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Why Is Amedisys (AMED) Up 4% Since the Last Earnings Report?

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It has been about a month since the last earnings report for Amedisys Inc (AMED - Free Report) . Shares have added about 4% in that time frame, outperforming the market .

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Amedisys Beats on Q1 Earnings, Revenues Meet Mark

Amedisys reported adjusted earnings from continuing operations of $0.47 per share in the first quarter of 2017, up 42.4% year over year. Earnings also surpassed the Zacks Consensus Estimate of $0.41. Excluding adjustments, the company reported earnings of $0.44 a share, reflecting a 131.6% surge from the year-ago quarter.

First-quarter net service revenues grossed $370.5 million, up 6.2% year over year. The top line met the Zacks Consensus Estimate of $370 million.
 
Quarter in Detail

Within the company's Home Health division, net service revenues totaled $271.3 million (down 0.5%) in the first quarter. Medicare revenues of $198.7 million declined 3.9% year over year, while non-Medicare revenues improved 10.2% year over year to $72.6 million.

Within the Hospice division, net service revenues grossed $85.6 million (up 17.3% year over year), including Medicare revenues of $80.7 million (up 17.5%) and non-Medicare revenues of $4.9 million (up 13.9%).

Recently, the company integrated two additional operating segments within its business –Personal Care and Corporate. At Personal Care, net service revenues totaled $13.6 million, a substantial 338.7% increase from year-ago comparable number of $3.1 million.

Corporate, on the other hand, did not register any revenue till the end of the first quarter.

The company’s gross margin contracted 38 basis points (bps) to 41.8% in the first quarter, while gross profit rose 5.2%. Expense on salaries and benefits declined 2.9% to $74.5 million. Other expenses also dropped 13.5% to $40.4 million. Adjusted operating income of $39.8 million in the reported quarter reflects an increase of 69% from the year-ago adjusted operating income of $39.8 million. Operating margin expanded 400 bps to 10.7% from the year-ago figure.

Amedisys exited the first quarter with cash and cash equivalents of $48.3 million, compared with $30.2 million at the end of the preceding year. The company's long-term obligations (excluding current portion) were $85.4 million in the reported quarter, down from $87.8 million in the year ago quarter. Net operating cash flow was $27.1 million, compared with $12.2 million in the year-ago period.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.

Amedisys Inc Price and Consensus

VGM Scores

At this time, Amedisys' stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. The stock was allocated a grade of 'C' on the value side, putting it in the middle 20% 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.

Our style scores indicate that the stock is more suitable for growth investors than value investors.

Outlook

While estimates have been broadly trending upward for the stock, the magnitude of these revisions is net zero. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.


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