AMED - Addus Amedisys given opposing views at Stifel on Medicare rate cuts

Launching its coverage on Amedisys ( NASDAQ: AMED ) and Addus HomeCare ( ADUS ), Stifel issues a contrasting view on the two home health care companies after the Centers for Medicare and Medicaid Services (CMS) proposed cuts to Medicare home health rates last week.

Issuing a Buy rating on Addus ( ADUS ), the analyst Tao Qiu argued that with limited exposure to rate cuts, the company could support stable margin and low-to-mid teens EBITDA growth as a strong state and local reimbursement offsets the labor inflation.

However, the proposed Medicare rate cuts, if implemented, could hurt Amedisys ( AMED ), the analyst pointed out, citing an adverse impact on organic growth and margin.

The firm highlights the experience of both management teams and argues that both companies are attractive based on their trading multiple relative to 2023 EBITDA.

However, Qiu, with a Hold on rating Amedisys ( AMED ), cited reimbursement overhang and limited near-term catalysts for the company, added that “a better buying opportunity can be had when the final rule is released in November.”

The analyst estimates $101 and $128 per share targets for Addus ( ADUS ) and Amedisys ( AMED ), implying a premium of ~22% and a downside of ~8% to the last close, respectively.

Amedisys ( AMED ) has underperformed Addus ( ADUS ) in 2022, as shown in this graph.

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