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Amedisys (AMED) Q3 Earnings Beat Estimates, Revenues Meet

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Amedisys, Inc. (AMED - Free Report) reported adjusted earnings per share (EPS) of $1.15 in the third quarter of 2019, up 21.1% from the year-ago figure. The bottom line also beat the Zacks Consensus Estimate of 97 cents by 27.8%.

Net service revenues grossed $494.6 million, up 18.5% year over year. Meanwhile, the top line marginally matched the Zacks Consensus Estimate.

Quarter in Detail

Within the company's Home Health division, net service revenues totaled $311.5 million in the quarter, reflecting a 5.6% improvement year over year. Moreover, Medicare revenues of $211.5 million rose a mere 2% year over year, driven by lowered Medicare recertification rate and an increase in price concessions. Non-Medicare revenues improved 15.1% to $100 million.

Within the Hospice division, net service revenues were $162.4 million (up 57.1% year over year) including Medicare revenues of $153.5 million (up 56.7%) and non-Medicare revenues of $8.9 million (up 64.8%).

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 recently integrated two additional operating segments within its business, namely, Personal Care and Corporate. At Personal Care, net service revenues totaled $20.7 million, representing an 8.9% rise from the year-ago number. Meanwhile, the Corporate segment did not register any revenues in the third quarter.

Margins

Gross margin expanded 147 basis points (bps) to 41.6% in the quarter under review. Further, expense on salaries and benefits rose 25.9% to $99.9 million. Other expenses increased 20.2% to $48.5 million as well. Meanwhile, adjusted operating profit of $57.5 million reflects a 20.1% rise from the year-ago tally. Adjusted operating margin also expanded 15 bps to 11.6% from the prior-year level.

Cash Position

Amedisys exited the September quarter with cash and cash equivalents of $20.7 million compared with $13.9 million at the end of the second quarter. The company's long-term obligations (excluding current portion) were $231.6 million at the end of the third quarter compared with $266.5 million at the end of the second quarter. However, year-to-date net cash provided by operating activities was $126.8 million compared with $159.5 million a year ago.

Our Take

Amedisys ended the third 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 concerns.

Zacks Rank and Other Key Picks

Amedisys currently sports a Zacks Rank #1 (Strong Buy). Some other top-ranked stocks, which posted solid results this earnings season are Edwards Lifesciences (EW - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and ResMed Inc. (RMD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Third-quarter net sales of $1.09 billion also surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which topped the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion trumped the Zacks Consensus Estimate by 1.3% as well.

ResMed reported first-quarter fiscal 2020 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Moreover, revenues of $681.1 million exceeded the Zacks Consensus Estimate by 3.6%.

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