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Envision Healthcare's (EVHC) Q3 Earnings Miss Expectations

Zacks Equity Research
Updated

Envision Healthcare Corp. EVHC reported third-quarter earnings of 73 cents per share, that missed the Zacks Consensus Estimate of 88 cents by 17%. Earnings significantly declined from $1.13 reported in the year-ago quarter.

Adjusted EBITDA for the third quarter came at $233.5 million, up 52% year over year.

The company reported net revenues of $1.99 billion, which missed the Zacks Consensus Estimate by 0.1% but increased from $822 million in the year-ago quarter.     

The company’s operations have been adversely affected by hurricanes Harvey and Irma during the quarter. For the third quarter, the results from continuing operations include a negative impact of $22 million of revenues and $22 million of adjusted EBITDA.

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Total operating expenses of $1.81 billion increased from $672.6 million in the year-ago quarter primarily due to higher salaries and benefits, insurance expenses and depreciation & amortization expenses.

Segment Update

Physician Services

Net revenues from the segment were $1.68 billion in the third quarter, reflecting an increase of 7.6% year over year. The revenue growth was driven by 9.6% contribution from acquisitions and 0.4% from same contracts.

Adjusted EBITDA was $179 million, down 13% year over year due to storm-related disruptions.

Ambulatory Services

Net revenues were $309.4 million, reflecting a decline of 1.6% year over year. The company estimates that storm-related disruption reduced Ambulatory Services revenues by $3 million.

For the reported quarter, adjusted EBITDA was $54.5 million, down 11% year over year. The segment’s adjusted EBITDA was reduced by an estimated $2 million due to storm-related disruptions.

Envision Healthcare Corporation Price, Consensus and EPS Surprise

Envision Healthcare Corporation Price, Consensus and EPS Surprise | Envision Healthcare Corporation Quote

Financial Update

Envision Healthcare had cash and cash equivalents of $278.1 million, down 12% from Dec 31, 2016.

Total long-term debt increased to $6.3 billion as of Sep 30, 2017, up 8% from 2016 year-end.

The company’s ratio of total net debt to trailing 12-month EBITDA on Sep 30, 2017 as calculated under the company’s credit agreement was 4.5 times.

Net cash provided by operating activities was $182.3 million for the quarter, up 17% year over year.

Fourth-Quarter 2017 Guidance

The company expectsrevenues to lie within the range of $1.88-$2.02 billion.

It expects adjusted EBITDA to remain in the band of $182-$202 million.

Adjusted EPS is expected to be between 44 cents and 54 cents.

Business Update

Envision Healthcare intends to discontinue its Medical Transportation business.

On Aug 7, 2017, the company inked a deal to divest its American Medical Response in a cash transaction valued at $2.4 billion. The deal is presently subject to regulatory approval and customary closing conditions.

Zacks Rank & Other Releases

Envision Healthcare carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among the other firms in the medical sector that have reported third-quarter earnings so far, the bottom line at Centene Corp. CNC, Aetna Inc AET and UnitedHealth Group Inc. UNH beat their respective Zacks Consensus Estimate.

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