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Can Home Health Growth Support Amedisys' (AMED) Q2 Earnings?

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Amedisys, Inc. (AMED - Free Report) is scheduled to report second-quarter 2019 results, after market close on Jul 30.

In the last reported quarter, the company’s earnings per share surpassed the Zacks Consensus Estimate by 23.4%. Moreover, the company delivered a positive surprise in three of the trailing four quarters, the average beat being 16.55%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

We are upbeat about solid contributions from the company’s business lines, such as Home Health, Hospice and Personal Care in the upcoming quarterly results. In the first quarter, the company generated around 66% of total revenues from Home Health.

Amedisys, Inc. Price and EPS Surprise

Amedisys, Inc. Price and EPS Surprise

Amedisys, Inc. price-eps-surprise | Amedisys, Inc. Quote

Within Home Health, in the second quarter, the company is expected to boost same-store volumes via increased admissions and re-certifications. Amedisys also continues to focus on Medicare fee for service growth, which has been rising over the last few quarters. PPS (prospective payment system) has also continued to demonstrate strong growth in revenue per episode, led by higheracuity levels of patients.

Banking on its quality rating, increased employment of business development staff, analytical means and innovative payment models, the company expects to maintain the growth trajectory in the second quarter.

Meanwhile, the Hospice segment (generating nearly 30% of the company’s total revenues)is registering significant growth of late. The company is currently focusing on expanding its hospice assets by means of tuck-in acquisitions and big deals. Its buyout of hospice care provider — RoseRock Healthcare — in April should be worth mentioning here. Oklahoma-based RoseRock Healthcare provides specialized hospice care to roughly 200 patients on a daily basis in the northeastern part. The transaction is expected to contribute to the company’s second-quarter hospice revenues.

The Hospice growth is quantified by its current average daily census (ADC). In the last reported quarter, ADC grew 8% while admissions were up 5%. Based on the recent developments, we expect second-quarter results to show both organic and inorganic improvements in the business.

Amedisys’ Personal Care business is living up to expectations in terms of stability and performance. The company is working to fortify its Personal Care business’ geographical presence through inorganic expansion. It is effecting tuck-in acquisitions like Bring Care Home, East Tennessee Personal Care Services and Intercity. According to the company, these buyouts will bolster its personal care footprint outside Massachusetts and Florida. We expect these integrations to aid Amedisys’ second-quarter top line significantly.

Here’s What Our Quantitative Model Predicts

The proven Zacks model clearly indicates that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chances of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Amedisys sports a Zacks Rank of 1, which increases the predictive power of ESP. Further, its Earnings ESP of +1.91% in the combination significantly raises its chances of an earnings beat this reporting cycle.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering from the broader medical space as these too comprise the right mix of elements to outpace expectations this earnings season.

DENTSPLY SIRONA (XRAY - Free Report) has an Earnings ESP of +6.95% and is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher Scientific Inc. (TMO - Free Report) has an Earnings ESP of +0.54% and a Zacks Rank #3.

Stryker Corporation (SYK - Free Report) has an Earnings ESP of +0.24% and a Zacks Rank #2.

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