It has been about a year and a half since I last wrote on Amedisys (AMED).
In that time, a lot of the bad news I feared (namely ongoing Medicare
pressure) materialized, and the company has struggled to offset weak
reimbursement and volume with cost cuts. While my bullish call on the
stock has technically worked out (the shares are up about 55% since
February 7, 2012), the stock really didn't go anywhere before August of
this year and I'm not really calling this a successful pick.
Looking
ahead, I see Amedisys broadly the same as I did before, only with a
higher valuation. I believe the Street still underestimates the long
term potential of this business, but that "potential" has to be set
against some very real challenges from reimbursement and in executing
additional cost cuts. I'm reasonably confident that Amedisys can improve
its margins from here, and I think the KKR investment supports that
basic idea, but it's hard to really pound the table for a company that
has to always stay a step ahead of government price cuts.
Please follow this link to continue:
Amedisys Still Facing Significant Headwinds
1 comment:
Good commentary. Hanging on with AFAM myself, but waiting seemingly forever for the 'growth via acquisition' to play out. Patience beats overpaying though. GTIV's debt level is too scary to consider. With a squeeze on the top line, I'd just as soon go with the best balance sheet.
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