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Amedisys (AMED) Q2 Earnings Surpass Estimates, Margins Down

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Amedisys, Inc. (AMED - Free Report) reported adjusted earnings per share (EPS) of $1.47 for second-quarter 2022, down 13% from the year-ago figure. The bottom line, however, beat the Zacks Consensus Estimate by 19.5%.

The quarter’s adjustments include acquisition and integration costs, COVID-19 costs and certain legal expenses, among others.

Our projection for second-quarter adjusted EPS was $1.29.

GAAP EPS for the second quarter was 91 cents, down 63% from the year-ago figure of $2.46.

Net service revenues grossed $557.9 million, down 1.1% year over year. The top line lagged the Zacks Consensus Estimate by 4.1%.

Our estimate for second-quarter net service revenues was $592 million.

Segment in Detail

Within the Home Health division, net service revenues totaled $340.2 million in the quarter, reflecting a 2.6% fall year over year. Within this segment, Medicare revenues of $222 million dropped 5.5% year over year. Non-Medicare revenues increased 3.2% to $118.2 million.

This figure compares to our Home Health segment’s Q2 projection of $367.8 million.

Within the Hospice division, net service revenues were $198.4 million (up 0.3% year over year), including Medicare revenues of $187.5 million (up 0.3%) and non-Medicare revenues of $10.9 million (down 0.9%).

Amedisys, Inc. Price, Consensus and EPS Surprise

Amedisys, Inc. Price, Consensus and EPS Surprise

Amedisys, Inc. price-consensus-eps-surprise-chart | Amedisys, Inc. Quote

For the Hospice segment, we projected $202.2 million of revenues in the second quarter.

At Personal Care, net service revenues totaled $14.9 million, reflecting a decline of 12.4% from the year-ago number.

For this segment, we projected $15.6 million of revenues in the second quarter.

Margins

Gross profit declined 5.4% to $241.7 million in the quarter under review. The gross margin contracted 196 basis points (bps) to 43.3%.

We projected the adjusted gross margin to be 43.6% in Q2.

Expenses on salaries and benefits rose 11.7% to $127.4 million. Other expenses rose 0.3% to $54.9 million. Adjusted operating profit of $59 million reflected a 31.7% decline from the year-ago quarter. Adjusted operating margin contracted 474 bps to 10.6% from the prior-year level.

Liquidity and Cash Position

Amedisys exited the second quarter of 2022 with cash and cash equivalents of $67.8 million compared with $67.8 million at the end of Q1. The company's long-term obligations (excluding the current portion) were $442.4 million at the end of the second quarter of 2022, compared with $429.5 million at the end of the first quarter of 2022.

Cumulative net cash provided by operating activities at the end of the second quarter of 2022 was $106 million compared with $121.9 million a year ago.

2022 Guidance

Amedisys has updated its guidance for 2022.

For full-year 2022, the company anticipates net service revenues in the range of $2.290 billion to $2.310 (the earlier-projected band was $2.330 billion to $2.365 billion). The Zacks Consensus Estimate for 2022 revenues is pegged at $2.35 billion.

Adjusted EPS is reiterated in the range of $5.23 to $5.45. The Zacks Consensus Estimate for the same is pegged at $5.29.

Our Take

Amedisys ended the second quarter of 2022 on a mixed note. While the company registered better-than-expected earnings, revenues lagged the estimates. Within Home Health, same-store total admissions were flat. Lower utilization of home health benefit, largely driven by lesser total discharges to post-acute settings, coupled with elevated utilization of telehealth, and in some markets, clinical staffing challenges impacted Amedisys’ ability to grow during the quarter.A year-over-year decline in Personal Care revenues does not bode well too. A spike in operating costs and the contraction of both margins are other downsides.

Within Hospice however, there has been a 2.5% sequential increase in the average daily census (ADC). According to the company, continued progress on the ADC front will help to drive performance in the second half of 2022.

Zacks Rank and Key Picks

Amedisys currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Neogen Corporation (NEOG - Free Report) .

Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quest Diagnostics has an earnings yield of 7.2% compared with the industry’s 3.3%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.

Medpace Holdings, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $1.46, which beat the Zacks Consensus Estimate by 8.9%. Revenues of $351.2 million outpaced the consensus mark by 1.3%.

Medpace Holdings has an estimated growth rate of 22.7% for full-year 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 17.3%.

Neogen reported fourth-quarter fiscal 2022 adjusted EPS of 18 cents, which surpassed the Zacks Consensus Estimate by 12.5%. Fiscal fourth-quarter revenues of $140.1 million outpaced the Zacks Consensus Estimate by 1.3%. It currently has a Zacks Rank #2.

Neogen has an estimated growth rate of 1.6% for fiscal 2023. NEOG’s earnings surpassed estimates in two of the trailing four quarters, lagged the same in one and broke even in the other, the average surprise being 1.5%.