Acquisitions Continue to Drive Amedisys’ Hospice Growth

Acquisitions contributed significantly to the Amedisys (AMED) hospice segment growth during the fourth quarter of 2019, continuing a trend for the past several quarters. 

The company was active in the hospice M&A space last year, completing several transactions that included its $340 million purchase of Compassionate Care Hospice in February and its tuck-in of RoseRock Healthcare for an undisclosed amount. The company will seek additional acquisitions throughout the year. 

“We continue to be very interested in hospice tuck-ins and we’ll look to do more this year. We are most excited though about 2021 and 2022 …” Amedisys CEO Paul Kusserow said in an earnings conference call. “Our new hospice assets will be fully integrated and operating at our legacy growth rate and margin levels.”

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Amedisys kicked off the new year with another acquisition, that of Asana Hospice for an undisclosed amount, on Jan 1. Asana Hospice, which operates eight locations in Pennsylvania, Ohio, Missouri, Kansas and Texas, has an average daily census of 540. This transaction extended the company’s hospice portfolio to 146 locations in 33 states.

In addition to M&A activity, the company also saw significant same-store hospice growth. Same-store admissions rose 8% during Q4 and 7% for all of 2019.

Amedisys reported adjusted earnings per share (EPS) of 94 cents in fourth-quarter 2019, up 3.3% from prior year. Net service revenues reached $500.7 million, up 15.3% year over year.

Net service revenues specific to the hospice segment topped $164.6 million, up 51.3% year over year, including Medicare revenues of $156.6 million and non-Medicare revenues of $8 million.

Amedisys is positioning itself to continue its forward momentum this year in terms of growth.

“Our next big 2020 initiative is delivering on the Compassionate Care Hospice EBITDA contribution of $34 million to $36 million. We have developed a fine-tuned integration engine and outperformed our initial expectations in 2019,” Kusserow said. “This asset is poised to grow and operate more efficiently, and we remain confident that we will deliver the EBITDA we promised. Continuing the progress we made in 2019 consistent above market growth in all three lines of business will be a major focus of 2020. We have become more and more sophisticated with our usage of data related to business development, staff activity, and referral source patterns, and expect 2020 to be a year of outsize consistent growth across all our lines of business.”

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