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Why Amedisys' Q4 Results Could Be a Speed Bump for the High-Flying Stock

By Keith Speights - Feb 19, 2020 at 7:05AM

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A revenue miss and a narrow earnings beat weren't what investors hoped for in Q4.

Amedisys (AMED -1.93%) ranked as one of several home-care stocks that performed really well in 2019. Its shares soared nearly 43% last year. And the stock was off to a great start in 2020 coming into this week.

But that momentum hit a pothole as Amedisys reported its 2019 fourth-quarter and full-year results after the market closed on Tuesday. Here are the highlights from the company's Q4 update.

Female healthcare provider assisting a matured male patient out of his bed.

Image source: Getty Images.

By the numbers

Amedisys announced Q4 revenue of $500.7 million, a 15% year-over-year increase. However, this result came in below the average analysts' revenue estimate of $511.55 million and appears to have burst the bubble for investors expecting a stronger performance.

The company reported net income in the fourth quarter of $27.7 million, or $0.83 per share, based on generally accepted accounting principles (GAAP). This compared to GAAP net income of $27.5 million, or $0.84 per share, in the prior-year period.

Amedisys posted adjusted net income in the fourth quarter of $31.1 million, or $0.94 per share. This reflected improvement from the company's adjusted earnings of $29.8 million, or $0.91 per share, in the same quarter of 2018. It was also slightly higher than the consensus analysts' adjusted earnings estimate of $0.93 per share.

Behind the numbers

The company's biggest moneymaker is its home health segment. Net service revenue for this segment totaled $316.2 million in Q4, up 4% year over year. Most of this growth came from payers other than Medicare.

Amedisys' fastest-growing unit was its hospice business. This segment generated net service revenue of $164.6 million, a 51% year-over-year jump. The company's acquisition of Compassionate Care Hospice, which closed in February 2019, fueled most of this growth.

The personal care segment was nearly an asterisk in the fourth quarter. Amedisys reported net service revenue for the segment of $19.9 million, down from $21.6 million in the prior-year period.

While the company's GAAP earnings were basically flat compared to the same period in the previous year, Amedisys' non-GAAP adjusted earnings improved considerably. This improvement stemmed primarily from adjustments for acquisition and integration costs and asset impairment.

Looking ahead

Amedisys projects full-year 2020 net service revenue will be between $2.115 billion and $2.16 billion. It expects adjusted earnings per share for the year will come in between $4.90 and $5.13. 

The company's recent acquisition of Asana Hospice should boost its hospice segment's revenue this year. Asana operates in five states, providing hospice care to around 540 patients on a daily basis.

Healthcare stocks, including Amedisys, could be especially volatile in 2020, though, as the U.S. presidential campaign heats up. Leading Democratic presidential candidate Sen. Bernie Sanders supports major changes to the U.S. healthcare system that could significantly affect Amedisys' business.

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Amedisys, Inc. Stock Quote
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