Is This the Right Time to Buy Amedisys (AMED)?
On Sep 9, 2014, we issued an updated research report on Amedisys Inc. (AMED). After several quarters of drag in sales with sustained volume pressure, Amedisys recorded an encouraging quarter beating the Zacks Consensus Estimate on both the earnings and revenue front.
Second-quarter 2014 adjusted earnings from continuing operations came in at 25 cents per share, ahead of the Zacks Consensus Estimate by 8 cents. Earnings also marked a massive 38.9% surge year over year. On the other hand, although revenues of $305 million were down 3.5%, the top line surpassed the estimate of $301 million.
The company also observed a solid 12.9% improvement in its adjusted EBITDA of $22.1 million, which (per management) reflects a positive step forward with respect to the industry-level margins. Moreover, Amedisys delivered a strong performance in its Home Health segment on the back of management's successful initiative of reducing cost per visit. This was done by shifting more clinicians to the pay-per-visit model.
Although it failed to generate positive growth in its Hospice segment, we believe, going forward, Amedisys will achieve organic growth in this segment, owing to its constant effort to revive the Hospice platform through better cost management. Our belief is also reinforced by the fact that Hospice has been a relatively consistent performer at Amedisys, contribution-wise, over the last few quarters.
Moreover, we are encouraged to note that the home health industry is poised for tremendous growth in the long term, driven by an aging U.S. population, patients’ desire for independence, and home health as a cheaper care modality. Strategic acquisitions and partnerships are also expected to add value to the company’s growth.
The stock currently carries a Zacks Rank #1 (Strong Buy).
Key Picks
Some other stocks worth considering in the same sector are Gentiva Health Services Inc. (GTIV), HEALTHSOUTH Corp. (HLS) and PharMerica Corporation (PMC), all sporting a similar Zacks Rank #1.
Read the Full Research Report on AMED
Read the Full Research Report on GTIV
Read the Full Research Report on PMC
Read the Full Research Report on HLS
Zacks Investment Research
