Amedisys Reports Third Quarter Financial Results

Date03 Nov 2016

CategoriesEarnings Releases And Operating Results

BATON ROUGE, La., Nov. 03, 2016 (GLOBE NEWSWIRE) — Amedisys, Inc. (NASDAQ:AMED), a leading home health and hospice company, today reported its financial results for the three and nine-month periods ended September 30, 2016.

Three-Month Periods Ended September 30, 2016 and 2015

Net service revenue increased $35.2 million to $361.6 million compared to $326.4 million in 2015.
Net income attributable to Amedisys, Inc. of $11.4 million compared to $8.4 million in 2015.
Net income attributable to Amedisys, Inc. per diluted share of $0.34 per diluted share compared to $0.25 in 2015.

Adjusted Results*

Adjusted net service revenue of $361.6 million compared to $326.4 million in 2015.
Adjusted net income attributable to Amedisys, Inc. of $12.1 million compared to $11.5 million in 2015.
Adjusted net income attributable to Amedisys, Inc. per diluted share of $0.36 compared to $0.34 in 2015.
Adjusted EBITDA (defined as net income (loss) attributable to Amedisys, Inc. before provision for income taxes, net interest expense and depreciation and amortization excluding certain items) of $25.6 million compared to $26.4 million in 2015.

Nine-Month Periods Ended September 30, 2016 and 2015

Net service revenue increased $129.0 million to $1,071.2 million compared to $942.2 million in 2015.
Net income attributable to Amedisys, Inc. of $28.3 million compared to $15.9 million net loss in 2015.
Net income attributable to Amedisys, Inc. per diluted share increased $1.32 to $0.84 compared to $0.48 net loss per diluted share in 2015.

Adjusted Results*

Adjusted net service revenue of $1,072.1 million compared to $942.2 million in 2015.
Adjusted net income attributable to Amedisys, Inc. of $37.2 million compared to $35.8 million in 2015.
Adjusted net income attributable to Amedisys, Inc. per diluted share of $1.10 compared to $1.09 in 2015.
Adjusted EBITDA of $79.4 million compared to $84.4 million in 2015.

* See pages 10 and 11 for the reconciliations of non-GAAP financial measures to GAAP measures.

Paul B. Kusserow, President and Chief Executive Officer stated, “I am extremely proud of our organization for their dedication to delivering high-quality, low-cost care to our patients while the company continues to undergo a significant transition. Our employees delivered solid results across all three business segments. As outlined in our earnings preannouncement last week, we did encounter some challenges in home health volumes as well as increased health insurance and bad debt expenses. However, as of October 31, our last group of care centers is live on HomeCare HomeBase, an effort that involved training over 11,000 employees over the course of only 15 months. We are focused on continued growth and delivering on the operational efficiencies we have promised our shareholders. At the same time, we are actively pursuing opportunities to reinvest in our business and deploy capital toward accretive acquisitions. We are extremely excited about the opportunities in front of us as we continue to execute on our strategy.”

We urge caution in considering the current trends disclosed in this press release. The home health and hospice industry is highly competitive and subject to intensive regulations, and trends are subject to numerous factors, risks, and uncertainties, some of which are referenced in the cautionary language below and others that are described more fully in our reports filed with the Securities and Exchange Commission (“SEC”) including our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and subsequent Quarterly Reports on Form 10-Q, and current reports on Form 8-K which can be found on the SEC’s internet website, http://www.sec.gov, and our internet website, http://www.amedisys.com. We disclaim any obligations to update disclosed information on trends.

Earnings Call and Webcast Information

To participate on the conference call, please call a few minutes before 11:00 a.m. ET to either (877) 524-8416 (Toll-Free) or (412) 902-1028 (Toll). A replay of the conference call will be available through December 3, 2016 by dialing (877) 660-6853 (Toll-Free) or (201) 612-7415 (Toll) and entering conference ID #13648537.

A live webcast of the call will be accessible through our website on our Investor Relations section at the following web address: http://investors.amedisys.com.

Amedisys, Inc. (the “Company”) is headquartered in Baton Rouge, Louisiana and our common stock trades on the NASDAQ Global Select Market under the symbol “AMED”.

Additional information

Our company website address is www.amedisys.com. We use our website as a channel of distribution for important company information. Important information, including press releases, analyst presentations and financial information regarding our company, is routinely posted on and accessible on the Investor Relations subpage of our website, which is accessible by clicking on the tab labeled “Investors” on our website home page. We also use our website to expedite public access to time-critical information regarding our company in advance of or in lieu of distributing a press release or a filing with the SEC disclosing the same information. Therefore, investors should look to the Investor Relations subpage of our website for important and time-critical information. Visitors to our website can also register to receive automatic e-mail and other notifications alerting them when new information is made available on the Investor Relations subpage of our website.

Forward-Looking Statements

When included in this press release, words like “believes,” “belief,” “expects,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” “would,” “should” and similar expressions are intended to identify forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a variety of risks and uncertainties that could cause actual results to differ materially from those described therein. These risks and uncertainties include, but are not limited to the following: changes in Medicare and other medical payment levels, our ability to open care centers, acquire additional care centers and integrate and operate these care centers effectively, changes in or our failure to comply with existing Federal and State laws or regulations or the inability to comply with new government regulations on a timely basis, competition in the home health industry, changes in the case mix of patients and payment methodologies, changes in estimates and judgments associated with critical accounting policies, our ability to maintain or establish new patient referral sources, our ability to attract and retain qualified personnel, changes in payments and covered services due to the economic downturn and deficit spending by Federal and State governments, future cost containment initiatives undertaken by third-party payors, our access to financing due to the volatility and disruption of the capital and credit markets, our ability to meet debt service requirements and comply with covenants in debt agreements, business disruptions due to natural disasters or acts of terrorism, our ability to integrate and manage our information systems, our ability to comply with requirements stipulated in our corporate integrity agreement and changes in law or developments with respect to any litigation relating to the Company, including various other matters, many of which are beyond our control.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on any forward-looking statement as a prediction of future events. We expressly disclaim any obligation or undertaking and we do not intend to release publicly any updates or changes in our expectations concerning the forward-looking statements or any changes in events, conditions or circumstances upon which any forward-looking statement may be based, except as required by law.

Non-GAAP Financial Measures

This press release includes the following non-GAAP financial measures as defined under SEC rules: (1) EBITDA, defined as net income (loss) attributable to Amedisys, Inc. before provision for income taxes, net interest expense and depreciation and amortization; (2) adjusted EBITDA, defined as EBITDA excluding certain items; (3) adjusted net service revenue, defined as net service revenue excluding certain items; (4) adjusted net income attributable to Amedisys, Inc., defined as net income (loss) attributable to Amedisys, Inc. excluding certain items; and (5) adjusted net income attributable to Amedisys, Inc. per diluted share, defined as net income (loss) attributable to Amedisys, Inc. common stockholders per diluted share excluding certain items. In accordance with SEC rules, we have provided herein a reconciliation of these non-GAAP financial measures to the most directly comparable measures under GAAP. Management believes that these are useful gauges of our performance and are common measures used in our industry to assess relative financial performance among companies.

AMEDISYS, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED FINANCIAL STATEMENT DATA AND SUPPLEMENTAL INFORMATION
(Amounts in thousands, except share, per share data and statistical information)


*Balance Sheet Information*
	September 30, 2016			December 31, 2015
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	8,915		$	27,502
Patient accounts receivable, net of allowance for doubtful accounts of $16,710 and $16,526		162,500			125,010
Prepaid expenses		9,948			8,110
Other current assets		12,070			14,641
Total current assets		193,433			175,263
Property and equipment, net of accumulated depreciation of $144,055 and $141,793		42,960			42,695
Goodwill		284,552			261,663
Intangible assets, net of accumulated amortization of $27,180 and $25,386		47,249			44,047
Deferred income taxes		113,797			125,245
Other assets, net		39,741			32,802
Total assets	$	721,732		$	681,715
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	33,088		$	25,682
Payroll and employee benefits		78,754			72,546
Accrued expenses		65,112			71,965
Current portion of long-term obligations		5,220			5,000
Total current liabilities		182,174			175,193
Long-term obligations, less current portion		88,874			91,630
Other long-term obligations		4,306			4,456
Total liabilities		275,354			271,279
Equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued or outstanding.		—			—
Common stock, $0.001 par value, 60,000,000 shares authorized; 35,195,655 and 34,786,966 shares issued; and 33,551,441 and 33,607,282 shares outstanding		35			35
Additional paid-in capital		531,112			504,290
Treasury stock at cost, 1,644,214 and 1,179,684 shares of common stock		(46,253	)		(26,966	)
Accumulated other comprehensive income		15			15
Retained earnings		(39,462	)		(67,806	)
Total Amedisys, Inc. stockholders’ equity		445,447			409,568
Noncontrolling interests		931			868
Total equity		446,378			410,436
Total liabilities and equity	$	721,732		$	681,715

*Statement of Operations Information (Unaudited)*

	For the Three-Month Periods Ended September 30,						For the Nine-Month Periods Ended September 30,
		2016			2015			2016			2015
Net service revenue	$	361,595		$	326,450		$	1,071,158		$	942,174
Cost of service, excluding depreciation and amortization		212,124			186,772			620,466			533,432
General and administrative expenses:
Salaries and benefits		77,019			69,993			231,079			209,797
Non-cash compensation		4,750			3,060			12,556			7,637
Other		42,658			39,551			134,951			114,734
Provision for doubtful accounts		5,471			3,638			13,664			9,370
Depreciation and amortization		5,214			4,646			14,662			15,798
Asset impairment charge		—			2,075			—			77,268
Operating expenses		347,236			309,735			1,027,378			968,036
Operating income (loss)		14,359			16,715			43,780			(25,862	)
Other income (expense):
Interest income		14			7			45			33
Interest expense		(1,136	)		(4,936	)		(3,551	)		(9,778	)
Equity in earnings from equity method investments		3,244			1,924			3,602			8,701
Miscellaneous, net		1,713			1,330			3,106			3,962
Total other income (expense), net		3,835			(1,675	)		3,202			2,918
Income (loss) before income taxes		18,194			15,040			46,982			(22,944	)
Income tax (expense) benefit		(6,693	)		(6,465	)		(18,323	)		7,560
Net income (loss)		11,501			8,575			28,659			(15,384	)
Net income attributable to noncontrolling interests.		(66	)		(135	)		(315	)		(548	)
Net income (loss) attributable to Amedisys, Inc.	$	11,435		$	8,440		$	28,344		$	(15,932	)
Basic earnings per common share:
Net income (loss) attributable to Amedisys, Inc. common stockholders	$	0.34		$	0.25		$	0.86		$	(0.48	)
Weighted average shares outstanding		33,309			33,128			33,142			32,957
Diluted earnings per common share:
Net income (loss) attributable to Amedisys, Inc. common stockholders	$	0.34		$	0.25		$	0.84		$	(0.48	)
Weighted average shares outstanding		33,823			33,631			33,699			32,957

*Cash Flow and Days Revenue Outstanding, Net Information (Unaudited)*

	For the Three-Month Periods Ended September 30,						For the Nine-Month Periods Ended September 30,
		2016			2015			2016			2015
Net cash provided by operating activities	$	6,803		$	30,704		$	33,698		$	87,741
Net cash used in investing activities		(7,649	)		(8,037	)		(45,400	)		(19,859	)
Net cash (used in) provided by financing activities		(207	)		1,183			(6,885	)		(18,863	)
Net (decrease) increase in cash and cash equivalents		(1,053	)		23,850			(18,587	)		49,019
Cash and cash equivalents at beginning of period		9,968			33,201			27,502			8,032
Cash and cash equivalents at end of period	$	8,915		$	57,051		$	8,915		$	57,051
Days revenue outstanding, net (1)		40.0			33.1			40.0			33.1

(1) Our calculation of days revenue outstanding, net at September 30, 2016 and 2015 is derived by dividing our ending patient accounts receivable (i.e., net of estimated revenue adjustments and allowance for doubtful accounts) by our average daily net patient revenue for the three-month period ended September 30, 2016 and 2015, respectively.

Supplemental Information – Home Health


	For the Three-Month Periods Ended September 30,
	2016			2015
Financial Information (in millions):
Medicare	$	203.9		$	190.2
Non-Medicare		65.0			63.2
Net service revenue		268.9			253.4
Cost of service		162.4			150.0
Gross margin		106.5			103.4
Other operating expenses		77.4			70.0
Operating income	$	29.1		$	33.4
Key Statistical Data:
Medicare:
Same Store Volume (1):
Revenue		1	%		3	%
Admissions		1	%		4	%
Recertifications		(3	%)		0	%
Total (2):
Admissions		47,625			44,434
Recertifications		25,522			25,420
Completed episodes		71,948			67,288
Visits		1,266,780			1,208,853
Average revenue per completed episode (3)	$	2,841		$	2,821
Visits per completed episode (4)		17.5			17.5
Non-Medicare:
Same Store Volume (1):
Revenue		4	%		22	%
Admissions		(1	%)		21	%
Recertifications		1	%		15	%
Total (2):
Admissions		24,335			24,792
Recertifications		9,479			9,447
Visits		506,729			504,441
Total (2):
Cost per Visit	$	91.58		$	87.54
Visits		1,773,509			1,713,294

	For the Nine-Month Periods Ended September 30,
	2016			2015

*Financial Information (in millions):*
Medicare	$	619.2		$	565.8
Non-Medicare		198.0			176.8
Net service revenue		817.2			742.6
Cost of service		483.6			431.0
Gross margin		333.6			311.6
Other operating expenses		230.5			204.0
Operating income	$	103.1		$	107.6
Key Statistical Data:
Medicare:
Same Store Volume (1):
Revenue		3	%		2	%
Admissions		3	%		2	%
Recertifications		1	%		(2	%)
Total (2):
Admissions		147,025			133,973
Recertifications		77,565			74,386
Completed episodes		218,007			200,301
Visits		3,893,568			3,580,751
Average revenue per completed episode (3)	$	2,835		$	2,816
Visits per completed episode (4)		17.5			17.4
Non-Medicare:
Same Store Volume (1):
Revenue		12	%		19	%
Admissions.		4	%		17	%
Recertifications		11	%		13	%
Total (2):
Admissions		74,139			71,733
Recertifications		28,945			26,072
Visits		1,549,760			1,424,595
Total (2):
Cost per Visit	$	88.83		$	86.10
Visits		5,443,328			5,005,346

(1) Same store Medicare and Non-Medicare revenue, admissions or recertifications growth (decline) is the percent increase (decrease) in our Medicare and Non-Medicare revenue, admissions or recertifications for the period as a percent of the Medicare and Non-Medicare revenue, admissions or recertifications of the prior period.
(2) Total includes acquisitions.
(3) Average Medicare revenue per completed episode is the average Medicare revenue earned for each Medicare completed episode of care which includes the impact of sequestration.
(4) Medicare visits per completed episode are the home health Medicare visits on completed episodes divided by the home health Medicare episodes completed during the period.

*Supplemental Information – Hospice*

	For the Three-Month Periods Ended September 30,
	2016			2015
*Financial Information (in millions):*
Medicare	$	77.0		$	68.6
Non-Medicare.		5.0			4.4
Net service revenue		82.0			73.0
Cost of service		41.9			36.8
Gross margin		40.1			36.2
Other operating expenses		19.3			16.9
Operating income	$	20.8		$	19.3
*Key Statistical Data:*
Same Store Volume (1):
Medicare revenue		12	%		17	%
Non-Medicare revenue		14	%		14	%
Hospice admissions		16	%		26	%
Average daily census		14	%		17	%
Total (2):
Hospice admissions		5,751			4,962
Average daily census		6,087			5,346
Revenue per day, net	$	146.49		$	148.47
Cost of service per day	$	74.77		$	74.82
Average length of stay		92			92

	For the Nine-Month Periods Ended September 30,
	2016			2015
*Financial Information (in millions):*
Medicare	$	217.0		$	187.6
Non-Medicare		13.8			12.0
Net service revenue		230.8			199.6
Cost of service		120.1			102.4
Gross margin		110.7			97.2
Other operating expenses		55.6			48.2
Operating income	$	55.1		$	49.0
*Key Statistical Data:*
Same Store Volume (1):
Medicare revenue		16	%		10	%
Non-Medicare revenue		15	%		11	%
Hospice admissions		18	%		14	%
Average daily census		17	%		8	%
Total (2):
Hospice admissions		16,757			14,239
Average daily census		5,776			4,947
Revenue per day, net	$	145.86		$	147.79
Cost of service per day	$	75.89		$	75.87
Average length of stay		94			90

(1) Same store Medicare and Non-Medicare revenue, Hospice admissions or average daily census growth (decline) is the percent increase (decrease) in our Medicare and Non-Medicare revenue, Hospice admissions or average daily census for the period as a percent of the Medicare and Non-Medicare revenue, Hospice admissions or average daily census of the prior period.
(2) Total includes acquisitions.

*Supplemental Information – Corporate*

	For the Three-Month Periods Ended September 30,
	2016		2015
*Financial Information (in millions):*
Other operating expenses	$	32.7	$	30.8
Depreciation and amortization		3.3		3.1
Total before impairment (1)	$	36.0	$	33.9

	For the Nine-Month Periods Ended September 30,
	2016		2015
*Financial Information (in millions):*
Other operating expenses	$	106.4	$	94.3
Depreciation and amortization		9.3		10.8
Total before impairment (1)	$	115.7	$	105.1

(1) Total of $36.0 million on a GAAP basis for the three-month period ended September 30, 2015 (including $2.1 million asset impairment charge). Total of $182.4 million on a GAAP basis for the nine-month period ended September 30, 2015 (including $77.3 million asset impairment charge).

AMEDISYS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL STATEMENTS
(Amounts in thousands)
(Unaudited)

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA:

	For the Three-Month Periods Ended September 30,					For the Nine-Month Periods Ended September 30,
	2016		2015			2016		2015
Net income (loss) attributable to Amedisys, Inc.	$	11,435	$	8,440		$	28,344	$	(15,932	)
Add:
Income tax expense (benefit)		6,693		6,465			18,323		(7,560	)
Interest expense, net		1,122		4,929			3,506		9,745
Depreciation and amortization		5,214		4,646			14,662		15,798
EBITDA (1) (7)		24,464		24,480			64,835		2,051
Add:
Certain items (2)		1,158		5,100			14,560		85,567
Debt refinance costs (2)		—		(3,212	)		—		(3,212	)
Adjusted EBITDA (3) (7)	$	25,622	$	26,368		$	79,395	$	84,406

Adjusted Net Service Revenue Reconciliation:

	For the Three-Month Periods Ended September 30,				For the Nine-Month Periods Ended September 30,
	2016		2015		2016		2015
Net service revenue	$	361,595	$	326,450	$	1,071,158	$	942,174
Add:
Certain items (2)		—		—		948		—
Adjusted net service revenue (4) (7)	$	361,595	$	326,450	$	1,072,106	$	942,174

Adjusted Net Income Attributable to Amedisys, Inc. Reconciliation:

	For the Three-Month Periods Ended September 30,				For the Nine-Month Periods Ended September 30,
	2016		2015		2016		2015
Net income (loss) attributable to Amedisys, Inc.	$	11,435	$	8,440	$	28,344	$	(15,932	)
Add:
Certain items (2)		700		3,086		8,809		51,768
Adjusted net income attributable to Amedisys, Inc. (5) (7)	$	12,135	$	11,526	$	37,153	$	35,836

Adjusted Net Income Attributable to Amedisys, Inc. per Diluted Share:

	For the Three-Month Periods Ended September 30,				For the Nine-Month Periods Ended September 30,
	2016		2015		2016		2015
Net income (loss) attributable to Amedisys, Inc. common stockholders per diluted share.	$	0.34	$	0.25	$	0.84	$	(0.48	)
Add:
Certain items (2)		0.02		0.09		0.26		1.57
Adjusted net income attributable to Amedisys, Inc. common stockholders per diluted share (6) (7)	$	0.36	$	0.34	$	1.10	$	1.09

(1) EBITDA is defined as net income (loss) attributable to Amedisys, Inc. before provision for income taxes, net interest expense, and depreciation and amortization.
(2) The following details the certain items for the three and nine-month periods ended September 30, 2016 and 2015:

	For the Three-Month Period Ended September 30, 2016			For the Nine-Month Period Ended September 30, 2016
	(Income) Expense			(Income) Expense
HCHB implementation	$	1,993		$	7,025
Acquisition costs		467			2,509
Legal fees – non-routine		374			2,350
Legal settlements		(1,242	)		(2,048	)
Restructuring activity		1,965			5,669
Third party audit reserve		—			948
Disaster relief		338			338
Miscellaneous, other (income) expense, net		(2,737	)		(2,231	)
Total	$	1,158		$	14,560
Net of tax		700			8,809
Diluted EPS		0.02			0.26

	For the Three-Month Period Ended September 30, 2015			For the Nine-Month Period Ended September 30, 2015
	(Income) Expense			(Income) Expense
Wage and Hour litigation	$	—		$	8,000
HCHB implementation		2,048			2,048
Legal fees – non-routine		286			286
Legal settlements		(1,014	)		(2,139	)
Inventory and Data Security Reporting		—			2,121
Asset impairment		2,075			77,268
Restructuring activity.		56			2,735
Debt refinance costs		3,212			3,212
Miscellaneous, other (income) expense, net		(1,563	)		(7,964	)
Total	$	5,100		$	85,567
Net of tax	$	3,086		$	51,768
Diluted EPS	$	0.09		$	1.57

(3) Adjusted EBITDA is defined as EBITDA, as defined in footnote 1, excluding certain items as described in footnote 2.
(4) Adjusted net service revenue is defined as net service revenue plus certain items as described in footnote 2.
(5) Adjusted net income attributable to Amedisys, Inc. is defined as net income (loss) attributable to Amedisys, Inc. excluding certain items as described in footnote 2.
(6) Adjusted net income attributable to Amedisys, Inc. common stockholders per diluted share is defined as diluted income (loss) per share excluding the earnings per share effect of certain items as described in footnote 2.
(7) EBITDA, adjusted EBITDA, adjusted net service revenue, adjusted net income attributable to Amedisys, Inc. and adjusted net income attributable to Amedisys, Inc. common stockholders per diluted share should not be considered as an alternative to, or more meaningful than, income before income taxes, cash flow from operating activities, or other traditional indicators of operating performance. These calculations may not be comparable to a similarly titled measure reported by other companies, since not all companies calculate these non-GAAP financial measures in the same manner.

Contact:  Investor Contact: Amedisys, Inc. David Castille Managing Director, Treasury/Finance (225) 299-3391 [email protected]  Media Contact: Amedisys, Inc. Kendra Kimmons Managing Director, Marketing & Communications (225) 299-3720 [email protected]

Amedisys Reports Third Quarter Financial Results

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