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Here's Why You Should Retain Change Healthcare (CHNG) Stock
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Change Healthcare Inc. is well-poised for growth, backed by strength in artificial intelligence (AI) and machine learning (ML) initiatives and strategic deals. However, stiff competition remains a concern.
Shares of the Zacks Rank #3 (Hold) company have gained 15.9% against the industry’s decline of 36.6% on a year-to-date basis. Meanwhile, the S&P 500 Index has fallen 18.3%.
Change Healthcare — with a market capitalization of $8.14 billion — is an independent healthcare technology platform offering data and analytics-driven solutions to boost clinical financial and patient engagement outcomes in the United States. Its earnings are anticipated to improve 8% over the next five years. The company beat earnings estimates in one of the trailing four quarters, missed twice and met once, the average negative surprise being 2.23%.
Image Source: Zacks Investment Research
Key Catalysts
Change Healthcare has been utilizing AI and ML to detect inefficiencies and eliminate them from administrative processes in the healthcare system, consequently lowering costs and helping payers, providers and patients with improved outcomes.
During the fiscal first-quarter 2023, the company reported top-line growth of 1.9% year over year. Change Healthcare did some portfolio rejig and, beginning the first quarter of fiscal 2023, started reporting in four reportable segments, namely, Software and Analytics, Network Solutions, Enterprise Imaging and Technology-Enabled Services. The company established Enterprise Imaging as a standalone segment, which was earlier reported as part of the Software and Analytics segment. The company also shifted responsibility for certain products among its reportable segments, which are expected to impact all segment-related figures, except the new one.
Per the fiscal first-quarter 2023 earnings press release, Change Healthcare released InterQual 2022, which includes new criteria for emergent trends, restructured and interactive criteria to streamline workflows, and AI to drive proactive insights and efficiency.
During the quarter, the company collaborated with Luma Health to launch a patient engagement suite, which combines Luma Health’s Patient Success Platform solution with Change Healthcare’s revenue cycle management solutions to give patients and providers a cohesive experience that spans the entire healthcare journey.
Moreover, the extension of Stratus Imaging PACS during fiscal third-quarter 2022, which is a cloud-native, zero-footprint Picture Archiving and Communication System, to clinical use is driving demand. This scalable, cloud-native platform is currently being utilized by StatRad — an award-winning teleradiology service whose 90 radiologists read approximately 1.5 million studies a year and cater to hundreds of hospitals throughout the United States.
During the fiscal third quarter of 2022, the company made an announcement of a first-of-its-kind collaboration with Zasti to aid healthcare providers in accurate measurement and monitoring of greenhouse gas emissions based on actual care activity. The company launched The ASAM Criteria Powered by InterQual, which is a SaaS solution developed through an exclusive partnership with the American Society of Addiction Medicine (ASAM) during the quarter. This software facilitates seamless integration into existing care-management workflows, substantially lowering the time needed for substance use disorder (SUD) patient assessments, enhancing consistency, and simplifying the prior-authorization process utilizing industry-standard criteria.
These developments are likely to help Change Healthcare cater to an expanded patient population, driving its business going forward.The company has been implementing growth initiatives and integrating innovation across its platform.The company’s pending merger with OptumInsight also represents a significant opportunity.
Factor Hurting the Stock
The healthcare information technology (HCIT) solutions, devices, and services market is extremely competitive and rapidly evolving. Consequently, intense competition can weigh on the company’s pricing and margins.
The Zacks Consensus Estimate for fiscal 2023 revenues is pegged at $3.53 billion, suggesting growth of 1.4% from the year-ago reported number. The same for earnings stands at $1.47 per share, indicating a decline of 3.9% from the prior-year quarter.
AMN Healthcare, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.31, which beat the Zacks Consensus Estimate by 11.8%. Revenues of $1.43 billion outpaced the consensus mark by 4.8%.
AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.7%.
Bio-Rad, carrying a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $3.38, which beat the Zacks Consensus Estimate by 37.4%. Revenues of $691.1 million outpaced the consensus mark by 3.9%.
Bio-Rad has a historical earnings growth rate of 31.2%. BIO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 46.8%.
McKesson reported second-quarter 2022 adjusted EPS of $5.83, which surpassed the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the Zacks Consensus Estimate by 5.1%. It currently carries a Zacks Rank #2.
McKesson has an earnings yield of 6.8% compared with the industry’s 4.4% yield. MCK’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13%.
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Here's Why You Should Retain Change Healthcare (CHNG) Stock
Change Healthcare Inc. is well-poised for growth, backed by strength in artificial intelligence (AI) and machine learning (ML) initiatives and strategic deals. However, stiff competition remains a concern.
Shares of the Zacks Rank #3 (Hold) company have gained 15.9% against the industry’s decline of 36.6% on a year-to-date basis. Meanwhile, the S&P 500 Index has fallen 18.3%.
Change Healthcare — with a market capitalization of $8.14 billion — is an independent healthcare technology platform offering data and analytics-driven solutions to boost clinical financial and patient engagement outcomes in the United States. Its earnings are anticipated to improve 8% over the next five years. The company beat earnings estimates in one of the trailing four quarters, missed twice and met once, the average negative surprise being 2.23%.
Image Source: Zacks Investment Research
Key Catalysts
Change Healthcare has been utilizing AI and ML to detect inefficiencies and eliminate them from administrative processes in the healthcare system, consequently lowering costs and helping payers, providers and patients with improved outcomes.
During the fiscal first-quarter 2023, the company reported top-line growth of 1.9% year over year. Change Healthcare did some portfolio rejig and, beginning the first quarter of fiscal 2023, started reporting in four reportable segments, namely, Software and Analytics, Network Solutions, Enterprise Imaging and Technology-Enabled Services. The company established Enterprise Imaging as a standalone segment, which was earlier reported as part of the Software and Analytics segment. The company also shifted responsibility for certain products among its reportable segments, which are expected to impact all segment-related figures, except the new one.
Per the fiscal first-quarter 2023 earnings press release, Change Healthcare released InterQual 2022, which includes new criteria for emergent trends, restructured and interactive criteria to streamline workflows, and AI to drive proactive insights and efficiency.
During the quarter, the company collaborated with Luma Health to launch a patient engagement suite, which combines Luma Health’s Patient Success Platform solution with Change Healthcare’s revenue cycle management solutions to give patients and providers a cohesive experience that spans the entire healthcare journey.
Moreover, the extension of Stratus Imaging PACS during fiscal third-quarter 2022, which is a cloud-native, zero-footprint Picture Archiving and Communication System, to clinical use is driving demand. This scalable, cloud-native platform is currently being utilized by StatRad — an award-winning teleradiology service whose 90 radiologists read approximately 1.5 million studies a year and cater to hundreds of hospitals throughout the United States.
During the fiscal third quarter of 2022, the company made an announcement of a first-of-its-kind collaboration with Zasti to aid healthcare providers in accurate measurement and monitoring of greenhouse gas emissions based on actual care activity. The company launched The ASAM Criteria Powered by InterQual, which is a SaaS solution developed through an exclusive partnership with the American Society of Addiction Medicine (ASAM) during the quarter. This software facilitates seamless integration into existing care-management workflows, substantially lowering the time needed for substance use disorder (SUD) patient assessments, enhancing consistency, and simplifying the prior-authorization process utilizing industry-standard criteria.
These developments are likely to help Change Healthcare cater to an expanded patient population, driving its business going forward.The company has been implementing growth initiatives and integrating innovation across its platform.The company’s pending merger with OptumInsight also represents a significant opportunity.
Factor Hurting the Stock
The healthcare information technology (HCIT) solutions, devices, and services market is extremely competitive and rapidly evolving. Consequently, intense competition can weigh on the company’s pricing and margins.
Change Healthcare Inc. Price
Change Healthcare Inc. price | Change Healthcare Inc. Quote
Estimates Trend
The Zacks Consensus Estimate for fiscal 2023 revenues is pegged at $3.53 billion, suggesting growth of 1.4% from the year-ago reported number. The same for earnings stands at $1.47 per share, indicating a decline of 3.9% from the prior-year quarter.
Stocks to Consider
Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Bio-Rad Laboratories, Inc. (BIO - Free Report) and McKesson (MCK - Free Report) . You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.31, which beat the Zacks Consensus Estimate by 11.8%. Revenues of $1.43 billion outpaced the consensus mark by 4.8%.
AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.7%.
Bio-Rad, carrying a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $3.38, which beat the Zacks Consensus Estimate by 37.4%. Revenues of $691.1 million outpaced the consensus mark by 3.9%.
Bio-Rad has a historical earnings growth rate of 31.2%. BIO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 46.8%.
McKesson reported second-quarter 2022 adjusted EPS of $5.83, which surpassed the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the Zacks Consensus Estimate by 5.1%. It currently carries a Zacks Rank #2.
McKesson has an earnings yield of 6.8% compared with the industry’s 4.4% yield. MCK’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13%.