Amedisys (AMED) Q2 Earnings Beat Estimates, Margins Grow
Amedisys, Inc. AMED reported adjusted earnings per share (EPS) of $1.69 for second-quarter 2021, up 26.1% from the year-ago figure. The bottom line beat the Zacks Consensus Estimate by 3.1%.
The quarter’s adjustments include depreciation and amortization costs, certain COVID-related costs as well as benefits from CARES Act & State COVID-19 grants.
GAAP EPS for the second quarter was $2.43, up 133.7% compared with the year-ago $1.04.
Net service revenues grossed $564.2 million, up 16.3% year over year. The top line missed the Zacks Consensus Estimate by 0.1%.
Segment in Detail
Within the Home Health division, net service revenues totaled $349.3 million in the quarter, reflecting a 20.4% rise year over year. Within this segment, Medicare revenues of $234.8 million improved 21.7% year over year. Non-Medicare revenues increased 17.7% to $114.5 million.
Within the Hospice division, net service revenues were $197.9 million (up 11.7% year over year), including Medicare revenues of $186.9 million (up 11.9%) and non-Medicare revenues of $11 million (up 8.9%).
Amedisys, Inc. Price, Consensus and EPS Surprise
Amedisys, Inc. price-consensus-eps-surprise-chart | Amedisys, Inc. Quote
At Personal Care, net service revenues totaled $17 million, reflecting a decline of 3.9% from the year-ago number. The Corporate segment did not register any revenue in the second quarter.
Gross profit for the company improved 34.6% to $255.5 million in the quarter under review. Gross margin expanded 615 basis points (bps) to 45.3%.
Expenses on salaries and benefits rose 8.3% to $114.3 million. Other expenses rose 24.4% to $54.7 million. Adjusted operating profit of $86.4 million reflected a 114.9% improvement from the year-ago quarter. Adjusted operating margin expanded 703 bps to 15.3% from the prior-year level.
Liquidity and Cash Position
Amedisys exited the second quarter of 2021 with cash and cash equivalents of $91.7 million compared with $77.3 million at the end of first-quarter 2021. The company's long-term obligations (excluding the current portion) were $179.4 million at the end of the second quarter compared with $231.4 million at the end of the last reported quarter.
Cumulative net cash provided by operating activities at the end of the second quarter was $67.9 million compared with $133.9 million at the end of second-quarter 2020.
Contessa Acquisition Update
The company closed the earlier-announced acquisition deal of Contessa Health, a Nashville, TN-based company that offers higher-acuity hospital-at-home and skilled nursing facility (SNF)-at-home services. With the completion of the deal, Contessa’s risk-based model and claims analytics capabilities will get integrated into Amedisys’ business, enabling the company to become a risk-bearing, home-based care delivery organization. Contessa will operate as a wholly-owned division of Amedisys and will be reported as a separate operating segment in the company’s future filings.
Amedisys raised its outlook for 2021 for both core Amedisys (excluding any acquisitions closed subsequent to Jun 30, 2021) and Contessa business, taking into account the rapidly-changing business environment posed by the COVID-19 pandemic, future regulations or government interventions, reduction in elective procedures, and other issues that can potentially impact the company’s core business.
For 2021, the company anticipates net service revenues in the range of $2.230 billion to $2.245 billion compared with the earlier guidance of $2.302-$2.342 billion. Adjusted earnings per share are projected in the range of $6.37-$6.49 compared with the prior guidance of $6.85-$7.07.
Amedisys also updated its 2021 guidance, including all acquisition activity closed as of Aug 4, 2021.
For 2021, the company anticipates net service revenues in the range of $2.241 billion to $2.259 billion and adjusted earnings per share are projected in the band of $6.03-$6.18.
The Zacks Consensus Estimate for 2021 revenues is pegged at $2.32 billion. The Zacks Consensus Estimate for adjusted earnings per share is pegged at $6.94.
Amedisys ended the second quarter on a mixed note with better-than-expected earnings and a revenue miss. On a positive note, both Home Health and Hospice divisions registered year-over-year growth. Expansion of both margins looks encouraging as well. The closing of the Contessa Health acquisition buoys optimism.
However, the prolonged and lingering impact of COVID-19 on the Hospice business has hampered its ability to grow at the previously projected rates. The rise in operating expenses compared to the prior year is concerning.
Zacks Rank and Key Picks
Amedisys currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced their quarterly results are Encompass Health Corporation EHC, West Pharmaceutical Services, Inc. WST and Bruker Corporation BRKR.
Encompass Health, carrying a Zacks Rank #1 (Strong Buy), reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Revenues of $1.3 billion outpaced the consensus mark by 1.5%.You can see the complete list of today’s Zacks #1 Rank stocks here.
West Pharmaceutical, carrying a Zacks Rank #2 (Buy), reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.
Bruker, sporting a Zacks Rank #2, reported second-quarter 2021 adjusted EPS of 44 cents, surpassing the Zacks Consensus Estimate by 10%. Revenues of $570.8 million surpassed the Zacks Consensus Estimate by 6.1%.
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