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Why Is Amedisys (AMED) Up 6.4% Since Last Earnings Report?

Zacks Equity Research
·4 min read

It has been about a month since the last earnings report for Amedisys (AMED). Shares have added about 6.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Amedisys Q2 Earnings Beat Estimates, Revenues Fall Y/Y

Amedisys 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%).

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Amedisys has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 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 upward for the stock, and the magnitude of these revisions looks promising. 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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