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Change Healthcare (CHNG) Q2 Earnings Beat, Revenues Miss

Change Healthcare's (CHNG) fiscal second-quarter results benefit from solid performance across Software and Analytics and Network Solutions segments.

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This story originally appeared on Zacks

Change Healthcare Inc. CHNG reported second-quarter fiscal 2022 adjusted earnings per share (EPS) of 35 cents, which beat the Zacks Consensus Estimate of 34 cents by 2.9%. The bottom line improved 9.4% on a year-over-year basis.

Net loss per share was 11 cents in the quarter, slightly narrower than the year-ago quarter’s loss of 13 cents.

- Zacks

Revenue Details

Revenues rose 9.4% from the prior-year period to $826.8 million in the reported quarter. The top line, however, missed the Zacks Consensus Estimate by 0.8%.

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 $363.4 million, up 2.4% on a year-over-year basis.

Network Solutions

Revenues at this segment were $215.6 million, up 17.1% year over year.

Change Healthcare Inc. Price, Consensus and EPS Surprise

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 $231.9 million, which remained flat on a year-over-year basis.

Postage and Eliminations

Revenues at this segment totaled $19.1 million, down 20.7% year over year.

Margin Analysis

Total operating expenses were $815.6 million, up 8.4% from the prior-year quarter.

In the quarter under review, Change Healthcare reported an operating income of $11.1 million, compared with $3.3 million in the year-ago quarter.

Financial Position

The company exited the quarter with cash and cash equivalents of $80.4 million, compared with $109.1 million in the preceding quarter.

Cash provided operating activities at the end of the fiscal second quarter amounted to $261.4 million compared with $296.6 million in the year-ago period.

Guidance

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

Wrapping Up

Change Healthcare exited the second-quarter fiscal 2022 on a mixed note, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. The company exhibited robust performance across Software and Analytics and Network Solutions segments in the quarter under review. Addition of products and forming new data solutions partnerships were the business highlights in the quarter.

However, cut-throat competition remains a concern. Weak performance at the Postage and Eliminations segment is a woe. Higher operating expenses are concerning.

Zacks Rank

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

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. TMO, West Pharmaceutical Services, Inc. WST, and AngioDynamics, Inc. ANGO. While both Thermo Fisher and AngioDynamics sport a Zacks Rank of 1 (Strong Buy), West Pharmaceutical carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the consensus mark by 12%.

West Pharmaceutical reported third-quarter 2021 adjusted EPS of $2.06, which surpassed the Zacks Consensus Estimate by 13.2%. Third-quarter revenues of $706.5 million outpaced the Zacks Consensus Estimate by 3.2%.

AngioDynamics reported first-quarter fiscal 2022 loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 5 cents. Revenues of $76.9 million surpassed the Zacks Consensus Estimate by 8.4%.



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