Amedisys (AMED) Suffers From Low Occupancy Amid Pandemic

Apart from COVID-19 distress, Amedisys (NASDAQ:AMED), Inc. AMED is currently entwined in reimbursement headwinds and competitive challenges. Yet, the company is exploring new opportunities in Home Health and Hospice segments.

The stock currently carries a Zacks Rank #5 (Strong Sell).

Over the past three months, Amedisys has underperformed the industry it belongs to. As per the last trading price, the stock has declined 23% compared with 20.5% decline of the industry.

Second-quarter 2021 revenues missed the Zacks Consensus Estimate. As business per episode dropped, the company’s ability to increase LPN (Licensed Practical Nurse) utilization has become more challenging. According to the company, the rebound in hospice has slowed down and the pandemic is still impacting the business in 2021 in multiple ways.

The prolonged and lingering impact of COVID-19 on the Hospice business has hampered its ability to grow at the earlier-projected rates. Occupancy pressure continues to be a headwind. Especially with the Delta variant surging, there are high chances of occupancy being significantly low throughout the remainder of 2021. Amedisys noted that COVID-19 patients on service significantly impacted the median length of stay during the early part of 2021. Average length of stay at the end of the second quarter was 18 days compared with the pre-COVID level of 26 days, marking a 32% decline.

Amedisys, Inc. Price

Amedisys, Inc. price | Amedisys, Inc. Quote

The rise in operating expenses compared to the prior year is concerning. The reduced 2021 guidance is indicates that this dull trend may continue through the upcoming quarters. Further, an intensely competitive landscape and reimbursement woes weigh on the home health and hospice industry.

On a positive note, Amedisys ended the second quarter with better-than-expected earnings. Home health continued with its strong performance. Second-quarter total volume grew 12% and total admissions improved 20% year over year. The company performed 14.2 visits per episode, up 0.3 visits sequentially. In terms of clinical mix, in the second quarter, the company achieved 47.5% LPN utilization and 52.9% PTA (physical therapist assistant) utilization.

The company also observed year-over-year productivity improvements in home health clinical staff performances as visits per episode per full-time equivalent (FTE) staff increased over 1%. According to the company, increased productivity, combined with decreased visits per episode led to an increase in capacity, which will be key to Amedisys’future growth opportunities. Further, hospice total admissions grew 2% in the second quarter.

The newly-closed Contessa Health acquisition seems to be strategically aligned for Amedisys business.

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