Accretive Health slumps on delayed 4Q report
NEW YORK (AP) — Shares of Accretive Health Inc. dropped Wednesday after the company delayed the release of its fourth-quarter results, saying it is re-evaluating the way it recognizes revenue from contracts.
THE SPARK: Accretive Health, which helps hospitals manage their revenue, said late Tuesday it may change the way it records revenue from its contracts with those hospitals. If it changes that method, it may restate its earnings from previous periods. However Accretive Health said the restatements wouldn't affect the total revenue it gets from the contracts.
The company was scheduled to report its fourth-quarter and 2012 results Wednesday morning.
THE BIG PICTURE: The Chicago company withdrew its annual guidance, which called for adjusted income of 23 to 27 cents per share and net service revenue of $948 million to $980 million.
Analysts expected net income of 25 cents per share and $950.8 million in revenue for the year, according to FactSet.
In early 2012, the attorney general of Minnesota said Accretive Health appeared to have violated federal and state laws by advising Minnesota hospitals to use high-pressure tactics to collect money from some patients, including emergency room visitors, before the patients were treated. The company was also accused of failing to keep health care records confidential and of failing to fully inform patients about its involvement in their health care.
Accretive Health modified an agreement with a Minnesota hospital operator in March, reducing its revenue. The following month the hospital ended the contract. In April, the attorney general's office released a six-volume report detailing the allegations, and Accretive shares plunged.
In July Accretive agreed to stop doing business in Minnesota for at least two years. It also paid $2.5 million in restitution for patients and returned data to client hospitals. Accretive has not acknowledged any wrongdoing or liability.
THE ANALYSIS: William Blair & Co. analyst Ryan Daniels said the company's issues in Minnesota and the revenue restatement could make its sales process take longer and may make it harder for the company to get new clients.
"This is clearly a negative event for a company desiring significantly less drama," he wrote in a note to clients. Daniels rates Accretive Health shares "Market Perform."
SHARE ACTION: Accretive Health stock lost $2.97, or 24.5 percent, to $9.14 in midday trading. As of Tuesday's close, the stock has lost 34.5 percent of its value since the release of the Minnesota attorney general's report in late April. Since late March the shares have lost almost 50 percent of their value.