In this Thursday, Dec. 13, 2012 photo, amazon shipments are packaged in Koblenz, Germany. Amazon’s fourth-quarter net income fell 45 percent, as sharply higher revenue failed to keep pace with increased spending on order fulfillment and digital content, a trend that’s become the norm for the world’s largest online retailer. (AP Photo/dapd, Harald Tittel)
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In this Thursday, Dec. 13, 2012 photo, amazon shipments are packaged in Koblenz, Germany. Amazon’s fourth-quarter net income fell 45 percent, as sharply higher revenue failed to keep pace with increased spending on order fulfillment and digital content, a trend that’s become the norm for the world’s largest online retailer. (AP Photo/dapd, Harald Tittel)
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FILE - In this file photo made Jan. 26, 2010, the 3M Co. logo is seen on some of their products in Philadelphia. 3M Co. annouced Tuesday, Oct. 23, 2012, that it is reducing its profit expectations for this year because of what it calls "current economic realities." 3M makes everything from Post-it notes and Scotch tape to roofing granules, coatings for LCD screens, and traffic sign coatings. The variety of its businesses and its worldwide footprint make it an economic bellwether. And CEO Inge Thulin said what it's seeing right now is a "slow-growth economy." (AP Photo/Matt Rourke, file)
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In this May 14, 2012 photo, shoppers walk by the GAP store at a shopping mall in Peabody, Mass. Gap Inc. announced Thursday, Nov. 15, 2012, it is raising its outlook for the year after its third-quarter net income rose 60 percent from a year ago. (AP Photo/Elise Amendola, File)
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This March 1, 2011 photo shows a customer walking down the bread and pastry aisle at a Kroger Co. supermarket. The Kroger Co. reported a second-quarter profit that beat Wall Street expectations, Friday, Sept. 7, 2012, as the supermarket operator said its loyalty program helped lift a key sales figure. The nation's largest traditional grocery store chain also raised its outlook for the year. (AP Photo/Al Behrman)
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FILE - In a Tuesday, Aug. 14, 2012, file photo, aperson walks toward a Home Depot in Nashville, Tenn. Home Depot’s fiscal fourth-quarter net income surged 32 percent, the home improvement retailer said Tuesday Feb. 26, 2013. (AP Photo/Mark Humphrey, File)
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FILE - In a Nov. 14, 2011 file photo customers enter and exit a Lowe's store in Saugus, Mass. Home improvement retailer Lowe’s Cos. said Monday, Feb. 25, 2013, cleanup efforts after Superstorm Sandy and its new pricing strategy helped its fourth-quarter net income surpass expectations. (AP Photo/Michael Dwyer, file)
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FILE - In this Monday, Sept. 10, 2012 file photo, a General Electric logo is seen on a kitchen stove at a Lowe's store in Framingham, Mass. General Electric Co. is reporting, Friday, Jan. 18, 2013, that net income rose 8 percent in the fourth quarter as earnings at all of the conglomerate's industrial segments improved due to growth in developing economies. (AP Photo/Steven Senne, File)
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FILE - In this Monday, Jan. 7, 2013, file photo, a man walks past the Intel booth at the International Consumer Electronics Show in Las Vegas.. Intel Corp., the world's largest chipmaker, on Thursday, Jan. 17, 2013, said its fourth-quarter net income fell 27 percent from the previous year, as PC sales continued to weaken. (AP Photo/Jae C. Hong, File)
Accretive Health slumps on delayed 4Q report
NEW YORK (
AP) — Shares of
Accretive Health Inc. dropped Wednesday after the company delayed the release of its fourth-quarter results, saying it is re-evaluating the way it recognizes revenue from contracts.
THE SPARK: Accretive Health, which helps hospitals manage their revenue, said late Tuesday it may change the way it records revenue from its contracts with those hospitals. If it changes that method, it may restate its earnings from previous periods. However Accretive Health said the restatements wouldn't affect the total revenue it gets from the contracts.
The company was scheduled to report its fourth-quarter and 2012 results Wednesday morning.
THE BIG PICTURE: The Chicago company withdrew its annual guidance, which called for adjusted income of 23 to 27 cents per share and net service revenue of $948 million to $980 million.
Analysts expected net income of 25 cents per share and $950.8 million in revenue for the year, according to FactSet.
In early 2012, the attorney general of Minnesota said Accretive Health appeared to have violated federal and state laws by advising Minnesota hospitals to use high-pressure tactics to collect money from some patients, including emergency room visitors, before the patients were treated. The company was also accused of failing to keep health care records confidential and of failing to fully inform patients about its involvement in their health care.
Accretive Health modified an agreement with a Minnesota hospital operator in March, reducing its revenue. The following month the hospital ended the contract. In April, the attorney general's office released a six-volume report detailing the allegations, and Accretive shares plunged.
In July Accretive agreed to stop doing business in Minnesota for at least two years. It also paid $2.5 million in restitution for patients and returned data to client hospitals. Accretive has not acknowledged any wrongdoing or liability.
THE ANALYSIS: William Blair & Co. analyst Ryan Daniels said the company's issues in Minnesota and the revenue restatement could make its sales process take longer and may make it harder for the company to get new clients.
"This is clearly a negative event for a company desiring significantly less drama," he wrote in a note to clients. Daniels rates Accretive Health shares "Market Perform."
SHARE ACTION: Accretive Health stock lost $2.97, or 24.5 percent, to $9.14 in midday trading. As of Tuesday's close, the stock has lost 34.5 percent of its value since the release of the Minnesota attorney general's report in late April. Since late March the shares have lost almost 50 percent of their value.
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