Why Amedisys Shares Bounced Higher

Why Amedisys Shares Bounced Higher

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 home health and hospice company Amedisys surged 23% today after its quarterly results and outlook impressed Wall Street.

So what: The stock has slumped over the past year on concerns over reimbursement cuts, but today's Q2 results -- adjusted EPS of $0.17 vs. the consensus of $0.10 -- coupled with in-line guidance is quickly easing some of that worry. In fact, the blowout quarter comes despite a $0.09 negative impact from sequestration and continued lower volumes, suggesting that management's cost-cutting initiatives are offsetting the operating pressure quite well.

Now what: Management now sees full-year EPS of $0.45-$0.55 on revenue of $1.24 billion-$1.28 billion, versus the consensus of $0.51 and $1.31 billion.

"We continue to make progress on numerous strategic initiatives focused on growth, increasing efficiency and continued improvement in patient outcomes," said CEO William Borne.

Of course, when you combine today's big surge with the reimbursement uncertainty that still surrounds Amedisys, the risk/reward trade-off doesn't seem too appealing at this point.

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The article Why Amedisys Shares Bounced Higher originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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