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Amedisys (AMED) Up 17% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Amedisys, Inc. (AMED - Free Report) . Shares have added about 17% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is AMED 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 catalysts.

Recent Earnings

Amedisys reported earnings per share (EPS) of 79 cents in the first quarter of 2018, up 68.1% from the year-ago adjusted EPS of 47 cents. The bottom line also remained well ahead of the Zacks Consensus Estimate of 66 cents.

First-quarter net service revenues grossed $399.3 million, up 9.5% year over year. The top line also beat the Zacks Consensus Estimate of $397 million.

Quarter in Detail

Within the company's Home Health division, net service revenues totaled $284.1 million in the first quarter, reflecting a 6.2% improvement year over year. Medicare revenues of $205 million rose 3.2% year over year while non-Medicare revenues improved 14.8% year over year to $79.1 million.

Within the Hospice division, net service revenues grossed $97.3 million (up 16.4% year over year) including Medicare revenues of $91.8 million (up 13.8%) and non-Medicare revenues of $5.5 million (up 89.7%).

Recently, the company integrated two additional operating segments within its business, namely Personal Care and Corporate. At Personal Care, net service revenues totaled $17.9 million, representing a 32.6% increase from the year-ago number. Meanwhile, the Corporate segment did not register any revenues till the end of the first quarter.

The company’s gross margin contracted 36 basis points (bps) to 40.3% in the quarter under review despite an 8.5% climb in gross profit. Expense on salaries and benefits inched up 1.6% to $75.6 million. Other expenses rose 3.1% to $41.7 million. Adjusted operating income of $43.6 million in the reported quarter reflects a surge of 30.4% from the year-ago tally. Adjusted operating margin expanded 176 bps to 10.9% from the year-ago figure.

Amedisys exited the first quarter of 2018 with cash and cash equivalents of $120 million compared with $86.3 million at the end of 2017. The company's long-term obligations (excluding current portion) were $75.8 million at the end of the first quarter, down from $78.2 million as of Dec 31, 2017. Net cash provided by operating activities in the first three months of 2018 was $40.3 million compared with $27.1 million in the year-ago period.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. There have been four revisions higher for the current quarter.

Amedisys, Inc. Price and Consensus

VGM Scores

At this time, AMED has a strong Growth Score of A, though it is lagging a lot 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 A. 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 growth investors than value investors.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise AMED has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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