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Amedisys (AMED) Banks on Home Health & Hospice Amid Cost Woe

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On Nov 13, we issued an updated research report on Amedisys, Inc. (AMED - Free Report) ). The stock currently carries a Zacks Rank #3 (Hold).

This renowned home health and hospice services provider has outperformed its industry over the past six months. The stock has rallied 35.9% compared with 23.6% rise of the industry.

Amid the coronavirus-led volume disruption across the United States, Amedisys ended the third quarter of 2020 with better-than-expected earnings and revenues. In home health, total admission increased 5% and total volume rose 6%, indicating a strong and fast business recovery from the initial impact of COVID-19. The company expects these trends to strengthen through the fourth quarter, setting the platform for stronger growth in 2021.

An impressive performance by the company’s Hospice division amid the pandemic-led business disruptions buoys optimism. The third quarter demonstrated strong contribution from acquisitions like Asana and AseraCare. Further, the continued successful implementation of PDGM, the company’s ability to successfully complete its hospice acquisition and strong cash flow generation during these challenging times are encouraging. The raised full-year guidance by the company instills investors’ confidence.

Amedisys, Inc. Price

Meanwhile, we note that Amedisys is exploring opportunities in Home Health and Hospice segments. Amedisys has been benefiting from the recent acquisitions of hospice care providers — Asana Hospice, RoseRock Healthcare and Compassionate Care Hospice (CCH). In June 2020, the company closed the acquisition of Homecare Preferred Choice, Inc.

In July 2019, the company announced a crucial partnership with ClearCare, the personal care industry's leading software platform with 4,000 personal care agencies in every zip code in the United States.

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, Amedisys’ strong cash balance bolsters investor confidence in the stock.

However, elevated operating expenses continue to raise concerns. Further, an intensely competitive landscape and regulatory woes weigh on the home health and hospice industry.

Key Picks

Some better-ranked stocks from the broader medical space include Laboratory Corporation of America Holdings or LabCorp (LH - Free Report) , Hologic (HOLX - Free Report) and Acadia Healthcare Company (ACHC - Free Report) .

LabCorp’s long-term earnings growth rate is estimated at 10.1%. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hologic’s long-term earnings growth rate is estimated at 17.4%. It currently carries a Zacks Rank #1.

Acadia Healthcare’s long-term earnings growth rate is estimated at 12.8%. The company presently carries a Zacks Rank #2 (Buy).

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