Change Healthcare (CHNG) Q4 Earnings Miss Estimates, Revenues Top

Change Healthcare Inc. CHNG reported fourth-quarter fiscal 2022 adjusted earnings per share (EPS) of 39 cents, which missed the Zacks Consensus Estimate of 43 cents by 9.3%. The bottom line declined 7.1% on a year-over-year basis.

Net income per share was 2 cents in the quarter, against the year-ago quarter’s net loss per share of 4 cents.

Revenue Details

Revenues rose 7.6% from the prior-year period to $920.1 million in the reported quarter. The top line outpaced the Zacks Consensus Estimate by 1.8%.

For the full-year 2022, the company reported revenues of $3.48 billion, up 12.6% from the prior-year quarter. The figure beat the consensus mark by 0.6%.

Segmental Analysis

Change Healthcare operates through three segments — Software and Analytics, Network Solutions, Technology-Enabled Services and Postage and Eliminations.

Software and Analytics

Revenues at this segment totaled $443.2 million, up 6.5% on a year-over-year basis.

Network Solutions

Revenues at this segment were $216.4 million, up 9.1% year over year.

Change Healthcare Inc. Price, Consensus and EPS Surprise

Change Healthcare Inc. price-consensus-eps-surprise-chart | Change Healthcare Inc. Quote

Technology-Enabled Services

Revenues at this segment were $234.3 million, up 3.1% on a year-over-year basis.

Postage and Eliminations

Revenues at this segment totaled $26.3 million, up 12.4% year over year.

Margin Analysis

Total operating expenses were $867.3 million, up 6.6% from the prior-year quarter.

In the quarter under review, Change Healthcare reported an operating income of $52.8 million, compared with $41.7 million in the year-ago quarter.

Financial Position

The company exited the quarter with cash and cash equivalents of $252.3 million, compared with $96 million in the preceding quarter.

Cumulative net cash provided by operating activities at the end of the fiscal fourth quarter amounted to $696.9 million compared with $586.2 million in the year-ago period.

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Guidance

Given the proposed merger agreement (with OptumInsight), Change Healthcare will not be issuing financial guidance going forward.

Wrapping Up

Change Healthcare exited the fourth-quarter fiscal 2022 on a mixed note, wherein earnings missed the Zacks Consensus Estimate, but revenues beat the same. The company exhibited robust performance across all its segments in the quarter under review. Strategic collaboration with Luma Health was one of the business highlights in the quarter.

However, cut-throat competition remains a headwind. Deterioration in the bottom line is disappointing. Higher operating expenses are concerning.

Zacks Rank

Currently, Change Healthcare carries a Zacks Rank #3 (Hold).

Key Picks

Some better-ranked stocks in the broader medical space that have announced quarterly results are Bio-Rad Laboratories, Inc. BIO, AMN Healthcare Services, Inc. AMN and Masimo Corporation MASI.

Bio-Rad, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of $4.94, which beat the Zacks Consensus Estimate by 76.4%. Revenues of $700 million outpaced the consensus mark by 3.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bio-Rad has a historical earnings growth rate of 31.2%. BIO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 58.9%.

AMN Healthcare, sporting a Zacks Rank #1, reported first-quarter 2022 adjusted EPS of $3.49, which beat the Zacks Consensus Estimate by 7.4%. Revenues of $1.55 billion outpaced the consensus mark by 3.7%.

AMN Healthcare has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 15.6%.

Masimo reported first-quarter 2022 adjusted EPS of 93 cents, which surpassed the Zacks Consensus Estimate by 1.1%. Revenues of $304.2 million outpaced the Zacks Consensus Estimate by 3.6%. It currently carries a Zacks Rank #2.

Masimo has an earnings yield of 3.4% against the industry’s negative yield. MASI’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 4.4%.

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