Amedisys Takes Hits from COVID-19, Hospice Recovery on Horizon

Amedisys, Inc. (NASDAQ: AMED) was among many hospice providers weathering second quarter storms in 2020 as the coronavirus pandemic continued to spread its reach into financial bottom lines. While COVID-19 headwinds have limited the provider’s anticipated recovery in Q2, improving patient volumes and shifts in regulatory rules are among the factors contributing to positive projections on its horizon.

Despite rising hospice admissions, recovery and growth were an upstream battle as the second quarter came to a close as the pandemic picked up speed across the nation’s southern and eastern regions. As one of the country’s largest hospice providers, Amedisys has faced financial hits resulting from increased costs to protect and boost the workforce during the outbreak.

“While hospice referrals hit their low point the week of March 22, comparatively it was a minor drop,” said Amedisys President and CEO, Paul Kusserow in an earnings call. “We have seen a significant recovery in our admissions, which means we are winning market share and new referral sources. Hospice admission volumes have significantly improved, and we are projecting nearly 6% admission growth in July.”


Amedisys’ second quarter revenues dropped by $8 million compared to Q2 2019, decreasing in the second quarter of 2020 to $485 million from the previous year’s $493 million. Spending on personal protective equipment (PPE) remained a top concern as the quarter ended, with increased staffing costs and COVID-19 impacts also leading the charge in revenue dips.

“We have been paying nearly five times the normal costs for PPE, with increased costs at nearly $11 million” said Scott Ginn, chief financial officer for Amedisys. “Our costs are slowly moderating and continue to do so as equipment becomes more available through traditional suppliers. We also gave $9 million in bonuses to our caregivers for their service during the pandemic in the second quarter, and quarantine pay of approximately $2 million. These reductions are partially offset by acquisition revenue of $16 million, and $3 million of additional reimbursements from the suspension of sequestration effective May 1.”

Amedisys completed its acquisition of Homecare Preferred Choice, Inc., doing business as AseraCare Hospice, in June this year for $235 million. The acquisition contributed to the second quarter’s growth in the hospice segment, according to Kusserow.


“AseraCare is an extremely high-quality hospice asset with 44 care centers across 14 states and a census of approximately 2,100 patients with about $117 million in revenue,” said Kusserow. “This asset is a great addition to our portfolio and integration is well underway. We have grown our hospice assets significantly over the past few years, and now with AseraCare we operate 190 hospice care centers in 35 states. Hospice is an important benefit in the care continuum and I am proud of the work our hospice team has done to bring their incredible care and compassion to more and more patients and families.”

Along with an expanded geographical footprint, the company attributed rising hospice admissions to patients’ increasing desire to receive care in the home, as opposed to now high risk settings during the pandemic such as nursing homes and hospitals. The trend towards aging in place has been amplified amid patient and family concerns of COVID-19 exposure.

“The pandemic continues to highlight the importance of caring for people in their homes, wherever they call home, and as such has positioned Amedisys for continued growth in the future,” said Kusserow. “We believe there is a compelling post-acute market share capture proposition from offering a skilled nursing at home product and finding other ways to capture patients that historically would have received care in facilities. We will continue to aggressively invest to make sure we have the best employees with the best tools delivering the best care to our patients.”

According to Chris Gerard, chief operating officer of Amedisys, the provider has placed driving down staff turnover among its top priorities for 2020, even as it makes adjustments around staffing availability and capacity during the pandemic. Staffing recruitment efforts are expected to ramp back up, with new hires in the pipeline.

“It’s mainly an issue of making sure we have enough staff because there’s an increase in staff work quarantining as these COVID cases increase in markets like Florida and Georgia,” Gerard said. “We have an opportunity to go after some very good people who want to start work in the home. We first started this effort five years ago with a 40% staff turnover. Our goal is to get as close to below 15% as we can get, and we anticipate that we’ll get there.”

In addition to staffing levels, plans for recovery from the pandemic’s pitfalls will also be based on the regulatory outlook for the home health and hospice spaces. Telehealth has played a vital role in staff’s ability to reach patients amid COVID-19, with current flexibilities under extended consideration past the national health emergency. Additional federal regulatory action from national agencies such as the U.S. Centers for Medicare & Medicaid Services (CMS) has also impacted Amedisys prospects, such as the 2021 proposed hospice rule and updated capitation rates for Medicare Advantage plans.

“We expect our impact to be in line with the CMS 2.6% rate update,” said Kusserow. “Positive rate updates in hospice are increasingly impactful to our business as we continue to grow hospice both organically and inorganically. In addition to this positive payment update, we applaud CMS for its proposal to extend telehealth flexibilities, and we look forward to working with them on this important policy. We think this modality could be a highly additive tool in care provision. These two payment updates will be significant tailwinds for our company as we enter 21 producing approximately incremental $40 million in 2021.”

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