Amedisys Subsidiary Contessa Going Full Speed Ahead on Palliative Care JVs

Hot on the heels of forming four palliative care-focused joint ventures, Contessa Health has several more in the works during the remainder of 2022.

Contessa is a subsidiary of Amedisys, Inc. (NASDAQ: AMED), which announced its $250 million acquisition of the high-acuity home care company in June of last year. Since that time, Contessa has doubled down on joint ventures.

During the past 12 months, the company has launched JVs that offer palliative care with Mount Sinai Health System, Baylor Scott & White Health, Memorial Hermann Health System, and Henry Ford Health System.

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Contessa expects additional joint ventures to “come online” during Q3 with additional announcements in fourth quarter, according to Amedisys CEO Chris Gerard. The company did not indicate which services the forthcoming JVs would offer, but most of their ventures in the past year have included palliative care.

“Contessa is still tracking towards closing these partnerships to eventually bring this additional volume on platform,” Gerard said in an earnings call. “Contessa’s palliative-at-home model continues to demonstrate strong progress and momentum, evidenced by hitting 131% of budgeted engaged member months in the second quarter.”

Contessa reportedly has a pipeline for similar partnerships that includes more than 100 hospitals in 28 states, with the potential to double Contessa’s footprint, according to previous statements by Amedisys executives.

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The Nashville, Tennessee-based provider also has current partnerships with Penn State Health, Marshfield Clinic Health System, Ascension Saint Thomas, CommonSpirit Health, and Highmark Health, among others.

At Hospice News’ recent Palliative Care Conference in Chicago, Contessa COO Aaron Stein said that the company is “extremely bullish” on palliative care. 

“I think our palliative care segment is going to become much more significant at Contessa,” Stein told Hospice News. “We, like everybody else, think that palliative care is an underused service.”

Amedisys brought in $566.3 million in adjusted net service revenue during the second quarter of the year, up from $557.6 million for the same period in 2021.

The company’s hospice segment accounted for $198.4 million of that total, up from $197.9 million in the prior year’s quarter. Contessa’s quarterly net service revenue totaled $4.4 million. Amedisys expects to complete its integration of the high-acuity subsidiary on August 1, one year to the day since the deal closed.

Hospice segment growth included a 6% jump in hospice same-store admissions during Q2, with 8% in average daily census. Largely due to COVID-related disruption, this marks Amedisys’ first quarter of ADC growth since the third quarter of 2020.

The company expects this growth to accelerate during the latter half of the year, Gerard indicated.

The upswing in Amedisys’ hospice business foretells a positive revenue outlook for the rest of the year, according to Brian Tanquilut, equity analyst for Jeffries Financial Group.

“We are positive on AMED and view its strong Q2 EBITDA as an indication of the company’s improving earnings power, driven by notable gains in its hospice segment, as well as the stabilization of its home nursing care delivery costs,” Tanquilut indicated in a note. “Looking ahead, we see stock upside as AMED continues to drive length of stay and margins higher in hospice, just as [management] announces new case rate contracts with large [Medicare Advantage] plans that translate to improved profitability as well.”

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