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Amedisys (AMED) Down 11% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Amedisys (AMED). Shares have lost about 11% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Amedisys due for a breakout? 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 catalysts.

Amedisys Q1 Earnings Surpass Estimates, Margins Down

Amedisys reported adjusted earnings per share of $1.23 for first-quarter 2022, down 20.1% from the year-ago figure. The bottom line, however, beat the Zacks Consensus Estimate by 10.8%.

The quarter’s adjustments include contingency accrual, certain COVID-related costs as well as benefits from CARES Act & State COVID-19 grants.

GAAP EPS for the first quarter was 97 cents, down 35.3% compared with the year-ago $1.50.

Net service revenues grossed $545.3 million, up 1.5% year over year. However, the top line lagged the Zacks Consensus Estimate by 2.3%.

Segment in Detail

Within the Home Health division, net service revenues totaled $335.5 million in the quarter, reflecting a 2.1% rise year over year. Within this segment, Medicare revenues of $224.1 million improved 1.2% year over year. Non-Medicare revenues increased 3.9% to $111.4 million.

Within the Hospice division, net service revenues were $193.1 million (up 0.8% year over year), including Medicare revenues of $182.5 million (up 0.6%) and non-Medicare revenues of $10.6 million (up 6%).

At Personal Care, net service revenues totaled $14 million, reflecting a decline of 17.6% from the year-ago number. The High Acuity Care segment reported net service revenues of $2.7 million in the first quarter. The Corporate segment did not register any recognizable revenue in the first quarter.

Margins

Gross profit for the company rose 0.2% to $240.4 million in the quarter under review. Gross margin contracted 57 basis points (bps) to 44.1%.

Expenses on salaries and benefits rose 6.6% to $123.5 million. Other expenses rose 9.2% to $53.6 million. Adjusted operating profit of $55.9 million reflected a 17.3% decline from the year-ago quarter. Adjusted operating margin contracted 234 bps to 10.3% from the prior-year level.

Liquidity and Cash Position

Amedisys exited the first quarter of 2022 with cash and cash equivalents of $67.8 million compared with $42.7 million at the end of the fourth quarter of 2021. The company's long-term obligations (excluding the current portion) were $429.5 million at the end of the first quarter of 2022, compared with $432.1 million at the end of the fourth quarter of 2021.

Cumulative net cash provided by operating activities at the end of the first quarter of 2022 was $48.6 million compared with $54 million a year ago.

2022 Guidance

Amedisys has reaffirmed its outlook for 2022.

For full-year 2022, the company anticipates net service revenues in the range of $2.330 billion to $2.365 billion. The Zacks Consensus Estimate for 2022 revenues is pegged at $2.36 billion.

Adjusted EPS is projected in the range of $5.23-$5.45. The Zacks Consensus Estimate for the same is pegged at $5.31.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -9.1% due to these changes.

VGM Scores

At this time, Amedisys has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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.

Performance of an Industry Player

Amedisys is part of the Zacks Medical - Outpatient and Home Healthcare industry. Over the past month, Chemed (CHE), a stock from the same industry, has gained 0.2%. The company reported its results for the quarter ended March 2022 more than a month ago.

Chemed reported revenues of $530.55 million in the last reported quarter, representing a year-over-year change of +0.6%. EPS of $4.79 for the same period compares with $4.44 a year ago.

For the current quarter, Chemed is expected to post earnings of $4.78 per share, indicating a change of +3.9% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Chemed. Also, the stock has a VGM Score of B.


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