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Amedisys (AMED) Poised on Strong Home Health, Risks Remain
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On Apr 04, we issued an updated research report on renowned home health and hospice services provider, Amedisys Inc. (AMED - Free Report) . The stock currently carries a Zacks Rank #3 (Hold).
Over the last three months, Amedisys consistently traded above the Zacks categorized Medical - Outpatient and Home Healthcare industry. Per the last trading price, overall the company returned 17.41%, much ahead of the 1.72% gain of the broader industry over this period.
Despite a dull top-line show in the last reported fourth-quarter 2016, the market is positive on its strong Home Health division’s performance. The company witnessed solid organic growth in Medicare and non-Medicare revenues in the quarter. We expect this growth momentum to continue ahead of the company’s first-quarter 2017 earnings release. We are also upbeat about the company’s strategic merger and acquisition initiatives. Its strong cash balance position further bolsters our confidence in the stock.
We note that, the home health industry is poised for tremendous growth in the long term, driven by the aging U.S. population, patients’ desire for independence, and home health as a cheaper care modality. The company should continue to benefit from the aging demographics of the U.S. population and the need for higher acuity patients to be taken care of in a home nursing environment.
In addition, with continued pressure on the U.S. healthcare system, we believe operators such as Amedisys will continue to benefit from increased volume shift from higher-cost institutional settings to a lower-cost environment such as home health.
Over the last one year, the company made three strategic acquisitions, Associated HomeCare in Mar 2016, followed by Professional Profiles late in the year, and finally Home Staff in Jan 2017. Closing the Home Staff acquisition with Fallon Health, made Amedisys the largest provider of PACE (Program for All Inclusive Care) for the elderly in Massachusetts.
However, we are concerned about Amedisys’ intensifying competition from local privately and publicly-owned and hospital-owned health care providers. Since the market for home health and hospice is fragmented with a number of small local providers, there are only a few barriers to entry. The competition is based on the availability of personnel, the quality of services, expertise of visiting staff and the price of services.
Also CMS’ recent proposed rule for Home Health in 2017 includes a shift toward a budget neutral plan for reimbursement which may affect the company’s growth adversely.
Heska returned 249.22% in the last one year compared with the S&P 500’s gain of 15.03%.The company reported a stellar four-quarter positive average earnings surprise of 291.54%.
Enzo Biochem surged 83.26% in the last one year compared with the S&P 500’s gain. Its four-quarter average earnings surprise is a positive 39.17%.
Galapagos gained 105.11% in the past one year, surpassing the S&P 500 mark. It delivered a positive average earnings surprise of 203.27% in the trailing four quarters.
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Amedisys (AMED) Poised on Strong Home Health, Risks Remain
On Apr 04, we issued an updated research report on renowned home health and hospice services provider, Amedisys Inc. (AMED - Free Report) . The stock currently carries a Zacks Rank #3 (Hold).
Over the last three months, Amedisys consistently traded above the Zacks categorized Medical - Outpatient and Home Healthcare industry. Per the last trading price, overall the company returned 17.41%, much ahead of the 1.72% gain of the broader industry over this period.
Despite a dull top-line show in the last reported fourth-quarter 2016, the market is positive on its strong Home Health division’s performance. The company witnessed solid organic growth in Medicare and non-Medicare revenues in the quarter. We expect this growth momentum to continue ahead of the company’s first-quarter 2017 earnings release. We are also upbeat about the company’s strategic merger and acquisition initiatives. Its strong cash balance position further bolsters our confidence in the stock.
Amedisys Inc Price
Amedisys Inc Price | Amedisys Inc Quote
We note that, the home health industry is poised for tremendous growth in the long term, driven by the aging U.S. population, patients’ desire for independence, and home health as a cheaper care modality. The company should continue to benefit from the aging demographics of the U.S. population and the need for higher acuity patients to be taken care of in a home nursing environment.
In addition, with continued pressure on the U.S. healthcare system, we believe operators such as Amedisys will continue to benefit from increased volume shift from higher-cost institutional settings to a lower-cost environment such as home health.
Over the last one year, the company made three strategic acquisitions, Associated HomeCare in Mar 2016, followed by Professional Profiles late in the year, and finally Home Staff in Jan 2017. Closing the Home Staff acquisition with Fallon Health, made Amedisys the largest provider of PACE (Program for All Inclusive Care) for the elderly in Massachusetts.
However, we are concerned about Amedisys’ intensifying competition from local privately and publicly-owned and hospital-owned health care providers. Since the market for home health and hospice is fragmented with a number of small local providers, there are only a few barriers to entry. The competition is based on the availability of personnel, the quality of services, expertise of visiting staff and the price of services.
Also CMS’ recent proposed rule for Home Health in 2017 includes a shift toward a budget neutral plan for reimbursement which may affect the company’s growth adversely.
Zacks Rank & Key Picks
Some better-ranked stocks in the broader industry include Heska Corporation , Enzo Biochem, Inc. (ENZ - Free Report) and Galapagos NV (GLPG - Free Report) . While Heska sports a Zacks Rank #1 (Strong Buy), Enzo Biochem and Galapagos carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Heska returned 249.22% in the last one year compared with the S&P 500’s gain of 15.03%.The company reported a stellar four-quarter positive average earnings surprise of 291.54%.
Enzo Biochem surged 83.26% in the last one year compared with the S&P 500’s gain. Its four-quarter average earnings surprise is a positive 39.17%.
Galapagos gained 105.11% in the past one year, surpassing the S&P 500 mark. It delivered a positive average earnings surprise of 203.27% in the trailing four quarters.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>