AMEDISYS INC MANAGEMENT REPORT ON FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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The following discussion and analysis provides information we believe is
relevant to an assessment and understanding of our results of operations and
financial condition for the three and six-month periods ended June 30, 2022.
This discussion should be read in conjunction with the condensed consolidated
financial statements and notes thereto included herein and the consolidated
financial statements and notes and the related Management's Discussion and
Analysis of Financial Condition and Results of Operations in our Annual Report
on Form 10-K for the year ended December 31, 2021 filed with the Securities and
Exchange Commission ("SEC") on February 24, 2022 (the "Form 10-K"), which are
incorporated herein by this reference. Historical results that appear in the
condensed consolidated financial statements should not be interpreted as being
indicative of future operations.

Unless otherwise specified, “Amedisys“, “we”, “our” and “the company” refer to
Amedisys, Inc. and our consolidated subsidiaries.

Insight

We are a provider of high-quality in-home healthcare and related services to the
chronic, co-morbid, aging American population, with approximately 74% of our
consolidated net service revenue derived from Medicare for the three and
six-month periods ended June 30, 2022 and approximately 75% of our consolidated
net service revenue derived from Medicare for the three and six-month periods
ended June 30, 2021.

Our operations involve servicing patients through our four reportable business
segments: home health, hospice, personal care and high acuity care. Our home
health segment delivers a wide range of services in the homes of individuals who
may be recovering from an illness, injury or surgery. Our hospice segment
provides care that is designed to provide comfort and support for those who are
facing a terminal illness. Our personal care segment provides patients
assistance with the essential activities of daily living. Our high acuity care
segment, which was established with the acquisition of Contessa Health
("Contessa") on August 1, 2021, delivers the essential elements of inpatient
hospital and skilled nursing facility ("SNF") care to patients in their homes.
As of June 30, 2022, we owned and operated 353 Medicare-certified home health
care centers, 174 Medicare-certified hospice care centers, 14 personal-care care
centers and 9 admitting high acuity care joint ventures in 38 states within the
United States and the District of Columbia.

Summary of care centers (Includes unconsolidated joint ventures)

                                   Home                      Personal
                                  Health       Hospice         Care          High Acuity Care
As of December 31, 2021           331           175             14                    8
Acquisitions/Startups/Denovos      24             -              -                    1
Closed/Consolidated                (2)           (1)             -                    -
As of June 30, 2022               353           174             14                    9


Recent Developments

Acquisitions

On April 1, 2022we acquired fifteen home care centers from Evolution Health, LLCa division of Envision Healthcare, doing business as Guardian of healthGem City and Care Connection of Cincinnati (“Evolution”), for a purchase price of $68 million.

Additionally, on April 1, 2022, we acquired two home health locations from
AssistedCare Home Health, Inc. and RH Homecare Services, LLC, doing business as
AssistedCare Home Health and AssistedCare of the Carolinas ("AssistedCare"),
respectively, for a purchase price of $25 million.

Government Investigations and Inquiries and Other Litigation

See Note 6 – Commitments and Contingencies to our summary consolidated financial statements for discussion and updates regarding legal proceedings and investigations in which we are involved. No assurance can be given as to the timing or the outcome of these elements.

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The Medicare and Medicaid Service Centers (“CMS”) Payment Updates

Hospice

On July 29, 2021, CMS issued the final rule to update hospice payment rates and
the wage index for fiscal year 2022, effective for services provided beginning
October 1, 2021. CMS estimated hospices serving Medicare beneficiaries would see
a 2.0% increase in payments. This increase was the result of a 2.7% market
basket adjustment as required under the Patient Protection and Affordable Health
Care Act and the Health Care and Education Reconciliation Act (collectively,
"PPACA") less a 0.7% productivity adjustment. Additionally, CMS increased the
aggregate cap amount by 2.0% to $31,298. The final rule also rebased the labor
shares for all four levels of care, included updates to the hospice conditions
of participation ("COPs"), which made permanent certain flexibilities allowed
during the novel coronavirus pandemic ("COVID-19") public health emergency, and
finalized changes to the Hospice Quality Reporting Program. Based on our
analysis of the final rule, we estimated that our impact would be in line with
the 2.0% increase.

On July 27, 2022, CMS issued the final rule to update hospice payment rates and
the wage index for fiscal year 2023, effective for services provided beginning
October 1, 2022. CMS estimates hospices serving Medicare beneficiaries will see
a 3.8% increase in payments. This increase is the result of a 4.1% market basket
adjustment as required under PPACA less a 0.3% productivity adjustment.
Additionally, CMS proposed to increase the aggregate cap amount by 3.8% to
$32,487. Based on our analysis of the proposed rule, we expect our impact to be
in line with the 3.8% increase.

Home health

On November 2, 2021, CMS issued the Home Health Final Rule for Medicare home
health providers for calendar year 2022. CMS estimated that the final rule would
result in a 3.2% increase in payments to home health providers. This increase
was the result of a 2.6% payment update (3.1% market basket adjustment less a
0.5% productivity adjustment) plus a 0.7% fixed-dollar loss ratio adjustment,
reduced by 0.1% for the rural add-on. Based on our analysis of the final rule,
we estimated that our impact would be in line with the 3.2% increase.

The final rule also provided for the expansion of the Home Health Value-Based
Purchasing ("HHVBP") model to all 50 states beginning January 1, 2023 with
calendar year 2023 being the first performance year and calendar year 2025 being
the first payment year with a proposed maximum payment adjustment, up or down,
of 5%.

On June 17, 2022, CMS issued a proposed payment change for Medicare home health
providers for calendar year 2023. CMS estimates that the proposed rule will
result in a 4.2% decrease in payments to home health providers. This decrease is
the result of a 2.9% payment update (3.3% market basket adjustment less a 0.4%
productivity adjustment) less a permanent adjustment of 6.9% (derived from a
7.69% behavioral assumption adjustment), reduced by 0.2% for the update to the
fixed-dollar loss ratio ("FDL") used in determining outlier payments. This rule
also proposes a permanent 5% cap on negative wage index changes for home health
agencies. Based on our preliminary analysis of the proposed rule, we expect our
impact to be in line with the 4.2% rate cut.

In addition to the permanent adjustment of 6.9%, CMS is also considering a temporary adjustment of approximately $2 billion to offset overpayments in calendar years 2020 and 2021. CMS is not proposing to apply the temporary adjustment to calendar year 2023; however, CMS is seeking feedback on how best to apply the adjustment in the future.

A group of bipartisan lawmakers has introduced a bill, The Preserving Access to
Home Health Act of 2022, which upon enactment, would pause the implementation of
any temporary or permanent adjustments to the Medicare home health base payment
rate until 2026. This would delay the cuts currently proposed by CMS and would
allow time for the industry and CMS to work on a more reasonable methodology
that adequately measures the impact of the transition to PDGM and fully accounts
for the impacts that COVID-19 has had on utilization, patient mix and the level
of care provided by home health agencies.

Sequestration

In March 2020, Congress passed the bipartisan Coronavirus Aid, Relief and
Economic Security Act ("CARES Act") which provided for the suspension of the
automatic 2% reduction of Medicare claim reimbursements ("sequestration") for
the period May 1, 2020 through December 31, 2020. In December 2020, Congress
passed additional COVID-19 relief legislation as part of the Consolidated
Appropriations Act, 2021. This legislation extended the suspension of
sequestration through March 31, 2021. In April 2021, Congress passed H.R. 1868,
which among other items, provided for an additional extension of the temporary
suspension of sequestration through December 31, 2021. In December 2021,
Congress passed the Protecting Medicare and American Farmers from Sequester Cuts
Act. This legislation extended the 2% suspension of sequestration through March
31, 2022; sequestration was reinstated as a 1% reduction to Medicare claim
reimbursements for the period April 1, 2022 through June 30, 2022 and has been
fully reinstated as a 2% reduction to Medicare claim reimbursements effective
July 1, 2022. The reinstatement of sequestration will result in a reduction of
our net service revenue for the remainder of the year.

Novel Coronavirus Pandemic (“COVID-19”)

Our operations and financial performance continue to be impacted by COVID-19.
The financial impacts of COVID-19 are discussed in further detail under "Results
of Operations" below. While we currently believe that we have a reasonable view
of
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operations, the uncertainty created by COVID-19 could alter our outlook of the
pandemic's impact on our consolidated financial condition, results of operations
or cash flows. The following factors could potentially impact our performance:
the increase or decrease in the number of COVID-19 cases nationwide; the
severity and impacts of new variants of the virus; uncertainty regarding vaccine
utilization rates and efficacy; staffing shortages due to clinician quarantines,
the competitive labor market and federal, state and local vaccine mandates; the
return of patient confidence to enter a hospital or a doctor's office; the
utilization of elective procedures; the ability to have access to our patients
in their homes and in facilities; supply chain disruption and our ability to
find suitable alternative products at reasonable prices; cost normalization
around personal protective equipment ("PPE"); and any future or prolonged
shelter-in-place orders and other federal, state and local requirements.
Potential impacts of COVID-19 on our results include lower revenue; higher
salary and wage expense related to quarantine pay, contract clinicians, wage
inflation, increased costs to hire and retain employees and training; and
increased supply costs related to supply chain constraints, PPE and COVID-19
testing. The impacts to net service revenue may consist of the following:

• lower volumes due to the disruption of operations of our referral sources, patient reluctance to accept services and facility access restrictions for palliative care services;

• Lower reimbursement due to missed visits resulting in increased Low Usage Payment Adjustments (“LUPA”) and lost billing periods; and

• Lower average daily count in palliative care due to a decrease in our average length of stay.

On March 27, 2020, the CARES Act was signed into law. The CARES Act provided the following:

•$175 billion to healthcare providers, including hospitals on the front lines of
the COVID-19 pandemic. Of this total allocated amount, $30 billion was
distributed immediately to providers based on their proportionate share of
Medicare fee-for-service reimbursements in 2019. Healthcare providers were
required to sign an attestation confirming receipt of the Provider Relief Fund
("PRF") funds and agree to the terms and conditions of payment. Our home health
and hospice segments received approximately $100 million from the first
$30 billion of funds distributed to healthcare providers in April 2020, which is
inclusive of $2 million related to our joint venture care centers (equity method
investments). We also acquired approximately $6 million of PRF funds in
connection with the acquisition of AseraCare Hospice. Under the terms and
conditions for receipt of the payment, we were allowed to use the funds to cover
lost revenues and health care costs related to COVID-19 through June 30, 2021,
and we were required to properly and fully document the use of these funds in
reports to the U.S. Department of Health and Human Services ("HHS"). All
required reporting was completed during the three-month period ended September
30, 2021.

For our wholly-owned subsidiaries, we only utilized PRF funds to the extent we
had qualifying COVID-19 expenses; we did not use PRF funds to cover lost
revenues resulting from COVID-19. The grant income associated with the COVID-19
expenses incurred is reflected in other operating income within our condensed
consolidated statements of operations.

•The temporary suspension of sequestration for the period May 1, 2020 through
December 31, 2020. See The Centers for Medicare and Medicaid Services ("CMS")
Payment Updates above for details on extensions beyond December 31, 2020.

•The deferral of the employer share of social security tax (6.2%), effective for
payments due after the enactment date through December 31, 2020. During 2020, we
deferred approximately $55 million of social security tax. Approximately $27
million was paid during December 2021; the remaining balance is due on December
31, 2022 and is reflected in payroll and employee benefits within our condensed
consolidated balance sheet.

• Temporary suspension of Medicare patient coverage criteria and documentation and care requirements and expansion of the provision of home health care and palliative care to patients via telehealth.

•The ability for non-physician practitioners to certify home care, order home health services, establish and review care plans, and certify and recertify eligibility.

The well-being of our employees has been one of our top priorities during the
pandemic. We have taken the following steps to support our employees:
implemented paid leave during any required quarantine periods; awarded bonuses
to our clinicians and caregivers who saw patients during the pandemic; completed
an early cash pay-out of employee paid-time-off; instituted work-from-home
arrangements for our corporate and administrative support employees; allowed
employees to temporarily suspend any 401(k) plan loan deductions and offered
employees the option of making a withdrawal from their 401(k) plan for
coronavirus-related distributions without incurring the additional 10% early
withdrawal penalty; expanded access to telehealth services to all employees;
provided access to COVID-19 self-test kits to all employees and created a
COVID-19 Resource Center, available 24 hours a day, seven days a week for
employees to access educational materials, safety documents, policies, clinical
protocols and operational metrics.
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The safety of our clinicians and patients has also been a focus, and as a
result, we have made the following business changes: developed clinical
protocols for COVID-19 testing, proper usage of PPE, caring for COVID-positive
patients and maintaining safety measures in our care centers; researched each
state's vaccination plan to develop a state by state protocol to work with local
health departments and other health systems to obtain vaccine appointments for
our clinical staff; implemented software enabling us to track staff that have
been vaccinated; procured PPE; and created a centralized distribution center for
all critical PPE, allowing us to flex our supplies on a care center by care
center basis, based on need and demand.

Operating results

Three-month period ended June 30, 2022 Compared to the three-month period ended
June 30, 2021

Consolidated

The following table summarizes our consolidated results of operations (amounts
in millions):

                                                                            For the Three-Month Periods
                                                                                  Ended June 30,
                                                                             2022                  2021
Net service revenue                                                    $       557.9           $    564.2
Other operating income                                                             -                  4.6
Cost of service, excluding depreciation and amortization                       316.2                308.7
Gross margin, excluding depreciation and amortization                          241.7                260.1
% of revenue                                                                    43.3  %              46.1  %
Other operating expenses                                                       187.9                175.3
% of revenue                                                                    33.7  %              31.1  %
Depreciation and amortization                                                    6.2                  6.7
Operating income                                                                47.6                 78.1
Total other (expense) income                                                    (7.3)                31.0
Income tax expense                                                             (11.3)               (28.5)
Effective income tax rate                                                       28.0   %             26.1  %
Net income                                                                      29.0                 80.6
Net loss (income) attributable to noncontrolling interests                       0.6                 (0.5)
Net income attributable to Amedisys, Inc.                              $        29.6           $     80.1



On a consolidated basis, our operating income decreased $31 million on a $6
million decrease in net service revenue. The year-over-year decrease in
operating income is primarily due to the acquisitions of Contessa on August 1,
2021 and Evolution and AssistedCare on April 1, 2022 (which combined contributed
$18 million in revenue and an operating loss of $11 million), an $8 million
accrual related to our Infinity Home Care, L.L.C. Zone Program Integrity
Contractor ("Infinity ZPIC") audits and a $7 million favorable adjustment
recorded in the prior year related to our U.S. Department of Justice ("DOJ")
matters (see Note 6 - Commitments and Contingencies to our condensed
consolidated financial statements for additional information regarding both the
Infinity ZPIC and DOJ matters).

Excluding our acquisitions and the Infinity ZPIC and DOJ matters, our operating
income decreased $5 million on a $9 million decrease in net service revenue
primarily due to a year over year decline in our home health volumes, the
reinstatement of sequestration at 1%, a shift in our home health patient mix
from episodic payors to lower margin per visit payors, a decrease in our other
operating income due to the expiration of the CARES Act PRF funds and an
increase in our cost of service resulting from labor cost increases. We were
able to partially overcome these items through improvements in home health
clinician utilization and reductions in our hospice staffing levels.
Additionally, our year over year results were positively impacted by rate
increases.

As noted above, we received CARES Act PRF funds in 2020 which were used to cover
COVID-19 expenses incurred by our home health and hospice segments through June
30, 2021. We recorded income related to these funds totaling $5 million in other
operating income within our condensed consolidated statements of operations
during the three-month period ended June 30, 2021. This income fully offset the
COVID-19 costs incurred during this period, which totaled $5 million. Due to the
expiration of the CARES Act PRF funds on June 30, 2021, we were not able to
recognize any operating income during the three-month period ended June 30, 2022
to offset the $2 million of COVID-19 costs incurred during this period.
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Our operating results reflect a $13 million increase in our other operating
expenses compared to prior year. Excluding our acquisitions, our other operating
expenses were flat as the addition of resources to support growth, planned wage
increases, higher travel and training spend, higher acquisition and integration
costs, severance and lease termination costs related to hospice care center
closures and consolidations and increased information technology fees were
partially offset by higher gains on the sale of fleet vehicles and a favorable
legal settlement.

Total other (expense) income includes the following items (amounts in millions):

                                                                            For the Three-Month Periods
                                                                                   Ended June 30,
                                                                              2022                  2021
Interest expense, net                                                  $          (8.3)         $     (1.9)
Equity in earnings from equity method investments                                  0.7                 1.3
Gain on equity method investment                                                     -                31.1
Miscellaneous, net                                                                 0.3                 0.5
Total other (expense) income                                           $    

(7.3) $31.0


Interest expense, net increased $6 million year over year as a result of
interest accrued in conjunction with the Infinity ZPIC audits discussed above
and outstanding term loan borrowings under our Second Amended Credit Agreement
(see Note 5 - Long-Term Obligations to our condensed consolidated financial
statements for additional information regarding our Second Amended Credit
Agreement). Gain on equity method investments for the prior year includes a $31
million gain related to our investment in Medalogix (see Note 1 - Nature of
Operations, Consolidation and Presentation of Financial Statements to our
condensed consolidated financial statements for additional information).
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