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Change Healthcare (CHNG) Q3 Earnings in Line, Revenues Beat

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Change Healthcare Inc. (CHNG - Free Report) reported third-quarter fiscal 2022 adjusted earnings per share (EPS) of 36 cents, which matched the Zacks Consensus Estimate. The bottom line improved 5.9% on a year-over-year basis.

Net loss per share was 8 cents in the quarter, against the year-ago quarter’s net income of a penny.

Revenue Details

Revenues rose 10.3% from the prior-year period to $866.1 million in the reported quarter. The top line outpaced the Zacks Consensus Estimate by 1.6%.

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 $386 million, up 3.7% on a year-over-year basis.

Network Solutions

Revenues at this segment were $226.9 million, up 17.8% year over year.

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 were $232.8 million, up 4.6% on a year-over-year basis.

Postage and Eliminations

Revenues at this segment totaled $20.3 million, down 7.7% year over year.

Margin Analysis

Total operating expenses were $837.4 million, up 15.9% from the prior-year quarter.

In the quarter under review, Change Healthcare reported an operating income of $28.7 million, compared with $62.7 million in the year-ago quarter.

Financial Position

The company exited the quarter with cash and cash equivalents of $96 million, compared with $80.4 million in the preceding quarter.

Cumulative net cash provided by operating activities at the end of the fiscal third quarter amounted to $438.8 million compared with $487.2 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 the third-quarter fiscal 2022 on a mixed note, wherein earnings met the Zacks Consensus Estimate while revenues beat the same. The company exhibited robust performance across Software and Analytics, Network Solutions and Technology-Enabled segments in the quarter under review. Collaborations and expansion of Stratus Imaging PACS were the business highlights in the quarter.

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

Zacks Rank

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

Key Picks

Some better-ranked stocks that are supposed to report earnings soon are Cerner Corporation , Baxter International Inc. (BAX - Free Report) and AMN Healthcare Services, Inc. (AMN - Free Report) .

The Zacks Consensus Estimate for Cerner’s fourth-quarter 2021 adjusted EPS is currently pegged at 88 cents. The consensus estimate for fourth-quarter 2021 revenues stands at $1.49 billion. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cerner has an estimated long-term growth rate of 12.8%. CERN’s earnings yield of 4% compares favorably with the industry’s negative yield.

Baxter currently has a Zacks Rank #2. The Zacks Consensus Estimate for its fourth-quarter 2021 adjusted EPS is currently pegged at $1.03. The consensus estimate for fourth-quarter revenues stands at $3.35 billion.

Baxter has an estimated long-term growth rate of 9.5%. BAX’s earnings yield of 4.9% compares favorably with the industry’s negative yield.

AMN Healthcare currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its fourth-quarter 2021 adjusted EPS currently stands at $2.58. The consensus estimate for its revenues stands at $1.28 billion.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings yield of 6.7% compares favorably with the industry’s 1.1%.


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