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Amedisys (AMED - Free Report) faces major reimbursement headwinds and competitive challenges. Further, the ongoing nurse staffing shortages continued to be a widespread challenge for the organization. The stock carries a Zacks #4 (Sell).
Amedisys ended the third quarter of 2022 on a disappointing note, with lower-than-expected earnings and revenues. According to the company, nurse staffing shortages continued to be a major challenge across its health care system, accounting for 59% of Amedisys volume miss within the live joint venture partnerships in 2022. Within Home Health and Hospice, the reinstatement of sequestration marred growth.
Given the current labor market dynamics, payer mix shifts in home health, the pressure on hospice admissions and length of stay in continued investments in Contessa, Amedisys reduced its guidance for 2022.
Further, Amedisys’ gross profit declined 3.1% in the quarter under review. The gross margin contracted 169 basis points (bps) to 42.3%. Expenses on salaries and benefits rose 5.2%. Adjusted operating profit reflected a 10.9% decline from the year-ago quarter. Adjusted operating margin contracted 262 bps to 19.8% from the prior-year level.
The CMS-proposed home health rule for 2023, according to Amedisys seems unfavorable for the company’s business. Added to this, the market for home health and hospice is fragmented, with a number of small local providers. With a few barriers to entry in this market, Amedisys primarily faces tough competition from local privately and publicly-owned and hospital-owned healthcare providers.
On a positive note, during the third quarter, the company noted that for Home Health, the quality of patient care star score is 4.49 stars, with 99% of care centers reaching 4 stars or greater and 83% achieving 4.5 stars or greater. Total admissions in Q3 for hospital and SNF at home were 430, representing 25% growth. Within Hospice, same-store ADC was slightly positive at 1%. Continued progress on the ADC front is expected to help Amedisys drive performance in the second half of the year.
The Contessa Health acquisition seems to be strategically aligned with Amedisys’ business. The company’s newly formed high acuity care segment, Contessa, experienced continued positive momentum in the third quarter, offering home-based recovery solutions to patients needing acute care. In Q3, total admissions for hospital and SNF at home were 430, representing 25% growth.
Amedisys is developing and acquiring new business lines that will complement its existing home care and hospice business and help seniors manage their health more effectively and stay in their homes longer.
In December 2022, Amedisys completed its joint venture with the University of Arkansas for Medical Sciences (UAMS) to provide home health services in Searcy and Little Rock. The joint venture is part of the partnership between UAMS, Amedisys and Contessa — an Amedisys company — to offer patients a full spectrum of medical care in the comfort and convenience of their homes through UAMS Health Comprehensive Care at Home.
In the past year, Amedisys has outperformed the industry it belongs to. Per the last trading price, the stock has declined 27.3% compared with a 27.7% decline of the industry.
Key Picks
Some better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% decline in the past year.
Orthofix Medical, currently carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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Amedisys (AMED) Faces Macro Challenges, Margin Pressure
Amedisys (AMED - Free Report) faces major reimbursement headwinds and competitive challenges. Further, the ongoing nurse staffing shortages continued to be a widespread challenge for the organization. The stock carries a Zacks #4 (Sell).
Amedisys ended the third quarter of 2022 on a disappointing note, with lower-than-expected earnings and revenues. According to the company, nurse staffing shortages continued to be a major challenge across its health care system, accounting for 59% of Amedisys volume miss within the live joint venture partnerships in 2022. Within Home Health and Hospice, the reinstatement of sequestration marred growth.
Given the current labor market dynamics, payer mix shifts in home health, the pressure on hospice admissions and length of stay in continued investments in Contessa, Amedisys reduced its guidance for 2022.
Further, Amedisys’ gross profit declined 3.1% in the quarter under review. The gross margin contracted 169 basis points (bps) to 42.3%. Expenses on salaries and benefits rose 5.2%. Adjusted operating profit reflected a 10.9% decline from the year-ago quarter. Adjusted operating margin contracted 262 bps to 19.8% from the prior-year level.
The CMS-proposed home health rule for 2023, according to Amedisys seems unfavorable for the company’s business. Added to this, the market for home health and hospice is fragmented, with a number of small local providers. With a few barriers to entry in this market, Amedisys primarily faces tough competition from local privately and publicly-owned and hospital-owned healthcare providers.
Amedisys, Inc. Price
Amedisys, Inc. price | Amedisys, Inc. Quote
On a positive note, during the third quarter, the company noted that for Home Health, the quality of patient care star score is 4.49 stars, with 99% of care centers reaching 4 stars or greater and 83% achieving 4.5 stars or greater. Total admissions in Q3 for hospital and SNF at home were 430, representing 25% growth. Within Hospice, same-store ADC was slightly positive at 1%. Continued progress on the ADC front is expected to help Amedisys drive performance in the second half of the year.
The Contessa Health acquisition seems to be strategically aligned with Amedisys’ business. The company’s newly formed high acuity care segment, Contessa, experienced continued positive momentum in the third quarter, offering home-based recovery solutions to patients needing acute care. In Q3, total admissions for hospital and SNF at home were 430, representing 25% growth.
Amedisys is developing and acquiring new business lines that will complement its existing home care and hospice business and help seniors manage their health more effectively and stay in their homes longer.
In December 2022, Amedisys completed its joint venture with the University of Arkansas for Medical Sciences (UAMS) to provide home health services in Searcy and Little Rock. The joint venture is part of the partnership between UAMS, Amedisys and Contessa — an Amedisys company — to offer patients a full spectrum of medical care in the comfort and convenience of their homes through UAMS Health Comprehensive Care at Home.
In the past year, Amedisys has outperformed the industry it belongs to. Per the last trading price, the stock has declined 27.3% compared with a 27.7% decline of the industry.
Key Picks
Some better-ranked stocks in the broader medical space that investors can consider are ShockWave Medical, Inc. (SWAV - Free Report) , Orthofix Medical Inc. (OFIX - Free Report) and Merit Medical System (MMSI - Free Report) .
ShockWave Medical, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 33.1% for 2023. The company’s earnings surpassed estimates in all the trailing four quarters, the average beat being 180.1%.
ShockWave Medical has outperformed its industry in the past year. SWAV has gained 35% against the industry’s 32.6% decline in the past year.
Orthofix Medical, currently carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2022 adjusted EPS of 13 cents, which beat the Zacks Consensus Estimate by a stupendous 550%. Revenues of $114 million outpaced the consensus mark by 2.7%.
Orthofix Medical has an estimated next-year growth rate of 58.97%. OFIX’s earnings surpassed estimates in the trailing three quarters and missed in one, the average being 129.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merit Medical, currently carrying a Zacks Rank of 2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.