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Amedisys to Buy Compassionate Care Hospice, Share Price Down

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Amedisys, Inc. (AMED - Free Report) recently inked an agreement to buy national hospice care provider —Compassionate Care Hospice. Amedisys is slated to pay $340 million, which includes $50 million in payments related to a tax asset and working capital for acquiring 100% ownership interest in Compassionate Care Hospice. The transaction is expected to close by Feb 1, 2019.

Amedisys' stock has lost 6.8% to close at $109.28 on Oct 12 since the announcement of the buyout.

Based in New Jersey, Compassionate Care Hospice has a wide network with presence in 53 locations across 24 states. It rakes in around $188 million of annual revenues. Per Amedisys, the buyout will add new access to its nationwide network of 83 hospice care centers, making the company the third-largest hospice provider in America.

Market Potential

Per a report by Transparency Market Research, growing incidence of diseases in the aging population and availability of several diverse programs customized to suit the disease and financial conditions of patients will continue to drive the hospice market.

According to the U.S. Census Bureau report, in 2050, people aged 65 or more are likely to total 83.7 million, almost double its estimated population of 43.1 million in 2012. Data also shows that the median age is increasing in most areas of the country and the global scenario is pretty similar. In view of the data, the latest development is a timely one.

Acquisitions & Partnerships Add Values

Amedisys competes with a number of small local providers in a fragmented industry. The company’s focuses on evolving from a traditional home health and hospice care company to one focused on bringing a continuum of care to better serve the needs of patients and diversify sources of payment so as to become less reliant on Medicare.

The company is thus developing and acquiring business lines that will complement its existing home care and hospice business and help the aged manage health more effectively and stay at home longer.

In August, Amedisys announced a minority equity investment in Medalogix — a Home Health and Hospice predictive modeling and analytics company in Nashville.

Per Amedisys, this partnership will help it to progress with respect to the latest and differentiated payment model. Further, the company expects to strengthen partnerships with Managed Care Organizations and drive patient insights required for risk arrangements using the Medalogix platform.

The company has made a number of acquisitions of — the latest one being of Bring Care Home, a personal care provider in northeastern Massachusetts.

Share Price Movement

Amedisys has been gaining investor confidence on consistently positive results. Over the past year, the company’s stock has outperformed its industry. The stock has gained 127.7% compared with the industry’s 15.1% rise.

Zacks Rank & Other Key Picks

Amedisys currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , Genomic Health and Masimo Corporation (MASI - Free Report) .

Intuitive Surgical’s long-term expected earnings growth rate is 15.8%. The stock currently carries a Zacks Rank of 2.

Genomic Health’s expected earnings growth rate for the next year is 40.7%. The stock holds a Zacks Rank #2 at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Masimo’s long-term expected earnings growth rate is 14.8%. The stock has a Zacks Rank #2 at present.

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