Reuters: Global Markets: Accretive Health revenue beats, shares rise

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Accretive Health revenue beats, shares rise May 9th 2012, 16:32 By Zeba Siddiqui Wed May 9, 2012 12:32pm EDT (Reuters) - Accretive Health Inc's (AH.N) quarterly revenue topped market expectations as the company increased its customer base even as it faces allegations that it violated patient privacy and debt collection laws, sending its shares up as much as 20 percent on Wednesday. The Chicago-based company, which provides medical billing, insurance verification and other services to healthcare providers, also slashed its full-year outlook. Analysts, however, said the cut was expected after the company last month lost an important customer, Fairview Health Services. "I think everyone understood that the guidance was going to come down because of the loss of Fairview," Cowen & Co analyst Charles Rhyee said. On Tuesday, investment firm S.A.C. Capital Advisors disclosed a 3.8 percent stake in Accretive, a news that Oppenheimer & Co analyst Bret Jones said shareholders would view as a vote of confidence in the company. Minnesota's Attorney General last month alleged that Accretive Health placed debt collectors in emergency rooms and demanded payments from patients before they received treatment. "We believe we have very strong legal and factual defenses to the allegations in the complaint and we are going to have very strong fact-based answers," Chief Executive Mary Tolan said, adding that the company had not received any inquiries from other attorneys general. The allegations raised concerns that the company may face the cold from other customers, including St. Louis-based healthcare service provider Ascension Health. Accretive is currently in talks to renew its contract with Ascension and CEO Tolan said the "process is going very well." Cowen analyst Rhyee expects the Ascension contract to be renewed. "There are a lot of uncertainties given the situation we have right now ... but we do believe that we will continue to see growth in our pipeline, although it may be somewhat deferred," Accretive's Chief Financial Officer John Staton said on a conference call with analysts. OUTLOOK SLASHED Accretive's first-quarter revenue rose 55 percent to $253.7 million. Analysts on average expected revenue of $231.0 million, according to Thomson Reuters I/B/E/S. For 2012, the company now expects adjusted earnings of 42 cents to 50 cents per share, on net services revenue of $960 million to $992 million. It had earlier forecast earnings of 61 cents to 65 cents per share, on net services revenue of $1.09 billion to $1.12 billion. Analysts on average were expecting earnings of 54 cents per share, on revenue of $1.01 billion. Shares in the company rose 17 percent to $10.37 on Wednesday afternoon. They had touched a high of $10.66 earlier in the session. (Reporting by Anand Basu and Zeba Siddiqui in Bangalore; Editing by Maju Samuel, Supriya Kurane) Link this Share this Digg this Email Reprints

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