December 6, 2024
It has been about a month since the last earnings report for Amedisys (AMED). Shares have lost about 12.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amedisys due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Amedisys reported adjusted earnings per share (EPS) of $1.00 in the third quarter of 2024, up 2% year over year. However, the metric missed the Zacks Consensus Estimate by 12.3%.
The quarter’s adjustments include certain merger-related expenses and other (income)/expenses, net.
GAAP EPS was 51 cents compared with 79 cents in the corresponding period of 2023.
Net service revenues totaled $587.7 million, up 5.7% year over year. The top line missed the Zacks Consensus Estimate marginally by 0.1%.
Net service revenues from the Home Health division totaled $372.1 million, up 5.8% year over year.
Within the segment, Medicare revenues of $212.1 million decreased 2.7% year over year. Non-Medicare revenues improved 19.7% year over year to $160 million.
Within the Hospice division, net service revenues were $207.9 million (up 3.8% year over year), including Medicare revenues of $197.8 million (up 4.7%) and non-Medicare revenues of $10.1 million (down 10.6%).
The High Acuity Care segment reported net service revenues of $7.7 million compared with $4.4 million in the year-ago quarter. The Corporate segment did not register any recognizable revenues in the third quarter.
The company's gross profit climbed 2.2% to $250.1 million in the quarter under review. However, the gross margin fell 142 basis points (bps) to 42.6% due to an 8.3% increase in the cost of services (including depreciation).
SG&A expenses on salaries and benefits rose 4.4% to $134.8 million. Other expenses fell 0.9% to $56.8 million. The adjusted operating profit amounted to $58.5 million, up 0.4% from the year-ago level. The adjusted operating margin contracted 52 bps to 9.9% from the prior-year figure.
Amedisys exited the third quarter with cash and cash equivalents of $245.4 million compared with $149.9 million at the end of the second quarter of 2024. The company's long-term obligations (excluding the current portion) totaled $344.4 million at the end of the third quarter of 2024 compared with $351.4 million at the end of the second quarter.
Cumulative net cash provided by operating activities at the end of the third quarter was $151.4 million compared with $76.9 million a year ago.
Amedisys’ impending merger with UnitedHealth Group’s Optum, announced in June 2023, brings together two organizations dedicated to providing compassionate, value-based, comprehensive care to patients and their families. The deal is expected to be closed in the second half of 2024.
On June 28, 2024, Amedisys, UnitedHealth Group and certain of their respective subsidiaries entered into a purchase agreement and agreements relating to the sale of certain Amedisys home health care centers and certain UnitedHealth Group care centers to VCG Luna, LLC, an affiliate of VitalCaring. The divestiture is subject to several conditions, including the successful closing of the merger.
It turns out, estimates revision have trended downward during the past month.
Currently, Amedisys has an average Growth Score of C, though it is lagging a bit on the Momentum Score 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Amedisys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Amedisys belongs to the Zacks Medical - Outpatient and Home Healthcare industry. Another stock from the same industry, Chemed (CHE), has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
Chemed reported revenues of $606.18 million in the last reported quarter, representing a year-over-year change of +7.4%. EPS of $5.64 for the same period compares with $5.32 a year ago.
Chemed is expected to post earnings of $6.79 per share for the current quarter, representing a year-over-year change of +2.9%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Chemed. Also, the stock has a VGM Score of D.
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