Back to top

Image: Bigstock

Amedisys (AMED) Q2 Earnings Top Estimates, Margins Decline

Read MoreHide Full Article

Amedisys, Inc. (AMED - Free Report) reported adjusted earnings per share (EPS) of $1.21 in the second quarter of 2019, showing a 21% jump from the year-ago figure. The bottom line also beat the Zacks Consensus Estimate of 97 cents by 24.7%.

Also, net service revenues grossed $492.9 million, up 19.8% year over year. Moreover, the top line beat the Zacks Consensus Estimate by 0.4%.

Quarter in Detail

Within the company's Home Health division, net service revenues totaled $318.6 million in the quarter, reflecting a 9.3% improvement year over year. Moreover, Medicare revenues of $219.1 million rose 6.2% year over year while non-Medicare revenues improved 16.8% to $99.5 million.

Within the Hospice division, net service revenues grossed $153.2 million (up 51.1% year over year) including Medicare revenues of $145.8 million (up 50.5%) and non-Medicare revenues of $7.4 million (up 64.4%).

Amedisys, Inc. Price, Consensus and EPS Surprise

Amedisys, Inc. Price, Consensus and EPS Surprise

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

The company integrated two additional operating segments within its business, namely, Personal Care and Corporate. At Personal Care, net service revenues totaled $21.2 million, representing a 13.4% rise from the year-ago number. Meanwhile, the Corporate segment did not register any revenues in the second quarter.

Margins

Gross margin dipped 5 basis points (bps) to 41 % in the quarter under review. Further, expense on salaries and benefits rose 27.4% to $98.4 million. Other expenses rose 14.9% to $48.4 million as well. Although adjusted operating profit of $55.5 million in the reported quarter reflects an 11.6% rise from the year-ago tally, adjusted operating margin contracted 83 bps to 11.3% from the prior year.

Cash Position

Amedisys exited second-quarter 2019 with cash and cash equivalents of $13.9 million compared with $10.6 million at the end of the first quarter. The company's long-term obligations (excluding current portion) were $266.5 million at the end of the quarter compared with $303.7 million at the end of the first quarter. Year-to-date net cash provided by operating activities was $79.3 million compared with $90.9 million a year ago.

Our Take

Amedisys ended the second quarter on a promising note. At the Home Health and Hospice divisions, the company witnessed solid year-over-year growth in Medicare and non-Medicare revenues. Amedisys is currently exploring opportunities in these segments. We are also impressed by the company’s solid performance in the recently-launched Personal Care segment.  A favorable demographic trend and strategic acquisitions also bode well.

However, an intense competitive landscape and regulatory concerns pose challenges to the home health and hospice industry. Escalating costs and expenses too are putting pressure on the margins.

Zacks Rank and Other Key Picks

Amedisys currently sports a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks having reported solid results this earnings season are Stryker Corporation (SYK - Free Report) , Baxter International Inc. (BAX - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .

Stryker delivered second-quarter 2019 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by 2.6%. Further, revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Baxter delivered second-quarter 2019 adjusted earnings of 89 cents per share, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Additionally, revenues of $2.84 billion outpaced the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company has a Zacks Rank of 2.

Intuitive Surgical reported second-quarter 2019 adjusted earnings per share of $3.25, which beat the Zacks Consensus Estimate of $2.85. Also revenues of $1.1 billion surpassed the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank of 1.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>