a physician, but the doctors didn’t get the paperwork in on time, Skolnick said. Amedisys’ solution is to use its sales force to help doctors complete the documents needed for the company to get Medicare payments.

The end result is that Amedisys will either lose revenue or earn a smaller profit on the revenue the company generates from home health, Skolnick said.

During a conference call with analysts and investors, Borne said the company is “a little disheartened” by the challenges and an expected reduction in Medicare payments for 2012. The home health payment reduction has been estimated at as much as 5 percent.

But the company’s capital position, technology, infrastructure and focus on quality will allow Amedisys to take advantage of a huge growth opportunity next year, Borne said. Last week Amedisys announced it received $4.7 million from the Centers for Medicare and Medicaid Services, based on its performance in a home health demonstration program.

“We’re optimistic about what the future holds for the organization,” Borne said.

Skolnick was less so.

While some subscribe to the theory that CEOs have to be optimistic leaders, Skolnick said a dose of reality is what’s needed now.

It would be better for Amedisys’ management to recognize that things are difficult now, and the world has changed, she said. Amedisys’ position should be that the company needs to change with the world and the company is confident it can do so, although the next 12 months will be difficult.

“I think that’s the right attitude, not this unbridled, unfounded optimism which reduces the credibility that management has,” Skolnick said. “I don’t know why anybody would believe anything they say now.”