| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
March 31, 2023
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
| Delaware | 11-3131700 | |||||||
| (State or other jurisdiction of
| (I.R.S. Employer
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| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Common Stock, par value $0.001 per share | AMED | The NASDAQ Global Select Market | ||||||||||||
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||||||||
| Emerging growth company | ☐ | |||||||||||||||||||
April 28, 2023.
TABLE OF CONTENTS;;; PART I. ITEM 1. 345ITEM 2. 16ITEM 3 29ITEM 4. 29ITEM 1. 30ITEM 1A. 30ITEM 2. 30ITEM 3. 30ITEM 4. 30ITEM 5. 30ITEM 6. 3132
SPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTSWhen included in this Quarterly Report on Form10-Q, or in other documents that we file with the Securities and Exchange Commission (“SEC”) or in statements made by or on behalf of the Company, words like “believes,” “belief,” “expects,” “strategy,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” “will,” “could,” “would,” “should” and similar expressions are intended to identify forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a variety of risks and uncertainties that could cause actual results to differ materially from those described therein. These risks and uncertainties include, but are not limited to, the following: the risk that the cost savings and any revenue synergies or other synergies from the proposed merger with Option Care Health may not be realized or may take longer than anticipated to be realized; disruption from the proposed merger with patient, payer, provider, referral sources, supplier or management and employee relationships; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with Option Care Health or the inability to complete the proposed transaction on the anticipated terms and timetable; the risk that necessary regulatory approvals for the proposed merger with Option Care Health are delayed, are not obtained or are obtained subject to conditions that are not anticipated; the failure of the conditions to the proposed merger to be satisfied; the inability to complete the proposed transaction due to the failure to obtain approval of the stockholders at Option Care Health or Amedisys or to satisfy any other condition in a timely manner or at all; the risks related to the integration of the combined businesses, including the risk that the integration will be materially delayed or will be more costly or difficult than expected; the ability of the combined company to execute carefully its strategic plans; the costs related to the proposed transaction; the diversion of management time on merger-related issues; the ability of Option Care Health to effectively manage the larger and more complex operations of the combined company following the proposed merger with the Company; reputational risk related to the proposed merger; the risk of litigation or regulatory action related to the proposed merger; changes in Medicare and other medical payment levels,levels; changes in payments and covered services by federal and state governments; future cost containment initiatives undertaken by third-party payors; changes in the episodic versus non-episodic mix of our payors, the case mix of our patients and payment methodologies; staffing shortages driven by the competitive labor market; our ability to open care centers, acquire additional care centersattract and integrate and operate these care centers effectively,retain qualified personnel; competition in the healthcare industry; our ability to maintain or establish new patient referral sources; changes in or our failure to comply with existing federal and state laws or regulations or the inability to comply with new government regulations on a timely basis, competition inbasis; the healthcare industry, our ability to integrate our personal care segment intoimpact of the novel coronavirus pandemic ("COVID-19") on our business, changes in the case mixfinancial condition and results of patients and payment methodologies,operations; changes in estimates and judgments associated with critical accounting policies,policies; our ability to maintain or establish new patient referral sources,consistently provide high-quality care; our ability to attractkeep our patients and retain qualified personnel, changes in payments and covered services by federal and state governments, future cost containment initiatives undertaken by third-party payors,employees safe; our access to financing,financing; our ability to meet debt service requirements and comply with covenants in debt agreements,agreements; business disruptions due to natural or man-made disasters, climate change or acts of terrorism, widespread protests or civil unrest; our ability to open care centers, acquire additional care centers and integrate and operate these care centers effectively; our ability to realize the anticipated benefits of acquisitions, investments and joint ventures; our ability to integrate, manage and keep our information systems secure, our ability to comply with requirements stipulated in our corporate integrity agreementsecure; the impact of inflation; and changes in lawlaws or developments with respect to any litigation relating to the Company, including various other matters, many of which are beyond our control.Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on any forward-looking statement as a prediction of future events. We expressly disclaim any obligation or undertaking and we do not intend to release publicly any updates or changes in our expectations concerning the forward-looking statements or any changes in events, conditions or circumstances upon which any forward-looking statement may be based, except as required by law. For a discussion of some of the factors discussed above as well as additional factors, see our Annual Report on Form10-K for the year ended December 31, 2016,2022, filed with the SEC on March 1, 2017,February 16, 2023, particularly, Part I, Item 1A—1A - Risk Factors therein, which are incorporated herein by reference and Part II, Item 1A. Risk Factors of this Quarterly Report on Form10-Q. Additional risk factors may also be described in reports that we file from time to time with the SEC.Available InformationOur company website address is www.amedisys.com. We use our website as a channel of distribution for important company information. Important information, including press releases, investoranalyst presentations and financial information regarding our company, is routinely posted on and accessible on the Investor Relations subpage of our website, which is accessible by clicking on the tab labeled “Investors” on our website home page. Visitors to our website can also register to receive automatice-mail and other notifications alerting them when new information is made available on the Investor Relations subpage of our website. In addition, we make available on the Investor Relations subpage of our website (under the link “SEC filings”), free of charge, our annual reports on Form10-K, quarterly reports on Form10-Q, current reports on Form8-K, ownership reports on Forms 3, 4 and 5 and any amendments to those reports as soon as reasonably practicable after we electronically file or furnish such reports with the SEC. Further, copies of our Certificate of Incorporation and Bylaws, our Code of Ethical Business Conduct, our Corporate Governance Guidelines and the charters for the Audit, Compensation, Quality of Care, Compliance and Ethics and Nominating and Corporate Governance Committees of our Board are also available on the Investor Relations subpage of our website (under the link “Corporate Governance”“Governance”).Additionally, the public may read and copy any Reference to our website does not constitute incorporation by reference of the materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Informationinformation contained on the operationwebsite and should not be considered part of the Public Reference Room may be obtained by calling the SEC at(800) SEC-0330.this document. Our electronically filed reports can also be obtained on the SEC’s internet site at http://www.sec.gov.1PART I. FINANCIAL INFORMATION
ASSETS Current assets: Cash and cash equivalents Patient accounts receivable, net of allowance for doubtful accounts of $19,933 and 17,716 Prepaid expenses Other current assets Total current assets Property and equipment, net of accumulated depreciation of $148,301 and $138,650 Goodwill Intangible assets, net of accumulated amortization of $29,932 and $27,864 Deferred income taxes Other assets, net Total assets LIABILITIES AND EQUITY Current liabilities: Accounts payable Payroll and employee benefits Accrued expenses Current portion of long-term obligations Total current liabilities Long-term obligations, less current portion Other long-term obligations Total liabilities Commitments and Contingencies—Note 5 Equity: Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued or outstanding Common stock, $0.001 par value, 60,000,000 shares authorized; 35,687,068 and 35,253,577 shares issued; and 33,913,558 and 33,597,215 shares outstanding Additionalpaid-in capital Treasury stock at cost, 1,773,510 and 1,656,362 shares of common stock Accumulated other comprehensive income Retained earnings (deficit) Total Amedisys, Inc. stockholders’ equity Noncontrolling interests Total equity Total liabilities and equity Net service revenue Cost of service, excluding depreciation and amortization General and administrative expenses: Salaries and benefits Non-cash compensation Other Provision for doubtful accounts Depreciation and amortization Securities Class Action Lawsuit settlement, net Operating expenses Operating income Other income (expense): Interest income Interest expense Equity in earnings from equity method investments Miscellaneous, net Total other income, net Income before income taxes Income tax expense Net income Net income attributable to noncontrolling interests Net income attributable to Amedisys, Inc. Basic earnings per common share: Net income attributable to Amedisys, Inc. common stockholders Weighted average shares outstanding Diluted earnings per common share: Net income attributable to Amedisys, Inc. common stockholders Weighted average shares outstanding STOCKHOLDERS’ EQUITY thousands, except common stock shares) Cash Flows from Operating Activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Provision for doubtful accounts Non-cash compensation 401(k) employer match (Gain) loss on disposal of property and equipment Deferred income taxes Equity in earnings from equity method investments Amortization of deferred debt issuance costs Return on equity investment Changes in operating assets and liabilities, net of impact of acquisitions: Patient accounts receivable Other current assets Other assets Accounts payable Accrued expenses Other long-term obligations Net cash provided by operating activities Cash Flows from Investing Activities: Proceeds from sale of deferred compensation plan assets Purchase of investment Purchases of property and equipment Proceeds from the sale of property and equipment Acquisitions of businesses, net of cash acquired Net cash used in investing activities Cash Flows from Financing Activities: Proceeds from issuance of stock upon exercise of stock options and warrants Proceeds from issuance of stock to employee stock purchase plan Shares withheld upon stock vesting Tax benefit from stock options exercised and restricted stock vesting Non-controlling interest distribution Sale ofnon-controlling interest Proceeds from revolving line of credit Repayments of revolving line of credit Principal payments of long-term obligations Purchase of company stock Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental Disclosures of Cash Flow Information: Cash paid for interest Cash paid for income taxes, net of refunds received We divested our personal care business on March 31, 2023. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from the interim financial information presented, as allowed by SEC rules and regulations. These reclassifications had no effect on our previously reported net income. See Note 8 - Segment Information for additional information regarding these reclassifications. additional information. is as follows: acute-care hospitalization rates). terms, the majority of which range from 95% to 100% of Medicare rates. historical experience and success rates in the claim appeals and adjudication process. based on our historical experience to reflect the estimated transaction price. rendered based on gross charges for the services provided, reduced by estimates for contractual and non-contractual revenue adjustments. We receive payment for providing such services from payors, including state and local governmental agencies, managed care organizations, commercial insurers and private consumers. Payors include the following elder service agencies: Aging Services Access Points ("ASAPs"), Senior Care Options ("SCOs"), Program of All-Inclusive Care for the Elderly ("PACE") and the Veterans Administration ("VA"). We believe the receivable. and High Acuity Care make estimates and assumptions surrounding projected revenues and costs, growth rates and discount rates. Financial Instrument Long-term obligationsITEM 1. FINANCIAL STATEMENTSCONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands, except share data) September 30, 2017
(Unaudited) December 31,
2016 $ 66,114 $ 30,197 177,402 166,056 9,770 7,397 14,904 11,260 268,190 214,910 32,695 36,999 313,663 288,957 44,845 46,755 91,160 107,940 48,976 38,468 $ 799,529 $ 734,029 $ 22,815 $ 30,358 86,139 82,480 83,516 63,290 9,387 5,220 201,857 181,348 80,523 87,809 3,930 3,730 286,310 272,887 — — 36 35 561,380 537,472 (53,228 ) (46,774 ) 15 15 4,053 (30,545 ) 512,256 460,203 963 939 513,219 461,142 $ 799,529 $ 734,029 March 31, 2023 (Unaudited) December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 49,436 $ 40,540 Restricted cash 19,664 13,593 Patient accounts receivable 294,122 296,785 Prepaid expenses 18,754 11,628 Other current assets 23,581 26,415 Total current assets 405,557 388,961 Property and equipment, net of accumulated depreciation of $105,183 and $101,364 33,353 16,026 Operating lease right of use assets 85,211 102,856 Goodwill 1,244,679 1,287,399 Intangible assets, net of accumulated amortization of $16,071 and $14,604 99,929 101,167 Other assets 78,230 79,836 Total assets $ 1,946,959 $ 1,976,245 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 40,017 $ 43,735 Payroll and employee benefits 122,723 125,387 Accrued expenses 137,899 137,390 Current portion of long-term obligations 26,958 15,496 Current portion of operating lease liabilities 25,453 33,521 Total current liabilities 353,050 355,529 Long-term obligations, less current portion 373,202 419,420 Operating lease liabilities, less current portion 59,826 69,504 Deferred income tax liabilities 22,752 20,411 Other long-term obligations 4,781 4,808 Total liabilities 813,611 869,672 Commitments and Contingencies—Note 7 Equity: Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued or outstanding — — Common stock, $0.001 par value, 60,000,000 shares authorized; 37,938,354 and 37,891,186 shares issued; 32,544,145 and 32,511,465 shares outstanding 38 38 Additional paid-in capital 758,669 755,063 Treasury stock, at cost, 5,394,209 and 5,379,721 shares of common stock (462,508) (461,200) Retained earnings 782,918 757,672 Total Amedisys, Inc. stockholders’ equity 1,079,117 1,051,573 Noncontrolling interests 54,231 55,000 Total equity 1,133,348 1,106,573 Total liabilities and equity $ 1,946,959 $ 1,976,245 The accompanying notes are an integral part of these condensed consolidated financial statements.2CONDENSED CONSOLIDATED INCOME STATEMENTS OF OPERATIONS(Amounts in thousands, except per share data)(Unaudited) For the Three-Month Periods
Ended September 30, For the Nine-Month Periods
Ended September 30, 2017 2016 2017 2016 $ 380,163 $ 361,595 $ 1,129,442 $ 1,071,158 226,642 212,124 662,192 620,466 77,130 77,019 226,532 231,079 3,558 4,750 11,788 12,556 38,189 42,658 120,223 134,951 7,086 5,471 18,078 13,664 4,185 5,214 13,139 14,662 — — 28,712 — 356,790 347,236 1,080,664 1,027,378 23,373 14,359 48,778 43,780 44 14 104 45 (1,335 ) (1,136 ) (3,600 ) (3,551 ) 900 3,244 3,149 3,602 1,043 1,713 3,282 3,106 652 3,835 2,935 3,202 24,025 18,194 51,713 46,982 (9,364 ) (6,693 ) (17,324 ) (18,323 ) 14,661 11,501 34,389 28,659 (103 ) (66 ) (240 ) (315 ) $ 14,558 $ 11,435 $ 34,149 $ 28,344 $ 0.43 $ 0.34 $ 1.02 $ 0.86 33,838 33,309 33,640 33,142 $ 0.42 $ 0.34 $ 1.00 $ 0.84 34,363 33,823 34,255 33,699 For the Three-Month
Periods Ended March 31, 2023 2022 Net service revenue $ 556,389 $ 545,257 Operating expenses: Cost of service, inclusive of depreciation 315,010 304,820 General and administrative expenses: Salaries and benefits 126,339 123,480 Non-cash compensation 3,273 7,347 Depreciation and amortization 4,443 8,008 Other 64,945 53,640 Total operating expenses 514,010 497,295 Operating income 42,379 47,962 Other income (expense): Interest income 406 13 Interest expense (7,517) (3,173) Equity in earnings (loss) from equity method investments 123 (1,403) Miscellaneous, net (682) 333 Total other expense, net (7,670) (4,230) Income before income taxes 34,709 43,732 Income tax expense (9,800) (12,019) Net income 24,909 31,713 Net loss (income) attributable to noncontrolling interests 337 (42) Net income attributable to Amedisys, Inc. $ 25,246 $ 31,671 Basic earnings per common share: Net income attributable to Amedisys, Inc. common stockholders $ 0.78 $ 0.97 Weighted average shares outstanding 32,558 32,555 Diluted earnings per common share: Net income attributable to Amedisys, Inc. common stockholders $ 0.77 $ 0.97 Weighted average shares outstanding 32,643 32,766 The accompanying notes are an integral part of these condensed consolidated financial statements.3CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)(Unaudited) For the Nine-Month Periods
Ended September 30, 2017 2016 $ 34,389 $ 28,659 13,139 14,662 18,078 13,664 11,788 12,556 6,547 5,134 (22 ) 556 17,228 18,689 (3,149 ) (3,602 ) 555 555 4,656 1,913 (28,924 ) (46,107 ) (5,896 ) 870 (12,202 ) (11,909 ) (5,430 ) 7,308 22,584 (9,100 ) 201 (150 ) 73,542 33,698 622 230 (436 ) (750 ) (9,074 ) (13,502 ) 118 — (24,128 ) (31,378 ) (32,898 ) (45,400 ) 4,214 — 1,798 1,818 (6,454 ) — — 7,241 (216 ) (284 ) — 405 — 128,500 — (128,500 ) (4,069 ) (3,750 ) — (12,315 ) (4,727 ) (6,885 ) 35,917 (18,587 ) 30,197 27,502 $ 66,114 $ 8,915 $ 2,188 $ 2,276 $ 315 $ 758 For the Three-Months Ended March 31, 2023 Total Common Stock Additional
Paid-in
CapitalTreasury
StockRetained
EarningsNoncontrolling
InterestsShares Amount Balance, December 31, 2022 $ 1,106,573 37,891,186 $ 38 $ 755,063 $ (461,200) $ 757,672 $ 55,000 Issuance of stock – employee stock purchase plan 816 11,498 — 816 — — — Issuance/(cancellation) of non-vested stock — 35,670 — — — — — Non-cash compensation 3,273 — — 3,273 — — — Surrendered shares (1,308) — — — (1,308) — — Purchase of noncontrolling interest (630) — — (483) — — (147) Noncontrolling interest distributions (285) — — — — — (285) Net income 24,909 — — — — 25,246 (337) Balance, March 31, 2023 $ 1,133,348 37,938,354 $ 38 $ 758,669 $ (462,508) $ 782,918 $ 54,231 For the Three-Months Ended March 31, 2022 Total Common Stock Additional
Paid-in
CapitalTreasury
StockRetained
EarningsNoncontrolling
InterestsShares Amount Balance, December 31, 2021 $ 976,323 37,674,868 $ 38 $ 728,118 $ (435,868) $ 639,063 $ 44,972 Issuance of stock – employee stock purchase plan 985 7,161 — 985 — — — Issuance/(cancellation) of non-vested stock — 80,494 — — — — — Exercise of stock options 86 1,182 — 86 — — — Non-cash compensation 7,347 — — 7,347 — — — Surrendered shares (4,682) — — — (4,682) — — Noncontrolling interest contributions 9,552 — — — — — 9,552 Noncontrolling interest distributions (672) — — — — — (672) Net income 31,713 — — — — 31,671 42 Balance, March 31, 2022 $ 1,020,652 37,763,705 $ 38 $ 736,536 $ (440,550) $ 670,734 $ 53,894 The accompanying notes are an integral part of these condensed consolidated financial statements.4CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands)(Unaudited) For the Three-Month
Periods Ended March 31, 2023 2022 Cash Flows from Operating Activities: Net income $ 24,909 $ 31,713 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization (inclusive of depreciation included in cost of service) 5,694 8,008 Non-cash compensation 3,273 7,347 Amortization and impairment of operating lease right of use assets 8,622 10,096 (Gain) loss on disposal of property and equipment (70) 5 Loss on personal care divestiture 2,186 — Deferred income taxes 2,772 3,205 Equity in (earnings) loss from equity method investments (123) 1,403 Amortization of deferred debt issuance costs 248 248 Return on equity method investments 1,787 1,710 Changes in operating assets and liabilities, net of impact of acquisitions: Patient accounts receivable (7,476) (18,618) Other current assets (4,128) 7,882 Operating lease right of use assets (918) (749) Other assets (111) 247 Accounts payable (3,457) (2,115) Accrued expenses 741 7,483 Other long-term obligations (28) (57) Operating lease liabilities (7,960) (9,187) Net cash provided by operating activities 25,961 48,621 Cash Flows from Investing Activities: Proceeds from the sale of deferred compensation plan assets 19 22 Proceeds from the sale of property and equipment — 37 Purchases of property and equipment (1,350) (902) Investments in technology assets (210) (236) Purchase of cost method investment — (15,000) Proceeds from personal care divestiture 47,787 — Acquisitions of businesses, net of cash acquired (350) — Net cash provided by (used in) investing activities 45,896 (16,079) Cash Flows from Financing Activities: Proceeds from issuance of stock upon exercise of stock options — 86 Proceeds from issuance of stock to employee stock purchase plan 816 985 Shares withheld to pay taxes on non-cash compensation (1,308) (4,682) Noncontrolling interest contributions — 652 Noncontrolling interest distributions (285) (672) Proceeds from borrowings under revolving line of credit 8,000 — Repayments of borrowings under revolving line of credit (8,000) — Principal payments of long-term obligations (55,313) (3,771) Purchase of noncontrolling interest (800) — Net cash used in financing activities (56,890) (7,402) Net increase in cash, cash equivalents and restricted cash 14,967 25,140 Cash, cash equivalents and restricted cash at beginning of period 54,133 45,769 Cash, cash equivalents and restricted cash at end of period $ 69,100 $ 70,909 5For the Three-Month
Periods Ended March 31,2023 2022 Supplemental Disclosures of Cash Flow Information: Cash paid for interest $ 6,654 $ 1,864 Cash paid for income taxes, net of refunds received $ 352 $ 551 Cash paid for operating lease liabilities $ 8,878 $ 9,936 Cash paid for finance lease liabilities $ 2,457 $ 357 Supplemental Disclosures of Non-Cash Activity: Right of use assets obtained in exchange for operating lease liabilities $ 7,083 $ 11,203 Right of use assets obtained in exchange for finance lease liabilities $ 20,790 $ 216 Reductions to right of use assets resulting from reductions to operating lease liabilities $ 141 $ 299 Reductions to right of use assets resulting from reductions to finance lease liabilities $ 369 $ — Noncontrolling interest contribution $ — $ 8,900 The accompanying notes are an integral part of these condensed consolidated financial statements.6AMEDISYS, INC. AND SUBSIDIARIESNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)1. NATURE OF OPERATIONS, CONSOLIDATION AND PRESENTATION OF FINANCIAL STATEMENTSAmedisys, Inc., a Delaware corporation and(together with its consolidated subsidiaries, (“Amedisys,referred to herein as “Amedisys,” “we,” “us,” or “our”) are, is a multi-state provider of home health, hospice, personal care and personalhigh acuity care services with approximately 74%72% and 75% of our consolidated net service revenue derived from Medicare for the three and nine-monththree-month periods ended September 30, 2017March 31, 2023 and approximately 78% of our revenue derived from Medicare for the three and nine-month periods ended September 30, 2016.2022, respectively. As of September 30, 2017,March 31, 2023, we owned and operated 328348 Medicare-certified home health care centers, 81165 Medicare-certified hospice care centers and 16 personal-care9 admitting high acuity care centersjoint ventures in 3437 states within the United States and the District of Columbia.Basis of PresentationIn our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly our financial position, our results of operations and our cash flows in accordance with U.S. Generally Accepted Accounting Principlesgenerally accepted accounting principles (“U.S. GAAP”). for interim financial reporting. Our results of operations for the interim periods presented are not necessarily indicative of the results of our operations for the entire year and have not been audited by our independent auditors.Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from the interim financial information presented. This report should be read in conjunction with our consolidated financial statements and related notes included in our Annual Report on Form10-K for the year ended December 31, 2016,2022, as filed with the Securities and Exchange Commission (“SEC”) on March 1, 2017February 16, 2023 (the “Form10-K”), which includes information and disclosures not included herein.Use of EstimatesOur accounting and reporting policies conform with U.S. GAAP. In preparing the unaudited condensed consolidated financial statements, we are required to make estimates and assumptions that impact the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.Reclassifications and ComparabilityReclassificationCertain reclassifications have been made to prior periods’periods' financial statements in order to conform to the current period’syear presentation.Principles of ConsolidationThese unaudited condensed consolidated financial statements include the accounts of Amedisys, Inc., and our wholly ownedwholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in our accompanying unaudited condensed consolidated financial statements, and business combinations accounted for as purchases have been included in our unaudited condensed consolidated financial statements from their respective dates of acquisition. In addition to our wholly owned subsidiaries, we also have certain equity investments that are accounted for as set forth below.Equity InvestmentsWewe either consolidate, investments when the entity is a variable interest entity and we are the primary beneficiary or if we have controlling interests in the entity, which is generally ownership in excess of 50%. Third party equity interests in our consolidated joint ventures are reflected as noncontrolling interests in our condensed consolidated financial statements.We account for investments in entities in which we have the ability to exercise significant influence under the equity method if we hold 50% or less of the voting stock and the entity is not a variable interest entity in which we are the primary beneficiary. The book value of investments that we accounted for under the equity method of accounting was $26.8 million as of September 30, 2017, and $27.8 million as of December 31, 2016. Weor account for investments in entities in which we have less than a 20% ownership interest under the cost method of accounting if we do not have the ability to exercise significant influence over the investee.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESRevenue RecognitionWe earn net service revenue through our home health, hospice and personal-care care centers by providing a variety of services almost exclusively in the homes of our patients. This net service revenue is earned and billed either on an episode of care basis, on a per visit basis or on a daily basis depending upon the payment terms and conditions established with each payoraccounting. See Note 3 - Investments for services provided. We refer to home health revenue earned and billed on a60-day episode of care as episodic-based revenue.7AMEDISYS, INC. AND SUBSIDIARIESNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)When we record our2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESRevenue RecognitionWe account for service revenue from contracts with customers in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, and as such, we record it netrecognize service revenue in the period in which we satisfy our performance obligations under our contracts by transferring our promised services to our customers in amounts that reflect the consideration to which we expect to be entitled in exchange for providing patient care, which are the transaction prices allocated to the distinct services. Our cost of estimatedobtaining contracts is not material.Revenues are recognized as performance obligations are satisfied, which varies based on the nature of the services provided. Our performance obligation is the delivery of patient care services in accordance with the nature and frequency of services outlined in physicians' orders, which are determined by a physician based on a patient's specific goals.Our performance obligations relate to contracts with a duration of less than one year; therefore, we have elected to apply the optional exemption provided by ASC 606 and are not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. The unsatisfied or partially unsatisfied performance obligations are generally completed when the patients are discharged, which generally occurs within days or weeks of the end of the reporting period.We determine the transaction price based on gross charges for services provided, reduced by estimates for contractual and non-contractual revenue adjustments. Contractual revenue adjustments are recorded for the difference between our standard rates and contractualthe contracted rates to be realized from patients, third-party payors and others for services provided. Non-contractual revenue adjustments include discounts provided to self-pay, uninsured patients or other payors, adjustments resulting from payment reviews and adjustments arising from our inability to obtain appropriate billing documentation, authorizations or face-to-face documentation. Subsequent changes to the estimate of the transaction price are recorded as adjustments to reflectnet service revenue in the period of change.Non-contractual revenue adjustments are recorded for self-pay, uninsured patients and other payors by major payor class based on our historical collection experience, aged accounts receivable by payor and current industry conditions. The non-contractual revenue adjustments represent the difference between amounts billed and amounts we expect to collect based on our collection history with similar payors. We assess our ability to collect for the healthcare services provided at the time of patient admission based on our verification of the patient's insurance coverage under Medicare, Medicaid, and other commercial or managed care insurance programs. Medicare represented approximately 72% and 75% of our consolidated net service revenue for the three-month periods ended March 31, 2023 and 2022, respectively.Amounts due from third-party payors, primarily commercial health insurers and government programs (Medicare and Medicaid), include variable consideration for retroactive revenue adjustments due to settlements of audits and payment reviews. We determine our estimates for non-contractual revenue adjustments related to audits and payment reviews based on our historical experience and success rates in the claim appeals and adjudication process.We determine our estimates for non-contractual revenue adjustments related to our inability to obtain appropriate billing documentation, authorizations or face-to-face documentation based on our historical experience which primarily includes a historical collection rate of over 99% on Medicare claims. Revenue is recorded at amounts we estimate to be realizable for services provided,provided.8AMEDISYS, INC. AND SUBSIDIARIESNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)Net service revenue by payor class as discussed below. We believe, based on information currently available to us and based on our judgment, that changes to one or more factors that impact the accounting estimates (such as our estimates related to revenue adjustments, contractual adjustments and episodes in progress) we make in determininga percentage of total net service revenue which changes are likely to occur from period to period, will not materially impact our reported consolidated financial condition, results of operations, cash flows or our future financial results.For the Three-Month Periods Ended March 31, 2023 2022 Home Health: Medicare 39 % 41 % Non-Medicare - Episodic-based 7 % 8 % Non-Medicare - Non-episodic based 15 % 12 % Hospice: Medicare 33 % 34 % Non-Medicare 2 % 2 % Personal Care 3 % 3 % High Acuity Care 1 % < 1% 100 % 100 % Home Health Revenue RecognitionMedicare RevenueAll Medicare contracts are required to have a signed plan of care which represents a single performance obligation, comprised of the delivery of a series of distinct services that are substantially similar and have a similar pattern of transfer to the customer. Accordingly, we account for the series of services ("episode") as a single performance obligation satisfied over time, as the customer simultaneously receives and consumes the benefits of the goods and services provided. An episode starts the first day a billable visit is performed and ends 60 days later or upon discharge, if earlier, with multiple continuous episodes allowed. Each 60-day episode includes two 30-day payment periods.Net service revenue is recorded under the Medicare prospective payment system (“PPS”) based on a60-day episodethe established Federal Medicare home health payment rate for a 30-day period of care. ASC 606 notes that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value of the entity’s performance completed to date, the entity may recognize revenue in the amount to which the entity has a right to invoice. We have elected to apply the "right to invoice" practical expedient and therefore, our revenue recognition is based on the reimbursement we are entitled to for each 30-day payment period. We utilize our historical average length of stay for each 30-day period of care as the measure of progress towards the satisfaction of our performance obligation.Effective January 1, 2020, the Centers for Medicare and Medicaid Services ("CMS") implemented a revised case-mix adjustment methodology, the Patient-Driven Groupings Model ("PDGM"). PDGM uses timing, admission source, functional impairment levels and principal and other diagnoses to case-mix adjust payments. The case-mix adjusted payment for a 30-day period of care is subject to adjustmentadditional adjustments based on certain variables, including, but not limited to:to (a) an outlier payment if our patient’spatient's care was unusually costly (capped at 10% of total reimbursement per provider number); (b) a low utilization payment adjustment (“LUPA”) if the number of visits provided was fewerless than five;the established threshold, which ranges from two to six visits and varies for every case-mix group; (c) a partial payment if oura patient is transferred to another provider or we received a patient from another provider before completing the episode;30-day period of care; and (d) athe applicable geographic wage index. Payments for routine and non-routine supplies are included in the 30-day payment adjustment based upon the level of therapy services required (withrate.Medicare can also make various incremental adjustments made for additional visits, with larger payment increases associated with the sixth, fourteenth and twentieth visit thresholds); (e) adjustments to payments received if we are unable to perform periodic therapy assessments; (f) the number of episodes of care provided to a patient, regardless of whether the same home health provider provided care for the entire series of episodes; (g) changes in the base episode payments established by the Medicare Program; (h) adjustments to the base episode payments for case mix and geographic wages; and (i) recoveries of overpayments. In addition, we make adjustments to Medicare revenue if we find that we are unable to produce appropriate documentation of a face to face encounter between the patient and physician.We make adjustments to Medicare revenue to reflect differences between estimated and actual payment amounts, our discovered inability to obtain appropriate billing documentation or authorizations and other reasons unrelated to credit risk.acceptable authorizations. We estimate the impact of such adjustments based on our historical experience, which primarily includes a historical collection rate of over 99% on Medicare claims, and record this estimate during the period in which services are rendered as an estimatedto revenue adjustment andwith a corresponding reduction to patient accounts receivable. Therefore, we believe that our reported net service revenue and patient accounts receivable will be the net amounts to be realizedAmounts due from Medicare include variable consideration for retroactive revenue adjustments due to settlements of audits and payment reviews. We determine our estimates for non-contractual revenue adjustments related to audits and payment reviews based on our historical experience and success rates in the claim appeals and adjudication process.The Medicare home health benefit requires that beneficiaries be homebound (meaning that the beneficiary is unable to leave his/her home without a considerable and taxing effort), require intermittent skilled nursing, physical therapy or speech therapy services rendered.In addition to revenue recognized on completed episodes, we also recognizeand receive treatment under a portion of revenue associated with episodes in progress. Episodes in progress are60-day episodesplan of care established and periodically reviewed by a physician.9AMEDISYS, INC. AND SUBSIDIARIESNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)Effective January 1, 2022, CMS implemented a new Notice of Admission ("NOA") process. The NOA process requires a one-time submission that begin duringestablishes the reportinghome health period but wereof care and covers all contiguous 30-day periods of care until the patient is discharged from home health services. If the NOA is not completed assubmitted timely, a payment reduction is applied equal to 1/30 of the end30-day payment rate for each day from the start of care until the period. We estimate this revenue ondate the NOA is submitted.Non-Medicare RevenuePayments from non-Medicare payors are either a monthly basis basedpercentage of Medicare rates, per-visit rates or case rates depending upon historical trends. The primary factors underlying this estimate are the numberterms and conditions established with such payors. Approximately 30% of episodesour managed care contract volume affords us the opportunity to receive additional payments if we achieve certain quality or process metrics as defined in progress at the end of the reporting period, expected Medicare revenue per episodeeach contract (e.g. star ratings and our estimate of the average percentage complete based on the number of days elapsed during an episode of care. As of September 30, 2017 and 2016, the difference between the cash received from Medicare for a request for anticipated payment (“RAP”) on episodes in progress and the associated estimated revenue was immaterial and, therefore, the resulting credits were recorded as a reduction to our outstanding patient accounts receivable in our condensed consolidated balance sheets for such periods.Non-Medicare RevenueEpisodic-based Revenue.We recognize revenue in a similar manner as we recognize Medicare revenue for episodic-based ratesamounts that are paid by other insurance carriers, including Medicare Advantage programs; however, these ratesamounts can vary based upon the negotiated terms.Non-episodic based Revenue.Gross For our per visit contracts, gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to our established or estimatedper-visit rates, as applicable. rates. For our case rate contracts, gross revenue is recorded over our historical average length of stay using the established case rate for each admission. Contractual revenue adjustments are recorded for the difference between our standard rates and the contracted rates to be realized from patients, third parties and others for services provided and are deducted from gross revenue to determine net service revenue. We also make non-contractual revenue and are also recorded as a reductionadjustments to non-episodic revenue based on our outstanding patient accounts receivable. In addition, wehistorical experience to reflect the estimated transaction price. We receive a minimal amount of our net service revenue from patients who are either self-insured or are obligated for an insuranceco-payment.Under our case rate contracts, we may receive reimbursement before all services are rendered. Any cash received that exceeds the associated revenue earned is recorded to deferred revenue in accrued expenses within our condensed consolidated balance sheets.Hospice Revenue RecognitionHospice Medicare RevenueGross revenue is recorded on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are predetermined daily or hourly rates for each of the four levels of care we deliver. The four levels of care are routine care, general inpatient care, continuous home care and respite care. Routine care accountsaccounted for 98%97% of our total net Medicare hospice service revenue for each of the three and nine-monththree-month periods ended September 30, 2017,March 31, 2023 and 99% of our total net Medicare hospice serviceAMEDISYS, INC. AND SUBSIDIARIESNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)revenue for each of the three and nine-month periods ended September 30, 2016. Beginning January 1, 2016, the Centers for Medicare and Medicaid Services (“CMS”) has provided for2022. There are two separate payment rates for routine care: payments for the first 60 days of care and care beyond 60 days. In addition to the two routine rates, beginning January 1, 2016, Medicare iswe may also reimbursing forreceive a service intensityadd-on (“SIA”). The SIA is based on visits made in the last seven days of life by a registered nurse (“RN”) or medical social worker (“MSW”) for patients in a routine level of care.The performance obligation is the delivery of hospice services to the patient, as determined by a physician, each day the patient is on hospice care.We make adjustments to Medicare revenue for annon-contractual revenue adjustments, which include our inability to obtain appropriate billing documentation or acceptable authorizations and other reasons unrelated to credit risk. We estimate the impact of these non-contractual revenue adjustments based on our historical experience, which primarily includes oura historical collection rate of over 99% on Medicare claims, and record it during the period services are rendered as an estimatedrendered.Amounts due from Medicare include variable consideration for retroactive revenue adjustmentadjustments due to settlements of audits and as a reductionpayment reviews. We determine our estimates for non-contractual revenue adjustments related to audits and payment reviews based on our outstanding patient accounts receivable.Additionally, as Medicareour hospice service revenue is subject to certain limitations on payments from Medicare which are considered variable consideration. We are subject to an inpatient cap limit and an overall Medicare payment cap for each provider number, wenumber. We monitor these caps on a provider-by-provider basis and estimate amounts due back to Medicare if we estimate a cap has been exceeded. We record these adjustments as a reduction to revenue and an increase in other accrued liabilities. Beginning for the cap year ending October 31, 2014, providersexpenses within our condensed consolidated balance sheets. Providers are required to self-report and pay their estimated cap liability by March 31stFebruary 28th of the following year. As of September 30, 2017, we have settled our Medicare hospice reimbursements for all fiscal years through OctoberMarch 31, 2012. As of September 30, 20172023, we have recorded $1.0$4.1 million for estimated amounts due back to Medicare10AMEDISYS, INC. AND SUBSIDIARIESNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)in accrued expenses for the Federal cap years ended October 31, 2016 through September 30, 2023. As of December 31, 2022, we had recorded $4.3 million for estimated amounts due back to Medicare in other accrued liabilitiesexpenses for the Federal cap years ended October 31, 20132016 through October 31, 2017. As of December 31, 2016, we hadSeptember 30, 2023.Hospice Non-Medicare RevenueGross revenue is recorded $0.8 million for estimated amounts due back to Medicare in other accrued liabilities for the Federal cap years ended October 31, 2013 through October 31, 2016.HospiceNon-Medicare RevenueWe record gross revenue on an accrual basis based upon the date of service at amounts equal to our established rates or estimated per day rates, as applicable. Contractual revenue adjustments are recorded for the difference between our establishedstandard rates and the amounts estimatedcontractual rates to be realizablerealized from patients, third partiesthird-party payors and others for services provided and are deducted from gross revenue to determine our net service revenue. We also make non-contractual adjustments to non-Medicare revenue and patient accounts receivable.Personal Care Revenue RecognitionPersonal CareNon-Medicare RevenueWe generate net service revenues by providing our services directly to patients primarily on a per hour, visit or unit basis. We receive payment for providing such services from our customers, including state and local governmental agencies, managed care organizations, commercial insurers and private consumers. Net service revenues are principally provided based on authorized hours, visits or units determined by the relevant agency, at a rate that is either contractual or fixed by legislation, which are recognized as netlegislation. Net service revenue is recognized at the time services are rendered.High Acuity Care Revenue RecognitionHigh Acuity Care RevenueOur revenues are derived from contracts with (1) health insurance plans for the coordination and provision of home recovery care services to clinically-eligible patients who are enrolled members in those insurance plans and (2) health system partners for the coordination and provision of home recovery care services to clinically-eligible patients who are discharged early from a health system facility to complete their inpatient stay at home.Under our health insurance plan contracts, we provide home recovery care services, which include hospital-equivalent ("H@H") and skilled nursing facility ("SNF") equivalent services ("SNF@H"), for high acuity care patients on a full risk basis whereby we assume the financial risk for the coordination and payment of all hospital or SNF replacement medical services necessary to treat the medical condition for which the patient was diagnosed in a home-based setting for a 30-day (H@H) or 60-day (SNF@H) episode of care in exchange for a fixed contracted bundled rate. For H@H programs, the fixed rate is based on the assigned diagnosis related group ("DRG") and the 30-day post-discharge related spend. For SNF@H programs, the fixed rate is based on the 60-day post-discharge related spend. Our performance obligation is the coordination and provision of patient care in accordance with physicians’ orders over either a 30-day or 60-day episode of care. The majority of our care coordination services and direct patient care is provided in the first five to seven days of the episode period (the "acute phase"). Monitoring services and follow-up direct patient care, as deemed necessary by the treating physician, are provided throughout the remainder of the episode. Since the majority of our services are provided during the acute phase, we recognize net service revenues over the acute phase based on gross charges for the services provided per the applicable managed care contract rates, reduced by estimates for revenue adjustments.Under our contracts with health system partners, we provide home recovery care services for high acuity patients on a limited risk basis whereby we assume the risk for certain healthcare services during the remainder of an inpatient acute stay serviced at the patient’s home in exchange for a contracted per diem rate. The performance obligation is the coordination and provision of required medical services, as determined by the treating physician, for each day the patient receives inpatient-equivalent care at home. As such, revenues are recognized as services are administered and as our performance obligations are satisfied on a per diem basis, reduced by estimates for revenue adjustments.We recognize adjustments to revenue during the period in which changes to estimates of assigned patient diagnoses or episode terminations become known, in accordance with the applicable managed care contracts. For certain health insurance plans, revenue is reduced by amounts owed by enrollees to healthcare providers under deductible, coinsurance or copay provisions of health insurance plan policies, since those amounts are repaid to the health insurance plans by us as part of a retrospective reconciliation process.11AMEDISYS, INC. AND SUBSIDIARIESNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)Cash, Cash Equivalents and Restricted CashCash and cash equivalents include certificates of deposit and all highly liquid debt instruments with maturities of three months or less when purchased. Restricted cash includes cash that is not available for ordinary business use. As of March 31, 2023 and December 31, 2022, we had $19.7 million and $13.6 million, respectively, classified as restricted cash related to funds placed into escrow accounts in connection with the indemnity, closing payment and other provisions within the purchase agreements of our acquisitions.The following table summarizes the balances related to our cash, cash equivalents and restricted cash (amounts in millions):As of March 31, 2023 As of December 31, 2022 Cash and cash equivalents $ 49.4 $ 40.5 Restricted cash 19.7 13.6 Cash, cash equivalents and restricted cash $ 69.1 $ 54.1 Patient Accounts ReceivableWe report accounts receivable from services rendered at their estimated transaction price, which includes contractual and non-contractual revenue adjustments based on the amounts expected to be due from payors. Our patient accounts receivable are uncollateralized and consist of amounts due from Medicare, Medicaid, other third-party payors and patients. Our non-Medicare third-party payor base is comprised of a diverse group of payors that are geographically dispersed across the country. As of September 30, 2017March 31, 2023, there is no single payor, other than Medicare, that accounts for more than 10% of our total outstanding patient receivables. Thus, we believe there are no other significant concentrations of receivables that would subject us to any significant credit risk in the collection of our patient accounts receivable. We fully reserve for accounts which are aged at 365 days or greater. We write off accounts on a monthly basis once we have exhausted our collection efforts and deem an account to be uncollectible.creditcollectability risk associated with our Medicare accounts, which represent 60% and 61%represented 67% of our net patient accounts receivable at September 30, 2017March 31, 2023 and December 31, 2016, respectively,2022, is limited due to our historical collection rate of over 99% from Medicare and the fact that Medicare is a U.S. government payor. Accordingly, weWe do not record an allowance for doubtful accounts for our Medicare patient accounts receivable, which are recorded at their net realizable value after recording estimated revenue adjustments as discussed above. During the three and nine-month periods ended September 30, 2017, we recorded $3.5 million and $11.9 million, respectively, in estimated revenue adjustments to Medicare revenue as compared to $1.6 million and $5.9 million during the three and nine-month periods ended September 30, 2016, respectively.We believe there is a certain levelare any significant concentrations of revenues from any payor that would subject us to any significant credit risk associated withnon-Medicare payors. To provide for ournon-Medicare patient accounts receivable that could become uncollectible in the future, we establish an allowance for doubtfulcollection of our accounts to reduce the carrying amount to its estimated net realizable value.Medicare Home HealthFor our home health patients, ourpre-billing process includes verifying that we are eligible for payment from Medicare for the services that we provide to our patients. Our Medicare billing begins with a process to ensure that our billings are accurate through the utilization of an electronic Medicare claim review. We submit a RAP for 60%bill Medicare following the end of our estimated payment for the initial episode atAMEDISYS, INC. AND SUBSIDIARIESNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)the starteach 30-day period of care or 50% ofupon discharge, if earlier, for the estimated payment for any subsequent episodes of care contiguous withservices provided to the first episode for a particular patient. The full amount of the episode is billed after the episode has been completed (“final billed”). The RAP received for that particular episode is then deducted from our final payment. If a final bill is not submitted within the greater of 120 days from the start of the episode, or 60 days from the date the RAP was paid, any RAPs received for that episode will be recouped by Medicare from any other claims in process for that particular provider number. The RAP and final claim must then bere-submitted.Medicare HospiceFor our hospice patients, ourpre-billing process includes verifying that we are eligible for payment from Medicare for the services that we provide to our patients. Our Medicare billing begins with a process to ensure that our billings are accurate through the utilization of an electronic Medicare claim review. We bill Medicare on a monthly basis for the services provided to the patient.Non-Medicare Home Health, Hospice, and Personal CareFor ournon-Medicare patients, ourpre-billing process primarily begins with verifying a patient’s eligibility for services with the applicable payor. Once the patient has been confirmed for eligibility, we will provide services to the patient and bill the applicable payor. Our review and evaluation ofnon-Medicare accounts receivable includes a detailed review of outstanding balances and special consideration to concentrations of receivables from particular payors or groups of payors with similar characteristics that would subject us to any significant credit risk.12AMEDISYS, INC. AND SUBSIDIARIESNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)Business CombinationsWe estimate an allowanceaccount for doubtful accounts based uponacquisitions using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Acquisitions are accounted for as purchases and are included in our assessmentcondensed consolidated financial statements from their respective acquisition dates. Assets acquired, liabilities assumed and noncontrolling interests, if any, are measured at fair value on the acquisition date using the appropriate valuation method. Goodwill generated from acquisitions is recognized for the excess of historicalthe purchase price over tangible and expected net collections, businessidentifiable intangible assets. In determining the fair value of identifiable intangible assets and economic conditions, trends in paymentany noncontrolling interests, we use various valuation techniques including the income approach, the cost approach and an evaluation of collectability based upon the date that the service was provided. Based upon our best judgment, we believe the allowance for doubtful accounts adequately provides for accounts that will not be collected duemarket approach. These valuation methods require us to credit risk.Fair Value of Financial InstrumentsThe following details our financial instruments where the carrying value and the fair value differ (amounts in millions): Fair Value at Reporting Date Using Carrying Value
as of
September 30, 2017 Quoted Prices in Active
Markets for Identical
Items
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable Inputs
(Level 3) $ 92.0 $ — $ 92.8 $ — Fair Value at Reporting Date Using Financial Instrument Carrying Value as of March 31, 2023 Quoted Prices in Active
Markets for Identical
Items
(Level 1)Significant Other
Observable Inputs
(Level 2)Significant
Unobservable Inputs
(Level 3)Long-term obligations $ 383.3 $ — $ 374.7 $ — The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The three levels of inputs are as follows:•Level 1 – Quoted prices in active markets for identical assets and liabilities.
| For the Three- Month Periods Ended March 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Weighted average number of shares outstanding - basic | 32,558 | 32,555 | |||||||||
| Effect of dilutive securities: | |||||||||||
| Stock options | 13 | 65 | |||||||||
| Non-vested stock and stock units | 72 | 146 | |||||||||
| Weighted average number of shares outstanding - diluted | 32,643 | 32,766 | |||||||||
| Anti-dilutive securities | 323 | 188 | |||||||||
| For the Three-Month Periods Ended September 30, | For the Nine-Month Periods Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Weighted average number of shares outstanding—basic | 33,838 | 33,309 | 33,640 | 33,142 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options | 271 | 207 | 279 | 156 | ||||||||||||
Non-vested stock and stock units | 254 | 307 | 336 | 401 | ||||||||||||
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Weighted average number of shares outstanding—diluted | 34,363 | 33,823 | 34,255 | 33,699 | ||||||||||||
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Recently Issued Accounting Pronouncements
In May 2014,
In February 2016, the FASB issued ASU2016-02,Leases (Topic 842),VIE in which will require lessees to recognize a lease liability andright-of-use asset for all leases (with the exception of short-term leases) at the commencement date. The ASU is effective for annual and interim periods beginning on or after December 15, 2018. Early adoption is permitted. The standard requires a modified retrospective transition method which requires application of the new guidance for all periods presented. While the Company expects adoption of this standard to lead to a material increase in the assets and liabilities recorded on our balance sheet, we are still evaluating the overall impact on our consolidated financial statements and related disclosures and the effectprimary beneficiary. The book value of the standard on our ongoing financial reporting.
In March 2016, the FASB issued ASU2016-09,Compensation – Stock Compensation (Topic 718):Improvements to Employee Share-Based Payment Accounting, which will simplify the accountinginvestments that we account for share-based payment award transactions, including income tax consequences, classification of awards as either equity or liability and classification on the statement of cash flows. The ASU is effective for annual and interim periods beginning after December 15, 2016. We adopted this ASU effective January 1, 2017, and as a result, we recorded a $0.4 million increase to ournon-current deferred tax asset and retained earnings for tax benefits that were not previously recognized under the prior rules. Additionally, on a prospective basis, we recorded excess tax benefitsequity method of accounting was $38.9 million and $40.5 million as a discrete itemof March 31, 2023 and December 31, 2022, respectively, and is reflected in our income tax provisionother assets within our condensed consolidated statements of operations. balance sheets.
In August 2016, the FASB issued ASU2016-15,Statement of Cash Flows (Topic 230)millions): Classification of Certain Cash Receipts and Cash Payments, which provides specific guidance on eight cash flow classification issues not specifically addressed by U.S. GAAP. The ASU is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. The standard should be applied using a retrospective transition method unless it is impractical to do so for some of the issues. In such case, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company does not expect an impact on its consolidated financial statements and related disclosures upon implementation of ASU2016-15 on January 1, 2018.
In January 2017, the FASB issued ASU2017-01,Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The ASU is effective for annual and interim periods beginning after December 15, 2017. The impact on our consolidated financial statements and related disclosures will depend on the facts and circumstances of any specific future transactions.
In January 2017, the FASB issued ASU2017-04,Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (Step 2 of the goodwill impairment test). Instead, impairment will be measured using the difference of the carrying amount to the fair
value of the reporting unit. The ASU is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the effect that ASU2017-04 will have on its consolidated financial statements and related disclosures and the effect of the standard on its ongoing financial reporting.
3.
| As of March 31, 2023 | As of December 31, 2022 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 7.3 | $ | 15.6 | |||||||
| Patient accounts receivable | 6.9 | 6.1 | |||||||||
| Other current assets | 0.5 | 0.6 | |||||||||
| Total current assets | 14.7 | 22.3 | |||||||||
| Property and equipment | 0.1 | 0.1 | |||||||||
| Operating lease right of use assets | 0.1 | 0.1 | |||||||||
| Goodwill | 8.5 | 8.5 | |||||||||
| Intangible assets | 0.4 | 0.4 | |||||||||
| Other assets | 0.2 | 0.2 | |||||||||
| Total assets | $ | 24.0 | $ | 31.6 | |||||||
| LIABILITIES | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 0.3 | $ | 0.1 | |||||||
| Payroll and employee benefits | 0.6 | 0.5 | |||||||||
| Accrued expenses | 6.4 | 5.8 | |||||||||
| Operating lease liabilities | — | 0.1 | |||||||||
| Current portion of long-term obligations | 0.2 | 0.2 | |||||||||
| Total liabilities | $ | 7.5 | $ | 6.7 | |||||||
On May 1, 2017, we acquired three home health care centers (one in each Illinois, Massachusetts and Texas) and two hospice care centers (one in each Arizona and Massachusetts) from Tenet Healthcare for a total purchase price of $20.5 million, (subject to certain adjustments).million. The purchase price was paid with cash on hand on the date of the transaction. Based on ourthe Company's preliminary purchase price allocation,valuation, we recorded goodwill ($20.9 million)of $0.3 million and other assets and liabilities, net ($0.8 million)intangibles (certificate of need) of $0.1 million in connection with thisthe acquisition.
| Amount | |||||
| ASSETS | |||||
| Patient accounts receivable | $ | 7.3 | |||
| Prepaid expenses | 0.2 | ||||
| Other current assets | 0.1 | ||||
| Property and equipment | 1.9 | ||||
| Operating lease right of use assets | 3.2 | ||||
| Intangible assets (licenses) | 1.3 | ||||
| Deferred income tax asset | 0.1 | ||||
| Other assets | 0.1 | ||||
| Total assets acquired | $ | 14.2 | |||
| LIABILITIES | |||||
| Accounts payable | $ | (0.8) | |||
| Payroll and employee benefits | (2.6) | ||||
| Accrued expenses | (2.6) | ||||
| Operating lease liabilities | (2.8) | ||||
| Current portion of long-term obligations | (0.6) | ||||
| Total liabilities assumed | (9.4) | ||||
| Net identifiable assets acquired | $ | 4.8 | |||
| Goodwill | 61.7 | ||||
| Total consideration | $ | 66.5 | |||
4.Revolving Credit Facility. The remainder ($2.5 million) was placed into an escrow account in accordance with the indemnity provisions within the purchase agreement and is reflected in restricted cash within our condensed consolidated balance sheet. A corresponding liability was also recorded to other long-term obligations within our condensed consolidated balance sheet related to this contingent consideration arrangement. The $2.5 million will either be paid to third parties or to the seller at certain intervals in the future.
| As of December 31, 2022 | |||||
| ASSETS | |||||
| Current assets: | |||||
| Patient accounts receivable | $ | 9.6 | |||
| Prepaid expenses | 0.1 | ||||
| Other current assets | 9.7 | ||||
| Property and equipment | 0.1 | ||||
| Operating lease right of use assets | 2.5 | ||||
| Goodwill | 43.1 | ||||
| Total assets | $ | 55.4 | |||
| LIABILITIES | |||||
| Current liabilities: | |||||
| Accounts payable | $ | 0.4 | |||
| Payroll and employee benefits | 0.6 | ||||
| Accrued expenses | 1.8 | ||||
| Current portion of operating lease liabilities | 0.6 | ||||
| Total current liabilities | 3.4 | ||||
| Operating lease liabilities, less current portion | 1.9 | ||||
| Total liabilities | $ | 5.3 | |||
| September 30, 2017 | December 31, 2016 | |||||||
$100.0 million Term Loan; principal payments plus accrued interest payable quarterly; interest rate at ABR Rate plus applicable percentage or Eurodollar Rate plus the applicable percentage (3.24% at September 30, 2017); due August 28, 2020 | $ | 91.3 | $ | 95.0 | ||||
$200.0 million Revolving Credit Facility; interest only payments; interest rate at ABR Rate plus applicable percentage or Eurodollar Rate plus the applicable percentage; due August 28, 2020 | — | — | ||||||
Promissory notes | 0.7 | 0.7 | ||||||
Deferred debt issuance costs | (2.1 | ) | (2.7 | ) | ||||
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| 89.9 | 93.0 | |||||||
Current portion of long-term obligations | (9.4 | ) | (5.2 | ) | ||||
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Total | $ | 80.5 | $ | 87.8 | ||||
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Our weighted average interest rate for our $100.0 million Term Loan, under
| March 31, 2023 | December 31, 2022 | ||||||||||
| $450.0 million Term Loan; interest rate at Base Rate plus Applicable Rate or Term SOFR Rate plus Applicable Rate (6.1% at March 31, 2023); due July 30, 2026 | $ | 383.1 | $ | 435.9 | |||||||
| $550.0 million Revolving Credit Facility; interest only payments; interest rate at Base Rate plus Applicable Rate or Term SOFR Rate plus Applicable Rate; due July 30, 2026 | — | — | |||||||||
| Promissory notes | 0.2 | 0.2 | |||||||||
| Finance leases | 20.1 | 2.3 | |||||||||
| Principal amount of long-term obligations | 403.4 | 438.4 | |||||||||
| Deferred debt issuance costs | (3.3) | (3.5) | |||||||||
| 400.1 | 434.9 | ||||||||||
| Current portion of long-term obligations | (26.9) | (15.5) | |||||||||
| Long-term obligations, less current portion | $ | 373.2 | $ | 419.4 | |||||||
| Pricing Tier | Consolidated Leverage Ratio | Base Rate Loans | Term SOFR Loans and SOFR Daily Floating Rate Loans | Commitment Fee | Letter of Credit Fee | ||||||||||||
| I | > 3.00 to 1.0 | 1.00% | 2.00% | 0.30% | 1.75% | ||||||||||||
| II | < 3.00 to 1.0 but > 2.00 to 1.0 | 0.75% | 1.75% | 0.25% | 1.50% | ||||||||||||
| III | < 2.00 to 1.0 but > 0.75 to 1.0 | 0.50% | 1.50% | 0.20% | 1.25% | ||||||||||||
| IV | < 0.75 to 1.0 | 0.25% | 1.25% | 0.15% | 1.00% | ||||||||||||
2023, and (ii) 1.250% for the period commencing on October 1, 2023 and ending on July 30, 2026. The remaining balance of the
5. COMMITMENTS AND CONTINGENCIES
Legal Proceedings—Ongoing
We are involved in
Securities Class Action Lawsuits
As previously disclosed, between June 10Compassionate Care Hospice ("CCH") acquisition, we entered into a Joinder Agreement, dated as of February 4, 2019 (the “CCH Joinder”), pursuant to which CCH and July 28, 2010, several putative securities class action complaintsits subsidiaries were filed in the United States District Court for the Middle District of Louisiana (the “District Court”) against the Companymade parties to, and certain of our former senior executives. The cases were consolidated into the first-filed actionBach, et al. v. Amedisys, Inc., et al. Case No.3:10-cv-00395, and the District Court appointed asco-lead plaintiffs the Public Employees’ Retirement System of Mississippi and the Puerto Rico Teachers’ Retirement System (the“Co-Lead Plaintiffs”). They filed a consolidated, amended complaint which all defendants moved to dismiss. The District Court granted the defendants’ motions to dismiss on June 28, 2012, and theCo-Lead Plaintiffs appealed that rulingbecame subject to the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”). On October 2, 2014, a three-judge panelterms and conditions of, the Fifth Circuit reversedAmended Credit Agreement (now the District Court’s dismissalThird Amended Credit Agreement), the Amended and remanded the case to the District Court for further proceedings. The defendants request for anen banc review was denied on December 29, 2014 and their Petition for a Writ of Certiorari from the United States Supreme Court was denied on June 29, 2015.
After remand to the District Court, the Plaintiffs were granted leave to file a First Amended Consolidated Complaint (the “First Amended Securities Complaint”) on behalf of all purchasers or acquirers of Amedisys’ securities between August 2, 2005 and September 30, 2011. The First Amended Securities Complaint alleges that the Company and seven individual defendants violated Section 10(b), Section 20(a), and Rule10b-5 of the Securities Exchange Act of 1934 by materially misrepresenting the Company’s financial results and concealing a scheme to obtain higher Medicare reimbursements and additional patient referrals by (1) providing medically unnecessary care to patients, including certifying andre-certifying patients for medically unnecessary60-day treatment episodes; (2) implementing clinical tracks such as “Balanced for Life” and wound care programs that provided apre-set number of therapy visits irrespective of medical need; (3) “upcoding” patients’ Medicare forms to attribute a “primary diagnosis” to a medical condition associated with higher billing rates; and (4) providing improper and illegal remuneration to physicians to obtain patient certifications orre-certifications. The First Amended Securities Complaint seeks certification of the case as a class action and an unspecified amount of damages, as well as interest and an award of attorneys’ fees.
All defendants moved to dismiss the First Amended Securities Complaint on December 15, 2015. While that motion was pending the parties agreed to mediate the case. This mediation was not successful. On August 19, 2016, the District Court issued its ruling on the defendants’ motions to dismiss, dismissing with prejudice all claims against two former officers, dismissing all except Section 20(a) claims against three former officers, and denying all other relief. The Company and four individual defendants then filed their answers to the First Amended Securities Complaint on October 20, 2016. The independent executrix of the estate of William F. Borne, who was substituted as a defendant in the case after Mr. Borne’s death, filed her answer on February 6, 2017.
On June 12, 2017, the Company reached anagreement-in-principle to settle this matter. All parties to the action executed a binding term sheet that, subject to final documentation and court approval, provided in part for a settlement payment of approximately $43.7 million, which we accruedRestated Security Agreement, dated as of June 30, 2017,29, 2018 (the “Amended and Restated Security Agreement”), and the dismissal with prejudice of the litigation. Approximately $15.0 million of the settlement amount paid by the Company’s insurance carriers during the three-month period ended September 30, 2017, was previously recorded with other current assets in our condensed consolidated balance sheetAmended and Restated Pledge Agreement, dated as of June 30, 2017. The net29, 2018 (the “Amended and Restated Pledge Agreement”). In connection with the AseraCare acquisition, we entered into a Joinder Agreement, dated as of these two amounts, $28.7 million, was recorded as a charge in our condensed consolidated statements of operations duringJune 12, 2020, pursuant to which the three-month period ended June 30, 2017AseraCare entities were made parties to, and paid with cash on hand during the three-month period ended September 30, 2017.
Subpoena Duces Tecum Issued by the U.S. Department of Justice
On May 21, 2015, we received a Subpoena Duces Tecum (“Subpoena”) issued by the U.S. Department of Justice. The Subpoena requests the delivery of information regarding 53 identified hospice patientsbecame subject to the United States Attorney’s Office forterms and conditions of, the DistrictAmended Credit Agreement (now the Third Amended Credit Agreement), the Amended and Restated Security Agreement and the Amended and Restated Pledge Agreement (the “AseraCare Joinder"). In connection with the Contessa acquisition and the Second Amendment, we entered into a Joinder Agreement, dated as of Massachusetts. It also requests the delivery of documents relatingSeptember 3, 2021, pursuant to our hospice clinicalwhich Contessa and business operationsits subsidiaries and related compliance activities. The Subpoena generally covers the period fromAsana Hospice ("Asana"), which we acquired on January 1, 2011, through May 21, 2015. We are fully cooperating2020, and its subsidiaries were made parties to, and became subject to the terms and conditions of, the Second Amended Credit Agreement (now the Third Amended Credit Agreement), the Amended and Restated Security Agreement and the Amended and Restated Pledge Agreement (the “Contessa and Asana Joinder,” and together with the U.S. DepartmentCCH Joinder and the AseraCare Joinder, the “Joinders”).
AseraCare entities, Contessa and its subsidiaries and Asana and its subsidiaries also guaranteed our obligations, whether now
Civil Investigative Demand Issued by
On November 3, 2015, we received a civil investigative demand (“CID”) issued by the U.S. Department of JusticeJoinders, under the Third Amended Credit Agreement pursuant to the federal False Claims Act relatingterms of the Joinders and the Third Amended Credit Agreement.
On June 27, 2016, we received a CID issued by the U.S. Department of Justice pursuant to the federal False Claims Act relating to claims submitted to Medicare and/or Medicaid for hospice services provided through designated facilities in the Parkersburg, West Virginia area. The CID requests the delivery of information to the United States Attorney’s Office for the Southern District of West Virginia regarding 68 identified hospice patients, as well as documents relating to our hospice clinical and business operations in the Parkersburg area. The CID generally covers the period from January 1, 2011 through June 20, 2016. We are fully cooperating with the U.S. Department of Justice with respect to this investigation. Based on the information currently available to us, we cannot predict the timing or outcome of this investigation or reasonably estimate the amount or range of potential losses, if any, which may arise from this matter.
In addition to the matters referenced in this note, we are involved in legal actions in the normal course of business, some of which seek monetary damages, including claims for punitive damages. WeBased on information available to us as of the date of this filing, we do not believe that these normal course actions, when finally concluded and determined, will have a material impact on our consolidated financial condition, results of operations or cash flows.
Other Investigative Matters—Ongoing
Corporate Integrity Agreement
On April 23, 2014, with no admissions of liability on our part, we entered into a settlement agreement with the U.S. Department of Justice relating
Idaho and Wyoming Self-Report
During 2016, the Company engaged an independent auditing firm to perform a clinical audit of the hospice care centers acquired by Frontier Home Health and Hospice in April 2014. No assurances can be given as to the timing or outcome of the audit on the Company, its consolidated financial condition, results of operations or cash flows, which could be material, individually or in the aggregate.
Other Investigative Matters—Closed
Computer Inventory and Data Security Reporting
On March 1 and March 2, 2015, we provided official notice under federal and state data privacy laws concerning the outcome of an extensive risk management process to locate and verify our large computer inventory. The process identified approximately 142 encrypted computers and laptops for which reports were required under federal and state data privacy laws. The devices at issue were originally assigned to Company clinicians and other team members who left the Company between 2011 and 2014. We reported these devices to the U.S. Department of Health and Human Services, state agencies, and individuals whose information may be involved, as required under applicable law because we could not rule out unauthorized access to patient data on the devices. In accordance with our CIA, we notified the OIG of this matter. As of September 30, 2017, this matter has been resolved, and the Company incurred no penalties or fees.
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
incurred.
ultimate outcome of any regulatory reviews or other governmental audits and investigations.
within other assets in our condensed consolidated balance sheets.
As these matters continue to develop, the Company is working with the appropriate stakeholders to favorably resolve these matters. At this stage of the review, based on the information currently available to the Company, the Company cannot predict the timing or outcome of this review. The estimated potential range of loss related to this review is between $6.5 million (assuming the Company is successful in seeking indemnity from the prior owners and unsuccessful in demonstrating that the extrapolation method used by SafeGuard was erroneous) and $38.8 million (the maximum amount Palmetto claims has been overpaid for both the Lakeland Care Centers was reduced to $26.0 million and the alleged overpayment for the Clearwater Care Center was reduced to $3.3 million. The Company filed Level III Administrative Appeals, and the ALJ hearings regarding the Lakeland Request for Repayment and the Clearwater Request for Repayment were held in April 2022.
As of($22.8 million extrapolated repayment plus $11.5 million accrued interest) was made during the three-month period ended September 30, 2017,2022. The repayment for the Clearwater Care Center totaling $3.7 million ($2.4 million extrapolated repayment plus $1.2 million accrued interest) was made during the three-month period ended December 31, 2022. Additionally, we have an accrued liabilitywrote off $1.5 million of approximately $17.4 million related to this matter.receivables that were impacted by these matters. We expect to be indemnified by the prior owners, upon exhaustion of the parties' appeal rights, for approximately $10.9 million and have recorded this amount withwithin other assets net in our condensed consolidated balance sheet as of September 30, 2017. The net of these two amounts, $6.5 million, was recorded as a reduction in revenue in our condensed consolidated statements of operations during the three-month period ended September 30, 2017. As of September 30, 2017, $7.8 million of net receivables have been impacted by this payment suspension.
AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
sheets.
6. Our fleet insurance has an exposure limit of $0.4 million per accident.
| For the Three-Month Period Ended September 30, 2017 | ||||||||||||||||||||
| Home Health | Hospice | Personal Care | Other | Total | ||||||||||||||||
Net service revenue | $ | 269.5 | $ | 96.5 | $ | 14.2 | $ | — | $ | 380.2 | ||||||||||
Cost of service, excluding depreciation and amortization | 168.2 | 47.8 | 10.6 | — | 226.6 | |||||||||||||||
General and administrative expenses | 70.9 | 19.0 | 3.1 | 25.9 | 118.9 | |||||||||||||||
Provision for doubtful accounts | 5.4 | 1.2 | 0.5 | — | 7.1 | |||||||||||||||
Depreciation and amortization | 0.9 | 0.2 | — | 3.1 | 4.2 | |||||||||||||||
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Operating expenses | 245.4 | 68.2 | 14.2 | 29.0 | 356.8 | |||||||||||||||
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Operating income (loss) | $ | 24.1 | $ | 28.3 | $ | — | $ | (29.0 | ) | $ | 23.4 | |||||||||
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| For the Three-Month Period Ended September 30, 2016 | ||||||||||||||||||||
| Home Health | Hospice | Personal Care | Other | Total | ||||||||||||||||
Net service revenue | $ | 268.9 | $ | 82.0 | $ | 10.7 | $ | — | $ | 361.6 | ||||||||||
Cost of service, excluding depreciation and amortization | �� | 162.4 | 41.9 | 7.8 | — | 212.1 | ||||||||||||||
General and administrative expenses | 71.8 | 17.6 | 2.3 | 32.7 | 124.4 | |||||||||||||||
Provision for doubtful accounts | 4.0 | 1.4 | 0.1 | — | 5.5 | |||||||||||||||
Depreciation and amortization | 1.6 | 0.3 | — | 3.3 | 5.2 | |||||||||||||||
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Operating expenses | 239.8 | 61.2 | 10.2 | 36.0 | 347.2 | |||||||||||||||
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Operating income (loss) | $ | 29.1 | $ | 20.8 | $ | 0.5 | $ | (36.0 | ) | $ | 14.4 | |||||||||
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| For the Three-Month Period Ended March 31, 2023 | |||||||||||||||||||||||||||||||||||
| Home Health | Hospice | Personal Care | High Acuity Care | Other | Total | ||||||||||||||||||||||||||||||
| Net service revenue | $ | 343.3 | $ | 193.4 | $ | 15.0 | $ | 4.7 | $ | — | $ | 556.4 | |||||||||||||||||||||||
| Cost of service, inclusive of depreciation | 197.0 | 101.4 | 11.1 | 5.5 | — | 315.0 | |||||||||||||||||||||||||||||
| General and administrative expenses | 89.1 | 47.9 | 2.3 | 4.4 | 50.9 | 194.6 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 1.1 | 0.6 | — | 0.8 | 1.9 | 4.4 | |||||||||||||||||||||||||||||
| Operating expenses | 287.2 | 149.9 | 13.4 | 10.7 | 52.8 | 514.0 | |||||||||||||||||||||||||||||
| Operating income (loss) | $ | 56.1 | $ | 43.5 | $ | 1.6 | $ | (6.0) | $ | (52.8) | $ | 42.4 | |||||||||||||||||||||||
| For the Three-Month Period Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||
| Home Health | Hospice | Personal Care | High Acuity Care | Other | Total | ||||||||||||||||||||||||||||||
| Net service revenue | $ | 335.7 | $ | 193.1 | $ | 14.0 | $ | 2.5 | $ | — | $ | 545.3 | |||||||||||||||||||||||
| Cost of service | 185.2 | 106.4 | 10.8 | 2.4 | — | 304.8 | |||||||||||||||||||||||||||||
| General and administrative expenses | 83.2 | 51.3 | 2.2 | 4.3 | 43.5 | 184.5 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 0.9 | 0.6 | 0.1 | 0.8 | 5.6 | 8.0 | |||||||||||||||||||||||||||||
| Operating expenses | 269.3 | 158.3 | 13.1 | 7.5 | 49.1 | 497.3 | |||||||||||||||||||||||||||||
| Operating income (loss) | $ | 66.4 | $ | 34.8 | $ | 0.9 | $ | (5.0) | $ | (49.1) | $ | 48.0 | |||||||||||||||||||||||
| For the Nine-Month Period Ended September 30, 2017 | ||||||||||||||||||||
| Home Health | Hospice | Personal Care | Other | Total | ||||||||||||||||
Net service revenue | $ | 814.5 | $ | 272.8 | $ | 42.1 | $ | — | $ | 1,129.4 | ||||||||||
Cost of service, excluding depreciation and amortization | 496.1 | 134.9 | 31.2 | — | 662.2 | |||||||||||||||
General and administrative expenses | 207.7 | 56.2 | 9.2 | 85.4 | 358.5 | |||||||||||||||
Provision for doubtful accounts | 12.6 | 4.8 | 0.7 | — | 18.1 | |||||||||||||||
Depreciation and amortization | 2.7 | 0.7 | 0.1 | 9.6 | 13.1 | |||||||||||||||
Securities Class Action Lawsuit settlement, net | — | — | — | 28.7 | 28.7 | |||||||||||||||
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Operating expenses | 719.1 | 196.6 | 41.2 | 123.7 | 1,080.6 | |||||||||||||||
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Operating income (loss) | $ | 95.4 | $ | 76.2 | $ | 0.9 | $ | (123.7 | ) | $ | 48.8 | |||||||||
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Net service revenue | $ | 817.2 | $ | 230.8 | $ | 23.2 | $ | — | $ | 1,071.2 | ||||||||||
Cost of service, excluding depreciation and amortization | 483.6 | 120.1 | 16.8 | — | 620.5 | |||||||||||||||
General and administrative expenses | 215.3 | 51.8 | 5.0 | 106.4 | 378.5 | |||||||||||||||
Provision for doubtful accounts | 10.8 | 2.8 | 0.1 | — | 13.7 | |||||||||||||||
Depreciation and amortization | 4.4 | 1.0 | — | 9.3 | 14.7 | |||||||||||||||
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Operating expenses | 714.1 | 175.7 | 21.9 | 115.7 | 1,027.4 | |||||||||||||||
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Operating income (loss) | $ | 103.1 | $ | 55.1 | $ | 1.3 | $ | (115.7 | ) | $ | 43.8 | |||||||||
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9.
EVENTS
the representations and warranties of the other party and (8) performance by each party of its respective obligations under the Merger Agreement.
. Historical results that appear in the condensed consolidated financial statements should not be interpreted as being indicative of future operations. 2022, respectively. At December 31, 2016 Acquisitions Closed/Consolidated At September 30, 2017 2.8% increase. predicted at this time. March 31, 2022 Net service revenue Gross margin, excluding depreciation and amortization % of revenue Other operating expenses % of revenue Operating income Total other income, net Income tax expense Effective income tax rate Net income Net income attributable to noncontrolling interests Net income attributable to Amedisys, Inc. gains which were previously reflected as a reduction to our general and administrative expenses (see Note 6 - Long-Term Obligations to our condensed consolidated financial statements for additional information). Segment Financial Information(in millions): Medicare Non-Medicare Net service revenue Cost of service Gross margin Other operating expenses Operating income Same Store Growth (1): Medicare revenue Non-Medicare revenue Medicare admissions Total Episodic admissions Total admissions Key Statistical Data—Total (2): Medicare: Admissions Recertifications Total volume Completed episodes Visits Average revenue per completed episode (3) Visits per completed episode (4) Non-Medicare: Admissions Recertifications Visits Visiting Clinician Cost per Visit Clinical Manager Cost per Visit Total Cost per Visit Visits visit. Our be impacted by staffing shortages driven by the competitive labor market. Hospice Division The following table summarizes our hospice segment results from continuing operations: Financial Information (in millions): Medicare Non-Medicare Net service revenue Cost of service Gross margin Other operating expenses Operating income Same Store Growth (1): Medicare revenue Non-Medicare revenue Hospice admissions Average daily census Key Statistical Data - Total (2): Hospice admissions Average daily census Revenue per day, net Cost of service per day Average discharge length of stay denovos. as well as care center closures. travel and training spend partially offset by planned wage increases. Segment Financial Information (in millions): Medicare Non-Medicare Net service revenue Cost of service Gross margin Other operating expenses Operating income Key Statistical Data: Billable hours Clients served Shifts Revenue per hour Revenue per shift Hours per shift admissions for which we assume the financial risk for all related healthcare services during a 30-day or 60-day episodic period in exchange for a fixed contracted bundled rate. Limited risk admissions are admissions for which we assume the risk for certain healthcare services during a shorter acute phase period (equivalent to an inpatient hospital stay) in exchange for a contracted per diem payment. Financial Information (in millions): Other operating expenses Depreciation and amortization Total operating expenses Net service revenue Gross margin, excluding depreciation and amortization % of revenue Other operating expenses % of revenue Securities Class Action Lawsuit settlement, net Operating income Total other income, net Income tax expense Effective income tax rate Net income Net income attributable to noncontrolling interests Net income attributable to Amedisys, Inc. Financial Information(in millions): Medicare Non-Medicare Net service revenue Cost of service Gross margin Other operating expenses Operating income Same Store Growth (1): Medicare revenue Non-Medicare revenue Medicare admissions Total Episodic admissions Total admissions Key Statistical Data—Total (2): Medicare: Admissions Recertifications Total volume Completed episodes Visits Average revenue per completed episode (3) Visits per completed episode (4) Non-Medicare: Admissions Recertifications Visits Visiting Clinician Cost per Visit Clinical Manager Cost per Visit Total Cost per Visit Visits Financial Information (in millions): Medicare Non-Medicare Net service revenue Cost of service Gross margin Other operating expenses Operating income Same Store Growth (1): Medicare revenue Non-Medicare revenue Hospice admissions Average daily census Key Statistical Data—Total (2): Hospice admissions Average daily census Revenue per day, net Cost of service per day Average discharge length of stay Financial Information (in millions): Medicare Non-Medicare Net service revenue Cost of service Gross margin Other operating expenses Operating income Key Statistical Data: Billable hours Clients served Shifts Revenue per hour Revenue per shift Hours per shift Financial Information (in millions): Other operating expenses Depreciation and amortization Total operating expenses before Securities Class Action Lawsuit settlement, net Securities Class Action Lawsuit settlement, net Total operating expenses December 31, 2022. Cash provided by operating activities Cash used in investing activities Cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period business. Cash used in investing activities our purchase of company stock under our stock repurchase program. Cash used in financing activities March 31, 2023. indebtedness. $17.0 million to $18.0 million, excluding the impact of any future acquisitions. requirements for the next twelve months and beyond. March 31, 2022. Provision for estimated revenue adjustments Provision for doubtful accounts Total As a percent of revenue At September 30, 2017: Medicare patient accounts receivable, net (1) Other patient accounts receivable: Medicaid Private Total Allowance for doubtful accounts (2) Non-Medicare patient accounts receivable, net Total patient accounts receivable, net Days revenue outstanding, net (3) At December 31, 2016: Medicare patient accounts receivable, net (1) Other patient accounts receivable: Medicaid Private Total Allowance for doubtful accounts (2) Non-Medicare patient accounts receivable, net Total patient accounts receivable, net Days revenue outstanding, net (3) Balance at beginning of period Provision for estimated revenue adjustments Write offs Balance at end of period Balance at beginning of period Provision for doubtful accounts Write offs Balance at end of period In the event we are not in compliance with our debt covenants in the future, we would pursue various alternatives in an attempt to successfully resolve the non-compliance, which might include, among other things, seeking debt covenant waivers or amendments. operations have been partially mitigated by rate increases, improvements in clinician utilization, reductions in hospice staffing levels and clinical optimization and reorganization initiatives. No assurance can be given as to our ability to offset the impacts of inflation in the future.ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion and analysis provides information we believe is relevant to an assessment and understanding of our results of operations and financial condition for the three and nine-month periodsthree-month period ended September 30, 2017.March 31, 2023. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included herein, and the consolidated financial statements and notes and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form10-K for the year ended December 31, 20162022 filed with the Securities and Exchange Commission (“SEC”) on March 1, 2017February 16, 2023 (the “Form10-K”), which are incorporated herein by this reference.Unless otherwise provided, “Amedisys,” “we,” “our,” and the “Company”“the Company” refer to Amedisys, Inc. and our consolidated subsidiaries.OverviewWe are a provider of high-qualityin-home healthcare and related services to the chronic,co-morbid, aging American population, with approximately 74%72% and 75% of our consolidated net service revenue derived from Medicare for the three and nine-monththree-month periods ended September 30, 2017,March 31, 2023 and approximately 78% of our revenue derived from Medicare for the three and nine-month periods ended September 30, 2016.Our operations involve servicing patients through our threefour reportable business segments: home health, hospice, personal care and personalhigh acuity care. Our home health segment delivers a wide range of services in the homes of individuals who may be recovering from an illness, injury or surgery. Our hospice segment provides care that is designed to provide comfort and support for those who are facing a terminal illness. Our personal care segment provides patients assistance with the essential activities of daily living. Our high acuity care segment delivers the essential elements of inpatient hospital, palliative and skilled nursing facility ("SNF") care to patients in their homes. As of September 30, 2017,March 31, 2023, we owned and operated 328348 Medicare-certified home health care centers, 81165 Medicare-certified hospice care centers and 16 personal-care9 admitting high acuity care centersjoint ventures in 3437 states within the United States and the District of Columbia.Owned We divested our personal care business on March 31, 2023.Care Centers Summary (Includes Unconsolidated Joint Ventures)Home
HealthHospice Personal
CareHigh Acuity Care (1)As of December 31, 2022 347 164 13 8 Acquisitions/Startups/Denovos 1 1 — 1 Divestitures/Closures/Consolidations — — (13) — As of March 31, 2023 348 165 — 9 (1) We have 9 admitting high acuity care joint ventures, which operate in 10 markets.Recent DevelopmentsProposed MergerOn May 3, 2023, Amedisys, Option Care Health, Inc., a Delaware corporation ("Option Care Health"), and OperatedUintah Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Option Care Centers Home Health Hospice Personal Care 327 79 14 3 2 3 (2 ) — (1 ) 328 81 16 Recent DevelopmentsGovernmental InquiriesHealth ("Merger Sub") entered into an Agreement and InvestigationsPlan of Merger (the "Merger Agreement"). The Merger Agreement provides for, among other things and Other LitigationDuring the three-month period ended June 30, 2017, we reached anagreement-in-principle to resolve the Securities Class Action Lawsuit. All partiessubject to the action executedsatisfaction or waiver of the conditions set forth therein, the merger of Merger Sub with and into Amedisys (the "Merger"), with Amedisys surviving the Merger as a binding term sheet that,wholly-owned subsidiary of Option Care Health.Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of Amedisys’ common stock issued and outstanding (excluding shares held by Amedisys as treasury stock or owned by Option Care Health or Merger Sub or any of their respective subsidiaries, in each case, immediately prior to the Effective Time) will be converted into the right to receive 3.0213 (the "Exchange Ratio") fully paid and nonassessable shares of Option Care Health common stock (and, if applicable, cash in lieu of fractional shares) (the "Merger Consideration"), less any applicable withholding taxes.Pursuant to the terms of the Merger Agreement, as of the Effective Time, each outstanding time-based vesting Amedisys restricted stock unit award (each, an "Amedisys RSU") and Amedisys option to purchase shares of Amedisys common stock (each, an "Amedisys Option") will be converted into an equivalent restricted stock unit award or option, as applicable, of Option Care Health relating to the number of shares of Option Care Health common stock (each, a "Converted RSU" or a26"Converted Option", as applicable) equal to (1) the number of shares of Amedisys common stock subject to final documentationsuch Amedisys RSU or Amedisys Option immediately prior to the Effective Time, multiplied by (2) the Exchange Ratio, rounded to the nearest whole number of shares of Option Care Health common stock. A Converted Option will have an exercise price per share equal to (1) the exercise price per share of the equivalent Amedisys Option immediately prior to the Effective Time divided by (2) the Exchange Ratio, rounded to the nearest whole cent. In addition, each Amedisys performance-based vesting restricted stock unit award (each, an "Amedisys PSU") will be converted into an equivalent restricted stock unit award of Option Care Health relating to the number of shares of Option Care Health common stock (each, a "Converted PSU") equal to (1) the number of shares of Amedisys common stock subject to such Amedisys PSU immediately prior to the Effective Time, multiplied by (2) the Exchange Ratio, assuming achievement at target performance with respect to any Amedisys PSU for which the level of performance-vesting has not yet been determined, rounded to the nearest whole number of shares of Option Care Health common stock. Each Converted RSU, Converted Option and court approval, provided for a settlement paymentConverted PSU shall have the same terms and conditions (including any double-trigger protections but excluding any performance-based vesting conditions) that applied to the corresponding Amedisys RSU, Amedisys Option or Amedisys PSU immediately prior to the Effective Time (other than any other terms rendered inoperative by reason of approximately $43.7 million, which we accrued asthe transactions contemplated by the Merger Agreement or other immaterial or administrative or ministerial changes).The completion of June 30, 2017,the Merger is subject to certain conditions, including: (1) the adoption of the Merger Agreement by Amedisys’ stockholders, (2) the adoption of the Charter Amendment (as defined in the Merger Agreement) and the dismissal with prejudiceapproval of the litigation. Approximately $15.0 millionissuance of shares of Option Care Health common stock in the Merger by Option Care Health stockholders, (3) the expiration or termination of the settlement amount was recordedapplicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (4) the receipt of other required regulatory approvals, (5) the absence of any order or law that has the effect of enjoining or otherwise prohibiting the completion of the Merger, (6) the approval for listing of the shares of Option Care Health common stock to be issued in connection with the Merger on the Nasdaq Global Select Market and the effectiveness of a registration statement with respect to such common stock, (7) subject to certain exceptions, the accuracy of the representations and warranties of the other current assetsparty and (8) performance by each party of its respective obligations under the Merger Agreement.The board of directors of each of Option Care Health and Amedisys has approved the Merger Agreement and the transactions contemplated thereby.The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement, which has been filed with the SEC as an exhibit to Amedisys’ Current Report on Form 8-K filed on May 3, 2023.Executive LeadershipOn March 13, 2023, our condensed consolidated balance sheetBoard of Directors named Richard Ashworth as of June 30, 2017, and subsequently paid by the Company’s insurance carriers during the three-month period ended September 30, 2017. The net of these two amounts, $28.7 million, was recordedPresident and Chief Executive Officer and elected Mr. Ashworth as a charge in our condensed consolidated statements of operations during the three-month period ended June 30, 2017 and paid with cashdirector, all effective April 10, 2023. Mr. Ashworth will not serve on hand during the three-month period ended September 30, 2017. See Note 5 – Commitments and Contingencies to our condensed consolidated financial statements for additional information regarding this matter.During the three-month period ended September 30, 2017, we received a request for medical records from SafeGuard Services, L.L.C (“SafeGuard”), a Zone Program Integrity Contractor (“ZPIC”) related to services provided by someany committees of the care centers that the Company acquired from Infinity Home Care, L.L.C. The review period covers time periods both before and after our ownershipBoard of Directors. Paul B. Kusserow ceased serving as Chief Executive Officer effective April 10, 2023 but will continue serving as Chairman of the Board.Personal Care DivestitureOn February 10, 2023, we signed a definitive agreement to sell our personal care centers, which were acquiredbusiness (excluding the Florida operations). The divestiture closed on DecemberMarch 31, 2015. Subsequent to2023. We received net proceeds of $47.8 million and recognized a loss of $2.2 million in connection with the request for medical records, we received Requests for Repayment from Palmetto GBA, LLC (“Palmetto”) regarding two of these care centers. As a result, we recorded a $6.5 million reduction in revenue in our condensed consolidated statement of operations related to this matter during the three-month period ended September 30, 2017. See Note 5 – Commitments and Contingencies to our condensed consolidated financial statements for additional information regarding this matter.In addition, see Note 5 – Commitments and Contingencies to our condensed consolidated financial statements for additional information regarding our corporate integrity agreement and for a discussion of and updates regarding other legal proceeding and investigations we are involved in. No assurances can be given as to the timing or outcome of these items.PaymentOn August 1, 2017, thedivestiture.The Centers for Medicare and Medicaid Services (“CMS”("CMS") Payment UpdatesHospiceOn July 27, 2022, CMS issued athe final rule to update hospice payment rates and the wage index for fiscal year 2018.2023, effective for services provided beginning October 1, 2022. CMS estimated hospices serving Medicare beneficiaries would see a 3.8% increase in payments. This increase is the result of a 4.1% market basket adjustment as required under the Patient Protection and Affordable Health Care Act and the Health Care and Education Reconciliation Act ("PPACA") less a 0.3% productivity adjustment. Additionally, CMS increased the aggregate cap amount by 3.8% to $32,487. Based on our analysis of the final rule, we expect our impact to be in line with the 3.8% increase.On March 31, 2023, CMS issued a proposed rule to update hospice payment rates and the wage index for fiscal year 2024, effective for services provided beginning October 1, 2023. CMS estimates hospices serving Medicare beneficiaries wouldwill see an estimated 1.0%a 2.8% increase in payments, consistent withpayments. This increase is the requiredresult of a 3.0% market basket set in fiscal year 2018 by statute in the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”). Absent the statutory cap on payment increases included in MACRA,adjustment as required under PPACA less a 0.2% productivity adjustment. Additionally, CMS notes that the rateproposed to increase would have been a 2.2% net increase. CMS also increased the aggregate cap amount by 1.0%2.8% to $28,689.04. We$33,397. Based on our analysis of the proposed rule, we expect our impact of the 2018 final rule to be in line with that of the hospice industry.27Home HealthOn November 1, 2017,October 31, 2022, CMS issued its final rulethe Home Health Final Rule for Medicare home health providers.providers for calendar year 2023. CMS estimatesestimated that the net impact of the payment provisions of the final rule willwould result in a decrease of 0.4%0.7% increase in reimbursementpayments to home health providers in 2018.providers. This decreaseincrease is the result of a 1.0%4.0% payment update (4.1% market basket adjustment less a 0.1% productivity adjustment) and an increase of 0.2% for the update to the fixed-dollar loss ratio used in determining outlier payments offset by a permanent adjustment of -3.5% based on the difference between assumed and actual behavioral changes resulting from the implementation of PDGM. The -3.5% permanent adjustment was derived from a -3.925% behavioral assumption adjustment which was only applied to the 30-day payment rate and not the low utilization payment adjustment. The -3.925% behavioral assumption adjustment is only half of the total proposed adjustment of -7.85%. The remaining -3.925% adjustment will be considered in future rulemaking. The final rule also finalized a permanent 5% cap on negative wage index changes for home health payment update,agencies. Based on our analysis of the final rule, we expect our impact to be flat, which is less than the estimated 0.7% rate increase.In addition to the permanent adjustments, CMS is also considering a 0.9%temporary adjustment of approximately $2 billion to offset overpayments in calendar years 2020 and 2021. CMS has elected not to apply the temporary adjustment to calendar year 2023; however, CMS is still considering how to best apply the national, standardized 60-day episode payment rate to accountadjustment in future rulemaking.SequestrationIn March 2020, Congress passed the bipartisan Coronavirus Aid, Relief and Economic Security Act ("CARES Act") which provided for nominal case-mix growth and the sunsetsuspension of the rural add-on provision. Asautomatic 2% reduction of SeptemberMedicare claim reimbursements ("sequestration") for the period May 1, 2020 through December 31, 2020. During 2020 and 2021, Congress passed additional COVID-19 relief legislation which extended the 2% suspension of sequestration through March 31, 2022; sequestration was reinstated as a 1% reduction to Medicare claim reimbursements for the period April 1, 2022 through June 30, 2017,2022 and was fully reinstated as a 2% reduction to Medicare claim reimbursements effective July 1, 2022. The reinstatement of sequestration has resulted in a reduction of our net service revenue.Impact of COVID-19Our operations and financial performance have been impacted by COVID-19. While we estimate ourcurrently believe that we have a reasonable view of operations, the ultimate impact of COVID-19, including the 2018 final rule toimpact on our liquidity, financial condition and results of operations, is uncertain and will depend on many factors and future developments, which are highly uncertain and cannot be approximately 1.4% which is inclusive of the sunset of the rural add-on provision.Home Health Division Restructure PlanOn October 2, 2017, the Company announced that it will close four Florida home health care centers, consolidate another three Florida home health care centers with care centers servicing the same market and implement a plan to restructure the Company’s home health division. These actions are expected to be completed during the three-month period ended December 31, 2017. As a result of these actions, we recorded approximately $2 million in salaries and benefits related to severance costs during the three-month period ended September 30, 2017. We expect to incur additional charges in the range of $2 million to $3 million during the three-month period ended December 31, 2017 related to our restructure plan.Executive LeadershipOn October 5, 2017, Gary D. Willis resigned as Chief Financial Officer. As a result of his departure, the Board of Directors appointed Scott G. Ginn as Chief Financial Officer, effective October 5, 2017.Results of OperationsThree-Month Period Ended September 30, 2017March 31, 2023 Compared to the Three-Month Period Ended September 30, 2016ConsolidatedThe following table summarizes our consolidated results of operations (amounts in millions): For the Three-Month Periods
Ended September 30, 2017 2016 $ 380.2 $ 361.6 153.5 149.5 40.4 % 41.3 % 130.1 135.1 34.2 % 37.4 % 23.4 14.4 0.7 3.8 (9.4 ) (6.7 ) 39.0 % 36.8 % 14.7 11.5 (0.1 ) (0.1 ) $ 14.6 $ 11.4 Overall, For the Three-Month Periods
Ended March 31, 2023 2022 Net service revenue $ 556.4 $ 545.3 Cost of service, inclusive of depreciation 315.0 304.8 Gross margin 241.4 240.5 % of revenue 43.4 % 44.1 % General and administrative expenses 194.6 184.5 % of revenue 35.0 % 33.8 % Depreciation and amortization 4.4 8.0 Operating income 42.4 48.0 Total other expense (7.7) (4.2) Income tax expense (9.8) (12.0) Effective income tax rate 28.2 % 27.5 % Net income 24.9 31.7 Net income attributable to noncontrolling interests 0.3 — Net income attributable to Amedisys, Inc. $ 25.2 $ 31.7 28On a consolidated basis, our operating income increased $9decreased $6 million on a revenue increase of $19 million and a $5 million decrease in other operating expenses which was offset by a $15an $11 million increase in cost of service. The increase in operating income was drivennet service revenue. Our year-over-year results were impacted by the performancereturn of our hospice divisionsequestration (prior year included a benefit of $9 million associated with the suspension of sequestration) and reductionsthe acquisitions of Evolution and AssistedCare on April 1, 2022 (which combined contributed $10 million in corporatenet service revenue and an operating expenses. Additionally, our resultsloss of less than $1 million for the three-month period ended September 30, 2017 includeMarch 31, 2023). Excluding these items, our operating income increased $4 million on a $10 million increase in net service revenue due to the hospice rate increase, lower COVID-related costs and lower depreciation and amortization partially offset by planned wage increases, an increase in our general and administrative expenses and higher revenue adjustments.Our operating results reflect a $10 million increase in our general and administrative expenses compared to prior year. Excluding our acquisitions, our general and administrative expenses increased $7 million (4%) primarily due to costs associated with our clinical optimization and reorganization initiatives, planned wage increases, increased information technology fees, higher recruiting fees, higher insurance-related costs and a change in the presentation of gains on the sale of fleet vehicles which are reflected in other income (expense) within our condensed consolidated income statement as of January 1, 2023 due to the modification of our acquisition of three home healthfleet leases. Partially offsetting these items, our general and two hospice care centers on May 1, 2017, which added approximately $2 million in other operatingadministrative expenses related to care center costs.Our results for the three-month periods ended September 30, 2017 and 2016 were favorably impacted by additional expenses incurred duringlower staffing levels and lower executive compensation costs.Total other expense includes the quarters. Our 2016 operating results were negatively impacted byfollowing items (amounts in millions): For the Three-Month Periods
Ended March 31, 2023 2022 Interest income $ 0.4 $ — Interest expense (7.5) (3.2) Equity in earnings (loss) from equity method investments 0.1 (1.4) Miscellaneous, net (0.7) 0.3 Total other expense $ (7.7) $ (4.2) Interest expense increased $4 million year over year as a result of costs associated with Homecare Homebase (“HCHB”) implementation and restructuring activity charges (primarily severance costs).Our 2017 operating results were negatively impacted $9 million; these impacts include a $7 million reduction in revenue as a result of the Florida ZPIC audithigher interest rates on our outstanding term loan borrowings under our Third Amended Credit Agreement (see Note 5 – Commitments and Contingencies6 - Long-Term Obligations to our condensed consolidated financial statements for additional information regarding this matter) and approximatelyour Third Amended Credit Agreement).Miscellaneous, net includes a $2 million in severance costs related toloss on the sale our home health closures and restructuring plan. In addition,personal care business recorded during the three-month period ended September 30, 2017, we experienced a decline in admissions and incurredMarch 31, 2023 (see Note 5 - Dispositions to our condensed consolidated financial statements for additional costs as a resultinformation) which was partially offset by gains on the sale of Hurricane Irma which impacted operating income by approximatelyour fleet vehicles totaling $1 million.Total other income (expense), net formillion during the three-month period ended September 30, 2016 includesMarch 31, 2023. Our fleet leases were modified effective January 1, 2023 resulting in a gain from an equity method investmentchange in the presentation of approximately $3 million.29Home Health DivisionThe following table summarizes our home health segment results from continuingof operations: For the Three-Month Periods Ended September 30, 2017 2016 $ 191.4 $ 203.9 78.1 65.0 269.5 268.9 168.2 162.4 101.3 106.5 77.2 77.4 $ 24.1 $ 29.1 (7 %) 1 % 19 % 4 % (3 %) 1 % 1 % 3 % 1 % - % 46,823 47,625 26,996 25,522 73,819 73,147 71,454 71,948 1,259,156 1,266,780 $ 2,820 $ 2,841 17.4 17.5 26,686 24,335 12,263 9,479 592,742 506,729 $ 82.53 $ 82.86 $ 8.30 $ 8.72 $ 90.83 $ 91.58 1,851,898 1,773,509 (1)Same store information represents the percent increase (decrease) in our Medicare andNon-Medicare revenue or admissions for the period as a percent of the Medicare andNon-Medicare revenue or admissions of the prior period.(2)Total includes acquisitions.(3)Average Medicare revenue per completed episode is the average Medicare revenue earned for each Medicare completed episode of care.(4)Medicare visits per completed episode are the home health Medicare visits on completed episodes divided by the home health Medicare episodes completed during the period. For the Three-Month Periods
Ended March 31, 2023 2022 Financial Information (in millions) (6):Medicare $ 215.4 $ 224.1 Non-Medicare 127.9 111.6 Net service revenue 343.3 335.7 Cost of service, inclusive of depreciation 197.0 185.2 Gross margin 146.3 150.5 General and administrative expenses 89.1 83.2 Depreciation and amortization 1.1 0.9 Operating income $ 56.1 $ 66.4 Same Store Growth(1):Medicare revenue (7 %) 1 % Non-Medicare revenue 12 % 4 % Total admissions 8 % 2 % Total volume(2)5 % — % Key Statistical Data - Total(3)(6):Admissions 101,963 91,764 Recertifications 43,325 42,856 Total volume 145,288 134,620 Medicare completed episodes 73,563 74,443 Average Medicare revenue per completed episode(4)$ 2,974 $ 3,013 Medicare visits per completed episode(5)12.4 13.0 Visiting clinician cost per visit $ 100.00 $ 97.28 Clinical manager cost per visit 10.97 10.62 Total cost per visit $ 110.97 $ 107.90 Visits 1,775,206 1,716,211 (1) Same store information represents the percent change in our Medicare, Non-Medicare and Total revenue, admissions or volume for the period as a percent of the Medicare, Non-Medicare and Total revenue, admissions or volume of the prior period. Same store is defined as care centers that we have operated for at least the last twelve months and startups that are an expansion of a same store care center.(2) Total volume includes all admissions and recertifications.(3) Total includes acquisitions, start-ups and denovos.(4) Average Medicare revenue per completed episode is the average Medicare revenue earned for each Medicare completed episode of care. Average Medicare revenue per completed episode reflects the suspension of sequestration for the three-month period ended March 31, 2022 and the reinstatement of sequestration at 2% for the three-month period ended March 31, 2023.(5) Medicare visits per completed episode are the home health Medicare visits on completed episodes divided by the home health Medicare episodes completed during the period.(6) Prior year has been recast to conform to the current year presentation.Operating ResultsOn March 23, 2022, we entered into a transaction with one of our high acuity care health system partners in which our health system partner contributed its home health operations to one of our existing high acuity care joint ventures. The home health operations were reflected in our high acuity care segment during 2022. Effective January 1, 2023, the operating results of this home health care center are included within our home health segment. Prior periods have been recast to conform to the current year presentation.30Overall, our operating income decreased $5$10 million on a $5an $8 million decreaseincrease in gross margin; othernet service revenue. Our year over year results were impacted by the April 1, 2022 acquisitions of Evolution and AssistedCare (which contributed net service revenue of $10 million and an operating expenses remained flat compared to prior year. The $5loss of less than $1 million decrease is net of the $7 million reduction in revenue related to the Florida ZPIC audit (see Note 5 – Commitments and Contingencies to our condensed consolidated financial statements for additional information regarding this matter).Net Service RevenueOur Medicare revenue decreased approximately $13 million which includes a $7 million reduction in revenue related to the Florida ZPIC audit. Our total Medicare volumes (admissions plus recertifications) increased during the three-month period ended September 30, 2017. The volume increase was offset byMarch 31, 2023) and a $2prior year benefit of $5 million decrease in revenue per episode in addition toconnection with the suspension of sequestration. Excluding these items, our operating income decreased $4 million on a $3 million reduction asincrease in net service revenue. The decline in our operating income is primarily due to a result ofshift in our payor mix, higher revenue adjustments and planned wage increases. These items were partially offset by improvement in our operating performance driven by improvements in clinician utilization.Net Service RevenueOur net service revenue increased $8 million. Excluding our acquisitions and the sequestration benefit recognized in prior year, our net service revenue increased $3 million due to 5% total volume growth and an increase in our provision for revenue adjustments primarily related to the aging of Medicare receivables for our Florida care centers included in the ZPIC audit. The decrease innon-Medicare revenue per episode is the result of the 2017 CMS rate cut which reduced our revenue by approximately $4 million which was offset by a $2 million increase related to the acuity level of our patients.non-Medicare revenue increased $13 million with same store revenues increasing 19%. Admissions from episodic payors increased 24% while our per visit payors increased 3%. We volumes continue to focus on contract payors with significant concentrations in our markets and those that add incremental margin to our operations as we continue to evaluate our portfolio of managed care contracts.Cost of Service, ExcludingInclusive of Depreciation and AmortizationOur cost per visitof service consists of costs associated with direct clinician care in the homes of our patients as well as the cost of clinical managers who monitor the overall delivery of care. OurOverall, our total cost of service increased 4% which is consistent with6% due to a 3% increase in our total cost per visit and a 3% increase in total visits. OurThe 3% increase in our total cost per visit decreased approximately 1% despite disruptions relatedis primarily due to Hurricane Irma and annualplanned wage increases, effective during the current quarter.Other Operating ExpensesOther operating expenses remained flat despite incurring approximately $2 million in severance costs related to our home health restructuring plan and an increase in salaried employees and visit mix partially offset by lower COVID-related costs. The 3% increase in total visits was driven by growth in volumes and our provisionacquisitions.General and Administrative ExpensesOur general and administrative expenses increased $6 million. Excluding our acquisitions, our general and administrative expenses increased $3 million primarily due to planned wage increases, higher information technology fees and higher insurance-related costs partially offset by lower staffing levels and savings associated with clinical optimization and reorganization activities.31Hospice SegmentThe following table summarizes our hospice segment results of operations: For the Three-Month Periods
Ended March 31, 2023 2022 Financial Information (in millions):Medicare $ 182.7 $ 182.5 Non-Medicare 10.7 10.6 Net service revenue 193.4 193.1 Cost of service, inclusive of depreciation 101.4 106.4 Gross margin 92.0 86.7 General and administrative expenses 47.9 51.3 Depreciation and amortization 0.6 0.6 Operating income $ 43.5 $ 34.8 Same Store Growth(1):Medicare revenue — % 1 % Hospice admissions (5 %) 2 % Average daily census (1 %) (3 %) Key Statistical Data - Total(2):Hospice admissions 12,998 13,886 Average daily census 12,730 12,920 Revenue per day, net $ 168.83 $ 166.04 Cost of service per day $ 88.21 $ 91.48 Average discharge length of stay 90 89 (1) Same store information represents the percent change in our Medicare revenue, Hospice admissions or average daily census for doubtful accountsthe period as a percent of the Medicare revenue, Hospice admissions or average daily census of the prior period. Same store is defined as care centers that we experienced decreases in otherhave operated for at least the last twelve months and startups that are an expansion of a same store care center related expenses, primarily salariescenter.(2) Total includes acquisitions and benefits as the result of planned decreases post our HCHB rollout. Other operating expenses include approximately $1 million related to acquisitions during the three-month period ended September 30, 2017. For the Three-Month Periods Ended September 30, 2017 2016 $ 91.4 $ 77.0 5.1 5.0 96.5 82.0 47.8 41.9 48.7 40.1 20.4 19.3 $ 28.3 $ 20.8 17 % 12 % (2 %) 14 % 7 % 16 % 14 % 14 % 6,257 5,751 7,026 6,087 $ 149.25 $ 146.49 $ 73.99 $ 74.77 95 92 (1)Same store information represents the percent increase (decrease) in our Medicare andNon-Medicare revenue, Hospice admissions or average daily census for the period as a percent of the Medicare andNon-Medicare revenue, Hospice admissions or average daily census of the prior period.(2)Total includes acquisitions.Operating ResultsOverall, our operating income increased $8$9 million on a $9 million increase in gross margin offsetflat net service revenue. Our year over year results were positively impacted by a $1 million increase in other operating expenses.Net Service RevenueOur hospice revenue increased $15 million, primarily due to an increase in our average daily census as a result of a 7% increase in hospice admissions and a 2%the increase in reimbursement effective October 1, 2016. The 14%2022, savings associated with clinical optimization and reorganization initiatives, reductions in staffing levels and a decrease in our general and administrative expenses. These items were partially offset by a benefit recognized in the prior year totaling $4 million associated with the suspension of sequestration, a decline in our hospice average daily census and planned wage increases.Net Service RevenueOur net service revenue remained flat as the increase in reimbursement effective October 1, 2022 was offset by the reinstatement of sequestration at 2% and a decline in our average daily census. Our decline in average daily census year over year is driven byprimarily due to a decline in our 13%hospice admissions growth for the nine-month period ended September 30, 2017.Cost of Service, ExcludingInclusive of Depreciation and AmortizationOur hospice cost of service increased $6 million as the resultdecreased 5% primarily due to a 4% decrease in our cost of a 14% increaseservice per day. The 4% decrease in average daily census. Ourour cost of service per day decreased by approximately $1.00 primarilyis due to an improvementreductions in pharmacy cost per day.Other Operatingstaffing levels, savings associated with clinical optimization and reorganization initiatives, lower utilization of contractors to supplement our staffing levels and lower COVID-19 costs. These items were partially offset by planned wage increases.32General and Administrative ExpensesOther operatingOur general and administrative expenses increased $1decreased $3 million primarily due to census growthreductions in staffing levels and an acquisition that occurred during the three-month period ended June 30, 2017.Personal Care DivisionThe following table summarizes our personal care segment results from continuingof operations: For the Three-Month Periods Ended September 30, 2017 2016 $ — $ — 14.2 10.7 14.2 10.7 10.6 7.8 3.6 2.9 3.6 2.4 $ — $ 0.5 616,036 448,133 8,145 7,132 281,904 203,465 $ 23.00 $ 23.70 $ 50.26 $ 52.19 2.2 2.2 On March 1, 2016, we acquired Associated Home Care, a For the Three-Month Periods
Ended March 31, 2023 2022 Financial Information (in millions):Medicare $ — $ — Non-Medicare 15.0 14.0 Net service revenue 15.0 14.0 Cost of service, inclusive of depreciation 11.1 10.8 Gross margin 3.9 3.2 General and administrative expenses 2.3 2.2 Depreciation and amortization — 0.1 Operating income $ 1.6 $ 0.9 Key Statistical Data - Total: Billable hours 440,464 451,032 Clients served 7,892 7,479 Shifts 191,379 193,742 Revenue per hour $ 33.97 $ 30.95 Revenue per shift $ 78.19 $ 72.04 Hours per shift 2.3 2.3 Operating ResultsWe completed the sale of our personal care home healthbusiness on March 31, 2023.Operating income related to our personal care companysegment increased $1 million on a $1 million increase in net service revenue driven by an increase in rates. Our cost of service and general and administrative expenses remained flat.33High Acuity Care SegmentThe following table summarizes our high acuity care segment results of operations: For the Three-Month Periods
Ended March 31, 2023 2022 Financial Information (in millions) (1):Medicare $ — $ — Non-Medicare 4.7 2.5 Net service revenue 4.7 2.5 Cost of service, inclusive of depreciation 5.5 2.4 Gross margin (0.8) 0.1 General and administrative expenses 4.4 4.3 Depreciation and amortization 0.8 0.8 Operating loss $ (6.0) $ (5.0) Key Statistical Data - Total: Full risk admissions 158 106 Limited risk admissions 459 227 Total admissions 617 333 Full risk revenue per episode $ 11,343 $ 10,077 Limited risk revenue per episode $ 5,711 $ 5,779 Number of admitting joint venture markets 10 9 (1)Prior year has been recast to conform to the current year presentation.Operating ResultsIn connection with nineour reorganization initiatives, we transitioned corporate functions that were previously included within our high acuity care centers. On Septembersegment to the corporate support function effective January 1, 2016, we acquired the assets of Professional Profiles, Inc. which owned and operated four personal-care care centers. In addition2023. Additionally, during the three-month period ended September 30, 2016,March 31, 2022, we openedentered into astart-up personal-care care center. On February 1, 2017, we acquired the assets of Home Staff LLC, which owned and operated three personal-care care centers, one of which was subsequently consolidated transaction with one of our high acuity care health system partners in which our health system partner contributed its home health operations to one of our existing personal-carehigh acuity care centers. Acquisitionsjoint ventures. The home health operations were reflected in our high acuity care segment during 2022. Effective January 1, 2023, the operating results of this home health care center are included inwithin our consolidated financial statementshome health segment. Prior periods have been recast to conform to the current year presentation.Our year over year results reflect net service revenue growth resulting from their respective acquisition dates. As a result, our personalhome recovery care operating resultsservices. Our gross margin for the three-month periodsperiod ended September 30, 2017March 31, 2023 reflects a forecasted loss on the first performance year of our new risk-based palliative care contract resulting from investments in resources to support this contract as well as future palliative care arrangements.Although we expect our high acuity care segment to continue to generate operating losses, we also expect improvement as we leverage our operating structure through growth in current and 2016future joint ventures and expansion of palliative care at home arrangements.Net Service RevenueOur high acuity care segment provides home recovery care services for high acuity patients on either a full risk or limited risk basis, each with different reimbursement arrangements. Full risk admissions are not fully comparable.34Cost of Service, Inclusive of DepreciationOur cost of service consists primarily of medical costs associated with direct clinician care provided to our patients during the applicable episode period, costs associated with our virtual care unit (“VCU”), which enables us to provide monitoring services and facilitates virtual patient rounding visits via telehealth and costs associated with resources to support our palliative care at home programs. The increase in cost of service over prior year is primarily related to a forecasted loss on the first performance year of our new risk-based palliative care contract resulting from investments in resources to support this contract as well as future palliative care arrangements.General and Administrative ExpensesOur general and administrative expenses which primarily consist of salaries and benefits were flat year over year. We have made significant investments to build the clinical, operational and technological infrastructure necessary to support the development and future growth of home recovery care programs on a national scale.CorporateThe following table summarizes our corporate results from continuingof operations: For the Three-Month Periods Ended September 30, 2017 2016 $ 25.9 $ 32.7 3.1 3.3 $ 29.0 $ 36.0 For the Three-Month Periods
Ended March 31, 2023 2022 Financial Information (in millions) (1):General and administrative expenses $ 50.9 $ 43.5 Depreciation and amortization 1.9 5.6 Total operating expenses $ 52.8 $ 49.1 (1)Prior year has been recast to conform to the current year presentation.Corporate expenses consist of costs relatingrelated to our executive management and corporate and administrative support functions, primarily information services, accounting, finance, billing and collections, legal, compliance, risk management, procurement, marketing, clinical administration, training, human resources and administration. Corporate other operating expenses have decreased approximately $7 million. This decrease is driven by a $3 million decrease related to HCHB implementation costs and fees and reductions in acquisition costs and various other operating expenses including professional fees, salaries and benefits, personnel costs and IT related services.Nine-Month Period Ended September 30, 2017 ComparedIn connection with our reorganization initiatives, we transitioned corporate functions that were previously included within our high acuity care segment to the Nine-Month Period Ended September 30, 2016ConsolidatedThe following table summarizes our results from continuing operations (amounts in millions): For the Nine-Month Periods
Ended September 30, 2017 2016 $ 1,129.4 $ 1,071.2 467.2 450.7 41.4 % 42.1 % 389.8 406.9 34.5 % 38.0 % 28.7 — 48.8 43.8 2.9 3.2 (17.3 ) (18.3 ) 33.5 % 39.0 % 34.4 28.7 (0.2 ) (0.3 ) $ 34.1 $ 28.3 Overall, our operating incomecorporate support function effective January 1, 2023. Prior periods have been recast to conform to the current year presentation.Corporate general and administrative expenses increased $5$7 million on a revenue increase of $58 million which was offset by a $42 million increase in cost of service and an $11 million increase in other operating expenses which is inclusive of the $30 million charge for the Securities Class Action Lawsuit settlement accrual and related legal fees incurred during the three-month period ended June 30, 2017. Excluding these amounts,March 31, 2023 primarily due to planned wage increases, costs associated with our operatingclinical optimization and reorganization initiatives, higher recruiting fees and a change in the presentation of gains on the sale of fleet vehicles which are reflected in other income increased $34 million driven by(expense) within our condensed consolidated income statement as of January 1, 2023 due to the performancemodification of our hospice division and reductions in corporate operating expenses as the result of approximately $17 million related to HCHB implementation costs and acquisition activity incurred during the nine-month period ended September 30, 2016. Additionally our results for the nine-month period ended September 30, 2017 include the results of our acquisition of three home health and two hospice care centers on May 1, 2017, which added approximately $3 million in other operating expenses related to care center costs and approximately $1 million related to integration costs.Home Health DivisionThe following table summarizes our home health segment results from continuing operations: For the Nine-Month Periods Ended September 30, 2017 2016 $ 588.4 $ 619.2 226.1 198.0 814.5 817.2 496.1 483.6 318.4 333.6 223.0 230.5 $ 95.4 $ 103.1 (5 %) 3 % 14 % 12 % (3 %) 3 % 1 % 4 % 1 % 3 % 143,711 147,025 78,878 77,565 222,589 224,590 217,190 218,007 3,794,001 3,893,568 $ 2,811 $ 2,835 17.3 17.5 80,244 74,139 33,949 28,945 1,727,618 1,549,760 $ 81.41 $ 80.52 $ 8.42 $ 8.31 $ 89.83 $ 88.83 5,521,619 5,443,328 (1)Same store information represents the percent increase (decrease) in our Medicare andNon-Medicare revenue or admissions for the period as a percent of the Medicare andNon-Medicare revenue or admissions of the prior period.(2)Total includes acquisitions.(3)Average Medicare revenue per completed episode is the average Medicare revenue earned for each Medicare completed episode of care.(4)Medicare visits per completed episode are the home health Medicare visits on completed episodes divided by the home health Medicare episodes completed during the period.OperatingResultsOverall, our operating income declined $8 million on a $15 million decrease in gross margin offset by a $7 million decrease in other operating expenses.Net Service RevenueOur Medicare revenue decreased approximately $31 million which includes a $7 million reduction in revenue related to the Florida ZPIC audit. Approximately $13 million of the remaining $24 million decrease is due to lower volumes and increases in our provision for revenue adjustments. Additionally, we experienced a $12 million decrease in revenue per episode as a result of the 2017 CMS rate cut which wasfleet leases partially offset by an increase in the acuity level of our patients.Ournon-Medicare revenue increased approximately $28 million. Admissions from episodic payors increased 28% while our per visit payors increased 1%. We continue to focus on contract payors with significant concentrations in our marketslower executive compensation costs.Corporate depreciation and those that add incremental margin to our operations as we continue to evaluate our portfolio of managed care contracts.Cost of Service, Excluding Depreciation and AmortizationOur cost of service increased $12amortization decreased $4 million due to an increase in both our cost per visit and our total visits. Our cost per visit is up approximately 1% as the result of an increase in health insurance costs and annual wage increases during the three-month period ended September 30, 2017. We have seen continued improvement in this metric driven by increases in clinician productivity.Other Operating ExpensesOther operating expense decreased $7 million despite incurring approximately $2 million in severance costs related to our home health restructuring plan and an increase in our provision for doubtful accounts during the nine-month period ended September 30, 2017. These charges were offset by decreases in other care center related expenses, primarily salaries and benefits as the result of planned decreases post our HCHB rollout. Other operating expenses include approximately $2 million related to acquisitions during the nine-month period ended September 30, 2017.Hospice DivisionThe following table summarizes our hospice segment results from continuing operations: For the Nine-Month Periods Ended September 30, 2017 2016 $ 257.9 $ 217.0 14.9 13.8 272.8 230.8 134.9 120.1 137.9 110.7 61.7 55.6 $ 76.2 $ 55.1 18 % 16 % 7 % 15 % 13 % 18 % 15 % 17 % 19,010 16,757 6,705 5,776 $ 149.01 $ 145.86 $ 73.72 $ 75.89 92 94 (1)Same store information represents the percent increase (decrease) in our Medicare andNon-Medicare revenue, Hospice admissions or average daily census for the period as a percent of the Medicare andNon-Medicare revenue, Hospice admissions or average daily census of the prior period.(2)Total includes acquisitions.Operating ResultsOverall, our operating income increased $21 million on a $27 million increase in gross margin offset by a $6 million increase in other operating expenses. The increase in our hospice volumes has attributed to an 18% increase in revenue. Combined with a decrease in cost of service per day, we have seen a 25% increase in our hospice gross margin compared to the nine-month period ended September 30, 2016.Net Service RevenueOur hospice revenue increased $42 million primarilyMarch 31, 2023 due to a 15% increasereduction in our average daily census as a result of a 13% increase in hospice admissions.Cost of Service, Excluding Depreciation and AmortizationOur hospice cost of service increased $15 million as the result of a 15% increase in average daily census. Our cost of service per day decreased $2.17 primarily due to significant improvement in salary and pharmacy cost per day driven by cost controls and census growth.Other Operating ExpensesOther operating expenses increased $6 million due to increases in other care center related expenses, primarily salaries and benefitsamortization expense and provision for doubtful accounts. The $2 million increase in provision for doubtful accounts is due to an increase in room and board revenue andnon-Medicare revenue. We continue to see sequential improvement as our collection patterns normalize.Personal Care DivisionThe following table summarizes our personal care segment results from continuing operations: For the Nine-Month Periods Ended September 30, 2017 2016 $ — $ — 42.1 23.2 42.1 23.2 31.2 16.8 10.9 6.4 10.0 5.1 $ 0.9 $ 1.3 1,822,653 990,389 11,372 8,969 830,151 451,421 $ 23.13 $ 23.41 $ 50.77 $ 51.36 2.2 2.2 Operating income related to our personal care division remained flat on a $5 million increase in gross margin offset by $5 million increase in other operating expenses. As previously mentioned, due to the acquisition activityacquired names and non-compete agreements that were fully amortized as of this division, our personal care operating results for the nine-month periods ended September 30, 2017 and 2016 are not fully comparable. Revenue from acquisitions that have closed since September 1, 2016 was approximately $13 million for the nine-month period ended September 30, 2017.CorporateThe following table summarizes our corporate results from continuing operations: For the Nine-Month Periods Ended September 30, 2017 2016 $ 85.4 $ 106.4 9.6 9.3 95.0 115.7 28.7 — $ 123.7 $ 115.7 Excluding the $30 million Securities Class Action Lawsuit settlement accrual and related legal fees in 2017, corporate expenses decreased approximately $21 million primarily as a result of a $7 million reduction in HCHB implementation costs and a $9 million reduction in acquisition activity costs (including acquired corporate support and other acquisition costs). We also experienced reductions in various other operating expenses including salaries and benefits,non-cash compensation, personnel costs and IT related services which is inclusive of approximately $1 million in acquisition integration costs incurred during the nine-month period ended September 30, 2017.35Liquidity and Capital ResourcesCash FlowsThe following table summarizes our cash flows for the periods indicated (amounts in millions): For the Nine-Month Periods
Ended September 30, 2017 2016 $ 73.5 $ 33.7 (32.9 ) (45.4 ) (4.7 ) (6.9 ) 35.9 (18.6 ) 30.2 27.5 $ 66.1 $ 8.9 For the Three-Month Periods
Ended March 31, 2023 2022 Cash provided by operating activities $ 26.0 $ 48.6 Cash provided by (used in) investing activities 45.9 (16.1) Cash used in financing activities (56.9) (7.4) Net increase in cash, cash equivalents and restricted cash 15.0 25.1 Cash, cash equivalents and restricted cash at beginning of period 54.1 45.8 Cash, cash equivalents and restricted cash at end of period $ 69.1 $ 70.9 Cash provided by operating activities increased $39.8decreased $22.6 million during the nine-monththree-month period ended September 30, 2017March 31, 2023 compared to the nine-monththree-month period ended September 30, 2016March 31, 2022 primarily due to an increase inlower operating income and higher interest payments combined with the timing of the payment of accrued expenses.Our investing activities primarily consist of the purchase of property and equipment, investments and acquisitions. Cash provided by investing activities totaled $45.9 million during the three-month period ended March 31, 2023 primarily due to the divestiture of our cash collections as compared to 2016. For additional information regarding our operating performance, see “Resultspersonal care line of Operations” and “Outstanding Patient Accounts Receivable”.decreased $12.5totaled $16.1 million during the nine-monththree-month period ended September 30, 2017 compared to the nine-month period ended September 30, 2016March 31, 2022 primarily due to our purchase of a decrease incost method investment.Our financing activities primarily consist of borrowings under our acquisition activity ($7.3 million)term loan and/or revolving credit facility, repayments of borrowings, the remittance of taxes associated with shares withheld on non-cash compensation, proceeds related to the exercise of stock options, proceeds related to the purchase of stock under our employee stock purchase plan and a decrease in capital expenditures ($4.4 million).decreased $2.2totaled $56.9 million and $7.4 million during the nine-monththree-month periods ended March 31, 2023 and 2022, respectively, and was primarily related to the repayment of borrowings and the remittance of taxes associated with shares withheld on non-cash compensation. Net proceeds from the divestiture of our personal care line of business were used to pay a portion of our Term Loan during the three-month period ended September 30, 2017 compared to the nine-month period ended September 30, 2016 primarily due to a decrease in repurchases of company stock pursuant to our stock repurchase program during the nine-month period ended September 30, 2016 offset by employee stock activity.LiquidityTypically, our principal source of liquidity is the collection of our patient accounts receivable, primarily through the Medicare program. In addition to our collection of patient accounts receivable, from time to time, we can and do obtain additional sources of liquidity by the incurrence of additional indebtedness or through sales of equity.During the nine-monththree-month period ended September 30, 2017,March 31, 2023, we spent $9.1$1.6 million in capital expenditures and investments in technology assets as compared to $13.5$1.1 million during the nine-monththree-month period ended September 30, 2016.March 31, 2022. Our capital expenditures and investments in technology assets for 20172023 are expected to be approximately $10.0 million—$12.0 million.As of September 30, 2017,March 31, 2023, we had $66.1$49.4 million in cash and cash equivalents and $167.3$519.2 million in availability under our $200.0$550.0 million Revolving Credit Facility.During the three-month period ended September 30, 2017, we settled the Securities Class Action Lawsuit for approximately $43.7 million, of which approximately $15.0 million was paid by the Company’s insurance carriers. We used cash on hand to make the required remaining $28.7 million payment during the three-month period ended September 30, 2017.Based on our operating forecasts and our debt service requirements, we believe we will have sufficient liquidity to fund our operations, capital requirements and debt service requirements.Outstanding Patient Accounts ReceivableOur net patient accounts receivable increased $11.3decreased $2.7 million from December 31, 2016 to September 30, 2017.2022. Our cash collection as a percentage of revenue was 101%99% and 98%97% for the nine-monththree-month periods ended September 30, 2017March 31, 2023 and 2016,2022, respectively. Our days revenue outstanding net at September 30, 2017March 31, 2023 was 40.746.3 days, which is an increase of 0.50.2 days from December 31, 20162022 and from June 30, 2017. The Florida ZPIC audit (see Note 5 – Commitments and Contingenciesflat when compared to our condensed consolidated financial statements) which resulted in $7.8 million of net receivables being placed on payment suspension as of September 30, 2017, has added 1.7 days to our days revenue outstanding, net. Additionally, collections of receivables of the three home health and two hospice care centers acquired on May 1, 2017, has added 1.0 day to our days revenue outstanding, net. As is typical with newly acquired care centers, we experienced an increase in our aging of receivables due to regulatory delays related to the change of ownership process.36Our patient accounts receivable includes unbilled receivables and are aged based upon our initial service date. We monitor unbilled receivables on a care center by care center basis to ensure that all efforts are made to bill claims within timely filing deadlines. Our unbilled patient accounts receivable can be impacted by acquisition activity, probepre-claim reviews required by the Medicare Administrative Contractors in the five Review Choice Demonstration states, voluntary pre-bill edits orand review, efforts to secure needed documentation to bill (orders, consents, etc.), integrations of recent acquisitions, changes of ownership and any regulatory changes which result in additional information or procedures needed prior to billing.and procedural updates impacting claim submission. The timely filing deadline for Medicare is one year from the date of the episode was completed,last billable service in the 30-day billing period and varies by state for Medicaid-reimbursable services and varies among insurance companies and other private payors.Our provision for estimated revenue adjustments (which is deducted from our service revenue to determine net service revenue) and provision for doubtful accounts were as follows for the periods indicated (amounts in millions). We fully reserve for both our Medicare and other patient accounts receivable that are aged over 365 days. For those patient accounts that are not aged over 365 days, we make adjustments to Medicare revenue or our provision for doubtful accounts based on our aging of accounts and historical collection experience. We have experienced a $10 million increase in our provision for doubtful accounts and contractual reserves during the nine-month period ended September 30, 2017 compared to the nine-month period ended September 30, 2016 due to increased write-offs and accounts receivable aging as a result of our conversion to HCHB as well as the Florida ZPIC audit. For the Three-Month Periods
Ended September 30, For the Nine-Month Periods
Ended September 30, 2017 2016 2017 2016 $ 3.5 $ 1.6 $ 11.9 $ 5.9 7.1 5.5 18.1 13.7 $ 10.6 $ 7.1 $ 30.0 $ 19.6 2.8% 1.9% 2.7% 1.8% The following schedules detail our patient accounts receivable, net of estimated revenue adjustments, by payor class, aged based upon initial date of service (amounts in millions, except days revenue outstanding):0-90 91-180 181-365 Over 365 Total At March 31, 2023: Medicare patient accounts receivable $ 178.7 $ 14.0 $ 4.2 $ 0.2 $ 197.1 Other patient accounts receivable: Medicaid 17.2 1.3 0.8 — 19.3 Private 65.7 6.9 5.1 — 77.7 Total $ 82.9 $ 8.2 $ 5.9 $ — $ 97.0 Total patient accounts receivable $ 294.1 Days revenue outstanding (1) 46.3 0-90 91-180 181-365 Over 365 Total At December 31, 2022: Medicare patient accounts receivable $ 179.9 $ 11.4 $ 5.1 $ 0.1 $ 196.5 Other patient accounts receivable: Medicaid 16.3 1.4 0.7 — 18.4 Private 67.5 8.7 5.7 — 81.9 Total $ 83.8 $ 10.1 $ 6.4 $ — $ 100.3 Total patient accounts receivable $ 296.8 Days revenue outstanding (1) 46.1 (1)Our calculation of days revenue outstanding net): 0-90 91-180 181-365 Over 365 Total $ 90.4 $ 13.9 $ 2.9 $ — $ 107.2 13.3 3.0 2.2 0.5 19.0 44.0 10.2 10.9 6.0 71.1 $ 57.3 $ 13.2 $ 13.1 $ 6.5 $ 90.1 (19.9 ) $ 70.2 $ 177.4 40.7 0-90 91-180 181-365 Over 365 Total $ 82.7 $ 17.1 $ 1.4 $ — $ 101.2 13.6 3.6 3.6 0.2 21.0 39.8 10.4 7.6 3.8 61.6 $ 53.4 $ 14.0 $ 11.2 $ 4.0 $ 82.6 (17.7 ) $ 64.9 $ 166.1 40.2 (1)The following table summarizes the activity andis derived by dividing our ending balances in our estimated revenue adjustments (amounts in millions), which is recorded to reduce our Medicare outstanding patient accounts receivable to their estimated net realizable value, as we do not estimate an allowance for doubtful accounts for our Medicare claims. For the
Three-Month
Period Ended
September 30, 2017 For the
Three-Month
Period Ended
December 31,
2016 For the
Nine-Month
Period Ended
September 30, 2017 For the
Nine-Month
Period Ended
December 31, 2016 $ 6.9 $ 3.8 $ 4.1 $ 3.4 3.5 2.0 11.9 6.2 (3.8 ) (1.7 ) (9.4 ) (5.5 ) $ 6.6 $ 4.1 $ 6.6 $ 4.1 Our estimated revenue adjustments were 5.8% and 3.9% of our outstanding Medicare patient accounts receivable at September 30, 2017March 31, 2023 and December 31, 2016, respectively.(2)The following table summarizes the activity and ending balances in our allowance for doubtful accounts (amounts in millions), which is recorded to reduce only our Medicaid and private payer outstanding patient accounts receivable to their estimated net realizable value. For the
Three-Month
Period Ended
September 30,
2017 For the
Three-Month
Period Ended
December 31, 2016 For the
Nine-Month
Period Ended
September 30,
2017 For the
Nine-Month
Period
Ended
December 31,
2016 $ 17.9 $ 16.7 $ 17.7 16.7 7.1 5.9 18.1 15.6 (5.1 ) (4.9 ) (15.9 ) (14.6 ) $ 19.9 $ 17.7 $ 19.9 $ 17.7 Our allowance2022 by our average daily net service revenue for doubtful accounts was 22% and 21% of our outstanding Medicaid and private patient accounts receivable at September 30, 2017the three-month periods ended March 31, 2023 and December 31, 2016,2022, respectively.(3)Our calculation of days revenue outstanding, net is derived by dividing our ending net patient accounts receivable (i.e., net of estimated revenue adjustments and allowance for doubtful accounts ) at September 30, 2017 and December 31, 2016 by our average daily net patient revenue for the three-month periods ended September 30, 2017 and December 31, 2016, respectively.IndebtednessSecond Amendment to the Credit AgreementOn July 30, 2021, we entered into the Second Amendment to our Credit Agreement (as amended by the Second Amendment, the "Second Amended Credit Agreement"). The Second Amended Credit Agreement provides for a senior secured credit facility in an initial aggregate principal amount of up to $1.0 billion, which includes a $550.0 million Revolving Credit Facility and a term loan facility with a principal amount of up to $450.0 million (the "Amended Term Loan Facility" and collectively with the Revolving Credit Facility, the "Amended Credit Facility").Third Amendment to the Credit AgreementOn March 10, 2023, we entered into the Third Amendment to our Credit Agreement (as amended by the Third Amendment, the "Third Amended Credit Agreement"). The Third Amendment (i) formally replaced the use of the London Interbank Offered Rate ("LIBOR") with the Secured Overnight Financing Rate ("SOFR") for interest rate pricing and (ii) allowed for the disposition of our personal care business.The loans issued under the Amended Credit Facility bear interest on a per annum basis, at our election, at either: (i) the Base Rate plus the Applicable Rate or (ii) the Term SOFR Rate plus the Applicable Rate. The “Base Rate” means a fluctuating rate per annum equal to the highest of (a) the federal funds rate plus 0.50% per annum, (b) the prime rate of interest established by37the Administrative Agent, and (c) the Term SOFR Rate plus 1% per annum. The “Term SOFR Rate” means the quoted rate per annum equal to the SOFR for an interest period of one or three months (as selected by us) plus the SOFR adjustment of 0.10%.As of March 31, 2023 and 2022, we had no outstanding borrowings under our $550.0 million Revolving Credit Facility. Our weighted average interest rate for borrowings under our $100.0 millionAmended Term Loan under our Credit Agreement,Facility was 3.2%6.1% and 3.0%1.7% for the three and nine-monththree-month periods ended September 30, 2017, respectively,March 31, 2023 and 2.5% for the three and nine-month periods ended September 30, 2016,2022, respectively. Our weighted average interest rate for our $200.0 million Revolving Credit Facility was 4.5% and 3.5% for the three and nine-month periods ended September 30, 2016, respectively.As of September 30, 2017,March 31, 2023, our consolidated leverage ratio as defined by our Credit Agreement, was 0.9,1.6, our consolidated fixed chargeinterest coverage ratio as defined by our Credit Agreement, was 4.110.3 and we are in compliance with our covenants under the Third Amended Credit Agreement.As of September 30, 2017,March 31, 2023, our availability under our $200.0$550.0 million Revolving Credit Facility was $167.3$519.2 million as we had $32.7have no outstanding borrowings and $30.8 million outstanding in letters of credit.See Note 46 - Long Term Obligations to our condensed consolidated financial statements and Note 7 of the financial statements included in our Form10-K for additional details on our outstanding long-term obligations.InflationStock Repurchase ProgramOn August 2, 2021, our Board of Directors authorized a share repurchase program, under which we could repurchase up to $100 million of our outstanding common stock through December 31, 2022 (the "2022 Share Repurchase Program").Under the terms of the 2022 Share Repurchase Program, we were allowed to repurchase shares from time to time through open market purchases, unsolicited or solicited privately negotiated transactions, an accelerated stock repurchase program, and/or a trading plan in compliance with Exchange Act Rule 10b5-1. The timing and the amount of the repurchases were determined by management based on a number of factors, including but not limited to share price, trading volume and general market conditions, as well as on working capital requirements, general business conditions and other factors. We dodid not believerepurchase any shares under the 2022 Share Repurchase Program during the three-month period ended March 31, 2022. The 2022 Share Repurchase Program expired on December 31, 2022.On February 2, 2023, our Board of Directors authorized a share repurchase program, under which we may repurchase up to $100 million of our outstanding common stock through December 31, 2023 (the "2023 Share Repurchase Program").Under the terms of the 2023 Share Repurchase Program, we are allowed to repurchase shares from time to time through open market purchases, unsolicited or solicited privately negotiated transactions, an accelerated stock repurchase program, and/or a trading plan in compliance with Exchange Act Rule 10b5-1. The timing and the amount of the repurchases will be determined by management based on a number of factors, including but not limited to share price, trading volume and general market conditions, as well as on working capital requirements, general business conditions and other factors. Effective January 1, 2023, repurchases are subject to a 1% excise tax under the Inflation Reduction Act. We have not repurchased any shares under the 2023 Share Repurchase Program as of March 31, 2023.InflationOur operations have been materially impacted by the current inflationary environment as we have experienced higher labor costs and increases in supply costs, fuel costs and mileage reimbursements. We expect inflation has significantly impactedto continue to impact our operations in 2023. As of March 31, 2023, the impacts of inflation on our results of operations.Critical Accounting EstimatesSee Part II, Item 7 – Critical Accounting Estimates and our consolidated financial statements and related notes in Part II, Item 8 of our 20162022 Annual Report on Form10-K for accounting policies and related estimates we believe are the most critical to understanding our condensed consolidated financial statements, financial condition and results of operations and which require complex management judgment and assumptions or involve uncertainties. These critical accounting estimates include:include revenue recognition, patient accounts receivable, insurance,business combinations and goodwill and other intangible assets and income taxes.assets. There have not been any changes to our significant accounting policies or their application since we filed our 20162022 Annual Report on Form10-K.38ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
| Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c ) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs | ||||||||||||
July 1, 2017 to July 31, 2017 | 12,515 | $ | 50.81 | — | $ | — | ||||||||||
August 1, 2017 to August 31, 2017 | — | — | — | — | ||||||||||||
September 1, 2017 to September 30, 2017 | 1,694 | 54.66 | — | — | ||||||||||||
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| 14,209 | (1) | $ | 51.27 | — | $ | — | ||||||||||
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| Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs | |||||||||||||||||||
| January 1, 2023 to January 31, 2023 | 6,820 | $ | 82.60 | — | $ | 100,000,000 | |||||||||||||||||
| February 1, 2023 to February 28, 2023 | 7,668 | 97.11 | — | 100,000,000 | |||||||||||||||||||
| March 1, 2023 to March 31, 2023 | — | — | — | 100,000,000 | |||||||||||||||||||
| 14,488 | (1) | $ | 90.28 | — | $ | 100,000,000 | |||||||||||||||||
| Exhibit Number | Document Description | Report or Registration Statement | SEC File or Registration Number | Exhibit or Other Reference | ||||||||||||||||||||||
| 2.1 | ||||||||||||||||||||||||||
| 3.1 | The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 | 0-24260 | 3.1 | |||||||||||||||||||||||
| 3.2 | The Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 | 0-24260 | 3.2 | |||||||||||||||||||||||
| *10.1 | ||||||||||||||||||||||||||
| 10.2 | ||||||||||||||||||||||||||
| †31.1 | ||||||||||||||||||||||||||
| †31.2 | ||||||||||||||||||||||||||
| ††32.1 | ||||||||||||||||||||||||||
| ††32.2 | ||||||||||||||||||||||||||
| †101.INS | Inline XBRL Instance - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||||||||||||||||||||
| †101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||||||||||||||||||||
| †101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||||||||||||||
| †101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | |||||||||||||||||||||||||
| †101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document | |||||||||||||||||||||||||
| †101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||||||||||||||||||||
AMEDISYS, INC. (Registrant) | ||||||||
By: | /s/ SCOTT G. GINN | |||||||
| Scott G. Ginn, | ||||||||
| Principal | ||||||||
| Duly Authorized Officer | ||||||||
32