Shares of Change Healthcare Inc. CHNG have gained 1.9% as of Aug 12, 2020 driven by better-than-expected fiscal first-quarter performance.
The company reported first-quarter fiscal 2021 adjusted earnings per share of 25 cents, which beat the Zacks Consensus Estimate by 66.7%. However, the bottom line declined 55.4% year over year.
Revenues declined 18.9% from the prior-year period to $694.2 million in the reported quarter. However, the top line surpassed the Zacks Consensus Estimate by 7.3%.
Change Healthcare operates through three segments — Software and Analytics, Network Solutions, and Technology-Enabled Services.
Software and Analytics
Revenues at this segment totaled $391.6 million, down 9.7% on a year-over-year basis.
Change Healthcare Inc. Price, Consensus and EPS Surprise
Change Healthcare Inc. price-consensus-eps-surprise-chart | Change Healthcare Inc. Quote
Revenues at this segment were $142.8 million, up 0.9% year over year.
Revenues at this segment came in at $187.7 million, down 24.2% year over year.
Total operating expenses were $701.9 million, down 0.2% from the prior-year quarter.
In the quarter under review, Change Healthcare reported operating loss of $7.7 million, against the year-ago operating income of $152.3 million.
The company exited the quarter with cash and cash equivalents of $178.4 million compared with $410.4 million in the preceding quarter.
Cash used in operating activities at the end of first-quarter fiscal 2021 amounted to $169.1 million compared with cash flow from operating activities of $84.5 million in the year-ago period.
Due to uncertainty surrounding the COVID-19 pandemic, Change Healthcare has only issued quarterly guidance.
For second-quarter fiscal 2021, the company projects Solutions revenues between $670 million and $690 million. The Zacks Consensus Estimate for the same is pegged at $731.7 million.
Adjusted EPS is estimated between 20 cents and 23 cents. The Zacks Consensus Estimate for the same stands at 18 cents.
Change Healthcare exited first-quarter fiscal 2021 on a strong note, with both earnings and revenues beating the Zacks Consensus Estimate. The Network Solutions recorded solid performance in the quarter under review. Strong guidance also instills investor optimism in the stock.
During the quarter under review, the company launched Connected Consumer Health suite — an innovative new consumer and financial engagement platform partnership with Adobe and Microsoft — that will offer healthcare providers a modern, simplified experience throughout the patient journey.
Also, Change Healthcare introduced nationwide Clinical Data Retrieval service, a new cloud-based interoperability solution, which can help payers to retrieve patient records from the industry’s leading electronic health record systems and other systems in a quick and easy manner.
Additionally, the company offered open access to the Clinical Network lab service, which can allow providers to quickly order COVID-19 tests and other lab tests, thereby expediting diagnostic results for patients nationwide.
These developments have impacted the company’s overall performance and are likely to accelerate growth in the near term.
However, cut-throat competition remains a concern. Also, weak performance of the Software and Analytics, and Technology-Enabled Services segments is a woe.
Currently, Change Healthcare carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. TMO, PerkinElmer, Inc. PKI and West Pharmaceutical Services, Inc. WST. While PerkinElmer sports a Zacks Rank of 1 (Strong Buy), both Thermo Fisher and West Pharmaceuticals carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PerkinElmer reported second-quarter 2020 adjusted EPS of $1.57, surpassing the Zacks Consensus Estimate by 68.8%. Revenues of $811.7 million outpaced the consensus mark by 1.3%.
Thermo Fisher reported second-quarter 2020 adjusted EPS of $3.89, beating the Zacks Consensus Estimate by 45.7%. Revenues of $6.92 billion surpassed the consensus mark by 0.1%.
West Pharmaceuticals reported second-quarter 2020 adjusted EPS of $1.25, outpacing the Zacks Consensus Estimate of 91 cents. Revenues of $527.2 million surpassed the consensus estimate by 6.9%.
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