Accretive Health 1Q Profit Soars, Forecast Falls
CBS Minnesota (con't)
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CHICAGO (AP) — Accretive Health Inc.’s first-quarter earnings soared, but the company, which helps hospitals manage their revenue cycles, cut its 2012 forecast due to business problems in Minnesotaprompted by a lawsuit from that state’s attorney general.
Accretive, based in Chicago, now expects adjusted earnings of 42 cents to 50 cents in 2012, down from a forecast it made in late February that called for earnings of 61 cents to 65 cents per share.
Minnesota Attorney General Lori Swanson filed a lawsuit against Accretive earlier this year and has accused the company of using high-pressure tactics to get patients at Minnesotahospitals to pay before treatment was given. A report from Swanson’s office also accused Accretive of misusing private patient information and creating an atmosphere in which employees were coached to aggressively collect debt.
Accretive has asked that the lawsuit be dismissed and said that it includes allegations that are “factually baseless and legally indefensible.” It also said late last month that a client involved in the case, Fairview Health Services, has since ended a contract with Accretive.
The new forecast stems in part from the end of that contract and expenses tied to Accretive’s legal defense.
In the first quarter ended March 31, Accretive reported net income of $1.49 million, or a penny per share, up from $160,000, or breakeven on a per share basis, a year ago. Adjusted earnings in this year’s first quarter amounted to 6 cents per share, matching what analysts surveyed by FactSet had expected, on average.
Revenue climbed 55 percent to $253.7 million from $163.7 million a year ago. Analysts expected revenue of $231.3 million.
The company said its revenue rose as fees for managed service contracts climbed 52 percent to $214.7 million.
Accretive shares climbed 63 cents, or 7.1 percent, to $9.48 in morning trading Wednesday. The company’s stock ended last year at $22.98 and topped $27 in early February, but the price started falling steeply last month after the attorney general’s office released its report.
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