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Amedisys (AMED) Up 7.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Amedisys (AMED - Free Report) . Shares have added about 7.5% in that time frame, outperforming 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 Gains Ground On Strength in Medicare Arm in Q3

Amedisys reported earnings per share (EPS) of 95 cents in the third quarter of 2018, up 69.6% from the year-ago 56 cents. The bottom line also beat the Zacks Consensus Estimate of 77 cents by 23.4%.

Net service revenues grossed $417.3 million, up 11.7% year over year. Moreover, the top line beat the Zacks Consensus Estimate by 1.7%.

Quarter in Detail

Within the company's Home Health division, net service revenues totaled $294.9 million in the third quarter, reflecting an 11.7% improvement year over year. Medicare revenues of $208 million rose 8.7% year over year while non-Medicare revenues improved 19.5% year over year to $86.9 million.

Within the Hospice division, net service revenues grossed $103.4 million (up 7.8% year over year), including Medicare revenues of $98 million (up 7.2%) and non-Medicare revenues of $5.4 million (up 20%).

Additionally, the company integrated two additional operating segments within its business, namely, Personal Care and Corporate. At Personal Care, net service revenues totaled $19 million, representing a 38.7% surge from the year-ago number. Meanwhile, the Corporate segment did not register any revenue in the third quarter.

Gross margin expanded 100 basis points (bps) to 40.2% in the quarter under review on a 14.5% gain in gross profit. Expense on salaries and benefits rose 3% to $79.4 million. Other expenses rose 5.5% to $40.3 million. Adjusted operating income of $47.9 million in the reported quarter reflects a 54% rise from the year-ago tally. Adjusted operating margin expanded 320 bps to 11.5% from the year-ago figure.

Amedisys exited the third quarter of 2018 with cash and cash equivalents of $14 million compared with $25.9 million at the end of the second quarter. The company's long-term obligations (excluding current portion) were $54.9 million at the end of the third quarter compared with $123.9 million at the end of the second quarter. Net cash provided by operating activities was $159.5 million for the nine months ending Sep 30, 2018, compared with $73.5 million in the year-ago quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

Currently, Amedisys has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Amedisys has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.




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