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Amedisys Rides on Coronavirus-Led Business Amid Cost Woes

On Jul 17, we issued an updated research report on Amedisys, Inc. AMED. The stock currently carries a Zacks Rank #2 (Buy).

This renowned home health and hospice services provider has outperformed its industry over the past six months. The stock has rallied 16.4% against 1.4% decline of the industry.

The company noted that the COVID-19-led economic mayhem has had a mixed impact on its business. Before the second week of March, Amedisys witnessed a decline in referral volumes and an increase in MIS visits. From the second week of March, the company started to see a drop in MIS visits while witnessing steady recovery in referral volumes in all lines of businesses. In hospice, while referrals hit their lowest point, admission volumes significantly improved.

The company started to see signs of progress in episodes in March. Although the impact of COVID-19 ultimately led to increased lupus and fall in building periods in this population (the full impact is expected in the second quarter), the company is confident that it can achieve its target improvements to mitigate the impact of behavioral assumptions once the pandemic subsides.

Meanwhile, we note that Amedisys is exploring opportunities in Home Health and Hospice segments. Amedisys has been benefiting from the recent acquisitions of hospice care providers — Asana Hospice, RoseRock Healthcare and Compassionate Care Hospice (CCH). Also, in June 2020, the company closed the acquisition of Homecare Preferred Choice, Inc.

Meanwhile, the company is poised to benefit from the aging demographics of the U.S. population and the need for higher acuity patients in a home-nursing environment. Also, Amedisys’ strong cash balance bolsters investor confidence in the stock.

However, elevated operating expenses and a declining operating margin continue to raise concerns. Further, an intensely competitive landscape and regulatory woes weigh on the home health and hospice industry.

Other Key Picks

A few other top-ranked stocks from the broader medical space include Exact Sciences Corporation EXAS, Laboratory Corporation of America Holdings LH or LabCorp and QIAGEN N.V. QGEN.

Exact Sciences’ long-term earnings growth rate is projected at 30%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LabCorp’s long-term earnings growth rate is estimated at 7.5%. The company presently sports a Zacks Rank #1.

QIAGEN’s long-term earnings growth rate is estimated at 22.3%. It currently sports a Zacks Rank #1.

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