Intrinsic value of Amedisys Inc - AMED

Previous Close

$133.02

  Intrinsic Value

$175.83

stock screener

  Rating & Target

buy

+32%

Previous close

$133.02

 
Intrinsic value

$175.83

 
Up/down potential

+32%

 
Rating

buy

We calculate the intrinsic value of AMED stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
  5.22
  5.20
Revenue, $m
  1,816
  1,975
  2,141
  2,314
  2,494
  2,680
  2,874
  3,075
  3,285
  3,502
  3,729
  3,964
  4,210
  4,465
  4,731
  5,009
  5,298
  5,600
  5,915
  6,245
  6,589
  6,948
  7,325
  7,718
  8,130
  8,561
  9,012
  9,485
  9,980
  10,499
Variable operating expenses, $m
  893
  971
  1,053
  1,137
  1,225
  1,317
  1,412
  1,511
  1,613
  1,720
  1,828
  1,944
  2,064
  2,189
  2,319
  2,455
  2,597
  2,745
  2,900
  3,061
  3,230
  3,407
  3,591
  3,784
  3,986
  4,197
  4,418
  4,650
  4,893
  5,147
Fixed operating expenses, $m
  719
  735
  751
  768
  785
  802
  820
  838
  856
  875
  894
  914
  934
  955
  976
  997
  1,019
  1,042
  1,064
  1,088
  1,112
  1,136
  1,161
  1,187
  1,213
  1,240
  1,267
  1,295
  1,323
  1,352
Total operating expenses, $m
  1,612
  1,706
  1,804
  1,905
  2,010
  2,119
  2,232
  2,349
  2,469
  2,595
  2,722
  2,858
  2,998
  3,144
  3,295
  3,452
  3,616
  3,787
  3,964
  4,149
  4,342
  4,543
  4,752
  4,971
  5,199
  5,437
  5,685
  5,945
  6,216
  6,499
Operating income, $m
  203
  269
  337
  409
  483
  561
  642
  727
  815
  907
  1,006
  1,107
  1,212
  1,321
  1,436
  1,556
  1,681
  1,813
  1,951
  2,095
  2,247
  2,406
  2,572
  2,747
  2,931
  3,124
  3,327
  3,540
  3,764
  3,999
EBITDA, $m
  214
  280
  349
  421
  497
  575
  657
  743
  832
  925
  1,022
  1,124
  1,230
  1,340
  1,456
  1,577
  1,704
  1,837
  1,976
  2,122
  2,275
  2,436
  2,604
  2,781
  2,966
  3,161
  3,366
  3,581
  3,807
  4,044
Interest expense (income), $m
  3
  1
  4
  8
  11
  15
  19
  23
  27
  32
  36
  41
  46
  51
  56
  62
  67
  73
  80
  86
  93
  100
  108
  115
  124
  132
  141
  150
  160
  170
  181
Earnings before tax, $m
  202
  264
  329
  397
  468
  542
  619
  700
  783
  871
  965
  1,061
  1,161
  1,265
  1,374
  1,488
  1,608
  1,733
  1,865
  2,002
  2,147
  2,298
  2,457
  2,624
  2,799
  2,983
  3,177
  3,380
  3,594
  3,818
Tax expense, $m
  55
  71
  89
  107
  126
  146
  167
  189
  212
  235
  261
  286
  313
  342
  371
  402
  434
  468
  503
  541
  580
  620
  663
  708
  756
  805
  858
  913
  970
  1,031
Net income, $m
  148
  193
  240
  290
  342
  396
  452
  511
  572
  636
  705
  774
  847
  923
  1,003
  1,087
  1,174
  1,265
  1,361
  1,462
  1,567
  1,678
  1,794
  1,915
  2,043
  2,178
  2,319
  2,467
  2,623
  2,787

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  783
  852
  923
  998
  1,075
  1,156
  1,239
  1,326
  1,416
  1,510
  1,608
  1,709
  1,815
  1,925
  2,040
  2,160
  2,285
  2,415
  2,551
  2,693
  2,841
  2,996
  3,159
  3,328
  3,506
  3,692
  3,886
  4,090
  4,304
  4,527
Adjusted assets (=assets-cash), $m
  783
  852
  923
  998
  1,075
  1,156
  1,239
  1,326
  1,416
  1,510
  1,608
  1,709
  1,815
  1,925
  2,040
  2,160
  2,285
  2,415
  2,551
  2,693
  2,841
  2,996
  3,159
  3,328
  3,506
  3,692
  3,886
  4,090
  4,304
  4,527
Revenue / Adjusted assets
  2.319
  2.318
  2.320
  2.319
  2.320
  2.318
  2.320
  2.319
  2.320
  2.319
  2.319
  2.319
  2.320
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
  2.319
Average production assets, $m
  234
  255
  276
  299
  322
  346
  371
  397
  424
  452
  481
  511
  543
  576
  610
  646
  683
  722
  763
  806
  850
  896
  945
  996
  1,049
  1,104
  1,163
  1,224
  1,287
  1,354
Working capital, $m
  -18
  -20
  -21
  -23
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -40
  -42
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -86
  -90
  -95
  -100
  -105
Total debt, $m
  29
  51
  75
  99
  125
  151
  178
  207
  236
  267
  299
  333
  367
  403
  441
  480
  521
  564
  609
  655
  704
  755
  808
  864
  922
  983
  1,047
  1,113
  1,183
  1,257
Total liabilities, $m
  257
  279
  303
  327
  353
  379
  406
  435
  465
  495
  527
  561
  595
  632
  669
  708
  749
  792
  837
  883
  932
  983
  1,036
  1,092
  1,150
  1,211
  1,275
  1,342
  1,412
  1,485
Total equity, $m
  526
  572
  621
  671
  723
  777
  833
  891
  952
  1,015
  1,081
  1,149
  1,220
  1,294
  1,371
  1,451
  1,535
  1,623
  1,714
  1,810
  1,909
  2,014
  2,123
  2,237
  2,356
  2,481
  2,612
  2,749
  2,892
  3,042
Total liabilities and equity, $m
  783
  851
  924
  998
  1,076
  1,156
  1,239
  1,326
  1,417
  1,510
  1,608
  1,710
  1,815
  1,926
  2,040
  2,159
  2,284
  2,415
  2,551
  2,693
  2,841
  2,997
  3,159
  3,329
  3,506
  3,692
  3,887
  4,091
  4,304
  4,527
Debt-to-equity ratio
  0.050
  0.090
  0.120
  0.150
  0.170
  0.190
  0.210
  0.230
  0.250
  0.260
  0.280
  0.290
  0.300
  0.310
  0.320
  0.330
  0.340
  0.350
  0.350
  0.360
  0.370
  0.370
  0.380
  0.390
  0.390
  0.400
  0.400
  0.410
  0.410
  0.410
Adjusted equity ratio
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672
  0.672

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  148
  193
  240
  290
  342
  396
  452
  511
  572
  636
  705
  774
  847
  923
  1,003
  1,087
  1,174
  1,265
  1,361
  1,462
  1,567
  1,678
  1,794
  1,915
  2,043
  2,178
  2,319
  2,467
  2,623
  2,787
Depreciation, amort., depletion, $m
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  16
  17
  18
  19
  20
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  37
  39
  41
  43
  45
Funds from operations, $m
  158
  204
  253
  303
  355
  410
  467
  527
  589
  654
  721
  792
  865
  943
  1,024
  1,108
  1,197
  1,289
  1,387
  1,488
  1,595
  1,707
  1,825
  1,949
  2,078
  2,215
  2,358
  2,508
  2,666
  2,832
Change in working capital, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
Cash from operations, $m
  160
  206
  254
  305
  357
  412
  469
  529
  591
  656
  723
  794
  868
  945
  1,026
  1,111
  1,200
  1,292
  1,390
  1,492
  1,599
  1,711
  1,829
  1,953
  2,082
  2,219
  2,362
  2,513
  2,671
  2,838
Maintenance CAPEX, $m
  -7
  -8
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -43
New CAPEX, $m
  -19
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -36
  -37
  -39
  -41
  -42
  -44
  -46
  -49
  -51
  -53
  -56
  -58
  -61
  -64
  -67
Cash from investing activities, $m
  -26
  -29
  -29
  -31
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -53
  -56
  -59
  -62
  -65
  -67
  -71
  -74
  -79
  -82
  -86
  -91
  -95
  -100
  -105
  -110
Free cash flow, $m
  134
  178
  224
  273
  324
  377
  433
  490
  551
  614
  679
  747
  819
  894
  973
  1,055
  1,141
  1,231
  1,325
  1,424
  1,527
  1,636
  1,750
  1,870
  1,996
  2,128
  2,267
  2,413
  2,567
  2,728
Issuance/(repayment) of debt, $m
  21
  23
  23
  24
  25
  26
  27
  28
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  21
  23
  23
  24
  25
  26
  27
  28
  30
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
  73
Total cash flow (excl. dividends), $m
  155
  200
  248
  297
  349
  404
  460
  519
  580
  645
  711
  781
  854
  930
  1,010
  1,094
  1,182
  1,273
  1,370
  1,470
  1,576
  1,687
  1,804
  1,926
  2,054
  2,189
  2,331
  2,480
  2,637
  2,801
Retained Cash Flow (-), $m
  -45
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -68
  -71
  -74
  -77
  -80
  -84
  -88
  -91
  -95
  -100
  -104
  -109
  -114
  -119
  -125
  -131
  -137
  -143
  -150
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  110
  154
  200
  247
  297
  349
  404
  461
  520
  582
  645
  713
  783
  856
  933
  1,014
  1,098
  1,186
  1,278
  1,375
  1,476
  1,583
  1,695
  1,812
  1,935
  2,064
  2,200
  2,343
  2,493
  2,651
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  106
  141
  174
  204
  231
  254
  273
  288
  299
  305
  306
  304
  298
  287
  274
  258
  239
  218
  197
  175
  153
  131
  111
  92
  75
  60
  47
  36
  27
  20
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Amedisys, Inc. is a healthcare services company. The Company's segments are Home Health, Hospice, Personal Care and Other. The Company is a provider of home health, hospice and personal care services. As of December 31, 2016, the Company owned and operated 327 Medicare-certified home healthcare centers, 79 Medicare-certified hospice care centers and 14 personal-care care centers in 34 states within the United States and the District of Columbia. The Company's Home Health segment provides compassionate healthcare to help its patients recover from surgery or illness, live with chronic diseases, and prevent avoidable hospital readmissions. The Hospice segment provides support for those who are dealing with a terminal illness. The Personal care segment provides patients with assistance with the essential activities of daily living.

FINANCIAL RATIOS  of  Amedisys Inc (AMED)

Valuation Ratios
P/E Ratio 120.8
Price to Sales 3.1
Price to Book 9.7
Price to Tangible Book
Price to Cash Flow 72.1
Price to Free Cash Flow 97.2
Growth Rates
Sales Growth Rate 12.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -23.8%
Cap. Spend. - 3 Yr. Gr. Rate -17.6%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 19.1%
Total Debt to Equity 20.2%
Interest Coverage 22
Management Effectiveness
Return On Assets 5.5%
Ret/ On Assets - 3 Yr. Avg. 2.8%
Return On Total Capital 7%
Ret/ On T. Cap. - 3 Yr. Avg. 3.1%
Return On Equity 8.5%
Return On Equity - 3 Yr. Avg. 3.7%
Asset Turnover 2
Profitability Ratios
Gross Margin 42%
Gross Margin - 3 Yr. Avg. 42.6%
EBITDA Margin 5.9%
EBITDA Margin - 3 Yr. Avg. 4.2%
Operating Margin 4%
Oper. Margin - 3 Yr. Avg. 1.8%
Pre-Tax Margin 4.3%
Pre-Tax Margin - 3 Yr. Avg. 2%
Net Profit Margin 2.6%
Net Profit Margin - 3 Yr. Avg. 1.1%
Effective Tax Rate 38.7%
Eff/ Tax Rate - 3 Yr. Avg. 25.6%
Payout Ratio 0%

AMED stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMED stock intrinsic value calculation we used $1663 million for the last fiscal year's total revenue generated by Amedisys Inc. The default revenue input number comes from 0001 income statement of Amedisys Inc. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AMED stock valuation model: a) initial revenue growth rate of 9.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AMED is calculated based on our internal credit rating of Amedisys Inc, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Amedisys Inc.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AMED stock the variable cost ratio is equal to 49.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $704 million in the base year in the intrinsic value calculation for AMED stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 15.3% for Amedisys Inc.

Corporate tax rate of 27% is the nominal tax rate for Amedisys Inc. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AMED stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AMED are equal to 12.9%.

Life of production assets of 30.2 years is the average useful life of capital assets used in Amedisys Inc operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AMED is equal to -1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $481.582 million for Amedisys Inc - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 31.988 million for Amedisys Inc is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Amedisys Inc at the current share price and the inputted number of shares is $4.3 billion.

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