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Change Healthcare (CHNG) Q1 Earnings Miss, Revenues Beat

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Change Healthcare Inc. (CHNG - Free Report) reported first-quarter fiscal 2022 adjusted earnings per share (EPS) of 41 cents, which missed the Zacks Consensus Estimate of 46 cents by 10.9%. Nonetheless, the bottom line improved 64% on a year-over-year basis.

Net loss per share was 1 cent in the quarter, much narrower that the year-ago quarter’s loss of 18 cents.

Revenue Details

Revenues climbed 25% from the prior-year period to $867.9 million in the reported quarter. The top line outpaced the Zacks Consensus Estimate by 2.3%.

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 $420.3 million, up 7.3% on a year-over-year basis.

Network Solutions

Revenues at this segment were $209.5 million, up 46.7% year over year.

McKesson Corporation Price, Consensus and EPS Surprise

McKesson Corporation Price, Consensus and EPS Surprise

McKesson Corporation price-consensus-eps-surprise-chart | McKesson Corporation Quote

Technology-Enabled Services

Revenues at this segment amounted to $225.5 million, up 20.1% year over year.

Postage and Eliminations

Revenues at this segment totaled $17 million, down 37.1% year over year.

Margin Analysis

Total operating expenses were $823.7 million, up 17.4% from the prior-year quarter.

In the quarter under review, Change Healthcare reported operating income of $44.1 million, against the year-ago quarter’s operating loss of $7.7 million.

Financial Position

The company exited the quarter with cash and cash equivalents of $109.1 million, compared with $113.1 million in the preceding quarter.

Cash provided operating activities at the end of fiscal first quarter amounted to $110.1 million compared with $169.1 million in the year-ago period.

Guidance

Given the proposed merger agreement (with OptumInsight), Change Healthcare will not be issuing financial guidance going forward.

Wrapping Up

Change Healthcare exited first-quarter fiscal 2022 on a mixed note, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. The company exhibited robust performance across Software and Analytics, Network Solutions and Technology-Enabled segments in the quarter under review.

However, cut-throat competition remains a concern. Weak performance at the Postage and Eliminations segment is a woe. Higher operating expenses is concerning.

Zacks Rank

Currently, Change Healthcare carries a Zacks Rank #2 (Buy).

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 Encompass Health Corporation (EHC - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Hill-Rom Holdings, Inc. . While Encompass Health sports a Zacks Rank #1 (Strong Buy), both West Pharmaceutical and Hill-Rom carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Encompass Health reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Second-quarter revenues of $1.3 billion outpaced the consensus mark by 1.5%.

West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.

Hill-Rom reported third-quarter fiscal 2021 adjusted EPS of $1.38, which beat the Zacks Consensus Estimate by 2.9%. Fiscal third-quarter revenues of $717.7 million outpaced the consensus mark by 1.6%.


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