A month has gone by since the last earnings report for Envision Healthcare Corporation . Shares have added about 4.6% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is EVHC 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.
Envision Healthcare Q4 Earnings Beat, Revenues Rise
Envision Healthcare reported fourth-quarter earnings of 59 cents per share that beat the Zacks Consensus Estimate by 18%. Earnings significantly declined from $1.08 reported in the year-ago quarter, due to high operating expense.
Adjusted EBITDA for the fourth quarter came at $211.4 million, up 14.8% year over year.
The company reported net revenues of $2 billion, which beat the Zacks Consensus Estimate by 1% and improved 68% year over year.
The company incurred a net benefit of approximately $600 million from a reduction of deferred tax liabilities from the Tax Reform Act as well as a non-cash impairment charge of $500 million in goodwill reduction in its Physician Services segment.
Total operating expenses of $2.36 billion increased 82.7% year over year, due to higher salaries and benefits, insurance expenses and depreciation & amortization expenses.
Favorable Segment Performance
Net revenues from the segment were $1.67 billion, reflecting an increase of 8.3% year over year. The revenue growth was driven by 8.6% contribution from acquisitions and 0.4% from same contracts.
Adjusted EBITDA was $133.1 million, up 10.5% year over year.
Net revenues were $333.1 million, up nearly 2% year over year, led by procedure volume growth.
For the reported quarter, adjusted EBITDA was $78.3 million, up 23.1% year over year thanks to a $7.7 million favorable legal settlement.
Envision Healthcare had cash and cash equivalents of $312.2 million, down 1.4% year over year.
Total long-term debt increased 8.2% year over year to $6.26 billion as of Dec 31, 2017.
The company’s ratio of total net debt to trailing 12-month EBITDA on Dec 31, 2017 as calculated under its credit agreement was 4.6 times.
Net cash provided by operating activities was $236.4 million as of Dec 31, 2017, up from $68.8 million as of Dec 31, 2016.
First-Quarter 2018 Guidance
The company expects adjusted EPS within the range of 61 cents and 67 cents and adjusted EBITDA in the band of $195-$205 million.
Full-Year 2018 Guidance
The company expects net revenues in the range of $8.35 to $8.53 billion, adjusted EBIDTA of $960 million to $1 billion and adjusted EPS between $3.46 and $3.70.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to four lower.
At this time, EVHC has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, EVHC has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.