Why Amedisys Shares Sank

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Amedisys (NASDAQ: AMED  ) , a home health and hospice care provider, tumbled as much as 15% after reporting its fourth-quarter earnings results.

So what: For the quarter, Amedisys reported that net service revenue fell 2% to $362.9 million as earnings from operations dipped 53% to $0.23 from $0.49 in the previous year. Wall Street had been expecting just $0.22 in EPS, however, the net revenue consensus estimate of $373.3 million was decisively short. Looking ahead, Amedisys forecast 2013 full-year EPS of $0.60-$0.70 and total sales of $1.425 billion to $1.45 billion compared to expectations of $0.78 in EPS and $1.52 billion in revenue from analysts.

Now what: And that's why Amedisys' earnings report was one of the three can't-miss health-care events of the week! Amedisys' forward guidance is factoring in both bigger technological investments and also the 2% Medicare sequestration amount, which analysts seem to have forgotten about when formulating their estimates. Assuming the company can boost its operational efficiency, a boom in an aging population should see a dramatic rise in hospice needs over the next decade, which may be able to counteract any reductions in Medicare reimbursements. It's definitely a name worth keeping your eyes on!

Craving more input? Start by adding Amedisys to your free and personalized watchlist so you can keep up on the latest news with the company.

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