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Amedisys (AMED) Earnings and Revenues Beat Estimates in Q2

Zacks Equity Research
·4 min read

Amedisys, Inc. AMED reported adjusted earnings per share (EPS) of $1.34 for second-quarter 2020, up 10.7% from the year-ago figure. The bottom line beat the Zacks Consensus Estimate by 69.6%.

Net service revenues grossed $485.1 million, down 1.6% year over year. However, the top line surpassed the Zacks Consensus Estimate by 4.3%.

Quarter in Detail

Within the Home Health division, net service revenues totaled $290.2 million in the quarter, reflecting an 8.9% decline year over year. Moreover, Medicare revenues of $192.9 million dropped 11.9% year over year. Non-Medicare revenues fell 2.2% to $97.3 million.

Within the Hospice division, net service revenues were $177.1 million (up 15.6% year over year), including Medicare revenues of $167 million (up 14.5%) and non-Medicare revenues of $10.1 million (up 36.5%).

Amedisys, Inc. Price, Consensus and EPS Surprise

 

Amedisys, Inc. Price, Consensus and EPS Surprise
Amedisys, Inc. Price, Consensus and EPS Surprise

Amedisys, Inc. price-consensus-eps-surprise-chart | Amedisys, Inc. Quote

The company’s additional operating segments, post integration, are Personal Care and Corporate. At Personal Care, net service revenues totaled $17.7 million, representing a decline of 16.5% from the year-ago number. Meanwhile, the Corporate segment did not register any revenues in the second quarter.

Margins

Gross profit for the company declined 6.1% to $189.8 million in the quarter under review. Gross margin contracted 189 basis points (bps) to 39.1%.

Expense on salaries and benefits rose 7.4% to $105.6 million. However, Other expenses decreased 9.1% to $44 million. Operating profit of $40.2 million reflected a 27.5% fall from the year-ago figure. Operating margin also contracted 296 bps to 8.3% from the prior-year level.

Cash Position

Amedisys exited the quarter with cash and cash equivalents of $177.3 million compared with $174.7 million at the end of the first quarter of 2020. The company's long-term obligations (excluding current portion) were $392.7 million at the end of the second quarter compared with $379.9 million at the end of first-quarter 2020.

Cumulative net cash provided by operating activities at the end of the second quarter was $139.9 million compared with $79.3 million a year ago.

2020 Guidance

The company, after taking its second-quarter performance into consideration, has reissued its full-year guidance.

Amedisys projects net service revenues within $2.04-$2.07 billion. The Zacks Consensus Estimate for the same is pegged at $2.06 billion.

The adjusted EPS is anticipated within $4.84-$5.06 (based on an estimated 33.4 million outstanding shares). The Zacks Consensus Estimate for the same is pegged at $4.58.

Further, adjusted EBITDA is projected within $245-$255 million.

Our Take

Amid the coronavirus-led volume disruption across the United States, Amedisys ended the second quarter with better-than-expected earnings and revenues. An impressive performance by the company’s Hospice division amid the pandemic-led business disruptions buoys optimism. The issuance of the full-year guidance by the company instills investors’ confidence.

However, the year-over-year decline in the top line as well as the other two reporting segments is concerning. Contraction of both margins, partly due to increase in salaries and benefits, is worrying.

Zacks Rank and Key Picks

Currently, Amedisys carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are West Pharmaceutical Services, Inc. WST, Patterson Companies, Inc. PDCO and Laboratory Corporation of America Holdings LH or LabCorp. All three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

West Pharmaceutical reported second-quarter 2020 adjusted EPS of $1.25 in contrast to the Zacks Consensus Estimate of a loss of 91 cents. Net revenues of $527.2 million outpaced the consensus estimate by 6.9%.

Patterson reported fourth-quarter fiscal 2020 adjusted EPS of 43 cents, surpassing the Zacks Consensus Estimate by 152.9%. Revenues of $1.29 billion beat the consensus mark by 1.9%.

LabCorp reported second-quarter 2020 adjusted EPS of $2.57, surpassing the Zacks Consensus Estimate of 78 cents. Revenues of $2.77 billion outpaced the consensus mark by 14.3%.

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