AHP's fourth quarter earnings drop

BRENTWOOD, Tenn. - American HomePatient's net income took a fourth quarter dive due to Medicare reimbursement cuts, the company announced March 14. For the fourth quarter ending Dec. 31, 2005, net income was $1.7 million compared to $8.2 million for the same period in 2004--a 79.3% drop. For the year ended Dec. 31, 2005, net income was $7.7 million compared to $13.2 million for the previous year. Reimbursement changes associated with the Medicare Modernization Act (MMA) had a negative impact on AHP, reducing net income by $4.3 million. Reimbursement reductions of $3 million were comprised of $500,000 for inhalation drugs, $600,000 for DME and $1.9 million for oxygen. The remaining $1.3 million was the result of increased cost of sales. Revenues for the quarter ended Dec. 31, 2005, were $83.6 million, a decrease of 0.7% compared to $84.2 million for the same period the previous year. Year-end revenues for 2005 were $328.4 million compared to $335.8 million for the previous year, a decrease of $7.4 million or 2.2%. Company efforts to boost productivity and reduce costs in its branches and billing centers resulted in a $8.4 million reduction in operating expenses, which had a positive impact on net earnings for the year, the company reported. A shareholder who owns 10% of AHP's stock made an offer to buy the company in late February. Highland Capital Management stated it does not believe AHP's current management has "substantially improved the company's liquidity situation."