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Change Healthcare (CHNG) Q3 Earnings Top Estimates, Up Y/Y
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Change Healthcare Inc. reported third-quarter fiscal 2021 adjusted earnings per share of 34 cents, which beat the Zacks Consensus Estimate by 13%. The bottom line also improved 3% year over year.
Revenue Details
Revenues declined 2.9% from the prior-year period to $785.1 million in the reported quarter. Further, the top line missed the Zacks Consensus Estimate by 0.1%.
Segmental Analysis
Change Healthcare operates through three segments — Software and Analytics, Network Solutions, Technology-Enabled Services and Postage and Eliminations.
Software and Analytics
Revenues at this segment totaled $372.2 million, down 3.9% on a year-over-year basis.
Network Solutions
Revenues at this segment were $192.6 million, up 27.8% year over year.
Change Healthcare Inc. Price, Consensus and EPS Surprise
Revenues at this segment amounted to $222.5 million, down 7.8% year over year.
Postage and Eliminations
Revenues at this segment totaled $22 million, down 23.4% year over year.
Margin Analysis
Total operating expenses were $722.4 million, up 1.5% from the prior-year quarter.
In the quarter under review, Change Healthcare reported operating income of $62.7 million, which plunged 34.8% from the year-ago quarter.
Financial Position
The company exited the quarter with cash and cash equivalents of $137.4 million compared with $167.5 million in the preceding quarter.
Cumulative cash provided operating activities at the end of third-quarter fiscal 2021 amounted to $487.2 million compared with cash flow from operating activities of $400.9 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 terms of 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 third-quarter fiscal 2021 on a mixed note, wherein earnings and beat the Zacks Consensus Estimate but revenues missed the same. The Network Solutions recorded solid performance in the quarter under review.
During the quarter under review, the company launched Social Determinants of Health (SDoH) Analytics, which is an innovative national data resource that will enable health systems, insurers, and life sciences organizations to explore how geodemographic factors impact patient outcomes.
Also, the company entered into an agreement with Carnegie Mellon University’s Delphi Research Group with respect to the launch of Delphi's enhanced COVIDcast real-time COVID-19 indicators.
Additionally, Change Healthcare completed the divestiture of Capacity Management business, which helped its strategy to focus on and invest in core aspects of its business to drive growth and accelerate innovation.
These developments have impacted the company’s overall performance and are likely to advance growth in the near term.
However, cut-throat competition remains a concern. Also, weak performance of the Software and Analytics, and Technology-Enabled Services segments is a woe. Decline in operating income remains a headwind.
Zacks Rank
Currently, Change Healthcare carries a Zacks Rank #4 (Sell).
PerkinElmer reported fourth-quarter 2020 adjusted earnings per share (EPS) of $3.96, which beat the Zacks Consensus Estimate of $3.61 per share by 9.7%. Revenues of $1.36 billion surpassed the consensus mark by 7.7%.
AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.
Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.
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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >>
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Change Healthcare (CHNG) Q3 Earnings Top Estimates, Up Y/Y
Change Healthcare Inc. reported third-quarter fiscal 2021 adjusted earnings per share of 34 cents, which beat the Zacks Consensus Estimate by 13%. The bottom line also improved 3% year over year.
Revenue Details
Revenues declined 2.9% from the prior-year period to $785.1 million in the reported quarter. Further, the top line missed the Zacks Consensus Estimate by 0.1%.
Segmental Analysis
Change Healthcare operates through three segments — Software and Analytics, Network Solutions, Technology-Enabled Services and Postage and Eliminations.
Software and Analytics
Revenues at this segment totaled $372.2 million, down 3.9% on a year-over-year basis.
Network Solutions
Revenues at this segment were $192.6 million, up 27.8% year over year.
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 $222.5 million, down 7.8% year over year.
Postage and Eliminations
Revenues at this segment totaled $22 million, down 23.4% year over year.
Margin Analysis
Total operating expenses were $722.4 million, up 1.5% from the prior-year quarter.
In the quarter under review, Change Healthcare reported operating income of $62.7 million, which plunged 34.8% from the year-ago quarter.
Financial Position
The company exited the quarter with cash and cash equivalents of $137.4 million compared with $167.5 million in the preceding quarter.
Cumulative cash provided operating activities at the end of third-quarter fiscal 2021 amounted to $487.2 million compared with cash flow from operating activities of $400.9 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 terms of 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 third-quarter fiscal 2021 on a mixed note, wherein earnings and beat the Zacks Consensus Estimate but revenues missed the same. The Network Solutions recorded solid performance in the quarter under review.
During the quarter under review, the company launched Social Determinants of Health (SDoH) Analytics, which is an innovative national data resource that will enable health systems, insurers, and life sciences organizations to explore how geodemographic factors impact patient outcomes.
Also, the company entered into an agreement with Carnegie Mellon University’s Delphi Research Group with respect to the launch of Delphi's enhanced COVIDcast real-time COVID-19 indicators.
Additionally, Change Healthcare completed the divestiture of Capacity Management business, which helped its strategy to focus on and invest in core aspects of its business to drive growth and accelerate innovation.
These developments have impacted the company’s overall performance and are likely to advance growth in the near term.
However, cut-throat competition remains a concern. Also, weak performance of the Software and Analytics, and Technology-Enabled Services segments is a woe. Decline in operating income remains a headwind.
Zacks Rank
Currently, Change Healthcare carries a Zacks Rank #4 (Sell).
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 PerkinElmer, Inc. , Abbott Laboratories (ABT - Free Report) and AngioDynamics, Inc. (ANGO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
PerkinElmer reported fourth-quarter 2020 adjusted earnings per share (EPS) of $3.96, which beat the Zacks Consensus Estimate of $3.61 per share by 9.7%. Revenues of $1.36 billion surpassed the consensus mark by 7.7%.
AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.
Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>