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AMED Q3 Earnings and Revenues Miss, Margins Dip, Stock Falls
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Amedisys, Inc. (AMED - Free Report) reported adjusted earnings per share (EPS) of $1.00 in the third quarter of 2024, up 2% year over year. However, the metric missed the Zacks Consensus Estimate by 12.3%.
The quarter’s adjustments include certain merger-related expenses and other (income)/expenses, net.
GAAP EPS was 51 cents compared with 79 cents in the corresponding period of 2023.
Following the earnings announcement, AMED’s shares lost 0.1% to reach $96.71 last Friday.
AMED’s Q3 Revenues
Net service revenues totaled $587.7 million, up 5.7% year over year. The top line missed the Zacks Consensus Estimate marginally by 0.1%.
AMED’s Q3 Segmental Performance
Net service revenues from the Home Health division totaled $372.1 million, up 5.8% year over year.
Within the segment, Medicare revenues of $212.1 million decreased 2.7% year over year. Non-Medicare revenues improved 19.7% year over year to $160 million.
Within the Hospice division, net service revenues were $207.9 million (up 3.8% year over year), including Medicare revenues of $197.8 million (up 4.7%) and non-Medicare revenues of $10.1 million (down 10.6%).
The High Acuity Care segment reported net service revenues of $7.7 million compared with $4.4 million in the year-ago quarter. The Corporate segment did not register any recognizable revenues in the third quarter.
Margins
The company's gross profit climbed 2.2% to $250.1 million in the quarter under review. However, the gross margin fell 142 basis points (bps) to 42.6% due to an 8.3% increase in the cost of services (including depreciation).
SG&A expenses on salaries and benefits rose 4.4% to $134.8 million. Other expenses fell 0.9% to $56.8 million. The adjusted operating profit amounted to $58.5 million, up 0.4% from the year-ago level. The adjusted operating margin contracted 52 bps to 9.9% from the prior-year figure.
AMED’s Q3 Liquidity and Cash Position
Amedisys exited the third quarter with cash and cash equivalents of $245.4 million compared with $149.9 million at the end of the second quarter of 2024. The company's long-term obligations (excluding the current portion) totaled $344.4 million at the end of the third quarter of 2024 compared with $351.4 million at the end of the second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter was $151.4 million compared with $76.9 million a year ago.
Developments on the Pending Merger
Amedisys’ impending merger with UnitedHealth Group’s Optum, announced in June 2023, brings together two organizations dedicated to providing compassionate, value-based, comprehensive care to patients and their families. The deal is expected to be closed in the second half of 2024.
On June 28, 2024, Amedisys, UnitedHealth Group and certain of their respective subsidiaries entered into a purchase agreement and agreements relating to the sale of certain Amedisys home health care centers and certain UnitedHealth Group care centers to VCG Luna, LLC, an affiliate of VitalCaring. The divestiture is subject to several conditions, including the successful closing of the merger.
Amedisys ended the third quarter of 2024 with lower-than-expected results, wherein both earnings and revenues missed estimates. Home Health service revenues benefited from total volume growth as well as Medicare and per-visit rate increases. The Hospice segment’s growth was supported by an increase in reimbursement (effective Oct. 1, 2023) and a slight increase in the average daily census. The High Acuity Care segment achieved its highest total admissions volume since inception during the quarter.
However, the cost of services in the Hospice and Home Health segments rose mainly due to planned wage increases, wage inflation, investments in hospice clinical staffing and an increase in health insurance costs.
On the flip side, the contraction of both margins in the quarter does not bode well for the stock. On a positive note, the company’s bottom line surged in the quarter.
AMED’s Zacks Rank & Key Picks
AMED currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Phibro Animal Health (PAHC - Free Report) , Quest Diagnostics (DGX - Free Report) and HealthEquity (HQY - Free Report) .
Phibro Animal Health reported fourth-quarter fiscal 2024 adjusted earnings of 41 cents per share, which topped the Zacks Consensus Estimate by 20.6%. Revenues of $273.2 million beat the Zacks Consensus Estimate by 4.1%. PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
PAHC’s fiscal 2025 earnings are expected to surge 31.9% compared with the industry’s 11.6% growth. The company’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 4.1%.
Quest Diagnostics reported third-quarter 2024 adjusted earnings of $2.30 per share, which topped the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion beat the consensus mark by 3.4%.
DGX carries a Zacks Rank #2 (Buy) at present. DGX’s 2024 earnings are expected to surge 2.1% year over year. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.
HealthEquity, carrying a Zacks Rank #2 at present, reported a second-quarter fiscal 2025 adjusted earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate by 22.9%. Revenues of $299.9 million topped the Zacks Consensus Estimate by 5.4%.
HQY has an estimated long-term earnings growth rate of 28.2% compared with the industry’s 13.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.8%.
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AMED Q3 Earnings and Revenues Miss, Margins Dip, Stock Falls
Amedisys, Inc. (AMED - Free Report) reported adjusted earnings per share (EPS) of $1.00 in the third quarter of 2024, up 2% year over year. However, the metric missed the Zacks Consensus Estimate by 12.3%.
The quarter’s adjustments include certain merger-related expenses and other (income)/expenses, net.
GAAP EPS was 51 cents compared with 79 cents in the corresponding period of 2023.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the earnings announcement, AMED’s shares lost 0.1% to reach $96.71 last Friday.
AMED’s Q3 Revenues
Net service revenues totaled $587.7 million, up 5.7% year over year. The top line missed the Zacks Consensus Estimate marginally by 0.1%.
AMED’s Q3 Segmental Performance
Net service revenues from the Home Health division totaled $372.1 million, up 5.8% year over year.
Within the segment, Medicare revenues of $212.1 million decreased 2.7% year over year. Non-Medicare revenues improved 19.7% year over year to $160 million.
Within the Hospice division, net service revenues were $207.9 million (up 3.8% year over year), including Medicare revenues of $197.8 million (up 4.7%) and non-Medicare revenues of $10.1 million (down 10.6%).
The High Acuity Care segment reported net service revenues of $7.7 million compared with $4.4 million in the year-ago quarter. The Corporate segment did not register any recognizable revenues in the third quarter.
Margins
The company's gross profit climbed 2.2% to $250.1 million in the quarter under review. However, the gross margin fell 142 basis points (bps) to 42.6% due to an 8.3% increase in the cost of services (including depreciation).
SG&A expenses on salaries and benefits rose 4.4% to $134.8 million. Other expenses fell 0.9% to $56.8 million. The adjusted operating profit amounted to $58.5 million, up 0.4% from the year-ago level. The adjusted operating margin contracted 52 bps to 9.9% from the prior-year figure.
AMED’s Q3 Liquidity and Cash Position
Amedisys exited the third quarter with cash and cash equivalents of $245.4 million compared with $149.9 million at the end of the second quarter of 2024. The company's long-term obligations (excluding the current portion) totaled $344.4 million at the end of the third quarter of 2024 compared with $351.4 million at the end of the second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter was $151.4 million compared with $76.9 million a year ago.
Developments on the Pending Merger
Amedisys’ impending merger with UnitedHealth Group’s Optum, announced in June 2023, brings together two organizations dedicated to providing compassionate, value-based, comprehensive care to patients and their families. The deal is expected to be closed in the second half of 2024.
On June 28, 2024, Amedisys, UnitedHealth Group and certain of their respective subsidiaries entered into a purchase agreement and agreements relating to the sale of certain Amedisys home health care centers and certain UnitedHealth Group care centers to VCG Luna, LLC, an affiliate of VitalCaring. The divestiture is subject to several conditions, including the successful closing of the merger.
Amedisys, Inc. Price, Consensus and EPS Surprise
Amedisys, Inc. price-consensus-eps-surprise-chart | Amedisys, Inc. Quote
Our Take
Amedisys ended the third quarter of 2024 with lower-than-expected results, wherein both earnings and revenues missed estimates. Home Health service revenues benefited from total volume growth as well as Medicare and per-visit rate increases. The Hospice segment’s growth was supported by an increase in reimbursement (effective Oct. 1, 2023) and a slight increase in the average daily census. The High Acuity Care segment achieved its highest total admissions volume since inception during the quarter.
However, the cost of services in the Hospice and Home Health segments rose mainly due to planned wage increases, wage inflation, investments in hospice clinical staffing and an increase in health insurance costs.
On the flip side, the contraction of both margins in the quarter does not bode well for the stock. On a positive note, the company’s bottom line surged in the quarter.
AMED’s Zacks Rank & Key Picks
AMED currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Phibro Animal Health (PAHC - Free Report) , Quest Diagnostics (DGX - Free Report) and HealthEquity (HQY - Free Report) .
Phibro Animal Health reported fourth-quarter fiscal 2024 adjusted earnings of 41 cents per share, which topped the Zacks Consensus Estimate by 20.6%. Revenues of $273.2 million beat the Zacks Consensus Estimate by 4.1%. PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
PAHC’s fiscal 2025 earnings are expected to surge 31.9% compared with the industry’s 11.6% growth. The company’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 4.1%.
Quest Diagnostics reported third-quarter 2024 adjusted earnings of $2.30 per share, which topped the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion beat the consensus mark by 3.4%.
DGX carries a Zacks Rank #2 (Buy) at present. DGX’s 2024 earnings are expected to surge 2.1% year over year. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.3%.
HealthEquity, carrying a Zacks Rank #2 at present, reported a second-quarter fiscal 2025 adjusted earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate by 22.9%. Revenues of $299.9 million topped the Zacks Consensus Estimate by 5.4%.
HQY has an estimated long-term earnings growth rate of 28.2% compared with the industry’s 13.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.8%.