About five months into the COVID-19 crisis, Amedisys Inc. (Nasdaq: AMED) believes that it’s better positioned for the future than it was before COVID-19 landed on U.S. soil.

The Patient-Driven Groupings Model (PDGM) and COVID-19 have presented challenges to the Baton Rouge, Louisiana-based company’s home health business, just like almost everyone else’s. But Amedisys bested its Q2 internal modeling and feels like it’s primed to ride the tailwinds that it’s expecting to take hold on the back half of 2020 and after that.

“Home health admissions and referrals hit a low point the week of April 5,” Amedisys CEO Paul Kusserow said on the company’s Q2 earnings call. “Since that time, I am happy to report that we have seen a steady, V-shaped recovery — a sharp bounce back instead of a prolonged trot.”

Amedisys has 480 care centers in 38 states and Washington, D.C., as part of its overall footprint. For Q2, its home health segment’s operating income was over just over $48 million, a 13.5% drop compared to $55.7 million in the same time period in 2019. 

An “aging-in-place company,” Amedisys simultaneously ranks as one of the largest home health and hospice providers in the country. Its hospice capabilities were bolstered by its $235 million acquisition of hospice giant AseraCare, which closed in early June.

Total home health volume — which includes both admissions and recertifications — was about 98% of the way to pre-COVID-19 levels at the end of Q2. Volumes continue to hold strong, despite recent resurgences, Kusserow said. Total admissions were at about 91% of their pre-COVID-19 baseline.

Other data points that Amedisys is getting back are encouraging, too, according to Kusserow. Its internal numbers are rebounding at a higher rate than many other general COVID-19-related numbers are, meaning the company is gaining ground.

“We have not seen a material recovery in elective procedures,” Kusserow said. “Yet we have seen a significant recovery in our admissions, which means we are winning market share and new referral sources.”

Additionally, Amedisys has been bullish on tailwinds related to skilled nursing facility (SNF) diversion efforts for months now. It is now beginning to see evidence of an increased preference to age in place, leadership believes.

“We believe there is a compelling post-acute market share capture proposition from offering a SNF-at-home product and finding other ways to capture patients that historically would have received care at facilities,” Kusserow said. “Our efforts are underway on this one. And we fully expect to be caring for more acutely ill patients in the home over the coming months.”

Amedisys has been taking on COVID-19 patients “from Day 1.” That has also helped to build new referral and partner sources.

The COVID-19 patients were not enough to offset the admissions dip, however. Admissions were at 74,327 for Q2 2020, down about 9% from 81,763 in Q2 2019.

Kusserow is still optimistic that those numbers are even better than they should be at this point, considering the state of COVID-19.

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“Our admissions would also suggest that we are starting to realize that trend of patients wanting to avoid admission into SNFs and other facility-based settings,” Kusserow said. “It is without a doubt [now] that the home is the safest place to care for patients.”

Earnings calls tend to favor the glass-half-full outlook. But analysts likewise appear to recognize the solid Q2 from Amedisys under the circumstances.

New York City-based Jefferies Group, an investment bank and financial services company, had generally positive things to say about Amedisys’ position after Q2.

“Amedisys’ Q2 beat is a positive, as it underscores the merits of its highly variable cost structure, management’s success with cost and operational enhancements, as well as progress with PDGM mitigation,” analysts Brian Tanquilut and Jack Slevin wrote in a note.

At a Bank of America event in May, Kusserow called Amedisys recession-proof and suggested it could even be recession-positive. Thus far, that doesn’t look completely off-base.

In addition to its assertion that it’s gaining market share, Amedisys is also planning on innovating and exploring new areas of business moving forward.

“We’re innovating on new ideas — SNF-at-home, dialysis in the home, telehealth, palliative care and our national personal care network,” Kusserow said. “It is truly an exciting time to be a part of Amedisys.”

Utilizing the CARES ACT

While some health care organizations have chosen to reject CARES Act relief funding, Amedisys has deployed at least a portion of the money it received to help offset COVID-19-related costs. In total, Amedisys received $22.78 million of CARES Act and state grants, according to the company.

In Q2, the company paid out $9 million in employee bonuses, $11 million for PPE and $2 million in quarantine pay, bringing the total of COVID-19-related costs to $23 million. The cost for PPE has been 5 times the normal level, the company said.

Still, Amedisys leadership felt that because it made the decision to take on COVID-19 patients right away, rewarding its workers was the right thing to do.

“Employees are always our most important asset, and patients and their families are the most important commitment,” Kusserow said. “[That has] been at the forefront of our decision-making during this pandemic. As such, I am proud to say that during the quarter, we gave out over $9 million of bonuses to home health, hospice, personal care and all front-line caregivers that have seen patients during the pandemic.”



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