Skilled Healthcare Group has reiterated full-year financial guidance for Wall Street, despite a relatively soft first quarter for the Foothill Ranch-based nursing home company.
The operator of about 100 facilities reaffirmed in a quarterly earnings conference call that it expects annual profit of $29.1 million to $31.8 million and revenue of $865 million to $880 million.
Skilled Healthcare posted a 46% decline in first-quarter profit to $6.4 million, missing the Wall Street consensus forecast of $7.1 million.
Quarterly revenue slipped 2% to $219.4 million, outpacing analysts’ consensus expectations of $215 million.
Analyst Jason Gurda of Boston-based Leerink Swann LLC said in a research note he was “surprised management didn’t at least lower the high-end of their guidance rate, which we believe looks unlikely at this point.”
But Gurda added that some moves under way could shave $10 million in company interest costs and fuel further gains in its share price, which is already up 34% this year.
Skilled is refinancing $130 million in bonds with additional bank loans. The refinancing will allow the company to pursue $250 million worth of long-term fixed-rate financings from the Department of Housing and Urban Development with an interest rate of 4%.
Skilled also said in its conference call that it anticipates a 2% increase in its Medicare skilled-nursing facility reimbursements during a 12-month period beginning Oct. 1. But Gurda noted those gains will be offset by certain cuts in Medicare reimbursements set to take effect Jan. 1, barring further action by Congress.
“Although the skilled nursing facility industry appears to be stabilizing, it still faces a number of potential headwinds, including declining lengths of stay and further potential cuts in Medicare and Medicaid,” the analyst wrote. “[Skilled] is also exposed to the state of California’s budget woes, which is where 40% of its beds are located.”
UnitedHealth Plan
UnitedHealth Group Inc., which has more than 3,000 workers in Orange County, recently introduced SignatureValue Alliance in California.
The Minnesota-based managed healthcare insurer said SignatureValue Alliance enables employers and their employees to save on healthcare costs through lower premiums while still having access to a wide range of health maintenance organizations.
The network includes six large doctors’ groups throughout the states, along with 90 hospitals and about 26,000 primary care and specialist doctors. Participating doctors’ groups include Monarch HealthCare Medical Group in Irvine.
UnitedHealth said it picked the groups that are participating in SignatureValue Alliance based on technological sophistication, clinical performance and quality measures, and an ability to deliver healthcare cost savings.
Policy Agreement
The California Hospital Association and SEIU-United Healthcare Workers, a union representing workers at Chapman Medical Center, Coastal Communities Hospital and Western Medical Center Santa Ana, will work together to develop public policies “that benefit patients and promote efficiency and cost-effectiveness.”
CHA said the union has agreed not to pursue a pair of November ballot referendums that the industry had opposed.
The statement offered no details on whether CHA made any concessions to the union in exchange for the halt on petition drives for the two referendums, one of which addresses the percentage of costs hospitals can charge for care; the other deals with making nonprofit hospitals provide a certain amount of charity care.
Bits and Pieces
Irvine patient monitoring device maker Masimo Corp. said it signed a three-year, dual-source contract with Irving, Texas-based hospital-buying group Novation and the University Health System Consortium for its SET pulse oximetry and rainbow SET pulse co-oximetry devices. Masimo has been selling its devices to Novation since 2003. … Disc Sports and Spine Center, a medical practice with a Newport Beach location, signed a co-management deal with Hoag Neurosciences Institute to develop a minimally invasive, neurosurgical spine surgery program. … Precice, a limb-lengthening medical device made by Irvine-based Ellipse Technologies Inc., was recently used by Samuel Rosenfeld, a surgeon with the Children’s Hospital of Orange County’s Children’s Orthopaedic Institute.
