Specialist
Former executive at Amedisys Inc
Agenda
- Key trends and developments in the home healthcare and hospice sector, assessing Amedisys' (NASDAQ: AMED) hospice care offerings
- Amedisys' consolidation and partnership strategy, including its April 2022 Evolution Health acquisition and Contessa's partnerships with Memorial Hermann and Baylor Scott & White Health
- Altering insurance coverage dynamics for hospice care and other reimbursement dynamics in light of evolving regulatory landscape
- Amedisys' competitive positioning vs Kindred (NASDAQ: KND), Encompass and others in product offerings and segment expansion
- Amedisys' 12-18-month growth outlook
Questions
1.
What are some notable key trends and recent developments within the US hospice and home health sector worth highlighting?
2.
Amedisys recently announced its Q2 2022 earnings results. The company’s home health segment experienced a marginal decrease while hospice experienced an approximate 3.7% YoY increase at the end of Q2. What contributed to the results in the home health and hospice sectors respectively? What is the company’s revenue model and key cost drivers, especially for these two segments?
3.
Home health billable hours are lagging due to post-pandemic impacts. Over what timeline do you expective home health billable hours to return to pre-pandemic levels?
4.
Amedisys’ hospice same-store total admissions grew more than 6% at the end of Q2 2022 and the ADC [average daily consensus] was flat. How do you expect the same-store total admissions to grow for the company? Do you have insight on the ADC for hospice and have you seen these numbers returning to normalcy post-pandemic?
5.
You touched on how Amedisys is trying to have a balanced book of business in terms of driving referrals and length of stay. The average length of stay decreased from 97 days in Q2 2021 to 87 days in Q2 2022. Do you expect this number to decrease over time, and by how much? What impact does this reduction have on patient costs and the company’s profitability?
6.
Revenue per day for Amedisys’ hospice sector was up +3.7% YoY in Q2 2022 and cost per day was up +3.4%, so about USD 2.88 per day the company’s hospice segment, which seems to be quite a bit lower than Q1. How long do you think cost will exceed revenue and when do you expect the reverse to take place, given wage increases and sign-on bonuses?
7.
Amedisys acquired Contessa in August 2021, a skilled nursing facility, enabling the growth of its analytical capabilities and tech platform. The company claims that Contessa’s model reduces readmission rates by 44% and decreases the length of a hospital stay by 35%. Do you think this is an accurate value proposition proposed or do you think otherwise?
8.
What is your holistic understanding of Baylor Scott & White Health and Contessa’s June 2022 partnership to create a new model for at-home care? It’s an important step for Amedisys being able to provide patients with care where they are. What does this model entail and how might it reduce costs and improve outcomes for patients?
9.
What are your expectations for Memorial Hermann and Contessa’s June 2022 partnership to provide patients with inpatient rehabilitation and palliative care in their own homes? As you said, it’s a value-add. To what extent is the ability to provide home care rather than only traditional bricks-and-mortar inpatient or rehab facilities important for Contessa?
10.
What is your take on Amedisys’s April 2022 acquisition of Evolution Health and its November 2022 JV with Penn State Health to expand its footprint in the US across Texas, Oklahoma and Ohio? What are the potential synergies enjoyed by the company through this acquisition and JV?
11.
What are your predictions for Amedisys’s M&A strategy going forward? Do you suspect the company will continue to aggressively acquire and consider more JVs, or more organic growth?
12.
How would Amedisys’ JV approach help in increasing referrals for its hospice or home health sector, or do you not expect it to? How are referrals trending within the company?
13.
What is Amedisys’ competitive positioning vs Kindred, Encompass, LHC Group and AccentCare, specifically pertaining to its strategy, approach, pricing and quality of care? How do you assess the approximate market share split across these competitors and how do you expect that to change in the next 5-7 years?
14.
Encompass recently completed the spin-off of its home health and hospice business with Enhabit. How has Amedisys’ positioning changed post- that spin-off? Do you think it’s at an added advantage, the same or a small disadvantage? How do you think the company is positioned compared to Encompass and Enhabit?
15.
Humana bought Kindred for USD 3.7bn in August 2021 with a 60% stake but announced it’s selling its 60% stake for USD 2.8bn, a huge loss. Do you believe a smaller business such as Amedisys could do a better job at managing the hospice sector than larger players such as Humana or United? If yes, how do you think the company can take advantage?
16.
What progress has Amedisys made in aligning reimbursement with Congressional intent in the Bipartisan Budget Act of 2018 post- the 2023 CMS [Centers for Medicare & Medicaid Services] proposed home health rule? What regulatory issues does the company have to face on the home health front?
17.
CMS mandated that 85-90% of all Medicare hospice lives be in the shared-risk category by 2030. Could you comment on the 2022 regulatory environment surrounding reimbursement for the hospice industry? Has the CMS made the environment conducive for hospice sector growth? Do you think a proposed FY23 hospice industry rule net, a 2.7% increase by 2023 October, is feasible?
18.
What are your thoughts on the different patient-driven groupings models being put in place for the home health and hospice sector? How have these models negatively affected Amedisys, and do you expect them to continue to be a persistent headwind for the company?
19.
What is Amedisys’ ability to manage costs in the rising labour environment and with wage inflation? How would you assess the company’s recruiting and retention efforts with FTE [full-time equivalent] staff, as well as any incentives used to retain its staff members?
20.
A specialist in a previous Interview [see US Home Health Market – Q3 2022 Update – 15 July 2022] believes that the utilisation of EMS workers as still enduring the staffing shortages is not a long-term solution for the home health segment. Do you agree with this statement or not, and has Amedisys been able to implement this strategy effectively and found a way around this?
21.
Do you think an updated and reduced adjusted net service revenue guidance of USD 2.29-2.31bn is realistic or too ambitious for Amedisys? Do you think the company is in a good position to achieve this target?
22.
How do you suggest Amedisys deploys capital over the next 12 months, between acquisitions as well as expansion into other service lines?
23.
What is your take on Amedisys’s leadership team and the newly appointed Chief Strategy Officer, Nick Muscato? Do you think he has an effective strategy in place to drive the company to near- and long-term success?
24.
Could you summarise 2-3 key insights from our Interview today that would be beneficial for investors to understand, given Amedisys’ current performance in the home health and hospice industry? Are there any imminent risks that come to mind when thinking about the company?
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