On March 6, Zacks Investment Research downgraded home health and hospice care provider Amedisys Inc. AMED to a Zacks Rank #3 (Hold).
Why the Downgrade?
We are disappointed with Amedisys' unimpressive fourth-quarter financial results wherein the bottom line was on par with the Zacks Consensus Estimate, while the top line missed by a whisker. Since the release of a disappointing quarter, the company's stock price has dropped 6.5% to close at $27.63 yesterday.
In the quarter under review, Amedisys reported adjusted earnings from continuing operations of 27 cents per share. Although the bottom line improved remarkably from the year-ago loss of 7 cents per share, it merely met the Zacks Consensus Estimate. Fourth quarter net service revenues of $300.5 million were down 1% year over year and short of the Zacks Consensus Estimate of $301 million by a narrow margin.
The Hospice division continued to disappoint with a 6.3% drop in revenues during the quarter. While admissions were up 2%, same store average daily census fell 3% year over year. Amedisys projects that its Hospice division will continue to suffer even in the first quarter of 2015 as two less hospice days of revenues during the period will have an impact of $1 million along with certain typical seasonality.
Moreover, the fact that Amedisys has not provided any guidance for the current fiscal year might work against the company.
The disappointing quarterly performance prompted a drop in the Zacks Consensus Estimate for the first quarter of 2015 in the last 30 days. The estimate declined 20% to 20 cents as 5 of the 6 estimates moved south with no movement in the positive direction.
Stocks to Consider
Investors interested in the similar sector can, however, consider stocks like Almost Family Inc. AFAM, Chemed Corp. CHE and LHC Group, Inc. LHCG. All the three stocks carry a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment