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Amedisys' (AMED) Q3 Earnings Miss Estimates, Margins Up

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Amedisys, Inc. (AMED - Free Report) reported adjusted earnings per share (EPS) of $98 cents in the third quarter of 2023, down 14.8% from the year-ago quarter’s figure. The bottom line missed the Zacks Consensus Estimate by 9.3%.

The quarter’s adjustments include certain acquisition and integration costs, clinical optimization and reorganization costs and executive board of directors/CEO transition awards.

GAAP loss per share in the third quarter was 79 cents, in line with the year-ago GAAP EPS of 79 cents.

Net service revenues totaled $556.2 million, down 0.3% year over year. The top line missed the Zacks Consensus Estimate by 0.9%.

Segments in Detail

In February 2023, Amedisys divested its Personal Care division to HouseWorks, LLC.

Net service revenues from the Home Health Division totaled $351.6 million in the quarter, up 3.7% year over year. Within the segment, Medicare revenues of $217.9 million dropped 3.4% year over year. Non-Medicare revenues increased 17.7% to $133.7 million.

Within the Hospice Division, net service revenues were $200.2 million (up 0.8% year over year), including Medicare revenues of $188.9 million (up 0.6%) and non-Medicare revenues of $11.3 million (up 3.7%).

The High Acuity Care segment reported net service revenues of $4.4 million in the third quarter, surging 25.7% from the year-ago quarter’s figure of $3.5 million. The Corporate segment did not register any recognizable revenues in the third quarter.

Margins

The gross profit for the company improved 3.8% to $244.6 million in the quarter under review. Yet, the gross margin expanded 172 basis points (bps) to 44%.

Expenses on salaries and benefits rose 2.8% to $129.1 million. Other expenses fell 3.4% to $57.3 million. The adjusted operating profit amounted to $58.2 million, up 14.4% from the year-ago quarter’s levels. The adjusted operating margin expanded 135 bps to 10.5% from the prior-year quarter’s level.

Liquidity and Cash Position

Amedisys exited the third quarter with cash and cash equivalents of $78.1 million compared with $49.4 million at the end of second-quarter 2023. The company's long-term obligations (excluding the current portion) were $366.9 million at the end of the third quarter compared with $369.9 million at the end of second-quarter 2023.

Amedisys, Inc. Price, Consensus and EPS Surprise

 

 

Cumulative net cash used by operating activities at the end of the third quarter was $76.9 million compared with $92.4 million a year ago.

Our Take

Amedisys ended the third-quarter 2023 with lower-than-expected earnings and revenues. The company is dealing with the continuous shortage of clinical labor, nursing in particular, which has been challenging.

Amedisys earlier announced that it would be acquired by UnitedHealth Group Incorporated unit Optum, scraping a previous all-stock deal offer from Option Care Health. Combining Optum’s extensive value-based care expertise with Amedisys’ dedication to quality and care innovation in the home and its employees’ patient-first culture can significantly improve the health outcomes and experiences of more patients at lower costs, resulting in continued growth.

Zacks Rank and Key Picks

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

Some of the top-ranked stocks from the broader medical space that are supposed to report earnings soon are Addus HomeCare (ADUS - Free Report) , Insulet (PODD - Free Report) and Inari Medical (NARI - Free Report) .

Addus currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its third-quarter 2023 adjusted EPS is pegged at $1.05. The same for its revenues stands at $266.2 million.

Addus has a long-term historical growth rate of 12.6%. ADUS’ earnings yield of 5.24% compares favorably with the industry’s yield of 4.37%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Insulet’s third-quarter 2023 adjusted EPS is currently pegged at 40 cents. The consensus estimate for revenues is pegged at $413.8 million. Insulet currently carries a Zacks Rank #2.

Insulet has an estimated long-term growth rate of 41.5%. PODD’s earnings yield of 1.14% compares favorably with the industry’s yield of (2.62%).

Inari Medical currently has a Zacks Rank #2. The Zacks Consensus Estimate for its third-quarter 2023 adjusted EPS is currently pegged at a breakeven level. The same for revenues is pegged at $122.4 million.

NARI has an estimated growth rate of 107.3% for 2023. NARI’s earnings yield of 0.07% compares favorably with the industry’s decline of 8.47%.

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