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AMEDISYS INC (AMED)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 revenue was $587.7M (+5.7% YoY), GAAP diluted EPS $0.51, and adjusted EPS $1.00; adjusted EBITDA was $58.1M and consolidated gross margin was 42.9% .
  • Hospice delivered margin expansion (gross margin 48.5%) on net revenue per day up 3.3% YoY, while Home Health grew non-Medicare revenue 20% YoY but saw margin compression from wage inflation and payer mix shift .
  • Operating metrics and cash conversion improved: DSO fell to 44.4 days (from 52.1 in Q2), CFFO was $105.6M, and free cash flow was $95.2M, helped by collections of aged A/R after the Change Healthcare outage .
  • No earnings call due to pending UnitedHealth Group merger; near-term stock narrative centers on regulatory rate tailwinds, improving working capital, and payer mix/wage inflation headwinds .

What Went Well and What Went Wrong

What Went Well

  • Hospice profitability strengthened: gross margin rose to 48.5% and pre-corporate EBITDA to $52.0M, driven by the 2024 rate increase and clinical optimization .
  • Cash flow and DSO improved significantly as aged A/R from the Change Healthcare outage were collected, yielding $105.6M CFFO and DSO of 44.4 days .
  • Quality scores remained industry-leading, with Oct’24 Quality of Patient Care at 4.24 stars and 89% of providers at 4+ stars; 92 care centers won SHPBest awards for 2023 satisfaction .

What Went Wrong

  • Home Health margins compressed: EBITDA margin down 130bps on wage inflation, higher benefits costs, and growth in lower-margin payors; visiting clinician cost per visit increased to $108.09 .
  • GAAP EPS declined to $0.51 (vs $0.79 YoY) due to elevated merger-related G&A ($16.7M in Q3), reducing operating income .
  • High Acuity Care remained loss-making despite admissions growth (873, +51% YoY); segment operating loss was $(6.5)M .

Financial Results

Consolidated: Revenue, EPS, EBITDA, Gross Margin %

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$556.2 $571.4 $591.2 $587.7
GAAP Diluted EPS ($)$0.79 $0.44 $0.98 $0.51
Adjusted EPS ($)$0.98 $1.03 $1.32 $1.00
Adjusted EBITDA ($USD Millions)$57.9 $59.9 $73.2 $58.1
Gross Margin % (Consolidated)44.3% 44.1% 44.7% (GAAP calc from rev/cost) 42.9%

Note: Q2 2024 gross margin computed from reported net service revenue and cost of service .

Segment Net Service Revenue ($USD Millions)

SegmentQ3 2023Q1 2024Q2 2024Q3 2024
Home Health$351.6 $364.0 $377.4 $372.1
Hospice$200.2 $201.0 $204.0 $207.9
High Acuity Care$4.4 $6.4 $9.8 $7.7

Segment Operating Income (Loss) ($USD Millions)

SegmentQ3 2023Q1 2024Q2 2024Q3 2024
Home Health$56.8 $60.8 $67.1 $54.5
Hospice$46.8 $46.9 $49.9 $49.7
High Acuity Care$(7.4) $(6.2) $(2.8) $(6.5)

KPIs

KPIQ3 2023Q1 2024Q2 2024Q3 2024
Home Health Admissions (Units)98,527 112,215 110,188 109,856
Home Health Total Volume (Admissions + Recerts)144,220 156,176 156,358 157,287
Avg Medicare Revenue per Episode ($)$3,015 $2,998 $3,036 $3,021
Home Health Total Cost per Visit ($)$116.20 $116.64 $117.89 $121.52
Hospice Admissions (Units)11,968 12,657 12,124 11,488
Hospice ADC (Units)12,943 12,767 12,968 13,004
Hospice Revenue per Day, net ($)$168.11 $173.04 $172.88 $173.74
Hospice Cost per Day ($)$87.48 $90.16 $88.65 $89.92
High Acuity Care Total Admissions (Units)580 761 832 873
HAC Full-Risk Rev per Episode ($)$10,168 $10,073 $10,124 $9,997
HAC Limited-Risk Rev per Episode ($)$6,242 $5,711 $6,816 $6,623

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Hospice industry rate updateFY2024 (effective 10/1/2023)N/A+3.1% Regulatory update
Home Health industry rate updateFY2024 (effective 1/1/2024)N/A+0.8% Regulatory update
Hospice industry rate updateFY2025 (effective 10/1/2024)N/A+2.9% Regulatory update
Home Health industry rate updateFY2025 (effective 1/1/2025)N/A+0.5% Regulatory update

Note: Amedisys did not hold a Q3 earnings call and did not issue formal revenue/EPS guidance due to the pending merger with UnitedHealth Group .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2024)Trend
Labor cost inflationQ2: Hospice cost/day $88.65 (+4.6% YoY) and HH CPV up vs 2023 . Q1: HH CPV up $6.19 YoY with raises/benefits .HH EBITDA margin −130bps; visiting clinician CPV $108.09; benefits costs higher .Persistent inflationary pressure; margin headwind.
Home Health payer mix shiftQ2: Non‑Medicare HH revenue +24% YoY . Q1: Non‑Medicare +16% YoY .Non‑Medicare +20% YoY; Medicare revenue −3% YoY .Continued shift to lower‑margin payors.
Working capital/DSOQ2: DSO 52.1 days (Change Healthcare impact) . Q1: DSO 54.1 days (outage delayed billing) .DSO improved to 44.4; CFFO $105.6M as aged A/R collected .Recovery and improvement.
Quality metricsQ1: QPC 4.32; 93% providers 4+ stars .Oct’24 QPC 4.24; 89% providers 4+ stars; multiple SHPBest awards .Still industry-leading despite slight QPC decline.
High Acuity Care (Contessa)Q2: Admissions +56% YoY; still loss-making . Q1: Admissions +23% YoY .Admissions +51% YoY; operating loss $(6.5)M; CMS GUIDE Model participation in Aug .Growth continues; strategic model expansion.
Regulatory ratesQ1: 2024 HH +0.8%, Hospice +3.1% .2025 finalized: HH +0.5%, Hospice +2.9% .Modest tailwinds sustained.
Strategic/M&AQ1/Q2: Pending merger with UNH .No earnings call due to pending merger .Transaction remains central narrative.

Management Commentary

  • “Nothing we do is possible without our incredible caregivers... Thanks to our dedicated family of caregivers, Amedisys is truly achieving clinical distinction.” — Scott Ginn, COO & CFO, on SHPBest awards .
  • “CMS is excited to partner with Contessa under the GUIDE Model... envisioning new ways to support... so that more Americans can remain in their homes and communities.” — CMS Administrator Chiquita Brooks‑LaSure .
  • “Through the GUIDE Model, we are able to apply this clinical model for dementia patients and their caregivers to allow this vulnerable population to... achieve a better quality of life.” — Dr. Gavin Baumgardner, Contessa VP/National Medical Director .
  • “In light of the pending merger... Amedisys will not conduct a quarterly earnings call to discuss the third quarter results.” — Company notice (Q3 release) .

Q&A Highlights

  • No Q3 earnings call or Q&A due to the pending merger with UnitedHealth Group .
  • Management’s slide commentary: revenue growth offset by wage inflation, benefits costs, Home Health mix shift, and investments in hospice clinical staffing; EBITDA margin 9.9% and adjusted EPS $1.00 .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable due to a Capital IQ mapping issue for AMED. As a result, beats/misses vs consensus cannot be determined for this quarter [GetEstimates error].

Key Takeaways for Investors

  • Hospice profitability and margins improved on rate updates and operational initiatives; Hospice remains a stabilizer within the portfolio .
  • Home Health growth is skewed to non‑Medicare payors, pressuring EBITDA margin amid wage/benefits inflation; monitor mix normalization and cost containment .
  • Working capital normalization post Change Healthcare outage boosted CFFO and FCF; DSO reduction is a material positive for near‑term cash generation .
  • High Acuity Care continues to scale admissions but is loss‑making; CMS GUIDE participation expands strategic scope and could catalyze future economics .
  • Regulatory tailwinds (2024–2025 rate updates) provide modest support to revenue and margins but are partially offset by labor cost pressures .
  • No guidance and no call due to pending UNH merger keeps the transaction as the primary stock narrative catalyst; focus on regulatory approvals/timing .
  • Near‑term trading setup: positive cash flow/DSO trajectory vs. ongoing margin headwinds in Home Health; medium‑term thesis hinges on integration and strategic alignment under UNH plus stable hospice fundamentals .