On Dec 14, 2015, we issued an updated research report on Amedisys Inc. AMED, a provider of home health and hospice services across the U.S.
In third-quarter 2015, Amedisys reported solid top and bottom-line beats over the Zacks Consensus Estimate. The company witnessed balanced revenue growth in both its Home Health and Hospice divisions.
In Home Health, the company continued to generate strong organic growth in Medicare and non-Medicare revenues. In Hospice, Amedisys successfully posted strong quarterly same-store revenue growth. Going ahead, Hospice growth prospects remain strong as the Centers for Medicare & Medicaid Services’ (CMS) programs will help drive increased adoption of hospice benefit.
The home health industry is poised for tremendous growth in the long term, driven by an aging U.S. population, patients’ desire for greater independence, and home health as a cheaper care modality. Amedisys is expected to consistently benefit from the aging demographics of the U.S. population and the need for higher acuity patients to be taken care of in a home nursing environment.
We are also upbeat about the company’s initiative to drive organic growth as well as its search for strategically fit merger and acquisition activities. Notably, the company is developing and acquiring new business lines that will complement its existing home care and hospice business and help seniors manage their health more effectively while staying in their homes longer. It is also working to develop or acquire new business lines that are focused on managing patients’ age-related diseases from their onset till the end of life.
On the flip side, the market for home health and hospice is essentially fragmented with a number of small local providers and few barriers to entry. On this account, Amedisys faces tough competition primarily from local private, public and hospital-owned health care providers. Also, reimbursement rate cuts arising out of Medicare reforms pose challenges to the stock.
Currently, Amedisys carries a Zacks Rank #2 (Buy).
Key Picks in the Sector
Some other top-ranked med-outpatient/home care stocks are AmSurg Corp. AMSG, Chemed Corp. CHE and PharMerica Corporation PMC. All the three stocks carry a Zacks Rank #1 (Strong Buy).
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