It has been about a month since the last earnings report for Amedisys (AMED Quick QuoteAMED - Free Report) . Shares have added about 2.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Amedisys due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Amedisys Q3 Earnings Lag Estimates, Margins Contract

Amedisys reported adjusted earnings per share 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 earnings per share 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

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.

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.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, Amedisys has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Amedisys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.