Amedisys Retains The Braff Group

Zacks

Home healthcare provider Amedisys Inc. (AMED) recently revealed that it continues with the offerings of The Braff Group who will help in the divestment of about 35 care locations.

These locations are a part of the 50 care locations that were up for consolidation or divestment in Amedisys’ last earnings results conference call. In addition to an outright sale, the company is open to other arrangements such as joint ventures. The search for divestment or joint venture options is likely to stretch into the third quarter of 2013. There is, however, no guarantee that the search will result in a deal.

The Braff Group has expertise in mergers and acquisitions, notably in health services, hospice and home health.

Amedisys recently altered its guidance for 2013. Net service revenue is envisaged in the range of $1.28 to $1.32 billion compared with $1.425 to $1.45 billion earlier. The company forecasts earnings per share in the range of 45 to 55 cents compared with the prior outlook of 60 to 70 cents.

We believe that 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 in 2013, thereby weakening the company’s performance.

The stock carries a Zacks Rank #4 (Sell). We are more positive about Becton, Dickinson and Company (BDX), Conmed Corporation (CNMD) and Steris Corp. (STE) each of which carry  a Zacks Rank #2 (Buy) and are expected to do well.

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