Amedisys (AMED) Up 2.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Amedisys (AMED). Shares have added about 2.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amedisys due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Amedisys Q1 Earnings Beat Estimates, Revenues Miss
Amedisys reported adjusted earnings per share (EPS) of $1.05 for first-quarter 2020, down 5.4% from the year-ago figure. The bottom line however beat the Zacks Consensus Estimate by 8.3%.
Net service revenues grossed $491.7 million, up 5.2% year over year. However, the top line missed the Zacks Consensus Estimate by 4%.
Quarter in Detail
Within the company's Home Health division, net service revenues totaled $303.6 million in the quarter, reflecting 2.1% decline year over year. Moreover, Medicare revenues of $203.9 million dropped 4.5% year over year. Non-Medicare revenues improved 3.1% to $99.7 million.
Within the Hospice division, net service revenues were $169.4 million (up 23.6% year over year) including Medicare revenues of $160.5 million (up 22.8%) and non-Medicare revenues of $8.9 million (up 41.3%).
The company recently integrated two additional operating segments within its business, namely, Personal Care and Corporate. At Personal Care, net service revenues totaled $18.7 million, representing a decline of 7.4% from the year-ago number. Meanwhile, the Corporate segment did not register any revenues in the first quarter.
Margins
Gross margin expanded 79 basis points (bps) to 41.9% in the quarter under review. Further, expense on salaries and benefits rose 7.1% to $101.6 million. Other expenses increased 13.5% to $49.3 million as well. Operating profit of $55.1 million reflected a 2.4% rise from the year-ago figure. Operating margin, however, contracted 31 bps to 11.2% from the prior-year level.
Cash Position
Amedisys exited the quarter with cash and cash equivalents of $174.7 million compared with $20.2 million at the end of 2019. The company's long-term obligations (excluding current portion) were $379.9 million at the end of the first quarter compared with $232.3 million in the year-ago quarter.
At the end of the first quarter, net cash provided by operating activities was $6 million compared with $20.1 million a year ago.
2020 Guidance
Given the rapidly changing operating conditions related to the coronavirus outbreak Amedisys is currently unable to gauge the magnitude of the impact on its annual financial results. Hence, the company has decided to withdraw its full-year 2020 guidance.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -22.81% due to these changes.
VGM Scores
At this time, Amedisys has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Amedisys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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