Amedisys Poised for COVID-19 Recovery, Further Hospice Growth

The Amedisys, Inc. (NASDAQ: AMED) hospice segment saw a drop in referrals and rising costs stemming from the COVID-19 pandemic during the first quarter of this year. Though the outbreak creates industry-wide uncertainty about the future, demographic tailwinds, de novo activity and acquisitions show promise for a strong recovery, including the company’s $235 million purchase of AseraCare Hospice. 

The company saw nearly $7 million in costs directly attributable to the ongoing national emergency, including spending on personal protective equipment (PPE) at nearly 5-times the equipments’ usual prices. This and other expenses drove up their costs per visit 2.6%.

“We were very, very aggressive in terms of (acquiring) PPE,” said Paul Kusserow, Amedisys president and CEO in an earnings call. “We overpaid for PPE initially, and hopefully those prices will come down. We’ve developed a COVID-19-positive patient treatment protocol and subsequent PPE policy for clinicians treating COVID-19 symptomatic and positive patients that includes utilizing masks, gloves, gowns and face shields, and also requires surgical masks to be worn by the patient. We have continued to find success in utilizing both traditional and nontraditional suppliers for PPE needs.”


Amedisys currently has stocked four months of surgical masks, six months of N-95 masks and one month of gowns, with another two months of gowns in transit, Kusserow indicated. The company has an average of three months of inventory on hand for other critical PPE.

Though starting out strong during January and February, referrals started to drop in the second week of March across the company’s hospice, home health and personal care service lines. Referral numbers are now beginning to tick back up, impacted by the pandemic.

“Hospice referrals hit a low point the week of March 22. We experienced an increase in missed visits and declines in referral volumes,” Kusserow said. “Our businesses are now seeing signs of recovery. Sixty-four of our hospice care centers and all of our personal care center locations have treated COVID-19 patients during the pandemic. This has already resulted in new referral sources that were previously not sending us patients.”


Impacting Amedisys’ hospice segment are government funds received pursuant to the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, intended to provide aid to businesses impacted by the COVID-19 pandemic. Amedisys received approximately $100 million in provider relief from the CARES Act, utilizing the funds to replace lost revenue and health care costs related to COVID-19.

Additional positive financial impact resulted from increased telehealth waivers, and the temporary suspension of 2% sequestration of hospice payments by the U.S. Centers for Medicare & Medicaid Services (CMS), a provision of the CARES Act.

“We have a sequestration holiday,” Kusserow said. “The suspension of the 2% sequestration from May 1 through December 31, 2020, will impact Amedysis’ revenue favorably by approximately $20 million.”

Due to uncertainties about how the pandemic may progress, the company withdrew its guidance for the rest of the year, but laid out a recovery plan to minimize the financial impact. Amedisys’ “rapid recovery strategy” includes a focus on easing patient and family fears by routing incoming calls by care centers, continuing staff hiring and on-boarding and increasing both organic and inorganic sources of revenue growth. 

“We really want to get moving on an [average daily census (ADC)] recovery perspective,” said Amedisys CFO Scott Ginn. “We’re going to probably want to spend some money, especially on the business development side, to really get our numbers up as we move to 2021, which is really our year that we’ve been most focused on, as we’ve done all these things to be prepared for it.”

Amedisys’ hospice segment brought in $38.3 million, representing an increase of $4.8 million from the prior year’s quarter. Revenues for the hospice segment rose 23.1% year-over-year, largely driven by the impact of the Amedisys’ 2019 acquisition of Compassionate Care Hospice for $340 million, which made the company the third-largest hospice provider in the nation.

Contributing to the jump was the opening of eight hospice de novos and six home health de novos. Same-store admissions also boosted the company’s growth.

Amedisys’ performance exceeded the expectations of industry observers.

“AMED’s 1Q20 results came in slightly ahead of expectations despite Medicare pricing headwinds from [patient-driven groupings model] and COVID headwinds beginning in the second half of March,” said Frank Morgan, analyst for RBC Capital Markets, LLC, in a note shared with Hospice News. “Despite disruption, management remains focused on growth and is very optimistic about the announced AseraCare Hospice acquisition, which is an asset AMED has pursued for a number of years.”

AseraCare is the second 2020 acquisition for Amedisys. It followed the January purchase of Asana Hospice for an undisclosed amount. The AseraCare Hospice deal is a substantial addition to Amedisys, according to Kusserow. 

“AseraCare is an extremely high-quality hospice asset that is in 14 states and operates 44 care centers, with a census of approximately 2,100 and $117 million in revenue,” Kusserow said. “This, along with their complementary geographic footprint, makes our two organizations a great fit. We expect the deal to close in 30 days, but [we] understand that COVID-19 impacts could extend the time to close. Once the deal does close, Amedysis will operate 190 hospice care centers in 35 states while caring for an ADC of approximately 14,000 patients.”

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