Sunday, March 16, 2014

Seeking Alpha: Weak Performance Continues To Plague Amedisys

If you can't beat 'em, give up. After several quarters where Amedisys (AMED) has missed analyst expectations, interim management has chosen to stop providing guidance for the timing being. Seeing as how the company needs to hire a new CEO (who likely will come in with a set of ideas about how to run/change the business) and is still in the midst of efforts to reduce costs and respond to reimbursement cuts, that's a reasonable move. Still, in the absence of information investors may choose to assume the worst.

It is difficult to feel all that cheerful or optimistic about this business. Costs per visit have been rising steadily, while revenue is pressured by reimbursement cuts and sluggish admissions. Amedisys is one of the largest operators in a fragmented industry likely to consolidate in response to ongoing reimbursement pressures, but a settlement with the government will stress the balance sheet and margins are very weak at present. The stock has been surprisingly strong for all of the company's travails, but I'd be hesitant to pay almost double the valuation (on a forward EV/EBITDA basis) for Amedisys over its peers even if this is a low period for the industry.

Read more here:
Weak Performance Continues To Plague Amedisys

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