Louisiana-based home health and hospice care provider
) reported adjusted earnings from continuing operations of 25 cents
per share in the second quarter of 2014, an impressive 38.9% rise
year over year. Adjusted earnings also steered past the Zacks
Consensus Estimate by 8 cents or 47.1%. Per management, operational
improvement primarily benefited the quarter's earnings.
Barring any adjustment, the company's reported earnings came in
at 23 cents a share, reflecting a significant improvement from net
earnings of 6 cents per share in the year-ago period.
Following Amedisys' promising earnings announcement, the
company's stock price surged 21.3% to eventually close at $19.49 on
Amedisys, Inc - Earnings Surprise |
Quarter in Detail
Amedisys primarily derives revenues from its home health and
hospice agencies. Second-quarter 2014 net service revenues grossed
$305 million, down 3.5% year over year. However, the top line
exceeded the Zacks Consensus Estimate of $301 million.
Within the company's Home Health division, net service revenues
totaled $243.5 million (down 2.8% year over year) with Medicare
revenues of $191.5 million and non-Medicare revenues of $52.0
Within the Hospice division, net service revenues reached $61.5
million (down 6.0% year over year) including Medicare revenues of
$57.7 million and non-Medicare revenues of $3.8 million.
The company reported a 30 basis points (bps) contraction in
gross margin to 43.4% in the reported quarter. Expenses on salaries
and benefits declined 4.8% to $71.4 million, while other expenses
fell 14.2% to $35.5 million. Amedisys posted adjusted operating
income of $25.5 million in the reported quarter, up 17.2% from the
adjusted operating income of $21.8 million in the prior year
Amedisys exited the quarter with cash and cash equivalents of
$11.2 million compared with $30.1 million at the end of
second-quarter 2013. The company's long-term obligations (excluding
current portion) were $132.0 million versus $33.0 million at
year-end 2013. Net cash used in operating activities in the quarter
was $89.1 million, compared to $33.6 million of net operating cash
flow in the year-ago quarter.
Amedisys recorded an encouraging quarter with both its top and
bottom line exceeding the respective Zacks Consensus Estimates. The
company also observed a solid 12.9% improvement in its adjusted
EBITDA of $22.1 million, which (per management) reflects a positive
step forward with respect to the industry-level margins. However,
the fact that Amedisys provided no guidance for the current fiscal
might have negated the positives to some extent.
The company delivered strong performance in its Home Health
segment on the back of management's successful initiative of
reducing cost per visit. This was done by shifting more clinicians
to the pay-per-visit model. However, Amedisys failed to generate
positive growth in its Hospice segment. Going forward, we however
believe the company will achieve organic growth in this segment,
owing to its constant effort to revive the Hospice platform with
better cost management. Our belief is also reinforced by the fact
that Hospice has been a relatively consistent performer for
Amedisys contribution-wise over the last few quarters.
Currently, the stock carries a Zacks Rank #1 (Strong Buy). Some
other well-placed Medical-Outpatient/Home Care stocks include
Chemed Corp. (
), HEALTHSOUTH Corp. (
) and AmSurg Corp. (
). While Chemed and HEALTHSOUTH sport a similar Zacks Rank #1,
Amsurg holds a Zacks Rank #2 (Buy).
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