Zacks_Analysts' Blog : More Patients for Amedisys - Analyst Blog

Leading US player in the home health and hospice segment, Amedisys (AMED) has inked a deal to acquire Beacon Hospice, a Boston-based company for $125 million. The deal is subject to customary closing conditions, including regulatory approvals.

Apart from expanding Amedysis’ presence in the New England region, the proposed acquisition of Beacon is expected to add 5−7 cents (excluding one-time expenses) to its fiscal 2011 earnings.

As a paramount hospice company of New England, Beacon Hospice has 23 free-standing locations and one inpatient unit serving the states of Massachusetts, Maine, New Hampshire, Rhode Island and Connecticut.

In fiscal 2010, the company reported annualized revenues of $80 million with daily volume of approximately 1300 patients. Amedisys strongly feels that this partnership will increase its hospice patients by nearly 40%. Additionally it is expected to strengthen the company’s foothold in the home health and hospice care market of the region.

With solid cash balance (Amedisys exited fourth quarter of fiscal 2010 with cash and cash equivalents of $120.2 million, up 71.3% year over year) the company assures promising internal and external growth, bolstered by its strategic acquisition efforts. 

Amedisys provides care to more than 35 thousand US patients each day. Apart from hospice services to patients. Amedisys expects strong growth in the near future as the demand for alternative to hospitals has been rising to curb the massive hospitalization cost.

However, presently Amedisys is going through a difficult phase primarily due to the investigation into the company and some of its competitors by the Senate Finance Committee, the Securities and Exchange Commission (SEC) and some other agencies for abuse of Medicare rules.

The investigations are being conducted to check if these companies had deliberately increased the number of patient visits to receive higher Medicare reimbursements.

Moreover, Amedisys faces stiff competition from the home health agencies and bigger companies like National HealthCare Corporation (NHC) and Gentiva Health Services (GTIV). Besides, there are concerns regarding Medicare reimbursements as well.