Why Amedisys Shares Plunged Temporarily

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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 , a provider of home-health and hospice care, fell as much as 14% before erasing most of the losses following the release of the company's first-quarter earnings results. Shares are down just around 1% as of this writing.

So what: For the quarter, Amedisys reported a 9% decline in revenue to $339.2 million as EPS dropped 55% to just $0.13. Wall Street had expected Amedisys to report revenue of $358.5 million and a profit of $0.18 per share. Amedisys CEO William Borne explained that the sequestration and lower volumes combined to hurt revenue at a much faster pace than cost controls helped. Further, Amedisys updated its full-year forecast to between $1.28 billion and $1.32 billion in revenue and EPS of $0.45-$0.55. The Street had been projecting $1.44 billion in revenue and $0.65 in EPS.


Now what: No mincing words here as it's pretty easy to see why shareholders are disappointed. However, looking at Amedisys over the long run, the company looks poised to benefit from an aging baby boomer population. Also, recent moves by the Centers for Medicare and Medicaid Services would suggest that reimbursement rates are moving higher, not lower, so there remains hope from a reimbursement standpoint for Amedisys. I'm not saying today's earnings report was anything to write home about, but any dips of greater than 10% in Amedisys are probably worth a closer look.

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.

While you can certainly make huge gains in home-health plays like Amedisys, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Why Amedisys Shares Plunged Temporarily originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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