On Mar 15, 2014, Zacks Investment Research downgraded
) to a Zacks Rank #3 (Hold) from a Zacks Rank #2 (Buy).
Why the Downgrade?
On Mar 12, Amedisys reported dismal operating results for
fourth-quarter 2013. The company recorded adjusted loss from
continuing operations per share of 5 cents, a massive downfall
from the adjusted income from continuing operations of 25 cents
earned in the year-ago quarter. Reported loss was also wider than
the Zacks Consensus Estimate of loss of 3 cents a share.
Although revenues of $303.5 million in the quarter fared
better than the Zacks Consensus Estimate of $295 million, the
results were down 13.7% year over year.
Amedisys also failed to meet its guidance for yet another
quarter. Per management, three factors led to the earnings
downfall: higher cost per visit in home health,
higher-than-expected employee healthcare cost and an accrual of
$450,000 related to one of the company's care centers.
We believe poor segment performance, sluggish growth trends
and the adverse impact from sequestration led to the dismal
fourth-quarter results. Moreover, the fact that no guidance was
provided for the upcoming fiscal failed to inspire
Subsequently, the company has seen a negative trend in
earnings estimate revision in the past 7 days. For the first
quarter of 2014, three estimates moved down in the past 30 days,
with no upward revision while for the full year, four estimates
moved down with a single upward revision alone.
The highly uncertain home nursing reimbursement environment,
coupled with significant reduction in Medicare reimbursement in
the recent past, has affected Amedisys' performance over the past
few quarters. We expect the healthcare reimbursement pressure to
persist even in 2014, thereby weakening the company's performance
Other Stocks to Consider
Some better-ranked stocks in the broader medical industry
Align Technology Inc.
CR Bard Inc.
Becton, Dickinson and Co.
). All the three stocks hold a Zacks Rank #2.
ALIGN TECH INC (ALGN): Free Stock Analysis
AMEDISYS INC (AMED): Free Stock Analysis
BARD C R INC (BCR): Free Stock Analysis
BECTON DICKINSO (BDX): Free Stock Analysis
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