Amedisys Inc (AMED)

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Q3 2016 Earnings Conference Call

November 4, 2016 11:00 AM ET


Scott Ginn - Senior Vice President of Accounting and Controller

Paul Kusserow - President and Chief Executive Officer

Ronnie LaBorde - Vice Chairman and Chief Financial Officer

Steve Seim - Head of Strategy

Michael North - Senior Vice President of Operations and Interim Chief Information Officer


Brian Tanquilut - Jefferies & Company, Inc.

Frank Morgan - RBC Capital Markets

Sheryl Skolnick - Mizuho Securities USA Inc.

Ryan Halsted - Wells Fargo Securities, LLC



Greetings and welcome to the Amedisys Third Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. And interactive question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being record.

I would now like to turn the conference over to your host, Mr. Scott Ginn, Senior Vice President of Finance and Accounting. Thank you. You may begin.

Scott Ginn

Thank you, Matt. Welcome to the Amedisys investor conference call to discuss the results of the third quarter ended September 30, 2016. A copy of our press release, supplemental slides and related Form 8-K filing with the SEC are available on the Investor Relations page on our website.

Speaking on today’s call from Amedisys will be Paul Kusserow, President and Chief Executive Officer; and Ronnie LaBorde, Vice Chairman and Chief Financial Officer.

Before we get started with our call, I’d like to remind everyone that statements made on this conference call today may constitute forward-looking statements and are protected under the Safe Harbor of the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Amedisys today. The Company assumes no obligation to update information provided on this call to reflect subsequent events, other than as required under applicable securities laws.

These forward-looking statements may involve a number of risks and uncertainties which may cause the Company’s results or actual outcomes to differ materially from such statements. These risks and uncertainties include factors detailed in our SEC filings including our Forms 10-K, 10-Q and 8-K.

In addition, as required by SEC Regulation G, a reconciliation of any non-GAAP measures mentioned during our call today to the most comparable GAAP measures will be available on our website on the Investor Relations page under the tab Financial Reports, Non-GAAP. Thank you.

And now, I will turn the call over to Paul Kusserow.

Paul Kusserow

Thank you, Scott. Hello everyone and welcome to the Amedisys third quarter conference call. All in all this was a mixed quarter for Amedisys. One which drew lots of challenges at us and where as the whole we responded well. Many of the issues we dealt with were self-induced transformative changes like the HomeCare HomeBase implementation. Some were environmental.

The heavy flooding that impacted a number of our employees at our Baton Rouge headquarters and care centers in the area. The key to a good company though is how well it responds and gets on top of change. And I'm satisfied with our responses and reactions. And I continue to be very optimistic about our future.

With that backdrop let's turn to our operational performance. During the quarter Amedisys reported revenue of $362 million, up 11% year-over-year. Adjusted EBITDA was $26 million and adjusted EPS was $0.36. Home Health generated $269 million of revenue and segment level EBITDA of $32 million. Hospice generated $82 million of revenue on continued strong growth and segment level EBITDA of $21 million.

Finally, our personal care business segment recorded impressive same-store growth of 8% in billable hours for the quarter. I’ve discussed in our earnings preannouncement last week we faced some challenges in the quarter with respect to Home Health growth particularly in August. We also saw higher than anticipated health insurance cost and increased bad debt expenses largely due to the platform transfer from AMS2 to HomeCare HomeBase.

Hospice and personal care exceeded growth targets for the quarter and continued their strong performance. Home Health growth was challenging, Home Health was in the depths of the HomeCare HomeBase implementation and disruption was at its peak during August. The disastrous flooding in Baton Rouge only acerbated these issues and with over 30% of our employees homes flooded in the area.

Adjusting for closures caused by Hurricane Matthew and some HomeCare HomeBase disruption October growth looks to be recovering to the levels we have seen in the first and second quarter. On Monday our last group of care centers went live on HomeCare HomeBase. The completion of an accelerated implementation timeline where we trained over 11,000 employees on the new system over a period of 15 months. This was an exhaustive but necessary effort and I am extremely proud the team for managing through this change.

Our implementation teams led by Mike North, [Dion Graham and Christi Covington] have performed tremendously. Based on past experience we should be clear of operational disruption as our last group of care centers finished post implementation mid-way through the first quarter of 2017. While we are managing through this disruption, we are seeing encouraging signs in several areas of our businesses.

As I mentioned, Hospice is performing well, delivering double-digit same-store admissions growth for the sixth straight quarter. Revenue is up 12% year-over-year and average daily census topped 6,000 for the quarter. The regulatory environment is favorable as well so we are encouraged by our prospects here.

Our new personal care business unit is thriving in Massachusetts and we integrated our Professional Profiles acquisition in a matter of weeks. We are pursuing additional opportunities for personal care tuck-in acquisitions in the Massachusetts and Southern New England markets and we look to expand this platform in other states, particularly Florida, Tennessee and Pennsylvania where we have a strong Home Health and Hospice presence.

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