Baton Rouge-based home nursing firm Amedisys Inc. reported a first-quarter loss of $35 million Wednesday, mainly the result of a $75.2 million write-off for a failed in-house software system.
A year earlier, Amedisys reported a loss of $12.4 million, or 39 cents per share, compared to this year’s loss of $1.07 per share.
However, after adjusting for the software write-off and other items, the company would have earned $9.8 million, or 30 cents per share, compared to a loss of $2.2 million, or 7.7 cents per share, a year earlier. Wall Street analysts surveyed by Zacks Investment Research and Thomson Reuters had forecast earnings of 20 cents per share.
The company’s stock climbed $1.63, or 6 percent, to close at $27.86 Wednesday.
Dumping the AMS3 software system, and taking a paper loss, was just one of the moves President and Chief Executive Officer Paul B. Kusserow and Chief Financial Officer Ronnie LaBorde discussed during a conference call with stock analysts and investors. Those moves include a more aggressive merger-and-acquisition strategy, management changes and cutting debt by more than $100 million over the past year.
Executives also responded to an analyst’s question about how committed Amedisys is to its name and to Baton Rouge. Kusserow said the name is often mispronounced and doesn’t reflect what the company does. He also noted that Amedisys has difficulty recruiting some professions and is considering opening satellite offices.
Amedisys is seeking home health and hospital deals in key areas that fit its business and expects to announce a small acquisition in the coming months, Kusserow said.
Meanwhile, abandoning the AMS3 system for Homecare Homebase software will result in some additional costs, Kusserow said. It will take 18 to 24 months for the company to make the transition from its current AMS2 system to another one.
The move gets Amedisys out of the software business. That will reduce Amedisys’ annual operating costs by $20 million and annual capital costs by $10 million, Kusserow said.
Amedisys spent five years developing and attempting to implement the AMS3 system. Amedisys founder and former CEO William Borne saw the platform as the key to harnessing data collection and managing changes in the way providers are paid, from a fee for each service to payments for overall care.
But Amedisys struggled to make the system work, resulting in delays in AMS3’s launch.
Beta test results in late 2014 were “rocky” and raised doubts that the system could be made workable, Kusserow said. Amedisys hired consulting firm Deloitte to do an independent review of the system and launched another test of AMS3 in more of its care centers.
“The impact on the operations of these care centers confirmed my doubts. When combined with the independent Deloite review of the platform, it became apparent that AMS3 was not ready to be fully implemented across the company,” Kusserow said.
Amedisys executives burst into laughter when Whit Mayo, senior research analyst with Robert W. Baird & Co., joked that he would have to find something new to complain about besides spending on information technology.
“It’s a happy day. I’m glad you guys have made this strategic decision,” Mayo said.
A question by Mayo also triggered a discussion about the company’s commitment to its name and to Baton Rouge.
“It’s a tough name for a lot of folks,” Kusserow said. “I also don’t think it reflects very well what we do. I mean, we take care of the most vulnerable people in their home.”
The company’s name came from a medical system. While Amedisys’ name recognition is strong in some markets, like Georgia, it’s not in others, and the mispronunciations are legion.
Kusserow also said while he’s been happy since he moved to Baton Rouge and is delighted with Amedisys’ employees here, the company is looking at other places where it can draw talent unwilling to relocate here. Those areas include managed care, bundled payments, certain types of information technology and human resources.
All of Amedisys’ executives are now in Baton Rouge full time, Kusserow said. But the company is looking at potential satellite locations closer to its operations.
“Whatever keeps our executives closer to our business is what’s important,” he said.
Amedisys has 395 care centers in 34 states, most of them east of the Mississippi River. More than 500 people work at the Baton Rouge corporate headquarters, and more than 15,000 are employed nationwide. The AMS3 issue was the only major blot on Amedisys’ first-quarter report.
The home nursing and hospice company reported first-quarter improvements in key performance indicators for “same-store” locations — those operating for at least a year. Revenue climbed to $301.6 million, compared to $298.8 million.
Among those home health locations, Medicare revenue increased by 6 percent and admissions by 4 percent. Non-Medicare revenue grew by 20 percent and admissions by 17 percent. Among hospice centers open at least a year, Medicare revenue grew by 2 percent and non-Medicare revenue increased by 13 percent.
“With these strong first-quarter results, Amedisys continues its upward trajectory,” Kusserow said.
Follow Ted Griggs on Twitter, @tedgriggsbr.