Amedisys Making Progress on Turnover, Earnings Stability

Amedisys, Inc. (NASDAQ: AMED) is seeing glimmers of improvement on the labor pressures that contributed to uneven earnings performance during 2022.

The company has reduced its nurse turnover rate to the vicinity of 20%, surpassing the industry average, Brian Tanquilut, equity analyst for the investment banking firm Jefferies Financial Group, indicated in a note. Jeffries recently hosted a dinner with Amedisys executives in San Francisco.

Amedisys anticipates further advances on the labor front on the horizon.


“Incremental turnover reduction will be driven by macro factors (counter-cyclical nature of nurse staffing), modest rate growth (+3% raise given in late 2022), and initiatives (lifestyle- & productivity-focused operational tweaks) aimed at enhancing the attractiveness of working for AMED,” Tanquilut indicated in the note. “With broader demand for home nursing remaining robust, gains in clinician capacity should translate to incremental growth.”

The labor shortage was the main culprit behind the capacity contraints that plagued Amedisys and many other providers during 2022. Referral rejection rates among hospice providers reached an all-time high of 41%, according to data from CarePort, a WellSky company. Pre-pandemic, the baseline rate hovered around 25%.

Workforce pressures slowed admissions at Amedisys during the third quarter of 2022, bruising the company’s earnings. Coupled with inflation and the return of Medicare sequestration, this led to slower-than-expected growth in Q3 2022.


Amedisys’ net service revenue rose to $558 million in Q3 2022, up from $533.5 million in the prior year’s quarter, but revenue fell short of Wall Street expectations and led the company to reduce its guidance for 2022. Moreover, adjusted earnings per share (EPS) hit $1.15 in Q3, down 24.8% year-over-year.

The company’s tumultuous year precipitated Kusserow’s return as the company’s chief executive following the departure of former CEO Chris Gerard early in Q4.

At the Jeffries dinner, Kusserow also opined on the future of home-based care companies as payer interest in the space rises, Tanquilut reported.

With interest in scaled home health assets climbing among strategic buyers, few large home health companies are likely to stay independent, Kusserow reportedly said.

His remarks come in the wake of huge payer-provider transactions that occurred during the past two years. These include Humana, Inc.’s (NYSE: HUM) $5.7 billion acquisition of a 100% stake in Kindred at Home and the pending purchase of LHC Group (NASDAQ: LHCG) by the UnitedHealth Group (NYSE: UHN) subsidiary Optum Health for $5.5 billion.

“As [Amedisys management] discussed the home health landscape beyond [near-term] labor and payor mix challenges, they noted their view that there’s scarcity in quality home health capacity and high level of interest among potential strategic acquirers to own scaled home nursing companies …,” Tanquilut indicated in a note. “Managed-care companies are showing increasing interest in partnering with or potentially owning home nursing operators in order to reduce the cost of care for patients with chronic conditions.”

One outstanding question about the impact of transactions like these is where hospice will ultimately fit into the picture.

Deals like these allow payers to capitalize on growing demand for home-based care and move more patients into a lower cost setting. They also present an opportunity to better manage the financial risk associated with value-based reimbursement.

However, because hospices currently have limited access to risk-based models, the payers that are acquiring these assets have their eyes fixed on their home health businesses.

Case in point, Humana last summer divested a 60% stake in Kindred at Home’s hospice segment to the private equity firm Clayton, Dubilier & Rice for $2.8 billion. Humana retained the remaining 40%.

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