What You Ought To Know About Adeptus Health Inc (NYSE:ADPT)’s Earnings

Shares of Adeptus Health Inc (NYSE:ADPT) plunged 10% on Tuesday ahead of the company’s 4Q2016 earnings release on the backdrop of a mixed earnings track record. The company has topped earnings expectations twice and also missed targets twice over the last 12 months.

For 3Q2016, Adeptus posted EPS of $0.06, sharply down from $0.31 a year earlier and significantly below the consensus estimate of $0.56.

Revenue of $85.4 million dipped from $101.3 million a year earlier and came short of consensus estimate of $90 million.

The management admitted that 3Q results were disappointing and promised to take actions that would improve future performance.

Liquidity problem

One of Adeptus Health Inc (NYSE:ADPT)’s major challenges has been cash shortage because the company hasn’t been able to generate enough cash flow from operations. That has forced the company to turn to external financing to help it fund operations and projects such as opening of new hospital facilities.

The company said in the last quarter that it secured $30 million in additional credit facility. Several other investors including Sterling Partners, co-founders and CEO also committed to pump $27.5 million into the business in exchange for prefer stock. The management of Adeptus said it would continue to work with financial advisers to explore additional financing with the aim of enhancing the company’s liquidity.

Stock rating

However, there have been concerns that Adeptus Health Inc (NYSE:ADPT) could be forced into more equity or debt fundraising as long as it consumes more cash than its operation produces. That led Jefferies analysts to downgrade the stock to a HOLD from a BUY on November 2. The analysts further cut their price target on the stock to $13 from $17. They cited concerns about Adeptus’ balance sheet health and cash flow

4Q2016 earnings

Adeptus was scheduled to report 4Q2016 earnings on March 1 after markets close. Internal guidance calls for EPS of $0.22 after it was significantly reduced from $0.83 in the earlier guidance. Consensus estimate calls for EPS of $0.22.

For full-year 2016, Adeptus is looking for EPS of $1.23 after it cut the estimate from $2.28. Fiscal 2017 EPS estimate was also reduced to $1.28 from $3.25.

Stock movements

Shares of Adeptus Health Inc (NYSE:ADPT) fell 10% to $6.75 on Monday, widening its year-to-date and 12-month losses to more than 11% and more than 86%, respectively. The decline in the stock appeared to be linked to investors exhibiting uncertainty ahead of the company’s earnings release.

2/28/2017
Ticker Symbol ADPT
Last Price a/o, 4:02PM EST  $                         6.75
Average Volume 850,610.00
Market Cap (mlns)  $                  145.80
Sales (mlns) $401.70
Shares Outstanding (mlns) 21.6
Share Float (mlns) 8.82
Shortable Yes
Optionable Yes
Inside Ownership 1.50%
Short Float 65.68%
Short Interest Ratio 6.81
Quarterly Return -32.57%
YTD Return -11.65%
Year Return -88.14%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

Author: Monica Gray

Monica has an undergraduate degree in Accounting and an MBA she earned - with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

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