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Amedisys (AMED) New Buyouts Aid Growth, CMS Ruling Unfavorable
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Amedisys (AMED - Free Report) is currently exploring new opportunities in Home Health and Hospice segments. The company’s favorable demographic trend and strategic acquisitions undertaken also encourage us. However, reimbursement headwinds and competitive challenges remain. The stock carries a Zacks Rank #3 (Hold).
Amedisys ended the fourth quarter with better-than-expected earnings and revenues. The Contessa Health acquisition seems to be strategically aligned with Amedisys’ business, which experienced positive momentum in the fourth quarter, offering home-based recovery solutions to patients needing acute care. 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.
Amedisys is currently focusing on improving clinical quality. The Centers for Medicare and Medicaid Services (CMS) April 2023 preview reports show that the Quality of Patient Care star average across all Amedisys providers was 4.49, with 99% of its care centers at 4+ stars and 46 care centers rated at five stars. Amedisys’ Patient Satisfaction star average for the January 2023 release was 3.57, outperforming the industry average by 1%. On the fourth quarter-2022 earnings call, the company noted that its patient satisfaction remains greater than 85%.
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 February 2023, Amedisys entered into a new agreement with BlueCross BlueShield of Tennessee to provide members in Middle Tennessee with palliative care in the comfort of their homes. With this program, BlueCross BlueShield of Tennessee’s members can receive palliative care in-person or via telehealth from Amedisys’ clinicians, including doctors, nurse practitioners and nurses at no additional cost.
In the same month, Amedisys entered into a definitive agreement to divest its Personal Care division to HouseWorks, LLC. Per management, this divestiture allows the company’s personal care division to grow under a proven leader in the industry while Amedisys focuses its attention on the core business units of Home Health, Hospice and High Acuity Care.
On the flip side, during the fourth quarter of 2022, Amedisys registered a year-over-year decline in the Hospice segment’s revenues, which 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 adjusted operating margin are other downsides. Amedisys’ expenses on salaries and benefits rose 5.5% and Other expenses rose 13.3%. Adjusted operating profit reflected a 17.7% decline from the year-ago quarter. Adjusted operating margin contracted 205 bps to 9.3% from the prior-year level.
On Oct 31, 2022, CMS issued the Home Health Final Rule for Medicare home health providers for 2023. CMS estimates that the final rule will result in a 0.7% increase in payments to home health providers. Per Amedisys’ management analysis of the final rule, the company expects its impact to be flat, which is less than the estimated 0.7% rate increase.
In the past year, Amedisys has underperformed the industry it belongs to. Per the last trading price, the stock has declined 48.1% compared with a 14.8% decline of the industry.
Hologic has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%.
Hologic has inched up 3.1% against the industry’s 16% decline in the past year.
Henry Schein has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched once, the average beat being 2.9%.
Henry Schein has lost 7.7% compared with the industry’s 5.5% decline in the past year.
Avanos has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has lost 11.8% compared with the industry’s 15.9% decline in the past year.
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Amedisys (AMED) New Buyouts Aid Growth, CMS Ruling Unfavorable
Amedisys (AMED - Free Report) is currently exploring new opportunities in Home Health and Hospice segments. The company’s favorable demographic trend and strategic acquisitions undertaken also encourage us. However, reimbursement headwinds and competitive challenges remain. The stock carries a Zacks Rank #3 (Hold).
Amedisys ended the fourth quarter with better-than-expected earnings and revenues. The Contessa Health acquisition seems to be strategically aligned with Amedisys’ business, which experienced positive momentum in the fourth quarter, offering home-based recovery solutions to patients needing acute care. 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.
Amedisys is currently focusing on improving clinical quality. The Centers for Medicare and Medicaid Services (CMS) April 2023 preview reports show that the Quality of Patient Care star average across all Amedisys providers was 4.49, with 99% of its care centers at 4+ stars and 46 care centers rated at five stars. Amedisys’ Patient Satisfaction star average for the January 2023 release was 3.57, outperforming the industry average by 1%. On the fourth quarter-2022 earnings call, the company noted that its patient satisfaction remains greater than 85%.
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.
Amedisys, Inc. Price
Amedisys, Inc. price | Amedisys, Inc. Quote
In February 2023, Amedisys entered into a new agreement with BlueCross BlueShield of Tennessee to provide members in Middle Tennessee with palliative care in the comfort of their homes. With this program, BlueCross BlueShield of Tennessee’s members can receive palliative care in-person or via telehealth from Amedisys’ clinicians, including doctors, nurse practitioners and nurses at no additional cost.
In the same month, Amedisys entered into a definitive agreement to divest its Personal Care division to HouseWorks, LLC. Per management, this divestiture allows the company’s personal care division to grow under a proven leader in the industry while Amedisys focuses its attention on the core business units of Home Health, Hospice and High Acuity Care.
On the flip side, during the fourth quarter of 2022, Amedisys registered a year-over-year decline in the Hospice segment’s revenues, which 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 adjusted operating margin are other downsides. Amedisys’ expenses on salaries and benefits rose 5.5% and Other expenses rose 13.3%. Adjusted operating profit reflected a 17.7% decline from the year-ago quarter. Adjusted operating margin contracted 205 bps to 9.3% from the prior-year level.
On Oct 31, 2022, CMS issued the Home Health Final Rule for Medicare home health providers for 2023. CMS estimates that the final rule will result in a 0.7% increase in payments to home health providers. Per Amedisys’ management analysis of the final rule, the company expects its impact to be flat, which is less than the estimated 0.7% rate increase.
In the past year, Amedisys has underperformed the industry it belongs to. Per the last trading price, the stock has declined 48.1% compared with a 14.8% decline of the industry.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and Avanos Medical, Inc. (AVNS - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%.
Hologic has inched up 3.1% against the industry’s 16% decline in the past year.
Henry Schein has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched once, the average beat being 2.9%.
Henry Schein has lost 7.7% compared with the industry’s 5.5% decline in the past year.
Avanos has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has lost 11.8% compared with the industry’s 15.9% decline in the past year.