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Helping the Street Digest a Reimbursement Reduction

A healthcare services company faced an unexpected, dramatic reduction in federal reimbursement.

ICR Westwicke’s Role

  • Reviewed the implications of the cut to determine an immediate response, including estimated financial impact, over the first 48 hours
  • Drafted a conference-call script to outline the estimated impact, public-policy opinion, and early stages of operating responses
  • Liaised with research analysts to ensure their assessments of the events were fair and correct
  • Finalized earnings impact, debt-covenant impact, and operating response comments for first earnings conference call after cut was announced
  • Assisted in preparing, and fully reviewed, updated guidance to ensure it was appropriate and attainable
  • Prepared Q&A responses for first earnings call after cut was announced
  • Maintained existing conference and non-deal roadshow schedule to ensure consistent communication with the Street
  • Drafted all ensuing conference-call scripts to ensure consistency with regards to expected cut impact and mitigating operational activities

Results

After the initial negative impact to the stock following the announcement of the reimbursement reduction, most large shareholders retained their ownership.  As clarity emerged that the company’s operating responses were effective, management’s assurance that debt-covenant retention was achievable, and updated guidance was credible, the stock outperformed its peers.  Nine months following the reimbursement reduction, the company agreed to be taken private in a transaction that valued the stock equally to where it was prior to the reimbursement reduction.

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