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Amedisys (AMED) Q2 Earnings Top Estimates, Gross Margin Down
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Amedisys, Inc. (AMED - Free Report) reported adjusted earnings per share (EPS) of $1.32 in the second quarter of 2024, down 3.6% year over year. However, the metric beat the Zacks Consensus Estimate by 8.2%.
The quarter’s adjustments include certain merger-related expenses and other (income)/expenses, net.
GAAP EPS in the second quarter was 98 cents compared to a loss of $2.46 in the same period last year.
Net service revenues totaled $591.2 million, up 6.9% year over year. The top line surpassed the Zacks Consensus Estimate by 2.1%.
Segments in Detail
Net service revenues from the Home Health division totaled $377.4 million in the quarter, up 7.9% year over year.
Within the segment, Medicare revenues of $216.1 million decreased by 1.7% year over year. Non-Medicare revenues improved by 24.1% year over year to $161.3 million.
Within the Hospice division, net service revenues were $204 million (up 2.4% year over year), including Medicare revenues of $193.7 million (up 2.9%) and non-Medicare revenues of $10.3 million (down 6.4%).
The High Acuity Care segment reported net service revenues of $9.8 million in the second quarter compared with $4 million in the year-ago quarter. The Corporate segment did not register any recognizable revenues in the second quarter.
Margins
The company's gross profit climbed 3.4% to $264.3 million in the quarter under review. However, the gross margin fell 151 basis points (bps) to 44.7% on a 9.9% increase in the cost of services (inclusive of depreciation).
SG&A expenses on salaries and benefits rose 3% to $129.3 million. Other expenses fell 2.3% to $58 million. The adjusted operating profit amounted to $77.3 million, up 8.8% from the year-ago quarter’s levels. The adjusted operating margin improved 23 bps to 13.1% from the prior-year quarter’s level.
Liquidity and Cash Position
Amedisys exited the second quarter with cash and cash equivalents of $149.9 million compared with $108.2 million at the end of the first quarter of 2024. The company's long-term obligations (excluding the current portion) were $351.4 million at the end of the second quarter of 2024 compared with $356.1 million at the first quarter-end.
Cumulative net cash provided by operating activities at the end of the second quarter was $45.8 million compared with $86.7 million a year ago.
Developments on the Pending Merger
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 close in the second half of 2024.
On Jun 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 contingent on several conditions, including the successful closing of the merger.
Our Take
Amedisys ended the second quarter of 2024 with both earnings and revenues surpassing estimates. Home Health service revenues benefitted from total volume growth as well as both Medicare and per-visit rate increases. An increase in the average daily census supported the Hospice segment’s revenue growth, which also gained from an increase in reimbursement (effective Oct 1, 2023). Furthermore, the operating margin expanded in the quarter, which bodes well for the stock.
On the flip side, Amedisys’ bottom line plunged in the quarter. The cost of services in the Hospice and Home Health segments rose mainly due to planned wage increases, wage inflation, investments in hospice clinical staffing and an increase in health insurance costs.
Zacks Rank and Key Picks
Amedisys currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgical reported a second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy), reported second-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an estimated earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.
Quest Diagnostics, carrying a Zacks Rank #2, reported a second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.
DGX’s historical five-year earnings growth rate of 7.4% compared favorably with the industry’s 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.
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Amedisys (AMED) Q2 Earnings Top Estimates, Gross Margin Down
Amedisys, Inc. (AMED - Free Report) reported adjusted earnings per share (EPS) of $1.32 in the second quarter of 2024, down 3.6% year over year. However, the metric beat the Zacks Consensus Estimate by 8.2%.
The quarter’s adjustments include certain merger-related expenses and other (income)/expenses, net.
GAAP EPS in the second quarter was 98 cents compared to a loss of $2.46 in the same period last year.
Net service revenues totaled $591.2 million, up 6.9% year over year. The top line surpassed the Zacks Consensus Estimate by 2.1%.
Segments in Detail
Net service revenues from the Home Health division totaled $377.4 million in the quarter, up 7.9% year over year.
Within the segment, Medicare revenues of $216.1 million decreased by 1.7% year over year. Non-Medicare revenues improved by 24.1% year over year to $161.3 million.
Amedisys, Inc. Price, Consensus and EPS Surprise
Amedisys, Inc. price-consensus-eps-surprise-chart | Amedisys, Inc. Quote
Within the Hospice division, net service revenues were $204 million (up 2.4% year over year), including Medicare revenues of $193.7 million (up 2.9%) and non-Medicare revenues of $10.3 million (down 6.4%).
The High Acuity Care segment reported net service revenues of $9.8 million in the second quarter compared with $4 million in the year-ago quarter. The Corporate segment did not register any recognizable revenues in the second quarter.
Margins
The company's gross profit climbed 3.4% to $264.3 million in the quarter under review. However, the gross margin fell 151 basis points (bps) to 44.7% on a 9.9% increase in the cost of services (inclusive of depreciation).
SG&A expenses on salaries and benefits rose 3% to $129.3 million. Other expenses fell 2.3% to $58 million. The adjusted operating profit amounted to $77.3 million, up 8.8% from the year-ago quarter’s levels. The adjusted operating margin improved 23 bps to 13.1% from the prior-year quarter’s level.
Liquidity and Cash Position
Amedisys exited the second quarter with cash and cash equivalents of $149.9 million compared with $108.2 million at the end of the first quarter of 2024. The company's long-term obligations (excluding the current portion) were $351.4 million at the end of the second quarter of 2024 compared with $356.1 million at the first quarter-end.
Cumulative net cash provided by operating activities at the end of the second quarter was $45.8 million compared with $86.7 million a year ago.
Developments on the Pending Merger
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 close in the second half of 2024.
On Jun 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 contingent on several conditions, including the successful closing of the merger.
Our Take
Amedisys ended the second quarter of 2024 with both earnings and revenues surpassing estimates. Home Health service revenues benefitted from total volume growth as well as both Medicare and per-visit rate increases. An increase in the average daily census supported the Hospice segment’s revenue growth, which also gained from an increase in reimbursement (effective Oct 1, 2023). Furthermore, the operating margin expanded in the quarter, which bodes well for the stock.
On the flip side, Amedisys’ bottom line plunged in the quarter. The cost of services in the Hospice and Home Health segments rose mainly due to planned wage increases, wage inflation, investments in hospice clinical staffing and an increase in health insurance costs.
Zacks Rank and Key Picks
Amedisys currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgical reported a second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy), reported second-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an estimated earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.
Quest Diagnostics, carrying a Zacks Rank #2, reported a second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.
DGX’s historical five-year earnings growth rate of 7.4% compared favorably with the industry’s 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.