Amedisys Inc. AMED reported adjusted earnings from continuing operations of 43 cents per share in the second quarter of 2015. The bottom line reflected a massive 72% improvement from the year-ago number and came in 9 cents ahead of the Zacks Consensus Estimate. Better-than-expected sales growth, along with an improved gross margin owing to reduced cost of revenue, was responsible for the impressive earnings outcome during the quarter.
Barring any adjustment, the company's reported earnings of 32 cents a share demonstrated an improvement of 39.1% year over year.
Buoyed by a better-than-expected performance in the second quarter, the stock has rallied 9.1% to reach $44.88 at yesterday’s close.
The Quarter in Detail
Amedisys primarily derives revenues from its home health and hospice agencies. Second-quarter 2015 net service revenues grossed $314.2 million, up 3% year over year. The top line also exceeded the Zacks Consensus Estimate of $306 million.
Within the company's Home Health division, net service revenues totaled $247.8 million (up 1.8% year over year) in the second quarter. While Medicare revenues of $188.3 million declined 1.7% year over year, this was offset by a 14.4% increase in non-Medicare revenues of $59.5 million.
Within the Hospice division, net service revenues grossed $62.5 million (up 8.3% year over year) including Medicare revenues of $62.5 million and non-Medicare revenues of $3.8 million.
The company reported a 63 basis point (bps) expansion in gross margin to 44.1% in the second quarter with a 1.8% decline in cost of service revenues on slight drop in cost per visit. Expense on salaries and benefits edged down 0.2% to $71.2 million. Other expenses increased 18.6% to $42.1 million. Amedisys posted adjusted operating income of $25.1 million in the reported quarter, reflecting a 1.9% decline year over year. Adjusted operating margin contracted 39 bps in the reported quarter.
Amedisys exited the quarter with cash and cash equivalents of $33.2 million compared with $3.1 million as of Mar 31, 2015. The company's long-term obligations (excluding current portion) were $83.5 million, down from $98.4 million at the end of first quarter. Net operating cash flow was $42.6 million, an improvement from $14.5 million at the end of the first quarter.
Our Take
Amedisys reported impressive second-quarter financial results with the top and the bottom line surpassing the respective Zacks Consensus Estimate and improving on a year-over-year basis as well. In Home Health, the company continued to generate strong organic growth in Medicare and non-Medicare revenues. We are also upbeat about the company’s initiative to drive organic growth as well as its search for strategically fit merger and acquisition activities. The company’s declaration about its ongoing restructuring program expected to be cost neutral, also raises investors’ optimism.
Zacks Rank
Currently, the stock carries a Zacks Rank #1 (Strong Buy). Some other well-placed medical stocks are AAC Holdings, Inc. AAC, Chemed Corp. CHE and DaVita HealthCare Partners Inc. DVA. While AAC holds the same Zacks Rank as Amedisys, the other two stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment