10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2004

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                              to                             

Commission file number: 0-24260

AMEDISYS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	11-3131700
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
Incorporation or Organization)

11100 Mead Road, Suite 300, Baton Rouge, LA 70816

(Address of principal executive offices including zip code)

(225) 292-2031

(Registrant’s telephone number, including area code)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

Number of shares of common stock, par value $.001, outstanding as of August 4, 2004: 12,371,955 shares

1

PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003	3
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2004 and 2003	4
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003	5
Notes to Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures about Market Risks	24
Item 4. Controls and Procedures	24
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings	24
Item 2. Changes in Securities and Use of Proceeds	24
Item 3. Defaults Upon Senior Securities	24
Item 4. Submission of Matters to a Vote of Security Holders	24
Item 5. Other Information	25
Item 6. Exhibits and Reports on Form 8-K	25

2

Item 1. FINANCIAL STATEMENTS

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of June 30, 2004 and December 31, 2003

(Amounts in thousands, except share data)

	(Unaudited)
	June 30, 2004			December 31, 2003
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents	$	22,279		$	29,779
Patient accounts receivable, net of allowance for doubtful accounts of $3,624 at June 30, 2004 and $3,008 at December 31, 2003		19,841			15,185
Prepaid expenses		2,268			1,103
Deferred income taxes		—			1,650
Inventory and other current assets		1,123			1,879
Total current assets		45,511			49,596
Property and equipment, net		8,121			7,219
Goodwill and other assets, net		57,383			35,658
Total assets	$	111,015		$	92,473
LIABILITIES AND STOCKHOLDERS’ EQUITY:
CURRENT LIABILITIES:
Accounts payable	$	3,255		$	3,340
Accrued expenses:
Payroll and payroll taxes		13,536			9,163
Insurance		2,908			2,336
Income taxes		1,400			575
Legal settlements		1,367			1,248
Other		3,919			2,818
Deferred income taxes		532			—
Current portion of long-term debt		3,875			3,974
Current portion of obligations under capital leases		456			1,217
Current portion of Medicare liabilities		9,326			9,347
Total current liabilities		40,574			34,018
Long-term debt		921			2,696
Obligations under capital leases		486			391
Deferred income taxes		3,725			2,756
Other long-term liabilities		1,213			1,213
Total liabilities		46,919			41,074
STOCKHOLDERS’ EQUITY:
Preferred stock, $.001 par value, 5,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $.001 par value, 30,000,000 shares authorized; 12,359,648 and 11,908,146 shares issued at June 30, 2004 and December 31, 2003, respectively		12			12
Additional paid-in capital		58,980			55,465
Treasury stock at cost, 4,167 shares held		(25	)		(25	)
Retained earnings (deficit)		5,129			(4,053	)
Total stockholders’ equity		64,096			51,399
Total liabilities and stockholders’ equity	$	111,015		$	92,473

See accompanying notes to consolidated financial statements.

3

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and six months ended June 30, 2004 and 2003

(Amounts in thousands, except per share data)

	(Unaudited)
	For the three months ended June 30						For the six months ended June 30
	2004			2003			2004			2003
Income:
Net service revenue	$	56,896		$	32,194		$	104,235		$	63,326
Cost of service revenue (excluding depreciation and amortization)		23,613			13,100			43,093			26,009
Gross margin		33,283			19,094			61,142			37,317
General and administrative expenses:
Salaries and benefits		14,794			9,881			27,351			19,742
Other		10,406			6,657			18,803			12,835
Total general and administrative expenses		25,200			16,538			46,154			32,577
Operating income		8,083			2,556			14,988			4,740
Other income (expense):
Interest income		44			24			96			41
Interest expense		(100	)		(341	)		(224	)		(701	)
Miscellaneous, net		(3	)		199			(7	)		209
Total other expense, net		(59	)		(118	)		(135	)		(451	)
Income before income taxes		8,024			2,438			14,853			4,289
Income tax expense		3,063			924			5,671			1,626
Net income	$	4,961		$	1,514		$	9,182		$	2,663
Basic weighted average common shares outstanding		12,281			9,477			12,144			9,402
Basic income per common share:
Net income	$	0.40		$	0.16		$	0.76		$	0.28
Diluted weighted average common shares outstanding		12,804			9,666			12,683			9,583
Diluted income per common share:
Net income	$	0.39		$	0.16		$	0.72		$	0.28

See accompanying notes to consolidated financial statements.

4

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2004 and 2003

(Amounts in thousands)

	(Unaudited)
	Six months ended June 30
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	9,182		$	2,663
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,805			1,502
Provision for bad debts		1,619			998
Deferred income taxes		3,151			1,529
Tax benefit from stock option exercises		1,050			9
Compensation expense		26			—
Changes in assets and liabilities:
(Increase) decrease in accounts receivable		(6,276	)		3,680
(Increase) decrease in inventory and other current assets		(354	)		104
(Increase) decrease in other assets		(1,029	)		31
Decrease in accounts payable		(85	)		(466	)
Decrease in Medicare liabilities		(21	)		(232	)
Increase in accrued expenses		6,987			2,088
Net cash provided by operating activities		16,055			11,906
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment		23			—
Purchase of property and equipment		(1,884	)		(623	)
Cash used in purchase acquisitions, net		(20,742	)		—
Net cash used in investing activities		(22,603	)		(623	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable		417			679
Payments on notes payable and capital leases		(3,262	)		(3,472	)
Decrease in Medicare liabilities, net		—			(1,375	)
Expenses incurred from 2003 private placement of stock, net		(108	)		—
Proceeds from issuance of stock from Employee Stock Purchase Plan		350			312
Proceeds from issuance of stock upon exercise of stock options and warrants		1,651			513
Net cash used in financing activities		(952	)		(3,343	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(7,500	)		7,940
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		29,779			4,861
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	22,279		$	12,801
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) for:
Interest	$	194		$	636
Income taxes	$	806		$	(35	)
Financing Activities:
Stock issued as contributions to the Company’s 401(k) Plan	$	546		$	335

See accompanying notes to consolidated financial statements.

5

AMEDISYS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

1. Organization

Amedisys, Inc. (“Amedisys” or “the Company”) is a provider of home health care nursing services. At June 30, 2004, the Company operated 96 home care nursing and hospice offices and two corporate offices in the southern and southeastern United States.

In the opinion of management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the Company’s financial position at June 30, 2004, the results of operations for the three and six months ended June 30, 2004 and 2003, respectively, and cash flows for the six months ended June 30, 2004 and 2003. The results of operations for the interim periods are not necessarily indicative of results of operations for the entire year. These interim consolidated financial statements should be read in conjunction with the Company’s annual financial statements and related notes in the Company’s Form 10-K for the year ended December 31, 2003.

2. Revenue Recognition

Medicare Revenue Recognition

The Company is paid by Medicare under the Medicare Prospective Payment System (“PPS”) based on episodes of care. An episode of care is defined as a length of care up to sixty days with multiple continuous episodes allowed. Medicare has established through federal legislation a base episode payment for all episodes of care ended on or after the applicable time periods detailed below:

Period	Base episode payment
Beginning October 1, 2000 through March 31, 2001	$2,115 per episode
April 1, 2001 through September 30, 2001	$2,264 per episode
October 1, 2001 through September 30, 2002	$2,274 per episode
October 1, 2002 through September 30, 2003	$2,159 per episode
October 1, 2003 through March 31, 2004	$2,231 per episode
April 1, 2004 through December 31, 2004	$2,213 per episode

The episode payment will be made to providers regardless of the cost incurred by providers to provide care. The services covered by the episode payment include all disciplines of care, in addition to medical supplies, within the scope of the Medicare home health benefit.

The base episode payment as shown above is adjusted by applicable regulations including, but not limited to, the following: a case mix adjuster consisting of 80 home health resource groups (“HHRG”), the applicable geographic wage index, low utilization (either expected or unexpected), intervening events and other factors. The episode payment is also adjusted in the event that a patient is either readmitted by the Company, or admitted to another home health agency prior to the expiration of 60 days from the original admission date – these adjustments are known as partial episode payments.

Medicare reimbursement rates are subject to change. The applicability of a reimbursement change depends upon the completion date of the episode. Therefore, any change in Medicare reimbursement, positive or negative, will impact the financial results of the Company up to sixty days in advance of the effective date of such change.

A portion of the cash reimbursement from each Medicare episode is typically received before all services are rendered. The estimated episodic payment is billed at the commencement of the episode. Medicare reimburses 60% percent of the estimated reimbursement at the initial billing for the initial episode of care per patient and the remaining reimbursement is received upon completion of the episode. Medicare reimburses 50% percent at initial billing for any subsequent episodes of care immediately following the first episode of care for a patient. The remaining 50% reimbursement is received upon completion of the episode.

While the estimated episodic payment is billed at the commencement of the episode, revenue is recorded as services are provided to a patient on a per visit basis. Amounts billed and/or received in advance of actual services performed are recorded

6

as deferred revenue. The amount of deferred revenue at June 30, 2004 and December 31, 2003 was $11,988,000 and $8,684,000, respectively. These deferred revenue amounts have been recorded as a reduction to accounts receivable in the accompanying consolidated balance sheets since only a nominal amount of deferred revenue represents cash collected in advance of providing services. For episodes of care that are completed, all of the revenue expected to be received for that episode is recognized. The amount of revenue recognized for episodes of care which are incomplete at a period end is based on an estimate of the portion of the episode which applies to the period, and is calculated based upon total visits performed to date as a percentage of total expected visits for a particular episode. Management believes that this is a reasonable estimate for revenue with respect to services provided for incomplete episodes, and for which reimbursement will be ultimately received. Because of the potential for changes in base episode payments referred to above and the complexity of the regulations noted above, the estimated amounts originally recorded as net patient revenue and accounts receivable at the end of a particular period may be subject to revision as additional information becomes known.

During 2003, Centers for Medicare & Medicaid Services (“CMS”) informed providers that it intended to make certain recoveries of amounts overpaid to providers for the periods dating from the implementation of PPS on October 1, 2000 through particular dates in 2003 and 2004. The first of these amounts related to partial episode payments (“PEPs”), whereby a patient was readmitted to a home health care agency prior to the passing of 60 days from a previous admission date at another home health agency. In such instances, reimbursement for the first agency is reduced. CMS advised the industry that CMS had recently implemented changes to its computer system to adjust at the time of claim submission on an ongoing basis, and that recovery for prior overpayments would commence in the summer of 2003 and extend over a two-year period. The Company reserved, based on information supplied by CMS, approximately $900,000 in fiscal 2003 for all claims dating from October 1, 2000. Secondly, CMS advised the industry that it would seek recovery of overpayments that were made for patients who had, within 14 days of such admission, been discharged from inpatient facilities, including hospitals, rehabilitation and skilled nursing units, and that these recoveries would commence in June, 2004. The Company conducted an analysis of a representative sample of claims where these events had occurred, and estimated that, for all periods dating from October 1, 2000 through December 31, 2003, a reserve in the amount of approximately $1.5 million was appropriate. These reserves for Medicare liabilities are recorded as current liabilities in the accompanying Consolidated Balance Sheets. Medicare has recouped $20,000 of these estimated amounts due to Medicare during the six months ended June 30, 2004.

Prior to the implementation of PPS on October 1, 2000, reimbursement for home health care services to patients covered by the Medicare program was based on reimbursement of allowable costs subject to certain limits. Final reimbursement was determined after submission of annual cost reports and audits thereof by the fiscal intermediaries. Retroactive adjustments have been accrued on an estimated basis in the period the related services were rendered and will be adjusted in future periods, as final settlements are determined. Estimated settlements for cost report years ended 1997 and subsequent years, which are still subject to audit by the intermediary and the Department of Health and Human Services, are recorded as a current liability in the accompanying Consolidated Balance Sheets. Under the new PPS rules, annual cost reports are still required as a condition of participation in the Medicare program. However, there are no final settlements or retroactive adjustments based on the annual cost reports.

Non-Medicare Revenue Recognition

The Company has agreements with third party payors that provide for payments to the Company at amounts different from established rates. Gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to the Company’s established rates or estimated reimbursement rates, as applicable. Allowances and contractual adjustments are recorded for the difference between the established rates and the amounts estimated to be payable by third parties and are deducted from gross revenue to determine net service revenue. Net service revenue is the estimated net amounts realizable from patients, third party payors and others for services rendered, including estimated retroactive adjustments under reimbursement agreements. Reimbursement from all sources except Medicare is typically billed and revenue is recorded as services are rendered and is based upon discounts from established rates.

7

3. Earnings Per Share

Earnings per common share are based on the weighted average number of shares outstanding during the period. The following table sets forth the computation of basic and diluted net income per common share for the three and six-month periods ended June 30, 2004 and 2003 (amounts in thousands, except per share amounts):

	Three months ended June 30				Six months ended June 30
	2004		2003		2004		2003
Basic Net Income per Share:
Net Income	$	4,961	$	1,514	$	9,182	$	2,663
Weighted Average Number of Shares Outstanding		12,281		9,477		12,144		9,402
Net Income per Common Share – Basic	$	0.40	$	0.16	$	0.76	$	0.28
Diluted Net Income per Share:
Net Income	$	4,961	$	1,514	$	9,182	$	2,663
Weighted Average Number of Shares Outstanding		12,281		9,477		12,144		9,402
Effect of Dilutive Securities:
Stock Options		417		184		407		168
Warrants		106		5		132		13
Weighted Average Number of Shares Outstanding – Diluted		12,804		9,666		12,683		9,583
Net Income per Common Share – Diluted	$	0.39	$	0.16	$	0.72	$	0.28

For the six months ended June 30, 2004, there were no additional potentially dilutive securities that were anti-dilutive at the end of the period, as compared to 553,000 potentially dilutive securities for the same period in 2003.

4. Medicare Reimbursement Changes

The Company derived 92% of its net service revenue from the Medicare program for the three months ended June 30, 2004 and 2003 and 92% and 91% of its net service revenue from the Medicare program for the six months ended June 30, 2004 and 2003, respectively.

From October 1, 1998 to October 1, 2000, prior to the implementation of PPS, Medicare-reimbursed home health agencies’ cost limits were determined as the lesser of (i) their actual costs, (ii) per visit cost limits based on 105% of national median costs of freestanding home health agencies, or (iii) a per beneficiary limit determined for each specific agency based on whether the agency was an “old” or “new” provider as defined.

In December 2000, Congress passed the Benefits Improvement and Protection Act (“BIPA”), which provided additional funding to healthcare providers. BIPA provided for the following: (i) a one-year delay in applying the budgeted 15% reduction on payment limits, subsequently extended to September 30, 2002, (ii) the restoration of a full home health market basket update for episodes of care ending on or after April 1, 2001, and before October 1, 2001, resulting in an increase to revenue of 2.2%, (iii) a 10% increase, beginning April 1, 2001 and extending for a period of 24 months, for home health services provided in a rural area, and (iv) a one-time advance equal to two months of periodic interim payments (“PIP”).

The scheduled reduction on payment limits was implemented effective October 1, 2002 for all episodes of care ended on or after October 1, 2002 and reflected an actual decrease of 7%, offset by an inflationary update of 2.1%, resulting in a net decrease to reimbursement of approximately 5.05%.

In addition to the reduction effective October 1, 2002, the provision in BIPA whereby home health providers received a 10% increase in reimbursement that began April 2001 for serving patients in rural areas expired March 31, 2003.

The recent passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 has resulted in two changes in Medicare reimbursement. First, for episodes ended on or after April 1, 2004 through December 31, 2006, the market basket

8

increase has been reduced by 0.8%. Second, a 5.0% payment increase for services furnished in a rural setting is provided for episodes ending on or after April 1, 2004 and before April 1, 2005. Patients in rural areas account for approximately 27% of the Company’s patient population.

5. Acquisitions

Each of the following acquisitions was completed pursuant to the Company’s strategy of achieving market dominance in the southern and southeastern United States through expansion of its service base and the enhancement of its position in certain geographic areas as a leading provider of home health nursing services. The purchase price of each acquisition was determined based on the Company’s analysis of comparable acquisitions and the acquisition target’s expected cash flows. Each purchase agreements with the seller is typically executed with separate non-compete agreements of at least two years in duration. Goodwill generated from the acquisitions was recognized given the expected contributions of each acquisition to the overall corporate strategy and is expected to be fully tax deductible. Each of the acquisitions completed was accounted for as a purchase and are included in the Company’s financial statements from the respective acquisition dates.

2004 Acquisitions

1. On January 5, 2004, the Company entered into an agreement to purchase certain assets and certain liabilities of 11 home health agencies and two hospice agencies (the “Acquired Entities”) that operated as departments of individual hospitals (the “Sellers”) owned by Tenet Healthcare Corporation. Subsequent to January 5, 2004, the Company and the Sellers agreed to exclude one of the home health agencies from the Acquired Entities. The Acquired Entities are Professional Home Health, Brookwood Home Care Services, Memorial Home Care, Spalding Regional Home Health, Tenet Home Care of Palm Beach, Tenet Home Care of Broward County, Tenet Home Care of Miami-Dade, First Community Home Care, Cypress-Fairbanks Home Health, St. Francis Home Health and Hospice, and Brookwood Health Services, Inc. The Company had no material relationship with the Sellers or any of their affiliates prior to this transaction. See also the Company’s Form 8-K/A filed by the Company on July 15, 2004, in connection with this transaction.

The transaction closed in three stages. Control over the first four agencies was transferred effective March 1, 2004. The second group was transferred effective April 1, 2004, with the final transfer effective May 1, 2004. The purchase price of approximately $19.1 million was comprised of $14.2 million in cash at initial closing, with the balance paid in two equal installments on April 1, 2004 and May 1, 2004.

Tangible assets acquired and liabilities assumed are immaterial to the purchase price. The Company has allocated approximately $19.1 million of the purchase price on a preliminary basis to goodwill and other intangibles. The allocation is preliminary pending an analysis of the value of the intangible assets acquired.

Supplemental pro forma information as required by Paragraph 58 of SFAS 141, Business Combinations, for the Acquired Entities would not have a material impact on the results of operations for the three and six months ended June 30, 2004 or on the Balance Sheet as of June 30, 2004. See also the supplemental pro forma information as reported in the Company’s Form 8-K/A filed on July 15, 2004.

2. Effective April 1, 2004, the Company, through its wholly-owned subsidiary Amedisys Oklahoma, L.L.C., acquired certain assets and liabilities of Hillcrest Medical Center associated with its home health care operations in Tulsa, Oklahoma, for which the Company paid $375,000 cash at closing with a deferred payment of $75,000 paid on June 30, 2004. In connection with this acquisition, the Company recorded substantially all of the purchase price as goodwill and other intangibles in the second quarter of 2004.

Supplemental pro forma information as required by Paragraph 58 of FAS 141, Business Combinations, for this acquisition would not have a material impact on the results of operations for the three and six months ended June 30, 2004 or on the Balance Sheet as of June 30, 2004.

3. Effective June 1, 2004, the Company, through its wholly-owned subsidiary Amedisys Mississippi, L.L.C., acquired a single home health agency in Vicksburg, Mississippi, from River Region Health System for $1.65 million. In connection with the acquisition, the Company preliminarily allocated substantially all of the purchase price as goodwill and other intangibles in the second quarter of 2004 pending a final analysis.

Supplemental pro forma information as required by Paragraph 58 of FAS 141, Business Combinations, for this acquisition would not have a material impact on the results of operations for the three and six months ended June 30, 2004 or on the Balance Sheet as of June 30, 2004.

9

2003 Acquisitions

1. Effective July 1, 2003, the Company, through its wholly-owned subsidiary Amedisys Arkansas, L.L.C., acquired certain assets and liabilities of Van Buren H.M.A., Inc. associated with its home health care operations in Van Buren, Arkansas. In connection with this acquisition, the Company recorded $391,000 of goodwill and other intangibles in the third quarter of 2003.

2. Effective August 1, 2003, the Company, through its wholly-owned subsidiary Amedisys LA Acquisitions, LLC., acquired substantially all of the assets and certain liabilities of Standard Home Health Care Inc. and Cypress Health Services, LLC, collectively Metro Preferred Home Care (“Metro”). In consideration for the acquired assets and liabilities, the Company paid $6,000,000 cash at closing and executed a three-year promissory note in the amount of $1,000,000, which was subject to the achievement of certain minimum earnings of the acquired operations, and issued 163,000 shares of Amedisys, Inc. common stock, for a total purchase price of approximately $8,000,000. The promissory note, bearing a maximum interest rate of 5% per annum, is payable in arrears in equal quarterly installments, plus accrued interest, beginning December 2003. In February 2004 the note was amended to remove the minimum earning requirements. In connection with this acquisition, the Company recorded $8,212,000 of goodwill and other intangibles in the third and fourth quarters of 2003. The allocation is preliminary pending an analysis of the intangible value of the acquired assets.

3. Effective November 1, 2003, the Company, through its wholly-owned subsidiary Amedisys Texas, Ltd., acquired certain assets and liabilities of St. Luke’s Episcopal Hospital associated with its home health services program for which the Company paid $500,000 cash at closing and executed a promissory note for $1,000,000 bearing interest at the Prime Rate plus two percent and payable over a three-year term in equal monthly installments beginning December 1, 2003. In connection with this acquisition, the Company recorded $1,249,000 of goodwill and other intangibles in the fourth quarter of 2003.

6. Long-Term Debt

Long-term debt consists primarily of notes payable to banks and other financial institutions and notes payable to sellers in purchase acquisitions that are due in monthly or quarterly installments through 2006. Long-term debt includes the following as of June 30, 2004 and December 31, 2003 (amounts in thousands):

	June 30, 2004			December 31, 2003
Long-term debt payable to Provident Bank—interest, at a variable rate of 7.5%, at June 30, 2004 and December 31, 2003 (1)	$	2,410		$	3,551
Other Long-term debt—interest ranging from 2.93-8.00%		2,386			3,119
Long-term debt		4,796			6,670
Less current portion		(3,875	)		(3,974	)
Long-term debt, net of current portion	$	921		$	2,696

(1) The Company’s note payable to Provident Bank was originally issued by NCFE Capital. NCFE Capital subsequently assigned the note payable, including its security interest therein, to Provident Bank.

Approximately $4,344,000 and $5,312,000 at June 30, 2004 and December 31, 2003, respectively, are secured by furniture, fixtures, computer equipment, and other assets. Maturities of debt as of June 30, 2004 are as follows (amounts in thousands):

12 months ended	Amount
June 30, 2005	$	3,875
June 30, 2006		685
June 30, 2007		236
	$	4,796

10

Effective April 29, 2004, the Company entered into a financing arrangement with GE Healthcare Financial Services for a working capital facility (the “GE facility”) of up to $25 million. The Company’s obligations under the GE facility are collateralized by its existing and after-acquired personal and real property. Currently, the Company has no borrowing availability under the GE facility, as the Company’s borrowing capabilities are restricted until amounts due to Provident Bank are satisfied and related security interests are released.

The GE facility matures in April 2008 and bears interest with respect to revolving credit advances at the “index rate” plus 1.75%. The index rate is determined by the higher of (i) the rate publicly quoted from time to time by The Wall Street Journal as the base rate on corporate loans posted by at least 75% of the nations 30 largest banks or (ii) the Federal Funds Rate plus 50 basis points per annum. At the election of the Company, revolving credit advances may bear interest at LIBOR plus 3.75%. With respect to swing line loans, the index rate as defined above plus 1.75% is applicable. The GE facility contains financial covenants that require (i) a maximum capital expenditures, (ii) a minimum fixed charge coverage ratio, (iii) a minimum EBITDA (earnings before interest, taxes, depreciation and amortization), (iv) a maximum leverage ratio and (v) a maximum days sales outstanding. Compliance with the financial covenants is measured quarterly. All of the financial covenants are predetermined and adjust over the term of the GE facility. All of the financial covenants are measured with results for the most recent 12-month period, except for the maximum days sales outstanding covenant, which is the most recent 90 days. As of June 30, 2004, the Company was in compliance with all of the financial covenants of the GE facility.

7. Amounts Due To Medicare

As of June 30, 2004 and December 31, 2003, the Company has estimated an aggregate payable to Medicare of $9.3 million, all of which is reflected as a current liability in the accompanying Consolidated Balance Sheets. The $9.3 million liability is comprised of two components: Cost report adjustments reserve ($6.8 million) and PPS payment adjustments reserve ($2.5 million). These adjustments are described below.

Cost Report Adjustments Reserve

Prior to the implementation of PPS on October 1, 2000, the Company recorded Medicare revenue at the lower of (i) actual costs, (ii) the per visit cost limit, or (iii) a per beneficiary cost limit on an individual provider basis. Ultimate reimbursement under the program was determined upon review of annual cost reports.

The recorded $6.8 million payable includes a $3.7 million reserve for open cost reports through October 2000 (also see Note 2, “Medicare Revenue Recognition”). At the time when these audits are completed and final assessments are issued, the Company may apply to Medicare for repayment over a 36-month period, although there is no assurance that such applications will be agreed to by Medicare. These amounts relate to the Medicare payment system in effect until October 2000, under which Medicare provided periodic interim payments to the Company, subject to audit of cost reports submitted by the Company and repayment of any overpayments by Medicare to the Company. CMS, the fiscal intermediary acting on behalf of Medicare, has not yet issued finalized audits with respect to 1999 and 2000, and is entitled to reopen settled cost reports for up to three years after issuing final assessments.

The payable to Medicare also includes a $3.1 million reserve related to amounts owed to Medicare as overpayments for a subsidiary of the Company that is currently in bankruptcy proceedings under Chapter 7 of the U. S. Bankruptcy Code. It is uncertain at this time whether the Company will have any responsibility for that amount if the debt of the subsidiary is discharged in bankruptcy.

11

The following table summarizes the cost report activity included in the above $6.8 million due to Medicare (amounts in thousands):

	Cost report reserves
Balance at December 31, 2000	$	(13,309	)
Cash payments made		4,319
To change estimated amounts owed to Medicare for the fiscal year 2000 cost reports		1,034
Advances received as a result of BIPA		(7,396	)
Reversal of additional amounts recorded for 1999 cost reports		1,180
Balance at December 31, 2001	$	(14,172	)
Cash payments made		4,389
Settlements received		(2,063	)
Reserve for re-opened 1997 cost reports		(1,001	)
Balance at December 31, 2002	$	(12,847	)
Cash payments made		8,507
To change estimated amounts owed to Medicare		(402	)
Settlements received		(2,101	)
Balance at December 31, 2003	$	(6,843	)
Adjustments to previous settlements		2
Balance at June 30, 2004	$	(6,841	)

During the second quarter of 2001 the Company revised the calculation of the estimated Medicare allowable costs for the 2000 cost report year based on additional information provided by the fiscal intermediary to the Company resulting in a $1.0 million decrease in amounts due to Medicare. Such amounts were recorded as an increase to revenue in the second quarter of 2001.

Also in the fourth quarter of 2001, CMS completed audits of the filed cost reports for the 1999 cost report year. Based on information received from the completed audits, the Company determined that the 2% audit adjustment factor, withheld from the initial review conducted by the intermediary in 2000, would be refunded less any additional audit adjustments. Based on guidance received from the intermediary, the fiscal 1999 provider cost reports for those providers the Company purchased from Columbia/HCA in December, 1998 were to receive an additional month of costs because the intermediary allowed the Company to file a 13 month cost report. Even though Amedisys did have unfavorable audit adjustments, the net effect of the additional allowable cost and the refunded 2% audit adjustment factor resulted in a net receivable from Medicare. As a result of this information, the Company reversed the previously established $1.2 million due to Medicare for the 2% audit adjustment factor with an increase to revenue in the fourth quarter of 2001.

During the third and fourth quarters of 2002, the Company received cash settlements of $2.1 million from Medicare related tentative settlements of the fiscal 2000 cost reports. This receivable was netted against the amounts due to Medicare on the balance sheet in the current-portion of Medicare liabilities; therefore, receipts of these settlements had no income statement impact.

In October 2002 the Company received notice from CMS that the fiscal 1997 Amedisys cost reports were being re-opened. In response to this notification from the intermediary, the Company established a liability of $1.0 million for amounts that are probable to be assessed during the re-opening of the 1997 cost reports, due to different interpretations of reimbursement regulations between the intermediary and the Company. The increase in liability resulted in a decrease to revenue in the fourth quarter of 2002. CMS has yet to complete the audit on these cost reports.

During the third and fourth quarters of 2003, the Company received cash settlements of $2.1 million from Medicare related to the settlements of the fiscal 1999 cost reports. This receivable was netted against the amounts due to Medicare on the balance sheet in the current-portion of Medicare liabilities; therefore, receipts of these settlements had no statement of operations impact.

12

During the second quarter of 2003, the Company recognized $402,000 as a decrease to revenue to offset settlements received in excess of amounts previously recorded.

PPS Payment Adjustments Reserve

The remaining balance of $2.5 million is related to notice from CMS that it intended to make certain recoveries of amounts overpaid to providers for the periods dating from the implementation of PPS on October 1, 2000 through particular dates in 2003 and 2004. The first of these amounts related to partial episode payments (“PEPs”) whereby a patient was readmitted to home health care prior to the expiration of 60 days from the previous admission date at another home health agency. In such instances, reimbursement for the first agency is reduced. CMS advised the industry that CMS had recently implemented changes to its computer system such that these instances would be adjusted at the time of claim submission on an ongoing basis, and that recovery for prior overpayments would commence in the summer of 2003 and extend over a two-year period. The Company reserved, based on information supplied by CMS, approximately $1.0 million in 2003 for all claims dating from October 1, 2000. Secondly, CMS advised the industry that it would seek recovery of overpayments that were made for patients who had, within 14 days of such admission, been discharged from inpatient facilities, including hospitals, rehabilitation and skilled nursing units, and that these recoveries would commence in April 2004. The Company conducted an analysis of a representative sample of claims where these events had occurred, and estimated that, for periods dating from October 1, 2000 through December 31, 2003, a reserve in the amount of approximately $1.5 million was appropriate.

The following table summarizes the PPS activity included in the amounts due to/from Medicare (amounts in thousands):

Balance at December 31, 2002	$	—
To reserve estimated amounts owed to Medicare		(2,504	)
Balance at December 31, 2003	$	(2,504	)
Cash payments made		20
Balance at June 30, 2004	$	(2,484	)

8. Income Taxes

The Company files a consolidated federal income tax return that includes all subsidiaries. State income tax returns are filed individually by the subsidiaries in accordance with state statutes.

The Company uses the asset and liability approach to measuring deferred tax assets and liabilities based on temporary differences existing at each balance sheet date using currently enacted tax rates in accordance with Statement of Financial Accounting Standards No. 109 (“SFAS 109”), “Accounting for Income Taxes”.

Total income tax expense for the three and six-month periods ended June 30, 2004 and 2003 is as follows (amounts in thousands):

	Three Months Ended June 30				Six Months Ended June 30
	2004		2003		2004		2003
Current income tax expense	$	1,240	$	56	$	1,640	$	89
Deferred income tax expense		1,823		868		4,031		1,537
Total income tax expense	$	3,063	$	924	$	5,671	$	1,626

13

Total tax expense on income before taxes resulted in effective tax rates that differed from the federal statutory income tax rate. A reconciliation of these rates is as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2004		2003		2004		2003
Income taxes computed on federal statutory rate	35	%	35	%	35	%	35	%
State income taxes and other	2		2		2		2
Nondeductible expenses and other	1		1		1		1
Total	38	%	38	%	38	%	38	%

Net deferred tax assets consist of the following components as of June 30, 2004 and December 31, 2003 (amounts in thousands):

	June 30, 2004			December 31. 2003
Deferred tax assets:
NOL carryforward	$	225		$	2,805
Allowance for doubtful accounts		1,377			1,143
Self-insurance reserves		1,105			875
Losses of consolidated subsidiaries not consolidated for tax purposes, expiring beginning in 2010		144			144
Expenses not currently deductible for tax purposes		336			395
Other		834			900
Deferred tax liabilities:
Amortization of intangible assets		(3,822	)		(3,083	)
Property and equipment		(1,838	)		(1,667	)
Deferred revenue		(2,618	)		(2,618	)
Net deferred tax liabilities	$	(4,257	)	$	(1,106	)

9. Goodwill and Other Assets, Net

At June 30, 2004, the Company’s Consolidated Balance Sheet reflects goodwill and net other assets of $57.4 million compared to $35.7 million at December 31, 2004. A summary rollforward total Goodwill and Other Assets, net is shown below (amounts in thousands):

	Goodwill		Other Intangible Assets, net			Other Assets, net			Total Other Assets, net
Balance at January 1, 2004	$	35,448	$	—		$	210		$	35,658
Additions		19,045		2,465			582			22,092
Less amortization		—		(337	)		(30	)		(367	)
Balance at June 30, 2004	$	54,493	$	2,128		$	762		$	57,383

A final allocation of the excess purchase price to net tangible assets acquired for the 2004 allocations is pending a valuation study and the Company expects to reflect this final allocation in the third quarter of 2004.

14

10. Stockholders’ Equity

The following table summarizes the activity in Stockholders’ Equity for the six months ended June 30, 2004 (amounts in thousands, except share information):

	Common Stock Shares	Common Stock Amount		Additional Paid-in Capital			Treasury Stock			Retained Earnings (Deficit)			Total Stockholders’ Equity
Balance, December 31, 2003	11,908,146	$	12	$	55,465		$	(25	)	$	(4,053	)	$	51,399
Issuance of stock for Employee Stock Purchase Plan	34,298		—		350			—			—			350
Issuance of stock for 401(k) match	30,773		—		546			—			—			546
Exercise of warrants	154,843		—		463			—			—			463
Exercise of stock options	230,288		—		1,188			—			—			1,188
Issuance of stock as compensation	1,300		—		26			—			—			26
Tax benefit from stock option exercises	—		—		1,050			—			—			1,050
Private placement expenses	—		—		(108	)		—			—			(108	)
Net income	—		—		—			—			9,182			9,182
Balance, June 30, 2004	12,359,648	$	12	$	58,980		$	(25	)	$	5,129		$	64,096

11. Restructuring

In response to the significant reduction in Medicare reimbursement effective October 1, 2002 (see Note 4 to the Consolidated Financial Statements) and in anticipation of the further reduction that occurred on April 1, 2003, management initiated major changes in its operations, including the termination of certain employees and abandonment and buyouts of certain leased space in December 2002. As a result of this restructuring plan, 117 employees were terminated. In 2002, the Company recorded $1,640,000 of costs associated with its restructuring plan. These costs were comprised of $1,209,000 for employee severance and $431,000 of costs associated with the abandonment and buyout of existing operating leases that were included in general and administrative expenses in the Consolidated Statements of Operations for the year ended December 31, 2002. During 2002, $262,000 of termination benefits were paid associated with the termination of 83 employees and charged against the accrued expenses. At December 31, 2003, a liability of $352,000 remained for the unpaid portion of the restructuring plan. At June 30, 2004, a liability of $195,000 remains for the unpaid portion of the restructuring plan, and will be paid through the fourth quarter of 2006. The following table summarizes the balance remaining at June 30, 2004 (amounts in thousands):

	Employee severance and other related benefits			Lease abandonment and buyouts			Total
Restructuring costs	$	1,209		$	431		$	1,640
Cash payments and other reductions		(1,150	)		(295	)		(1,445	)
Balance at June 30, 2004	$	59		$	136		$	195

12. Health Insurance Portability and Accountability Act

The Health Insurance Portability and Accountability Act (“HIPAA”) was enacted August 21, 1996 to assure health insurance portability, reduce health care fraud and abuse, guarantee security and privacy of health information and enforce standards for health information. Organizations were required to be in compliance with certain HIPAA provisions relating to security and privacy beginning April 14, 2003. Organizations are subject to significant fines and penalties if found not to be compliant with the provisions outlined in the regulations. Regulations issued pursuant to HIPAA impose ongoing obligations relative to training, monitoring and enforcement.

15

Pursuant to the provisions of HIPAA, covered health care providers were required to comply with the statute’s electronic Health Care Transactions and Code Sets Requirements by October 16, 2002, or secure automatic one-year extensions to the deadline. Prior to the regulatory deadline, the Company and its subsidiaries secured the automatic one-year extension in accordance with the directives of CMS. This automatic extension expired on October 16, 2003. Both the Company’s fiscal intermediary and many of the state Medicaid agencies to which the Company submits billings have further extended this deadline. As of June 30, 2004, the Company has completed the conversion process for a majority of its operating entities, and management believes all remaining entities will be fully converted prior to the deadlines imposed by individual payors. To the extent that other state Medicaid agencies have notified the Company that they are ready to receive submissions pursuant to the new HIPAA standards, management believes the Company has converted to the new standards.

13. Guarantees

At June 30, 2004, the Company has issued guarantees aggregating $1,698,000 related to office leases of subsidiaries. Approximately $86,000 of this amount is related to guarantees on locations that have been sold which the Company has the right to recover amounts under the sale agreement from the buyer, if payments are requested. The Company has not received any requests to make payments under these guarantees. Approximately $89,000 is related to locations that have been closed and the landlords have obtained judgments against the Company for unpaid rent. The Company has reserved substantially all of these amounts in Legal settlements on the Consolidated Balance Sheets at June 30, 2004. The above amounts were $951,000, $106,000 and $89,000 respectively at December 31, 2003.

14. Stock-Based Compensation

The Company has two stock option plans, the Amedisys, Inc. 1998 Stock Option Plan and the Amedisys, Inc. Directors Stock Option Plan (collectively, “the Plans”). The Company accounts for its stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). Statement of Financial Accounting Standards No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”), and Statement of Financial Accounting Standards No. 148 “Accounting for Stock-Based Compensation – Transition and Disclosure” permit the continued use of the intrinsic value-based method prescribed by APB 25, but require additional disclosures, including pro-forma calculations of earnings and net earnings per share as if the fair value method of accounting prescribed by SFAS 123 had been applied. The following table illustrates the effect on net income and earnings per share if the Company had recognized compensation expense for the Plans using the fair-value recognition method in SFAS 123 (amounts in thousands, except per share amounts):

	Three months ended June 30				Six months ended June 30
	2004		2003		2004		2003
Net income:
As reported	$4,961		$1,514		$9,182		$2,663
Deduct: Total stock-based employee compensation determined under fair value based method for all awards, net of taxes	(219	)	(116	)	(608	)	(333	)
Pro forma	4,742		1,398		8,574		2,330
Basic earnings per share:
As reported	0.40		0.16		0.76		0.28
Pro forma	0.39		0.15		0.71		0.25
Diluted earnings per share:
As reported	0.39		0.16		0.72		0.28
Pro forma	0.37		0.14		0.68		0.24
Black-Scholes option pricing model assumptions:
Risk free interest rate	3.55-5.16	%	4.26-5.16	%	3.55-5.16	%	4.26-5.16	%
Expected life (years)	10		10		10		10
Volatility	45.84-110.35	%	98.20-110.35	%	45.84-110.35	%	98.20-110.35	%
Expected annual dividend yield	—		—		—		—

16

15. Claim Against JP Morgan Chase Manhattan Bank (“JP Morgan”)

In November 2002, the Company elected to terminate its asset financing facility (the “facility”) with NPF VI, Inc. (“NPF VI”) and advised its payors that payments should be directed to the bank accounts of the Company rather than bank accounts controlled by NPF VI under collateral arrangements for the facility. NPF VI has filed for Chapter 11 bankruptcy protection. The Company is taking legal and other action to recover Company funds from JP Morgan, as trustee, for NPF VI that have not been released to the Company. During the fourth quarter of 2002, the Company recorded a reserve for the full amount of approximately $7.1 million related to the Company’s funds held by JP Morgan. During the quarter ended June 30, 2004, the Company received an unfavorable verdict in its suit against JP Morgan. The Company is now appealing the court’s decision to the U.S. Circuit Court of Appeals. No assessment of the likelihood of a favorable outcome to the Company can be made at this time.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of the Company’s results of operations and financial condition. This discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included herein, and the Consolidated Financial Statements and Notes and the related Management’s Discussion and Analysis in the Company’s Form 10-K for the year ended December 31, 2003.

The Company’s Annual Report on Form 10-K for the year ended December 31, 2003 describes the accounting policies that management believes are most critical to our financial position and operating results and that require management’s most difficult, subjective or complex judgments and estimates. Actual results could differ materially from these judgments and estimates. The significant accounting policies include: revenue recognition; collectibility of accounts receivable; insurance and litigation reserves; goodwill and other intangible assets; and income taxes. This quarterly report should be read in conjunction with the discussion of Critical Accounting Policies contained the Amedisys Inc. Annual Report of Form 10-K for the year ended December 31, 2003.

RESULTS OF OPERATIONS

Three Months ended June 30, 2004 compared to Three Months ended June 30, 2003

Net Service Revenue.

Approximately 92% of the Company’s net service revenue for the three months ended June 30, 2004 was derived from Medicare, compared to 91% for the same period last year. The Company is paid by Medicare based on completed episodes of care. An episode of care may arise from either a new admission, or by a physician ordering additional episodes of care for an existing patient. For each episode of care, the Company receives the applicable amount for each patient’s diagnoses, location and severity of illness – see revenue recognition discussion in Note 2 to the Consolidated Financial Statements. In the case of non – Medicare patients, the Company is generally paid on a per visit basis for each patient admission.

Net service revenue increased $24,702,000, or 77%, for the three months ended June 30, 2004 as compared to the same period in 2003. This increase is due to a 78% increase in Medicare revenue of $23,038,000, and a 59% increase in revenue from non-Medicare payors of $1,664,000. Of the 78% increase in Medicare revenue, $9,677,000, or 33%, is attributable to acquisitions (See Note 5 to the Consolidated Financial Statements for a discussion

17

of Company acquisitions). The remaining $13,361,000, or 46%, reflects internal growth resulting from a 34% increase in total Medicare patient admissions, a 7% increase in episodes per patient, and a 6% improvement in revenue per episode. The Company defines internal growth to include growth from operating locations owned by the Company for more than twelve months, any start up locations initiated by the Company, and from those acquisitions where the monthly Medicare admissions at the acquired locations does not exceed 1% of total Company admissions in the month of acquisition.

The increase in episodes per patient and the improvement in revenue per episode are a result of more intensive analysis of episodes while they are in progress rather than on a retrospective basis, and has been made possible through several technical enhancements to the information systems used by the Company, combined with a published net increase in Medicare reimbursement rates (see Note 2 to the Consolidated Financial Statements). In particular, the use of scanning technology and associated edits of admission data, has allowed the Company to standardize, and minimize inconsistencies in, assessment data. Furthermore, exception reporting on a real time basis has allowed a centralized episode review team to operate in tandem with both admission nurses and clinical review staff in each of the Company’s operating locations to achieve more consistent clinical outcomes.

Total patient admissions for the quarter ended June 30, 2004 totaled 15,386 and increased from the prior year admissions by 5,570, or 57%. Medicare patient admissions increased to 12,627, representing an increase of approximately 59% over the three months ended June 30, 2003.

The 59% increase in Medicare admissions for the most recent quarterly comparative period is comprised of internal growth in admissions of 34% with acquisitions contributing growth of 25%. Admissions from non-Medicare payors increased by 48% from 1,862 in the three months ended June 30, 2003 to 2,759 in the same period in 2004, entirely as a result of acquisitions.

Cost of Service Revenue

Cost of service revenue for the three months ended June 30, 2004 increased by $10,513,000, or 80%, as compared to the same period in 2003. This increase is attributable to a 60% increase in the total number of visits performed to 378,000 visits and by a 13% increase in the cost per visit. The number of visits increased by 60% as a result of a 61% increase in visits for non-Medicare patients for the reasons outlined above, and a 60% increase in the number of visits to Medicare patients. This increase in the number of visits to Medicare patients is due to an increase in the average number of patients served during the most recent quarter of approximately 10,500 when compared with approximately 6,500 in the comparable period of 2003. The 13% increase in the cost per visit is attributable to a higher number of staff at the acquired locations, higher cost per visits associated with hospice care (two of the acquired Tenet Healthcare Corporation locations are hospice care providers) and higher rates of pay per visit at the acquired locations for visiting staff. Typically, our acquisitions take up to 12 months to reach the labor efficiencies of existing operations.

Cost of service revenue as a percent of net service revenue increased 0.8%, in large part due to the increased cost per visit as described above.

General and Administrative Expenses (“G&A”)

General and administrative expenses increased by $8.7 million or by 52% in the quarter ended June 30, 2004 as compared to the same quarter in 2003. This increase is primarily attributable to $4.8 million of general and administrative expenses incurred by the Company’s acquisitions (see Note 5 to the Consolidated Financial Statements). Further increases included a $0.2 million increase in bad debt expense, $0.8 million related to purchased services and supplies related to the Company’s acquisitions and other operating initiatives, increased personnel costs of $0.9 million related to additional operational and corporate staff necessitated by the Company’s acquisitions, $0.3 million related to accrued bonuses, net increases in health insurance and other benefit costs of $0.6 million and increase in travel and related costs of $1.0 million particularly with respect to operational and corporate training meetings and new employee orientation.

As a percentage of net service revenue, general and administrative expenses decreased 7% to 44% in 2004 from 51% in 2003 due to higher levels of net service revenue.

18

Operating Income.

The Company had operating income of $8.1 million for the three months ended June 30, 2004 as compared with $2.6 million in the same period of 2003. This increase is attributable to internal growth, acquisitions and the operational efficiencies discussed above.

Other Income and Expense, net.

Net other expense decreased by $59,000 for the three months ended June 30, 2004 as compared to the same period in 2003. The decrease is primarily attributable to a $0.2 million decrease in interest expense incurred during 2004 from lower interest-bearing liabilities. In particular, during the fourth quarter of 2003 the Company repaid all amounts owed to CMS under interest bearing extended payment arrangements. These arrangements carried an average liability of $5.5 million at an interest rate of 12.625%. The decrease in interest expense was largely offset by a $0.1 million payment received during the second quarter of 2003 from a competitive bidder on an acquisition the Company did not pursue.

Income Tax Expense.

Income tax expense of $3,063,000 and $924,000 was recorded for the three months ended June 30, 2004 and 2003, respectively. An effective income tax rate of approximately 38% was recorded on income before taxes during the periods.

Six Months ended June 30, 2004 compared to Six Months ended June 30, 2003

Net Service Revenue.

Approximately 92% of the Company’s net service revenue for the six months ended June 30, 2004 and 2003 was derived from Medicare. The Company is paid by Medicare based on completed episodes of care. An episode of care may arise from either a new admission, or by a physician ordering additional episodes of care for an existing patient. For each episode of care, the Company receives the applicable amount for each patient’s diagnoses, location and severity of illness – see revenue recognition discussion in Note 2 to the Consolidated Financial Statements. In the case of non – Medicare patients, the Company is generally paid on a per visit basis for each patient admission.

Net service revenue increased $40,909,000, or 65%, for the six months ended June 30, 2004 as compared to the same period in 2003. This increase is due to a 67% increase in Medicare revenue of $38,591,000, and a 40% increase in revenue from non-Medicare payors of $2,318,000. Of the 67% increase in Medicare revenue, $15,579,000, or 27%, is attributable to acquisitions (See Note 5 to the Consolidated Financial Statements for a discussion of Company acquisitions). The remaining $23,012,000, or 40%, reflects internal growth resulting from a 28% increase in total Medicare patient admissions, a 6% increase in episodes per patient, and a 6% improvement in revenue per episode. The Company defines internal growth to include growth from operating locations owned by the Company for more than twelve months, any start up locations initiated by the Company, and from those acquisitions where the monthly Medicare admissions at the acquired locations does not exceed 1% of total Company admissions in the month of acquisition.

The increase in episodes per patient, and the improvement in revenue per episode, are a result of more intensive analysis of episodes while they are in progress rather than on a retrospective basis, and has been made possible through several technical enhancements to the information systems used by the Company, combined with an increase in Medicare reimbursement rates (see Note 2 to the Consolidated Financial Statements). In particular, the use of scanning technology and associated edits of admission data, has allowed the Company to standardize, and minimize inconsistencies in, assessment data. Furthermore, exception reporting on a real time basis has allowed a centralized episode review team to operate in tandem with both admission nurses and clinical review staff in each of the Company’s operating locations to achieve more consistent clinical outcomes.

Total patient admissions for the six months ended June 30, 2004 totaled 29,115 and increased from the prior year admissions by 8,645, or 42%. Medicare patient admissions increased to 24,143, representing an increase of approximately 47% over the six months ended June 30, 2003.

The 42% increase in Medicare admissions for the most recent quarterly comparative period is comprised primarily of internal growth of 28% with acquisitions contributing growth of 14%. Admissions from non-Medicare payors increased by 23% from 4,048 in the six months ended June 30, 2003 to 4,972 in the same period in 2004, entirely as a result of acquisitions.

19

Cost of Service Revenue

Cost of service revenue for the six months ended June 30, 2004 increased by $17,084,000, or 66%, as compared to the same period in 2003. This increase is attributable to a 52% increase in the total number of visits performed to 712,000 visits and by a 9% increase in the cost per visit. The number of visits increased by 52% as a result of a 61% increase in visits for non-Medicare patients for the reasons outlined above, and a 41% increase in the number of visits to Medicare patients. This increase in the number of visits to Medicare patients is due to an increase in the average number of patients served during the most recent quarter of approximately 9,600 when compared with approximately 6,300 in the comparable period of 2003. The 9% increase in the cost per visit is attributable to a higher number of staff at the acquired locations, higher cost per visits associated with hospice care (two of the acquired Tenet Healthcare Corporation locations are hospice care providers) and higher rates of pay per visit at the acquired locations for visiting staff.

Cost of service revenue as a percent of net service revenue increased 0.3%, primarily due to the increased cost per visit as described above.

General and Administrative Expenses (“G&A”)

General and administrative expenses increased by $13.6 million, or by 42% in the six months ended June 30, 2004 as compared to the same quarter in 2003. This increase is primarily attributable to $8.0 million of general and administrative expenses for the 2004 acquisitions. Further increases included $0.6 million increase in bad debt expense, $1.4 million related to purchased services and supplies related to the Company’s acquisitions and other operating initiatives, increased personnel costs of $1.0 million related to additional operational and corporate staff necessitated by the Company’s acquisitions, $0.6 million related to accrued bonuses, net increases in health insurance and other benefit costs, of $0.8 million and increase in travel and related costs of $1.4 million particularly with respect to operational and corporate training meetings and new employee orientation.

As a percentage of net service revenue, general and administrative expenses decreased 7% to 44% in 2004 from 51% in 2003 due to the higher levels of net service revenue.

Operating Income.

The Company had operating income of $15.0 million for the six months ended June 30, 2004 compared to $4.7 million in the same period of 2003. This increase is attributable to internal growth, acquisitions and the operational efficiencies discussed above.

Other Income and Expense, net.

Net other expense decreased by $316,000 to $135,000 for the six months ended June 30, 2004 compared to the same period in 2003. The decrease is primarily attributable to a $0.5 million decrease in interest expense incurred during 2004 from lower interest-bearing liabilities. In particular, during 2003 the Company repaid all amounts owed to CMS under interest bearing extended payment arrangements. These arrangements carried an average liability of $5.5 million at an interest rate of 12.625%. The decrease in interest expense was partially offset by a $0.1 million payment received during the second quarter of 2003 from a competitive bidder on an acquisition the Company did not pursue.

Income Tax Expense.

Income tax expense of $5,671,000 and $1,626,000 was recorded for the six months ended June 30, 2004 and 2003, respectively. An effective income tax rate of approximately 38% was recorded on income before taxes during the periods.

20

LIQUIDITY AND CAPITAL RESOURCES

The Company’s principal source of liquidity is the collection of its account receivable, the most significant component of which are amounts due from the Medicare program.

The Company’s operating activities provided $16.1 million in cash during the six months ended June 30, 2004, whereas such activities provided $11.9 million in cash during the comparative six-month period last year. Cash provided by operating activities for the six months ended June 30, 2004, is primarily attributable to net income of $9.2 million, non-cash items such as depreciation and amortization of $1.8 million, provision for bad debts of $1.6 million, and an increase in accrued expenses of $7.0 million reflecting the additional payroll and benefits costs resulting from the 2004 acquisitions (see Note 5 to the Consolidated Financial Statements). The tax benefit derived from the exercise of stock options provided $1.1 million, and the provision for deferred income taxes added $3.2 million. These were offset by 2004 acquisition-related increases in accounts receivable, other assets and other current assets of $6.3 million, $1.0 million and $0.4 million, respectively.

Investing activities used $22.7 million for the six months ended June 30, 2004, whereas such activities used $0.6 million for the six months ended June 30, 2003. Cash used in investing activities in 2004 is primarily attributed to purchases of property and equipment of $1.9 million and cash used in various 2004 acquisitions (see Note 5 to the Consolidated Financial Statements) of $20.8 million.

Financing activities used $1.0 million for the six months ended June 30, 2004, whereas such activities used $3.3 million during the same period of 2003. Cash used by financing activities in 2004 is primarily attributed to payments on notes and capital leases of $3.3 million, offset by proceeds from the issuance of common stock of $2.0 million.

The Company has a letter of credit with Bank One for $200,000 at June 30, 2004, secured in full by cash, relating to its workers’ compensation plan for the plan year December 31, 2000 through December 31, 2001.

At June 30, 2004 the Company had working capital of $4.9 million compared to $15.6 million at December 31, 2003. The June 30, 2004 working capital includes short-term Medicare liabilities of $9.3 million, $6.2 million of which the Company does not expect to fully liquidate in cash during 2004. As discussed in Note 8, these Medicare liabilities include $3.1 million owed by a subsidiary currently in bankruptcy, and $3.1 million of anticipated cost report settlements yet to be finalized. Management does not expect the final cost report settlements to all occur in the coming year. In addition, when the cost reports are settled, the Company may be eligible to apply for a payment plan for up to three years in length. There can be no assurance that such a payment plan will be granted. The $15.6 million of working capital at December 31, 2003, reflects $21.3 million of proceeds from a November 2003 private placement of common stock. This working capital surplus has been substantially reduced to the current level by the Company’s 2004 acquisitions (see Note 5 to the Consolidated Financial Statements).

The Company has certain other contingencies and reserves, including litigation reserves, recorded as current liabilities in the accompanying Consolidated Balance Sheets (in accordance with statement of Financial Accounting Standard No. 5) that management might not be required to liquidate in cash during 2004. However, in the event that all current liabilities become due within twelve months, the Company may be required to obtain debt financing and/or sell securities on unfavorable terms. There can be no assurance that such action may not be necessary to ensure appropriate liquidity for the operations of the Company. As discussed in Note 6, the Company entered into a $25 million working capital facility with GE Healthcare Financial Services on April 29, 2004. However, the Company’s borrowing capabilities under the facility are restricted until amounts due to Provident Bank are satisfied and the related security interests released (see Note 6 to the Consolidated Financial Statements).

21

Contractual Obligations and Medicare Liabilities

The following table summarizes the Company’s current contractual obligations and Medicare liabilities at June 30, 2004 (amounts in thousands):

	Payments Due by Period
	Total		Less than 1 year		1-3 years		4-5 years
Long-Term Debt (see Note 6*)	$	4,796	$	3,875	$	921	$	—
Capital Lease Obligations (see Note 7*)		942		456		386		100
Medicare Liabilities (see Note 8*)		9,326		9,326		—		—
Total Contractual Cash Obligations	$	15,064	$	13,657	$	1,307	$	100

* The above tabular references to various notes refer to the Notes to the Consolidated Financial Statements.

At June 30, 2004, the Company was indebted under various promissory notes for $4.8 million, including amounts due for the Company’s note with Provident Bank of $2.4 million. In June 2002, the terms of the Provident Bank note were amended to extend the maturity date to June 28, 2005 and to change the interest rate to prime plus 3.25%. The security for this note consists of all credits, deposits, accounts, securities or moneys, and all other property rights belonging to or in which the Company has any interest, now or hereafter, as well as every other asset now or hereafter existing of the Company, absolute or contingent, due or to become due.

As of June 30, 2004, the Company estimates an aggregate payable to Medicare of $9.3 million, all of which is reflected as a current liability in the accompanying Consolidated Balance Sheets. The $9.3 million includes estimated amounts owed to Medicare for cost report adjustments and PPS payment adjustments (see Note 8 for further discussion).

In November 2002, the Company elected to terminate its asset financing facility with NPF VI (see Note 17 in the Notes to the Consolidated Financial Statements) and advised its payors that remittances should be directed to the bank accounts of the Company rather than bank accounts controlled by NPF VI under collateral arrangements for the facility. The decision to terminate the above facility was made in response to the failure of NPF VI, through its trustee, JP Morgan, to provide $3.3 million on October 31, 2002 as requested by the Company on October 29, 2002 in accordance with the terms of the facility. At that date, Amedisys, Inc. determined that an amount of approximately $7.1 million was being held on behalf of the Company by JP Morgan, as trustee for NPF VI, and engaged in correspondence with representatives of JP Morgan in an effort to have these funds returned to the Company. On November 18, 2002, NPF VI filed bankruptcy petitions, and accordingly, the Company elected to reserve the amount of $7.1 million in the fourth quarter of fiscal 2002. The Company is taking legal and other action to recover the funds that have not been released to the Company. The Company incurred approximately $1.5 million in legal fees related to this matter in the period ended June 30, 2004, and may incur substantial legal expenses in the future.

The Company entered into a working capital facility with GE Healthcare Financial Services on April 28, 2004. The Company has no borrowing availability under the GE facility as the Company’s borrowing capabilities under this arrangement are restricted until the Provident Bank note payable is satisfied. See Note 6 to the Consolidated Financial Statements for further information.

The Company does not expect that capital expenditures in fiscal 2004 will exceed $4.0 million, as compared with $1.8 million in 2003. The increase in capital expenditures in 2004 compared to 2003 is a result of the 2004 acquisitions (see Note 5 to the Consolidated Financial Statements).

The Company believes that available cash balances together with cash flow generated from operations are sufficient to meet its debt service and capital expenditure requirements, including targeted acquisitions, for the foreseeable future.

Recent Developments

The passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 on December 6, 2003, has resulted in two changes in Medicare reimbursement. First, for episodes ended on or after April 1, 2004 through December 31, 2006,

22

the base episode rate (see Note 2 to the Consolidated Financial Statements) increase has been reduced by 0.8%. Secondly, a 5.0% payment increase is provided for services furnished in a rural setting for episodes ending on or after April 1, 2004 and before April 1, 2005. These two changes represent a net increase to Amedisys of approximately 0.6% to Medicare net service revenue.

Effective January 1, 2005, the Company will receive the “market basket adjustment”, currently estimated to be an increase of approximately 2.0% (net of the 0.8% reduction referred to above). The Medicare Payment Advisory Commission (“MedPAC”) has recommended to Congress that the increase be eliminated. MedPAC is an independent federal body established by the Balanced Budget Act of 1997 to advise the U.S. Congress on issues affecting the Medicare program. Our industry trade association, the National Association for Home Care and Hospice, does not believe that Congress will address reimbursement issues this year. The Company cannot predict the timing or the magnitude of such changes, if any.

The Centers for Medicare and Medicaid Services, or CMS, administers the Medicare program and works in partnership with the states to administer Medicaid. CMS is responsible for the administrative simplification standards from HIPAA and quality standards in health care facilities through its survey and certification activity. In its administrative capacity, CMS has the regulatory means to impact reimbursement. CMS is expected in either 2005 or 2006 to review the case mix adjustments index (see Note 2 to the Consolidated Financial Statements) as part of a previously scheduled process. The Company is unable to predict the timing or outcome of such a review.

The Office of Inspector General (“OIG”) of the Department of Health and Human Services (“DHHS”) has a responsibility to report both to the Secretary of DHHS and to the Congress program and management problems related to programs such as Medicare and Medicaid. The OIG’s duties are carried out through a nationwide network of audits, investigations and inspections. The OIG has recently undertaken a study with respect to Medicare reimbursement rates. No estimate can be made at this time regarding the impact, if any, of the OIG’s findings.

Section 721 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, adds a new section 1807 “Voluntary Chronic Care Improvement Under Traditional Fee-for-Service (FFS) Medicare” to the Social Security Act (“the Act”). The Act specifies that the Secretary of Health and Human Services shall provide for the phased-in development, testing, evaluation, and implementation of chronic care improvement programs. CMS plans to test programs in approximately ten areas in which in the aggregate at least 10 percent of the Medicare FFS population resides, incorporating relevant features from private sector programs, but allowing sufficient flexibility to meet the unique needs of the Medicare population. CMS is seeking proposals from eligible organizations and one awardee will be selected per area to offer intervention group beneficiaries services. The awardee will be required to assume financial risk in the event of failure to meet agreed upon performance guarantees for clinical quality, beneficiary and provider satisfaction and savings targets. The Company has submitted a proposal to CMS to provide home health care services for this chronic care improvement pilot program. The Company believes that it has the clinical and operational expertise that can efficiently and profitably provide chronic care services. No estimate of the impact to net income or cash flow from operations can be made at this time should the Company be awarded a contract to provide such chronic care services.

The Company does not believe that inflation has had a material effect on its results of operations during the three and six-month periods ended June 30, 2004 or 2003.

FORWARD LOOKING STATEMENTS

When included in the Quarterly Report on Form 10-Q or in documents incorporated herein by reference, the words “expects”, “intends”, “anticipates”, “believes”, “estimates”, and analogous expressions are intended to identify forward-looking statements. Such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, among others, general economic and business conditions, current cash flows and operating deficits, debt service needs, adverse changes in federal and state laws relating to the health care industry, competition, regulatory initiatives and compliance with governmental regulations, customer preferences and various other matters, many of which are beyond the Company’s control. These forward-looking statements speak only as of the date of the Quarterly Report on Form
10-Q. The Company expressly disclaims any obligation or undertaking to release publicly any updates or any changes in the Company’s expectations with regard thereto or any changes in events, conditions or circumstances on which any statement is based.

23

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The Company does not engage in derivative financial instruments, other financial instruments, or derivative commodity instruments for speculative or trading/non-trading purposes. The Company has no off-balance sheet obligations.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls And Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedure (as is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of a date within 90 days before the filing date of this quarterly report (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic filings under the Exchange Act.

Changes In Internal Controls

Since the Evaluation Date, there have not been any significant changes in the Company’s internal controls or in other factors that could significantly affect such controls.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None.

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

1. The annual shareholders meeting of the Company was held on June 10, 2004, for election of six directors to serve until the next annual meeting of the shareholders of the Company. The nominated individuals were William F. Borne, CEO of Amedisys, Inc.; Ronald A. LaBorde, a private investor; Jake L. Netterville, Chairman of the Board of Directors of Postlethwaite and Netterville, a professional accounting firm; David R. Pitts, President and CEO of Pitts Management Associates, Inc.; Peter F. Ricchiuti, Assistant Dean and Director of Research of BURKENROAD REPORTS at Tulane University’s A. B. Freeman School of Business; Donald A. Washburn, a private investor. These individuals were elected with the following votes:

Director	Votes in Favor	Votes Withheld
Mr. Borne	9,159,160	1,419,778
Mr. LaBorde	10,219,781	359,157
Mr. Netterville	10,244,991	333,947
Mr. Pitts	10,219,991	358,947
Mr. Ricchiuti	10,244,991	333,947
Mr. Washburn	10,257,091	321,847

2. (a) Proposal to amend the 1998 Stock Option Plan (the “Plan”) that would increase the number of shares available under the Plan by 700,000 shares, to a total of 2,125,000 shares, subject to future adjustment as

24

provided by the Plan; (b) Proposal to amend the directors stock option plan (the “Directors Plan”) to increase the number of shares available by 150,000 shares to a total of 400,000 shares.

Proposal	Votes in Favor	Votes Withheld
(a) Amend the Plan	5,324,570	613,655
(b) Amend the Directors Plan	5,384,901	553,324

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit No.		Identification of Exhibit
2.1	(3)	Asset purchase agreement by and between Amedisys, Inc. and Professional Home Health, Brookwood Home Care Services, Memorial Home Care, Spalding Regional Home Health, Tenet Home Care of Palm Beach, Tenet Home Care of Broward County, St. Mary’s Hospital Home Health, Tenet Home Care of Miami-Dade, First Community Home Care, Cypress-Fairbanks Home Health, St. Francis Home Health and Hospice, and Brookwood Health Services, Inc.
2.2	(3)	Amendment to asset purchase agreement by and between Amedisys, Inc. and Professional Home Health, Brookwood Home Care Services, Memorial Home Care, Spalding Regional Home Health, Tenet Home Care of Palm Beach, Tenet Home Care of Broward County, St. Mary’s Hospital Home Health, Tenet Home Care of Miami-Dade, First Community Home Care, Cypress-Fairbanks Home Health, St. Francis Home Health and Hospice, and Brookwood Health Services, Inc.
2.3	(3)	Second amendment to asset purchase agreement by and between Amedisys, Inc. and Professional Home Health, Brookwood Home Care Services, Memorial Home eCare, Spalding Regional Home Health, Tenet Home Care of Palm Beach, Tenet Home Care of Broward County, St. Mary’s Hospital Home Health, Tenet Home Care of Miami-Dade, First Community Home Care, Cypress-Fairbanks Home Health, St. Francis Home Health and Hospice, and Brookwood Health Services, Inc.
2.4	(3)	Third amendment to asset purchase agreement by and between Amedisys, Inc. and Professional Home Health, Brookwood Home Care Services, Memorial Home Care, Spalding Regional Home Health, Tenet Home Care of Palm Beach, Tenet Home Care of Broward County, St. Mary’s Hospital Home Health, Tenet Home Care of Miami-Dade, First Community Home Care, Cypress-Fairbanks Home Health, St. Francis Home Health and Hospice, and Brookwood Health Services, Inc.
2.5	(4)	Fourth amendment to asset purchase agreement by and between Amedisys, Inc. and Professional Home Health, Brookwood Home Care Services, Memorial Home Care, Spalding Regional Home Health, Tenet Home Care of Palm Beach, Tenet Home Care of Miami-Dade, First Community Home Care, Cypress-Fairbanks Home Health, St. Francis Home Health and Hospice, and Brookwood Health Services, Inc.
2.6	(4)	Fifth amendment to asset purchase agreement by and between Amedisys, Inc. and Professional Home Health, Brookwood Home Care Services, Memorial Home Care, Spalding Regional Home Health, Tenet Home Care of Palm Beach, Tenet Home Care of Miami-Dade, First Community Home Care, Cypress-Fairbanks Home Health, St. Francis Home Health and Hospice, and Brookwood Health Services, Inc.
2.7	(5)	Asset Purchase Agreement between Amedisys Mississippi, L.L.C. and Vicksburg Healthcare, LLC
3.1	(1)	Certificate of Incorporation
3.2	(2)	Bylaws
4.1	(3)	Financing agreement with GE Healthcare Financial Services
31.1	(5)	Certification of William F. Borne, Chief Executive Officer
31.2	(5)	Certification of Gregory H. Browne, Chief Financial Officer
32.1	(5)	Certification of William F. Borne, Chief Executive Officer
32.2	(5)	Certification of Gregory H. Browne, Chief Financial Officer

(1) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended March 31, 2002.

(2) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the period ended March 31, 2001.

(3) Previously filed as an exhibit to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2004.

(4) Previously filed as an exhibit to the Company’s Form 8-K/A as filed on July 15, 2004.

(5) Filed herewith.

(b) Reports on Form 8-K

On April 28, 2004, the Company filed with the SEC a Current Report on Form 8-K attaching a press release announcing a new director appointment to the Company’s Board of Directors.

On April 28, 2004, the Company filed with the SEC a Current Report on Form 8-K attaching a press release announcing that the Company will release first quarter operating results on May 4, 2004, and host a conference call at 10:00 a.m. ET that same day.

On May 6, 2004, the Company filed with the SEC a Current Report on Form 8-K attaching a press release announcing the Company’s first quarter 2004 operating results.

On May 7, 2004, the Company filed with the SEC a Current Report on Form 8-K attaching a transcript of the teleconference call held on May 4, 2004, to discuss the first quarter ended March 31, 2004 earnings.

On May 19, 2004, the Company filed with the SEC a Current Report on Form 8-K, pursuant to Regulation FD, attaching the text of slides that the Company’s management began using in presentations to investor conferences.

On June 2, 2004, the Company filed with the SEC a Current Report on Form 8-K attaching a press release announcing the Company’s purchase of a home health agency in Vicksburg, Mississippi, from River Region Health System.

25

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AMEDISYS, INC.

By: /s/ Gregory H. Browne            

Gregory H. Browne

Chief Financial Officer

DATE: August 9, 2004

26

EX-2.7

Exhibit 2.7

ASSET PURCHASE AGREEMENT

By

and

Between

AMEDISYS MISSISSIPPI, L.L.C., as Purchaser,

And

VICKSBURG HEALTHCARE, LLC, as Seller,

Dated as of June 01, 2004

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into this 1st day of June, 2004, by and between Amedisys Mississippi, L.L.C., a Mississippi limited liability company, with its principal offices at 11100 Mead Road, Suite 300, Baton Rouge, Louisiana, 70816 (hereinafter referred to as “Purchaser”) and Vicksburg Healthcare, LLC, a Delaware limited liability company having its principal place of business at 2100 Highway 61 North, Vicksburg, Mississippi, 39183 (hereinafter referred to as “Seller”).

RECITALS

WHEREAS, Seller conducts a home health care business which provides services to Medicare, Medicaid, commercially-insured, and private-pay patients in the Non-competition Area defined in Section 10.04 hereof (“Home Health Business”), which Home Health Business is located at 1111 North Frontage Road, Vicksburg, Mississippi, 39180 (“Agency Address”);

WHEREAS, Purchaser desires to buy and Seller desires to sell certain of the assets that are utilized in its Home Health Business.

NOW THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows:

1. Definitions. As used in this Agreement, the following terms have the meanings indicated:

1.01 Home Health Assets: The assets to be sold and transferred by Seller to Purchaser pursuant to this Agreement consist of the assets owned by Seller and used in its Home Health Business as of the Closing and Effective Date (as defined below) that are described in clauses (a)-(k) below and that are more specifically detailed in the Schedules attached hereto as herein indicated, provided however, the Excluded Assets are specifically excluded from the Home Health Assets.

a) All inventory owned by Seller and used by Seller in the operation of the Home Health Business at the Agency Address, which are further identified in Schedule 1.05;

b) The current patient lists of present or former patients of the Home Health Business, the related mailing lists of the Home Health Business, and all records relating to the current patients of the Home Health Business;

c) To the extent assignable, all of Seller’s rights under the agreements described in Schedule 5.06.02 and the rights given therein.

d) All licenses and permits, to the extent assignable, held by the Seller relating to the ownership, development and operations of the Seller’s Business, including but not limited to the Seller’s state home health license, certificate(s) of need, Seller’s Medicare Provider

1

Number 25-7103 and all rights under Seller’s corresponding Medicare Provider Agreement, and all rights under the corresponding Medicaid Provider Number 00770548 and all goodwill associated therewith.

1.02 Closing. The consummation of the transactions contemplated by this Agreement.

1.03 Excluded Assets. Only the Home Health Assets set forth above and on the related schedules are being sold and transferred to the Purchaser. Without limiting the generality of the foregoing, the Seller is not selling or transferring the following assets relating to the Home Health Business: insurance policies providing coverage to Seller and all rights under such policies, any tax identification number, all cash on hand, depositary accounts and the agreements between Seller and any of its banks; any of Seller’s accounts receivables or any indebtedness owing to Seller, and cost report receivables; furniture, fixtures, and leasehold interests of the Seller; any right to the name “River Region Home Health Agency” or any variation thereof; automobiles used by Seller for the operation of Seller’s Home Health Business or otherwise; and any other assets not specifically identified as being sold pursuant to this Agreement.

1.04 Inventory. All inventory relating to and used exclusively in the Seller’s Home Health Business and located at the Agency Address as of the Closing or maintained in the possession of the Assumed Employees as of the Closing.

1.05 Health Care Laws. Any state or federal statute relating to the submission of a false and fraudulent claim to a government program or payments or contractual relationships with referral sources, including but not limited to the Medicare and Medicaid Anti-Fraud and Abuse Law, the federal Anti-Kickback law, the Stark laws, and the Health Insurance Portability and Accountability Act, and to the extent applicable, their respective state-law counterparts.

1.06 Liabilities. Those liabilities of Seller to be assumed by Purchaser at the Closing pursuant to this Agreement, which consist of those liabilities of Seller specifically disclosed on Schedule 1.06. Purchaser shall also assume the obligations of Seller accruing after the Effective Date on the contracts and agreements comprising a part of the Home Health Assets, as disclosed on Schedule 5.06. Purchaser shall not assume any other liabilities, contingent or certain, of Seller unless incurred and disclosed in the manner provided in this Section 1.06. Without limiting the foregoing, Purchaser is not assuming (i) any expenses, liabilities, or obligations of Seller arising out of the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby which are unpaid at the Closing, (nor may Seller pay any of such expenses out of the Home Health Assets), (ii) any liabilities or obligations of Seller relating to federal, state, or local income for the period through the Closing, or other taxes attributable to the transactions contemplated hereby, (iii) any obligation of Seller to pay a fee to any agent, broker, or finder relating to this transaction, or (iv) any liabilities that may accrue to Seller as a result of any present or future Medicare and/or Medicaid audit related to the provision of care by Seller prior to and up to the Closing.

1.07 Material Adverse Effect. Any change in the Home Health Assets that would affect the Home Health Business materially and adversely, including but not limited to, material changes in its business condition or financial condition.

2

1.08 Purchaser’s Knowledge. The actual knowledge of Purchaser’s officers and directors after reasonable inquiry.

1.09 Home Health Business. The home health care business operated by Seller and described in the first recital of this Agreement.

1.10 Seller’s Knowledge. The actual knowledge of Seller’s officers, directors, and/or Seller’s home health director after reasonable inquiry.

2. Agreement to Purchase and Sell. On the Effective Date (as defined below), and subject to the terms and conditions of this Agreement, Purchaser agrees to purchase from Seller, and Seller agrees to sell, transfer, convey, assign, and deliver to Purchaser, the Home Health Assets, free and clear of all liens, claims, liabilities, restrictions on transfer and encumbrances, except (i) those liabilities listed in Schedule 1.06, (ii) the restrictions set forth in the agreements and contracts identified in Schedule 5.06, copies of which are attached thereto; (iii) the consents required but not obtained identified in Schedule 5.03 and (iv) liens, claims and liabilities accruing after the Closing.

2.01 The Closing. The Closing of the transactions contemplated by this Agreement shall occur on June 01, 2004, and shall be effective as of the 1st day of June, 2004 (the “Effective Date”).

3. Purchase Price.

3.01 Purchase Price. The purchase price for the sale, transfer, conveyance, assignment, and delivery of the Assets to Purchaser, subject to the terms and conditions of this Agreement, shall be ONE MILLION SIX HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($1,650,000.00) to be paid in cash via wire transfer on the Effective Date.

3.02 Total Consideration. The consideration to be paid pursuant to the provisions of this Section 3 and the Liabilities to be assumed by Purchaser pursuant to Section 4 shall constitute all the consideration to be paid by Purchaser in connection with the purchase of the Home Health Assets contemplated by this Agreement.

3.03 Misdirected Payments. Except as provided herein, if either party receives any amount from patients or third-party payors that relate to services rendered by the other party, the party receiving such amount shall, within seventy-two (72) hours of receipt thereof, remit such full amount to the other party. If Purchaser receives any amounts from the Medicare or Medicaid program for reimbursement associated with the operation of the Home Health Business and relating to services performed during periods prior to the Effective Date, Purchaser shall, within seventy-two (72) hours of receipt thereof, tender same to Seller. If the Seller or any company affiliated with Seller receives any amounts from the Medicare program for reimbursement associated with the operations of the Home Health Business relating to services performed during periods subsequent to the Effective Date, Seller shall, within seventy-two (72) hours of receipt thereof, tender same to Purchaser.

3

3.04 Payment for Post-Closing Services

3.04.01 Medicare Billings. Purchaser and Seller acknowledge and agree that, as to Medicare PPS episodes of care in progress as of the Effective Date and continuing following the Effective Date (hereinafter referred to as “Straddle Episodes”), any billing or claims submissions to occur after the Effective Date will be performed by Purchaser. The revenue from each Straddle Episode will be divided pro-rata based on a proportion of days within each Straddle Episode for which the respective parties were responsible for servicing the patient, which shall be calculated by multiplying the total amount of the episodic payment (inclusive of the RAP and final payment) times a fraction, the numerator of which shall be the number of days following the Effective Date and the denominator shall be the total number of days in the episode (which shall be sixty (60), except in instances of low utilization payment adjustments or where the patient is discharged prior to the end of an episode, for which the denominator shall be the total number of days for which the patient was on service) (hereinafter referred to as the “Straddle Amount”). The Straddle Amount shall be credited to Purchaser, and amounts in excess of the Straddle Amount shall be credited to Seller, and Purchaser and Seller shall reconcile payments accordingly.

3.04.02 Other Billings. For revenue earned through Medicaid, Managed Care, Private Insurance, Self-Pay, and Private Pay, Seller and Purchaser acknowledge and agree that Purchaser, after the Effective Date, will bill and collect for certain home health services provided by Seller, its agents and employees prior to the Effective Date. Any revenue for these pre-closing services will be received for the credit of Seller.

4. Assumption of Liabilities. In connection with the purchase of the Home Health Assets hereunder, Purchaser shall specifically assume as of the Effective Date the Liabilities listed on Schedule 1.06. Purchaser shall not assume any other liabilities, contingent or certain, of Seller. Notwithstanding the foregoing, Purchaser acknowledges and understands that certain applicable case law holds that a purchaser of assets who assumes the provider agreement of a provider of Medicare services also assumes certain additional liabilities of the seller irrespective of a contrary provision in the applicable sales agreement. Accordingly, Seller makes no representation or warranty to Purchaser regarding the limitation on its assumption of liabilities hereunder, and Purchaser acknowledges that any federal or state agency or third party may take the position that Purchaser, through its acceptance of the Seller’s provider agreements and Medicare and Medicaid provider numbers referenced in Section 1.01(d) hereof, has assumed additional liabilities of the Seller not specifically referenced herein; however, the parties’ obligations with respect to one another shall remain subject to this Agreement, including but not limited to applicable indemnification provisions.

5. Representations and Warranties of Seller. Seller hereby represents and warrants to Purchaser, as of the date of this Agreement and as of the Effective Date (unless another date is expressly provided in this Section 5) that the statements contained in this Section 5 are correct and complete in all material respects:

5.01 Ownership. Seller is the beneficial owner of the Home Health Assets and has good and marketable title to, and the right to sell, assign, and transfer the Home Health Assets to Purchaser, free and clear of any security interest, claims, liens, pledges, penalties, charges, restrictions on transfer, encumbrances whatsoever of every kind and character, other than (i) the restrictions set forth in the agreements and contracts identified in Schedule 5.06, copies of which are attached thereto; (ii) the consents required but not obtained identified in Schedule 5.03; and (iii) those

4

accruing after the Closing. Upon the execution of this Agreement and obtaining the consents described on Schedule 5.03, good and marketable title to, or valid leasehold interest in, the Home Health Assets shall be delivered to Purchaser, free and clear of any security interest, claims, liens, pledges, penalties, charges, encumbrances, whatsoever, other than those specifically set forth and assumed herein.

5.02 Valid Existence. Seller is duly organized, validly existing, and in good standing as a limited liability company under the laws of the State of Delaware and is authorized to conduct business in the State of Mississippi and has full power and authority (including all licenses, franchises, permits, and other authorizations that are legally required) to own the Home Health Assets, its properties and to engage in the Home Health Business in Mississippi and activities now conducted by it.

5.03 Due Authorization: Consent of Third Parties. Seller has the right, power, legal capacity and authority to enter into and perform Seller’s obligations under this Agreement, and no approval or consent of any person other than the Seller is necessary in connection with the execution, delivery, or performance of this Agreement by the Seller, except for the consents set forth in Schedule 5.03. This Agreement constitutes a legal and binding obligation of the Seller, and is valid and enforceable against the Seller in accordance with its terms except that (i) the enforcement of certain rights and remedies created by this Agreement is subject to bankruptcy, insolvency, reorganization, and similar laws of general application affecting the rights and remedies of parties, and (ii) the enforceability of any particular provision of this Agreement under principles of equity or the availability of equitable remedies, such as specific performance, injunctive relief, waiver, or other equitable remedies, is subject to the discretion of courts of competent jurisdiction.

5.04 Use of Home Health Assets. All of the Home Health Assets, which are tangible personal property are located at the Agency Address and are useable, non-expired, and are maintained in accordance with normal industry practice.

5.05 Litigation. Except as described on Schedule 5.05, there is not any suit, action, arbitration, or legal, administrative, or other proceeding or governmental investigation pending or, to Seller’s Knowledge, threatened (in the form of threats made to representatives of Seller), against or affecting the Home Health Business or the Home Health Assets, including but not limited to any action or claim under any federal, state, local or other governmental act, rule, regulation, or any interpretations thereof, relating to environmental matters or the protection of the safety and health of persons connected with the Home Health Business (including but not limited to the transportation, treatment, storage, recycling, disposal, or release into the environment of hazardous or toxic materials or waste), or any basis on which any proceeding or investigation against Seller might reasonably be undertaken or brought. The Seller has informed Purchaser of, and upon request has furnished or made available to Purchaser, copies of all relevant court papers and other documents relating to, the matters set forth in this Section. Except as described on Schedule 5.05, to Seller’s knowledge, Seller is not in default with respect to any order, writ, injunction, or decree of any Health Care Law affecting the Home Health Assets and/or Home Health Business. In addition, to Seller’s Knowledge, it is not in violation of any other federal, state, local law, rule or regulation, or foreign court, department, agency, or instrumentality relating to the Home Health Assets and/or Home Health Business. During the five year period immediately preceding the Closing, except as described on Schedule 5.05, Seller has neither received nor been a party to any written notice of violations, orders, claims, citations, complaints, penalties, assessments, court, or other proceedings,

5

administrative, civil or criminal, at law or in equity, with respect to any Health Care Law affecting the Home Health Assets and/or Home Health Business. In addition, to Seller’s Knowledge, except as described on Schedule 5.05, it has neither received nor been party to any written notice of violations, orders, claims, citations, complaints, penalties, assessments, court, or other proceedings, administrative, civil or criminal, at law or in equity, with respect to any alleged violations of any other federal, state, or local environmental law, regulation, ordinance, standard, permit, or order in connection with the conduct of the Home Health Assets and/or Home Health Business or otherwise during the past five years.

5.06 Contracts, Agreements and Instruments. Schedule 5.06 contains a list of the following, copies of which have been heretofore furnished by Seller to Purchaser, which acknowledges receipt thereof:

5.06.01 The Certificate of Formation, as presently in effect, certified by a member of Seller;

5.06.02 True and correct copies of all material contracts, agreements and other instruments relating to the Home Health Assets which are being transferred to Purchaser.

Except for matters which, in the aggregate, would not have a Material Adverse Effect or as otherwise disclosed in the Agreement, Seller is no, and to Seller’s Knowledge, no other party to any such contract, agreement, instrument, lease, or license being assigned to Purchaser hereunder is now in violation or breach of, or in default with respect to complying with, any material provision thereof, and each such contract, agreement, instrument, lease, or license by which Seller is presently engaged is in full force and effect and is the legal, valid, and binding obligation of the parties thereto and is enforceable as to them in accordance with its terms, except that (i) the enforcement of certain rights and remedies created thereby and is subject to bankruptcy, insolvency, reorganization, and similar laws of general application affecting the rights and remedies of parties, and (ii) the enforceability of any particular provision thereof under principles of equity or the availability of equitable remedies, such as specific performance, injunctive relief, waiver, or other equitable remedies, is subject to the discretion of courts of competent jurisdiction.

5.07 Compliance With Law; Taxes. Seller has received no notice that it is not in compliance with any Health Care Law applicable to the Home Health Assets and Home Health Business. Except as described on Schedule 5.07, the Seller has made timely payment of all taxes applicable to the Home Health Assets and Home Health Business when due and payable and has paid all interest, penalties, deficiencies, and assessments, if any, levied or assessed against it. Except as described on Schedule 5.07, Seller has made timely payment of all taxes applicable to the Home Health Assets and Home Health Business when due and payable and has paid all interest, penalties, deficiencies, and assessments, if any, levied or assessed against it with respect thereto.

5.08 Permits and Licenses. Seller has all permits, licenses, and other similar authorizations necessary for the conduct of the Home Health Business as now being conducted by it, and it is not in default in any respect under any such permits, licenses, or authorizations. No royalties, commissions, or fees are payable by Seller to any person by reason of the ownership or use of any intangible property comprising the Home Health Assets, except as set forth in the contracts described on Schedule 5.06. There are no material licenses, sublicenses, or agreements relating to the use by Seller of any intangible property comprising the Home Health Assets, except as set forth in

6

the contracts described on Section 5.06, and Seller has no knowledge that any Home Health Asset is being infringed by others. No claim that will have a Material Adverse Effect on the Home Health Assets or Home Health Business is pending or, to Seller’s Knowledge, threatened, that the operation of Home Health Assets or Home Health Business or any method, process, part, or material that Seller employs, conflicts in any material way with, or infringes in any material way upon any rights of the type enumerated above, owned by others.

5.09 Employees.

5.09.01 Current Employees. Schedule 5.09.01 is a list of names of all employees of Seller employed within the operations of the Home Health Business as of the date of the Closing, stating the amounts or rates of compensation payable to each, the employee benefits enjoyed by each, and whether or not each respective employee has executed any employment agreement with Seller.

5.09.02 Employment of Seller’s Employees. Schedule 5.09.02 is a list of names of employees of Seller which Purchaser shall employ effective as of the date of the Closing (the employees listed on Schedule 5.09.02 shall be referred to individually as “Assumed Employee” and collectively “Assumed Employees”).

5.09.03 Non-Employment of Assumed Employees by Seller. Seller agrees that for a period of one hundred eighty (180) days following the date of the Closing, Seller, or any affiliate thereof, will not employ any Assumed Employee without the express, written consent of the Purchaser. Purchaser agrees that for a period of one hundred eighty (180) days following the Closing, Purchaser or any affiliate thereof, will not employ any full-time or part-time employee of the Seller without the express, written consent of the Seller.

5.09.04 Non-Solicitation of Assumed Employees by Seller. In conjunction with Section 5.09.03, Seller agrees that for a period of three hundred sixty-five (365) days following the date of the Closing, Seller, or any affiliate thereof, will not solicit or encourage for employment any Assumed Employee. If, during the time period of day one hundred eighty-one (181) through day three hundred sixty-five (365) of the term of this provision, Seller receives a request for employment from any Assumed Employee, Seller shall not be prevented from employing any such Assumed Employee provided (i) the Assumed Employee contacts Seller on his or her own initiative without any direct or indirect solicitation by, or encouragement from, Seller, and (ii) Seller notifies Purchaser of said request and Seller does not employ the requesting Assumed Employee for at least ten (10) days from the date of Purchaser’s receipt of said notification.

5.10 No Violation of Employee Contracts. Seller is not, and to Seller’s knowledge, no employee of Seller is in violation of any term of any employment contract, non-competition agreement, or any other contract or agreement or any restrictive covenant with, or any other common law obligation to, a former employer of such employee relating to the right of any such employee to be employed by Seller because of the nature of the business conducted by Seller or of the use of trade secrets or proprietary information of others. There is no pending or, to Seller’s Knowledge, threatened, any actions, suits, proceedings, or claims with respect to any contract, agreement, covenant, or obligation referred to in the preceding sentence.

7

5.11 Hazardous Materials. The Seller is not in the business of possession, transportation, or disposal of hazardous materials. If and to the extent that Seller’s Home Health Business has involved the possession, transportation, or disposal of hazardous materials, to Seller’s Knowledge, the Seller has complied with any and all applicable laws, ordinances, rules, and regulations and has not and will not be the basis of any claim or proceeding against, or any liability of, Seller with respect the Home Health Business prior to the Closing. To Seller’s Knowledge, no Assumed Employee has been exposed to hazardous materials during the period of their employment by Seller such that exposure could cause damage to such employee.

5.12 Interest in Competitors. To Seller’s Knowledge, except as disclosed on Schedule 5.12, none of Seller’s officers or directors has a direct or indirect ownership interest in any competitor, supplier, or customer of Seller’s Home Health Business.

5.13 Financial Condition. Seller has delivered to Purchaser true and correct copies of the following: internally generated balance sheets and income statements relating to the Home Health Business for the fiscal year ended December 31, 2003 and for the first quarter of 2004 (collectively, “Financial Statements”). Such Financial Statements present fairly in all material respects the financial condition, assets and liabilities of Seller relating to the Home Health Assets and Home Health Business as of their respective dates. Such Financial Statements referred to in this section have been prepared in accordance with the books and records of Seller.

5.14 Changes of Events. Since December 31, 2003, and as of the Closing, except as described on Schedule 5.14, none of the following has occurred or shall occur with respect to the Home Health Assets:

5.14.01 Other than in the ordinary course of business or as contemplated by this Agreement, any change in the financial condition of the Home Health Business, Assumed Liabilities, or Home Health Assets, that, when considered individually or in the aggregate, are reasonably expected to have a Material Adverse Effect;

5.14.02 The destruction of, damage to, or loss of any Home Health Asset of Seller (regardless of whether covered by insurance) that, when considered individually or in the aggregate, are reasonably expected to have a Material Adverse Effect;

5.14.03 Any labor disputes that, when considered individually or in the aggregate, are reasonably expected to have a Material Adverse Effect;

5.14.04 Other than in the ordinary course of business, any increase in the salary or other compensation payable or to become payable by Seller to any Assumed Employee, or the declaration, payment, or commitment or obligation of any kind for the payment by Seller of a bonus or other additional salary or compensation to any such person;

5.14.05 Any mortgage, pledge, or other encumbrance of any Home Health Asset except in the ordinary course of business;

5.14.06 The material amendment or termination of any material contract or agreement to be assumed by Purchaser;

8

5.14.07 Except such matters undertaken in consultation with Purchaser or as contemplated by this Agreement, any failure on the part of Seller to operate its Home Health Business in the ordinary course and consistent with past practices, so as to retain the services of the Assumed Employees up to and as of the Closing, and to preserve its goodwill associated with the Home Health Assets and Home Health Business and to maintain relationships with suppliers, creditors, customers of the Home Health Business;

5.14.08 Any action taken or omitted to be taken by Seller which would cause (after lapse of time, notice or both) the breach, default, or acceleration of any right, contract, commitment, or other obligation to be transferred to Purchaser hereunder; or

5.14.09 Any agreement by Seller to do any of the things described in the preceding clauses in this section.

5.15 No Defaults. Subject to obtaining the consents described on Schedule 5.03, the consummation of the transactions contemplated by this Agreement will not result in or constitute any of the following: (i) a breach of any term or provision of any other agreement to which Seller is a party that will not be waived or released at the Closing, (ii) a default on an event that will not be waived or released at the Closing and that, with notice or lapse of time or both, would be a default, breach, or violation of any agreement be transferred to Purchaser hereunder or by which the Home Health Assets is bound (iv) the creation or imposition of any lien, charge, or encumbrance on any of the Home Health Assets; or (v) a violation of any law or any rule or regulation of any administrative agency or governmental body to which the Seller is subject.

5.16 Liabilities. No liabilities of Seller will be assumed by or transferred to Purchaser pursuant to the transactions contemplated by this Agreement, except as provided in Section 1.06, those listed in Schedule 1.06, or as provided in Section 4, nor will any of the Home Health Assets to be acquired by Purchaser be subject to any pre-Closing or post-Closing liabilities of Seller.

5.17 No Prohibited Payments. Neither Seller nor any employee or agent of Seller had made or authorized any payment of funds of Seller or on behalf of the Home Health Business prohibited by law and no funds of Seller have been set aside to be used for any such purpose.

6. Representation and Warranties of Purchaser. Purchaser hereby represents and warrants to Seller, as of the date of this Agreement, that the statements contained in this Section 6 are correct and complete in all material respects:

6.01 Organization. Purchaser is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Mississippi and is authorized to do business in every other jurisdiction in which its ownership, leasing, licensing, or use of property assets or the conduct of its business makes such qualification necessary, except where the failure to do so would not have a material adverse effect on the business or operations of the Purchaser.

6.02 Due Authorization: Purchaser has the right, power, legal capacity, and authority to enter into and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement by the Purchaser has been duly authorized by its governing authority and no other act or authority on the part of Purchaser is necessary to authorize this

9

Agreement or the consummation of the transactions contemplated hereby. This Agreement constitutes a legal and binding obligation of the Purchaser, and is valid and enforceable against the purchaser in accordance with its terms except that (i) the enforcement of certain rights and remedies created by this Agreement is subject to bankruptcy, insolvency, reorganization, and similar laws of general application affecting the rights and remedies of parties, and (ii) the enforceability of any particular provision of this Agreement under principles of equity or the availability of equitable remedies, such as specific performance, injunctive relief, waiver or other equitable remedies, is subject to the discretion of courts of competent jurisdiction.

6.03 No Violation. The consummation of the transactions contemplated by this Agreement will not result in or constitute, (i) a default or an event that will not be waived or released at the Closing and that, with notice or lapse of time or both, would be a default, breach, or violation of the articles of organization or operating agreement of Purchaser or (ii) a violation of any law or any rule or regulation of any administrative agency or governmental body or any order, writ, injunction, or decree of any court, administrative agency or governmental body to which Purchaser is subject.

7. Condition to Obligations of Purchaser. The obligations of Purchaser under this Agreement are subject, at the option of Purchaser, to the satisfaction of the following conditions:

7.01 Completion of Satisfactory Due Diligence. As of the Effective Date, Purchaser shall have completed satisfactory due diligence of the operations of the Home Health Business. Further, Purchaser, through its due diligence, shall not have found evidence of any aspect of the Home Health Business that would have an Adverse Material Effect on the Home Health Assets.

7.02 Regulatory Approval. The Closing shall not be in contravention of any law, rule, regulation or order of any state or federal regulatory agency. Further, Purchaser shall have obtained, as of the Effective Date, necessary approval from any state or federal regulatory body governing the operation of home health facilities or the change of ownership thereof. Seller shall have cooperated and assisted Purchaser where reasonably necessary in order for Purchaser to adequately complete the necessary paperwork to effectuate a change in control of Seller’s Medicare and/or Medicaid provider numbers and corresponding agreements.

7.03 Accuracy of Representations and Compliance With Conditions. All representations and warranties of Seller contained in this Agreement shall be accurate as of the date of this Agreement and shall be accurate as of the Effective Date, as though such representations and warranties were then made by Seller, other than such representations and warranties that are made as to another date. As of the Effective Date, Seller shall have performed and complied with all covenants and agreements, and satisfied all conditions, required by this Agreement to be performed and complied with by Seller at or before such time.

7.04 Closing Documents. In connection with the Closing, Seller shall deliver to Purchaser the following items:

7.04.01 Bills of sale, endorsements, assignments, drafts, checks, and other instruments of transfer in form and substance consistent with this Agreement and mutually

10

satisfactory to Purchaser and Seller in order to transfer all right, title and interest of Seller in the Home Health Assets to Purchaser;

7.04.03 Evidence (including, if applicable, the delivery of duly executed UCC-3 Termination Statements) reasonably satisfactory to Purchaser and its counsel, of the satisfaction and discharge by Seller of all existing liens, claims, and encumbrances upon or affecting the Home Health Assets; and

7.04.04 Such other instruments and documents in form and content consistent with the terms of this Agreement and mutually satisfactory to Seller and Purchaser, as may be necessary or appropriate to (i) effectively transfer and assign to and vest in Purchaser good and marketable title to the Home Health Assets and/or to consummate more effectively the transactions contemplated hereby and (ii) in order to enable Purchaser to determine whether the conditions to Seller’s obligations under this Agreement have been met and otherwise to carry out the provisions of this Agreement.

7.05 Review of Proceedings. All actions, proceedings, instruments, and documents required to carry out this Agreement, or any agreement incidental thereto and all other related legal matters shall be subject to the reasonable approval of counsel to Purchaser, and Seller shall have furnished such counsel for Purchaser such documents as such counsel may have reasonably requested for the purpose of enabling them to pass upon such matters.

7.06 Legal Action. There shall not have been instituted or threatened any legal proceeding relating to, or seeking to prohibit or otherwise challenging the consummation of, the transactions contemplated by this Agreement or related agreements or to obtain substantial damages with respect thereto.

7.07 No Governmental Action. There shall not have been any action taken, or any law, rule, regulation, order, or decree proposed, promulgated, enacted, entered, enforced, or deemed applicable to the transactions contemplated by this Agreement by any federal, state, local, or other governmental authority or by any court or other tribunal, including the entry of a preliminary or permanent injunction which, in the reasonable judgment of Purchaser:

7.07.01 Makes any of the transactions contemplated by this Agreement illegal;

7.07.02 Results in a delay, which affects the ability of Purchaser to consummate any of the transactions contemplated by this Agreement;

7.07.03 Requires the divestiture by Purchaser of a material portion of the Home Health Business of either Purchaser taken as a whole, or of Seller taken as a whole; and

7.07.04 Otherwise prohibits, restricts, or delays consummation of any of the transactions contemplated by this Agreement or impairs the contemplated benefits to Purchaser of the transactions contemplated by this Agreement.

7.08 Contractual Consents Needed. The parties to this Agreement shall have obtained, prior to the Effective Date, all consents required for the consummation of the transactions

11

contemplated by this Agreement from any party to any contract, agreement, instrument, lease, license, arrangement, or understanding to which either of them is a party, or to which any of their respective businesses, properties, or assets are subject, except where the failure to obtain the same would not have a Material Adverse Effect on such party.

7.09 Other Agreements. Agreements set forth as exhibits or schedules to this Agreement shall have been duly authorized, executed, and delivered by the parties thereto at or prior to the Effective Date, shall be in full force and effect, valid and binding upon the parties thereto, and enforceable by them in accordance with their terms at the Closing, and no party thereto at any time from the execution thereof until immediately after the Closing shall have been in violation of or in default in complying with any material provision thereof.

7.10 Management Approval. The managing members of Seller and Purchaser, or their parent companies as applicable, shall have approved the transactions contemplated herein.

8. Conditions to Obligations of Seller. The obligations of Seller under this Agreement are subject, at the option of Seller, to the satisfaction of the following conditions:

8.01 Accuracy of Representations and Compliance With Conditions. All representations and warranties of Purchaser contained in this Agreement shall be accurate as of the date of this Agreement and shall be accurate as of the Effective Date, as though such representations and warranties were then made by Purchaser, other than such representations and warranties that are made as to another date. As of the Effective Date, Purchaser shall have performed and complied with all covenants and agreements, and satisfied all conditions, required by this Agreement to be performed and complied with by Purchaser at or before such time.

8.02 Other Closing Documents. Purchaser shall have delivered to Seller, at or prior to the Closing, such other documents as Seller may reasonably request in order to enable Seller to determine whether the conditions to its obligations under this Agreement have been met and otherwise to carry out the provision of this Agreement. Seller shall also execute the required Change of Ownership (“CHOW”) form CMS 855 and submit the executed form to Purchaser prior to Closing; such form shall not be submitted by Purchaser to regulatory authorities until such time as this Agreement is executed.

8.03 Review of Proceedings. All actions, proceedings, instruments, and documents required to carry out this Agreement, or any agreement incidental thereto and all other related legal matters shall be subject to the reasonable approval of counsel to Seller, and Purchaser shall have furnished such counsel such documents as such counsel may have reasonably requested for the purpose of enabling them to pass upon such matters.

8.04 Legal Action. There shall not have been instituted or threatened any legal proceeding relating to, or seeking to prohibit or otherwise challenging the consummation of, the transactions contemplated by this Agreement or related agreements set forth as an exhibit hereto, or to obtain substantial damages with respect thereto.

8.05 No Governmental Action. There shall not have been any action taken, or any law, rule, regulation, order, or decree proposed, promulgated, enacted, entered, enforced, or deemed

12

applicable to the transactions contemplated by this Agreement by any federal, state, local, or other governmental authority or by any court of other tribunal, including the entry of a preliminary or permanent injunction, which, in the reasonable judgment of Seller:

8.05.01 Makes any of the transactions contemplated by this Agreement illegal;

8.05.02 Results in a delay that affects the ability of Seller to consummate any of the transactions contemplated by this Agreement;

8.05.03 Otherwise, prohibits, restricts, or delays consummation of any of the transactions contemplated by this Agreement or impairs the contemplated benefits to Seller or the Stockholders of the transactions contemplated by this Agreement.

8.06 Contractual Consents Needed. The parties to this Agreement shall have obtained, prior to the Effective Date, all consents required for the consummation of the transactions contemplated by this Agreement from any party to any contract, agreement, instrument, lease, license, arrangement, or understanding to which either of them is a party, or to which any of their respective businesses, properties, or assets are subject, except where the failure to obtain the same would not have a Material Adverse Effect on such party.

8.07 Other Agreements. Agreements set forth as exhibits or schedules to this Agreement shall have been duly authorized, executed, and delivered by the parties thereto at or prior to the Effective Date, shall be in full force, valid and binding upon the parties thereto, and enforceable by them in accordance with their terms at the Closing, and no party thereto any time from the execution thereof until immediately after the Closing shall have been in violation of or in default in complying with any material provision thereof.

8.08 Management Approval. The managing members of Purchaser and Seller, or their parent companies as applicable, shall have approved the transaction contemplated herein.

9. Covenants and Agreements of Purchaser. Purchaser covenants and agrees as follows:

9.01 Post Closing Covenants. On and after the Closing, Purchaser agrees to maintain in confidence and not to disclose, except in accordance with and as permitted by applicable laws and regulations, the records of the patients to whom Seller provided services.

9.02 Information Accessibility. Upon prior reasonable notice and at reasonable times, Seller shall be allowed access to those patient records transferred herein.

9.03 Public Statements. Before Purchaser shall execute or administer a press release or public announcement related to consummation of this transaction, Purchaser shall cooperate with Seller, shall furnish drafts of all documents or proposed oral statements to Seller for comment, and shall not release any such information without the written consent of Seller. Nothing contained herein shall prevent Purchaser from furnishing any information to any governmental authority if required to do so by law.

13

10. Covenants and Agreements of Seller. Seller covenants and agrees as follows:

10.01 Payment of Taxes. All accrued but unpaid federal, state, and local income and other taxes of Seller for the period ended as of the Closing and all prior periods will be paid by Seller.

10.02 Post-Closing Consents. Seller agrees to use its best good faith effort to secure and/or assist Purchaser in securing post-Closing third party consents material to the ongoing operation of Seller’s Home Health Business.

10.03 Public Statements. Before Seller shall execute or administer a press release or public announcement related to consummation of this transaction, Seller shall cooperate with Purchaser, shall furnish drafts of all documents or proposed oral statements to Purchaser for comment, and shall not release any such information without the written consent of Purchaser. Nothing contained herein shall prevent Seller from furnishing any information to any governmental authority if required to do so by law.

10.04 Non Competition by Seller. For a period of two years from and following the Effective Date, without the prior written consent of the Purchaser, Seller shall not, in its capacity as an entity, partner, shareholder, consultant, joint venturer or owner, or in any other capacity, within the Mississippi counties of Warren, Claiborne, Jefferson, Copiah, Yazoo, Sharkey, Issaquenna, and Hinds (“Non-competition Area”), (i) invest (other than investments in publicly-owned companies whose securities are traded on the New York Stock Exchange or American Stock Exchange or listed on NASDAQ which constitute not more than 1% of the outstanding securities of any such company) in any home health nursing care business, or (ii) engage in any home health nursing care business that is competitive with the Company or any of its affiliates. As used in this provision, “affiliates” shall mean persons or entities that directly, or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the Seller and as such term is further defined under the Securities Act of 1933, as amended. Notwithstanding the foregoing restriction, the parties acknowledge that such restriction shall not apply to (a) any facility which is owned, operated or managed, directly or indirectly, by a company or companies which acquires all or substantially all of the assets or stock of Triad Hospitals, Inc. (“Triad”) (whether by merger or otherwise), which facility is owned by the acquiring party at the time of the acquisition of Triad, or (b) Triad’s acquisition of a hospital or group of other healthcare facilities which includes at the time of acquisition one or more of such facilities (each a “Subsequently Acquired Home Health Facility”); provided however, that in the event that prior to the end of the non-competition period set forth in this paragraph, Triad or the ultimate owner of the relevant Subsequently Acquired Home Health Facility, as applicable, accepts an offer to sell such Facility (the “Facility Identified for Sale”), the Purchaser shall be provided with notice of the terms of the proposed sale (“Transfer Notice”) and shall be afforded a right of first refusal to purchase the Facility Identified for Sale on the same terms and conditions that are deemed acceptable to Seller or the ultimate owner of such Facility. Purchaser shall have ten days from its receipt of the Transfer Notice to notify Seller of its desire to purchase the Facility Identified for Sale, and Purchaser shall close the purchase of such Facility within 45 days of its receipt of the Transfer Notice. If the Purchaser fails to provide the required notice or to purchase the Facility Identified for Sale within such 45-day period, Seller shall be free to sell Facility Identified for Sale to the original offeror or any other potential purchaser.

14

10.04.01 The parties acknowledge:

(i) that due to the nature of the business, the foregoing covenants place no greater restraint upon the Seller than is reasonably necessary to protect the business and goodwill of the Purchaser;

(ii) that this Agreement is not an invalid or unreasonable restraint of trade; and

(iii) that a breach of this Section by the Seller would cause irreparable damage to the Purchaser.

10.04.02 In the event of any breach, or any threatened or attempted breach by the Seller of the restrictions herein contained, it is agreed that in addition to all other legal remedies, the Purchaser shall also have the right, after prior notice to Seller of said breach or threatened or attempted breach, and after Seller has had ten (10) days subsequent to said notice to cure said breach or threatened or attempted breach, to obtain an injunction prohibiting such violation or attempted threatened violation in commanding compliance with the restrictions herein contained, in accordance with this Agreement. Seller further agrees that for the purpose of any such injunction proceeding, it shall be presumed that Purchaser’s legal remedies would be inadequate and that Purchaser would suffer irreparable harm as a result of Seller’s violation of the provisions of Section 10.04.

10.04.03 (i) Seller hereby acknowledges that the restrictive covenants set forth above are reasonable as to time and scope and are reasonably necessary to protect the Purchaser’s business.

(ii) Seller further agrees that, should the legality or enforceability of the restrictive covenants ever be challenged and any part thereof be deemed unreasonably excessive, the Court rendering such decision shall not invalidate the restrictive covenant in its entirety, but rather shall reduce the scope thereof to what the Court deems reasonable under the circumstances;

(iii) Seller further agrees that such non-competition covenants and/or any portion thereof are severable, separate and independent, and should any specific restriction or the application thereof, to any person, firm, corporation or situation be held to be invalid, that holding shall not effect the remainder of such restrictive covenant.

10.04 Confidentiality. Seller hereby acknowledges that it has had access to the customer accounts, referral sources and personnel information and other proprietary information of the Seller relating to its Home Health Business that must remain confidential for the continuing success of Purchaser (“Confidential Information”). Seller agrees that it will not disclose, intentionally or unintentionally, and shall cause its attorneys, auditors and other agents to not use or disclose, such Confidential Information to others, without the Purchaser’s prior written permission. In the event that the Closing does not take place and discussions between the parties hereto regarding the transactions contemplated hereby are terminated, if Seller requests, the Purchaser shall, and shall cause its attorneys, auditors and other agents promptly to, return to the Seller all Confidential Information in their possession which was furnished to the Purchaser pursuant to this Agreement.

15

10.05 Non-Solicitation. Seller acknowledges that the business goodwill and business contacts regarding its Home Health Business are a valuable asset that is the subject of this Agreement. Therefore, in consideration of the mutual promises herein contained, and other good and valuable consideration, to protect the foregoing valuable property of Purchaser, Purchaser and Seller expressly covenant and agree as follows:

10.05.01 For a period of two years from and following the Effective Date, Seller specifically agrees that it will not, for itself, on behalf of, or in conjunction with any person, firm or corporation other than Purchaser (either as principal, employee, shareholder, director, partner, owner or part owner of any corporation, partnership or any type of business entity) do any of the following:

        (i) directly or indirectly solicit or divert any home health nursing care business or patronage from Purchaser, to a competitor or for the benefit of Seller; or

        (ii) directly or indirectly induce or attempt to induce any home health nursing care customer of Purchaser to terminate their relationship with Purchaser; or

        (iii) directly or indirectly induce or attempt to induce any Assumed Employee to terminate his relationship with the Purchaser; or

        (iv) authorize any agent, servant or employee of the Seller to do any of the foregoing acts on behalf of Seller.

11. Miscellaneous.

11.01 Brokerage and Other Fees. Each party shall be responsible for the fees of their respective professionals (including, without limitation, brokerage, legal and accounting fees) engaged to assist in the brokering, preparation, negotiation and counseling with respect, and relating, to this Agreement and consummation of the transactions contemplated herein, as well as their respective out-of-pocket expenses.

11.02 Further Actions. At any time and from time to time, the parties agree, at their expense, to take such actions and to execute and deliver such documents as may be reasonably necessary to effectuate the transfer of the Home Health Assets to Purchaser.

11.03 Entire Agreement: Modification. The Agreement and the Schedules and Exhibits hereto set forth the entire understanding of the parties with respect to the subject matter hereof, supersede all existing agreements between them concerning such subject matter, and may be modified only by a written instrument duly executed by the parties.

16

11.04 Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by courier services, by telecopy (confirmed by telephone within twenty-four (24) hours following receipt thereof), or by registered or certified mail, (postage prepaid, return receipt requested) to the respective parties at the following address (or at such other address for a party as shall be specified in a notice given in accordance with this Section 11.04):

(a) If to Seller

Vicksburg Healthcare, LLC

2100 Highway 61 North

Vicksburg, Mississippi, 39183

Attention: Chief Financial Officer

Telecopy: 601.883-5930

Telephone: 601.833-5185

with copy to:

Robison & Folk LLP

1415 Louisiana Street, Suite 2510

Houston, Texas 77001

Attention: Linda M. Robison

Telecopy: 713.400.1515

Telephone: 713.400.1400

(b) If to Purchaser

Amedisys Mississippi, L.L.C.

11100 Mead Road

Suite 300

Baton Rouge, Louisiana 70816

Attention: Chief Financial Officer

Telecopy: (225) 292-8163

Telephone: (225) 292-2031

with copy to:

McKay Williamson Lutgring & Cochran, LLC

732 North Blvd.

Baton Rouge, Louisiana 70802

Attention: Michael D. Lutgring

Telecopy: (225) 214-1771

Telephone: (225) 389-1060

11.04 Waiver. Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of that provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions will not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing and, in case of a corporate party, be authorized by a resolution of the Board of Directors or by an officer of the waiving party.

17

11.05 Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of each party’s respective successors and assigns; provided, however, any such assignment by Purchaser shall not release Purchaser of any of its obligations under this Agreement.

11.06 No Third-Party Beneficiaries. This Agreement does not create, and shall not be construed as creating, any rights enforceable by any person not a party to this Agreement.

11.07 Severability. The invalidity of any one or more of the words, phrases, sentences, clauses, sections, subdivisions, or subparagraphs contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part thereof, all of which are inserted conditionally on their being legally valid. If any court of proper jurisdiction finds that this Agreement is overly broad or unenforceable for any reason whatsoever, then it is hereby agreed that this Agreement will be reduced or amended to be enforceable to the extent allowable under applicable law, and that any court of competent jurisdiction shall have the power to alter the scope of any provision herein in order that said provision would be made legal and enforceable upon the effectiveness of said alteration.

11.08 Headings. The headings of this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

11.9 Counterparts, Governing Law. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute on and the same instrument. The execution and delivery of this Agreement and the other instruments effecting the conveyances and transfers at the Closing may be perfected by the exchange of executed signature pages via facsimile or Adobe Portable Document Format followed by delivery of the original executed signature pages via overnight mail carrier thereafter. This Agreement shall be governed by and construed in accordance with the laws of the State of Mississippi without giving effect to conflict of laws.

11.10 Indemnification. Seller shall indemnify, defend and hold harmless Purchaser and each of its officers, directors, agents and affiliates from and against any damage, loss, claim, liability, cost or expense incurred by Purchaser, including fees and disbursements of counsel, accountants, experts and other consultants reasonably and necessarily incurred by Purchaser, net of any tax benefit to which Purchaser is entitled and net of any and all amounts to which Purchaser is entitled to from insurance, guarantees, indemnities, and contractual and legal rights by, from or against other persons, firms, or entities (collectively, “Damages”), resulting from, arising out of, based upon or occasioned by the inaccuracy of any warranty or any representation made by Seller in this Agreement, or any breach of any covenant or agreement of Seller contained herein, or any pre-Closing liability. Purchaser shall indemnify, defend and hold harmless Seller and each of its members, officers, directors, agents and affiliates from and against any Damages, resulting from, arising out of, based upon or occasioned by the inaccuracy of any warranty or representation made by the Purchaser herein, or any breach of any covenant or agreement of Purchaser contained herein, or any post-Closing liability.

11.11 Arbitration Procedures. Any and every dispute of any nature whatsoever that may arise between the parties hereto, whether sounding in contract, statute, tort, fraud, misrepresentation, discrimination or any other legal theory, or breach of this Agreement, or any schedule, certificate or other document delivered by any party hereto, or those arising under

18

any federal, state or local law, regulation or ordinance, shall be determined in accordance with the procedures for arbitration of the American Health Lawyers Association Alternative Dispute Resolution Service or any successor organization thereto. Unless otherwise agreed by the parties, the arbitration shall be held in Vicksburg, Mississippi.

11.12 Survival. Except as otherwise specifically provided herein, the representations and warranties of the Purchaser and Seller contained herein shall survive for a period of eighteen (18) months from the Closing Date. However, with respect to any pre-Closing liability of Seller, cost-report adjustments for pre-Closing Date periods, and/or litigation for pre-Closing Date causes of action for alleged claims against Seller, Purchaser’s indemnification rights shall remain valid and exercisable without regard to the survival period provided herein. Additionally, with respect to lawsuits for post-Closing causes of action instituted after eighteen months from Closing, Seller’s indemnification rights shall remain valid and exercisable without regard to the survival period provided herein.

IN WITNESS WHEREOF, the parties have duly executed this Agreement effective as of the date written in the preamble of this Agreement.

AMEDISYS MISSISSIPPI, L.L.C.

By: AMEDISYS, INC.

Sole Member

By:                                                      

Gregory H. Browne

Chief Financial Officer

VICKSBURG HEALTHCARE, LLC

By: River Region Medical Corporation

Member

By:                                                      

Donald P. Fay

Executive Vice President

19

EX-31.1

Exhibit 31.1

CERTIFICATION

I, William F. Borne, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Amedisys, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: August 9, 2004

/s/ William F. Borne

William F. Borne

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Gregory H. Browne, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Amedisys, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: August 9, 2004

/s/ Gregory H. Browne

Gregory H. Browne

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Amedisys, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2004 (the “Report”), I, William F. Borne, Chief Executive Officer of the Company, certify that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ William F. Borne

William F. Borne

Chief Executive Officer

August 9, 2004

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Amedisys, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2004 (the “Report”), I, Gregory H. Browne, Chief Financial Officer of the Company, certify that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Gregory H. Browne

Gregory H. Browne

Chief Financial Officer

August 9, 2004