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Amedisys Buys 6 Home Health, Hospice Care Centers from Tenet

Baton Rouge, LA-based Amedisys Inc.AMED , a household name in home health and hospice services space, recently signed an exclusive agreement with Tenet Healthcare Corporation (THC). Per the deal, the former will acquire six of Tenet's home health care centers and Hospice operations in Arizona, Illinois, Massachusetts and Texas.

Tenet Healthcare is a diversified healthcare services company that offers technology-based health management solutions to hospitals, health systems, integrated delivery networks, physician groups, self-insured organizations and health plans.

Amedisys claims that the impending buyout is a strategic fit as it will give the company a better opportunity to continue with its goal of providing high-quality post-acute services in key markets. The consolidation will allow Amedisys to improve the delivery of care and management of patients across the care continuum in these markets.

Amedisys Inc Price

Amedisys Inc Price | Amedisys Inc Quote

In the last reported fourth-quarter 2016, the company decided to acquire another home healthcare company known as Home Staff, LLC.

In this regard, Amedisys' long-term strategy is to evolve from being a traditional home health and hospice care company to one focused on bringing home a range of care to address the needs of patients. As a result, the company is developing and acquiring new business lines that will complement its existing home care and hospice business and help aged people manage their health more effectively and stay at their homes longer. It is also working to develop or acquire new business lines that are focused on managing patients' age-related disease processes from the onset till the end of life.

According to a recent report by MarketsandMarkets , the global home healthcare and hospice market is forecasted to reach a worth of $349.8 billion by 2020, at a CAGR of 9.0%. Growth will mainly be driven by factors such as rising old-age demography across the globe, growing need of cost-effective healthcare, rising incidences of chronic diseases and technological advancements in devices.

However, changing reimbursement policies, limited insurance coverage and risks to personal safety of home care workers are the factors restraining growth in the home healthcare market to a certain extent. The recent proposed rule for U.S. Home Health in 2017 by CMS, which includes a shift to a budget neutral plan for reimbursement, may affect home health care companies. Despite the persistent pressure on the U.S. healthcare system, Amedisys will continue to benefit from the above-mentioned strengths in the home-health care and hospice market.

Stock Performance

Amedisys has been performing well for quite some time. In the last three months, the company has been trading above the Zacks categorized Medical - Outpatient and Home Healthcare industry. The stock has gained 32% over the time frame, compared to the the broader industry's addition of only 7.3%.

Notably, in the recently concluded fourth quarter of 2016, the company witnessed strong organic growth in Medicare and non-Medicare revenues under its Home Health division. The division grew 2.2% year over year to $268.3 million. Within the Hospice division, net service revenues grossed $85.2 million, up 12.4% year over year.

Zacks Rank &Key Picks

Amedisys currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the medical product sector are Glaukos Corporation GKOS , Cardiovascular Systems CSII and Neogen Corp. NEOG . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Glaukos gained over 100% in the last one year in comparison to the S&P 500's gain of 20.2%. The company has a stellar four-quarter average earnings surprise of over 100%.

Cardiovascular Systems surged over 100% in the last one year in comparison to the S&P 500. It has a four-quarter average earnings surprise of 67.8%.

Neogen gained 27.9% in the past one year, better than the S&P 500 mark. The stock has an impressive long-term earnings growth rate of 16.7% for the next five years compared to the industry average of 15.2%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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