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Amedisys Rides High on Strong Prospects Amid Margin Woes


On Sep 12, we issued an updated research report on leading molecular diagnostic company, Amedisys, Inc. AMED. The stock currently carries a Zacks Rank #2 (Buy).

Over the last six months, Amedisys has gained 3.1% against the industry’s 5.2% decline. The company’s impressive results in second-quarter 2017 with both earnings and revenues significantly improving year over year have bolstered market confidence leading to a further rally in share price.

We are encouraged by the company’s long-term strategy to evolve from a traditional home health and hospice care company to a one focused on bringing home a continuum of care to serve patients better and diversify sources of payment and become less reliant on Medicare.

Moreover, the company has been witnessing growth in the personal care segment on synergies from acquisitions. The company recently made a number of strategic acquisitions — the recent one being that of Intercity Home Carein Massachusetts which is slated for close on Oct 1.

The home health industry is poised for substantial growth in the long term, driven by the positive demographic trend in the United States. The company is expected to continue to benefit from the aging demographics of the U.S. population and higher acuity patients in a home nursing environment.

Notably, the company is on track to fortify its footprint in the market place. Recently, it announced the completion of National Readmission Prevention Collaborative (‘’NRPC’’) certification program by clinical programs team which handles home healthcare programs.

Additionally, the company’s strong cash balance position bolsters our confidence in the stock.

On the flip side, we expect synergies from the Tenet Healthcare acquisition may escalate costs and operating expenses weighing on the company’s margins. Also, an intense competitive landscape and regulatory concerns continue to pose challenges in the home health and hospice industry.

Other Key Picks

A few other top-ranked medical stocks are Edwards Lifesciences Corporation EW, Lantheus Holdings, Inc. LNTH and IDEXX Laboratories, Inc. IDXX. Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings and IDEXX carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 19% over the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 39.4% over the last six months.

IDEXX has a long-term expected earnings growth rate of 19.8%. The stock has gained around 45.1% over the last year.

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