* RBC cuts Almost Family, LHC Group to to "sector perform"
* Baird cuts Amedisys to "hold"
(Adds analyst comments, updates share movement)
July 14 Shares of home healthcare agencies LHC
Group Inc (LHCG.O) and Gentiva Health Services Inc GTIV.O
fell on Wednesday, a day after the companies said U.S.
regulators have launched an investigation into their Medicare
Earlier this month, the U.S. Securities and Exchange
Commission had launched similar investigations against rivals
Amedisys Inc (AMED.O) and Almost Family (AFAM.O) seeking
documents from them. [ID:nSGE6600JD]
"We do not believe that the market will be surprised by
this news as Gentiva and LHC Group have been weak following
their peers' investigation announcements," said Oppenheimer &
Co analyst Michael Wiederhorn in a note to clients.
Wiederhorn said the issues under discussion are
industry-wide and should lead to broad changes to reimbursement
The involvement of Gentiva and LHC Group in the SEC
investigation will help Amedisys and Almost Family as all the
companies will have to share the burden now, said Wiederhorn.
"This also significantly reduces the likelihood of a
doomsday scenario for any one company," he added.
RBC Capital Market downgraded Almost Family and LHC Group
shares to "sector perform" from "outperform" and said increased
government scrutiny could lead to downward pressure on volumes
Robert W Baird & Co analyst Whit Mayo downgraded Amedisys
to "neutral" from "outperform," saying the company will feel
prolonged stress on operations from a slew of regulatory
criticisms that may weigh heavily on the organization.
The brokerage also lowered its price target on Gentiva and
LHC Group stocks, citing government reimbursement risks and SEC
Gentiva shares were down 5 percent at $21.15, while LHC
Group shares were down 5 percent at $21.89 in Wednesday morning
trade on Nasdaq. LHC shares touched a year-low of $20.50 in
Almost Family shares fell 5 percent to $24.92 on Nasdaq,
while Amedisys shares were down 2 percent at $26.17.
(Reporting by Anand Basu in Bangalore; Editing by Gopakumar