A month has gone by since the last earnings report for Envision Healthcare (EVHC). Shares have added about 1.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Envision Healthcare due for a pullback? 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 drivers.
Envision Healthcare Q2 Earnings Beat Estimates
Envision Healthcare Corporation came up with quarterly earnings of 86 cents per share, beating the Zacks Consensus Estimate by 4.9%. This compares to earnings of 79 cents per share a year ago.
Envision Healthcare posted revenues of $2.07 billion, missing the Zacks Consensus Estimate by 1.07% but increasing 6.1% year over year.
Better-than-expected earnings were driven by revenue growth at both the company's Physicians Services and Ambulatory Services segments.
Adjusted EBITDA for the second quarter came at $246.7 million, down 2.8% year over year.
Total operating expenses of $3.9 billion increased 122% year over year, due to $2 billion of impairment charges incurred in the quarter compared with nothing incurred in the year-ago quarter.
Strong Segment Performance
Net revenues from the segment were $1.74 billion, reflecting an increase of 7.1% year over year. The revenue growth was driven by 4.7% contribution from acquisitions and 1.2% each from same and new contracts.
Adjusted EBITDA was $182.4 million, down 5.6% year over year. The segment's results were impacted by higher-than-anticipated malpractice expense related to both settlement of prior-year claims as well as increased accruals for claims related to those same periods.
Net revenues were $328 million, up 3% year over year, led by volume and rate growth.
For the reported quarter, adjusted EBITDA was $64.3 million, up 6.1% year over year.
Envision Healthcare had cash and cash equivalents of $593.5 million, up 90% from the year-end 2017 level.
At Jun 30, 2018, Envision had total debt outstanding of $4.72 billion. The company's ratio of total net debt to EBIDTA ratio was 4.5 times at the end of second-quarter 2018.
Net cash provided by operating activities was $24.7 million as of Jun 30, 2018, down from $378.8 million as of Jun 30, 2017.
During the quarter, the company invested $69.0 million in acquisitions, and maintenance capital expenditures were $33.5 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, Envision Healthcare has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Envision Healthcare has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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