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Amedisys (AMED) Down 5% Despite Q2 Earnings and Revenue Beat
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Amedisys Inc. (AMED - Free Report) reported adjusted earnings from continuing operations of 42 cents per share in the second quarter of 2016, ahead of the Zacks Consensus Estimate by a penny.
Barring any adjustment, the company's reported earnings of 32 cents a share, on par with the year-ago quarter number.
Amedisys primarily derives revenues from its home health and hospice agencies. Second-quarter 2016 net service revenues grossed $360.7 million, up 14.8% year over year. The top line also exceeded the Zacks Consensus Estimate of $355 million.
While the company performed well in the second quarter, CMS’ announcement to change the reimbursement amount in a budget neutral manner, has adversely impacted the entire home health market leading to 5.3% plunge in Amedisys’s share price on yesterday's close.
The Quarter in Detail
Within the company's Home Health division, net service revenues totaled $275.5 million (up 11.2%) in the second quarter. Medicare revenues of $208.4 million improved 10.6% year over year while non-Medicare revenues climbed 12.8% to $67.1 million.
Same store Medicare fee for service admissions grew at a rate of 4.1% with 5.3% growth in total episodic admissions.
Within the Hospice division, net service revenues grossed $75.8 million (up 14.3% year over year), including Medicare revenues of $71.3 million (up 14.1%) and non-Medicare revenues of $4.5 million (up 18.4%).
The company reported a 2514 basis point (bps) expansion in gross margin to 42.8% in the second quarter on a 178.7% surge in gross profit. Expense on salaries and benefits scaled up 8.6% to $77.3 million. Other expenses also increased 8.2% to $45.6 million. Adjusted operating income of $31.3 million in the reported quarter reflects a huge improvement from the year-ago adjusted operating loss of $58 million.
Amedisys exited the second quarter of 2016 with cash and cash equivalents of $9.9 million compared with $7.8 million at the end of the first quarter. The company's long-term obligations (excluding current portion) were $89.5 million, marginally down from $90.5 million at the end of the first quarter. Year-to-date net operating cash flow was $26.9 million compared with $57 million in the year-ago period.
Our Take
Amedisys ended the second quarter of 2016 on a promising note with earnings and revenues both ahead of the respective Zacks Consensus Estimate. In Home Health, the company continued to generate strong organic growth in Medicare and non-Medicare revenues. Amedisys currently focuses on three priorities – clinical distinction, driving organic and inorganic growth, realizing operational efficiencies and becoming an employer of choice. The company’s strong cash balance position further bolsters our confidence in the stock.
However, the recent proposed rule for Home Health in 2017 by CMS which includes a shift to a budget neutral plan for reimbursement, may affect the company’s growth graph adversely.
Zacks Rank
Currently, Amedisys has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical sector include Almost Family Inc. , BioScrip, Inc. and AmSurg Corp. . All the three stocks hold a Zacks Rank #2 (Buy).
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Amedisys (AMED) Down 5% Despite Q2 Earnings and Revenue Beat
Amedisys Inc. (AMED - Free Report) reported adjusted earnings from continuing operations of 42 cents per share in the second quarter of 2016, ahead of the Zacks Consensus Estimate by a penny.
Barring any adjustment, the company's reported earnings of 32 cents a share, on par with the year-ago quarter number.
Amedisys primarily derives revenues from its home health and hospice agencies. Second-quarter 2016 net service revenues grossed $360.7 million, up 14.8% year over year. The top line also exceeded the Zacks Consensus Estimate of $355 million.
While the company performed well in the second quarter, CMS’ announcement to change the reimbursement amount in a budget neutral manner, has adversely impacted the entire home health market leading to 5.3% plunge in Amedisys’s share price on yesterday's close.
The Quarter in Detail
Within the company's Home Health division, net service revenues totaled $275.5 million (up 11.2%) in the second quarter. Medicare revenues of $208.4 million improved 10.6% year over year while non-Medicare revenues climbed 12.8% to $67.1 million.
Same store Medicare fee for service admissions grew at a rate of 4.1% with 5.3% growth in total episodic admissions.
Within the Hospice division, net service revenues grossed $75.8 million (up 14.3% year over year), including Medicare revenues of $71.3 million (up 14.1%) and non-Medicare revenues of $4.5 million (up 18.4%).
The company reported a 2514 basis point (bps) expansion in gross margin to 42.8% in the second quarter on a 178.7% surge in gross profit. Expense on salaries and benefits scaled up 8.6% to $77.3 million. Other expenses also increased 8.2% to $45.6 million. Adjusted operating income of $31.3 million in the reported quarter reflects a huge improvement from the year-ago adjusted operating loss of $58 million.
AMEDISYS INC Price, Consensus and EPS Surprise
AMEDISYS INC Price, Consensus and EPS Surprise | AMEDISYS INC Quote
Amedisys exited the second quarter of 2016 with cash and cash equivalents of $9.9 million compared with $7.8 million at the end of the first quarter. The company's long-term obligations (excluding current portion) were $89.5 million, marginally down from $90.5 million at the end of the first quarter. Year-to-date net operating cash flow was $26.9 million compared with $57 million in the year-ago period.
Our Take
Amedisys ended the second quarter of 2016 on a promising note with earnings and revenues both ahead of the respective Zacks Consensus Estimate. In Home Health, the company continued to generate strong organic growth in Medicare and non-Medicare revenues. Amedisys currently focuses on three priorities – clinical distinction, driving organic and inorganic growth, realizing operational efficiencies and becoming an employer of choice. The company’s strong cash balance position further bolsters our confidence in the stock.
However, the recent proposed rule for Home Health in 2017 by CMS which includes a shift to a budget neutral plan for reimbursement, may affect the company’s growth graph adversely.
Zacks Rank
Currently, Amedisys has a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical sector include Almost Family Inc. , BioScrip, Inc. and AmSurg Corp. . All the three stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>