10-Q 1 amed-20220930.htm 10-Q amed-20220930
FALSE2022Q3AMEDISYS INC0000896262--12-31P5DP7D12.429.83.83.81.93.80.10.40.52.81.42.8Fluctuating 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 by the Administrative Agent, and (c) the Eurodollar Rate for an interest period of one month plus 1% per annum.Rate at which Eurodollar deposits in the London interbank market for an interest period of one, two, three or six 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 0-24260 
amed-20220930_g1.jpg
AMEDISYS, INC.
(Exact Name of Registrant as Specified in its Charter)
 
Delaware 11-3131700
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
3854 American Way, Suite A, Baton Rouge, LA 70816
(Address of principal executive offices, including zip code)
(225) 292-2031 or (800) 467-2662
(Registrant’s telephone number, including area code)
 
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareAMEDThe NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes     No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer   Accelerated filer 
Non-accelerated filer 
  Smaller reporting company 
Emerging growth company 
   
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No  
The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date, is as follows: Common stock, $0.001 par value, 32,491,988 shares outstanding as of October 21, 2022.




TABLE OF CONTENTS
;;;
PART I.
ITEM 1.
ITEM 2.
ITEM 3
ITEM 4.
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.





SPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

When included in this Quarterly Report on Form 10-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 impact of the novel coronavirus pandemic ("COVID-19"), including the measures that have been and may be taken by governmental authorities to mitigate it, on our business, financial condition and results of operations; the impact of current and proposed federal, state and local vaccine mandates; staffing shortages driven by the competitive labor market; 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; changes in Medicare and other medical payment levels; our ability to open care centers, acquire additional care centers and integrate and operate these care centers effectively; competition in the healthcare industry; changes in the case mix of our patients, the episodic versus non-episodic mix of our payors or payment methodologies; changes in estimates and judgments associated with critical accounting policies; our ability to maintain or establish new patient referral sources; our ability to consistently provide high-quality care; our ability to attract and retain qualified personnel; our ability to keep our patients and employees safe; changes in payments and covered services by federal and state governments; future cost containment initiatives undertaken by third-party payors; our access to financing; our ability to meet debt service requirements and comply with covenants in debt agreements; business disruptions due to natural disasters, climate change or acts of terrorism, widespread protests or civil unrest; our ability to integrate, manage and keep our information systems secure; the impact of inflation; our ability to realize the anticipated benefits of acquisitions, investments and joint ventures; and changes in laws 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 Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022, particularly, Part I, Item 1A - Risk Factors therein, which are incorporated herein by reference, and Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q. Additional risk factors may also be described in reports that we file from time to time with the SEC.
Available Information
Our 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, analyst 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 automatic e-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 Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-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 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 “Governance”). Reference to our website does not constitute incorporation by reference of the information contained on the website and should not be considered part of this document. Our electronically filed reports can also be obtained on the SEC’s internet site at http://www.sec.gov.


1



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMEDISYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
September 30, 2022 (Unaudited)December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$17,956 $42,694 
Restricted cash13,504 3,075 
Patient accounts receivable302,470 274,961 
Prepaid expenses17,011 10,356 
Other current assets37,839 25,598 
Total current assets388,780 356,684 
Property and equipment, net of accumulated depreciation of $102,407 and $96,937
17,248 18,435 
Operating lease right of use assets105,843 101,257 
Goodwill1,285,455 1,196,090 
Intangible assets, net of accumulated amortization of $11,891 and $19,900
103,678 111,190 
Deferred income tax assets 289 
Other assets81,123 73,023 
Total assets$1,982,127 $1,856,968 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable$45,527 $38,217 
Payroll and employee benefits145,073 141,001 
Accrued expenses130,100 150,836 
Current portion of long-term obligations12,628 12,995 
Current portion of operating lease liabilities33,872 31,233 
Total current liabilities367,200 374,282 
Long-term obligations, less current portion443,431 432,075 
Operating lease liabilities, less current portion72,030 69,309 
Deferred income tax liabilities15,983  
Other long-term obligations13,873 4,979 
Total liabilities912,517 880,645 
Commitments and Contingencies—Note 6
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; 37,852,059 and 37,674,868 shares issued; and 32,479,475 and 32,509,969 shares outstanding
38 38 
Additional paid-in capital750,914 728,118 
Treasury stock, at cost 5,372,584 and 5,164,899 shares of common stock
(461,168)(435,868)
Retained earnings725,955 639,063 
Total Amedisys, Inc. stockholders’ equity1,015,739 931,351 
Noncontrolling interests53,871 44,972 
Total equity1,069,610 976,323 
Total liabilities and equity$1,982,127 $1,856,968 
The accompanying notes are an integral part of these condensed consolidated financial statements.


2



AMEDISYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED 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,
 2022202120222021
Net service revenue$557,988 $553,485 $1,661,135 $1,654,795 
Other operating income (4) 13,300 
Cost of service, excluding depreciation and amortization322,227 310,294 943,258 916,188 
General and administrative expenses:
Salaries and benefits125,550 119,373 376,788 349,533 
Non-cash compensation3,495 4,397 15,990 17,860 
Other59,299 55,158 167,851 158,995 
Depreciation and amortization5,477 7,487 19,705 21,763 
Investment impairment3,009  3,009  
Operating expenses519,057 496,709 1,526,601 1,464,339 
Operating income38,931 56,772 134,534 203,756 
Other income (expense):
Interest income59  108 49 
Interest expense(4,963)(2,730)(16,447)(6,734)
Equity in earnings (loss) from equity method investments302 1,444 (442)3,932 
Gain on equity method investments   31,092 
Miscellaneous, net491 490 1,155 1,253 
Total other (expense) income, net(4,111)(796)(15,626)29,592 
Income before income taxes34,820 55,976 118,908 233,348 
Income tax expense(9,417)(10,731)(32,755)(57,192)
Net income25,403 45,245 86,153 176,156 
Net loss (income) attributable to noncontrolling interests239 (239)739 (1,131)
Net income attributable to Amedisys, Inc.$25,642 $45,006 $86,892 $175,025 
Basic earnings per common share:
Net income attributable to Amedisys, Inc. common stockholders$0.79 $1.38 $2.67 $5.36 
Weighted average shares outstanding32,482 32,607 32,519 32,658 
Diluted earnings per common share:
Net income attributable to Amedisys, Inc. common stockholders$0.79 $1.37 $2.66 $5.30 
Weighted average shares outstanding32,616 32,899 32,680 33,021 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3



AMEDISYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts in thousands, except common stock shares)
(Unaudited)
For the Three-Months Ended September 30, 2022
TotalCommon StockAdditional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Noncontrolling
Interests
SharesAmount
Balance, June 30, 2022$1,038,995 37,780,242 $38 $743,276 $(457,981)$700,313 $53,349 
Issuance of stock – employee stock purchase plan966 10,814 — 966 — — — 
Issuance/(cancellation) of non-vested stock 57,420   — — — 
Exercise of stock options306 3,583 — 306 — — — 
Non-cash compensation3,495 — — 3,495 — — — 
Surrendered shares(3,187)— — — (3,187)— — 
Noncontrolling interest contributions1,148 — — — — — 1,148 
Noncontrolling interest distributions(450)— — — — — (450)
Sale of noncontrolling interest2,934 — — 2,871 — — 63 
Net income (loss)25,403 — — — — 25,642 (239)
Balance, September 30, 2022$1,069,610 37,852,059 $38 $750,914 $(461,168)$725,955 $53,871 
For the Three-Months Ended September 30, 2021
TotalCommon StockAdditional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Noncontrolling
Interests
SharesAmount
Balance, June 30, 2021$875,887 37,553,355 $38 $714,334 $(400,110)$560,010 $1,615 
Issuance of stock – employee stock purchase plan1,061 5,095 — 1,061 — — — 
Issuance/(cancellation) of non-vested stock 87,460   — — — 
Exercise of stock options1,083 13,374 — 1,083 — — — 
Non-cash compensation4,397 — — 4,397 — — — 
Surrendered shares(9,750)— — — (9,750)— — 
Shares repurchased(10,805)— — — (10,805)— — 
Noncontrolling interest distributions(459)— — — — — (459)
Acquired noncontrolling interest42,142 — — — — — 42,142 
Net income45,245 — — — — 45,006 239 
Balance, September 30, 2021$948,801 37,659,284 $38 $720,875 $(420,665)$605,016 $43,537 
For the Nine-Months Ended September 30, 2022
TotalCommon StockAdditional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Noncontrolling
Interests
SharesAmount
Balance, December 31, 2021$976,323 37,674,868 $38 $728,118 $(435,868)$639,063 $44,972 
Issuance of stock – employee stock purchase plan2,857 24,159 — 2,857 — — — 
Issuance/(cancellation) of non-vested stock 141,726   — — — 
Exercise of stock options1,078 11,306 — 1,078 — — — 
Non-cash compensation15,990 — — 15,990 — — — 
Surrendered shares(7,949)— — — (7,949)— — 
Shares repurchased(17,351)— — — (17,351)— — 
Noncontrolling interest contributions11,000 — —  — — 11,000 
Noncontrolling interest distributions(1,425)— — — — — (1,425)
Sale of noncontrolling interest2,934 — — 2,871 — — 63 
Net income (loss)86,153 — — — — 86,892 (739)
Balance, September 30, 2022$1,069,610 37,852,059 $38 $750,914 $(461,168)$725,955 $53,871 
For the Nine-Months Ended September 30, 2021
TotalCommon StockAdditional
Paid-in
Capital
Treasury
Stock
Retained
Earnings
Noncontrolling
Interests
SharesAmount
Balance, December 31, 2020$810,741 37,470,212 $38 $698,287 $(319,092)$429,991 $1,517 
Issuance of stock – employee stock purchase plan3,022 13,357 — 3,022 — — — 
Issuance/(cancellation) of non-vested stock 148,529   — — — 
Exercise of stock options1,706 27,186 — 1,706 — — — 
Non-cash compensation17,860 — — 17,860 — — — 
Surrendered shares(16,694)— — — (16,694)— — 
Shares repurchased(84,879)— — — (84,879)— — 
Noncontrolling interest distributions(1,253)— — — — — (1,253)
Acquired noncontrolling interest42,142 — — — — — 42,142 
Net income176,156 — — — — 175,025 1,131 
Balance, September 30, 2021$948,801 37,659,284 $38 $720,875 $(420,665)$605,016 $43,537 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4



AMEDISYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
 For the Nine-Month 
Periods Ended September 30,
 20222021
Cash Flows from Operating Activities:
Net income$86,153 $176,156 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization19,705 21,763 
Non-cash compensation15,990 17,860 
Amortization and impairment of operating lease right of use assets34,782 30,181 
Loss (gain) on disposal of property and equipment507 (64)
Gain on equity method investments (31,092)
Deferred income taxes19,031 34,729 
Equity in loss (earnings) from equity method investments442 (3,932)
Amortization of deferred debt issuance costs/debt discount743 669 
Return on equity method investments3,798 4,268 
Investment impairment3,009  
Changes in operating assets and liabilities, net of impact of acquisitions:
Patient accounts receivable(18,266)(17,638)
Other current assets(19,929)(6,219)
Other assets283 (938)
Accounts payable5,886 (1,192)
Accrued expenses(26,790)(9,363)
Other long-term obligations243 (1,785)
Operating lease liabilities(30,864)(27,372)
Operating lease right of use assets(2,323)(2,304)
Net cash provided by operating activities92,400 183,727 
Cash Flows from Investing Activities:
Proceeds from the sale of deferred compensation plan assets89 126 
Proceeds from the sale of property and equipment66 140 
Purchases of property and equipment(4,338)(5,187)
Investments in technology assets(848)(147)
Investment in equity method investee(637) 
Purchase of cost method investment(15,000) 
Acquisitions of businesses, net of cash acquired(71,952)(264,872)
Net cash used in investing activities(92,620)(269,940)
Cash Flows from Financing Activities:
Proceeds from issuance of stock upon exercise of stock options1,078 1,706 
Proceeds from issuance of stock to employee stock purchase plan2,857 3,022 
Shares withheld to pay taxes on non-cash compensation(7,949)(16,694)
Noncontrolling interest contributions2,100  
Noncontrolling interest distributions(1,425)(1,253)
Proceeds from sale of noncontrolling interest3,941  
Proceeds from borrowings under term loan 290,312 
Proceeds from borrowings under revolving line of credit484,000 500,700 
Repayments of borrowings under revolving line of credit (465,500)(551,700)
Principal payments of long-term obligations(10,126)(5,893)
Debt issuance costs (2,792)
Purchase of company stock(17,351)(84,879)
Payment of accrued contingent consideration(5,714) 
Provider relief fund advance (1,465)
Net cash (used in) provided by financing activities(14,089)131,064 
Net (decrease) increase in cash, cash equivalents and restricted cash(14,309)44,851 
Cash, cash equivalents and restricted cash at beginning of period45,769 83,357 
Cash, cash equivalents and restricted cash at end of period$31,460 $128,208 
5



For the Nine-Month 
Periods Ended September 30,
20222021
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest$9,153 $3,479 
Cash paid for Infinity ZPIC interest$11,544 $ 
Cash paid for income taxes, net of refunds received$23,582 $25,482 
Cash paid for operating lease liabilities$33,187 $29,676 
Cash paid for finance lease liabilities$1,074 $1,509 
Supplemental Disclosures of Non-Cash Activity:
Right of use assets obtained in exchange for operating lease liabilities$36,980 $34,881 
Right of use assets obtained in exchange for finance lease liabilities$1,846 $814 
Reductions to right of use assets resulting from reductions to operating lease liabilities$3,387 $1,183 
Reductions to right of use assets resulting from reductions to finance lease liabilities$564 $ 
Accrued contingent consideration$19,195 $ 
Noncontrolling interest contribution$8,900 $ 

The accompanying notes are an integral part of these condensed consolidated financial statements.
6


AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. NATURE OF OPERATIONS, CONSOLIDATION AND PRESENTATION OF FINANCIAL STATEMENTS
Amedisys, Inc., a Delaware corporation (together with its consolidated subsidiaries, referred to herein as “Amedisys,” “we,” “us,” or “our”), is a multi-state provider of home health, hospice, personal care and high acuity care services with approximately 74% of our consolidated net service revenue derived from Medicare for the three and nine-month periods ended September 30, 2022 and approximately 75% of our consolidated net service revenue derived from Medicare for the three and nine-month periods ended September 30, 2021. As of September 30, 2022, we owned and operated 353 Medicare-certified home health care centers, 172 Medicare-certified hospice care centers, 14 personal-care care centers and 8 admitting high acuity care joint ventures in 36 states within the United States and the District of Columbia.
Basis of Presentation
In 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 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.
This report should be read in conjunction with our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (“SEC”) on February 24, 2022 (the “Form 10-K”), which includes information and disclosures not included herein. 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.
Use of Estimates
Our 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 differ from those estimates.
Principles of Consolidation
These unaudited condensed consolidated financial statements include the accounts of Amedisys, Inc. and our wholly-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 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.
Investments
We consolidate investments when the entity is a variable interest entity ("VIE") 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 VIE in which we are the primary beneficiary. The book value of investments that we account for under the equity method of accounting was $41.5 million and $48.1 million as of September 30, 2022 and December 31, 2021, respectively, and is reflected in other assets within our condensed consolidated balance sheets.
We account for investments in entities in which we have less than 20% ownership interest under the cost method of accounting if we do not have the ability to exercise significant influence over the investee. During the three-month period ended March 31, 2022, we made a $15.0 million investment in an entity accounted for under the cost method. The book value of investments that we account for under the cost method of accounting was $20.0 million and $5.0 million as of September 30, 2022 and December 31, 2021, respectively, and is reflected in other assets within our condensed consolidated balance sheets.
7


AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
During the three-month period ended September 30, 2022, we sold a 30% interest in two of our home health care centers while maintaining a controlling interest in the newly formed joint venture. We are consolidating this joint venture. The total cash consideration received for the 30% noncontrolling interest was $3.9 million. In connection with the transaction, we recorded an after-tax gain of $2.9 million; this gain was recorded in additional paid-in capital within our condensed consolidated balance sheet.
During 2021, a third-party acquired a majority of the issued and outstanding membership interests of one of our equity method investments, Medalogix, for cash, with the remaining membership interests rolling over into a newly formed entity that includes Medalogix as well as another healthcare predictive data and analytics company. We rolled over 100% of our ownership interest in Medalogix to the newly formed entity, and in connection with this transaction, we recognized a $31.1 million gain based on the purchase price of Medalogix during the three-month period ended June 30, 2021, which is reflected in gain on equity method investments within our condensed consolidated statements of operations.
Our high acuity care segment includes interests in several joint ventures with health system partners and a professional corporation that employs clinicians. Each of these entities meets the criteria to be classified as a VIE. As of September 30, 2022, we are consolidating all of our admitting joint ventures with health system partners as well as the professional corporation as we have concluded that we are the primary beneficiary of these VIEs. We have management agreements in place with each of these entities whereby we manage the entities and run the day-to-day operations. As such, we possess the power to direct the activities that most significantly impact the economic performance of the VIEs. The significant activities include, but are not limited to, negotiating provider and payor contracts, establishing patient care policies and protocols, making employment and compensation decisions, developing the operating and capital budgets, performing marketing activities and providing accounting support. We also have the obligation to absorb any expected losses and the right to receive benefits. Additionally, from time to time, we may be required to provide joint venture funding. Our high acuity care segment also includes one non-admitting joint venture with a health system partner that is accounted for under the equity method of accounting. We are in the process of winding down the operations of this joint venture.
The terms of the agreements with each VIE prohibit us from using the assets of the VIE to satisfy the obligations of other entities. The carrying amount of the VIEs’ assets and liabilities included in our condensed consolidated balance sheets are as follows (amounts in millions):
8


AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of September 30, 2022As of December 31, 2021
ASSETS
Current assets:
     Cash and cash equivalents$13.0 $3.1 
     Patient accounts receivable5.4 2.4 
     Other current assets0.9 0.1 
          Total current assets19.3 5.6 
Property and equipment0.2 0.1 
Operating lease right of use assets0.1  
Goodwill8.5  
Intangible assets0.4  
Other assets0.1  
          Total assets$28.6 $5.7 
LIABILITIES
Current liabilities:
     Accounts payable$0.3 $ 
     Payroll and employee benefits0.6 0.3 
     Accrued expenses5.1 3.4 
     Current portion of long-term obligations0.2 0.8 
          Total current liabilities6.2 4.5 
Other long-term obligations  
          Total liabilities$6.2 $4.5 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
We account for revenue from contracts with customers in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, and as such, we recognize 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 obtaining 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 the 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-
9


AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
to-face documentation. Subsequent changes to the estimate of the transaction price are recorded as adjustments to net 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 economic 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 74% of our consolidated net service revenue for the three and nine-month periods ended September 30, 2022 and approximately 75% of our consolidated net service revenue for the three and nine-month periods ended September 30, 2021.
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.

Revenue by payor class as a percentage of total net service revenue is as follows:
For the Three-Month Periods Ended September 30,For the Nine-Month Periods
Ended September 30,
2022202120222021
Home Health:
     Medicare40 %41 %40 %41 %
     Non-Medicare - Episodic-based7 %8 %8 %8 %
     Non-Medicare - Non-episodic based13 %12 %13 %12 %
Hospice:
     Medicare34 %34 %33 %34 %
     Non-Medicare2 %2 %2 %2 %
Personal Care3 %3 %3 %3 %
High Acuity Care (1)1 % %1 % %
100 %100 %100 %100 %
(1) Acquired Contessa Health on August 1, 2021.

Home Health Revenue Recognition
Medicare Revenue
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 30-day periods of care rather than 60-day episodes of care as the unit of payment, eliminates the use of the number of therapy visits provided in determining payment and relies more heavily on clinical characteristics and other patient information.
All 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 periods of care.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Net service revenue is recorded based on the 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 period of care. 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.
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 additional adjustments based on certain variables, including, but not limited to (a) an outlier payment if our patient'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 less than the established threshold, which ranges from two to six visits and varies for every case-mix group; (c) a partial payment if a patient is transferred to another provider or from another provider before completing the 30-day period of care; and (d) the applicable geographic wage index. Payments for routine and non-routine supplies are included in the 30-day payment rate.
Medicare can also make various adjustments to payments received if we are unable to produce appropriate billing documentation or 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 to revenue with a corresponding reduction to patient accounts receivable.
Amounts 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, and receive treatment under a plan of care established and periodically reviewed by a physician. In order to provide greater flexibility during the novel coronavirus pandemic ("COVID-19"), CMS relaxed the definition of homebound status through the duration of the public health emergency. During the pandemic, a beneficiary is considered homebound if they have been instructed by a physician not to leave their home because of a confirmed or suspected COVID-19 diagnosis or if the patient has a condition that makes them more susceptible to contracting COVID-19. Therefore, if a beneficiary is homebound due to COVID-19 and requires skilled services, the services will be covered under the Medicare home health benefit.
Non-Medicare Revenue
Episodic-based Revenue. We recognize revenue in a similar manner as we recognize Medicare revenue for amounts that are paid by other insurance carriers, including Medicare Advantage programs; however, these amounts can vary based upon the negotiated terms, the majority of which range from 95% to 100% of Medicare rates.
Non-episodic based Revenue. 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 estimated per-visit 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 adjustments to non-episodic revenue based on our historical 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 insurance co-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.
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AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Hospice Revenue Recognition
Hospice Medicare Revenue
Gross 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 accounted for 97% of our total Medicare hospice service revenue for the three and nine-month periods ended September 30, 2022 and 2021. 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, we may also receive a service intensity add-on (“SIA”). The SIA is based on visits made in the last seven days of life by a registered nurse or medical social worker 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 non-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 a historical collection rate of over 99% on Medicare claims, and record it during the period services are rendered.
Amounts 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.
Additionally, our 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. 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 accrued expenses within our condensed consolidated balance sheets. Providers are required to self-report and pay their estimated cap liability by February 28th of the following year. Prior to the 2016 final rule, the cap year began on November 1st and ended on October 31st. Effective with the 2016 final rule, the cap year was changed to align with the federal fiscal year which begins on October 1st and ends on September 30th. As of September 30, 2022, we have recorded $4.1 million for estimated amounts due back to Medicare in accrued expenses for the Federal cap years ended October 31, 2016 through September 30, 2022. As of December 31, 2021, we had recorded $4.5 million for estimated amounts due back to Medicare in accrued expenses for the Federal cap years ended October 31, 2016 through September 30, 2022.
Hospice Non-Medicare Revenue
Gross revenue is recorded 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 standard rates and the contractual rates to be realized from patients, third-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 based on our historical experience to reflect the estimated transaction price.
Personal Care Revenue Recognition
Personal Care Revenue
We generate net service revenues by providing our services directly to patients based on authorized hours, visits or units determined by the relevant agency, at a rate that is either contractual or fixed by legislation. Net service revenue is recognized at the time services are 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").
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AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
High Acuity Care Revenue Recognition
High Acuity Care Revenue
Our 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, (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 and (3) Medicare and other payors for the provision of home health services.
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.
In March 2022, our high acuity care segment entered into a transaction in which one of our health system partners contributed its home health operations to one of our existing high acuity care joint ventures. We recognize Medicare and non-Medicare revenue in a manner that is consistent with our home health segment revenue recognition policy described above.
Government Grants
We account for government grants in accordance with Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832), by applying the grant model in accordance with International Accounting Standard ("IAS") 20, Accounting for Government Grants and Disclosure of Government Assistance, and as such, we recognize grant income on a systematic basis in line with the recognition of expenses or the loss of revenues for which the grants are intended to compensate. We recognize grants once both of the following conditions are met: (1) we are able to comply with the relevant conditions of the grant and (2) the grant will be received. See Note 3 – Novel Coronavirus Pandemic ("COVID-19") for additional information on our accounting for government funds received under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act").
Cash, Cash Equivalents and Restricted Cash
Cash 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 September 30, 2022 and December 31, 2021, we had $13.5 million and $3.1 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 increase in restricted cash from December 31, 2021 to September 30, 2022 is related to our
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AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
acquisitions of Evolution Health, LLC ("Evolution") and AssistedCare Home Health, Inc. and RH Homecare Services, LLC ("AssistedCare") on April 1, 2022. See Note 4 – Acquisitions for additional information.
The following table summarizes the balances related to our cash, cash equivalents and restricted cash (amounts in millions):
As of September 30, 2022As of December 31, 2021
Cash and cash equivalents$18.0 $42.7 
Restricted cash13.5 3.1 
Cash, cash equivalents and restricted cash$31.5 $45.8 
Patient Accounts Receivable
We 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, 2022, 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 write off accounts on a monthly basis once we have exhausted our collection efforts and deem an account to be uncollectible. We believe the collectability risk associated with our Medicare accounts, which represented 65% and 68% of our patient accounts receivable at September 30, 2022 and December 31, 2021, respectively, is limited due to our historical collection rate of over 99% from Medicare and the fact that Medicare is a U.S. government payor.
We do not believe there are any significant concentrations of revenues from any payor that would subject us to any significant credit risk in the collection of our accounts receivable.
Medicare Home Health
For our home health patients (within both our home health and high acuity care segments), our pre-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 following the end of each 30-day period of care or upon discharge, if earlier, for the services provided to the patient.
Medicare Hospice
For our hospice patients, our pre-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, Personal Care and High Acuity Care
For our non-Medicare patients, our pre-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 of non-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.
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AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Business Combinations
We account for acquisitions using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Acquisitions are accounted for as purchases and are included in our condensed 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 the purchase price over tangible and identifiable intangible assets. In determining the fair value of identifiable intangible assets and noncontrolling interests, we use various valuation techniques including the income approach, the cost approach and the market approach. These valuation methods require us to make estimates and assumptions surrounding projected revenues and costs, growth rates and discount rates.
Fair Value of Financial Instruments
The following details our financial instruments where the carrying value and the fair value differ (amounts in millions):
 Fair Value at Reporting Date Using
Financial InstrumentCarrying Value as of September 30, 2022Quoted Prices in Active
Markets for Identical
Items
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
Long-term obligations$457.4 $ $473.4 $ 

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.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.
Our deferred compensation plan assets are recorded at fair value and are considered a level 2 measurement. For our other financial instruments, including our cash and cash equivalents, patient accounts receivable, accounts payable, payroll and employee benefits and accrued expenses, we estimate the carrying amounts approximate fair value.
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AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Weighted-Average Shares Outstanding
Net income per share attributable to Amedisys, Inc. common stockholders, calculated on the treasury stock method, is based on the weighted average number of shares outstanding during the period. The following table sets forth, for the periods indicated, shares used in our computation of weighted-average shares outstanding, which are used to calculate our basic and diluted net income attributable to Amedisys, Inc. common stockholders (amounts in thousands):
 For the Three-
Month Periods
Ended September 30,