Change Healthcare (CHNG) Q3 Earnings in Line, Revenues Beat

Change Healthcare (NASDAQ:CHNG) Inc. CHNG reported third-quarter fiscal 2022 adjusted earnings per share (EPS) of 36 cents, which matched the Zacks Consensus Estimate. The bottom line improved 5.9% on a year-over-year basis.

Net loss per share was 8 cents in the quarter, against the year-ago quarter’s net income of a penny.

Revenue Details

Revenues rose 10.3% from the prior-year period to $866.1 million in the reported quarter. The top line outpaced the Zacks Consensus Estimate by 1.6%.

Segmental Analysis

Change Healthcare operates through three segments — Software and Analytics, Network Solutions, Technology-Enabled Services and Postage and Eliminations.

Software and Analytics

Revenues at this segment totaled $386 million, up 3.7% on a year-over-year basis.

Network Solutions

Revenues at this segment were $226.9 million, up 17.8% year over year.

Technology-Enabled Services

Revenues at this segment were $232.8 million, up 4.6% on a year-over-year basis.

Postage and Eliminations

Revenues at this segment totaled $20.3 million, down 7.7% year over year.

Margin Analysis

Total operating expenses were $837.4 million, up 15.9% from the prior-year quarter.

In the quarter under review, Change Healthcare reported an operating income of $28.7 million, compared with $62.7 million in the year-ago quarter.

Financial Position

The company exited the quarter with cash and cash equivalents of $96 million, compared with $80.4 million in the preceding quarter.

Cumulative net cash provided by operating activities at the end of the fiscal third quarter amounted to $438.8 million compared with $487.2 million in the year-ago period.

Guidance

Given the proposed merger agreement (with OptumInsight), Change Healthcare will not be issuing financial guidance going forward.

Wrapping Up

Change Healthcare exited the third-quarter fiscal 2022 on a mixed note, wherein earnings met the Zacks Consensus Estimate while revenues beat the same. The company exhibited robust performance across Software and Analytics, Network Solutions and Technology-Enabled segments in the quarter under review. Collaborations and expansion of Stratus Imaging PACS were the business highlights in the quarter.

However, cut-throat competition remains a headwind. Weak performance at the Postage and Eliminations segment is a woe. Higher operating expenses are concerning.

Zacks Rank

Currently, Change Healthcare carries a Zacks Rank #3 (Hold).

Key Picks

Some better-ranked stocks that are supposed to report earnings soon are Cerner Corporation (NASDAQ:CERN) CERN, Baxter International Inc (NYSE:BAX). BAX and AMN Healthcare Services (NYSE:AMN), Inc. AMN.

The Zacks Consensus Estimate for Cerner’s fourth-quarter 2021 adjusted EPS is currently pegged at 88 cents. The consensus estimate for fourth-quarter 2021 revenues stands at $1.49 billion. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cerner has an estimated long-term growth rate of 12.8%. CERN’s earnings yield of 4% compares favorably with the industry’s negative yield.

Baxter currently has a Zacks Rank #2. The Zacks Consensus Estimate for its fourth-quarter 2021 adjusted EPS is currently pegged at $1.03. The consensus estimate for fourth-quarter revenues stands at $3.35 billion.

Baxter has an estimated long-term growth rate of 9.5%. BAX’s earnings yield of 4.9% compares favorably with the industry’s negative yield.

AMN Healthcare currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its fourth-quarter 2021 adjusted EPS currently stands at $2.58. The consensus estimate for its revenues stands at $1.28 billion.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings yield of 6.7% compares favorably with the industry’s 1.1%.

Just Released: Zacks Top 10 Stocks for 2022

In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022?

From inception in 2012 through 2021, the Zacks Top 10 Stocks portfolios gained an impressive +1,001.2% versus the S&P 500’s +348.7%. Now our Director of Research has combed through 4,000 companies covered by the Zacks Rank and has handpicked the best 10 tickers to buy and hold. Don’t miss your chance to get in…because the sooner you do, the more upside you stand to grab.