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Change Healthcare (CHNG) Q4 Earnings & Revenues Top Estimates

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Change Healthcare Inc. CHNG reported fourth-quarter fiscal 2021 adjusted earnings per share (EPS) of 42 cents, which beat the Zacks Consensus Estimate of 37 cents by 13.5%. However, the bottom line remained flat on a year-over-year basis.

Revenue Details

Revenues rose 1.4% from the prior-year period to $855.2 million in the reported quarter. Further, the top line outpaced the Zacks Consensus Estimate by 1.7%.

Segmental Analysis

Change Healthcare operates through four segments — Software and Analytics, Network Solutions, Technology-Enabled Services and Postage and Eliminations.

Software and Analytics

Revenues at this segment totaled $416.3 million, down 0.6% on a year-over-year basis.

Network Solutions

Revenues at this segment were $198.3 million, up 30.3% year over year.

Change Healthcare Inc. Price, Consensus and EPS Surprise

Change Healthcare Inc. Price, Consensus and EPS Surprise
Change Healthcare Inc. Price, Consensus and EPS Surprise

Change Healthcare Inc. price-consensus-eps-surprise-chart | Change Healthcare Inc. Quote

Technology-Enabled Services

Revenues at this segment amounted to $227.3 million, down 6.2% year over year.

Postage and Eliminations

Revenues at this segment totaled $23.4 million, down 22.3% year over year.

Margin Analysis

Total operating expenses were $813.5 million, down 8.8% from the prior-year quarter.

In the quarter under review, Change Healthcare reported operating income of $41.7 million, against the year-ago quarter’s operating loss of $48.5 million.

Financial Position

The company exited the quarter with cash and cash equivalents of $113.1 million, compared with $137.4 million in the preceding quarter.

Cumulative cash provided operating activities at the end of fourth-quarter fiscal 2021 amounted to $586.2 million compared with cash flow from operating activities of $593.3 million in the year-ago period.

Merger Update

On Jan 5, 2021, Change Healthcare and OptumInsight — a diversified health services company — which is also part of UnitedHealth Group, made an agreement to combine. Per the agreement, OptumInsight (through a wholly-owned subsidiary) will purchase all of the outstanding shares of Change Healthcare common stock for $25.75 per share in cash. The merger is anticipated to be completed in the second half of 2021.

Guidance

Given the recently proposed merger agreement, Change Healthcare will not be issuing financial guidance going forward.

Wrapping Up

Change Healthcare exited fourth-quarter fiscal 2021 on a strong note, wherein both earnings revenues beat the Zacks Consensus Estimate. The Network Solutions recorded solid performance in the quarter under review. Lower operating expenses is encouraging.

However, cut-throat competition remains a concern. Also, weak performance of the Software and Analytics, and Technology-Enabled Services segments is a woe.

Zacks Rank

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

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Integer Holdings Corporation ITGR, Illumina, Inc. ILMN and HCA Healthcare, Inc. HCA, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Integer Holdings reported first-quarter 2021 adjusted EPS of 97 cents, which surpassed the Zacks Consensus Estimate by 12.8%. First-quarter revenues of $290.5 million outpaced the Zacks Consensus Estimate by 2.6%.

Illumina reported first-quarter 2021 adjusted EPS of $1.89, which surpassed the Zacks Consensus Estimate by 38.9%. First-quarter revenues of $1.09 billion outpaced the Zacks Consensus Estimate of $1.08 billion.

HCA Healthcare reported first-quarter 2021 adjusted EPS of $4.14, surpassing the Zacks Consensus Estimate by 23.6%. Net revenues of $14 billion exceeded the Zacks Consensus Estimate by 2.2%.

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