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Amedisys Strong on Segment Sales, Competition Persists

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On Sep 29, 2015, we issued an updated research report on Amedisys Inc.AMED , a provider of home health and hospice services across the U.S.

Amedysis delivered an impressive financial performance in the second quarter of 2015, beating the Zacks Consensus Estimate on both the revenue and earnings front. Moreover, the company witnessed positive revenue growth in both its Home Health and Hospice divisions.

In Home Health, Amedisys continued to generate strong organic growth in Medicare and non-Medicare revenues, while in Hospice, it successfully posted the strongest quarterly same-store revenue growth numbers in nearly three years.

Further, the home health industry is poised for tremendous growth in the long term, driven by the aging U.S. population, patients' desire for 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 and stay in 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 their onset till the end of life.

On Aug 28, 2015, the company entered into a new $300 million secured credit facility. We believe this will enable Amedisys to invest more in its business and thereby drive more efficiency in operations and increase production.

On the flip side, the market for home health and hospice being fragmented with a number of small local providers and few barriers to entry, Amedisys primarily faces tough competition from local privately and publicly-owned 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 #3 (Hold).

Key Picks in the Sector

Some better-ranked med-outpatient/home care stocks are AmSurg Corp. AMSG , Foundation Healthcare, Inc. FDNH and LHC Group, Inc. LHCG . All the three stocks carry a Zacks Rank #1 (Strong Buy).

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AMEDISYS INC (AMED): Free Stock Analysis Report

AMSURG CORP (AMSG): Free Stock Analysis Report

LHC GROUP LLC (LHCG): Free Stock Analysis Report

FOUNDATION HLTH (FDNH): Free Stock Analysis Report

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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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