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Amedisys Gains on Favorable Demography, New Hospice Buyouts

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On Jan 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 its 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 growth in Medicare and non-Medicare revenues. In Hospice, as a major breakthrough in the period, the company topped the national average in all measurement categories and presently leads the market.

Amedisys is currently exploring opportunities in the above-mentioned 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 third quarter. The company’s solid performance in the recently-launched Personal Care segment also drove its share price.

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

On the flip side, elevated 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-ranked stocks from the broader medical space are Haemonetics Corporation HAE, West Pharmaceutical Services (WST - Free Report) and Omnicell OMCL. While Haemonetics flaunts the same top Zacks Rank of 1 as Amedysis, the other two carry a Zacks Rank #2 (Buy).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%.

West Pharmaceutical Services has an expected long-term earnings growth rate of 14%.

Omnicell has a long-term earnings growth rate of 12.5%.

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