Zacks_Analysts' Blog : Gentiva Provides Weak 2012 Forecast - Analyst Blog

On Tuesday, Gentiva Health Services Inc. (GTIV) released its financial outlook for 2012. The company expects to generate net revenues of $1.70–1.76 billion in 2012, substantially lower than the 2011 guidance of $1.78–1.82 billion.

The Zacks Consensus Estimate for Gentiva’s 2012 revenue lies above the company’s guidance range at $1.79 billion.

Additionally, Gentiva expects the adjusted earnings before interest, taxes, depreciation and amortization attributable to continuing operations (Adjusted EBITDA) to be between $170 million and $190 million in 2012. The adjusted EBITDA guidance excludes expenses related to acquisitions, restructuring, integration activities, legal settlements, dividend income and impairment of goodwill, intangible asset and other long-lived asset.

However, Gentiva will disclose the 2012 outlook for its other financial parameters (including adjusted income from continuing operations attributable to Gentiva shareholders) subsequent to the amendment of its senior secured credit agreement. Meanwhile, the Zacks Consensus Estimate for 2012 earnings per share currently stands at 92 cents, down 44.3% from the previous year.

The company had announced the amendment to the credit agreement in November 2011 as the initial part of a two-pronged strategy to increase the flexibility of its financial covenants over the next few years.

Among other things, the amendment consists of alteration of the definition of consolidated EBITDA, whereby all expenses related to Gentiva’s cost realignment and the operating losses of all the branches that were closed or sold in the last quarter of 2011, will be added back during the calculation of consolidated EBITDA. Thus, in order to aid the dialogue related to the amendment with its bank, Gentiva revealed the net revenue and adjusted EBITDA guidance earlier than others.

On Monday, Tenet Healthcare Corp. (THC), a health care services company, which owns and operates general hospitals and related health care facilities, also announced its adjusted EBITDA projection of $1.2–1.3 billion in 2012.

Gentiva has not declared its 2011 earnings result as yet. The Zacks Consensus Estimate for the company’s earnings in 2011 is currently $1.65 per share, sinking 41.5% from 2010. The estimated number lies within the company’s guidance range of $1.50–1.70 billion.

Gentiva currently carries a Zacks #3 Rank, implying a short-term ‘Hold’ rating.