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Amedisys (AMED) Down 5.5% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Amedisys (AMED). Shares have lost about 5.5% 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 Q3 Earnings Beat Estimates, Revenues Fall Y/Y

Amedisys reported adjusted earnings per share (EPS) of $2.24 for third-quarter 2020, up 94.8% from the year-ago figure. The bottom line beat the Zacks Consensus Estimate by 76.4%.

Net service revenues grossed $485.1 million, up 9.9% year over year. The top line surpassed the Zacks Consensus Estimate by 2.1%.

Quarter in Detail

Within the Home Health division, net service revenues totaled $326 million in the quarter, reflecting 4.7% rise year over year. Within this, Medicare revenues of $222.2 million improved 5.1% year over year. Non-Medicare revenues increased 3.8% to $103.8 million.

Within the Hospice division, net service revenues were $199.7 million (up 22.9% year over year), including Medicare revenues of $189 million (up 23.5%) and non-Medicare revenues of $10.7 million (up 20.2%).

The company’s additional operating segments, post integration, are Personal Care and Corporate. At Personal Care, net service revenues totaled $18.4 million, representing a decline of 11.1% from the year-ago number. The Corporate segment did not register any revenues in the third quarter.

Margins

Gross profit for the company improved 19.7% to $246.4 million in the quarter under review. Gross margin expanded 366 basis points (bps) to 45.3%.

Expense on salaries and benefits rose 23.2% to $123.1 million. However, Other expenses increased 1.8% to $49.3 million. Operating profit of $73.9 million reflected a 28.5% improvement from the year-ago figure. Operating margin also expanded 196 bps to 13.6% from the prior-year level.

Cash Position

Amedisys exited the quarter with cash and cash equivalents of $112.9 million compared with $177.3 million at the end of the second quarter of 2020. The company's long-term obligations (excluding current portion) were $300.6 million at the end of the third quarter compared with $392.7 million at the end of second-quarter 2020.

Cumulative net cash provided by operating activities at the end of the third quarter was $223 million compared with $126.8 million a year ago.

2020 Guidance

The company, taking its third-quarter performance into consideration, updated its full-year guidance.

Amedisys currently projects net service revenues within $2.067 billion to $2.072 billion (compared with the earlier-provided range of $2.04-$2.07 billion). The Zacks Consensus Estimate for the same is pegged at $2.30 billion.

Adjusted EPS is anticipated within $6.02-$6.08 (compared with $4.84-$5.06 guided earlier). The Zacks Consensus Estimate for the same is pegged at $4.58.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 6.79% due to these changes.

VGM Scores

At this time, Amedisys has a strong Growth Score of A, a grade with the same score on the momentum front. 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 A. 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. Notably, Amedisys has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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