Kusserow: Amedisys Turned COVID-19 ‘Headwinds to Tailwinds’

Like many health care providers, Baton Rouge, La.-based Amedisys Inc. (NASDAQ: AMED) did not come out of 2020 unscathed by the coronavirus pandemic. Nevertheless, the company’s hospice segment grew during the outbreak and is anticipated to continue expanding, largely through acquisitions.

Amedisys is benefitting from demographic tailwinds of the aging population and rising utilization that are fueling a thriving hospice market. With about 10,000 people becoming Medicare eligible every day according to the Kaiser Family Foundation, demand for hospice and home health care is expected to rise steadily.

Favorable reimbursement changes could also play to providers’ advantage. Projections from the U.S. Centers for Medicare & Medicaid Services (CMS) show that positive rate updates for both hospice and home health are likely in the years ahead, Amedisys CEO Paul Kusserow indicated in a fourth quarter 2020 earnings conference call. 


“What we were able to accomplish in 2020 is turn the headwinds of PDGM and COVID-19 into tailwinds,” said Kusserow. “Demographics are strongly in our favor. The burgeoning 75-plus population coupled with ever increasing unsustainable health care costs puts us in a very advantageous position.”

Even with demographics and demand driving growth, hospice acquisitions will contribute to much of Amedisys’ performance during 2021, including the $235 million purchase of AseraCare Hospice and the acquisition of Asana Hospice for an undisclosed amount. Hospice acquisitions are projected to generate in excess of $25 million EBIDTA for the company in 2021.

Amedisys has poured more than $650 million into hospice segment acquisitions since 2019, but in the wake of the pandemic some of their strategies are evolving. Executive Vice-President and CFO Scott Ginn indicated that early on Amedisys expected more potential acquisitions to approach them, but they have shifted to identifying and pursuing potential targets.


“Our scale and cash flow generation, coupled with the fragmentation of both the home health and hospice industries, presents us with an exciting opportunity for continued inorganic growth and will position us as a major market consolidator,” Kusserow said.

The company’s hospice segment has seen drops in referrals and rising costs stemming from the pandemic. Hospice admissions in Q4 were up by 15% from the prior year’s quarter, but the average daily census fell. President and Chief Operating Officer Chris Gerard attributed this to an increase in the death and discharge rate of same-month admissions, along with the timing of patients coming on to service. Patients were coming into hospice later in the course of their illnesses and also passing away sooner.

This trend is in line with what other large providers are seeing. Restricted access to patients in facilities is a significant contributing factor to dropping lengths of stay, as those patients generally receive earlier referrals under normal circumstances. An uptick in daily census is anticipated as vaccinations roll out and visitation restrictions ease.

“We believe this is an industry-wide dynamic, which will of course correct over time. However, it’s hard to project when that time will be,” Ginn said. “We’re now seeing some very positive signs.”

Amedisys reported an estimated $ 2.1 billion in revenue last year, an increase of roughly $160 million, or 6%, compared to 2019. Amedisys’ hospice segment brought in $203.9 million in revenue during the fourth quarter, up from $164.6 million the prior year. Nearly 95% of the hospice revenue is attributable to Medicare fee-for-service dollars.

According to Ginn, Amedisys incurred nearly $1.6 million in personal protective equipment (PPE) costs during the fourth quarter and more than $14 million for the year. COVID-19 testing costs exceeded $5 million in 2020, while the company paid $1.2 million related to quarantine expenses in the last quarter and $4.1 million total for the year. Overall, Ginn reported that Amedisys utilized $33 million in federal provider relief funds established by the CARES Act, enacted March 27.

Change came at an executive level for Amedisys with the promotions of Ginn and Gerard.

“Both Chris and Scott bring incredible experience and expertise to our team, and have been key to setting the strategic direction and executing on that strategy to deliver superlative results,” said Kusserow.

According to Kusserow in a recent announcement, the company’s performance has been “nothing short of tremendous” in the face of challenges under new leadership in the last year.

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