UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-24260

AMEDISYS, INC.

(Exact Name of Registrant as Specified in its Charter)



Delaware						11-3131700
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3854 American Way, Suite A, Baton Rouge, LA 70816

(Address of principal executive offices, including zip code)

(225) 292-2031 or (800) 467-2662

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

AMED

The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date, is as follows: Common stock, $0.001 par value, ~~32,491,988~~32,559,388 shares outstanding as of ~~October 21, 2022.~~April 28, 2023.

TABLE OF CONTENTS



SPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTS		1
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PART I.	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS:
	CONDENSED CONSOLIDATED BALANCE SHEETS AS OF ~~SEPTEMBER 30, 2022~~MARCH 31, 2023 (UNAUDITED) AND DECEMBER 31, ~~2021~~2022	2
	CONDENSED CONSOLIDATED INCOME STATEMENTS ~~OF OPERATIONS~~ FOR THE ~~THREE AND NINE-MONTH~~THREE-MONTH PERIODS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~ (UNAUDITED)	3
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE ~~THREE AND NINE-MONTH~~THREE-MONTH PERIODS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~ (UNAUDITED)	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE ~~NINE-MONTH~~THREE-MONTH PERIODS ENDED ~~SEPTEMBER 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~ (UNAUDITED)	5
	NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2826
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4939
ITEM 4.	CONTROLS AND PROCEDURES	4939

PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	5140
ITEM 1A.	RISK FACTORS	5140
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	5142
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	5142
ITEM 4.	MINE SAFETY DISCLOSURES	5142
ITEM 5.	OTHER INFORMATION	5142
ITEM 6.	EXHIBITS	5243
SIGNATURES		5344

SPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

When included in this Quarterly Report on Form 10-Q, or in other documents that we file with the Securities and Exchange Commission (“SEC”) or in statements made by or on behalf of the Company, words like “believes,” “belief,” “expects,” “strategy,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” “will,” “could,” “would,” “should” and similar expressions are intended to identify forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a variety of risks and uncertainties that could cause actual results to differ materially from those described therein. These risks and uncertainties include, but are not limited to, the following: the ~~impact~~risk that the cost savings and any revenue synergies or other synergies from the proposed merger with Option Care Health may not be realized or may take longer than anticipated to be realized; disruption from the proposed merger with patient, payer, provider, referral sources, supplier or management and employee relationships; the occurrence of any event, change or other circumstances that could give rise to the termination of the ~~novel coronavirus pandemic ("COVID-19"),~~merger agreement with Option Care Health or the inability to complete the proposed transaction on the anticipated terms and timetable; the risk that necessary regulatory approvals for the proposed merger with Option Care Health are delayed, are not obtained or are obtained subject to conditions that are not anticipated; the failure of the conditions to the proposed merger to be satisfied; the inability to complete the proposed transaction due to the failure to obtain approval of the stockholders at Option Care Health or Amedisys or to satisfy any other condition in a timely manner or at all; the risks related to the integration of the combined businesses, including the ~~measures~~risk that ~~have been~~the integration will be materially delayed or will be more costly or difficult than expected; the ability of the combined company to execute carefully its strategic plans; the costs related to the proposed transaction; the diversion of management time on merger-related issues; the ability of Option Care Health to effectively manage the larger and ~~may be taken~~more complex operations of the combined company following the proposed merger with the Company; reputational risk related to the proposed merger; the risk of litigation or regulatory action related to the proposed merger; changes in Medicare and other medical payment levels; changes in payments and covered services by ~~governmental authorities to mitigate it, on~~federal and state governments; future cost containment initiatives undertaken by third-party payors; changes in the episodic versus non-episodic mix of our ~~business, financial condition~~payors, the case mix of our patients and ~~results of operations; the impact of current and proposed federal, state and local vaccine mandates;~~payment methodologies; staffing shortages driven by the competitive labor market; our ability to attract and retain qualified personnel; competition in the healthcare industry; our ability to maintain or establish new patient referral sources; changes in or our failure to comply with existing federal and state laws or regulations or the inability to comply with new government regulations on a timely basis; ~~changes in Medicare~~the impact of the novel coronavirus pandemic ("COVID-19") on our business, financial condition and other medical payment levels; our ability to open care centers, acquire additional care centers and integrate and operate these care centers effectively; competition in the healthcare industry; changes in the case mixresults of ~~our patients, the episodic versus non-episodic mix of our payors or payment methodologies;~~operations; changes in estimates and judgments associated with critical accounting policies; our ability to ~~maintain or establish new patient referral sources; our ability to~~ consistently provide high-quality care; ~~our ability to attract and retain qualified personnel;~~ our ability to keep our patients and employees safe; ~~changes in payments and covered services by federal and state governments; future cost containment initiatives undertaken by third-party payors;~~ our access to financing; our ability to meet debt service requirements and comply with covenants in debt agreements; business disruptions due to natural or man-made disasters, climate change or acts of terrorism, widespread protests or civil unrest; our ability to open care centers, acquire additional care centers and integrate ~~manage~~ and ~~keep our information systems secure; the impact of inflation;~~operate these care centers effectively; our ability to realize the anticipated benefits of acquisitions, investments and joint ventures; our ability to integrate, manage and keep our information systems secure; the impact of inflation; and changes in laws or developments with respect to any litigation relating to the Company, including various other matters, many of which are beyond our control.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on any forward-looking statement as a prediction of future events. We expressly disclaim any obligation or undertaking and we do not intend to release publicly any updates or changes in our expectations concerning the forward-looking statements or any changes in events, conditions or circumstances upon which any forward-looking statement may be based, except as required by law. For a discussion of some of the factors discussed above as well as additional factors, see our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC on February ~~24, 2022,~~16, 2023, particularly, Part I, Item 1A - Risk Factors therein, ~~which are incorporated herein by reference,~~ and Part II, Item 1A. Risk Factors of this Quarterly Report on Form 10-Q. Additional risk factors may also be described in reports that we file from time to time with the SEC.

Available Information

Our company website address is www.amedisys.com. We use our website as a channel of distribution for important company information. Important information, including press releases, analyst presentations and financial information regarding our company, is routinely posted on and accessible on the Investor Relations subpage of our website, which is accessible by clicking on the tab labeled “Investors” on our website home page. Visitors to our website can also register to receive automatic e-mail and other notifications alerting them when new information is made available on the Investor Relations subpage of our website. In addition, we make available on the Investor Relations subpage of our website (under the link “SEC filings”), free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, ownership reports on Forms 3, 4 and 5 and any amendments to those reports as soon as reasonably practicable after we electronically file or furnish such reports with the SEC. Further, copies of our Certificate of Incorporation and Bylaws, our Code of Ethical Business Conduct, our Corporate Governance Guidelines and the charters for the Audit, Compensation, Quality of Care, Compliance and Ethics and Nominating and Corporate Governance Committees of our Board are also available on the Investor Relations subpage of our website (under the link “Governance”). Reference to our website does not constitute incorporation by reference of the information contained on the website and should not be considered part of this document. Our electronically filed reports can also be obtained on the SEC’s internet site at http://www.sec.gov.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AMEDISYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)


		September 30, 2022 (Unaudited)		December 31, 2021			March 31, 2023 (Unaudited)		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	17,956	$	42,694	Cash and cash equivalents	$	49,436	$	40,540
Restricted cash	Restricted cash	13,504		3,075		Restricted cash	19,664		13,593
Patient accounts receivable	Patient accounts receivable	302,470		274,961		Patient accounts receivable	294,122		296,785
Prepaid expenses	Prepaid expenses	17,011		10,356		Prepaid expenses	18,754		11,628
Other current assets	Other current assets	37,839		25,598		Other current assets	23,581		26,415
Total current assets	Total current assets	388,780		356,684		Total current assets	405,557		388,961
Property and equipment, net of accumulated depreciation of $102,407 and $96,937		17,248		18,435
Property and equipment, net of accumulated depreciation of $105,183 and $101,364						Property and equipment, net of accumulated depreciation of $105,183 and $101,364	33,353		16,026
Operating lease right of use assets	Operating lease right of use assets	105,843		101,257		Operating lease right of use assets	85,211		102,856
Goodwill	Goodwill	1,285,455		1,196,090		Goodwill	1,244,679		1,287,399
Intangible assets, net of accumulated amortization of $11,891 and $19,900		103,678		111,190
Deferred income tax assets		—		289
Intangible assets, net of accumulated amortization of $16,071 and $14,604						Intangible assets, net of accumulated amortization of $16,071 and $14,604	99,929		101,167
Other assets	Other assets	81,123		73,023		Other assets	78,230		79,836
Total assets	Total assets	$	1,982,127	$	1,856,968	Total assets	$	1,946,959	$	1,976,245
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	45,527	$	38,217	Accounts payable	$	40,017	$	43,735
Payroll and employee benefits	Payroll and employee benefits	145,073		141,001		Payroll and employee benefits	122,723		125,387
Accrued expenses	Accrued expenses	130,100		150,836		Accrued expenses	137,899		137,390
Current portion of long-term obligations	Current portion of long-term obligations	12,628		12,995		Current portion of long-term obligations	26,958		15,496
Current portion of operating lease liabilities	Current portion of operating lease liabilities	33,872		31,233		Current portion of operating lease liabilities	25,453		33,521
Total current liabilities	Total current liabilities	367,200		374,282		Total current liabilities	353,050		355,529
Long-term obligations, less current portion	Long-term obligations, less current portion	443,431		432,075		Long-term obligations, less current portion	373,202		419,420
Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	72,030		69,309		Operating lease liabilities, less current portion	59,826		69,504
Deferred income tax liabilities	Deferred income tax liabilities	15,983		—		Deferred income tax liabilities	22,752		20,411
Other long-term obligations	Other long-term obligations	13,873		4,979		Other long-term obligations	4,781		4,808
Total liabilities	Total liabilities	912,517		880,645		Total liabilities	813,611		869,672
Commitments and Contingencies—Note 6
Commitments and Contingencies—Note 7						Commitments and Contingencies—Note 7
Equity:	Equity:					Equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued or outstanding	Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued or outstanding	—		—		Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued or outstanding	—		—
Common stock, $0.001 par value, 60,000,000 shares authorized; 37,852,059 and 37,674,868 shares issued; and 32,479,475 and 32,509,969 shares outstanding		38		38
Common stock, $0.001 par value, 60,000,000 shares authorized; 37,938,354 and 37,891,186 shares issued; 32,544,145 and 32,511,465 shares outstanding						Common stock, $0.001 par value, 60,000,000 shares authorized; 37,938,354 and 37,891,186 shares issued; 32,544,145 and 32,511,465 shares outstanding	38		38
Additional paid-in capital	Additional paid-in capital	750,914		728,118		Additional paid-in capital	758,669		755,063
Treasury stock, at cost 5,372,584 and 5,164,899 shares of common stock		(461,168)		(435,868)
Treasury stock, at cost, 5,394,209 and 5,379,721 shares of common stock						Treasury stock, at cost, 5,394,209 and 5,379,721 shares of common stock	(462,508)		(461,200)

Retained earnings	Retained earnings	725,955		639,063		Retained earnings	782,918		757,672
Total Amedisys, Inc. stockholders’ equity	Total Amedisys, Inc. stockholders’ equity	1,015,739		931,351		Total Amedisys, Inc. stockholders’ equity	1,079,117		1,051,573
Noncontrolling interests	Noncontrolling interests	53,871		44,972		Noncontrolling interests	54,231		55,000
Total equity	Total equity	1,069,610		976,323		Total equity	1,133,348		1,106,573
Total liabilities and equity	Total liabilities and equity	$	1,982,127	$	1,856,968	Total liabilities and equity	$	1,946,959	$	1,976,245

The accompanying notes are an integral part of these condensed consolidated financial statements.

AMEDISYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS ~~OF OPERATIONS~~

(Amounts in thousands, except per share data)

(Unaudited)


		For the Three-Month Periods Ended September 30,				For the Nine-Month Periods Ended September 30,					For the Three-Month Periods Ended March 31,
		2022		2021		2022		2021			2023		2022
Net service revenue	Net service revenue	$	557,988	$	553,485	$	1,661,135	$	1,654,795	Net service revenue	$	556,389	$	545,257
Other operating income		—		(4)		—		13,300
Cost of service, excluding depreciation and amortization		322,227		310,294		943,258		916,188
Operating expenses:										Operating expenses:
Cost of service, inclusive of depreciation										Cost of service, inclusive of depreciation	315,010		304,820
General and administrative expenses:	General and administrative expenses:									General and administrative expenses:
Salaries and benefits	Salaries and benefits	125,550		119,373		376,788		349,533		Salaries and benefits	126,339		123,480
Non-cash compensation	Non-cash compensation	3,495		4,397		15,990		17,860		Non-cash compensation	3,273		7,347
Depreciation and amortization										Depreciation and amortization	4,443		8,008
Other	Other	59,299		55,158		167,851		158,995		Other	64,945		53,640
Depreciation and amortization		5,477		7,487		19,705		21,763
Investment impairment		3,009		—		3,009		—
Operating expenses		519,057		496,709		1,526,601		1,464,339
Total operating expenses										Total operating expenses	514,010		497,295
Operating income	Operating income	38,931		56,772		134,534		203,756		Operating income	42,379		47,962
Other income (expense):	Other income (expense):									Other income (expense):
Interest income	Interest income	59		—		108		49		Interest income	406		13
Interest expense	Interest expense	(4,963)		(2,730)		(16,447)		(6,734)		Interest expense	(7,517)		(3,173)
Equity in earnings (loss) from equity method investments	Equity in earnings (loss) from equity method investments	302		1,444		(442)		3,932		Equity in earnings (loss) from equity method investments	123		(1,403)
Gain on equity method investments		—		—		—		31,092
Miscellaneous, net	Miscellaneous, net	491		490		1,155		1,253		Miscellaneous, net	(682)		333
Total other (expense) income, net		(4,111)		(796)		(15,626)		29,592
Total other expense, net										Total other expense, net	(7,670)		(4,230)
Income before income taxes	Income before income taxes	34,820		55,976		118,908		233,348		Income before income taxes	34,709		43,732
Income tax expense	Income tax expense	(9,417)		(10,731)		(32,755)		(57,192)		Income tax expense	(9,800)		(12,019)
Net income	Net income	25,403		45,245		86,153		176,156		Net income	24,909		31,713
Net loss (income) attributable to noncontrolling interests	Net loss (income) attributable to noncontrolling interests	239		(239)		739		(1,131)		Net loss (income) attributable to noncontrolling interests	337		(42)
Net income attributable to Amedisys, Inc.	Net income attributable to Amedisys, Inc.	$	25,642	$	45,006	$	86,892	$	175,025	Net income attributable to Amedisys, Inc.	$	25,246	$	31,671
Basic earnings per common share:	Basic earnings per common share:									Basic earnings per common share:
Net income attributable to Amedisys, Inc. common stockholders	Net income attributable to Amedisys, Inc. common stockholders	$	0.79	$	1.38	$	2.67	$	5.36	Net income attributable to Amedisys, Inc. common stockholders	$	0.78	$	0.97
Weighted average shares outstanding	Weighted average shares outstanding	32,482		32,607		32,519		32,658		Weighted average shares outstanding	32,558		32,555
Diluted earnings per common share:	Diluted earnings per common share:									Diluted earnings per common share:
Net income attributable to Amedisys, Inc. common stockholders	Net income attributable to Amedisys, Inc. common stockholders	$	0.79	$	1.37	$	2.66	$	5.30	Net income attributable to Amedisys, Inc. common stockholders	$	0.77	$	0.97
Weighted average shares outstanding	Weighted average shares outstanding	32,616		32,899		32,680		33,021		Weighted average shares outstanding	32,643		32,766

The accompanying notes are an integral part of these condensed consolidated financial statements.

AMEDISYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands, except common stock shares)

(Unaudited)

For the Three-Months Ended September 30, 2022
Total Common Stock Additional
Paid-in
Capital Treasury
Stock Retained
Earnings Noncontrolling
Interests
Shares Amount
Balance, June 30, 2022 $ 1,038,995 37,780,242 $ 38 $ 743,276 $ (457,981) $ 700,313 $ 53,349
Issuance of stock – employee stock purchase plan 966 10,814 — 966 — — —
Issuance/(cancellation) of non-vested stock — 57,420 — — — — —
Exercise of stock options 306 3,583 — 306 — — —
Non-cash compensation 3,495 — — 3,495 — — —
Surrendered shares (3,187) — — — (3,187) — —
Noncontrolling interest contributions 1,148 — — — — — 1,148
Noncontrolling interest distributions (450) — — — — — (450)
Sale of noncontrolling interest 2,934 — — 2,871 — — 63
Net income (loss) 25,403 — — — — 25,642 (239)
Balance, September 30, 2022 $ 1,069,610 37,852,059 $ 38 $ 750,914 $ (461,168) $ 725,955 $ 53,871
For the Three-Months Ended September 30, 2021
Total Common Stock Additional
Paid-in
Capital Treasury
Stock Retained
Earnings Noncontrolling
Interests
Shares Amount
Balance, June 30, 2021 $ 875,887 37,553,355 $ 38 $ 714,334 $ (400,110) $ 560,010 $ 1,615
Issuance of stock – employee stock purchase plan 1,061 5,095 — 1,061 — — —
Issuance/(cancellation) of non-vested stock — 87,460 — — — — —
Exercise of stock options 1,083 13,374 — 1,083 — — —
Non-cash compensation 4,397 — — 4,397 — — —
Surrendered shares (9,750) — — — (9,750) — —
Shares repurchased (10,805) — — — (10,805) — —
Noncontrolling interest distributions (459) — — — — — (459)
Acquired noncontrolling interest 42,142 — — — — — 42,142
Net income 45,245 — — — — 45,006 239
Balance, September 30, 2021 $ 948,801 37,659,284 $ 38 $ 720,875 $ (420,665) $ 605,016 $ 43,537
For the Nine-Months Ended September 30, 2022
Total Common Stock Additional
Paid-in
Capital Treasury
Stock Retained
Earnings Noncontrolling
Interests
Shares Amount
Balance, December 31, 2021 $ 976,323 37,674,868 $ 38 $ 728,118 $ (435,868) $ 639,063 $ 44,972
Issuance of stock – employee stock purchase plan 2,857 24,159 — 2,857 — — —
Issuance/(cancellation) of non-vested stock — 141,726 — — — — —
Exercise of stock options 1,078 11,306 — 1,078 — — —
Non-cash compensation 15,990 — — 15,990 — — —
Surrendered shares (7,949) — — — (7,949) — —
Shares repurchased (17,351) — — — (17,351) — —
Noncontrolling interest contributions 11,000 — — — — — 11,000
Noncontrolling interest distributions (1,425) — — — — — (1,425)
Sale of noncontrolling interest 2,934 — — 2,871 — — 63
Net income (loss) 86,153 — — — — 86,892 (739)
Balance, September 30, 2022 $ 1,069,610 37,852,059 $ 38 $ 750,914 $ (461,168) $ 725,955 $ 53,871
For the Nine-Months Ended September 30, 2021
Total Common Stock Additional
Paid-in
Capital Treasury
Stock Retained
Earnings Noncontrolling
Interests
Shares Amount
Balance, December 31, 2020 $ 810,741 37,470,212 $ 38 $ 698,287 $ (319,092) $ 429,991 $ 1,517
Issuance of stock – employee stock purchase plan 3,022 13,357 — 3,022 — — —
Issuance/(cancellation) of non-vested stock — 148,529 — — — — —
Exercise of stock options 1,706 27,186 — 1,706 — — —
Non-cash compensation 17,860 — — 17,860 — — —
Surrendered shares (16,694) — — — (16,694) — —
Shares repurchased (84,879) — — — (84,879) — —
Noncontrolling interest distributions (1,253) — — — — — (1,253)
Acquired noncontrolling interest 42,142 — — — — — 42,142
Net income 176,156 — — — — 175,025 1,131
Balance, September 30, 2021 $ 948,801 37,659,284 $ 38 $ 720,875 $ (420,665) $ 605,016 $ 43,537


	For the Three-Months Ended March 31, 2023
	Total		Common Stock			Additional Paid-in Capital		Treasury Stock		Retained Earnings		Noncontrolling Interests
			Shares	Amount
Balance, December 31, 2022	$	1,106,573	37,891,186	$	38	$	755,063	$	(461,200)	$	757,672	$	55,000
Issuance of stock – employee stock purchase plan	816		11,498	—		816		—		—		—
Issuance/(cancellation) of non-vested stock	—		35,670	—		—		—		—		—
Non-cash compensation	3,273		—	—		3,273		—		—		—
Surrendered shares	(1,308)		—	—		—		(1,308)		—		—
Purchase of noncontrolling interest	(630)		—	—		(483)		—		—		(147)
Noncontrolling interest distributions	(285)		—	—		—		—		—		(285)
Net income	24,909		—	—		—		—		25,246		(337)
Balance, March 31, 2023	$	1,133,348	37,938,354	$	38	$	758,669	$	(462,508)	$	782,918	$	54,231

	For the Three-Months Ended March 31, 2022
	Total		Common Stock			Additional Paid-in Capital		Treasury Stock		Retained Earnings		Noncontrolling Interests
			Shares	Amount
Balance, December 31, 2021	$	976,323	37,674,868	$	38	$	728,118	$	(435,868)	$	639,063	$	44,972
Issuance of stock – employee stock purchase plan	985		7,161	—		985		—		—		—
Issuance/(cancellation) of non-vested stock	—		80,494	—		—		—		—		—
Exercise of stock options	86		1,182	—		86		—		—		—
Non-cash compensation	7,347		—	—		7,347		—		—		—
Surrendered shares	(4,682)		—	—		—		(4,682)		—		—
Noncontrolling interest contributions	9,552		—	—		—		—		—		9,552
Noncontrolling interest distributions	(672)		—	—		—		—		—		(672)
Net income	31,713		—	—		—		—		31,671		42
Balance, March 31, 2022	$	1,020,652	37,763,705	$	38	$	736,536	$	(440,550)	$	670,734	$	53,894

The accompanying notes are an integral part of these condensed consolidated financial statements.

AMEDISYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


		For the Nine-Month Periods Ended September 30,					For the Three-Month Periods Ended March 31,
		2022		2021			2023		2022
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	86,153	$	176,156	Net income	$	24,909	$	31,713
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,705		21,763
Depreciation and amortization (inclusive of depreciation included in cost of service)						Depreciation and amortization (inclusive of depreciation included in cost of service)	5,694		8,008
Non-cash compensation	Non-cash compensation	15,990		17,860		Non-cash compensation	3,273		7,347
Amortization and impairment of operating lease right of use assets	Amortization and impairment of operating lease right of use assets	34,782		30,181		Amortization and impairment of operating lease right of use assets	8,622		10,096
Loss (gain) on disposal of property and equipment		507		(64)
Gain on equity method investments		—		(31,092)
(Gain) loss on disposal of property and equipment						(Gain) loss on disposal of property and equipment	(70)		5
Loss on personal care divestiture						Loss on personal care divestiture	2,186		—
Deferred income taxes	Deferred income taxes	19,031		34,729		Deferred income taxes	2,772		3,205
Equity in loss (earnings) from equity method investments		442		(3,932)
Amortization of deferred debt issuance costs/debt discount		743		669
Equity in (earnings) loss from equity method investments						Equity in (earnings) loss from equity method investments	(123)		1,403
Amortization of deferred debt issuance costs						Amortization of deferred debt issuance costs	248		248
Return on equity method investments	Return on equity method investments	3,798		4,268		Return on equity method investments	1,787		1,710
Investment impairment		3,009		—
Changes in operating assets and liabilities, net of impact of acquisitions:	Changes in operating assets and liabilities, net of impact of acquisitions:					Changes in operating assets and liabilities, net of impact of acquisitions:
Patient accounts receivable	Patient accounts receivable	(18,266)		(17,638)		Patient accounts receivable	(7,476)		(18,618)
Other current assets	Other current assets	(19,929)		(6,219)		Other current assets	(4,128)		7,882
Operating lease right of use assets						Operating lease right of use assets	(918)		(749)
Other assets	Other assets	283		(938)		Other assets	(111)		247
Accounts payable	Accounts payable	5,886		(1,192)		Accounts payable	(3,457)		(2,115)
Accrued expenses	Accrued expenses	(26,790)		(9,363)		Accrued expenses	741		7,483
Other long-term obligations	Other long-term obligations	243		(1,785)		Other long-term obligations	(28)		(57)
Operating lease liabilities	Operating lease liabilities	(30,864)		(27,372)		Operating lease liabilities	(7,960)		(9,187)
Operating lease right of use assets		(2,323)		(2,304)
Net cash provided by operating activities	Net cash provided by operating activities	92,400		183,727		Net cash provided by operating activities	25,961		48,621
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Proceeds from the sale of deferred compensation plan assets	Proceeds from the sale of deferred compensation plan assets	89		126		Proceeds from the sale of deferred compensation plan assets	19		22
Proceeds from the sale of property and equipment	Proceeds from the sale of property and equipment	66		140		Proceeds from the sale of property and equipment	—		37
Purchases of property and equipment	Purchases of property and equipment	(4,338)		(5,187)		Purchases of property and equipment	(1,350)		(902)
Investments in technology assets	Investments in technology assets	(848)		(147)		Investments in technology assets	(210)		(236)
Investment in equity method investee		(637)		—
Purchase of cost method investment	Purchase of cost method investment	(15,000)		—		Purchase of cost method investment	—		(15,000)
Proceeds from personal care divestiture						Proceeds from personal care divestiture	47,787		—
Acquisitions of businesses, net of cash acquired	Acquisitions of businesses, net of cash acquired	(71,952)		(264,872)		Acquisitions of businesses, net of cash acquired	(350)		—
Net cash used in investing activities		(92,620)		(269,940)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	45,896		(16,079)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Proceeds from issuance of stock upon exercise of stock options	Proceeds from issuance of stock upon exercise of stock options	1,078		1,706		Proceeds from issuance of stock upon exercise of stock options	—		86
Proceeds from issuance of stock to employee stock purchase plan	Proceeds from issuance of stock to employee stock purchase plan	2,857		3,022		Proceeds from issuance of stock to employee stock purchase plan	816		985
Shares withheld to pay taxes on non-cash compensation	Shares withheld to pay taxes on non-cash compensation	(7,949)		(16,694)		Shares withheld to pay taxes on non-cash compensation	(1,308)		(4,682)
Noncontrolling interest contributions	Noncontrolling interest contributions	2,100		—		Noncontrolling interest contributions	—		652
Noncontrolling interest distributions	Noncontrolling interest distributions	(1,425)		(1,253)		Noncontrolling interest distributions	(285)		(672)
Proceeds from sale of noncontrolling interest		3,941		—
Proceeds from borrowings under term loan		—		290,312
Proceeds from borrowings under revolving line of credit	Proceeds from borrowings under revolving line of credit	484,000		500,700		Proceeds from borrowings under revolving line of credit	8,000		—
Repayments of borrowings under revolving line of credit	Repayments of borrowings under revolving line of credit	(465,500)		(551,700)		Repayments of borrowings under revolving line of credit	(8,000)		—
Principal payments of long-term obligations	Principal payments of long-term obligations	(10,126)		(5,893)		Principal payments of long-term obligations	(55,313)		(3,771)
Debt issuance costs		—		(2,792)
Purchase of company stock		(17,351)		(84,879)
Payment of accrued contingent consideration		(5,714)		—
Provider relief fund advance		—		(1,465)
Net cash (used in) provided by financing activities		(14,089)		131,064
Net (decrease) increase in cash, cash equivalents and restricted cash		(14,309)		44,851
Purchase of noncontrolling interest						Purchase of noncontrolling interest	(800)		—
Net cash used in financing activities						Net cash used in financing activities	(56,890)		(7,402)
Net increase in cash, cash equivalents and restricted cash						Net increase in cash, cash equivalents and restricted cash	14,967		25,140
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	45,769		83,357		Cash, cash equivalents and restricted cash at beginning of period	54,133		45,769
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	31,460	$	128,208	Cash, cash equivalents and restricted cash at end of period	$	69,100	$	70,909

For the Nine-Month
Periods Ended September 30,
2022 2021
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest $ 9,153 $ 3,479
Cash paid for Infinity ZPIC interest $ 11,544 $ —
Cash paid for income taxes, net of refunds received $ 23,582 $ 25,482
Cash paid for operating lease liabilities $ 33,187 $ 29,676
Cash paid for finance lease liabilities $ 1,074 $ 1,509
Supplemental Disclosures of Non-Cash Activity:
Right of use assets obtained in exchange for operating lease liabilities $ 36,980 $ 34,881
Right of use assets obtained in exchange for finance lease liabilities $ 1,846 $ 814
Reductions to right of use assets resulting from reductions to operating lease liabilities $ 3,387 $ 1,183
Reductions to right of use assets resulting from reductions to finance lease liabilities $ 564 $ —
Accrued contingent consideration $ 19,195 $ —
Noncontrolling interest contribution $ 8,900 $ —



	For the Three-Month Periods Ended March 31,
	2023		2022
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	6,654	$	1,864
Cash paid for income taxes, net of refunds received	$	352	$	551
Cash paid for operating lease liabilities	$	8,878	$	9,936
Cash paid for finance lease liabilities	$	2,457	$	357
Supplemental Disclosures of Non-Cash Activity:
Right of use assets obtained in exchange for operating lease liabilities	$	7,083	$	11,203
Right of use assets obtained in exchange for finance lease liabilities	$	20,790	$	216
Reductions to right of use assets resulting from reductions to operating lease liabilities	$	141	$	299
Reductions to right of use assets resulting from reductions to finance lease liabilities	$	369	$	—
Noncontrolling interest contribution	$	—	$	8,900

The accompanying notes are an integral part of these condensed consolidated financial statements.

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. NATURE OF OPERATIONS, CONSOLIDATION AND PRESENTATION OF FINANCIAL STATEMENTS

Amedisys, Inc., a Delaware corporation (together with its consolidated subsidiaries, referred to herein as “Amedisys,” “we,” “us,” or “our”), is a multi-state provider of home health, hospice, personal care and high acuity care services with approximately ~~74% of our consolidated net service revenue derived from Medicare for the three~~72% and ~~nine-month periods ended September 30, 2022 and approximately~~ 75% of our consolidated net service revenue derived from Medicare for the ~~three and nine-month~~three-month periods ended ~~September 30, 2021.~~March 31, 2023 and 2022, respectively. As of ~~September 30, 2022,~~March 31, 2023, we owned and operated ~~353~~348 Medicare-certified home health care centers, ~~172~~165 Medicare-certified hospice care centers ~~14 personal-care care centers~~ and 89 admitting high acuity care joint ventures in 3637 states within the United States and the District of Columbia. We divested our personal care business on March 31, 2023.

Basis of Presentation

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly our financial position, our results of operations and our cash flows in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting. Our results of operations for the interim periods presented are not necessarily indicative of the results of our operations for the entire year and have not been audited by our independent auditors.

This report should be read in conjunction with our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, as filed with the Securities and Exchange Commission (“SEC”) on February ~~24, 2022~~16, 2023 (the “Form 10-K”), which includes information and disclosures not included herein. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from the interim financial information presented, as allowed by SEC rules and regulations.

Use of Estimates

Our accounting and reporting policies conform with U.S. GAAP. In preparing the unaudited condensed consolidated financial statements, we are required to make estimates and assumptions that impact the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassification

Certain reclassifications have been made to prior periods' financial statements in order to conform to the current year presentation. These reclassifications had no effect on our previously reported net income. See Note 8 - Segment Information for additional information regarding these reclassifications.

Principles of Consolidation

These unaudited condensed consolidated financial statements include the accounts of Amedisys, Inc. and our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in our accompanying unaudited condensed consolidated financial statements, and business combinations accounted for as purchases have been included in our condensed consolidated financial statements from their respective dates of acquisition. In addition to our ~~wholly-owned~~wholly owned subsidiaries, we also have certain equity investments that ~~are accounted for as set forth below.~~

~~Investments~~

Wewe either consolidate, investments when the entity is a variable interest entity ("VIE") and we are the primary beneficiary or if we have controlling interests in the entity, which is generally ownership in excess of 50%. Third-party equity interests in our consolidated joint ventures are reflected as noncontrolling interests in our condensed consolidated financial statements.

We account for investments in entities in which we have the ability to exercise significant influence under the equity method if we hold 50% or less of the voting stock and the entity is not a VIE in which we are the primary beneficiary. The book value of investments that we account for under the equity method of accounting ~~was $41.5 million and $48.1 million as of September 30, 2022 and December 31, 2021, respectively, and is reflected in other assets within our condensed consolidated balance sheets.~~

We account for investments in entities in which we have less than 20% ownership interest under the cost method of accounting if we do not have the ability to exercise significant influence over the investee. During the three-month period ended March 31, 2022, we made a $15.0 million investment in an entity accounted for under the cost method. The book value of investments that weor account for under the cost method of ~~accounting was $20.0 million and $5.0 million as of September 30, 2022 and December 31, 2021, respectively, and is reflected in other assets within our condensed consolidated balance sheets.~~accounting. See Note 3 - Investments for additional information.

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

During the three-month period ended September 30, 2022, we sold a 30% interest in two of our home health care centers while maintaining a controlling interest in the newly formed joint venture. We are consolidating this joint venture. The total cash consideration received for the 30% noncontrolling interest was $3.9 million. In connection with the transaction, we recorded an after-tax gain of $2.9 million; this gain was recorded in additional paid-in capital within our condensed consolidated balance sheet.

During 2021, a third-party acquired a majority of the issued and outstanding membership interests of one of our equity method investments, Medalogix, for cash, with the remaining membership interests rolling over into a newly formed entity that includes Medalogix as well as another healthcare predictive data and analytics company. We rolled over 100% of our ownership interest in Medalogix to the newly formed entity, and in connection with this transaction, we recognized a $31.1 million gain based on the purchase price of Medalogix during the three-month period ended June 30, 2021, which is reflected in gain on equity method investments within our condensed consolidated statements of operations.

Our high acuity care segment includes interests in several joint ventures with health system partners and a professional corporation that employs clinicians. Each of these entities meets the criteria to be classified as a VIE. As of September 30, 2022, we are consolidating all of our admitting joint ventures with health system partners as well as the professional corporation as we have concluded that we are the primary beneficiary of these VIEs. We have management agreements in place with each of these entities whereby we manage the entities and run the day-to-day operations. As such, we possess the power to direct the activities that most significantly impact the economic performance of the VIEs. The significant activities include, but are not limited to, negotiating provider and payor contracts, establishing patient care policies and protocols, making employment and compensation decisions, developing the operating and capital budgets, performing marketing activities and providing accounting support. We also have the obligation to absorb any expected losses and the right to receive benefits. Additionally, from time to time, we may be required to provide joint venture funding. Our high acuity care segment also includes one non-admitting joint venture with a health system partner that is accounted for under the equity method of accounting. We are in the process of winding down the operations of this joint venture.

The terms of the agreements with each VIE prohibit us from using the assets of the VIE to satisfy the obligations of other entities. The carrying amount of the VIEs’ assets and liabilities included in our condensed consolidated balance sheets are as follows (amounts in millions):

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

As of September 30, 2022 As of December 31, 2021
ASSETS
Current assets:
     Cash and cash equivalents $ 13.0 $ 3.1
     Patient accounts receivable 5.4 2.4
     Other current assets 0.9 0.1
          Total current assets 19.3 5.6
Property and equipment 0.2 0.1
Operating lease right of use assets 0.1 —
Goodwill 8.5 —
Intangible assets 0.4 —
Other assets 0.1 —
          Total assets $ 28.6 $ 5.7
LIABILITIES
Current liabilities:
     Accounts payable $ 0.3 $ —
     Payroll and employee benefits 0.6 0.3
     Accrued expenses 5.1 3.4
     Current portion of long-term obligations 0.2 0.8
          Total current liabilities 6.2 4.5
Other long-term obligations — —
          Total liabilities $ 6.2 $ 4.5

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

We account for service revenue from contracts with customers in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers, and as such, we recognize service revenue in the period in which we satisfy our performance obligations under our contracts by transferring our promised services to our customers in amounts that reflect the consideration to which we expect to be entitled in exchange for providing patient care, which are the transaction prices allocated to the distinct services. Our cost of obtaining contracts is not material.

Revenues are recognized as performance obligations are satisfied, which varies based on the nature of the services provided. Our performance obligation is the delivery of patient care services in accordance with the nature and frequency of services outlined in physicians' orders, which are determined by a physician based on a patient's specific goals.

Our performance obligations relate to contracts with a duration of less than one year; therefore, we have elected to apply the optional exemption provided by ASC 606 and are not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. The unsatisfied or partially unsatisfied performance obligations are generally completed when the patients are discharged, which generally occurs within days or weeks of the end of the reporting period.

We determine the transaction price based on gross charges for services provided, reduced by estimates for contractual and non-contractual revenue adjustments. Contractual revenue adjustments are recorded for the difference between our standard rates and the contracted rates to be realized from patients, third-party payors and others for services provided. Non-contractual revenue adjustments include discounts provided to self-pay, uninsured patients or other payors, adjustments resulting from payment reviews and adjustments arising from our inability to obtain appropriate billing documentation, authorizations or ~~face-~~

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~to-face~~face-to-face documentation. Subsequent changes to the estimate of the transaction price are recorded as adjustments to net service revenue in the period of change.

Non-contractual revenue adjustments are recorded for self-pay, uninsured patients and other payors by major payor class based on our historical collection experience, aged accounts receivable by payor and current ~~economic~~industry conditions. The non-contractual revenue adjustments represent the difference between amounts billed and amounts we expect to collect based on our collection history with similar payors. We assess our ability to collect for the healthcare services provided at the time of patient admission based on our verification of the patient's insurance coverage under Medicare, Medicaid, and other commercial or managed care insurance programs. Medicare represented approximately ~~74% of our consolidated net service revenue for the three~~72% and ~~nine-month periods ended September 30, 2022 and approximately~~ 75% of our consolidated net service revenue for the ~~three and nine-month~~three-month periods ended ~~September 30, 2021.~~March 31, 2023 and 2022, respectively.

Amounts due from third-party payors, primarily commercial health insurers and government programs (Medicare and Medicaid), include variable consideration for retroactive revenue adjustments due to settlements of audits and payment reviews. We determine our estimates for non-contractual revenue adjustments related to audits and payment reviews based on our historical experience and success rates in the claim appeals and adjudication process.

We determine our estimates for non-contractual revenue adjustments related to our inability to obtain appropriate billing documentation, authorizations or face-to-face documentation based on our historical experience which primarily includes a historical collection rate of over 99% on Medicare claims. Revenue is recorded at amounts we estimate to be realizable for services provided.

~~Revenue~~

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Net service revenue by payor class as a percentage of total net service revenue is as follows:
For the Three-Month Periods Ended September 30, For the Nine-Month Periods
Ended September 30,
2022 2021 2022 2021
Home Health:
     Medicare 40 % 41 % 40 % 41 %
     Non-Medicare - Episodic-based 7 % 8 % 8 % 8 %
     Non-Medicare - Non-episodic based 13 % 12 % 13 % 12 %
Hospice:
     Medicare 34 % 34 % 33 % 34 %
     Non-Medicare 2 % 2 % 2 % 2 %
Personal Care 3 % 3 % 3 % 3 %
High Acuity Care (1) 1 % — % 1 % — %
100 % 100 % 100 % 100 %

~~(1) Acquired Contessa Health on August 1, 2021.~~


	For the Three-Month Periods Ended March 31,
	2023		2022
Home Health:
Medicare	39	%	41	%
Non-Medicare - Episodic-based	7	%	8	%
Non-Medicare - Non-episodic based	15	%	12	%
Hospice:
Medicare	33	%	34	%
Non-Medicare	2	%	2	%
Personal Care	3	%	3	%
High Acuity Care	1	%	< 1%
	100	%	100	%

Home Health Revenue Recognition

Medicare Revenue

Effective January 1, 2020, the Centers for Medicare and Medicaid Services ("CMS") implemented a revised case-mix adjustment methodology, the Patient-Driven Groupings Model ("PDGM"). PDGM uses 30-day periods of care rather than 60-day episodes of care as the unit of payment, eliminates the use of the number of therapy visits provided in determining payment and relies more heavily on clinical characteristics and other patient information.

All Medicare contracts are required to have a signed plan of care which represents a single performance obligation, comprised of the delivery of a series of distinct services that are substantially similar and have a similar pattern of transfer to the customer. Accordingly, we account for the series of services ("episode") as a single performance obligation satisfied over time, as the customer simultaneously receives and consumes the benefits of the goods and services provided. An episode starts the first day a billable visit is performed and ends 60 days later or upon discharge, if earlier, with multiple continuous episodes allowed. Each 60-day episode includes two 30-day ~~periods of care.~~payment periods.

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Net service revenue is recorded based on the established Federal Medicare home health payment rate for a 30-day period of care. ASC 606 notes that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value of the entity’s performance completed to date, the entity may recognize revenue in the amount to which the entity has a right to invoice. We have elected to apply the "right to invoice" practical expedient and therefore, our revenue recognition is based on the reimbursement we are entitled to for each 30-day ~~period of care.~~payment period. We utilize our historical average length of stay for each 30-day period of care as the measure of progress towards the satisfaction of our performance obligation.

Effective January 1, 2020, the Centers for Medicare and Medicaid Services ("CMS") implemented a revised case-mix adjustment methodology, the Patient-Driven Groupings Model ("PDGM"). PDGM uses timing, admission source, functional impairment levels and principal and other diagnoses to case-mix adjust payments. The case-mix adjusted payment for a 30-day period of care is subject to additional adjustments based on certain variables, including, but not limited to (a) an outlier payment if our patient's care was unusually costly (capped at 10% of total reimbursement per provider number); (b) a low utilization payment adjustment (“LUPA”) if the number of visits provided was less than the established threshold, which ranges from two to six visits and varies for every case-mix group; (c) a partial payment if a patient is transferred to another provider or from another provider before completing the 30-day period of care; and (d) the applicable geographic wage index. Payments for routine and non-routine supplies are included in the 30-day payment rate.

Medicare can also make various adjustments to payments received if we are unable to produce appropriate billing documentation or acceptable authorizations. We estimate the impact of such adjustments based on our historical experience, which primarily includes a historical collection rate of over 99% on Medicare claims, and record this estimate during the period in which services are rendered to revenue with a corresponding reduction to patient accounts receivable.

Amounts due from Medicare include variable consideration for retroactive revenue adjustments due to settlements of audits and payment reviews. We determine our estimates for non-contractual revenue adjustments related to audits and payment reviews based on our historical experience and success rates in the claim appeals and adjudication process.

The Medicare home health benefit requires that beneficiaries be homebound (meaning that the beneficiary is unable to leave his/her home without a considerable and taxing effort), require intermittent skilled nursing, physical therapy or speech therapy services and receive treatment under a plan of care established and periodically reviewed by a physician. ~~In order~~

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Effective January 1, 2022, CMS implemented a new Notice of Admission ("NOA") process. The NOA process requires a one-time submission that establishes the home health period of care and covers all contiguous 30-day periods of care until the patient is discharged from home health services. If the NOA is not submitted timely, a payment reduction is applied equal to ~~provide greater flexibility during the novel coronavirus pandemic ("COVID-19"), CMS relaxed the definition of homebound status through the duration~~1/30 of the ~~public health emergency. During~~30-day payment rate for each day from the ~~pandemic, a beneficiary~~start of care until the date the NOA is considered homebound if they have been instructed by a physician not to leave their home because of a confirmed or suspected COVID-19 diagnosis or if the patient has a condition that makes them more susceptible to contracting COVID-19. Therefore, if a beneficiary is homebound due to COVID-19 and requires skilled services, the services will be covered under the Medicare home health benefit.submitted.

Non-Medicare Revenue

Payments from non-Medicare payors are either a percentage of Medicare rates, per-visit rates or case rates depending upon the terms and conditions established with such payors. Approximately 30% of our managed care contract volume affords us the opportunity to receive additional payments if we achieve certain quality or process metrics as defined in each contract (e.g. star ratings and acute-care hospitalization rates).

Episodic-based Revenue. We recognize revenue in a similar manner as we recognize Medicare revenue for amounts that are paid by other insurance carriers, including Medicare Advantage programs; however, these amounts can vary based upon the negotiated terms, the majority of which range from 95% to 100% of Medicare rates.

Non-episodic based Revenue. For our per visit contracts, gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to our established or estimated per-visit rates. For our case rate contracts, gross revenue is recorded over our historical average length of stay using the established case rate for each admission. Contractual revenue adjustments are recorded for the difference between our standard rates and the contracted rates to be realized from patients, third parties and others for services provided and are deducted from gross revenue to determine net service revenue. We also make non-contractual revenue adjustments to non-episodic revenue based on our historical experience to reflect the estimated transaction price. We receive a minimal amount of our net service revenue from patients who are either self-insured or are obligated for an insurance co-payment.

Under our case rate contracts, we may receive reimbursement before all services are rendered. Any cash received that exceeds the associated revenue earned is recorded to deferred revenue in accrued expenses within our condensed consolidated balance sheets.

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Hospice Revenue Recognition

Hospice Medicare Revenue

Gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are predetermined daily or hourly rates for each of the four levels of care we deliver. The four levels of care are routine care, general inpatient care, continuous home care and respite care. Routine care accounted for 97% of our total Medicare hospice service revenue for the ~~three and nine-month~~three-month periods ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022. There are two separate payment rates for routine care: payments for the first 60 days of care and care beyond 60 days. In addition to the two routine rates, we may also receive a service intensity add-on (“SIA”). The SIA is based on visits made in the last seven days of life by a registered nurse or medical social worker for patients in a routine level of care.

The performance obligation is the delivery of hospice services to the patient, as determined by a physician, each day the patient is on hospice care.

We make adjustments to Medicare revenue for non-contractual revenue adjustments, which include our inability to obtain appropriate billing documentation or acceptable authorizations and other reasons unrelated to credit risk. We estimate the impact of these non-contractual revenue adjustments based on our historical experience, which primarily includes a historical collection rate of over 99% on Medicare claims, and record it during the period services are rendered.

Additionally, our hospice service revenue is subject to certain limitations on payments from Medicare which are considered variable consideration. We are subject to an inpatient cap limit and an overall Medicare payment cap for each provider number. We monitor these caps on a provider-by-provider basis and estimate amounts due back to Medicare if we estimate a cap has been exceeded. We record these adjustments as a reduction to revenue and an increase in accrued expenses within our condensed consolidated balance sheets. Providers are required to self-report and pay their estimated cap liability by February 28th of the following year. Prior to the 2016 final rule, the cap year began on November 1st and ended on October 31st. Effective with the 2016 final rule, the cap year was changed to align with the federal fiscal year which begins on October 1st and ends on September 30th. As of ~~September 30, 2022,~~March 31, 2023, we have recorded $4.1 million for estimated amounts due back to Medicare

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

in accrued expenses for the Federal cap years ended October 31, 2016 through September 30, 2023. As of December 31, 2022, we had recorded $4.3 million for estimated amounts due back to Medicare in accrued expenses for the Federal cap years ended October 31, 2016 through September 30, 2022. As of December 31, 2021, we had recorded $4.5 million for estimated amounts due back to Medicare in accrued expenses for the Federal cap years ended October 31, 2016 through September 30, 2022.2023.

Hospice Non-Medicare Revenue

Gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to our established rates or estimated per day rates, as applicable. Contractual revenue adjustments are recorded for the difference between our standard rates and the contractual rates to be realized from patients, third-party payors and others for services provided and are deducted from gross revenue to determine our net service revenue. We also make non-contractual adjustments to non-Medicare revenue based on our historical experience to reflect the estimated transaction price.

Personal Care Revenue Recognition

Personal Care Revenue

We generate net service revenues by providing our services directly to patients based on authorized hours, visits or units determined by the relevant agency, at a rate that is either contractual or fixed by legislation. Net service revenue is recognized at the time services are rendered based on gross charges for the services provided, reduced by estimates for contractual and non-contractual revenue adjustments. We receive payment for providing such services from payors, including state and local governmental agencies, managed care organizations, commercial insurers and private consumers. Payors include the following elder service agencies: Aging Services Access Points ("ASAPs"), Senior Care Options ("SCOs"), Program of All-Inclusive Care for the Elderly ("PACE") and the Veterans Administration ("VA").

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

High Acuity Care Revenue Recognition

High Acuity Care Revenue

Our revenues are derived from contracts with (1) health insurance plans for the coordination and provision of home recovery care services to clinically-eligible patients who are enrolled members in those insurance plans and (2) health system partners for the coordination and provision of home recovery care services to clinically-eligible patients who are discharged early from a health system facility to complete their inpatient stay at ~~home and (3) Medicare and other payors for the provision of home health services.~~home.

Under our health insurance plan contracts, we provide home recovery care services, which include hospital-equivalent ("H@H") and skilled nursing facility ("SNF") equivalent services ("SNF@H"), for high acuity care patients on a full risk basis whereby we assume the financial risk for the coordination and payment of all hospital or SNF replacement medical services necessary to treat the medical condition for which the patient was diagnosed in a home-based setting for a 30-day (H@H) or 60-day (SNF@H) episode of care in exchange for a fixed contracted bundled rate. For H@H programs, the fixed rate is based on the assigned diagnosis related group ("DRG") and the 30-day post-discharge related spend. For SNF@H programs, the fixed rate is based on the 60-day post-discharge related spend. Our performance obligation is the coordination and provision of patient care in accordance with physicians’ orders over either a 30-day or 60-day episode of care. The majority of our care coordination services and direct patient care is provided in the first five to seven days of the episode period (the "acute phase"). Monitoring services and follow-up direct patient care, as deemed necessary by the treating physician, are provided throughout the remainder of the episode. Since the majority of our services are provided during the acute phase, we recognize net service revenues over the acute phase based on gross charges for the services provided per the applicable managed care contract rates, reduced by estimates for revenue adjustments.

Under our contracts with health system partners, we provide home recovery care services for high acuity patients on a limited risk basis whereby we assume the risk for certain healthcare services during the remainder of an inpatient acute stay serviced at the patient’s home in exchange for a contracted per diem rate. The performance obligation is the coordination and provision of required medical services, as determined by the treating physician, for each day the patient receives inpatient-equivalent care at home. As such, revenues are recognized as services are administered and as our performance obligations are satisfied on a per diem basis, reduced by estimates for revenue adjustments.

We recognize adjustments to revenue during the period in which changes to estimates of assigned patient diagnoses or episode terminations become known, in accordance with the applicable managed care contracts. For certain health insurance plans, revenue is reduced by amounts owed by enrollees to healthcare providers under deductible, coinsurance or copay provisions of health insurance plan policies, since those amounts are repaid to the health insurance plans by us as part of a retrospective reconciliation process.

In March 2022, our high acuity care segment entered into a transaction in which one of our health system partners contributed its home health operations to one of our existing high acuity care joint ventures. We recognize Medicare and non-Medicare revenue in a manner that is consistent with our home health segment revenue recognition policy described above.

~~Government Grants~~AMEDISYS, INC. AND SUBSIDIARIES

~~We account for government grants in accordance with Accounting Standards Update ("ASU") 2021-10,~~ ~~Government Assistance (Topic 832),~~ ~~by applying the grant model in accordance with International Accounting Standard ("IAS") 20,~~ ~~Accounting for Government Grants and Disclosure of Government Assistance~~, and as such, we recognize grant income on a systematic basis in line with the recognition of expenses or the loss of revenues for which the grants are intended to compensate. We recognize grants once both of the following conditions are met: (1) we are able to comply with the relevant conditions of the grant and (2) the grant will be received. See Note 3 – Novel Coronavirus Pandemic ("COVID-19") for additional information on our accounting for government funds received under the Coronavirus Aid, Relief and Economic Security Act ("CARES Act").NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include certificates of deposit and all highly liquid debt instruments with maturities of three months or less when purchased. Restricted cash includes cash that is not available for ordinary business use. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had ~~$13.5~~$19.7 million and ~~$3.1~~$13.6 million, respectively, classified as restricted cash related to funds placed into escrow accounts in connection with the indemnity, closing payment and other provisions within the purchase agreements of our acquisitions. ~~The increase in restricted cash from December 31, 2021 to September 30, 2022 is related to our~~

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

acquisitions of Evolution Health, LLC ("Evolution") and AssistedCare Home Health, Inc. and RH Homecare Services, LLC ("AssistedCare") on April 1, 2022. See Note 4 – Acquisitions for additional information.

The following table summarizes the balances related to our cash, cash equivalents and restricted cash (amounts in millions):


		As of September 30, 2022		As of December 31, 2021			As of March 31, 2023		As of December 31, 2022
Cash and cash equivalents	Cash and cash equivalents	$	18.0	$	42.7	Cash and cash equivalents	$	49.4	$	40.5
Restricted cash	Restricted cash	13.5		3.1		Restricted cash	19.7		13.6
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	31.5	$	45.8	Cash, cash equivalents and restricted cash	$	69.1	$	54.1

Patient Accounts Receivable

We report accounts receivable from services rendered at their estimated transaction price, which includes contractual and non-contractual revenue adjustments based on the amounts expected to be due from payors. Our patient accounts receivable are uncollateralized and consist of amounts due from Medicare, Medicaid, other third-party payors and patients. Our non-Medicare third-party payor base is comprised of a diverse group of payors that are geographically dispersed across the country. As of ~~September 30, 2022,~~March 31, 2023, there is no single payor, other than Medicare, that accounts for more than 10% of our total outstanding patient receivables. Thus, we believe there are no other significant concentrations of receivables that would subject us to any significant credit risk in the collection of our patient accounts receivable. We write off accounts on a monthly basis once we have exhausted our collection efforts and deem an account to be uncollectible. We believe the collectability risk associated with our Medicare accounts, which represented ~~65% and 68%~~67% of our patient accounts receivable at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, respectively,~~2022, is limited due to our historical collection rate of over 99% from Medicare and the fact that Medicare is a U.S. government payor.

We do not believe there are any significant concentrations of revenues from any payor that would subject us to any significant credit risk in the collection of our accounts receivable.

Medicare Home Health

For our home health patients, ~~(within both our home health and high acuity care segments),~~ our pre-billing process includes verifying that we are eligible for payment from Medicare for the services that we provide to our patients. Our Medicare billing begins with a process to ensure that our billings are accurate through the utilization of an electronic Medicare claim review. We bill Medicare following the end of each 30-day period of care or upon discharge, if earlier, for the services provided to the patient.

Medicare Hospice

For our hospice patients, our pre-billing process includes verifying that we are eligible for payment from Medicare for the services that we provide to our patients. Our Medicare billing begins with a process to ensure that our billings are accurate through the utilization of an electronic Medicare claim review. We bill Medicare on a monthly basis for the services provided to the patient.

Non-Medicare Home Health, Hospice, Personal Care and High Acuity Care

For our non-Medicare patients, our pre-billing process primarily begins with verifying a patient’s eligibility for services with the applicable payor. Once the patient has been confirmed for eligibility, we will provide services to the patient and bill the applicable payor. Our review and evaluation of non-Medicare accounts receivable includes a detailed review of outstanding balances and special consideration to concentrations of receivables from particular payors or groups of payors with similar characteristics that would subject us to any significant credit risk.

1412

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Business Combinations

We account for acquisitions using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Acquisitions are accounted for as purchases and are included in our condensed consolidated financial statements from their respective acquisition dates. Assets acquired, liabilities assumed and noncontrolling interests, if any, are measured at fair value on the acquisition date using the appropriate valuation method. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets. In determining the fair value of identifiable intangible assets and any noncontrolling interests, we use various valuation techniques including the income approach, the cost approach and the market approach. These valuation methods require us to make estimates and assumptions surrounding projected revenues and costs, growth rates and discount rates.

Fair Value of Financial Instruments

The following details our financial instruments where the carrying value and the fair value differ (amounts in millions):

Fair Value at Reporting Date Using
Financial Instrument Carrying Value as of September 30, 2022 Quoted Prices in Active
Markets for Identical
Items
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable Inputs
(Level 3)
Long-term obligations $ 457.4 $ — $ 473.4 $ —


	Fair Value at Reporting Date Using
Financial Instrument	Carrying Value as of March 31, 2023		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long-term obligations	$	383.3	$	—	$	374.7	$	—

The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The three levels of inputs are as follows:

•Level 1 – Quoted prices in active markets for identical assets and liabilities.

•Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 – Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

Our deferred compensation plan assets are recorded at fair value and are considered a level 2 measurement. For our other financial instruments, including our cash and cash equivalents, patient accounts receivable, accounts payable, payroll and employee benefits and accrued expenses, we estimate the carrying amounts approximate fair value.

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Weighted-Average Shares Outstanding

Net income per share attributable to Amedisys, Inc. common stockholders, calculated on the treasury stock method, is based on the weighted average number of shares outstanding during the period. The following table sets forth, for the periods indicated, shares used in our computation of weighted-average shares outstanding, which are used to calculate our basic and diluted net income attributable to Amedisys, Inc. common stockholders (amounts in thousands):


		For the Three- Month Periods Ended September 30,		For the Nine- Month Periods Ended September 30,			For the Three- Month Periods Ended March 31,
		2022	2021	2022	2021		2023	2022
Weighted average number of shares outstanding - basic	Weighted average number of shares outstanding - basic	32,482	32,607	32,519	32,658	Weighted average number of shares outstanding - basic	32,558	32,555
Effect of dilutive securities:	Effect of dilutive securities:					Effect of dilutive securities:
Stock options	Stock options	38	113	50	135	Stock options	13	65
Non-vested stock and stock units	Non-vested stock and stock units	96	179	111	228	Non-vested stock and stock units	72	146
Weighted average number of shares outstanding - diluted	Weighted average number of shares outstanding - diluted	32,616	32,899	32,680	33,021	Weighted average number of shares outstanding - diluted	32,643	32,766
Anti-dilutive securities	Anti-dilutive securities	202	141	276	82	Anti-dilutive securities	323	188

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

3. ~~NOVEL CORONAVIRUS PANDEMIC~~INVESTMENTS

We consolidate investments when the entity is a variable interest entity ("~~COVID-19"~~VIE")

~~In March 2020,~~ and we are the ~~World Health Organization declared COVID-19 a pandemic. As a healthcare at home company,~~primary beneficiary or if we have ~~been~~controlling interests in the entity, which is generally ownership in excess of 50%. Third-party equity interests in our consolidated joint ventures are reflected as noncontrolling interests in our condensed consolidated financial statements.

We account for investments in entities in which we have the ability to exercise significant influence under the equity method if we hold 50% or less of the voting stock and ~~will continue to be impacted by~~ the effects of COVID-19; however, we remain committed to carrying out our mission of caring for our patients. We will continue to closely monitor the impact of COVID-19 on all aspects of our business, including the impacts to our employees, patients and suppliers; however, at this time,entity is not a VIE in which we are ~~unable~~the primary beneficiary. The book value of investments that we account for under the equity method of accounting was $38.9 million and $40.5 million as of March 31, 2023 and December 31, 2022, respectively, and is reflected in other assets within our condensed consolidated balance sheets.

We account for investments in entities in which we have less than 20% ownership interest under the cost method of accounting if we do not have the ability to ~~estimate~~exercise significant influence over the ~~ultimate impact the pandemic will have on our consolidated financial condition, results of operations or cash flows.~~

On March 27, 2020, the CARES Act was signed into legislation. The CARES Act provided for $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 ("AseraCare"). 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 duringinvestee. During the three-month period ended ~~September 30, 2021,~~March 31, 2022, we made a $15.0 million investment in a home health benefit manager, which is accounted for under the cost method. The book value of investments that we account for under the cost method of accounting was $20.0 million as of March 31, 2023 and ~~our audit report was submitted to HHS on September 26, 2022.~~

For our wholly-owned subsidiaries, we 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 through June 30, 2021December 31, 2022 and is reflected in other ~~operating income~~assets within our condensed consolidated ~~statements~~balance sheets.

Our high acuity care segment includes interests in several joint ventures with health system partners and a professional corporation that employs clinicians. Each of these entities meets the criteria to be classified as a VIE. As of March 31, 2023, we are consolidating all but one of our admitting joint ventures with health system partners as well as the professional corporation as we have concluded that we are the primary beneficiary of these VIEs. We have management agreements in place with each of these entities whereby we manage the entities and run the day-to-day operations. As such, we possess the power to direct the activities that most significantly impact the economic performance of the VIEs. The significant activities include, but are not limited to, negotiating provider and payor contracts, establishing patient care policies and protocols, making employment and compensation decisions, developing the operating and capital budgets, performing marketing activities and providing accounting support. We also have the obligation to absorb any expected losses and the right to receive benefits. Additionally, from time to time, we may be required to provide joint venture funding. Our high acuity care segment also includes one admitting joint venture with a health system partner that is accounted for under the equity method of accounting.

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AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We did not fully utilize the PRF funds received; all unutilized funds were repaid in October 2021. In summary, the total funds that we received from the CARES Act PRF were accounted for as follows (amounts in millions):


	~~Amount~~
~~Funds utilized through June 30, 2021 by consolidated entities~~	$	~~46.6~~
~~Funds repaid to the government by consolidated entities (excludes $0.2 million of interest repaid)~~	~~58.3~~
~~Funds utilized through June 30, 2021 by unconsolidated joint ventures~~	~~1.3~~
~~Funds repaid to the government by unconsolidated joint ventures~~	~~0.6~~
	$	~~106.8~~

The CARES Act also provided for the temporary suspension of the automatic 2% reduction of Medicare claim reimbursements ("sequestration") for the period May 1, 2020 through December 31, 2020. During 2020 and 2021, Congress passed additional COVID-19 relief legislation which extended the 2% suspension of sequestration through March 31, 2022; sequestration was reinstated as a 1% reduction to Medicare claim reimbursements effective April 1, 2022 and as a 2% reduction to Medicare claim reimbursements effective July 1, 2022. Due to the reinstatement of sequestration on July 1, 2022, we did not receive a benefit to net service revenue during the three-month period ended September 30, 2022; however, we recognized a $9 million benefit to net service revenue during the three-month period ended September 30, 2021. During the nine-month periods ended September 30, 2022 and 2021, we recognized benefits to net service revenue totaling $13 million and $27 million, respectively.

Additionally, the CARES Act provided for 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 taxes. 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.

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~


	As of March 31, 2023		As of December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	7.3	$	15.6
Patient accounts receivable	6.9		6.1
Other current assets	0.5		0.6
Total current assets	14.7		22.3
Property and equipment	0.1		0.1
Operating lease right of use assets	0.1		0.1
Goodwill	8.5		8.5
Intangible assets	0.4		0.4
Other assets	0.2		0.2
Total assets	$	24.0	$	31.6
LIABILITIES
Current liabilities:
Accounts payable	$	0.3	$	0.1
Payroll and employee benefits	0.6		0.5
Accrued expenses	6.4		5.8
Operating lease liabilities	—		0.1
Current portion of long-term obligations	0.2		0.2
Total liabilities	$	7.5	$	6.7

4. ACQUISITIONS

We complete acquisitions from time to time in order to pursue our strategy of increasing our market presence by expanding our service base and enhancing our position in certain geographic areas as a leading provider of home health, hospice, personal care and high acuity care services. The purchase price paid for acquisitions is negotiated through arm’s length transactions, with consideration based on our analysis of, among other things, comparable acquisitions and expected cash flows. Acquisitions are accounted for as purchases and are included in our condensed consolidated financial statements from their respective acquisition dates. Goodwill generated from acquisitions is recognized for the excess of the purchase price over tangible and identifiable intangible assets because of the expected contributions of the acquisitions to our overall corporate strategy. We typically engage outside appraisal firms to assist in the fair value determination of identifiable intangible assets for significant acquisitions. The preliminary purchase price allocation is adjusted, as necessary, up to one year after the acquisition closing date if management obtains more information regarding asset valuations and liabilities assumed.

~~2022~~2023 Acquisitions

On ~~March 23, 2022,~~January 20, 2023, we ~~entered into~~acquired the regulatory assets of a ~~transaction with one of our high acuity care health system partners in which we contributed cash and our health system partner contributed its~~ home health ~~operations to one~~provider in West Virginia for a purchase price of ~~our existing high acuity care joint ventures. As a result~~$0.4 million. The purchase price was paid with cash on hand on the date of ~~this transaction,~~the transaction. Based on the Company's preliminary valuation, we recorded goodwill of ~~$8.5~~$0.3 million and other intangibles ~~of $0.4 million~~ (certificate of ~~need and licenses) and noncontrolling interest~~need) of ~~$8.9~~$0.1 million ~~within our condensed consolidated balance sheet. The fair value of noncontrolling interest was determined using an income approach and a market approach.~~in connection with the acquisition.

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2022 Acquisitions

On April 1, 2022, we acquired 15 home health care centers from Evolution Health, LLC, a division of Envision Healthcare, doing business as Guardian Healthcare, Gem City, and Care Connection of Cincinnati ("Evolution"), for an estimated purchase price of $67.8 million. A portion of the purchase price ($51.1 million) was paid to the seller with cash on hand and proceeds from borrowings under our Revolving Credit Facility. The remainder ($16.7 million) was placed into an escrow account in accordance with the closing payment, indemnity and other provisions within the purchase agreement and recorded as restricted cash within our condensed consolidated balance sheet. Corresponding liabilities were also recorded to accrued expenses and other long-term obligations within our condensed consolidated balance sheet related to these contingent consideration arrangements.

Of the total $16.7 million placed into escrow, $1.0 million was set aside for the closing payment adjustment. The closing payment calculated on the acquisition date included estimates for cash, working capital and various other items. Under the purchase agreement, the purchase price was subject to an adjustment for any differences between estimated amounts included in the closing payment and actual amounts at close. The closing payment adjustment, which was finalized during the three-month period ended September 30, 2022, ~~decreased~~reduced the purchase price by $1.3 million from $67.8 million to $66.5 million. The remaining $15.7 million placed into escrow relates to certain outstanding matters existing as of the acquisition date as well as potential losses the Company may incur for which the seller has an obligation to indemnify the Company. This amount will either be paid to third parties as outstanding matters are resolved or to the seller at certain intervals in the future. As of ~~September 30, 2022,~~March 31, 2023, $5.7 million of the $16.7 million has been released from escrow.

~~We expect $15~~$15 million of goodwill recorded for this acquisition towill be deductible for income tax purposes over approximately 15two to five years.

Evolution contributed $10.1 million in net service revenue and an operating loss of $1.9 million during the three-month period ended September 30, 2022 and $21.4 million in net service revenue and an operating loss of $3.8 million during the nine-month period ended September 30, 2022.

The Company ~~is in the process of reviewing the fair value~~has finalized its valuation of the assets acquired and liabilities assumed. During the three-month period ended ~~September 30, 2022,~~March 31, 2023, total assets acquired decreased ~~by $0.4~~$0.2 million (primarily patient accounts receivable) and total liabilities assumed ~~(specifically, the deferred income tax liability) decreased by $0.5 million~~remained flat as a result of our review. These adjustments ~~combined with the closing payment adjustment of $1.3 million described above~~ resulted in a ~~$1.4~~$0.2 million ~~decrease~~increase in goodwill. ~~Based on the Company's preliminary valuation, which may be revised as additional information becomes available during the measurement period, the~~The total consideration of $66.5 million has been allocated to assets acquired and liabilities assumed as of the acquisition date as follows (amounts in millions):

1816

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Amount
ASSETS
Patient accounts receivable	$	~~9.3~~7.3
Prepaid expenses	0.2
Other current assets	0.1
Property and equipment	1.9
Operating lease right of use assets	3.2
Intangible assets (licenses)	1.3
Deferred income tax asset	0.1
Other assets	0.1
Total assets acquired	$	~~16.1~~14.2
LIABILITIES ~~AND EQUITY~~
Accounts payable	$	(0.8)
Payroll and employee benefits	~~(2.7)~~(2.6)
Accrued expenses	~~(2.3)~~(2.6)
Operating lease liabilities	(2.8)
~~Deferred income tax liability~~	—
Current portion of long-term obligations	(0.6)
Total liabilities assumed	~~(9.2)~~(9.4)
Net identifiable assets acquired	$	~~6.9~~4.8
Goodwill	~~59.6~~61.7
Total consideration	$	66.5

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 $24.7 million. A portion of the purchase price ($22.2 million) was paid to the seller with cash on hand and proceeds from borrowings under our Revolving Credit Facility. The remainder ($2.5 million) was placed into an escrow account in accordance with the indemnity provisions within the purchase agreement and is reflected in restricted cash within our condensed consolidated balance sheet. A corresponding liability was also recorded to other long-term obligations within our condensed consolidated balance sheet related to this contingent consideration arrangement. The $2.5 million will either be paid to third parties or to the seller at certain intervals in the future.

~~Based on the Company's preliminary valuation, we~~We recorded goodwill of $24.0 million and other intangibles of $0.7 million in connection with the acquisition. Intangible assets acquired include licenses ($0.5 million), certificates of need ($0.2 million) and acquired names ~~($0.1~~(less than $0.1 million). The acquired names will be amortized over a weighted average period of one year.

~~We expect the~~ The entire amount of goodwill recorded for this acquisition towill be deductible for income tax purposes over approximately 15 years.

AssistedCare contributed $1.9 million in net service revenue and an operating loss of less than $0.1 million during the three-month period ended September 30, 2022 and $4.5 million in net service revenue and operating income of $0.6 million during the nine-month period ended September 30, 2022.

~~2021 Acquisitions~~

On August 1, 2021, we acquired Contessa, a leader in hospital-at-home and skilled nursing facility at-home services for an estimated purchase price of $240.7 million, net of cash acquired. The Contessa purchase price included estimates for cash, working capital and other items. Under the purchase agreement, the purchase price was subject to a closing payment adjustment for any differences between estimated amounts included in the closing payment and actual amounts at close. The closing payment adjustment, which was finalized during the three-month period ended December 31, 2021, increased the purchase price by $0.6 million from $240.7 million to $241.3 million.

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The Company has finalized its valuation of the assets acquired, liabilities assumed and noncontrolling interests. During the three-month period ended September 30, 2022, the deferred income liability was adjusted downward by $2.8 million resulting in a $2.8 million decrease in goodwill. The total consideration of $241.3 million has been allocated to assets acquired, liabilities assumed and noncontrolling interests as of the acquisition date as follows (amounts in millions):


	~~Amount~~
~~ASSETS~~
~~Patient accounts receivable~~	$	~~1.5~~
~~Prepaid expenses~~	~~0.3~~
~~Other current assets~~	~~0.1~~
~~Property and equipment~~	~~0.3~~
~~Operating lease right of use assets~~	~~0.8~~
~~Intangible assets~~	~~54.3~~
~~Other assets~~	~~3.1~~
~~Total assets acquired~~	$	~~60.4~~
~~LIABILITIES AND EQUITY~~
~~Accounts payable~~	$	~~(0.1)~~
~~Payroll and employee benefits~~	~~(0.6)~~
~~Accrued expenses~~	~~(3.4)~~
~~Operating lease liabilities~~	~~(0.8)~~
~~Deferred income tax liability~~	~~(0.3)~~
~~Current portion of long-term obligations~~	~~(0.9)~~
~~Other long-term obligations~~	~~(0.2)~~
~~Total liabilities assumed~~	~~(6.3)~~
~~Noncontrolling interests~~	~~(43.9)~~
~~Total equity assumed~~	~~(43.9)~~
~~Total liabilities and equity assumed~~	$	~~(50.2)~~
~~Net identifiable assets acquired~~	$	~~10.2~~
~~Goodwill~~	~~231.1~~
~~Total consideration~~	$	~~241.3~~

Intangible assets acquired include acquired names ($28.3 million), technology ($19.8 million) and non-compete agreements ($6.2 million). The non-compete agreements will be amortized over a weighted-average period of 2.0 years, and the technology will be amortized over a weighted-average period of 7.0 years. The fair value of noncontrolling interest ($43.9 million) was determined using an income approach.

~~We do not expect any of the goodwill recorded for this acquisition to be deductible for income tax purposes.~~

Contessa contributed $5.5 million in net service revenue and an operating loss of $12.4 million (inclusive of technology intangibles amortization totaling $0.7 million) during the three-month period ended September 30, 2022 and $12.6 million in net service revenue and an operating loss of $29.8 million (inclusive of technology intangibles amortization totaling $2.2 million) during the nine-month period ended September 30, 2022. During the three and nine-month periods ended September 30, 2021, Contessa contributed $1.5 million in net service revenue and an operating loss of $3.8 million (inclusive of technology intangibles amortization totaling $0.5 million).

~~For details regarding the Company's 2021 acquisitions, see Note 4 to the audited consolidated financial statements in our 2021 Annual Report on Form 10-K.~~

2017

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

5. DISPOSITIONS

On February 10, 2023, we signed a definitive agreement to sell our personal care business (excluding the Florida operations). The divestiture closed on March 31, 2023. We received net proceeds of $47.8 million and recognized a $2.2 million loss during the three-month period ended March 31, 2023 which is reflected in miscellaneous, net within our condensed consolidated income statement. The net proceeds of $47.8 million is inclusive of $6.0 million that was placed into an escrow account in accordance with the closing payment and indemnity provisions within the purchase agreement; this amount is recorded as restricted cash within our condensed consolidated balance sheet as of March 31, 2023.

The disposition of our personal care business did not qualify as a discontinued operation because it did not represent a strategic shift that has or will have a major effect on the Company's operations or financial results.

The carrying amounts of the assets and liabilities associated with our personal care reporting unit included in our condensed consolidated balance sheet as of December 31, 2022 were as follows (amounts in millions):


	As of December 31, 2022
ASSETS
Current assets:
Patient accounts receivable	$	9.6
Prepaid expenses	0.1
Other current assets	9.7
Property and equipment	0.1
Operating lease right of use assets	2.5
Goodwill	43.1
Total assets	$	55.4
LIABILITIES
Current liabilities:
Accounts payable	$	0.4
Payroll and employee benefits	0.6
Accrued expenses	1.8
Current portion of operating lease liabilities	0.6
Total current liabilities	3.4
Operating lease liabilities, less current portion	1.9
Total liabilities	$	5.3

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. LONG-TERM OBLIGATIONS

Long-term debt consists of the following for the periods indicated (amounts in millions):
September 30, 2022 December 31, 2021
$450.0 million Term Loan; interest rate at Base Rate plus Applicable Rate or Eurodollar Rate plus Applicable Rate (4.6% at September 30, 2022); due July 30, 2026 $ 438.7 $ 447.2
$550.0 million Revolving Credit Facility; interest only payments; interest rate at Base Rate plus Applicable Rate or Eurodollar Rate plus Applicable Rate (4.6% at September 30, 2022); due July 30, 2026 18.5 —
Promissory notes 0.2 0.8
Finance leases 2.4 1.6
Principal amount of long-term obligations 459.8 449.6
Deferred debt issuance costs (3.8) (4.5)
456.0 445.1
Current portion of long-term obligations (12.6) (13.0)
Total $ 443.4 $ 432.1


	March 31, 2023		December 31, 2022
$450.0 million Term Loan; interest rate at Base Rate plus Applicable Rate or Term SOFR Rate plus Applicable Rate (6.1% at March 31, 2023); due July 30, 2026	$	383.1	$	435.9
$550.0 million Revolving Credit Facility; interest only payments; interest rate at Base Rate plus Applicable Rate or Term SOFR Rate plus Applicable Rate; due July 30, 2026	—		—
Promissory notes	0.2		0.2
Finance leases	20.1		2.3
Principal amount of long-term obligations	403.4		438.4
Deferred debt issuance costs	(3.3)		(3.5)
	400.1		434.9
Current portion of long-term obligations	(26.9)		(15.5)
Long-term obligations, less current portion	$	373.2	$	419.4

Second Amendment to the Credit Agreement

On July 30, 2021, we entered into the Second Amendment to our Credit Agreement (as amended by the Second Amendment, the "Second Amended Credit Agreement"). The Second Amended Credit Agreement provides for a senior secured credit facility in an initial aggregate principal amount of up to $1.0 billion, which includes a $550.0 million Revolving Credit Facility and a term loan facility with a principal amount of up to $450.0 million (the "Amended Term Loan Facility" and collectively with the Revolving Credit Facility, the "Amended Credit Facility").

~~Net proceeds from~~Third Amendment to the ~~$450.0 million~~Credit Agreement

On March 10, 2023, we entered into the Third Amendment to our Credit Agreement (as amended by the Third Amendment, the "Third Amended ~~Term Loan Facility were used to fund~~Credit Agreement"). The Third Amendment (i) formally replaced the ~~Contessa acquisition.~~use of the London Interbank Offered Rate ("LIBOR") with the Secured Overnight Financing Rate ("SOFR") for interest rate pricing and (ii) allowed for the disposition of our personal care business.

The loans issued under the Amended Credit Facility bear interest on a per annum basis, at our election, at either: (i) the Base Rate plus the Applicable Rate or (ii) the ~~Eurodollar~~Term SOFR Rate plus the Applicable Rate. The “Base Rate” means a fluctuating rate per annum equal to the highest of (a) the federal funds rate plus 0.50% per annum, (b) the prime rate of interest established by the Administrative Agent, and (c) the ~~Eurodollar~~Term SOFR Rate plus 1% per annum. The ~~“Eurodollar~~“Term SOFR Rate” means the quoted rate per annum equal to the ~~London Interbank Offered Rate (“LIBOR”) or a comparable successor rate approved by the Administrative Agent~~SOFR for an interest period of one ~~three~~ or ~~six~~three months (as selected by us) plus the SOFR adjustment of 0.10%. The “Applicable Rate” is based on the consolidated leverage ratio and is presented in the table below. As of ~~September 30, 2022,~~March 31, 2023, the Applicable Rate is 0.50% per annum for Base Rate loans and 1.50% per annum for ~~Eurodollar~~Term SOFR Rate loans. We are also subject to a commitment fee and letter of credit fee under the terms of the ~~Second~~Third Amended Credit Agreement, as presented in the table below.

Pricing Tier Consolidated Leverage Ratio Base Rate Loans Eurodollar Rate Loans and Daily Floating LIBOR Rate Loans Commitment Fee Letter of Credit Fee
I > 3.00 to 1.0 1.00% 2.00% 0.30% 1.75%
II
< 3.00 to 1.0 but > 2.00 to 1.0
0.75% 1.75% 0.25% 1.50%
III
< 2.00 to 1.0 but > 0.75 to 1.0
0.50% 1.50% 0.20% 1.25%
IV
< 0.75 to 1.0
0.25% 1.25% 0.15% 1.00%


Pricing Tier	Consolidated Leverage Ratio	Base Rate Loans	Term SOFR Loans and SOFR Daily Floating Rate Loans	Commitment Fee	Letter of Credit Fee
I	> 3.00 to 1.0	1.00%	2.00%	0.30%	1.75%
II	< 3.00 to 1.0 but > 2.00 to 1.0	0.75%	1.75%	0.25%	1.50%
III	< 2.00 to 1.0 but > 0.75 to 1.0	0.50%	1.50%	0.20%	1.25%
IV	< 0.75 to 1.0	0.25%	1.25%	0.15%	1.00%

The final maturity date of the Amended Credit Facility is July 30, 2026. The Revolving Credit Facility will terminate and be due and payable as of the final maturity date. The Amended Term Loan Facility, however, is subject to quarterly amortization of principal in the amount of (i) 0.625% for the period commencing on July 30, 2021 and ending on September 30, 2023, and (ii) 1.250% for the period commencing on October 1, 2023 and ending on July 30, 2026. The remaining balance of the

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Amended Term Loan Facility must be paid upon the final maturity date. In addition to the scheduled amortization of the Amended Term Loan Facility, and subject to customary exceptions and reinvestment rights, we are required to prepay the Amended Term Loan Facility first and the Revolving Credit Facility second with 100% of all net cash proceeds received by any

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

loan party or any subsidiary thereof in connection with (a) any asset sale or disposition where such loan party receives net cash proceeds in excess of $5 million or (b) any debt issuance that is not permitted under the ~~Second~~Third Amended Credit Agreement.

Net proceeds received from the divestiture of our personal care line of business were used to pay a portion of our Term Loan during the three-month period ended March 31, 2023.

The ~~Second~~Third Amended Credit Agreement requires maintenance of two financial covenants: (i) a consolidated leverage ratio of funded indebtedness to Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), as defined in the ~~Second~~Third Amended Credit Agreement, and (ii) a consolidated interest coverage ratio of EBITDA to cash interest charges, as defined in the ~~Second~~Third Amended Credit Agreement. Each of these covenants is calculated over rolling four-quarter periods and also is subject to certain exceptions and baskets. The ~~Second~~Third Amended Credit Agreement also contains customary covenants, including, but not limited to, restrictions on: incurrence of liens, incurrence of additional debt, sales of assets and other fundamental corporate changes, investments and declarations of dividends. These covenants contain customary exclusions and baskets as detailed in the ~~Second~~Third Amended Credit Agreement. In connection with our entry into the Second Amended Credit Agreement, we recorded $2.8 million in deferred debt issuance costs as long-term obligations, less current portion within our condensed consolidated balance sheet during the three-month period ended September 30, 2021.

The Revolving Credit Facility is guaranteed by substantially all of our wholly-owned direct and indirect subsidiaries. The ~~Second~~Third Amended Credit Agreement requires at all times that we (i) provide guarantees from wholly-owned subsidiaries that in the aggregate represent not less than 95% of our consolidated net revenues and adjusted EBITDA from all wholly-owned subsidiaries and (ii) provide guarantees from subsidiaries that in the aggregate represent not less than 70% of consolidated adjusted EBITDA, subject to certain exceptions.

~~Our weighted average interest rate for~~

As of March 31, 2023 and 2022, we had no outstanding borrowings under our $550.0 million Revolving Credit ~~Facility was 4.2% and 3.2% for the three and nine-month periods ended September 30, 2022, respectively, and 2.9% and 1.9% for the three and nine-month periods ended September 30, 2021, respectively.~~Facility. Our weighted average interest rate for borrowings under our Amended Term Loan Facility was ~~3.8%~~6.1% and ~~2.6%~~1.7% for the ~~three and nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively, and 1.6% and 1.5% for the three and nine-month periods ended September 30, 2021,~~ respectively.

As of ~~September 30, 2022,~~March 31, 2023, our consolidated leverage ratio was ~~1.8,~~1.6, our consolidated interest coverage ratio was ~~13.3~~10.3 and we are in compliance with our covenants under the ~~Second~~Third Amended Credit Agreement. In the event we are not in compliance with our debt covenants in the future, we would pursue various alternatives in an attempt to successfully resolve the non-compliance, which might include, among other things, seeking debt covenant waivers or amendments.

As of ~~September 30, 2022,~~March 31, 2023, our availability under our $550.0 million Revolving Credit Facility was ~~$503.7~~$519.2 million as we have ~~$18.5 million~~no outstanding in borrowings and ~~$27.8~~$30.8 million outstanding in letters of credit.

Joinder Agreements

In connection with the Compassionate Care Hospice ("CCH") acquisition, we entered into a Joinder Agreement, dated as of February 4, 2019 (the “CCH Joinder”), pursuant to which CCH and its subsidiaries were made parties to, and became subject to the terms and conditions of, the Amended Credit Agreement (now the ~~Second~~Third Amended Credit Agreement), the Amended and Restated Security Agreement, dated as of June 29, 2018 (the “Amended and Restated Security Agreement”), and the Amended and Restated Pledge Agreement, dated as of June 29, 2018 (the “Amended and Restated Pledge Agreement”). In connection with the AseraCare acquisition, we entered into a Joinder Agreement, dated as of June 12, 2020, pursuant to which the AseraCare entities were made parties to, and became subject to the terms and conditions of, the Amended Credit Agreement (now the ~~Second~~Third Amended Credit Agreement), the Amended and Restated Security Agreement and the Amended and Restated Pledge Agreement (the “AseraCare Joinder"). In connection with the Contessa acquisition and the Second Amendment, we entered into a Joinder Agreement, dated as of September 3, 2021, pursuant to which Contessa and its subsidiaries and Asana Hospice ("Asana"), which we acquired on January 1, 2020, and its subsidiaries were made parties to, and became subject to the terms and conditions of, the Second Amended Credit Agreement (now the Third Amended Credit Agreement), the Amended and Restated Security Agreement and the Amended and Restated Pledge Agreement (the “Contessa and Asana Joinder,” and together with the CCH Joinder and the AseraCare Joinder, the “Joinders”).

Pursuant to the Joinders, the Amended and Restated Security Agreement and the Amended and Restated Pledge Agreement, CCH and its subsidiaries, the AseraCare entities, Contessa and its subsidiaries and Asana and its subsidiaries granted in favor of the Administrative Agent a first lien security interest in substantially all of their personal property assets and pledged to the Administrative Agent each of their respective subsidiaries' issued and outstanding equity interests. CCH and its subsidiaries, the AseraCare entities, Contessa and its subsidiaries and Asana and its subsidiaries also guaranteed our obligations, whether now ~~existing or arising after the respective effective dates of the Joinders, under the Second Amended Credit Agreement pursuant to the terms of the Joinders and the Second Amended Credit Agreement.~~

2220

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6.existing or arising after the respective effective dates of the Joinders, under the Third Amended Credit Agreement pursuant to the terms of the Joinders and the Third Amended Credit Agreement.

Promissory Notes

Our outstanding promissory note totaling $0.2 million, obtained through the acquisition of Contessa on August 1, 2021, bears an interest rate of 6.5%.

Finance Leases

Our outstanding finance leases totaling $20.1 million relate to leased equipment and fleet vehicles and bear interest rates ranging from 2.2% to 7.7%.

Effective January 1, 2023, the master lease agreement for our fleet leases was modified to remove the residual value guarantee provided by the lessor on each of our fleet leases. The modification resulted in a change in the classification of our fleet leases from operating leases to finance leases. In connection with the modification, we reclassified approximately $15 million from the operating lease asset and liability accounts to the property and equipment and current/long-term obligations accounts within our condensed consolidated balance sheet. Additionally, following the modification, expenses associated with our fleet leases will now be recorded in depreciation expense and interest expense within our condensed consolidated income statement as opposed to cost of service and general and administrative expenses which is where the expenses were reflected in prior periods.

7. COMMITMENTS AND CONTINGENCIES

Legal Proceedings - Ongoing

We are involved in legal actions in the normal course of business, some of which seek monetary damages, including claims for punitive damages. Based on information available to us as of the date of this filing, we do not believe that these normal course actions, when finally concluded and determined, will have a material impact on our consolidated financial condition, results of operations or cash flows.

Legal fees related to all legal matters are expensed as incurred.

~~Legal Proceedings - Completed~~

~~Subpoena Duces Tecum and Civil Investigative Demands Issued by the U.S. Department of Justice~~

On May 7, 2021, the U.S. Department of Justice notified the Company that they were closing their investigation into the below-referenced Subpoena Duces Tecum ("Subpoena") and civil investigative demands ("CIDs"). At the time, we had $6.5 million recorded to accrued expenses in our condensed consolidated balance sheets related to these matters. We reversed this accrual during the three-month period ended June 30, 2021.

On May 21, 2015, we received a Subpoena issued by the U.S. Department of Justice. The Subpoena requested the delivery of information regarding 53 identified hospice patients to the United States Attorney’s Office for the District of Massachusetts. It also requested the delivery of documents relating to our hospice clinical and business operations and related compliance activities. The Subpoena generally covered the period from January 1, 2011 through May 21, 2015.

On November 3, 2015, we received a CID issued by the U.S. Department of Justice pursuant to the federal False Claims Act relating to claims submitted to Medicare and/or Medicaid for hospice services provided through designated facilities in the Morgantown, West Virginia area. The CID requested the delivery of information to the United States Attorney’s Office for the Northern District of West Virginia regarding 66 identified hospice patients, as well as documents relating to our hospice clinical and business operations in the Morgantown area. The CID generally covered the period from January 1, 2009 through August 31, 2015.

On June 27, 2016, we received a CID issued by the U.S. Department of Justice pursuant to the federal False Claims Act relating to claims submitted to Medicare and/or Medicaid for hospice services provided through designated facilities in the Parkersburg, West Virginia area. The CID requested the delivery of information to the United States Attorney’s Office for the Southern District of West Virginia regarding 68 identified hospice patients, as well as documents relating to our hospice clinical and business operations in the Parkersburg area. The CID generally covered the period from January 1, 2011 through June 20, 2016.

Third Party Audits - Ongoing

From time to time, in the ordinary course of business, we are subject to audits under various governmental programs in which third party firms engaged by CMS, including Recovery Audit Contractors (“RACs”), Zone Program Integrity Contractors (“ZPICs”), Uniform Program Integrity Contractors (“UPICs”), Program Safeguard Contractors (“PSCs”), Medicaid Integrity Contractors (“MICs”), Supplemental Medical Review Contractors (“SMRCs”) and the Office of the Inspector General (“OIG”), conduct extensive reviews of claims data to identify potential improper payments. We cannot predict the ultimate outcome of any regulatory reviews or other governmental audits and investigations.

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

In July 2010, our subsidiary that provides hospice services in Florence, South Carolina received from a ZPIC a request for records regarding a sample of 30 beneficiaries who received services from the subsidiary during the period of January 1, 2008 through March 31, 2010 (the “Review Period”) to determine whether the underlying services met pertinent Medicare payment requirements. We acquired the hospice operations subject to this review on August 1, 2009; the Review Period covers time periods both before and after our ownership of these hospice operations. Based on the ZPIC’s findings for 16 beneficiaries, which were extrapolated to all claims for hospice services provided by the Florence subsidiary billed during the Review Period, on June 6, 2011, the Medicare Administrative Contractor (“MAC”) for the subsidiary issued a notice of overpayment seeking recovery from our subsidiary of an alleged overpayment. We dispute these findings, and our Florence subsidiary has filed appeals through the Original Medicare Standard Appeals Process, in which we are seeking to have those findings overturned. An administrative law judge ("ALJ") hearing was held in early January 2015. On January 18, 2016, we received a letter dated January 6, 2016 referencing the ALJ hearing decision for the overpayment issued on June 6, 2011. The decision was partially favorable with a new overpayment amount of $3.7 million with a balance owed of $5.6 million, including interest, based on 9 disputed claims (originally 16). We filed an appeal to the Medicare Appeals Council on the remaining 9 disputed claims and also argued that the statistical method used to select the sample was not valid. No assurances can be given as to the timing or outcome of the Medicare Appeals Council decision. As of ~~September 30, 2022,~~March 31, 2023, Medicare has withheld payments of $5.7 million (including additional interest) as part of their standard procedures once this level of the appeal process has been reached. In the event we are not able to recoup this alleged overpayment, we are entitled to be indemnified by the prior owners of the hospice

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

operations for amounts relating to the period prior to August 1, 2009. On January 10, 2019, an arbitration panel from the American Health Lawyers Association determined that the prior owners' liability for their indemnification obligation was $2.8 million. This amount is recorded as an indemnity receivable within other assets in our condensed consolidated balance sheets.

In July 2016, the Company received a request for medical records from SafeGuard Services, L.L.C (“SafeGuard”), a ZPIC, related to services provided by some of the care centers that the Company acquired from Infinity Home Care, L.L.C. The review period covered time periods both before and after our ownership of the care centers, which were acquired on December 31, 2015. In August 2017, the Company received Requests for Repayment from Palmetto GBA, LLC ("Palmetto") regarding Infinity Home Care of Lakeland, LLC ("Lakeland Care Centers") and Infinity Home Care of Pinellas, LLC ("Clearwater Care Center"). The Palmetto letters were based on a statistical extrapolation performed by SafeGuard which alleged an ~~extrapolated~~ overpayment of $34.0 million for the Lakeland Care Centers on a universe of 72 Medicare claims totaling $0.2 million in actual claims payments using a 100% error rate and an ~~extrapolated~~ overpayment of $4.8 million for the Clearwater Care Center on a universe of 70 Medicare claims totaling $0.2 million in actual claims payments using a 100% error rate.

The Lakeland Request for Repayment covered claims between January 2, 2014 and September 13, 2016. The Clearwater Request for Repayment covered claims between January 2, 2015 and December 9, 2016. As a result of partially successful Level I and Level II Administrative Appeals, the alleged overpayment for the Lakeland Care Centers was reduced to $26.0 million and the alleged overpayment for the Clearwater Care Center was reduced to $3.3 million. The Company filed Level III Administrative Appeals, and the ALJ hearings regarding the Lakeland Request for Repayment and the Clearwater Request for Repayment were held in April 2022.

The Company received the results of the ALJ ~~hearing~~hearings for the Clearwater Care Center and the Lakeland Care Centers on June 23, 2022 and June 30, 2022, respectively. The ALJ decisions for both the Clearwater Care Center and the Lakeland Care Centers were partially favorable for the claims that were reviewed, but the extrapolations were upheld. As a result, we increased our total accrual related to these matters from $17.4 million to $25.8 million during the three-month period ended June 30, 2022. The net of these two amounts, $8.4 million, was recorded as a reduction to net service revenue in our condensed consolidated statement of operations during the three-month period ended June 30, 2022. We received demands for repayment from Palmetto for both the Clearwater Care Center and the Lakeland Care Centers during the three-month period ended September 30, 2022. The demands were slightly less than our estimated accrual of $25.8 million. During the three-month period ended September 30, 2022, we adjusted our accrual to $25.2 million, ~~to reflect the final amounts owed,~~ excluding interest. The repayment for the Lakeland Care Centers totaling $34.3 million ($22.8 million extrapolated repayment plus $11.5 million accrued interest) was made during the three-month period ended September 30, 2022. The repayment for the Clearwater Care Center totaling $3.7 million ($2.4 million extrapolated repayment plus $1.2 million accrued interest) was made ~~on October 3,~~during the three-month period ended December 31, 2022. Additionally, we wrote off $1.5 million of receivables that were impacted by these matters. We expect to be indemnified by the prior owners, upon exhaustion of the parties' appeal rights, for approximately $10.9 million and have recorded this amount within other assets in our condensed consolidated balance sheets.

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Insurance

We are obligated for certain costs associated with our insurance programs, including employee health, workers’ compensation, professional liability and ~~professional liability.~~fleet. While we maintain various insurance programs to cover these risks, we are self-insured for a substantial portion of our potential claims. We recognize our obligations associated with these costs, up to specified deductible limits in the period in which a claim is incurred, including with respect to both reported claims and claims incurred but not reported. These costs have generally been estimated based on historical data of our claims experience. Such estimates, and the resulting reserves, are reviewed and updated by us on a quarterly basis.

Our health insurance has an exposure limit of $1.3 million for any individual covered life. Our workers’ compensation insurance has a retention limit of $2.0 million per ~~incident, and our~~incident. Our professional liability insurance has a retention limit of $0.3 million per incident. Our fleet insurance has an exposure limit of $0.4 million per accident.

7.8. SEGMENT INFORMATION

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 ansurgery, have a chronic disability or terminal illness ~~injury~~ or ~~surgery.~~need assistance with completing important tasks. Our hospice segment provides palliative care ~~that is designed~~and comfort to ~~provide comfort~~terminally ill patients and ~~support for those who are facing a terminal illness.~~their families. Our personal care segment provides patients with assistance with the essential activities of daily living. Our high acuity care segment ~~which was established with the acquisition of Contessa on August 1, 2021,~~ delivers the essential elements of inpatient hospital, palliative and SNF care to patients in their homes. The “other” column in the following tables consists of costs relating to executive management and administrative support functions, primarily information services, accounting, finance, billing and collections, legal, compliance, risk management, procurement, marketing, clinical administration, training, human resources and administration.

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In connection with our reorganization initiatives, management has revised its measurement of our reportable segments' operating income (loss). Effective January 1, 2023, we transitioned corporate functions that were previously included within our high acuity care segment to the corporate support function in order to realize operational efficiencies. Additionally, effective January 1, 2023, we transitioned from the high acuity care segment to the home health segment the operations of a home health care center that was contributed to the high acuity care segment by one of our health system partners during 2022. Prior periods have been recast to conform to the current year presentation.

Management evaluates performance and allocates resources based on the operating income of the reportable segments, which includes an allocation of corporate expenses directly attributable to the specific segment and includes revenues and all other costs directly attributable to the specific segment. Segment assets are not reviewed by the company’s chief operating decision maker and therefore are not disclosed below (amounts in millions).


	For the Three-Month Period Ended March 31, 2023
	Home Health		Hospice		Personal Care		High Acuity Care		Other		Total
Net service revenue	$	343.3	$	193.4	$	15.0	$	4.7	$	—	$	556.4
Cost of service, inclusive of depreciation	197.0		101.4		11.1		5.5		—		315.0
General and administrative expenses	89.1		47.9		2.3		4.4		50.9		194.6
Depreciation and amortization	1.1		0.6		—		0.8		1.9		4.4
Operating expenses	287.2		149.9		13.4		10.7		52.8		514.0
Operating income (loss)	$	56.1	$	43.5	$	1.6	$	(6.0)	$	(52.8)	$	42.4

	For the Three-Month Period Ended March 31, 2022
	Home Health		Hospice		Personal Care		High Acuity Care		Other		Total
Net service revenue	$	335.7	$	193.1	$	14.0	$	2.5	$	—	$	545.3
Cost of service	185.2		106.4		10.8		2.4		—		304.8
General and administrative expenses	83.2		51.3		2.2		4.3		43.5		184.5
Depreciation and amortization	0.9		0.6		0.1		0.8		5.6		8.0
Operating expenses	269.3		158.3		13.1		7.5		49.1		497.3
Operating income (loss)	$	66.4	$	34.8	$	0.9	$	(5.0)	$	(49.1)	$	48.0

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

For the Three-Month Period Ended September 30, 2022
Home
Health Hospice Personal
Care High Acuity Care Other Total
Net service revenue $ 337.2 $ 198.7 $ 16.6 $ 5.5 $ — $ 558.0
Cost of service, excluding depreciation and amortization 195.3 109.4 12.2 5.3 — 322.2
General and administrative expenses 88.3 49.1 2.4 8.8 39.8 188.4
Depreciation and amortization 0.9 0.5 — 0.8 3.3 5.5
Investment impairment — — — 3.0 — 3.0
Operating expenses 284.5 159.0 14.6 17.9 43.1 519.1
Operating income (loss) $ 52.7 $ 39.7 $ 2.0 $ (12.4) $ (43.1) $ 38.9
For the Three-Month Period Ended September 30, 2021
Home
Health Hospice Personal
Care High Acuity Care Other Total
Net service revenue $ 338.6 $ 197.5 $ 15.9 $ 1.5 $ — $ 553.5
Other operating income — — — — — —
Cost of service, excluding depreciation and amortization 190.1 107.6 11.7 0.9 — 310.3
General and administrative expenses 82.4 49.5 2.6 3.9 40.5 178.9
Depreciation and amortization 1.1 0.7 0.1 0.5 5.1 7.5
Operating expenses 273.6 157.8 14.4 5.3 45.6 496.7
Operating income (loss) $ 65.0 $ 39.7 $ 1.5 $ (3.8) $ (45.6) $ 56.8
For the Nine-Month Period Ended September 30, 2022
Home
Health Hospice Personal
Care High Acuity Care Other Total
Net service revenue $ 1,012.8 $ 590.2 $ 45.5 $ 12.6 $ — $ 1,661.1
Cost of service, excluding depreciation and amortization 573.3 323.2 34.5 12.3 — 943.3
General and administrative expenses 259.3 152.1 6.8 24.7 117.7 560.6
Depreciation and amortization 3.3 1.7 0.1 2.4 12.2 19.7
Investment impairment — — — 3.0 — 3.0
Operating expenses 835.9 477.0 41.4 42.4 129.9 1,526.6
Operating income (loss) $ 176.9 $ 113.2 $ 4.1 $ (29.8) $ (129.9) $ 134.5
For the Nine-Month Period Ended September 30, 2021
Home
Health Hospice Personal
Care High Acuity Care Other Total
Net service revenue $ 1,016.5 $ 586.9 $ 49.9 $ 1.5 $ — $ 1,654.8
Other operating income 7.3 6.0 — — — 13.3
Cost of service, excluding depreciation and amortization 563.5 314.4 37.4 0.9 — 916.2
General and administrative expenses 243.8 144.4 8.8 3.9 125.5 526.4
Depreciation and amortization 3.3 2.0 0.2 0.5 15.8 21.8
Operating expenses 810.6 460.8 46.4 5.3 141.3 1,464.4
Operating income (loss) $ 213.2 $ 132.1 $ 3.5 $ (3.8) $ (141.3) $ 203.7

~~AMEDISYS, INC. AND SUBSIDIARIES~~

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

8.9. SHARE REPURCHASES

On ~~December 23, 2020, we announced that~~August 2, 2021, our Board of Directors authorized a ~~stock~~share repurchase program, under which we could repurchase up to $100 million of our outstanding common stock through December 31, ~~2021~~2022 (the ~~"2021~~"2022 Share Repurchase Program").

Under the terms of the ~~2021~~2022 Share Repurchase Program, we were allowed to repurchase shares from time to time through open market purchases, unsolicited or solicited privately negotiated transactions, an accelerated stock repurchase program, and/or a trading plan in compliance with Exchange Act Rule 10b5-1. The timing and the amount of the repurchases were determined by management based on a number of factors, including but not limited to share price, trading volume and general market conditions, as well as on working capital requirements, general business conditions and other factors.

~~Pursuant to this program, we repurchased 54,609~~ We did not repurchase any shares ~~of our common stock at a weighted average price of $197.84 per share and a total cost of approximately $11 million~~under the 2022 Share Repurchase Program during the three-month period ended September 30, 2021 and 351,714 shares of our common stock at a weighted average price of $241.30 per share and a total cost of approximately $85 million during the nine-month period ended September 30, 2021.March 31, 2022. The ~~repurchased shares were classified as treasury shares. The 2021~~2022 Share Repurchase Program expired on December 31, ~~2021.~~2022.

On ~~August~~February 2, ~~2021,~~2023, our Board of Directors authorized a share repurchase program, under which we may repurchase up to $100 million of our outstanding common stock through December 31, ~~2022. This program commenced upon the completion of the Company's 2021 Share Repurchase Program~~2023 (the ~~"New~~"2023 Share Repurchase Program").

Under the terms of the ~~New~~2023 Share Repurchase Program, we are allowed to repurchase shares from time to time through open market purchases, unsolicited or solicited privately negotiated transactions, an accelerated stock repurchase program, and/or a trading plan in compliance with Exchange Act Rule 10b5-1. The timing and the amount of the repurchases will be determined by management based on a number of factors, including but not limited to share price, trading volume and general market conditions, as well as on working capital requirements, general business conditions and other factors. Effective January 1, 2023,

~~Pursuant~~

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

repurchases are subject to ~~this program, we~~a 1% excise tax under the Inflation Reduction Act. We have not repurchased ~~150,000~~any shares under the 2023 Share Repurchase Program as of our common stock at a weighted average price of $115.64 per share and a total cost of approximately $17 million during the nine-month period ended September 30, 2022. There were no shares repurchased during the three-month period ended September 30, 2022. The repurchased shares are classified as treasury shares.March 31, 2023.

9.10. RELATED PARTY TRANSACTIONS

We have an investment in Medalogix, a healthcare predictive data and analytics company, which is accounted for under the equity method. We incurred costs ~~totaling~~of approximately $2.4 million ~~and $7.1 million~~ during each of the ~~three and nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022 ~~respectively, and $1.4 million and $4.1 million during the three and nine-month periods ended September 30, 2021, respectively,~~ in connection with our usage of Medalogix's analytics platforms. We believe that the terms of these transactions are consistent with those negotiated at arm's length.

11. SUBSEQUENT EVENTS

On May 3, 2023, Amedisys, Option Care Health, Inc., a Delaware corporation ("Option Care Health"), and Uintah Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Option Care Health ("Merger Sub") entered into an Agreement and Plan of Merger (the "Merger Agreement"). The Merger Agreement provides for, among other things and subject to the satisfaction or waiver of the conditions set forth therein, the merger of Merger Sub with and into Amedisys (the "Merger"), with Amedisys surviving the Merger as a wholly-owned subsidiary of Option Care Health.

Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of Amedisys’ common stock issued and outstanding (excluding shares held by Amedisys as treasury stock or owned by Option Care Health or Merger Sub or any of their respective subsidiaries, in each case, immediately prior to the Effective Time) will be converted into the right to receive 3.0213 (the "Exchange Ratio") fully paid and nonassessable shares of Option Care Health common stock (and, if applicable, cash in lieu of fractional shares) (the "Merger Consideration"), less any applicable withholding taxes.

Pursuant to the terms of the Merger Agreement, as of the Effective Time, each outstanding time-based vesting Amedisys restricted stock unit award (each, an "Amedisys RSU") and Amedisys option to purchase shares of Amedisys common stock (each, an "Amedisys Option") will be converted into an equivalent restricted stock unit award or option, as applicable, of Option Care Health relating to the number of shares of Option Care Health common stock (each, a "Converted RSU" or a "Converted Option", as applicable) equal to (1) the number of shares of Amedisys common stock subject to such Amedisys RSU or Amedisys Option immediately prior to the Effective Time, multiplied by (2) the Exchange Ratio, rounded to the nearest whole number of shares of Option Care Health common stock. A Converted Option will have an exercise price per share equal to (1) the exercise price per share of the equivalent Amedisys Option immediately prior to the Effective Time divided by (2) the Exchange Ratio, rounded to the nearest whole cent. In addition, each Amedisys performance-based vesting restricted stock unit award (each, an "Amedisys PSU") will be converted into an equivalent restricted stock unit award of Option Care Health relating to the number of shares of Option Care Health common stock (each, a "Converted PSU") equal to (1) the number of shares of Amedisys common stock subject to such Amedisys PSU immediately prior to the Effective Time, multiplied by (2) the Exchange Ratio, assuming achievement at target performance with respect to any Amedisys PSU for which the level of performance-vesting has not yet been determined, rounded to the nearest whole number of shares of Option Care Health common stock. Each Converted RSU, Converted Option and Converted PSU shall have the same terms and conditions (including any double-trigger protections but excluding any performance-based vesting conditions) that applied to the corresponding Amedisys RSU, Amedisys Option or Amedisys PSU immediately prior to the Effective Time (other than any other terms rendered inoperative by reason of the transactions contemplated by the Merger Agreement or other immaterial or administrative or ministerial changes).

The completion of the Merger is subject to certain conditions, including: (1) the adoption of the Merger Agreement by Amedisys’ stockholders, (2) the adoption of the Charter Amendment (as defined in the Merger Agreement) and the approval of the issuance of shares of Option Care Health common stock in the Merger by Option Care Health stockholders, (3) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (4) the receipt of other required regulatory approvals, (5) the absence of any order or law that has the effect of enjoining or otherwise prohibiting the completion of the Merger, (6) the approval for listing of the shares of Option Care Health common stock to be issued in connection with the Merger on the Nasdaq Global Select Market and the effectiveness of a registration statement with respect to such common stock, (7) subject to certain exceptions, the accuracy of the representations and warranties of the other party and (8) performance by each party of its respective obligations under the Merger Agreement.

Amedisys expects to incur certain significant costs relating to the Merger, such as legal, accounting, financial advisory, printing and other professional services fees, as well as other customary payments. If the Merger Agreement is terminated due to a recommendation change by Amedisys’ board of directors or under certain circumstances where a proposal for an alternative transaction has been made to Amedisys and, within 12 months following termination, Amedisys enters into a definitive

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

agreement providing for an alternative transaction or consummates an alternative transaction, Amedisys will be required to pay to Option Care Health a termination fee of $106,000,000.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 nine-month periods~~three-month period ended ~~September 30, 2022.~~March 31, 2023. 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~~2022 filed with the Securities and Exchange Commission (“SEC”) on February ~~24, 2022~~16, 2023 (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 provided, “Amedisys,” “we,” “our,” and “the Company” refer to Amedisys, Inc. and our consolidated subsidiaries.

Overview

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~~72% and ~~nine-month periods ended September 30, 2022 and approximately~~ 75% of our consolidated net service revenue derived from Medicare for the ~~three and nine-month~~three-month periods ended ~~September 30, 2021.~~March 31, 2023 and 2022, respectively.

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, palliative and skilled nursing facility ("SNF") care to patients in their homes. As of ~~September 30, 2022,~~March 31, 2023, we owned and operated ~~353~~348 Medicare-certified home health care centers, ~~172~~165 Medicare-certified hospice care centers ~~14 personal-care care centers~~ and 89 admitting high acuity care joint ventures in 3637 states within the United States and the District of Columbia. We divested our personal care business on March 31, 2023.

Care Centers Summary (Includes Unconsolidated Joint Ventures)

Home
Health Hospice Personal
Care High Acuity Care
As of December 31, 2021 331 175 14 8
Acquisitions/Startups/Denovos 24 — — 1
Closed/Consolidated (2) (3) — (1)
As of September 30, 2022 353 172 14 8


	Home Health	Hospice	Personal Care	High Acuity Care (1)
As of December 31, 2022	347	164	13	8
Acquisitions/Startups/Denovos	1	1	—	1
Divestitures/Closures/Consolidations	—	—	(13)	—
As of March 31, 2023	348	165	—	9

(1) We have 9 admitting high acuity care joint ventures, which operate in 10 markets.

Recent Developments

~~Acquisitions~~Proposed Merger

On ~~April 1, 2022, we acquired fifteen home health care centers from Evolution~~May 3, 2023, Amedisys, Option Care Health, ~~LLC,~~Inc., a ~~division of Envision Healthcare, doing business as Guardian Healthcare, Gem City and~~Delaware corporation ("Option Care ~~Connection of Cincinnati ("Evolution"~~Health"), and Uintah Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Option Care Health ("Merger Sub") entered into an Agreement and Plan of Merger (the "Merger Agreement"). The Merger Agreement provides for, ~~a purchase price of $68 million.~~

~~Additionally, on April 1, 2022, we acquired two home health locations from AssistedCare Home Health, Inc.~~among other things and ~~RH Homecare Services, LLC, doing business as AssistedCare Home Health and AssistedCare~~subject to the satisfaction or waiver of the ~~Carolinas ("AssistedCare"~~conditions set forth therein, the merger of Merger Sub with and into Amedisys (the "Merger"), ~~respectively, for~~with Amedisys surviving the Merger as a ~~purchase price~~wholly-owned subsidiary of ~~$25 million.~~Option Care Health.

~~Governmental Inquiries and Investigations and Other Litigation~~

See Note 6 – Commitments and Contingencies to our condensed consolidated financial statements for a discussion of and updates regarding legal proceedings and investigations we are involved in. No assurances can be given asSubject to the ~~timing~~terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the "Effective Time"), each share of Amedisys’ common stock issued and outstanding (excluding shares held by Amedisys as treasury stock or ~~outcome~~owned by Option Care Health or Merger Sub or any of ~~these items.~~their respective subsidiaries, in each case, immediately prior to the Effective Time) will be converted into the right to receive 3.0213 (the "Exchange Ratio") fully paid and nonassessable shares of Option Care Health common stock (and, if applicable, cash in lieu of fractional shares) (the "Merger Consideration"), less any applicable withholding taxes.

2826

"Converted Option", as applicable) equal to (1) the number of shares of Amedisys common stock subject to such Amedisys RSU or Amedisys Option immediately prior to the Effective Time, multiplied by (2) the Exchange Ratio, rounded to the nearest whole number of shares of Option Care Health common stock. A Converted Option will have an exercise price per share equal to (1) the exercise price per share of the equivalent Amedisys Option immediately prior to the Effective Time divided by (2) the Exchange Ratio, rounded to the nearest whole cent. In addition, each Amedisys performance-based vesting restricted stock unit award (each, an "Amedisys PSU") will be converted into an equivalent restricted stock unit award of Option Care Health relating to the number of shares of Option Care Health common stock (each, a "Converted PSU") equal to (1) the number of shares of Amedisys common stock subject to such Amedisys PSU immediately prior to the Effective Time, multiplied by (2) the Exchange Ratio, assuming achievement at target performance with respect to any Amedisys PSU for which the level of performance-vesting has not yet been determined, rounded to the nearest whole number of shares of Option Care Health common stock. Each Converted RSU, Converted Option and Converted PSU shall have the same terms and conditions (including any double-trigger protections but excluding any performance-based vesting conditions) that applied to the corresponding Amedisys RSU, Amedisys Option or Amedisys PSU immediately prior to the Effective Time (other than any other terms rendered inoperative by reason of the transactions contemplated by the Merger Agreement or other immaterial or administrative or ministerial changes).

The board of directors of each of Option Care Health and Amedisys has approved the Merger Agreement and the transactions contemplated thereby.

The foregoing description of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement, which has been filed with the SEC as an exhibit to Amedisys’ Current Report on Form 8-K filed on May 3, 2023.

Executive Leadership

On March 13, 2023, our Board of Directors named Richard Ashworth as the Company’s President and Chief Executive Officer and elected Mr. Ashworth as a director, all effective April 10, 2023. Mr. Ashworth will not serve on any committees of the Board of Directors. Paul B. Kusserow ceased serving as Chief Executive Officer effective April 10, 2023 but will continue serving as Chairman of the Board.

Personal Care Divestiture

The Centers for Medicare and Medicaid Services ("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~~estimated hospices serving Medicare beneficiaries ~~will~~would see a 3.8% increase in payments. This increase is the result of a 4.1% market basket adjustment as required under ~~PPACA~~the Patient Protection and Affordable Health Care Act and the Health Care and Education Reconciliation Act ("PPACA") less a 0.3% productivity adjustment. Additionally, CMS increased the aggregate cap amount by 3.8% to $32,487. Based on our analysis of the final rule, we expect our impact to be in line with the 3.8% increase.

On March 31, 2023, CMS issued a proposed rule to update hospice payment rates and the wage index for fiscal year 2024, effective for services provided beginning October 1, 2023. CMS estimates hospices serving Medicare beneficiaries will see a 2.8% increase ~~which will~~in payments. This increase is the result of a 3.0% market basket adjustment as required under PPACA less a 0.2% productivity adjustment. Additionally, CMS proposed to increase the aggregate cap amount by 2.8% to $33,397. Based on our analysis of the proposed rule, we expect our impact to be in ~~an increase to net service revenue of approximately $7 million in~~line with the ~~fourth quarter.~~2.8% increase.

Home Health

On ~~November 2, 2021,~~October 31, 2022, CMS issued the Home Health Final Rule for Medicare home health providers for calendar year ~~2022~~.2023. CMS estimated that the final rule would result in a ~~3.2%~~0.7% increase in payments to home health providers. This increase ~~was~~is the result of a ~~2.6%~~4.0% payment update ~~(3.1%~~(4.1% market basket adjustment less a ~~0.5%~~0.1% productivity adjustment) ~~plus a 0.7% fixed-dollar loss ratio adjustment, reduced by 0.1% for the rural add-on. Based on our analysis~~and an increase 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 used in determining outlier ~~payments. This~~payments offset by a permanent adjustment of -3.5% based on the difference between assumed and actual behavioral changes resulting from the implementation of PDGM. The -3.5% permanent adjustment was derived from a -3.925% behavioral assumption adjustment which was only applied to the 30-day payment rate and not the low utilization payment adjustment. The -3.925% behavioral assumption adjustment is only half of the total proposed adjustment of -7.85%. The remaining -3.925% adjustment will be considered in future rulemaking. The final rule also ~~proposes~~finalized a permanent 5% cap on negative wage index changes for home health agencies. Based on our ~~preliminary~~ analysis of the ~~proposed~~final rule, we expect our impact to be ~~in line with~~flat, which is less than the ~~4.2%~~estimated 0.7% rate ~~cut.~~increase.

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

In late July 2022, a group of bipartisan lawmakers introduced The Preserving Access to Home Health Act of 2022 in the U.S. House of Representatives and the U.S. Senate. Upon enactment, this legislation 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 to determine budget neutrality 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.

Furthermore, Amedisys submitted formal comments to the calendar year 2023 Home Health proposed rule in mid-August and joined industry stakeholders in requesting that CMS use an alternative methodology to determine budget neutrality.future rulemaking.

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. During 2020 and 2021, Congress passed additional COVID-19 relief legislation which 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~~was fully reinstated as a 2% reduction to Medicare claim reimbursements effective July 1, 2022. The reinstatement of sequestration has resulted in a reduction of our net service revenue.

~~Novel Coronavirus Pandemic ("COVID-19")~~Impact of COVID-19

Our operations and financial performance ~~continue to be~~have been 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 operations, the ~~uncertainty created by~~ultimate impact of COVID-19, ~~could alter our outlook of~~including the ~~pandemic's~~ impact on our ~~consolidated~~liquidity, financial condition and results of operations, ~~or cash flows. The following~~is uncertain and will depend on many 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~~future developments, which are highly uncertain and efficacy; staffing shortages due to clinician quarantines, the competitive labor market and federal, state and local vaccine mandates; 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 productscannot be predicted at reasonable prices 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 interruption of the operations of our referral sources, patients' unwillingness to accept services and restrictions on access to facilities for hospice services;~~

•~~lower reimbursement due to missed visits resulting in an increase in low utilization payment adjustments ("LUPAs") and lost billing periods; and~~

•~~lower hospice average daily census due to a decline in our average length of stay.~~

~~See Note 3 – Novel Coronavirus Pandemic ("COVID-19") to our condensed consolidated financial statements for additional information regarding COVID-19 and the CARES Act.~~this time.

Results of Operations

Three-Month Period Ended ~~September 30, 2022~~March 31, 2023 Compared to the Three-Month Period Ended ~~September 30, 2021~~March 31, 2022

Consolidated

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


		For the Three-Month Periods Ended September 30,							For the Three-Month Periods Ended March 31,
		2022			2021				2023			2022
Net service revenue	Net service revenue	$	558.0		$	553.5		Net service revenue	$	556.4		$	545.3
Cost of service, excluding depreciation and amortization		322.2			310.3
Gross margin, excluding depreciation and amortization		235.8			243.2
Cost of service, inclusive of depreciation								Cost of service, inclusive of depreciation	315.0			304.8
Gross margin								Gross margin	241.4			240.5
% of revenue	% of revenue	42.3		%	43.9		%	% of revenue	43.4		%	44.1		%
Other operating expenses		188.4			178.9
General and administrative expenses								General and administrative expenses	194.6			184.5
% of revenue	% of revenue	33.8		%	32.3		%	% of revenue	35.0		%	33.8		%
Depreciation and amortization	Depreciation and amortization	5.5			7.5			Depreciation and amortization	4.4			8.0
Investment impairment		3.0			—
Operating income	Operating income	38.9			56.8			Operating income	42.4			48.0
Total other expense	Total other expense	(4.1)			(0.8)			Total other expense	(7.7)			(4.2)
Income tax expense	Income tax expense	(9.4)			(10.7)			Income tax expense	(9.8)			(12.0)
Effective income tax rate	Effective income tax rate	27.0		%	19.2		%	Effective income tax rate	28.2		%	27.5		%
Net income	Net income	25.4			45.2			Net income	24.9			31.7
Net loss (income) attributable to noncontrolling interests		0.2			(0.2)
Net income attributable to noncontrolling interests								Net income attributable to noncontrolling interests	0.3			—
Net income attributable to Amedisys, Inc.	Net income attributable to Amedisys, Inc.	$	25.6		$	45.0		Net income attributable to Amedisys, Inc.	$	25.2		$	31.7

During the quarter, we began to execute on our plan to centralize and reorganize our operating structure in order to drive more consistency and efficiency in our operations. As such, we recognized $4 million in severance and lease termination costs associated with these efforts. We are in the early stages of this project and anticipate more costs as these initiatives continue.

On a consolidated basis, our operating income decreased ~~$18~~$6 million on ~~a $5~~an $11 million increase in net service revenue. Our ~~year over year~~year-over-year results were impacted by the return of sequestration (prior year included a benefit of $9 million associated with the suspension of sequestration) and the acquisitions of ~~Contessa on August 1, 2021 and~~ Evolution and AssistedCare on April 1,

2022 (which combined contributed ~~$17~~$10 million in net service revenue and an operating loss of $14 million in the current year and $2 million in net service revenue and an operating loss of $4 million in the prior year), a $9 million benefit recognized in prior year net service revenue associated with the suspension of sequestration at 2% and aless than $1 million ~~reduction in current year net service revenue related to our Infinity HomeCare, L.L.C. Zone Program Integrity Contractor ("Infinity ZPIC") audits.~~for the three-month period ended March 31, 2023). Excluding these items, our operating income increased $2$4 million on a $1$10 million ~~decrease~~increase in net service revenue ~~primarily~~ due to the hospice rate ~~increases, improvements in home health clinician utilization~~increase, lower COVID-related costs and ~~reductions in our hospice staffing levels. These items were~~lower depreciation and amortization partially offset by ~~a decrease in our episodic home health revenue as a percentage of total net service revenue and~~planned wage increases, an increase in our ~~cost of service resulting from planned wage increases~~general and ~~wage inflation. Additionally, our volumes have been~~administrative expenses and ~~continue to be impacted by staffing shortages resulting from the competitive labor market.~~higher revenue adjustments.

Our operating results reflect a $10 million increase in our ~~other operating~~general and administrative expenses compared to prior year. Excluding our acquisitions, our ~~other operating~~general and administrative expenses ~~were flat as~~increased $7 million (4%) primarily due to costs associated with our clinical optimization and reorganization initiatives, planned wage increases, ~~higher~~increased information technology fees, higher recruiting fees, higher insurance-related costs and ~~professional fees and severance and lease termination costs related to centralization and reorganization initiatives were offset by higher~~a change in the presentation of gains on the sale of fleet vehicles which are reflected in other income (expense) within our condensed consolidated income statement as of January 1, 2023 due to the modification of our fleet leases. Partially offsetting these items, our general and administrative expenses were favorably impacted by lower staffing levels and lower ~~incentive~~executive compensation costs.

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


		For the Three-Month Periods Ended September 30,					For the Three-Month Periods Ended March 31,
		2022		2021			2023		2022
Interest expense, net		$	(4.9)	$	(2.7)
Equity in earnings from equity method investments		0.3		1.4
Interest income						Interest income	$	0.4	$	—
Interest expense						Interest expense	(7.5)		(3.2)
Equity in earnings (loss) from equity method investments						Equity in earnings (loss) from equity method investments	0.1		(1.4)
Miscellaneous, net	Miscellaneous, net	0.5		0.5		Miscellaneous, net	(0.7)		0.3
Total other expense	Total other expense	$	(4.1)	$	(0.8)	Total other expense	$	(7.7)	$	(4.2)

Interest expense ~~net~~ increased $2$4 million year over year as a result of ~~increased borrowings and~~ higher interest rates on our outstanding term loan borrowings under our ~~Second~~Third Amended Credit Agreement (see Note ~~5 –~~6 - Long-Term Obligations to our condensed consolidated financial statements for additional information regarding our ~~Second~~Third Amended Credit Agreement).

Miscellaneous, net includes a $2 million loss on the sale our personal care business recorded during the three-month period ended March 31, 2023 (see Note 5 - Dispositions to our condensed consolidated financial statements for additional information) which was partially offset by gains on the sale of our fleet vehicles totaling $1 million during the three-month period ended March 31, 2023. Our fleet leases were modified effective January 1, 2023 resulting in a change in the presentation of gains which were previously reflected as a reduction to our general and administrative expenses (see Note 6 - Long-Term Obligations to our condensed consolidated financial statements for additional information).

Home Health Segment

The following table summarizes our home health segment results of operations:


		For the Three-Month Periods Ended September 30,							For the Three-Month Periods Ended March 31,
		2022			2021				2023			2022
Financial Information (in millions):
Financial Information (in millions) (6):								Financial Information (in millions) (6):
Medicare	Medicare	$	222.4		$	228.2		Medicare	$	215.4		$	224.1
Non-Medicare	Non-Medicare	114.8			110.4			Non-Medicare	127.9			111.6
Net service revenue	Net service revenue	337.2			338.6			Net service revenue	343.3			335.7
Cost of service		195.3			190.1
Cost of service, inclusive of depreciation								Cost of service, inclusive of depreciation	197.0			185.2
Gross margin	Gross margin	141.9			148.5			Gross margin	146.3			150.5
Other operating expenses		88.3			82.4
General and administrative expenses								General and administrative expenses	89.1			83.2
Depreciation and amortization	Depreciation and amortization	0.9			1.1			Depreciation and amortization	1.1			0.9
Operating income	Operating income	$	52.7		$	65.0		Operating income	$	56.1		$	66.4
Same Store Growth (1):
Same Store Growth(1):								Same Store Growth(1):
Medicare revenue	Medicare revenue	(6		%)	2		%	Medicare revenue	(7		%)	1		%
Non-Medicare revenue	Non-Medicare revenue	(1		%)	6		%	Non-Medicare revenue	12		%	4		%
Total admissions	Total admissions	5		%	1		%	Total admissions	8		%	2		%
Total volume (2)	Total volume (2)	1		%	1		%	Total volume(2)	5		%	—		%

Key Statistical Data - Total (3):
Key Statistical Data - Total(3)(6):								Key Statistical Data - Total(3)(6):
Admissions	Admissions	94,992			86,732			Admissions	101,963			91,764
Recertifications	Recertifications	44,985			46,919			Recertifications	43,325			42,856
Total volume	Total volume	139,977			133,651			Total volume	145,288			134,620

Medicare completed episodes	Medicare completed episodes	75,891			78,318			Medicare completed episodes	73,563			74,443
Average Medicare revenue per completed episode (4)	Average Medicare revenue per completed episode (4)	$	2,989		$	2,969		Average Medicare revenue per completed episode(4)	$	2,974		$	3,013
Medicare visits per completed episode (5)	Medicare visits per completed episode (5)	12.7			13.8			Medicare visits per completed episode(5)	12.4			13.0

Visiting clinician cost per visit	Visiting clinician cost per visit	$	101.22		$	94.24		Visiting clinician cost per visit	$	100.00		$	97.28
Clinical manager cost per visit	Clinical manager cost per visit	11.33			9.85			Clinical manager cost per visit	10.97			10.62
Total cost per visit	Total cost per visit	$	112.55		$	104.09		Total cost per visit	$	110.97		$	107.90
Visits	Visits	1,735,015			1,826,505			Visits	1,775,206			1,716,211

(1) Same store information represents the percent change in our Medicare, Non-Medicare and Total revenue, admissions or volume for the period as a percent of the Medicare, Non-Medicare and Total revenue, admissions or volume of the prior period. Same store is defined as care centers that we have operated for at least the last twelve months and startups that are an expansion of a same store care center.

(2) Total volume includes all admissions and recertifications.

(3) Total includes acquisitions, start-ups and denovos.

(4) Average Medicare revenue per completed episode is the average Medicare revenue earned for each Medicare completed episode of care. Average Medicare revenue per completed episode reflects the suspension of sequestration for the three-month period ended ~~September 30, 2021~~March 31, 2022 and the reinstatement of sequestration at 2% for the three-month period ended ~~September 30, 2022.~~March 31, 2023.

(5) Medicare visits per completed episode are the home health Medicare visits on completed episodes divided by the home health Medicare episodes completed during the period.

(6) Prior year has been recast to conform to the current year presentation.

Operating Results

On March 23, 2022, we entered into a transaction with one of our high acuity care health system partners in which our health system partner contributed its home health operations to one of our existing high acuity care joint ventures. The home health operations were reflected in our high acuity care segment during 2022. Effective January 1, 2023, the operating results of this home health care center are included within our home health segment. Prior periods have been recast to conform to the current year presentation.

3230

~~Operating Results~~

Overall, our operating income decreased ~~$12~~$10 million on ~~a $1~~an $8 million ~~decrease~~increase in net service revenue. Our year over year results were impacted by the April 1, 2022 acquisitions of Evolution and AssistedCare (which contributed net service revenue of ~~$12~~$10 million and an operating loss of less than $1 million tofor the ~~quarter),~~three-month period ended March 31, 2023) and a prior year benefit of $5 million ~~benefit recognized~~ in ~~prior year net service revenue associated~~connection with the suspension of ~~sequestration and a $1 million reduction in current year net service revenue related to our Infinity ZPIC audits.~~sequestration. Excluding these items, our operating income decreased $5$4 million on a $7$3 million ~~decrease~~increase in net service ~~revenue~~revenue. The decline in our operating income is primarily due to a ~~decrease~~shift in our ~~episodic~~payor mix, higher revenue ~~as a percentage of total net service revenue,~~adjustments and planned wage ~~increases, wage inflation and increases in other operating expenses.~~increases. These items were partially offset by ~~the increase~~improvement in ~~reimbursement as well as~~our operating performance driven by improvements in clinician utilization.

Net Service Revenue

Our net service revenue ~~decreased $1~~increased $8 million. Excluding our ~~April 1, 2022~~ acquisitions ~~of Evolution~~ and ~~AssistedCare,~~ the sequestration benefit recognized in ~~the~~ prior year, ~~and the Infinity ZPIC audits,~~ our net service revenue ~~decreased $7 million. Despite~~increased $3 million due to 5% total volume growth and an ~~overall~~ increase in ~~same store total admissions (5%) and volume (1%), we experienced a year over year decline in episodic~~our non-Medicare revenue per visit. Our volumes ~~which generate higher revenue, resulting in a year over year decline in our net service revenue. Additionally, our volumes have been~~continue to be impacted by staffing shortages driven by the competitive labor market. ~~Partially offsetting these items, our net service revenue was favorably impacted by the 3.2% increase in reimbursement effective January 1, 2022.~~

The 0.7% increase in our Medicare revenue per episode was driven by the 3.2% increase in reimbursement effective January 1, 2022 which was partially offset by the reinstatement of sequestration at 2.0% and an increase in low utilization payment adjustments ("LUPAs") and lost billing periods ("LBPs").

Cost of Service, ~~Excluding~~Inclusive of Depreciation ~~and Amortization~~

Our cost of service consists of costs associated with direct clinician care in the homes of our patients as well as the cost of clinical managers who monitor the overall delivery of care. Overall, our total cost of service increased ~~3% primarily~~6% due to ~~an 8%~~a 3% increase in our total cost per visit ~~partially offset by~~and a ~~5% decrease~~3% increase in total ~~visits, resulting from improvements in clinician utilization, as evidenced by a decline of 1.1 visits per Medicare completed episode year over year.~~visits. The 8%3% increase in our total cost per visit is primarily due to planned wage increases, ~~wage inflation,~~ an increase in salaried employees and visit mix ~~and higher fuel prices and mileage reimbursements. In addition, while we compensate our clinicians on a per visit basis, there is a fixed cost component of our cost structure which also resulted in an~~partially offset by lower COVID-related costs. The 3% increase in total visits was driven by growth in volumes and our ~~cost per visit due to the significant decline in visits year over year.~~acquisitions.

~~Other Operating~~General and Administrative Expenses

~~Other operating~~Our general and administrative expenses increased $6 million. Excluding our acquisitions, ~~other operating~~our general and administrative expenses increased $3 million primarily due to planned wage increases, ~~the addition of resources to support volume growth,~~ higher information technology fees and ~~additional~~higher insurance-related costs ~~related to our centralization and reorganization initiatives which will result in future cost reductions~~ partially offset by lower ~~incentive compensation costs.~~staffing levels and savings associated with clinical optimization and reorganization activities.

3331

Hospice Segment

The following table summarizes our hospice segment results of operations:


		For the Three-Month Periods Ended September 30,							For the Three-Month Periods Ended March 31,
		2022			2021				2023			2022
Financial Information (in millions):	Financial Information (in millions):							Financial Information (in millions):
Medicare	Medicare	$	187.8		$	187.8		Medicare	$	182.7		$	182.5
Non-Medicare	Non-Medicare	10.9			9.7			Non-Medicare	10.7			10.6
Net service revenue	Net service revenue	198.7			197.5			Net service revenue	193.4			193.1
Cost of service		109.4			107.6
Cost of service, inclusive of depreciation								Cost of service, inclusive of depreciation	101.4			106.4
Gross margin	Gross margin	89.3			89.9			Gross margin	92.0			86.7
Other operating expenses		49.1			49.5
General and administrative expenses								General and administrative expenses	47.9			51.3
Depreciation and amortization	Depreciation and amortization	0.5			0.7			Depreciation and amortization	0.6			0.6
Operating income	Operating income	$	39.7		$	39.7		Operating income	$	43.5		$	34.8
Same Store Growth (1):
Same Store Growth(1):								Same Store Growth(1):
Medicare revenue	Medicare revenue	—		%	(1		%)	Medicare revenue	—		%	1		%
Hospice admissions	Hospice admissions	(3		%)	1		%	Hospice admissions	(5		%)	2		%
Average daily census	Average daily census	1		%	(5		%)	Average daily census	(1		%)	(3		%)
Key Statistical Data - Total (2):
Key Statistical Data - Total(2):								Key Statistical Data - Total(2):
Hospice admissions	Hospice admissions	12,782			13,292			Hospice admissions	12,998			13,886
Average daily census	Average daily census	13,314			13,272			Average daily census	12,730			12,920
Revenue per day, net	Revenue per day, net	$	162.24		$	161.74		Revenue per day, net	$	168.83		$	166.04
Cost of service per day	Cost of service per day	$	89.36		$	88.06		Cost of service per day	$	88.21		$	91.48
Average discharge length of stay	Average discharge length of stay	92			94			Average discharge length of stay	90			89

(1) Same store information represents the percent change in our Medicare revenue, Hospice admissions or average daily census for the period as a percent of the Medicare revenue, Hospice admissions or average daily census of the prior period. Same store is defined as care centers that we have operated for at least the last twelve months and startups that are an expansion of a same store care center.

(2) Total includes acquisitions and denovos.

Operating Results

Overall, our operating income ~~remained~~increased $9 million on flat ~~on a $1 million increase in~~ net service revenue. ~~The~~Our year over year results were positively impacted by the increase in reimbursement effective October 1, ~~2021, growth~~2022, savings associated with clinical optimization and reorganization initiatives, reductions in staffing levels and a decrease in our general and administrative expenses. These items were partially offset by a benefit recognized in the prior year totaling $4 million associated with the suspension of sequestration, a decline in our hospice average daily census and ~~a reduction~~planned wage increases.

Net Service Revenue

Our net service revenue remained flat as the increase in ~~our hospice staffing levels were~~reimbursement effective October 1, 2022 was offset by the reinstatement of sequestration at 2% ~~which benefited the prior year by $4 million, planned wage increases~~ and ~~wage inflation. Our results were also impacted by $1 million of centralization and reorganization costs which will result in future cost reductions.~~

~~Net Service Revenue~~

~~Our net service revenue increased $1 million primarily due to the 2% increase in reimbursement effective October 1, 2021 and growth~~a decline in our average daily ~~census partially offset by the reinstatement of sequestration at 2%.~~census. Our decline in average daily census ~~which~~year over year is ~~the main driver of~~primarily due to a decline in our hospice ~~revenue, was impacted by lower~~ admissions as well as a decline in our length of stay over the past year resulting from a delay in the timing of patients coming onto service and an increase in the discharge rate of our patients. We have recently seen an increase in our length of stay, which has helped to drive quarter over quarter increases in our average daily census in each of the last two quarters.care center closures.

Cost of Service, ~~Excluding~~Inclusive of Depreciation ~~and Amortization~~

Our hospice cost of service ~~increased 2%~~decreased 5% primarily due to a ~~1% increase~~4% decrease in our cost of service per ~~day and an increase in our average daily census.~~day. The ~~increase~~4% decrease in our cost of service per day is due to ~~planned wage increases, wage inflation, increased costs to hire and retain employees, severance costs~~reductions in staffing levels, savings associated with ~~centralization~~clinical optimization and reorganization initiatives, lower utilization of contractors to supplement our staffing levels and ~~higher fuel prices and mileage reimbursements~~lower COVID-19 costs. These items were partially offset by ~~lower COVID-19 costs and reductions in staffing levels.~~planned wage increases.

3432

~~Other Operating~~General and Administrative Expenses

~~Other operating~~Our general and administrative expenses ~~remained flat as planned wage increases, higher information technology fees and lease termination costs associated with centralization and reorganization initiatives were offset by~~decreased $3 million primarily due to reductions in staffing levels and travel and training spend ~~across various cost categories.~~partially offset by planned wage increases.

Personal Care Segment

The following table summarizes our personal care segment results of operations:

For the Three-Month Periods
Ended September 30,
2022 2021
Financial Information (in millions):
Medicare $ — $ —
Non-Medicare 16.6 15.9
Net service revenue 16.6 15.9
Cost of service 12.2 11.7
Gross margin 4.4 4.2
Other operating expenses 2.4 2.6
Depreciation and amortization — 0.1
Operating income $ 2.0 $ 1.5
Key Statistical Data - Total:
Billable hours 474,365 558,227
Clients served 7,771 8,697
Shifts 202,638 240,736
Revenue per hour $ 34.98 $ 28.44
Revenue per shift $ 81.89 $ 65.95
Hours per shift 2.3 2.3


	For the Three-Month Periods Ended March 31,
	2023		2022
Financial Information (in millions):
Medicare	$	—	$	—
Non-Medicare	15.0		14.0
Net service revenue	15.0		14.0
Cost of service, inclusive of depreciation	11.1		10.8
Gross margin	3.9		3.2
General and administrative expenses	2.3		2.2
Depreciation and amortization	—		0.1
Operating income	$	1.6	$	0.9
Key Statistical Data - Total:
Billable hours	440,464		451,032
Clients served	7,892		7,479
Shifts	191,379		193,742
Revenue per hour	$	33.97	$	30.95
Revenue per shift	$	78.19	$	72.04
Hours per shift	2.3		2.3

Operating Results

We completed the sale of our personal care business on March 31, 2023.

Operating income related to our personal care segment increased $1 million on a $1 million increase in net service ~~revenue. The increases are due to the recognition of temporary supplemental funding during the quarter. Our personal care segment continues to be impacted by staffing shortages~~revenue driven by ~~the competitive labor market.~~

an increase in rates. Our cost of service and general and administrative expenses remained flat.

3533

High Acuity Care Segment

The following table summarizes our high acuity care segment results of operations:


		For the Three-Month Periods Ended September 30,					For the Three-Month Periods Ended March 31,
		2022		2021			2023		2022
Financial Information (in millions):
Financial Information (in millions) (1):						Financial Information (in millions) (1):
Medicare	Medicare	$	1.6	$	—	Medicare	$	—	$	—
Non-Medicare	Non-Medicare	3.9		1.5		Non-Medicare	4.7		2.5
Net service revenue	Net service revenue	5.5		1.5		Net service revenue	4.7		2.5
Cost of service		5.3		0.9
Cost of service, inclusive of depreciation						Cost of service, inclusive of depreciation	5.5		2.4
Gross margin	Gross margin	0.2		0.6		Gross margin	(0.8)		0.1
Other operating expenses		8.8		3.9
General and administrative expenses						General and administrative expenses	4.4		4.3
Depreciation and amortization	Depreciation and amortization	0.8		0.5		Depreciation and amortization	0.8		0.8
Investment impairment		3.0		—
Operating loss	Operating loss	$	(12.4)	$	(3.8)	Operating loss	$	(6.0)	$	(5.0)
Key Statistical Data - Total:	Key Statistical Data - Total:					Key Statistical Data - Total:
Full risk admissions	Full risk admissions	130		46		Full risk admissions	158		106
Limited risk admissions	Limited risk admissions	300		188		Limited risk admissions	459		227
Total admissions	Total admissions	430		234		Total admissions	617		333

Full risk revenue per episode	Full risk revenue per episode	$	11,615	$	9,191	Full risk revenue per episode	$	11,343	$	10,077
Limited risk revenue per episode	Limited risk revenue per episode	$	5,580	$	5,524	Limited risk revenue per episode	$	5,711	$	5,779

Number of admitting joint ventures		8		8
Number of admitting joint venture markets						Number of admitting joint venture markets	10		9

(1)Prior year has been recast to conform to the current year presentation.

Operating Results

~~Our~~In connection with our reorganization initiatives, we transitioned corporate functions that were previously included within our high acuity care segment to the corporate support function effective January 1, 2023. Additionally, during the three-month period ended March 31, 2022, we entered into a transaction with one of our high acuity care health system partners in which our health system partner contributed its home health operations to one of our existing high acuity care joint ventures. The home health operations were reflected in our high acuity care segment during 2022. Effective January 1, 2023, the operating results ~~include a full quarter~~ of ~~operations in~~this home health care center are included within our home health segment. Prior periods have been recast to conform to the current year ~~compared to two months of operations in the prior year.~~ presentation.

Our year over year results reflect net service revenue growth ~~an increase in other operating expense driven by additional~~resulting from our home recovery care services. Our gross margin for the three-month period ended March 31, 2023 reflects a forecasted loss on the first performance year of our new risk-based palliative care contract resulting from investments in ~~the business and an impairment charge recorded in connection with the wind down of the operations of one of our joint ventures.~~ resources to support this contract as well as future palliative care arrangements.

Although we expect our high acuity care segment to continue to generate operating losses, we also expect improvement ~~in our operating income~~ as we leverage our operating structure through growth in current and future joint ventures and expansion ~~into new lines~~ of ~~business such as~~ palliative care at ~~home.~~home arrangements.

Net Service Revenue

Our high acuity care segment provides home recovery care services for high acuity patients on either a full risk or limited risk basis, each with different reimbursement arrangements. Full risk admissions are admissions for which we assume the financial risk for all related healthcare services during a 30-day or 60-day episodic period in exchange for a fixed contracted bundled rate. Limited risk admissions are admissions for which we assume the risk for certain healthcare services during a shorter acute phase period (equivalent to an inpatient hospital stay) in exchange for a contracted per diem payment.

Additionally, on March 23, 2022, our high acuity care segment entered into a transaction in which one of our health system partners contributed its home health operations to one of our existing joint ventures. As a result, our high acuity care segment includes revenue totaling approximately $2 million related to this joint venture's home health operations.

Cost of Service, ~~Excluding~~Inclusive of Depreciation ~~and Amortization~~

Our cost of service consists primarily of medical costs associated with direct clinician care provided to our patients during the applicable episode period, ~~whether such care was provided on the day of program admission, in the patients’ homes or via telehealth, as well as~~ costs associated with our virtual care unit (“VCU”), which enables us to provide monitoring services and facilitates virtual patient rounding visits via ~~telehealth. We continue~~telehealth and costs associated with resources to ~~invest~~support our palliative care at home programs. The increase in cost of service over prior year is primarily related to a forecasted loss on the ~~infrastructure~~first performance year of our ~~VCU~~new risk-based palliative care contract resulting from investments in ~~anticipation of~~resources to support this contract as well as future ~~growth.~~palliative care arrangements.

~~Other Operating~~General and Administrative Expenses

~~Other operating~~Our general and administrative expenses which primarily consist of salaries and ~~benefits.~~benefits were flat year over year. We have made significant investments to build the clinical, operational and technological infrastructure necessary to support the development and future growth of home recovery care programs on a national scale. ~~We have also invested in resources to support future palliative care at home programs. We have employees at both the local market level and at our corporate offices.~~

Corporate

The following table summarizes our corporate results of operations:


		For the Three-Month Periods Ended September 30,					For the Three-Month Periods Ended March 31,
		2022		2021			2023		2022
Financial Information (in millions):
Other operating expenses		$	39.8	$	40.5
Financial Information (in millions) (1):						Financial Information (in millions) (1):
General and administrative expenses						General and administrative expenses	$	50.9	$	43.5
Depreciation and amortization	Depreciation and amortization	3.3		5.1		Depreciation and amortization	1.9		5.6
Total operating expenses	Total operating expenses	$	43.1	$	45.6	Total operating expenses	$	52.8	$	49.1

(1)Prior year has been recast to conform to the current year presentation.

Corporate expenses consist of costs related to our executive management and corporate and administrative support functions, primarily information services, accounting, finance, billing and collections, legal, compliance, risk management, procurement, marketing, clinical administration, training, human resources and administration.

In connection with our reorganization initiatives, we transitioned corporate functions that were previously included within our high acuity care segment to the corporate support function effective January 1, 2023. Prior periods have been recast to conform to the current year presentation.

Corporate ~~other operating~~general and administrative expenses ~~decreased approximately $1~~increased $7 million during the three-month period ended ~~September 30, 2022~~March 31, 2023 primarily due to planned wage increases, costs associated with our clinical optimization and reorganization initiatives, higher recruiting fees and a change in the presentation of gains on the sale of fleet vehicles and lower incentive compensation costs partially offset by planned wage increases, higher professional fees and lease termination costs associated with our centralization and reorganization initiatives.

~~Nine-Month Period Ended September 30, 2022 Compared to the Nine-Month Period Ended September 30, 2021~~

~~Consolidated~~

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

For the Nine-Month Periods
Ended September 30,
2022 2021
Net service revenue $ 1,661.1 $ 1,654.8
Other operating income — 13.3
Cost of service, excluding depreciation and amortization 943.3 916.2
Gross margin, excluding depreciation and amortization 717.8 751.9
% of revenue 43.2 % 45.4 %
Other operating expenses 560.6 526.4
% of revenue 33.7 % 31.8 %
Depreciation and amortization 19.7 21.8
Investment impairment 3.0 —
Operating income 134.5 203.7
Total other (expense) income (15.6) 29.6
Income tax expense (32.8) (57.2)
Effective income tax rate 27.5 % 24.5 %
Net income 86.2 176.1
Net loss (income) attributable to noncontrolling interests 0.7 (1.1)
Net income attributable to Amedisys, Inc. $ 86.9 $ 175.0

On a consolidated basis, our operating income decreased $69 million on a $6 million increase 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 $38 million in net service revenue and an operating loss of $33 million in the current year and $2 million in net service revenue and an operating loss of $4 million in the prior year), a $9 million reduction to net service revenue related to our Infinity ZPIC audits, 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 ZPIC and DOJ matters) and a greater benefit recognized in the prior year totaling $14 million associated with the suspension of sequestration.

Excluding our acquisitions, the Infinity ZPIC audits, the DOJ matters and the incremental sequestration benefit recognized in the prior year, our operating income decreased $10 million while net service revenue remained flat. The decrease in operating income is primarily due to a decrease in our episodic home health revenue as a percentage of total net service revenue, a decline in our hospice average daily census, which is the main driver of hospice revenue, a decrease in our other operating income due to the expiration of the CARES Act PRF funds, an increase in our cost of service resulting from planned wage increases and wage inflation and an increase in our other operating expenses. Additionally, our volumes have been and continue to be impacted by staffing shortages resulting from the competitive labor market. Partially offsetting these items, our results were positively impacted by rate increases, improvements in clinician utilization and reductions in hospice staffing levels.

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 $13 millionare reflected in other ~~operating~~ income (expense) within our condensed consolidated ~~statements~~income statement as of ~~operations during~~January 1, 2023 due to the ~~nine-month period ended September 30, 2021. This income fully~~modification of our fleet leases partially offset ~~the COVID-19 costs incurred during the six-month period June 30, 2021, which totaled $13 million; however, we were not able to recognize any operating income~~by lower executive compensation costs.

Corporate depreciation and amortization decreased $4 million during the three-month period ended September 30, 2021 to offset the $4 million of COVID-19 costs incurred during this period. Additionally, we were not able to recognize any operating income during the nine-month period ended September 30, 2022 to offset the $8 million of COVID-19 costs incurred during this period.

~~Our operating results reflect a $34 million increase in our other operating expenses compared to prior year. Excluding our acquisitions, our other operating expenses increased $5 million (1%)~~March 31, 2023 due to ~~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~~

a reduction in amortization expense related to ~~centralization~~acquired names and ~~reorganization initiatives and increased information technology fees partially offset by higher gains on the sale~~non-compete agreements that were fully amortized as of ~~fleet vehicles, a favorable legal settlement and lower incentive compensation costs.~~

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

For the Nine-Month Periods
Ended September 30,
2022 2021
Interest expense, net $ (16.3) $ (6.7)
Equity in (loss) earnings from equity method investments (0.4) 3.9
Gain on equity method investments — 31.1
Miscellaneous, net 1.1 1.3
Total other (expense) income $ (15.6) $ 29.6

Interest expense, net increased $10 million year over year as a result of interest accrued in conjunction with the Infinity ZPIC audits discussed above and increased borrowings and higher interest rates 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).

~~Home Health Segment~~

~~The following table summarizes our home health segment results of operations:~~

For the Nine-Month Periods
Ended September 30,
2022 2021
Financial Information (in millions):
Medicare $ 668.4 $ 684.4
Non-Medicare 344.4 332.1
Net service revenue 1,012.8 1,016.5
Other operating income — 7.3
Cost of service 573.3 563.5
Gross margin 439.5 460.3
Other operating expenses 259.3 243.8
Depreciation and amortization 3.3 3.3
Operating income $ 176.9 $ 213.2
Same Store Growth (1):
Medicare revenue (5 %) 10 %
Non-Medicare revenue — % 10 %
Total admissions 2 % 8 %
Total volume (2) — % 6 %
Key Statistical Data - Total (3):
Admissions 280,266 265,933
Recertifications 133,555 136,744
Total volume 413,821 402,677
Medicare completed episodes 228,177 232,838
Average Medicare revenue per completed episode (4) $ 3,017 $ 2,962
Medicare visits per completed episode (5) 13.0 14.0
Visiting clinician cost per visit $ 98.63 $ 91.94
Clinical manager cost per visit 10.87 9.54
Total cost per visit $ 109.50 $ 101.48
Visits 5,235,922 5,553,423

~~(2) Total volume includes all admissions and recertifications.~~

~~(3) Total includes acquisitions, start-ups and denovos.~~

(4) Average Medicare revenue per completed episode is the average Medicare revenue earned for each Medicare completed episode of care. Average Medicare revenue per completed episode reflects the suspension of sequestration for the period January 1, 2021 through MarchDecember 31, ~~2022 and the reinstatement of sequestration at 1% effective April 1, 2022 and at 2% effective July 1,~~ 2022.

~~(5) Medicare visits per completed episode are the home health Medicare visits on completed episodes divided by the home health Medicare episodes completed during the period.~~

~~Operating Results~~

Overall, our operating income decreased $36 million on a $4 million decrease in net service revenue. Our year over year results were impacted by the April 1, 2022 acquisitions of Evolution and AssistedCare (which contributed net service revenue of $26 million and an operating loss of $2 million to the nine-month period ended September 30, 2022), a $9 million reduction in net service revenue related to our Infinity ZPIC audits and a greater benefit recognized in the prior year totaling $8 million associated with the suspension of sequestration. Excluding these items, our operating income decreased $17 million on a $13 million decrease in net service revenue primarily due to a decrease in episodic revenue as a percentage of total net service revenue, higher revenue adjustments, the expiration of the CARES Act PRF funds, planned wage increases, wage inflation and an increase in our other operating expenses. These items were partially offset by the increase in reimbursement as well as improvement in our operating performance driven by improvements in clinician utilization.

~~Net Service Revenue~~

Our net service revenue decreased $4 million (less than 1%). Excluding our April 1, 2022 acquisitions of Evolution and AssistedCare, the Infinity ZPIC audits and the incremental sequestration benefit recognized in the prior year, our net service revenue decreased $13 million. We have experienced a year over year decline in our episodic volumes, which generate higher revenue than our non-episodic volumes. Additionally, our volumes have been impacted by staffing shortages driven by the competitive labor market. These items, as well as an increase in revenue adjustments, have resulted in a year over year decline in our net service revenue which was partially offset by the 3.2% increase in reimbursement effective January 1, 2022.

~~Other Operating Income~~

Other operating income consists of the recognition of funds received from the CARES Act PRF, which were available for use through June 30, 2021. We recorded income related to these funds totaling $7 million in other operating income within our condensed consolidated statement of operations during the nine-month period ended September 30, 2021. This income fully offset the COVID-19 costs incurred during the six-month period ended June 30, 2021, which totaled $7 million; however, we were not able to recognize any operating income during the three-month period ended September 30, 2021 to offset the $2 million of COVID-19 costs incurred during this period. Additionally, we were not able to recognize any operating income during the nine-month period ended September 30, 2022 to offset the $5 million of COVID-19 costs incurred during this period. The COVID-19 costs were associated with the purchase of PPE, premiums paid to contract clinicians, quarantine pay and COVID-19 testing and have been recorded to cost of service within our condensed consolidated statements of operations.

~~Cost of Service, Excluding Depreciation and Amortization~~

Overall, our total cost of service increased 2% primarily due to an 8% increase in our total cost per visit partially offset by a 6% decrease in total visits, resulting from improvements in clinician utilization, as evidenced by a decline of 1.0 visits per Medicare completed episode year over year. The 8% increase in our total cost per visit is primarily due to planned wage increases, higher new hire pay, an increase in salaried employees (partially due to our recent acquisitions), wage inflation, increased costs to hire and retain employees, visit mix and higher fuel prices and mileage reimbursements partially offset by a decrease in COVID-19 costs. In addition, while we compensate our clinicians on a per visit basis, there is a fixed cost component of our cost structure which also resulted in an increase in our cost per visit due to the significant decline in visits year over year.

~~Other Operating Expenses~~

Other operating expenses increased $16 million. Excluding our acquisitions, other operating expenses increased $9 million primarily due to planned wage increases, the addition of resources to support volume growth, higher travel and training spend, higher information technology fees and severance related to centralization and reorganization initiatives partially offset by lower incentive compensation costs.

~~Hospice Segment~~

~~The following table summarizes our hospice segment results of operations:~~

For the Nine-Month Periods
Ended September 30,
2022 2021
Financial Information (in millions):
Medicare $ 557.8 $ 556.2
Non-Medicare 32.4 30.7
Net service revenue 590.2 586.9
Other operating income — 6.0
Cost of service 323.2 314.4
Gross margin 267.0 278.5
Other operating expenses 152.1 144.4
Depreciation and amortization 1.7 2.0
Operating income $ 113.2 $ 132.1
Same Store Growth (1):
Medicare revenue — % — %
Hospice admissions 1 % 3 %
Average daily census (1 %) (4 %)
Key Statistical Data - Total (2):
Hospice admissions 40,027 39,650
Average daily census 13,163 13,282
Revenue per day, net $ 164.24 $ 161.87
Cost of service per day $ 89.94 $ 86.68
Average discharge length of stay 90 95

~~(2) Total includes acquisitions and denovos.~~

~~Operating Results~~

Overall, our operating income decreased $19 million on a $3 million increase in net service revenue. Excluding a $7 million favorable adjustment recorded in the prior year related to our DOJ matters (see Note 6 – Commitments and Contingencies to our condensed consolidated financial statements for additional information) and a $6 million greater benefit recognized in the prior year associated with the suspension of sequestration, operating income decreased $6 million primarily due to planned wage increases, wage inflation, a decrease in other operating income due to the expiration of the CARES Act PRF funds and an increase in our other operating expenses. These items were partially offset by the increase in reimbursement effective October 1, 2021, lower revenue adjustments and reductions in staffing levels.

~~Net Service Revenue~~

Excluding the DOJ matters and incremental sequestration benefit recognized in the prior year, our net service revenue increased $16 million primarily due to the increase in reimbursement effective October 1, 2021 as well as lower revenue adjustments partially offset by a decline in our average daily census, which is the main driver of hospice revenue. Our same store average daily census was down 1% year over year primarily due to a decline in our length of stay resulting from a delay in the timing of patients coming onto service and an increase in the discharge rate of our patients.

~~Other Operating Income~~

Other operating income consists of the recognition of funds received from the CARES Act PRF, which were available for use through June 30, 2021. We recorded income related to these funds totaling $6 million in other operating income within our condensed consolidated statement of operations during the nine-month period ended September 30, 2021. This income fully offset the COVID-19 costs incurred during the six-month period ended June 30, 2021, which totaled $6 million; however, we were not able to recognize any operating income during the three-month period ended September 30, 2021 to offset the $1 million of COVID-19 costs incurred during this period. Additionally, we were not able to recognize any operating income during the nine-month period ended September 30, 2022 to offset the $2 million of COVID-19 costs incurred during this period. The COVID-19 costs were associated with the purchase of PPE, quarantine pay and COVID-19 testing and have been recorded to cost of service within our condensed consolidated statements of operations.

~~Cost of Service, Excluding Depreciation and Amortization~~

Our hospice cost of service increased 3% primarily due to a 4% increase in our cost of service per day partially offset by a 1% decline in our average daily census. The increase in our cost of service per day is due to planned wage increases, wage inflation, increased costs to hire and retain employees, severance costs associated with centralization and reorganization initiatives and higher fuel prices and mileage reimbursements partially offset by lower COVID-19 costs and reductions in staffing levels.

~~Other Operating Expenses~~

Other operating expenses increased $8 million primarily due to planned wage increases, the addition of resources to support volume growth, higher travel and training spend, higher information technology fees and severance and lease termination costs associated with centralization and reorganization initiatives.

~~Personal Care Segment~~

~~The following table summarizes our personal care segment results of operations:~~

For the Nine-Month Periods
Ended September 30,
2022 2021
Financial Information (in millions):
Medicare $ — $ —
Non-Medicare 45.5 49.9
Net service revenue 45.5 49.9
Other operating income — —
Cost of service 34.5 37.4
Gross margin 11.0 12.5
Other operating expenses 6.8 8.8
Depreciation and amortization 0.1 0.2
Operating income $ 4.1 $ 3.5
Key Statistical Data - Total:
Billable hours 1,397,919 1,774,965
Clients served 9,530 11,597
Shifts 598,376 759,242
Revenue per hour $ 32.53 $ 28.11
Revenue per shift $ 76.00 $ 65.71
Hours per shift 2.3 2.3

~~Operating Results~~

Operating income related to our personal care segment increased $1 million on a $4 million decrease in net service revenue. The decrease in net service revenue is due to the impact of COVID-19 and staffing shortages partially offset by rate increases. These impacts have been mitigated by a reduction in our cost of service as most of our personal care employees are paid on an hourly basis as well as a reduction in our other operating expenses.

~~High Acuity Care Segment~~

~~The following table summarizes our high acuity care segment results of operations:~~

For the Nine-Month Periods
Ended September 30,
2022 2021
Financial Information (in millions):
Medicare $ 3.3 $ —
Non-Medicare 9.3 1.5
Net service revenue 12.6 1.5
Other operating income — —
Cost of service 12.3 0.9
Gross margin 0.3 0.6
Other operating expenses 24.7 3.9
Depreciation and amortization 2.4 0.5
Investment impairment 3.0 —
Operating loss $ (29.8) $ (3.8)
Key Statistical Data - Total:
Full risk admissions 339 46
Limited risk admissions 768 188
Total admissions 1,107 234
Full risk revenue per episode $ 11,018 $ 9,191
Limited risk revenue per episode $ 5,556 $ 5,524
Number of admitting joint ventures 8 8

~~Operating Results~~

Our high acuity care segment results include a full year of operations in the current year compared to two months of operations in the prior year. Our year over year results reflect revenue growth, an increase in other operating expense driven by additional investments in the business and an impairment charge recorded in connection with the wind down of the operations of one of our joint ventures. Although we expect our high acuity care segment to continue to generate operating losses, we also expect improvement in our operating income as we leverage our operating structure through growth in current and future joint ventures and expansion into new lines of business such as palliative care at home.

~~Net Service Revenue~~

Additionally, on March 23, 2022, our high acuity care segment entered into a transaction in which one of our health system partners contributed its home health operations to one of our existing joint ventures. As a result, our high acuity care segment includes revenue totaling approximately $4 million related to this joint venture's home health operations.

~~Cost of Service, Excluding Depreciation and Amortization~~

Our cost of service consists primarily of medical costs associated with direct clinician care provided to our patients during the applicable episode period, whether such care was provided on the day of program admission, in the patients’ homes or via telehealth, as well as costs associated with our VCU, which enables us to provide monitoring services and facilitates virtual patient rounding visits via telehealth. We continue to invest in the infrastructure of our VCU in anticipation of future growth.

~~Other Operating Expenses~~

Other operating expenses primarily consist of salaries and benefits. We have made significant investments to build the clinical, operational and technological infrastructure necessary to support the development and future growth of home recovery care programs on a national scale. We have also invested in resources to support future palliative care at home programs. We have employees at both the local market level and at our corporate offices.

~~Corporate~~

~~The following table summarizes our corporate results of operations:~~

For the Nine-Month Periods
Ended September 30,
2022 2021
Financial Information (in millions):
Other operating expenses $ 117.7 $ 125.5
Depreciation and amortization 12.2 15.8
Total operating expenses $ 129.9 $ 141.3

Corporate other operating expenses decreased approximately $8 million during the nine-month period ended September 30, 2022. Excluding our acquisitions, other operating expenses decreased $9 million primarily due to higher gains on the sale of fleet vehicles, lower incentive compensation costs, a favorable legal settlement and lower spend in various cost categories partially offset by planned wage increases, lease termination costs associated with our centralization and reorganization initiatives and higher acquisition and integration costs.

4535

Liquidity and Capital Resources

Cash Flows

The following table summarizes our cash flows for the periods indicated (amounts in millions):


		For the Nine-Month Periods Ended September 30,					For the Three-Month Periods Ended March 31,
		2022		2021			2023		2022
Cash provided by operating activities	Cash provided by operating activities	$	92.4	$	183.7	Cash provided by operating activities	$	26.0	$	48.6
Cash used in investing activities		(92.6)		(269.9)
Cash (used in) provided by financing activities		(14.1)		131.1
Net (decrease) increase in cash, cash equivalents and restricted cash		(14.3)		44.9
Cash provided by (used in) investing activities						Cash provided by (used in) investing activities	45.9		(16.1)
Cash used in financing activities						Cash used in financing activities	(56.9)		(7.4)
Net increase in cash, cash equivalents and restricted cash						Net increase in cash, cash equivalents and restricted cash	15.0		25.1
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	45.8		83.3		Cash, cash equivalents and restricted cash at beginning of period	54.1		45.8
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	31.5	$	128.2	Cash, cash equivalents and restricted cash at end of period	$	69.1	$	70.9

Cash provided by operating activities decreased ~~$91.3~~$22.6 million during the ~~nine-month~~three-month period ended ~~September 30, 2022~~March 31, 2023 compared to the ~~nine-month~~three-month period ended ~~September 30, 2021~~March 31, 2022 primarily due to lower operating income and higher interest payments combined with the timing of the payment of a full year of operating expenses for our high acuity care segment compared to only two months in the prior year, the repayment of $34.3 million in connection with our Infinity ZPIC audits (see Note 6 – Commitments and Contingencies to our condensed consolidated financial statements for additional information), lower collections due to the reinstatement of sequestration and higher cash outflows resulting from increases in our cost of service, other operating expenses and interest on borrowings.accrued expenses.

Our ~~cash used in~~ investing activities primarily ~~consists~~consist of the purchase of property and equipment, investments and acquisitions. Cash provided by investing activities totaled $45.9 million during the three-month period ended March 31, 2023 primarily due to the divestiture of our personal care line of business. Cash used in investing activities ~~decreased $177.3~~totaled $16.1 million during the ~~nine-month~~three-month period ended ~~September 30,~~March 31, 2022 ~~compared~~primarily due to ~~the nine-month period ended September 30, 2021 as a result~~our purchase of a ~~reduction in acquisition spend.~~cost method investment.

Our financing activities primarily consist of borrowings under our term loan and/or revolving credit facility, repayments of borrowings, the remittance of taxes associated with shares withheld on non-cash compensation, proceeds related to the exercise of stock options, proceeds related to the purchase of stock under our employee stock purchase plan and our purchase of company stock under our stock repurchase program. Cash used in financing activities totaled ~~$14.1~~$56.9 million and $7.4 million during the ~~nine-month period~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, respectively, and was primarily ~~due~~related to the ~~remittance~~repayment of ~~taxes associated with shares withheld on non-cash compensation, the repurchase of company stock and the payment of accrued contingent consideration partially offset by net~~ borrowings under our Second Amended Credit Agreement. Cash provided by financing activities totaled $131.1 million during the nine-month period ended September 30, 2021 primarily due to net borrowings under our Second Amended Credit Agreement to fund acquisitions partially offset by the repurchase of company stock and the remittance of taxes associated with shares withheld on non-cash compensation. Net proceeds from the divestiture of our personal care line of business were used to pay a portion of our Term Loan during the three-month period ended March 31, 2023.

Liquidity

Typically, our principal source of liquidity is the collection of our patient accounts receivable, primarily through the Medicare program. In addition to our collection of patient accounts receivable, from time to time, we can and do obtain additional sources of liquidity by the incurrence of additional indebtedness.

During the ~~nine-month~~three-month period ended ~~September 30, 2022,~~March 31, 2023, we spent ~~$4.3~~$1.6 million in capital expenditures and investments in technology assets as compared to ~~$5.2~~$1.1 million during the ~~nine-month~~three-month period ended ~~September 30, 2021.~~March 31, 2022. Our capital expenditures and investments in technology assets for ~~2022~~2023 are expected to be approximately ~~$6.0~~$17.0 million to ~~$7.0~~$18.0 million, excluding the impact of any future acquisitions.

Additionally, during the nine-month period ended September 30, 2022, pursuant to our authorized stock repurchase program, we repurchased 150,000 shares of our common stock at a weighted average price of $115.64 per share and a total cost of approximately $17 million. The repurchased shares are classified as treasury shares.

As of ~~September 30, 2022,~~March 31, 2023, we had ~~$18.0~~$49.4 million in cash and cash equivalents and ~~$503.7~~$519.2 million in availability under our $550.0 million Revolving Credit Facility. We used cash on hand and proceeds from borrowings under our Revolving Credit Facility to fund the acquisitions of Evolution and AssistedCare on April 1, 2022 (see Note 4 – Acquisitions to our condensed consolidated financial statements for additional information).

Based on our operating forecasts and our ~~expected~~ debt service requirements, we believe we will have sufficient liquidity to fund our operations, capital requirements and debt service requirements for the next twelve months and beyond.

Outstanding Patient Accounts Receivable

Our patient accounts receivable ~~increased $27.5~~decreased $2.7 million from December 31, 2021. Our Medicare patient accounts receivable increased $9.7 million primarily due to the ongoing resolution of Medicare penalties on late submitted Notice of Admissions (“NOAs”) due to patient changes of coverage and delays in billing resulting from required pre-billing determination by the CMS Medicare Administrative Contractors (“MACs”) for the five Review Choice Demonstration states before a claim can be submitted for reimbursement. Earlier in 2022, CMS issued revised guidance to the MACs to allow an exception to the late NOA penalty when a patient’s change of coverage was identified retrospectively after admission. The reconsideration of late NOAs with these exceptions is ongoing. Our non-Medicare patient accounts receivable increased $17.8 million as a result of the transition of private episodic payor reimbursement models to per visit reimbursement methods with the introduction of third-party utilization management conveners.2022. Our cash collection as a percentage of revenue was ~~104%~~99% and 97% for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021.~~respectively. Our days revenue outstanding at ~~September 30, 2022~~March 31, 2023 was ~~47.3~~46.3 days, which is an increase of ~~4.1~~0.2 days from December 31, ~~2021~~2022 and ~~an increase of 3.8 days from September 30, 2021.~~flat when compared to March 31, 2022.

Our patient accounts receivable includes unbilled receivables and are aged based upon our initial service date. We monitor unbilled receivables on a care center by care center basis to ensure that all efforts are made to bill claims within timely filing deadlines. Our unbilled patient accounts receivable ~~may~~can be impacted by ~~pre-bill patient account submissions~~pre-claim reviews required by the ~~MACs~~Medicare Administrative Contractors in the five Review Choice Demonstration states, ~~in order to obtain billing affirmation,~~ voluntary pre-bill edits and ~~reviews,~~review, efforts to secure needed documentation to bill (orders, consents, etc.), integrations of recent acquisitions, ~~and~~ changes of ownership and any regulatory and procedural updates impacting claim submission. The timely filing deadline for Medicare is one year from the date of the last billable service in the 30-day billing period and varies by state for Medicaid-reimbursable services and among insurance companies and other private payors.

The following schedules detail our patient accounts receivable, by payor class, aged based upon initial date of service (amounts in millions, except days revenue outstanding):


		0-90		91-180		181-365		Over 365		Total			0-90		91-180		181-365		Over 365		Total
At September 30, 2022:
At March 31, 2023:												At March 31, 2023:
Medicare patient accounts receivable	Medicare patient accounts receivable	$	176.4	$	14.5	$	5.4	$	0.1	$	196.4	Medicare patient accounts receivable	$	178.7	$	14.0	$	4.2	$	0.2	$	197.1
Other patient accounts receivable:	Other patient accounts receivable:											Other patient accounts receivable:
Medicaid	Medicaid	16.1		1.3		0.5		—		17.9		Medicaid	17.2		1.3		0.8		—		19.3
Private	Private	74.0		9.7		4.5		—		88.2		Private	65.7		6.9		5.1		—		77.7
Total	Total	$	90.1	$	11.0	$	5.0	$	—	$	106.1	Total	$	82.9	$	8.2	$	5.9	$	—	$	97.0
Total patient accounts receivable	Total patient accounts receivable									$	302.5	Total patient accounts receivable									$	294.1
Days revenue outstanding (1)	Days revenue outstanding (1)									47.3		Days revenue outstanding (1)									46.3
		0-90		91-180		181-365		Over 365		Total			0-90		91-180		181-365		Over 365		Total
At December 31, 2021:
At December 31, 2022:												At December 31, 2022:
Medicare patient accounts receivable	Medicare patient accounts receivable	$	176.7	$	7.5	$	1.1	$	1.4	$	186.7	Medicare patient accounts receivable	$	179.9	$	11.4	$	5.1	$	0.1	$	196.5
Other patient accounts receivable:	Other patient accounts receivable:											Other patient accounts receivable:
Medicaid	Medicaid	16.0		1.5		0.7		—		18.2		Medicaid	16.3		1.4		0.7		—		18.4
Private	Private	59.7		8.7		1.7		—		70.1		Private	67.5		8.7		5.7		—		81.9
Total	Total	$	75.7	$	10.2	$	2.4	$	—	$	88.3	Total	$	83.8	$	10.1	$	6.4	$	—	$	100.3
Total patient accounts receivable	Total patient accounts receivable									$	275.0	Total patient accounts receivable									$	296.8
Days revenue outstanding (1)	Days revenue outstanding (1)									43.2		Days revenue outstanding (1)									46.1

(1)Our calculation of days revenue outstanding is derived by dividing our ending patient accounts receivable at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 by our average daily net service revenue for the three-month periods ended ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

Indebtedness

Second Amendment to the Credit Agreement

~~Net proceeds from~~Third Amendment to the ~~$450.0 million~~Credit Agreement

~~Our weighted average~~use of the London Interbank Offered Rate ("LIBOR") with the Secured Overnight Financing Rate ("SOFR") for interest rate pricing and (ii) allowed for the disposition of our personal care business.

The loans issued under the Amended Credit Facility bear interest on a per annum basis, at our election, at either: (i) the Base Rate plus the Applicable Rate or (ii) the Term SOFR Rate plus the Applicable Rate. The “Base Rate” means a fluctuating rate per annum equal to the highest of (a) the federal funds rate plus 0.50% per annum, (b) the prime rate of interest established by

the Administrative Agent, and (c) the Term SOFR Rate plus 1% per annum. The “Term SOFR Rate” means the quoted rate per annum equal to the SOFR for an interest period of one or three months (as selected by us) plus the SOFR adjustment of 0.10%.

See Note ~~5 –~~6 - Long Term Obligations to our condensed consolidated financial statements for additional details on our outstanding long-term obligations.

Stock Repurchase Program

~~Pursuant~~ Effective January 1, 2023, repurchases are subject to ~~this program, we~~a 1% excise tax under the Inflation Reduction Act. We have not repurchased ~~150,000~~any shares under the 2023 Share Repurchase Program as of our common stock at a weighted average price of $115.64 per share and a total cost of approximately $17 million during the nine-month period ended September 30, 2022. There were no shares repurchased during the three-month period ended September 30, 2022. The repurchased shares are classified as treasury shares.March 31, 2023.

Inflation

Our operations have been materially impacted by the current inflationary environment as we have experienced higher labor costs and increases in supply costs, fuel costs and mileage reimbursements. We expect inflation to continue to impact our operations in 2023. As of ~~September 30, 2022,~~March 31, 2023, the impacts of inflation on our results of operations have been partially mitigated

by rate increases, improvements in clinician utilization, ~~and~~ reductions in hospice staffing ~~levels.~~levels and clinical optimization and reorganization initiatives. No assurance can be given as to our ability ~~to continue~~ to offset the impacts of inflation in the future.

Critical Accounting Estimates

See Part II, Item 7 – Critical Accounting Estimates and our consolidated financial statements and related notes in Part II, Item 8 of our ~~2021~~2022 Annual Report on Form 10-K for accounting policies and related estimates we believe are the most critical to understanding our condensed consolidated financial statements, financial condition and results of operations and which require complex management judgment and assumptions or involve uncertainties. These critical accounting estimates include revenue recognition, business combinations and goodwill and other intangible assets. There have not been any changes to our significant accounting policies or their application since we filed our ~~2021~~2022 Annual Report on Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from fluctuations in interest rates. Our Term Loan and Revolving Credit Facility carry a floating interest rate which is tied to the ~~Eurodollar rate (i.e.~~ ~~LIBOR)~~Secured Overnight Financing Rate ("SOFR") and the Prime Rate, and therefore, our condensed consolidated ~~statements of operations~~income statement and our condensed consolidated statements of cash flows are exposed to changes in interest rates. ~~Our Second Amended Credit Agreement provides for the replacement of LIBOR with the daily or term secured overnight financing rate ("SOFR") in the event LIBOR is discontinued.~~ As of ~~September 30, 2022,~~March 31, 2023, the total amount of outstanding debt subject to interest rate fluctuations was ~~$457.2~~$383.1 million. A 1.0% interest rate change would cause interest expense to change by approximately ~~$4.6~~$3.8 million annually, assuming the Company makes no principal repayments.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures which are designed to provide reasonable assurance of achieving their objectives and to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, disclosed and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. This information is also accumulated and communicated to our management and Board of Directors to allow timely decisions regarding required disclosure.

In connection with the preparation of this Quarterly Report on Form 10-Q, as of ~~September 30, 2022,~~March 31, 2023, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act.

Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of ~~September 30, 2022,~~March 31, 2023, the end of the period covered by this Quarterly Report.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) that have occurred during the quarter ended ~~September 30, 2022,~~March 31, 2023, that have materially impacted, or are reasonably likely to materially impact, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal controls over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls’ effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and, based on an evaluation of our controls and procedures, our principal executive officer and our principal financial officer concluded our disclosure controls and procedures were effective at a reasonable assurance level as of ~~September 30, 2022,~~March 31, 2023, the end of the period covered by this Quarterly Report.

5039

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note ~~6 –~~7 - Commitments and Contingencies to the condensed consolidated financial statements for information concerning our legal proceedings.

ITEM 1A. RISK FACTORS

~~There have been no material changes~~In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the ~~risk~~ factors ~~described~~discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. These risks, which could materially affect our business, financial condition or future results, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition and/or operating results.

In addition to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, the following risks are related to the proposed Merger:

The proposed Merger is subject to approval of our stockholders as well as the satisfaction of other closing conditions, including government consents and approvals, some or all of which may not be satisfied or completed within the expected timeframe, if at all.

Completion of the Merger is subject to a number of closing conditions, including obtaining the approval of our stockholders and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. We can provide no assurance that all required consents and approvals will be obtained or that all closing conditions will otherwise be satisfied (or waived, if applicable), and, even if all required consents and approvals can be obtained and all closing conditions are satisfied (or waived, if applicable), we can provide no assurance as to the terms, conditions and timing of such consents and approvals or the timing of the completion of the Merger. Many of the conditions to completion of the Merger are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, if applicable). Any adverse consequence of the pending Merger could be exacerbated by any delays in completion of the Merger or termination of the Merger Agreement.

Each party’s obligation to consummate the Merger is also subject to the accuracy of the representations and warranties of the other party (subject to certain exceptions) and performance by each party of its respective obligations under the Merger Agreement, including, agreements by us and Option Care Health to use our reasonable best efforts to carry on our respective businesses in all material respects in the ordinary course, consistent with past practice, and to preserve our business organization and relationships with customers, suppliers, licensors, licensees and other third parties, and to comply with certain operating covenants. In addition, the Merger Agreement may be terminated under certain specified circumstances, including, but not limited to, if our board of directors make an Amedisys Recommendation Change (as defined in the Merger Agreement) or if the board of directors of Option Care Health makes an Option Care Health Recommendation Change (as defined in the Merger Agreement). As a result, we cannot assure you that the Merger will be completed, even if our stockholders approve the Merger, or that, if completed, it will be exactly on the terms set forth in the Merger Agreement or within the expected time frame.

We may not complete the proposed Merger within the time frame we anticipate or at all, which could have an adverse effect on our business, financial results and/or operations.

The proposed Merger may not be completed within the expected timeframe, or at all, as a result of various factors and conditions, some of which may be beyond our control. If the Merger is not completed for any reason, including as a result of our stockholders failing to adopt the Merger Agreement, our stockholders will not receive any payment for their shares of our common stock in connection with the Merger. Instead, we will remain a public company, our common stock will continue to be listed and traded on The Nasdaq Global Select Market and registered under the Exchange Act, and we will be required to continue to file periodic reports with the SEC. Moreover, our ongoing business may be materially adversely affected, and we would be subject to a number of risks, including the following:

•we may experience negative reactions from the financial markets, including negative impacts on our stock price, and it is uncertain when, if ever, the price of the shares would return to the prices at which the shares currently trade;

•we may experience negative publicity, which could have an adverse effect on our ongoing operations including, but not limited to, retaining and attracting employees, customers, partners, suppliers and others with whom we do business;

•we will still be required to pay certain significant costs relating to the Merger, such as legal, accounting, financial advisory, printing and other professional services fees, which may relate to activities that we would not have undertaken other than in connection with the Merger;

•we may be required to pay a termination fee to Option Care Health of $106,000,000, as required under the Merger Agreement under certain circumstances;

•while the Merger Agreement is in effect, we are subject to restrictions on our business activities, including, among other things, restrictions on our ability to engage in certain kinds of material transactions, which could prevent us from pursuing strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively and/or timely to competitive pressures and industry developments, and may as a result materially adversely affect our business, results of operations and financial condition;

•matters relating to the Merger require substantial commitments of time and resources by our management, which could result in the distraction of management from ongoing business operations and pursuing other opportunities that could have been beneficial to us; and

•we may commit significant time and resources to defending against litigation related to the Merger.

If the Merger is not consummated, the risks described above may materialize, and they may have a material adverse effect on our business operations, financial results and stock price, particularly to the extent that the current market price of our common stock reflects an assumption that the Merger will be completed.

We will be subject to various uncertainties while the Merger is pending that may cause disruption and may make it more difficult to maintain relationships with employees, customers and other third-party business partners.

Our efforts to complete the Merger could cause substantial disruptions in, and create uncertainty surrounding, our business, which may materially adversely affect our results of operation and our business. Uncertainty as to whether the Merger will be completed may affect our ability to recruit prospective employees or to retain and motivate existing employees. Employee retention may be particularly challenging while the Merger is pending because employees may experience uncertainty about their roles following the Merger. As mentioned above, a substantial amount of our management’s and employees’ attention is being directed toward the completion of the Merger and thus is being diverted from our day-to-day operations. Uncertainty as to our future could adversely affect our business and our relationship with customers and potential customers. For example, customers, suppliers and other third parties may defer decisions concerning working with us, or seek to change existing business relationships with us. Changes to or termination of existing business relationships could adversely affect our revenue, earnings and financial condition, as well as the market price of our common stock. The adverse effects of the pendency of the Merger could be exacerbated by any delays in completion of the Merger or termination of the Merger Agreement.

In certain instances, the Merger Agreement requires us to pay a termination fee to Option Care Health, which could affect the decisions of a third party considering making an alternative acquisition proposal.

Under the terms of the Merger Agreement, we may be required to pay Option Care Health a termination fee of $106,000,000 under specified conditions, including in the event the Merger Agreement is terminated due to a recommendation change by our board of directors or under certain circumstances where a proposal for an alternative transaction has been made to us and, within 12 months following termination, we enter into a definitive agreement providing for an alternative transaction or consummate an alternative transaction. This payment could affect the structure, pricing and terms proposed by a third party seeking to acquire or merge with us and could discourage a third party from making a competing acquisition proposal, including a proposal that would be more favorable to our stockholders than the Merger.

We have incurred, and will continue to incur, direct and indirect costs as a result of the Merger.

We have incurred, and will continue to incur, significant costs and expenses, including regulatory costs, fees for professional services and other transaction costs in connection with the Merger, for which we will have received little or no benefit if the Merger is not completed. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses. Many of these fees and costs will be payable by us even if the Merger is not completed and may relate to activities that we would not have undertaken other than to complete the Merger.

Litigation challenging the Merger Agreement may prevent the Merger from being consummated within the expected timeframe or at all.

Lawsuits may be filed against us, our board of directors or other parties to the Merger Agreement, challenging the Merger or making other claims in connection therewith. Such lawsuits may be brought by our purported stockholders and may seek, among other things, to enjoin consummation of the Merger. One of the conditions to the consummation of the Merger is the absence of any order or law that has the effect of enjoining or otherwise prohibiting the completion of the Merger. As such, if the plaintiffs in such potential lawsuits are successful in obtaining an injunction prohibiting the defendants from completing the Merger on the agreed upon terms, then such injunction may prevent the Merger from becoming effective, or from becoming effective within the expected timeframe.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides the information with respect to purchases made by us of shares of our common stock during each of the months during the three-month period ended ~~September 30, 2022:~~March 31, 2023:

Period (a) Total Number
of Shares (or Units)
Purchased (b) Average Price
Paid per Share (or
Unit) (c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs (d) Maximum Number (or
Approximate Dollar
Value) of Shares (or
Units) That May Yet Be
Purchased Under the
Plans or Programs
July 1, 2022 to July 31, 2022 24,743 $ 128.18 — $ 82,648,900
August 1, 2022 to August 31, 2022 126 120.97 — 82,648,900
September 1, 2022 to September 30, 2022 — — — 82,648,900
24,869 (1) $ 128.14 — $ 82,648,900


Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs
January 1, 2023 to January 31, 2023	6,820		$	82.60	—	$	100,000,000
February 1, 2023 to February 28, 2023	7,668		97.11		—	100,000,000
March 1, 2023 to March 31, 2023	—		—		—	100,000,000
	14,488	(1)	$	90.28	—	$	100,000,000

(1)Includes shares of common stock surrendered to us by certain employees to satisfy tax withholding and/or strike price obligations in connection with the vesting of non-vested stock ~~and exercise of stock options~~ previously awarded to such employees under our ~~2008 and~~ 2018 Omnibus Incentive Compensation ~~Plans.~~Plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The exhibits marked with the cross symbol (†) are filed and the exhibits marked with a double cross (††) are furnished with this Form 10-Q. Any exhibits marked with the asterisk symbol (*) are management contracts or compensatory plans or arrangements filed pursuant to Item 601(b)(10)(iii) of Regulation S-K.

Exhibit
Number

Document Description

Report or Registration Statement

SEC File or
Registration
Number

Exhibit
or Other
Reference

Exhibit
Number

Document Description

Report or Registration Statement

SEC File or
Registration
Number

Exhibit
or Other
Reference

2.1

Equity Purchase Agreement, by and among Associated Home Care, L.L.C., Amedisys Personal Care, LLC, Amedisys, Inc. and HouseWorks Holdings, LLC, dated February 10, 2023 (Immaterial schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission upon request.)

3.1

Composite of Certificate of Incorporation of the Company inclusive of all amendments through June 14, 2007

The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007

0-24260

3.1

Composite of Certificate of Incorporation of the Company inclusive of all amendments through June 14, 2007

The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007

0-24260

3.1

3.2

Composite of By-Laws of the Company inclusive of all amendments through October 20, 2021

The Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021

0-24260

3.2

Composite of By-Laws of the Company inclusive of all amendments through October 20, 2021

The Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021

0-24260

3.2

†*10.1

Mutual Separation Agreement and General Release, by and between Amedisys, Inc. and David L. Kemmerly (including the Consulting Services Agreement attached as Exhibit A thereto)

*10.1

Separation Agreement and General Release, by and between Amedisys, Inc. and Christopher T. Gerard

10.2

Third Amendment to Amended and Restated Credit Agreement, dated as of March 10, 2023, by and among Amedisys, Inc. and Amedisys Holding, L.L.C., as the borrowers, the Guarantors party thereto, the Lenders party thereto, Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer, and the other L/C Issuers party thereto (Immaterial schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission upon request.)

†31.1

Certification of Christopher T. Gerard, President and Chief Executive Officer (principal executive officer), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

†31.1

Certification of Richard Ashworth, President and Chief Executive Officer (principal executive officer), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

†31.2

Certification of Scott G. Ginn, Executive Vice President and Chief Financial Officer (principal financial officer), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

†31.2

Certification of Scott G. Ginn, Acting Chief Operating Officer, Executive Vice President and Chief Financial Officer (principal financial officer), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

††32.1

Certification of Christopher T. Gerard, President and Chief Executive Officer (principal executive officer), pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

††32.1

Certification of Richard Ashworth, President and Chief Executive Officer (principal executive officer), pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

††32.2

Certification of Scott G. Ginn, Executive Vice President and Chief Financial Officer (principal financial officer), pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

††32.2

Certification of Scott G. Ginn, Acting Chief Operating Officer, Executive Vice President and Chief Financial Officer (principal financial officer), pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

†101.INS

Inline XBRL Instance - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

†101.INS

Inline XBRL Instance - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

†101.SCH

Inline XBRL Taxonomy Extension Schema Document

†101.SCH

Inline XBRL Taxonomy Extension Schema Document

†101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

†101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

†101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase

†101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase

†101.LAB

Inline XBRL Taxonomy Extension Labels Linkbase Document

†101.LAB

Inline XBRL Taxonomy Extension Labels Linkbase Document

†101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

†101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

5243

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



AMEDISYS, INC. (Registrant)

By:						/s/ SCOTT G. GINN
						Scott G. Ginn,
						Principal Financial Officer and
						Duly Authorized Officer

Date: ~~October 27, 2022~~May 4, 2023

5344


	For the Three-Month Periods Ended September 30,				For the Nine-Month Periods Ended September 30,
	2022		2021		2022		2021
Home Health:
Medicare	40	%	41	%	40	%	41	%
Non-Medicare - Episodic-based	7	%	8	%	8	%	8	%
Non-Medicare - Non-episodic based	13	%	12	%	13	%	12	%
Hospice:
Medicare	34	%	34	%	33	%	34	%
Non-Medicare	2	%	2	%	2	%	2	%
Personal Care	3	%	3	%	3	%	3	%
High Acuity Care (1)	1	%	—	%	1	%	—	%
	100	%	100	%	100	%	100	%


	Fair Value at Reporting Date Using
Financial Instrument	Carrying Value as of September 30, 2022		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long-term obligations	$	457.4	$	—	$	473.4	$	—


	September 30, 2022		December 31, 2021
$450.0 million Term Loan; interest rate at Base Rate plus Applicable Rate or Eurodollar Rate plus Applicable Rate (4.6% at September 30, 2022); due July 30, 2026	$	438.7	$	447.2
$550.0 million Revolving Credit Facility; interest only payments; interest rate at Base Rate plus Applicable Rate or Eurodollar Rate plus Applicable Rate (4.6% at September 30, 2022); due July 30, 2026	18.5		—
Promissory notes	0.2		0.8
Finance leases	2.4		1.6
Principal amount of long-term obligations	459.8		449.6
Deferred debt issuance costs	(3.8)		(4.5)
	456.0		445.1
Current portion of long-term obligations	(12.6)		(13.0)
Total	$	443.4	$	432.1