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Amedisys (AMED) Q4 Earnings Beat, Operating Margin Dips

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Amedisys, Inc. (AMED - Free Report) reported adjusted earnings per share (EPS) of $1.16 in the fourth quarter of 2022, down 1.7% from the year-ago figure. The bottom line surpassed the Zacks Consensus Estimate by 12.6%.

The quarter’s adjustments include certain acquisition and integration costs, clinical optimization and reorganization costs, COVID-19 costs and fuel supplement expenses, among others.

GAAP EPS for the fourth quarter was 97 cents, down 6.7% year over year. Meanwhile, net service revenues grossed $562.1 million, up 0.5% year over year. The top line beat the Zacks Consensus Estimate by 0.4%.

2022 at a Glance

The adjusted EPS for the year was $5.01, down 15.8% from the prior year. The figure beat the consensus mark by 3.7%.

Full-year 2022 net service revenues totaled $2.22 billion, which improved 0.4% from the previous year. However, the top line missed the Zacks Consensus Estimate by 0.4%.

Segments in Detail

Net service revenues of the Home Health Division totaled $342.6 million in the quarter, which showed an improvement of 1.6% year over year. Within this segment, Medicare revenues of $222.8 million were down by 3.2% year over year. Non-Medicare revenues increased 11.8% to $119.8 million.

Within the Hospice Division, net service revenues were $197.6 million (down 3.6% year over year), including Medicare revenues of $186.3 million (up 43.9%) and non-Medicare revenues of $11.3 million (up 2.7%).

Amedisys, Inc. Price, Consensus and EPS Surprise

Amedisys, Inc. Price, Consensus and EPS Surprise

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

At Personal Care, net service revenues totaled $15.9 million, reflecting an increase of 5.3% from the year-ago number.

The High Acuity Care segment reported net service revenues of $5.9 million in the fourth quarter, a significant surge from the year-ago figure of $2 million. The Corporate segment did not register any recognizable revenue in the fourth quarter.

Margins

The gross profit for the company improved 1.1% to $244.9 million in the quarter under review. The gross margin expanded 28 basis points (bps) to 43.6%.

Expenses on salaries and benefits rose 5.5% to $132 million. Other expenses rose 13.3% to $60.9 million. The adjusted operating profit of $52 million reflected a 17.7% decline from the year-ago quarter. The adjusted operating margin contracted 205 bps to 9.3% from the prior-year level.

Liquidity and Cash Position

Amedisys exited 2022 with cash and cash equivalents of $40.5 million compared with $42.7 million at the 2021-end. The company's long-term obligations (excluding the current portion) were $419.4 million at the end of 2022, compared with $432.1 million at the end of 2021.

Cumulative net cash provided by operating activities at the end of 2022 was $133.3 million compared with $188.9 million a year ago.

2023 Outlook

Amedisys initiated its financial guidance for 2023.

The company anticipates net service revenues for the full year to be in the range of $2.24 billion-$2.27 billion. The Zacks Consensus Estimate for 2023 revenues is pegged at $2.37 billion.

The adjusted EPS is projected in the range of $4.13-$4.36. The Zacks Consensus Estimate for the same is pegged at $4.91.

AMED also announced a partnership with BlueCross BlueShield of Tennessee to provide home-based palliative care to their members. Recently, Amedisys signed an agreement to divest their Personal Care segment (excluding Florida operations), to HouseWorks, a Massachusetts-based personal care service provider. The deal is expected to close in the second quarter of 2023.

Our Take

Amedisys ended the fourth quarter with better-than-expected earnings and revenues.

However, a year-over-year decline in the Hospice segment’s revenues does not bode well. For the company, dealing with the continuous shortage of clinical labor, nursing in particular, has been challenging. Mounting costs and expenses and the contraction in the adjusted operating margin are other downsides.

In 2023, Amedisys remains confident about generating approximately $50 million in revenues from Contessa Health, the company’s newly formed high-acuity segment, driven by increased volumes from their current and signed JV partners.

The company has kept several growth opportunities in its pipeline. These include progress in direct relationships with health systems, partnering with a leading comprehensive care at-home provider and health plans interested in value-based arrangements for in-home services.

Zacks Rank and Key Picks

Amedisys currently has a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks from the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .

Cardinal Health, currently carrying a Zacks Rank #2 (Buy), reported a second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.

McKesson, with a Zacks Rank #2, reported a third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.

McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.

Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. The company currently sports a Zacks Rank #1.

Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.

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