Amedisys (AMED) Strong on Buyouts & Solid Personal Care Unit

On Mar 6, we issued an updated research report on Amedisys, Inc. AMED. The company has been expanding customer base through strategic buyouts. Moreover, the Personal Care segment has been growing strong and stable on the latest integrated tuck-in acquisitions. The stock carries a Zacks Rank #2 (Buy).

This renowned home health and hospice services provider has been outperforming its industry over the past six months. The stock has rallied 13.8% compared with the industry’s 1.7% gain.

We are upbeat about Amedisys’ strategic acquisitions over the past year. In this regard, the latest buyout has been that of Intercity Home Care, a personal care provider headquartered in Malden, MA. Notably, Intercity Home Care’s entire asset base has been taken over by Amedisys’ subsidiary, Associated Home Care.

With this, the renowned home health and hospice services provider have a wider presence in Massachusetts. Intercity Home Care has presence in across Greater Boston, North Shore and Merrimack Valley communities. Management believes that the company has enough cash to execute more such acquisitions in the days ahead.

 

 

We are also encouraged by the stabilization of the company’s Personal Care business, which has also been gaining from the recently integrated tuck-in acquisitions. Amedisys is looking forward to cashing in on the huge prospects in this segment. Moreover, the company is working on expanding the geographical presence of the Personal Care business.

We are also optimistic about the recently passed Bipartisan Budget Act of 2018 by the Congress, which reduces the company’s 2018 reimbursement impact from 1.4% to 0.7%.

Furthermore, the company has a long-term strategy to evolve from a traditional home health and hospice care company to one that is focused on bringing home a continuum of care. This is because Amedisys intends to better serve patients and diversify sources of payment so as to become less reliant on Medicare. In this regard, the company witnessed encouraging growth in Medicare and non-Medicare revenues at the Home Health and Hospice divisions in the last reported quarter.

Meanwhile, escalating operating expenses and declining gross margin continue to raise concerns.

Other Key Picks

Other top-ranked stocks in the broader medical sector are Bio-Rad Laboratories BIO, PetMed Express PETS and PerkinElmer PKI.

Bio-Rad Laboratories sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company has a long-term expected earnings growth rate of 20%.

PetMed has a long-term expected earnings growth rate of 10% and a Zacks Rank #1.

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.

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