Accendra Health (ACH) Q4 2018 earnings summary

Executive summary

• 2018 revenue rose 5.6% to $9.84B, while reported net loss was $437.0M; adjusted EPS was $1.15 versus $1.61 in 2017.

• Halyard’s Surgical & Infection Prevention business was acquired for $758M net of cash on April 30, expanding proprietary products and global reach.

• Leadership, organizational structure and reporting changed; the business now reports Global Solutions and Global Products, with Edward Pesicka set to become CEO in March 2019.

Financial highlights

• Q4 2018 revenue was $2.543B; gross margin was $364.7M; net loss was $261.8M, or $(4.37) per diluted share.

• FY 2018 revenue was $9.839B versus $9.318B; gross margin was $1.367B, or 13.89% of revenue versus 12.58%.

• Reported operating loss was $392.2M and net loss was $437.0M; adjusted operating income was $176.8M and adjusted net income was $70.4M.

• Adjusted EPS was $1.15 versus $1.61 in 2017; reported diluted EPS was $(7.28), including $439.6M in goodwill and intangible impairment charges.

• Operating cash flow was $115.6M; cash used in investing was $815.8M, including $751.8M for acquisitions, while financing cash flow was $701.1M.

Outlook and guidance

• 2019 priorities include restoring daily service reliability, growing proprietary and preferred-vendor product sales, and investing in Fusion5 and customer solutions.

• Management characterized 2019 expectations as reasonable and achievable and targeted a solid year that builds a foundation for future growth.

• Fusion5 planned to serve healthcare providers under bundled-payment arrangements in 2019 and beyond; it generated no revenue and incurred losses in 2018.