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Amedisys (AMED) Benefits From Home Health and Personal Care

Zacks Equity Research

On Dec 6, we issued an updated research report on Amedisys, Inc. AMED. The stock sports a Zacks Rank #1 (Strong Buy).

This renowned home health and hospice services provider has outperformed the industry over the past three months. The stock has rallied 26.7% against the 25.9% fall of the industry.

Notably, Amedisys ended third-quarter 2019 on a promising note with earnings exceeding the Zacks Consensus Estimate. At the Home Health and Hospice divisions, the company witnessed encouraging revenue growth in Medicare and non-Medicare revenues. In Hospice, as a major breakthrough, in the third quarter, the company topped the national average in all measurement categories and presently leads the market.

Amedisys is currently exploring opportunities in these segments. In this regard, the company has been benefiting from the recent acquisitions of hospice care providers, namely RoseRock Healthcare and Compassionate Care Hospice (CCH). Its ADC (average daily census) rose 5% while same- store admissions were up 4% during the quarter. The company’s solid performance in the recently-launched Personal Care segment also drove its share price.

Amedisys, Inc. Price

Amedisys, Inc. Price

Amedisys, Inc. price | Amedisys, Inc. Quote

Amedisys is currently focusing on improving its clinical quality. The company’s present Quality of Patient Care Star QPC score stands at 4.27. It now has 13% of its care centers rated at 5 stars with 90% of overall portfolio rated at 4 stars or better. Amedisys targets a 4.0 Quality Star Rating for all its care centers.

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, the company’s strong cash balance bolsters investors’ confidence in the stock.

On the flip side, escalating operating expenses and a declining gross 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-rankedstocks from the broader medical space are Haemonetics Corporation HAE, NuVasive, Inc NUVA and ResMed RMD. While ResMed sports a Zacks Rank #1 (Strong Buy), the other two carry the same Zacks Rank as Amedisys. You can see the complete list of today’s Zacks #1 Rank stocks here.

Haemonetics has a projected long-term earnings growth rate of 13.5%.

NuVasive has an expected long-term earnings growth rate of 10.9%.

ResMed has a long-term earnings growth rate of 12.9%.

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