10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

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 its Charter)

Delaware	11-3131700
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

5959 S. Sherwood Forest Blvd., Baton Rouge, LA 70816

(Address of principal executive offices, including zip code)

(225) 292-2031 or (800) 467-2662

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	þ	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

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

The number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date, is as follows: Common stock, $0.001 par value, 29,473,568 shares outstanding as of April 20, 2011.

TABLE OF CONTENTS

SPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTS AND AVAILABLE INFORMATION		1
PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED):
	CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2011 AND DECEMBER 31, 2010	2
	CONDENSED CONSOLIDATED INCOME STATEMENTS FOR THE THREE MONTH PERIODS ENDED MARCH 30, 2011 AND 2010	3
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2011 AND 2010	4
	NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	20
ITEM 4.	CONTROLS AND PROCEDURES	20
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	21
ITEM 1A.	RISK FACTORS	21
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	21
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	22
ITEM 4.	RESERVED	22
ITEM 5.	OTHER INFORMATION	22
ITEM 6.	EXHIBITS	23
SIGNATURES		25
INDEX TO EXHIBITS		26

SPECIAL CAUTION CONCERNING FORWARD-LOOKING STATEMENTS AND AVAILABLE INFORMATION

Special Caution Concerning Forward-Looking Statements

When included in this Quarterly Report on Form 10-Q, or in other documents that we file with the Securities and Exchange Commission (“SEC”), or in statements made by or on behalf of our company, words like “believes,” “belief,” “expects,” “plans,” “anticipates,” “intends,” “projects,” “estimates,” “may,” “might,” “would,” “should” and similar expressions are intended to identify forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a variety of risks and uncertainties that could cause actual results to differ materially from those described therein. These risks and uncertainties include, but are not limited to the following: changes in Medicare and other medical payment levels, our ability to open agencies, acquire additional agencies and integrate and operate these agencies effectively, changes in or our failure to comply with existing Federal and State laws or regulations or the inability to comply with new government regulations on a timely basis, competition in the home health industry, changes in the case mix of patients and payment methodologies, changes in estimates and judgments associated with critical accounting policies, our ability to maintain or establish new patient referral sources, our ability to attract and retain qualified personnel, changes in payments and covered services due to the economic downturn and deficit spending by Federal and State governments, future cost containment initiatives undertaken by third-party payors, our access to financing due to the volatility and disruption of the capital and credit markets, our ability to meet debt service requirements and comply with covenants in debt agreements, business disruptions due to natural disasters or acts of terrorism, our ability to integrate and manage our information systems, changes in or developments with respect to any litigation or investigations relating to the Company, including the United States Senate Committee on Finance inquiry, the SEC investigation and the U.S. Department of Justice Civil Investigative Demand and various other matters, many of which are beyond our control.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on any forward-looking statement as a prediction of future events. We expressly disclaim any obligation or undertaking and we do not intend to release publicly any updates or changes in our expectations concerning the forward-looking statements or any changes in events, conditions or circumstances upon which any forward-looking statement may be based, except as required by law. For a discussion of some of the factors discussed above as well as additional factors, see our Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 22, 2011, particularly Part I, Item 1A. – “Risk Factors” therein, which are incorporated herein by reference and Part II, Item 1A. – “Risk Factors” of this Quarterly Report on Form 10-Q. Additional risk factors may also be described in reports that we file from time to time with the SEC.

Available Information

Our company website address is www.amedisys.com. We use our website as a channel of distribution for important company information. Important information, including press releases, analyst presentations and financial information regarding our company, is routinely posted on and accessible on the Investor Relations subpage of our website, which is accessible by clicking on the tab labeled “Investors” on our website home page. We also use our website to expedite public access to time-critical information regarding our company in advance of or in lieu of distributing a press release or a filing with the SEC disclosing the same information. Therefore, investors should look to the Investor Relations subpage of our website for important and time-critical information. Visitors to our website can also register to receive automatic e-mail and other notifications alerting them when new information is made available on the Investor Relations subpage of our website. In addition, we make available on the Investor Relations subpage of our website (under the link “SEC filings”) free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, ownership reports on Forms 3, 4 and 5 and any amendments to those reports as soon as practicable after we electronically file such reports with the SEC. Further, copies of our Certificate of Incorporation and Bylaws, our Code of Ethical Business Conduct, our Corporate Governance Guidelines and the charters for the Audit, Compensation, Quality of Care and Nominating and Corporate Governance Committees of our Board are also available on the Investor Relations subpage of our website (under the link “Corporate Governance”).

Additionally, our filings can be obtained at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at (800) SEC-0330. Our electronically filed reports can also be obtained on the SEC’s internet site at http://www.sec.gov.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AMEDISYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

(Unaudited)

	March 31, 2011			December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	148,868		$	120,295
Patient accounts receivable, net of allowance for doubtful accounts of $19,125 and $20,977		141,923			141,549
Prepaid expenses		11,605			9,947
Other current assets		15,701			22,259
Total current assets		318,097			294,050
Property and equipment, net of accumulated depreciation of $81,300 and $78,074		144,023			138,554
Goodwill		791,412			791,412
Intangible assets, net of accumulated amortization of $18,280 and $17,135		52,248			53,393
Other assets, net		21,780			22,454
Total assets	$	1,327,560		$	1,299,863
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	21,290		$	20,663
Payroll and employee benefits		88,322			82,961
Accrued expenses		69,321			61,254
Current portion of long-term obligations		36,101			37,178
Current portion of deferred income taxes		12,694			14,285
Total current liabilities		227,728			216,341
Long-term obligations, less current portion		136,138			144,688
Deferred income taxes		54,276			52,286
Other long-term obligations		5,291			6,833
Total liabilities		423,433			420,148
Commitments and Contingencies - Note 5
Equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $0.001 par value, 60,000,000 shares authorized; 30,084,676 and 29,867,701 shares issued; and 29,445,137 and 29,232,807 shares outstanding		30			29
Additional paid-in capital		416,425			407,156
Treasury stock at cost, 639,539 and 634,894 shares of common stock		(14,194	)		(14,022	)
Accumulated other comprehensive income		15			25
Retained earnings		499,957			484,669
Total Amedisys, Inc. stockholders’ equity		902,233			877,857
Noncontrolling interests		1,894			1,858
Total equity		904,127			879,715
Total liabilities and equity	$	1,327,560		$	1,299,863

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMEDISYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Amounts in thousands, except per share data)

(Unaudited)

	For the Three-Month Periods Ended March 31,
	2011			2010
Net service revenue	$	364,302		$	412,967
Cost of service, excluding depreciation and amortization		191,179			204,059
General and administrative expenses:
Salaries and benefits		85,650			86,967
Non-cash compensation		1,910			2,513
Other		45,565			45,015
Provision for doubtful accounts		3,162			4,345
Depreciation and amortization		9,355			8,186
Operating expenses		336,821			351,085
Operating income		27,481			61,882
Other (expense) income:
Interest income		118			85
Interest expense		(2,252	)		(2,411	)
Equity in earnings from unconsolidated joint ventures		323			788
Miscellaneous, net		(339	)		33
Total other expense, net		(2,150	)		(1,505	)
Income before income taxes		25,331			60,377
Income tax expense		(10,007	)		(23,547	)
Net income		15,324			36,830
Net income attributable to noncontrolling interests		(36	)		(184	)
Net income attributable to Amedisys, Inc.	$	15,288		$	36,646
Net income per share attributable to Amedisys, Inc. common stockholders:
Basic	$	0.54		$	1.32
Diluted	$	0.53		$	1.29
Weighted average shares outstanding:
Basic		28,366			27,821
Diluted		28,867			28,359

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMEDISYS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	For the Three-Month Periods Ended March 31,
	2011			2010
Cash Flows from Operating Activities:
Net income	$	15,324		$	36,830
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,355			8,186
Provision for doubtful accounts		3,162			4,345
Non-cash compensation		1,910			2,513
401(k) employer match		1,403			5,705
Loss on disposal of property and equipment		656			171
Deferred income taxes		399			1,623
Equity in earnings of unconsolidated joint ventures		(323	)		(788	)
Amortization of deferred debt issuance costs		394			394
Return on equity investment		240			90
Changes in operating assets and liabilities, net of impact of acquisitions:
Patient accounts receivable		(3,536	)		(4,648	)
Other current assets		5,112			4,940
Other assets		(493	)		239
Accounts payable		2,889			3,204
Accrued expenses		17,605			8,858
Other long-term obligations		(1,543	)		(625	)
Net cash provided by operating activities		52,554			71,037
Cash Flows from Investing Activities:
Proceeds from sale of deferred compensation plan assets		853			—
Purchases of deferred compensation plan assets		(219	)		(54	)
Purchases of property and equipment		(16,580	)		(9,966	)
Acquisitions of businesses, net of cash acquired		—			(1,969	)
Acquisitions of reacquired franchise rights		—			(2,377	)
Net cash used in investing activities		(15,946	)		(14,366	)
Cash Flows from Financing Activities:
Proceeds from issuance of stock upon exercise of stock options and warrants		96			939
Proceeds from issuance of stock to employee stock purchase plan		1,578			1,445
Tax benefit from stock option exercises		(82	)		714
Principal payments of long-term obligations		(9,627	)		(12,274	)
Net cash used in financing activities		(8,035	)		(9,176	)
Net increase in cash and cash equivalents		28,573			47,495
Cash and cash equivalents at beginning of period		120,295			34,485
Cash and cash equivalents at end of period	$	148,868		$	81,980
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	3,490		$	3,735
Cash paid for income taxes, net of refunds received	$	2,793		$	14,620
Supplemental Disclosures of Non-Cash Financing and Investing Activities:
Notes payable issued for acquisitions	$	—		$	500

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. NATURE OF OPERATIONS, CONSOLIDATION AND PRESENTATION OF FINANCIAL STATEMENTS

Amedisys, Inc., a Delaware corporation, and its consolidated subsidiaries (“Amedisys,” “we,” “us,” or “our”) are a multi-state provider of home health and hospice services with approximately 85% and 87% of our revenue derived from Medicare for the three-month periods ended March 31, 2011 and 2010. As of March 31, 2011, we had 489 Medicare-certified home health and 69 Medicare-certified hospice agencies in 45 states within the United States, the District of Columbia and Puerto Rico.

Basis of Presentation

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly our financial position, our results of operations and our cash flows in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Our results of operations for the interim periods presented are not necessarily indicative of results of our operations for the entire year and have not been audited by our independent auditors.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from the interim financial information presented. This report should be read in conjunction with our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2010 as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2011 (the “Form 10-K”), which includes information and disclosures not included herein.

Use of Estimates

Our accounting and reporting policies conform with U.S. GAAP. In preparing the unaudited condensed consolidated financial statements, we are required to make estimates and assumptions that impact the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.

Reclassifications and Comparability

Certain reclassifications have been made to prior periods’ financial statements in order to conform them to the current period’s presentation.

Principles of Consolidation

These unaudited condensed consolidated financial statements include the accounts of Amedisys, Inc. and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in our accompanying unaudited condensed consolidated financial statements, and business combinations accounted for as purchases have been included in our unaudited condensed consolidated financial statements from their respective dates of acquisition. In addition to our wholly owned subsidiaries, we also have certain equity investments that are accounted for as set forth below.

Equity Investments

We consolidate subsidiaries and/or joint ventures when the entity is a variable interest entity and we are the primary beneficiary or if we have controlling interests in the entity, which is generally ownership in excess of 50%. Third party equity interests in our consolidated joint ventures are reflected as noncontrolling interests in our condensed consolidated financial statements.

For subsidiaries or joint ventures in which we do not have a controlling interest or for which we are not the primary beneficiary, we record such investments under the equity method of accounting.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

We earn net service revenue through our home health and hospice agencies by providing a variety of services almost exclusively in the homes of our patients. This net service revenue is earned and billed either on an episode of care basis, on a per visit basis or on a daily basis depending upon the payment terms and conditions established with each payor for services provided. We refer to home health revenue earned and billed on a 60-day episode of care as episodic-based revenue.

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When we record our service revenue, we record it net of estimated revenue adjustments and contractual adjustments to reflect amounts we estimate to be realizable for services provided, as discussed below. We believe, based on information currently available to us and based on our judgment, that changes to one or more factors that impact the accounting estimates (such as our estimates related to revenue adjustments, contractual adjustments and episodes in progress) we make in determining net service revenue, which changes are likely to occur from period to period, will not materially impact our reported consolidated financial condition, results of operations, cash flows or our future financial results.

Home Health Revenue Recognition

Medicare Revenue

Net service revenue is recorded under the Medicare prospective payment system (“PPS”) based on a 60-day episode payment rate that is subject to adjustment based on certain variables including, but not limited to: (a) an outlier payment if our patient’s care was unusually costly (capped at 10% of total reimbursement); (b) a low utilization payment adjustment (“LUPA”) if the number of visits was fewer than five; (c) a partial payment if our patient transferred to another provider or we received a patient from another provider before completing the episode; (d) a payment adjustment based upon the level of therapy services required (thresholds set at 6, 14 and 20 visits); (e) the number of episodes of care provided to a patient, regardless of whether the same home health provider provided care for the entire series of episodes; (f) changes in the base episode payments established by the Medicare Program; (g) adjustments to the base episode payments for case mix and geographic wages; and (h) recoveries of overpayments.

We make adjustments to Medicare revenue on completed episodes to reflect differences between estimated and actual payment amounts, an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk. We estimate the impact of such adjustments based on our historical experience, which primarily includes a historical collection rate of over 99% on Medicare claims, and record this estimate during the period in which services are rendered as an estimated revenue adjustment and a corresponding reduction to patient accounts receivable. Therefore, we believe that our reported net service revenue and patient accounts receivable will be the net amounts to be realized from Medicare for services rendered.

In addition to revenue recognized on completed episodes, we also recognize a portion of revenue associated with episodes in progress. Episodes in progress are 60-day episodes of care that begin during the reporting period, but were not completed as of the end of the period. We estimate this revenue on a monthly basis based upon historical trends. The primary factors underlying this estimate are the number of episodes in progress at the end of the reporting period, expected Medicare revenue per episode and our estimate of the average percentage complete based on visits performed. As of March 31, 2011 and 2010, the difference between the cash received from Medicare for a request for anticipated payment (“RAP”) on episodes in progress and the associated estimated revenue was immaterial and therefore the resulting credits were recorded as a reduction to our outstanding patient accounts receivable in our condensed consolidated balance sheets for such periods.

Non-Medicare Revenue

Episodic-based Revenue. We recognize revenue in a similar manner as we recognize Medicare revenue for episodic-based rates that are paid by other insurance carriers, including Medicare Advantage programs; however, these rates can vary based upon the negotiated terms.

Non-episodic Based Revenue. Gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to our established or estimated per-visit rates, as applicable. Contractual adjustments are recorded for the difference between our standard rates and the contracted rates to be realized from patients, third parties and others for services provided and are deducted from gross revenue to determine net service revenue and are also recorded as a reduction to our outstanding patient accounts receivable. In addition, we receive a minimal amount of our net service revenue from patients who are either self-insured or are obligated for an insurance co-payment.

Hospice Revenue Recognition

Hospice Medicare Revenue

Gross revenue is recorded on an accrual basis based upon the date of service at amounts equal to the estimated payment rates. The estimated payment rates are daily or hourly rates for each of the four levels of care we deliver. The four main levels of care we provide are routine care, general inpatient care, continuous home care and respite care. Routine care accounts for 98% and 96% of our total net Medicare hospice service revenue for the three month periods ended March 31, 2011 and 2010, respectively. We make adjustments to Medicare revenue for an inability to obtain appropriate billing documentation or authorizations acceptable to the payor and other reasons unrelated to credit risk. We estimate the impact of these adjustments based on our historical experience, which primarily includes our historical collection rate on Medicare claims, and record it during the period services are rendered as an estimated revenue adjustment and as a reduction to our outstanding patient accounts receivable.

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Additionally, as Medicare hospice revenue is subject to an inpatient cap limit and an overall payment cap for each provider number, we monitor these caps and estimate amounts due back to Medicare if a cap has been exceeded. We record these adjustments as a reduction to revenue and an increase in other accrued liabilities. We have settled our Medicare hospice reimbursements for all fiscal years through October 31, 2009. For the cap years ended October 31, 2010 and October 31, 2011, we have $1.7 million and $0.5 million, respectively, recorded for estimated amounts due back to Medicare in other accrued liabilities as of March 31, 2011 and $1.9 million recorded as of December 31, 2010. As a result of our adjustments, we believe our revenue and patients accounts receivable are recorded at amounts that will be ultimately realized.

Hospice Non-Medicare Revenue

We record gross revenue on an accrual basis based upon the date of service at amounts equal to our established rates or estimated per visit rates, as applicable. Contractual adjustments are recorded for the difference between our established rates and the amounts estimated to be realizable from patients, third parties and others for services provided and are deducted from gross revenue to determine our net service revenue and patient accounts receivable.

Patient Accounts Receivable

Our patient accounts receivable are uncollateralized and consist of amounts due from Medicare, Medicaid, other third-party payors and patients. There is no single payor, other than Medicare, that accounts for more than 10% of our total outstanding patient receivables, and thus we believe there are no other significant concentrations of receivables that would subject us to any significant credit risk in the collection of our patient accounts receivable. We fully reserve for accounts which are aged at 360 days or greater. We write off accounts on a monthly basis once we have exhausted our collection efforts and deem an account to be uncollectible.

We believe the credit risk associated with our Medicare accounts, which represent 75% and 76% of our net patient accounts receivable at March 31, 2011 and December 31, 2010, respectively, is limited due to (i) our historical collection rate of over 99% from Medicare and (ii) the fact that Medicare is a U.S. government payor. Accordingly, we do not record an allowance for doubtful accounts for our Medicare patient accounts receivable, which are recorded at their net realizable value after recording estimated revenue adjustments as discussed above. During the three month periods ended March 31, 2011 and 2010, we recorded $2.4 million and $0.2 million, respectively, in estimated revenue adjustments to Medicare revenue.

We believe there is a certain level of credit risk associated with non-Medicare payors. To provide for our non-Medicare patient accounts receivable that could become uncollectible in the future, we establish an allowance for doubtful accounts to reduce the carrying amount to its estimated net realizable value.

Medicare Home Health

For our home health patients, our pre-billing process includes verifying that we are eligible for payment from Medicare for the services that we provide to our patients. Our Medicare billing begins with a process to ensure that our billings are accurate through the utilization of an electronic Medicare claim review. We submit a RAP for 60% of our estimated payment for the initial episode at the start of care or 50% of the estimated payment for any subsequent episodes of care contiguous with the first episode for a particular patient. The full amount of the episode is billed after the episode has been completed (“final billed”). The RAP received for that particular episode is then deducted from our final payment. If a final bill is not submitted within the greater of 120 days from the start of the episode, or 60 days from the date the RAP was paid, any RAPs received for that episode will be recouped by Medicare from any other claims in process for that particular provider number. The RAP and final claim must then be re-submitted.

Medicare Hospice

For our hospice patients, our pre-billing process includes verifying that we are eligible for payment from Medicare for the services that we provide to our patients. Once each patient has been confirmed for eligibility, we will bill Medicare on a monthly basis for the services provided to the patient.

Non-Medicare Home Health and Hospice

For our non-Medicare patients, our pre-billing process primarily begins with verifying a patient’s eligibility for services with the applicable payor. Once the patient has been confirmed for eligibility, we will provide services to the patient and bill the applicable payor. We estimate an allowance for doubtful accounts to reduce the carrying amount of the receivables to the amounts we estimate will be ultimately collected. Our review and evaluation of non-Medicare accounts receivable includes a detailed review of outstanding balances and special consideration to concentrations of receivables from particular payors or groups of payors with similar characteristics that would subject us to any significant credit risk. In addition, the amount of the allowance for doubtful accounts is based upon our assessment of historical and expected net collections, business and economic conditions, trends in payment and an evaluation of collectibility based upon the date that the service was provided. Based upon our best judgment, we believe the allowance for doubtful accounts adequately provides for accounts that will not be collected due to credit risk.

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Fair Value of Financial Instruments

The following details our financial instruments where the carrying value and fair value differ (amounts in millions):

			Fair Value at Reporting Date Using
Financial Instrument	As of March 31, 2011		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long-term obligations	$	172.2	$	—	$	177.3	$	—

The estimates of the fair value of our long-term obligations are based upon a discounted present value analysis of future cash flows. Due to the existing uncertainty in the capital and credit markets, the actual rates that would be obtained to borrow under similar conditions could materially differ from the estimates we have used.

The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The three levels of inputs are as follows:

• Level 1 — Quoted prices in active markets for identical assets and liabilities.

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 — Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

For our other financial instruments, including our cash and cash equivalents, patient accounts receivable, accounts payable and accrued expenses, we estimate the carrying amounts’ approximate fair value due to their short term maturity. Our deferred compensation plan assets are recorded at fair value.

Weighted-Average Shares Outstanding

Net income per share attributable to Amedisys, Inc. common stockholders, calculated on the treasury stock method, is based on the weighted average number of shares outstanding during the period. The following table sets forth, for the periods indicated, shares used in our computation of the weighted-average shares outstanding, which are used to calculate our basic and diluted net income per share attributable to Amedisys, Inc. common stockholders (amounts in thousands):

	For the Three-Month Periods Ended March 31,
	2011		2010
Weighted average number of shares outstanding - basic		28,366		27,821
Effect of dilutive securities:
Stock options		91		175
Non-vested stock and stock units		410		363
Weighted average number of shares outstanding - diluted		28,867		28,359

For the three-month period ended March 31, 2011 we had no shares of additional securities that were anti-dilutive compared to 4,222 shares for the same period in 2010.

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3. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

The following table summarizes the activity related to our goodwill and our other intangible assets, net, as of and for the three-month period ended March 31, 2011 (amounts in millions):

	Goodwill
	Home Health		Hospice		Total
Balances at December 31, 2010	$	723.3	$	68.1	$	791.4
Additions		—		—		—
Balances at March 31, 2011	$	723.3	$	68.1	$	791.4

	Other Intangible Assets, Net
	Certificates of Need and Licenses		Acquired Names of Business (1)			Non-Compete Agreements & Reacquired Franchise Rights (2)			Total
Balances at December 31, 2010	$	41.7	$	4.7		$	7.0		$	53.4
Amortization		—		(0.1	)		(1.1	)		(1.2	)
Balances at March 31, 2011	$	41.7	$	4.6		$	5.9		$	52.2

(1) Acquired Names of Business includes $4.4 million of unamortized acquired names and $0.2 million of amortized acquired names which have a weighted-average amortization period of 2.4 years.

(2) The weighted-average amortization period of our non-compete agreements and reacquired franchise rights is 2.4 and 2.2 years, respectively.

4. LONG-TERM OBLIGATIONS

Long-term obligations, including capital lease obligations, consisted of the following for the periods indicated (amounts in millions):

	March 31, 2011			December 31, 2010
Senior Notes:
$35.0 million Series A Notes; semi-annual interest only payments; interest rate at 6.07% per annum; due March 25, 2013	$	35.0		$	35.0
$30.0 million Series B Notes; semi-annual interest only payments; interest rate at 6.28% per annum; due March 25, 2014	$	30.0			30.0
$35.0 million Series C Notes; semi-annual interest only payments; interest rate at 6.49% per annum; due March 25, 2015	$	35.0			35.0
$150.0 million Term Loan; $7.5 million principal payments plus accrued interest payable quarterly; interest rate at ABR Rate plus applicable percentage or Eurodollar Rate plus the applicable percentage (1.01% at March 31, 2011); due March 26, 2013	$	60.0			67.5
Promissory notes		12.2			14.4
		172.2			181.9
Current portion of long-term obligations		(36.1	)		(37.2	)
Total	$	136.1		$	144.7

Our weighted-average interest rate for our five year Term Loan for the quarters ended March 31, 2011 and 2010 was 1.0%.

As of March 31, 2011, our total leverage ratio (used to compute the margin and commitment fees, described in more detail in Note 6 of the financial statements included in our Form 10-K) was 0.9 and our fixed charge coverage ratio was 1.5.

As of March 31, 2011, our availability under our $250.0 million Revolving Credit Facility was $232.5 million as we had $17.5 million outstanding in letters of credit.

See Note 6 of the financial statements included in our Form 10-K for additional details on our outstanding long-term obligations.

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5. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

In addition to the matters referenced in this note, we are involved in legal actions in the normal course of business, some of which seek monetary damages, including claims for punitive damages. We do not believe that these normal course actions, when finally concluded and determined, will have a material impact on our consolidated financial condition, results of operations or cash flows. We are also involved in the legal actions set forth below.

United States Senate Committee on Finance Inquiry

On May 12, 2010, we received a letter of inquiry from the United States Senate Committee on Finance requesting documents and information relating to our policies and practices regarding home therapy visits and therapy utilization trends. A similar letter was sent to the other major publicly traded home health care companies. We are cooperating with the Committee with respect to this inquiry.

Securities Class Action Lawsuits

On June 7, 2010, a putative securities class action complaint was filed in the United States District Court for the Middle District of Louisiana against the Company and certain of our current and former senior executives. Additional putative securities class actions were filed in the United States District Court for the Middle District of Louisiana on July 14, July 16, and July 28, 2010.

On October 22, 2010, the Court issued an order consolidating the putative securities class action lawsuits and the derivative actions (described immediately below) for pre-trial purposes. In the same order, the Court appointed the Public Employees Retirement System of Mississippi and the Puerto Rico Teachers’ Retirement System as co-lead plaintiffs (together, the “Co-Lead Plaintiffs”) for the putative class. On December 10, 2010, the Court also consolidated the ERISA class action lawsuit (described below) with the putative securities class actions and derivative actions for pre-trial purposes.

On January 18, 2011, the Co-Lead Plaintiffs filed an amended, consolidated class action complaint (the “Securities Complaint”) which supersedes the earlier-filed securities class action complaints. The Securities Complaint alleges that the defendants made false and/or misleading statements and failed to disclose material facts about our business, financial condition, operations and prospects, particularly relating to our policies and practices regarding home therapy visits under the Medicare home health prospective payment system and the related alleged impact on our business, financial condition, operations and prospects. The Securities Complaint seeks a determination that the action may be maintained as a class action on behalf of all persons who purchased the Company’s securities between August 2, 2005 and September 28, 2010. All defendants have moved to dismiss the Securities Complaint.

Derivative Actions

On July 2, 2010, an alleged shareholder of the Company filed a derivative lawsuit in the United States District Court for the Middle District of Louisiana, purporting to assert claims on behalf of the Company against certain of our current and former officers and directors. Three similar derivative suits were filed in the United States District Court for the Middle District of Louisiana on July 15, July 21, and August 2, 2010. We are named as a nominal defendant in all of those actions. As noted above, on October 22, 2010, the United States District Court for the Middle District of Louisiana issued an order consolidating the derivative actions with the putative securities class action lawsuits and for pre-trial purposes.

On January 18, 2011, the plaintiffs in the consolidated federal derivative actions filed a consolidated, amended complaint (the “Derivative Complaint”) which supersedes the earlier-filed derivative complaints. The Derivative Complaint alleges that certain of our current and former officers and directors breached their fiduciary duties to the Company by making allegedly false statements, by allegedly failing to establish sufficient internal controls over certain of our home health and Medicare billing practices, by engaging in alleged insider trading, and by committing unspecified acts of waste of corporate assets and unjust enrichment. All defendants in the derivative action, including the Company as a nominal defendant, have moved to dismiss the Derivative Complaint.

On July 23, 2010, a derivative suit was filed in the Nineteenth Judicial District Court, Parish of East Baton Rouge, State of Louisiana. That action also purports to assert claims on behalf of the Company against certain of our current and former officers and directors. On December 8, 2010, the Court entered an order staying the action in deference to the earlier-filed derivative actions pending in federal court.

ERISA Class Action Lawsuit

On September 27, 2010 and October 22, 2010, separate putative class action complaints were filed in the United States District Court for the Middle District of Louisiana against us, certain of our current and former senior executives and members of our 401(k) Plan Administrative Committee. The suits allege violations of the Employee Retirement Income Security Act (“ERISA”) since January 1, 2006 and July 1, 2007, respectively. The plaintiffs brought the complaints on behalf of themselves and a class of similarly situated participants in our 401(k) plan. The plaintiffs assert that the defendants breached their fiduciary duties to the 401(k) Plan’s participants by causing the 401(k) plan to offer and hold Amedisys common stock during the respective class periods when it was an allegedly unduly risky and imprudent retirement investment because of our alleged improper business practices. The complaints seek a determination that the actions may be maintained as a class action, an award of unspecified monetary damages and other unspecified relief. As noted above, on December 10, 2010, the Court consolidated the putative ERISA class actions with the putative securities class actions and derivative actions for pre-trial purposes. In addition, on December 10, 2010, the Court appointed interim lead counsel and interim liaison counsel in the ERISA class action.

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On March 10, 2011, Wanda Corbin, Pia Galimba and Linda Trammell (the “Co-ERISA Plaintiffs”), filed an amended, consolidated class action complaint (the “ERISA Complaint”), which supersedes the earlier-filed ERISA class action complaints. The ERISA Complaint seeks a determination that the action may be maintained as a class action on behalf of themselves and a class of similarly situated participants in our 401(k) plan from January 1, 2008 through present. All of the defendants have moved to dismiss the ERISA Complaint.

SEC Investigation

On June 30, 2010, we received notice of a formal investigation from the SEC and received a subpoena for documents relating to the matters under review by the United States Senate Committee on Finance and other matters involving our operations. We are cooperating with the SEC with respect to this investigation.

U.S. Department of Justice Civil Investigative Demand (“CID”)

On September 27, 2010, we received a CID issued by the U.S. Department of Justice pursuant to the federal False Claims Act. The CID requires the delivery of a wide range of documents and information to the United States Attorney’s Office for the Northern District of Alabama, relating to the Company’s clinical and business operations, including reimbursement and billing claims submitted to Medicare for home health services, and related compliance activities. The CID generally covers the period from January 1, 2003. We have been informed by the Department of Justice that the Company will be receiving another related CID requiring the production of additional documents. We are cooperating with the Department of Justice with respect to this investigation.

We are unable to assess the probable outcome or reasonably estimate the potential liability, if any, arising from the United States Senate Committee on Finance inquiry, the SEC investigation, the U.S. Department of Justice CID and the securities, shareholder derivative and ERISA litigation described above given the preliminary stage of these matters. The Company intends to continue to vigorously defend itself in the securities, shareholder derivative and ERISA litigation matters. No assurances can be given as to the timing or outcome of the United States Senate Committee on Finance inquiry, the SEC investigation, the U.S. Department of Justice CID or the securities, shareholder derivative and ERISA litigation matters described above or the impact of any of the inquiry, investigation or litigation matters on the Company, its consolidated financial condition, results of operations or cash flows.

We recognize that additional putative securities class action complaints and other litigation could be filed, and that other investigations and actions could be commenced, relating to matters involving our home therapy visits and therapy utilization trends or other matters.

Third Party Audits

We are subject in the ordinary course of our business from time to time to audits under various governmental programs in which third party firms engaged by CMS conduct extensive review of claims data to identify potential improper payments under the Medicare program. In January 2010, our subsidiary that provides home health services in Dayton, Ohio received from a Medicare Program Safeguard Contractor (“PSC”) a request for records regarding 137 claims submitted by the subsidiary paid from January 2, 2008 through November 10, 2009 (the “Claim Period”) to determine whether the underlying services met pertinent Medicare payment requirements. Based on the PSC’s findings, which were extrapolated to all claims for home health services provided by the Dayton subsidiary paid during the Claim Period, on March 9, 2011, the Medicare Administrative Contractor for the subsidiary issued a notice of overpayment seeking recovery from our subsidiary of an alleged overpayment of approximately $5.6 million. We dispute these findings and intend to vigorously seek to have these findings overturned, but no assurances can be given as to the timing or outcome of any appeal.

Insurance

We are obligated for certain costs associated with our insurance programs, including employee health, workers’ compensation and professional liability. While we maintain various insurance programs to cover these risks, we are self-insured for a substantial portion of our potential claims. We recognize our obligations associated with these costs in the period in which a claim is incurred, including with respect to both reported claims and claims incurred but not reported, up to specified deductible limits. These costs have generally been estimated based on historical data of our claims experience. Such estimates, and the resulting reserves, are reviewed and updated by us on a quarterly basis.

Our health insurance has a retention limit of $0.8 million, our workers’ compensation insurance has a retention limit of $0.4 million and our professional liability insurance has a retention limit of $0.3 million.

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6. SEGMENT INFORMATION

Our operations involve servicing patients through our two reportable business segments: home health and hospice. Our home health segment delivers a wide range of services in the home of individuals who may be recovering from surgery, have a chronic disability or terminal illness or need assistance with the essential activities of daily living. Our hospice segment provides palliative care and comfort to terminally ill patients and their families. The “other” column in the following tables consists of costs relating to corporate support functions that are not directly attributable to a specific segment.

Management evaluates performance and allocates resources based on the operating income of the reportable segments, which exclude corporate expenses, but includes revenues and all other costs directly attributable to the specific segment. Segment assets are not reviewed by the company’s chief operating decision maker and therefore are not disclosed below. The following table summarizes our segment information for the periods indicated (amounts in millions):

	For the Three-Month Period Ended March 31, 2011
	Home Health		Hospice		Other			Total
Net service revenue	$	325.5	$	38.8	$	—		$	364.3
Cost of service, excluding depreciation and amortization		170.8		20.4		—			191.2
General and administrative expenses		76.7		8.1		48.2			133.0
Provision for doubtful accounts		3.2		—		—			3.2
Depreciation and amortization		3.2		0.1		6.1			9.4
Operating expenses		253.9		28.6		54.3			336.8
Operating income	$	71.6	$	10.2	$	(54.3	)	$	27.5
	For the Three-Month Period Ended March 31, 2010
	Home Health		Hospice		Other			Total
Net service revenue	$	380.5	$	32.5	$	—		$	413.0
Cost of service, excluding depreciation and amortization		187.0		17.1		—			204.1
General and administrative expenses		86.3		7.8		40.4			134.5
Provision for doubtful accounts		3.8		0.5		—			4.3
Depreciation and amortization		3.6		0.1		4.5			8.2
Operating expenses		280.7		25.5		44.9			351.1
Operating income	$	99.8	$	7.0	$	(44.9	)	$	61.9

7. SUBSEQUENT EVENTS

On April 15, 2011, we signed a definitive agreement to acquire Beacon Hospice, Inc (“Beacon”). We have agreed in the definitive agreement to a purchase price of approximately $125 million, subject to customary adjustments. This transaction remains subject to normal closing conditions, including regulatory approvals and is expected to close in May 2011. Beacon operates 23 free-standing locations and one inpatient unit, servicing the states of Massachusetts, Maine, New Hampshire, Rhode Island and Connecticut with revenue of approximately $80 million for 2010.

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

The following discussion and analysis provides information we believe is relevant to an assessment and understanding of our results of operations and financial condition for the three month period ended March 31, 2011. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included herein, and the consolidated financial statements and notes and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission (“SEC”) on February 22, 2011 (the “Form 10-K”), which are incorporated herein by this reference.

Unless otherwise provided, “Amedisys,” “we,” “us,” “our” and the “Company” refer to Amedisys, Inc. and our consolidated subsidiaries.

Overview

We are a leading provider of high-quality, low-cost home health services to the chronic, co-morbid, aging American population. Our services include home health and hospice services, and approximately 85% and 87% of our revenue was derived from Medicare for the three-month periods ended March 31, 2011 and 2010. During the three-month period ended March 31, 2011, we had $364.3 million in net service revenue, earnings per diluted share of $0.53 and cash flow from operations of $52.5 million.

Our operations involve servicing patients through our two reportable business segments: home health and hospice. Our home health segment delivers a wide range of services in the homes of individuals who may be recovering from surgery, have a chronic disability or terminal illness. Our hospice segment provides palliative care and comfort to terminally ill patients and their families. As of March 31, 2011, we had 489 Medicare-certified home health and 69 Medicare-certified hospice agencies in 45 states within the United States, the District of Columbia and Puerto Rico as detailed below:

	Owned and Operated Agencies
	Home health			Hospice
At December 31, 2010		486			67
Start-ups		4			2
Closed/Consolidated		(1	)		—
At March 31, 2011		489			69

When we refer to “same store business,” we mean home health and hospice agencies that we have operated for at least the last twelve months; when we refer to “acquisitions,” we mean home health and hospice agencies that we acquired within the last twelve months; and when we refer to “start-ups,” we mean any home health or hospice agency opened by us in the last twelve months. Once an agency has been in operation for a twelve month period, the results for that particular agency are included as part of our same store business from that date forward. When we refer to episodic-based revenue, admissions, recertifications or completed episodes, we mean home health revenue, admissions, recertifications or completed episodes of care for those payors that pay on an episodic-basis, which includes Medicare and other insurance carriers including Medicare Advantage programs.

Recent Developments

Governmental Inquiries and Investigations and Stockholder Litigation

See Note 5 to our condensed consolidated financial statements for a discussion of the recent governmental inquiry, investigations and subsequent stockholder litigation we are involved in. No assurances can be given as to the timing or outcome of these items.

Health Care Reform

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act (“PPACA”) and the Health Care and Education Reconciliation Act of 2010 (“HCERA”), which amends the PPACA (collectively, the “Health Care Reform Bills”). The Health Care Reform Bills make a number of changes to Medicare payment rates, including the reinstatement of the 3% home health rural add-on, which began on April 1, 2010 (expiring January 1, 2016). CMS has recently made several changes to Medicare home health payments for 2011, as discussed below.

The Health Care Reform Bills also include a systemic rebasing of the amount CMS reimburses for home health services, to be phased in over four years, beginning in 2014. We anticipate that many of the provisions of the Health Care Reform Bills may be subject to further clarification and modification through the rule-making process. It is uncertain at this time the effect the rebasing will have on our future results of operations or cash flows.

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Payment

In November 2010, CMS issued a final rule to update and revise Medicare home health rates for calendar year 2011. The final rule includes the following changes to the base rate: a 1.1% market basket increase which includes the 1% reduction mandated by the Health Care Reform Bills, a negative 3.79% case-mix adjustment and a 2.5% reduction to reflect the elimination of the increase in the base reimbursement rate resulting from the outlier cap introduced in 2010. The net effect of these changes decreases the base rate for 2011 by 5.22% to $2,192. The change is effective for all episodes completing during 2011, accordingly, all episodes in progress at December 31, 2010 were impacted.

Face-to-Face and Therapy Requirements

The rule also finalized two provisions of the PPACA: (1) a face-to-face encounter requirement for home health and hospice and (2) changes in the therapy assessment schedule. As a condition for Medicare payment, the PPACA mandates that prior to certifying a patient’s eligibility for the home health benefit, the certifying physician must document that he or she, or an allowed non-physician practitioner, has had a face-to-face encounter with the patient. The encounter must occur in the timeframe of 90 days prior to the start of care or 30 days after the start of care. Documentation regarding these encounters must be present on certifications.

The rule also finalized hospice policy for the implementation of a PPACA provision requiring that a hospice physician or nurse practitioner have a face-to-face encounter with hospice patients during the 30 day period prior to the 180th-day recertification (third benefit period) and each subsequent recertification, and that the certifying hospice physician attest that such a visit took place.

The face-to-face encounter requirement for home health and hospice providers was to become effective January 1, 2011. However, due to concerns that some providers may need additional time to establish operational protocols necessary to comply with face-to-face encounter requirements, CMS delayed full enforcement of the requirements until the second quarter of 2011. Beginning with the second quarter, CMS will expect home health and hospices agencies to have fully established such internal processes and have appropriate documentation of required encounters.

In addition, the final rule imposed important therapy assessment requirements. A professional qualified therapist assessment must take place at least once every 30 days during a therapy patient’s course of treatment. For those qualified patients needing 13 or 19 therapy visits, a qualified therapist must perform the therapy service required, assess the patient, and measure and document effectiveness of the 13^th visit and the 19^th visit for all therapy disciplines caring for the patient. CMS delayed the effective date for all therapy provisions until April 1, 2011 to allow time for home health agencies to take necessary steps to comply.

Results of Operations

During the three-month period ended March 31, 2011, we incurred certain costs of $3.3 million ($2.0 million, net of tax or $0.07 per diluted share) associated with the realignment of operations, acquisition costs, and legal expenses related to the United States Senate Committee on Finance inquiry and SEC and DOJ investigation discussed in Note 5 to the condensed consolidated financial statements and incurred costs associated with agency closings/consolidations we announced in 2010 of $1.1 million ($0.7 million net of tax or $0.02 per diluted share). These costs are included in other operating expenses in our consolidated results of operations.

Consolidated

The following table summarizes our consolidated results of operations (amounts in millions):

	For the Three-Month Periods Ended March 31,
	2011			2010
Net service revenue	$	364.3		$	413.0
Gross margin		173.1			208.9
% of revenue		47.5	%		50.6	%
Other operating expenses		145.6			147.0
% of revenue		40.0	%		35.6	%
Operating income		27.5			61.9
Income tax expense		10.0			23.5
Effective income tax rate		39.5	%		39.0	%
Net income attributable to Amedisys, Inc.	$	15.3		$	36.6

Net Service Revenue

Our net service revenue decreased $48.7 million from 2010 to 2011 and consisted of a decrease of $55.0 million in home health revenue and an increase of $6.3 million in hospice revenue. The decrease in our home health revenue is primarily due to the 5.2% CMS rate cut, our recent closures and consolidations announced last year and a decline in our recertification volume.

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Gross Margin

The decline in our gross margin percentage from 2010 to 2011 is due primarily to the 5.2% CMS rate cut. Our cost of service consists of salaries, taxes and benefits (including health care insurance and workers’ compensation insurance); travel and training expenses (primarily reimbursed mileage at a standard rate); and supplies and services expenses (including payments to contract therapists) incurred by our clinical personnel in our agencies.

Other Operating Expenses

Other operating expenses have decreased from 2010 to 2011 primarily due to a decrease of $1.9 million in salaries and benefits. Additionally, other operating expenses include $0.8 million and $2.5 million in lease terminations and legal costs, respectively.

Depreciation and amortization expense added $1.2 million in additional costs from 2010 to 2011. This increase is primarily due to the implementation of our enterprise resource planning system and the purchase of additional computers and POC tablets for our agencies.

Operating Income

Our operating income decreased $34.4 million from 2010 and is inclusive of $4.4 million in expenses associated with agency closures, legal expenses, and other costs.

Other Expense, Net

Other expense, net increased $0.6 million from 2010 to 2011 primarily due to a $0.5 million increase in loss on the disposal of property and equipment.

Income Taxes

The increase in the estimated income tax rate from 2010 to 2011 is due to an increase in nondeductible expenses in 2011.

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Three-Month Period Ended March 31, 2011 Compared to the Three-Month Period Ended March 31, 2010

Home Health Division

The following table summarizes our home health segment results of operations:

	For the Three-Month Periods Ended March 31,
	2011								2010
	Same Store			Start-ups/ Acquisitions			Total		Same Store			Other (1)			Total
Financial Information (in millions):
Episodic-based revenue		300.3			6.9			307.2		347.8			13.9			361.7
Nonepisodic-based revenue		18.0			0.3			18.3		17.9			0.9			18.8
Net service revenue		318.3			7.2			325.5		365.7			14.8			380.5
Same store episodic-based revenue growth (2)		(14	)%							14	%
Cost of service		166.9			3.9			170.8		176.3			10.7			187.0
Gross margin		151.4			3.3			154.7		189.4			4.1			193.5
Other operating expenses		79.6			3.5			83.1		82.8			10.9			93.7
Operating income	$	71.8		$	(0.2	)	$	71.6	$	106.6		$	(6.8	)	$	99.8
Key Statistical Data:
Admissions:
Episodic-based		61,158			1,322			62,480		62,445			2,833			65,278
Nonepisodic-based		10,504			189			10,693		9,480			512			9,992
Total admissions		71,662			1,511			73,173		71,925			3,345			75,270
Same store episodic-based admission growth (2)		(2	)%							10	%
Recertifications:
Episodic-based		43,284			447			43,731		48,058			1,657			49,715
Nonepisodic-based		4,236			41			4,277		4,785			111			4,896
Total recertifications		47,520			488			48,008		52,843			1,768			54,611
Same store episodic-based recertification growth (2)		(10	)%							(1	)%
Completed episodes		97,941			1,576			99,517		100,913			4,183			105,096
Visits:
Episodic-based		1,905,098			31,588			1,936,686		2,014,528			76,725			2,091,253
Nonepisodic-based		197,308			3,275			200,583		197,426			10,646			208,072
Total visits		2,102,406			34,863			2,137,269		2,211,954			87,371			2,299,325
Cost per visit	$	79.38		$	111.34		$	79.91	$	79.69		$	122.36		$	81.32
Average episodic-based revenue per completed episode (3)	$	3,029		$	3,007		$	3,029	$	3,284		$	3,216		$	3,282
Episodic-based visits per completed episode (4)		18.5			17.2			18.5		18.7			17.4			18.6

(1) Agencies for the prior period which are not considered same store agencies (i.e. agencies closed or consolidated in current or prior period or unopened startups).

(2) Same store episodic-based revenue, admissions or recertifications growth is the percent increase (decrease) in our same store episodic-based revenue, admissions or recertifications for the period as a percent of the same store episodic-based revenue, admissions or recertifications of the prior period.

(3) Average episodic-based revenue per completed episode is the average episodic-based revenue earned for each episodic-based completed episode of care.

(4) Episodic-based visits per completed episode is the home health episodic-based visits on completed episodes divided by the home health episodic-based episodes completed during the period.

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Net Service Revenue

The components of the $55.0 million decline in our home health revenues are the 5.2% CMS rate cut which reduced revenue by $18.0 million, $14.8 million related to agencies we closed or merged in 2010, with the remainder due to declining volumes.

Our revenue per episode decreased 8% due to the 5.2% CMS rate cut and a reduction in the therapy needs of our patients. We also experienced declines in both admissions and recertifications as our same store episodic-based admissions and recertifications declined 2% and 10%, respectively. The decline in recertifications is due to both a decline in our recertification rate and a lower patient census. We expect the decline in our year over year recertification rate to continue into the third quarter of 2011. While we experienced a decline in same store episodic-based admissions over 2010, we did see a sequential improvement from the fourth quarter of 2010.

Cost of Service, excluding Depreciation and Amortization

Our home health cost of service decreased $16.2 million as we performed 162,056 fewer visits which accounted for $13.2 million of the decrease with the remainder from the $1.41 decrease in cost per visit. The cost per visit improvement is due to our portfolio realignment as well as a focus on productivity and conversion of salaried clinicians to our pay per visit model. In addition, we have experienced sequential improvement in cost per visit on a same store basis.

Other Operating Expenses

Our other operating expenses decreased $10.6 million in total and $3.2 million on a same store basis with the primary drivers being a decline in salary and benefits as a result of closures and mergers and additional cost reductions in our remaining portfolio.

Hospice Division

The following table summarizes our hospice segment results of operations:

	For the Three-Month Periods Ended March 31,
	2011								2010
	Same Store			Start-ups/ Acquisitions			Total		Same Store			Other (1)			Total
Financial Information (in millions):
Medicare revenue	$	35.7		$	0.8		$	36.5	$	29.5		$	1.3		$	30.8
Non-Medicare revenue		2.3			—			2.3		1.6			0.1			1.7
Net service revenue		38.0			0.8			38.8		31.1			1.4			32.5
Same store Medicare revenue growth (2)		21	%							33	%
Cost of service		19.6			0.8			20.4		15.8			1.3			17.1
Gross margin		18.4			—			18.4		15.3			0.1			15.4
Other operating expenses		7.4			0.8			8.2		7.3			1.1			8.4
Operating income	$	11.0		$	(0.8	)	$	10.2	$	8.0		$	(1.0	)	$	7.0
Key Statistical Data:
Hospice admits		3,088			109			3,197		2,629			164			2,793
Hospice days		277,500			6,245			283,745		226,481			10,038			236,519
Average daily census		3,083			69			3,153		2,516			112			2,628
Revenue per day	$	136.84		$	134.32		$	136.78	$	137.22		$	139.56		$	137.32
Cost of service per day	$	70.50		$	133.46		$	71.89	$	69.89		$	125.70		$	72.26
Average length of stay		89			48			88		89			61			87

(1) Agencies for the prior period which are not considered same store agencies (i.e. agencies closed or consolidated in current or prior period or unopened startups).

(2) Same Store Medicare revenue growth is the percent increase in our same store Medicare revenue for the period as a percent of the same store Medicare revenue of the prior period

Net Service Revenue

Our hospice revenue increased $6.3 million with $6.9 million from our same store agencies, $0.6 million from our start-up agencies and $0.2 million from our acquisitions offset by $1.4 million from agencies we closed or merged in 2010. Hospice revenue is primarily impacted by average daily census, levels of care and payment rates. Our 2011 revenue includes an increase related to an annual hospice rate increase effective October 1, 2010, which was approximately 1.8%. Additionally, our 2011 hospice revenue is net of a $0.4 million hospice cap adjustment, an increase of $0.2 million from 2010.

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Cost of Service excluding Depreciation and Amortization

Our hospice cost of service increased $3.3 million (19%) due to the 20% increase in our average daily census over 2010. Our hospice clinicians are generally paid on a salaried basis, and our agencies are staffed based on the average census of the agency.

Other Operating Expenses

Our other operating expenses were relatively flat despite our significant increase in revenue. The hospice division did benefit from a $0.5 million reduction in bad debt expense due to significant improvement in cash collections.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows for the Three-Month Period Ended March 31, 2011 Compared to the Three-Month Period Ended March 31, 2010

The following table summarizes our cash flows for the periods indicated (amounts in millions):

	For the Three-Month Periods Ended March 31,
	2011			2010
Cash provided by operating activities	$	52.5		$	71.1
Cash used in investing activities		(15.9	)		(14.4	)
Cash used in financing activities		(8.0	)		(9.2	)
Net increase in cash and cash equivalents		28.6			47.5
Cash and cash equivalents at beginning of period		120.3			34.5
Cash and cash equivalents at end of period	$	148.9		$	82.0

Cash provided by operating activities decreased $18.6 million during 2011 compared to 2010, primarily as a result of changes in net income, accounts payable and accrued expenses.

Cash used in investing activities increased $1.5 million during 2011 compared to 2010 primarily due to the decrease in our acquisition activity offset by an increase in purchases of property, plant and equipment.

Cash used in financing activities decreased $1.2 million during 2011 compared to 2010, primarily due to a decrease in repayments on our long-term obligations. We decreased our outstanding long-term obligations net of borrowings by $9.6 million from December 31, 2010.

Liquidity

Typically, our principal source of liquidity is the collection of our patient accounts receivable, primarily through the Medicare program; however, from time to time, we can and do obtain additional sources of liquidity through sales of our equity or by incurrence of additional indebtedness. As of March 31, 2011, we had $148.9 million in cash and cash equivalents and $232.5 million in availability under our $250.0 million Revolving Credit Facility.

During 2011, we spent $8.5 million in routine capital expenditures, which primarily included equipment, furniture and computer software and $8.1 million in capital expenditures related to the implementation of our enterprise resource planning system and a company-wide refresh of computer hardware. Based on our operating forecasts and our debt service requirements, we believe we will have sufficient liquidity to fund our operations, capital requirements and debt service requirements over the next twelve months and into the foreseeable future.

Outstanding Patient Accounts Receivable

Our patient accounts receivable, net increased $0.4 million from December 31, 2010 to March 31, 2011 as our cash collection as a percentage of revenue was 101.1% for the three-month periods ended March 31, 2011 and 99.3% for the three-month periods ended December 31, 2010.

Our patient accounts receivable includes unbilled receivables, which are aged based upon our initial service date. At March 31, 2011, the unbilled patient accounts receivable, as a percentage of gross patient accounts receivable, was 25.1%, or $42.0 million compared to 28.3% or $47.9 million at December 31, 2010. We monitor unbilled receivables on an agency by agency basis to ensure that all efforts are made to bill claims within timely filing deadlines. The timely filing deadlines vary by state for Medicaid-reimbursable services and among insurance companies.

Our provision for estimated revenue adjustments (which is deducted from our service revenue to determine net service revenue) and provision for doubtful accounts were as follows for the periods indicated (in millions). We fully reserve for both our Medicare and other patient accounts receivable that are aged over 360 days.

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	For the Three-Month Periods Ended March 31,
	2011			2010
Provision for estimated revenue adjustments	$	2.4		$	0.2
Provision for doubtful accounts		3.2			4.3
Total	$	5.6		$	4.5
As a percent of revenue		1.5	%		1.1	%

The following schedule details our patient accounts receivable, net of estimated revenue adjustments, by payor class, aged based upon initial date of service (amounts in millions, except days revenue outstanding, net):

	0-90		91-180		181-365		Over 365		Total
At March 31, 2011:
Medicare patient accounts receivable, net (1)	$	86.8	$	17.6	$	2.2	$	—	$	106.6
Other patient accounts receivable:
Medicaid		5.9		1.9		1.3		0.1		9.2
Private		27.2		9.6		6.8		1.6		45.2
Total	$	33.1	$	11.5	$	8.1	$	1.7	$	54.4
Allowance for doubtful accounts (2)										(19.1	)
Non-Medicare patient accounts receivable, net									$	35.3
Total patient accounts receivable, net									$	141.9
Days revenue outstanding, net (3)										34.8
	0-90		91-180		181-365		Over 365		Total
At December 31, 2010:
Medicare patient accounts receivable, net (1)	$	89.4	$	16.4	$	1.3	$	—	$	107.1
Other patient accounts receivable:
Medicaid		6.0		2.2		2.0		0.1		10.3
Private		27.2		9.9		7.0		1.0		45.1
Total	$	33.2	$	12.1	$	9.0	$	1.1	$	55.4
Allowance for doubtful accounts (2)										(21.0	)
Non-Medicare patient accounts receivable, net									$	34.4
Total patient accounts receivable, net									$	141.5
Days revenue outstanding, net (3)										32.8

(1) The following table summarizes the activity and ending balances in our estimated revenue adjustments (amounts in millions), which is recorded to reduce our Medicare outstanding patient accounts receivable to their estimated net realizable value, as we do not estimate an allowance for doubtful accounts for our Medicare claims.

	For the Three-Month Period Ended March 31, 2011			For the Three-Month Period Ended December 31, 2010
Balance at beginning of period	$	6.5		$	6.3
Provision for estimated revenue adjustments		2.4			2.6
Write offs		(2.5	)		(2.4	)
Balance at end of period	$	6.4		$	6.5

Our estimated revenue adjustments were 5.6% and 5.7% of our outstanding Medicare patient accounts receivable at March 31, 2011 and December 31, 2010, respectively.

(2) The following table summarizes the activity and ending balances in our allowance for doubtful accounts (amounts in millions), which is recorded to reduce only our Medicaid and private outstanding patient accounts receivable to their estimated net realizable value.

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	For the Three-Month Period Ended March 31, 2011			For the Three-Month Period Ended December 31, 2010
Balance at beginning of period	$	21.0		$	23.0
Provision for doubtful accounts		3.2			5.1
Write offs		(5.1	)		(7.1	)
Balance at end of period	$	19.1		$	21.0

Our allowance for doubtful accounts was 35.1% and 37.8% of our outstanding Medicaid and private patient accounts receivable at March 31, 2011 and December 31, 2010, respectively.

(3) Our calculation of days revenue outstanding, net is derived by dividing our ending net patient accounts receivable (i.e. net of estimated revenue adjustments and allowance for doubtful accounts) at March 31, 2011 and December 31, 2010 by our average daily net patient revenue for the three-month periods ended March 31, 2011 and December 31, 2010, respectively.

Indebtedness

Our weighted-average interest rate for our five year Term Loan for the quarters ended March 31, 2011 and 2010 was 1.0%.

As of March 31, 2011, our total leverage ratio (used to compute the margin and commitment fees, described in more detail in Note 6 of the financial statements included in our Form 10-K) was 0.9 and our fixed charge coverage ratio was 1.5.

As of March 31, 2011, our availability under our $250.0 million Revolving Credit Facility was $232.5 million as we had $17.5 million outstanding in letters of credit.

See Note 6 of the financial statements included in our Form 10-K for additional details on our outstanding long-term obligations.

Inflation

We do not believe that inflation has significantly impacted our results of operations.

Critical Accounting Policies

See Part II, Item 7 — Critical Accounting Policies and our consolidated financial statements and related notes in Part IV, Item 15 of our Form 10-K, for accounting policies and related estimates we believe are the most critical to understanding our condensed consolidated financial statements, financial condition and results of operations and which require complex management judgment and assumptions, or involve uncertainties. These critical accounting policies include revenue recognition; patient accounts receivable; insurance; goodwill and intangible assets; and income taxes. There have not been any changes to our significant accounting policies or their application, since we filed our Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our Revolving Credit Facility and Term Loan carry a floating interest rate which is tied to the Eurodollar rate (i.e. LIBOR) and the Prime Rate and, therefore, our condensed consolidated statements of operations and our condensed consolidated statements of cash flows will be exposed to changes in interest rates. As of March 31, 2011, the total amount of outstanding debt subject to interest rate fluctuations was $60.0 million. A 1.0% interest rate increase would increase interest expense by approximately $0.6 million annually.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized, disclosed and reported within the time periods specified in the SEC’s rules and forms. This information is also accumulated and communicated to our management and Board of Directors to allow timely decisions regarding required disclosure.

In connection with the preparation of this Quarterly Report on Form 10-Q, as of March 31, 2011, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act.

Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2011, the end of the period covered by this Quarterly Report.

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Changes in Internal Controls

On January 1, 2011, the Company implemented two modules of a new enterprise resource planning system, PeopleSoft Financials and PeopleSoft Human Capital Management. This implementation was part of our focus on upgrading and enhancing our financial systems and was not in response to any internal control deficiencies. In connection with this system implementation, we are in the process of updating our internal controls over financial reporting, as necessary, to accommodate modifications to our business and accounting processes. We do not believe this implementation will have an adverse affect on our internal controls over financial reporting.

There were no other changes in internal control over financial reporting during the quarter ended March 31, 2011, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal controls over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls’ effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies and procedures.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 5 to the condensed consolidated financial statements for information concerning our legal proceedings.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors included in Part I, “Item 1A. — “Risk Factors” of our Annual Report on Form 10-K. These risk factors could materially impact our business, financial condition and/or operating results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely impact our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides the information with respect to purchases made by us of shares of our common stock during each of the months during the three-month period ended March 31, 2011:

Period	(a) Total Number of Shares (or Units) Purchased			(b) Average Price Paid per Share (or Unit)		(c) Total Number of Share (or Units) Purchased as Part  of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares  (or Units) that May Yet Be Purchased Under the Plans or Programs
January 1, 2011 to January 31, 2011		2,111		$	33.42		—		—
February 1, 2011 to February 28, 2011		2,359		$	40.18		—		—
March 1, 2011 to March 31, 2011		175		$	35.37		—		—
Total		4,645	(1)	$	36.92		—	$	—

(1) Includes shares of common stock surrendered to us by certain employees to satisfy tax withholding obligations in connection with the vesting of non-vested stock previously awarded to such employees under our 2008 Omnibus Incentive Compensation Plan.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. RESERVED

ITEM 5. OTHER INFORMATION

None.

22

ITEM 6. EXHIBITS

The exhibits marked with the cross symbol (†) are filed and the exhibits marked with the double cross symbol (††) are furnished with this Form 10-Q. Any exhibits marked with the asterisk symbol (*) are management contracts or compensatory plans or arrangements filed pursuant to Item 601(b)(10)(iii) of Regulation S-K.

Exhibit Number	Document Description	Report or Registration Statement	SEC File or Registration Number	Exhibit or Other Reference
3.1	Composite of Certificate of Incorporation of the Company inclusive of all amendments through June 14, 2007	The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007	0-24260	3.1
3.2	Composite of By-Laws of the Company inclusive of all amendments through October 22, 2009	The Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009	0-24260	3.2
4.1	Common Stock Specimen	The Company’s Registration Statement on Form S-3 filed August 20, 2007	333-145582	4.8
4.2	Note Purchase Agreement dated March 25, 2008 among Amedisys, Inc., Amedisys Holding, L.L.C. and the Purchasers identified on Schedule A thereto, relating to the issuance and sale of (a) $35,000,000 aggregate principal amount of their 5.07% Series A Senior Notes due March 25, 2013 (b) $30,000,000 aggregate principal amount of their 6.28% Series B Senior Notes due March 25, 2014 and (c) $35,000,000 aggregate principal amount of their 6.49% Series C Senior Notes due March 25, 2015	The Company’s Current Report on Form 8-K filed on April 1, 2008	0-24260	4.1
4.3	Form of Series A Note due March 25, 2013 (attached as Exhibit 1 to the Note Purchase Agreement Incorporated by reference as Exhibit 4.4 hereto)	The Company’s Current Report on Form 8-K filed on April 1, 2008	0-24260	4.2
4.4	Form of Series B Note due March 25, 2014 (attached as Exhibit 2 to the Note Purchase Agreement Incorporated by reference as Exhibit 4.4 hereto)	The Company’s Current Report on Form 8-K filed on April 1, 2008	0-24260	4.3
4.5	Form of Series C Note due March 25, 2015 (attached as Exhibit 3 to the Note Purchase Agreement Incorporated by reference as Exhibit 4.4 hereto)	The Company’s Current Report on Form 8-K filed on April 1, 2008	0-24260	4.4
†10.1*	Amended and Restated Amedisys, Inc. Employee Stock Purchase Plan effective as of April 1, 2011
†31.1	Certification of William F. Borne, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
†31.2	Certification of Dale E. Redman, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
††32.1	Certification of William F. Borne, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

23

Exhibit Number	Document Description	Report or Registration Statement	SEC File or Registration Number	Exhibit or Other Reference
††32.2	Certification of Dale E. Redman, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
††101.INS	XBRL Instance
††101.SCH	XBRL Taxonomy Extension Schema Document
††101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
††101.DEF	XBRL Taxonomy Definition Linkbase Document
††101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
††101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

24

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 thereunto duly authorized.

AMEDISYS, INC.
(Registrant)
By:	/s/ Dale E. Redman
	Dale E. Redman
	Chief Financial Officer and       Duly Authorized Officer

DATE: April 26, 2011

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EXHIBIT INDEX

The exhibits marked with the cross symbol (†) are filed and the exhibits marked with the double cross symbol (††) are furnished with this Form 10-Q. Any exhibits marked with the asterisk symbol (*) are management contracts or compensatory plans or arrangements filed pursuant to Item 601(b)(10)(iii) of Regulation S-K.

Exhibit Number	Document Description	Report or Registration Statement	SEC File or Registration Number	Exhibit or Other Reference
3.1	Composite of Certificate of Incorporation of the Company inclusive of all amendments through June 14, 2007	The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007	0-24260	3.1
3.2	Composite of By-Laws of the Company inclusive of all amendments through October 22, 2009	The Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009	0-24260	3.2
4.1	Common Stock Specimen	The Company’s Registration Statement on Form S-3 filed August 20, 2007	333-145582	4.8
4.2	Note Purchase Agreement dated March 25, 2008 among Amedisys, Inc., Amedisys Holding, L.L.C. and the Purchasers identified on Schedule A thereto, relating to the issuance and sale of (a) $35,000,000 aggregate principal amount of their 5.07% Series A Senior Notes due March 25, 2013 (b) $30,000,000 aggregate principal amount of their 6.28% Series B Senior Notes due March 25, 2014 and (c) $35,000,000 aggregate principal amount of their 6.49% Series C Senior Notes due March 25, 2015	The Company’s Current Report on Form 8-K filed on April 1, 2008	0-24260	4.1
4.3	Form of Series A Note due March 25, 2013 (attached as Exhibit 1 to the Note Purchase Agreement Incorporated by reference as Exhibit 4.4 hereto)	The Company’s Current Report on Form 8-K filed on April 1, 2008	0-24260	4.2
4.4	Form of Series B Note due March 25, 2014 (attached as Exhibit 2 to the Note Purchase Agreement Incorporated by reference as Exhibit 4.4 hereto)	The Company’s Current Report on Form 8-K filed on April 1, 2008	0-24260	4.3
4.5	Form of Series C Note due March 25, 2015 (attached as Exhibit 3 to the Note Purchase Agreement Incorporated by reference as Exhibit 4.4 hereto)	The Company’s Current Report on Form 8-K filed on April 1, 2008	0-24260	4.4
†10.1*	Amended and Restated Amedisys, Inc. Employee Stock Purchase Plan effective as of April 1, 2011
†31.1	Certification of William F. Borne, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
†31.2	Certification of Dale E. Redman, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
††32.1	Certification of William F. Borne, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

26

Exhibit Number	Document Description	Report or Registration Statement	SEC File or Registration Number	Exhibit or Other Reference
††32.2	Certification of Dale E. Redman, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
††101.INS	XBRL Instance
††101.SCH	XBRL Taxonomy Extension Schema Document
††101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
††101.DEF	XBRL Taxonomy Definition Linkbase Document
††101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
††101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

27

EX-10.1

Exhibit 10.1

AMEDISYS, INC.

AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN

(Effective as of April 1, 2011)

The following constitute the provisions of the Amended and Restated Employee Stock Purchase Plan of Amedisys, Inc.

1. Purpose. The purpose of the Amedisys, Inc. Amended and Restated Stock Purchase Plan (the “Plan”) is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company. It is the intention of the Company to have the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.

2. Definitions.

a) “Board” shall mean the Board of Directors of the Company.

b) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

c) “Closing Market Price” shall mean the closing price of the Common Stock for such date (or, in the event that the Common Stock is not traded on such date, on the immediately preceding trading date on which there was a closing price), as reported by the Nasdaq Global Market or, if such price is not reported, the mean of the bid and asked prices per share of the Common Stock as reported by Nasdaq or, in the event the Common Stock is listed on a stock exchange, the closing price on such exchange on such date (or, in the event that the Common Stock is not traded on such date, on the immediately preceding trading date), as reported in the Wall Street Journal, or in the event that the Common Stock shall no longer be publicly traded or quoted (whether or not on an exchange) as of the particular date, such price as is determined by the Committee in such a method as it deems appropriate.

d) “Committee” shall mean the Compensation Committee of the Board.

e) “Common Stock” shall mean the $0.001 par value common stock of the Company.

f) “Company” shall mean Amedisys, Inc., a Delaware corporation.

g) “Compensation” shall mean all regular straight time gross earnings and commissions, and shall not include payments for overtime, shift premium incentive compensation, incentive payments, bonuses and other compensation.

1

h) “Continuous Status as an Employee” shall mean the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of a leave of absence agreed to in writing by the Company or required to be provided to an Employee by law, provided that such leave is for a period of not more than 90 days or re-employment upon the expiration of such leave is guaranteed by contract or statute.

i) “Contribution Account” shall mean the account established on behalf of a Participant to which shall be credited that Participant’s Contributions.

j) “Contributions” shall mean all amounts deducted from a Participant’s payroll pursuant to Section 5.

k) “Designated Subsidiaries” shall mean the Subsidiaries which have been designated by the Board from time to time in its sole discretion as eligible to participate in the Plan.

l) “Employee” shall mean any person employed by the Company or one of its Designated Subsidiaries, other than an individual who is not customarily employed for more than five (5) months in a calendar year.

m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

n) “Exercise Date” shall mean the last trading day of each Offering Period.

o) “Offering Date” shall mean the first trading day of each Offering Period.

p) “Offering Period” shall mean a period of three (3) months commencing on January 1, April 1, July 1 and October 1 of each year except as otherwise indicated by the Company.

q) “Participant” shall mean an eligible Employee who has elected to buy Shares pursuant to and in accordance with the Plan.

r) “Plan” shall have the meaning set forth in Section 1.

s) “Purchase Price” shall mean eighty-five percent (85%) of the Closing Market Price on the Exercise Date.

t) “Shares” shall mean shares of the Common Stock.

u) “Subsidiary” shall mean a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.

2

3. Eligibility.

a) Any person who is an Employee as of the first day of a given Offering Period may become a Participant, subject to the requirements of the Plan (including the limitations set forth in Section 5(a)) and the limitations imposed by Section 423(b) of the Code.

b) Any provisions of the Plan to the contrary notwithstanding, no Employee may become a Participant if, on or immediately after an Offering Date, such Employee (or any other person whose stock would be attributed to such an Employee pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary of the Company.

4. Participation.

a) A Participant must complete an enrollment form at least ten (10) days prior to the commencement of the applicable Offering Date, unless a later time for filing enrollment forms is set by the Committee for all eligible Employees with respect to a given offering.

b) Payroll deductions shall commence on the first payroll following the Offering Date and shall end on the last payroll paid prior to the Exercise Date of each Offering Period subject to each Participant’s right to terminate deductions as provided in Section 9.

5. Method and Amount of Payment of Contributions.

a) Each Participant’s enrollment form shall set forth the whole number percentage of the Participant’s Compensation (which shall be not less than 1% and not more than 15%) to be deducted and paid as Contributions. In addition, no Participant: (i) during any calendar year, may purchase Shares (under the Plan and all other employee stock purchase plans (described in Section 423 of the Code) that may be established by the Company and its Subsidiaries) having a fair market value (determined as of each Offering Date) of more than Twenty-Five Thousand Dollars ($25,000); or (ii) during any Offering Period, may purchase more than 5,000 Shares.

b) All payroll deductions made by a Participant shall be credited to his or her Contribution Account. A Participant may not make any additional payments into such Contribution Account.

c) A Participant may elect once during an Offering Period to decrease the rate of Contributions for the remainder of the Offering Period by completing an election change form. A Participant’s decrease in the rate of Contributions shall be effective as soon as administratively practicable following receipt of Participant’s election change form.

3

d) A Participant may elect to discontinue Contributions to the Plan for the remainder of the Offering Period by completing an election cancellation form at least two (2) business days before an Exercise Date. Upon a Participant’s discontinuation of Contributions, such Participant’s option for the then current Offering Period will be automatically terminated, and the Participant’s Contribution Account automatically will be distributed to him or her as soon as practicable.

6. Grant of Option. On the Offering Date of each Offering Period, each Participant shall be granted an option to purchase on the Exercise Date a number of Shares determined by dividing the amount of the Participant’s Contribution Account on the Exercise Date by the Purchase Price.

7. Exercise of Option. Unless a Participant withdraws from the Plan as provided in Section 9, his or her option will be exercised automatically on the Exercise Date of the Offering Period, and the maximum number of whole and fractional Shares subject to the option will be purchased at the applicable Purchase Price with his or her Contribution Account. The Shares purchased upon exercise of an option hereunder shall be deemed to be transferred to the participant on the Exercise Date. During his or her lifetime, a Participant’s option to purchase Shares hereunder is exercisable only by him or her.

8. Delivery. As promptly as practicable after each Exercise Date, the Company shall arrange the delivery to each Participant, as appropriate, including but not limited to, direct deposit into a book entry account or brokerage account, the Shares purchased upon exercise of each Participant’s option. Shares to be delivered to a Participant will be registered in the name of the Participant or in the “Street Name” of a Company approved broker.

9. Voluntary Withdrawal; Termination of Employment.

a) A Participant may voluntarily withdraw all, but not less than all, amounts in his or her Contribution Account at any time that is at least two (2) business days before an Exercise Date by completing a Company approved notification, and payment will be made to the Participant as soon as practicable after receipt of his or her notice of withdrawal. Upon a Participant’s voluntary withdrawal of his or her Contribution Account, his or her option for the then current Offering Period will be automatically terminated, and no further Contributions for the purchase of Shares will be accepted during the Offering Period.

b) Upon termination of a Participant’s Continuous Status as an Employee prior to an Exercise Date for any reason, including retirement or death, all amounts in his or her Contribution Account will be returned to him or her or, in the case of his or her death, to the person or persons entitled thereto under Section 13, and his or her option for the then current Offering Period will be automatically terminated, and no further Contributions for the purchase of Shares will be accepted.

c) A Participant’s withdrawal from an offering will not have any effect upon his or her eligibility to participate in a succeeding Offering Period (if then eligible) or in any similar plan which may hereafter be adopted by the Company.

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10. Interest. No interest shall accrue on the Contributions of a Participant.

11. Stock.

a) The maximum number of Shares which shall be made available for sale under the Plan shall be 2,500,000 Shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 17. If the total number of Shares which would otherwise be subject to options granted pursuant to Section 6(a) on the Offering Date of an Offering Period exceeds the number of Shares then available under the Plan (after deduction of all Shares for which options have been exercised or are then outstanding), the Company shall make a pro rata allocation of the Shares remaining available for option grant in as uniform a manner as shall be practicable and as it shall determine to be equitable. In such event, the Company shall give written notice of such reduction of the number of Shares subject to the option to each Participant affected thereby and shall similarly reduce the rate of Contributions, if necessary.

b) Participants will have no interest or voting right in Shares covered by his or her option until such option has been exercised.

12. Administration. The Committee shall oversee and administer the Plan and shall have full power to adopt, amend and rescind any rules deemed desirable and appropriate for the administration of the Plan and not inconsistent with the Plan, to construe and interpret the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. Any interpretation, determination or other action made or taken by the Committee shall be final, binding and conclusive. No member of the Committee shall be liable for any action taken or omitted or determination made in good faith with respect to the Plan.

13. Designation of Beneficiary. In the event of the death of a Participant, the Company shall deliver any Shares purchased under the Plan (if death occurs after an Exercise Date) and cash, if any, from the Participant’s Contribution Account, to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Shares and/or cash to the spouse or to any one or more dependents of relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

14. Transferability. Neither Contributions credited to a Contribution Account nor any rights with regard to the exercise of an option or to receive Shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 13) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be void and without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Section 9.

15. Use of Funds. All Contributions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such Contributions.

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16. Reports. Individual accounts will be maintained for each Participant. Statements of account will be given to Participants promptly following each Exercise Date, which statements will set forth the amounts of Contributions, the Purchase Price, the number of Shares purchased and the remaining cash balance, if any.

17. Adjustments. Upon Changes in Capitalization; Corporate Transactions.

a) Adjustments. Subject to any required action by the shareholders of the Company, the number of Shares covered by each option under the Plan which has not yet been exercised and the number of Shares which have been authorized for issuance under the Plan but have not yet been placed under option (collectively, the “Reserves”), as well as the Purchase Price with respect to each option under the Plan which has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of outstanding Shares resulting from a stock spit, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number and Purchase Price of Shares subject to an option.

b) Corporate Transactions. In the event of the proposed dissolution or liquidation of the Company, the then current Offering Period will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each option under the Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Board determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, to shorten the Offering Period then in progress by setting a new Exercise Date (the “New Exercise Date”). If the Board shortens the Offering Period then in progress in lieu of assumption or substitution in the event of the merger or sale of assets, the Board shall notify each Participant in writing, at least ten (10) days prior to the New Exercise Date, that the Exercise Date for his or her option has been changed to the New Exercise Date and that this or her option will be exercised automatically on the New Exercise Date, unless prior to such date he or she has withdrawn from the Offering Period as provided in Section 9. For purposes of this paragraph, an option granted under the Plan shall be deemed to be assumed if, following the sale of assets or merger, the option confers the right to purchase, for each Share subject to the option immediately prior to the sale of assets or merger, the consideration (whether stock, cash or other securities or property) received in the sale of assets or merger by holders of Shares for each Share held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if such consideration received in the sale of assets or merger was not solely common stock of the successor

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corporation or its parent (as defined in Section 424(e) of the Code), the Board may, with the consent of the successor corporation and the Participant, provide for the consideration to be received upon exercise of the option to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Shares in the sale of assets or merger.

18. Amendment or Termination.

a) The Plan shall continue until terminated in accordance with this Section 18.

b) The Board or the stockholders of the Company may terminate or amend the Plan in any respect at any time, except that without the approval of the stockholders, the total number of Shares of that may be sold under the Plan may not be increased (except by adjustment pursuant to Section 17), the provisions of section 3 and 5 regarding eligibility may not be modified, the price at which shares may be purchased hereunder may not be reduced (except by adjustment pursuant to Section 17), and the provisions of this Section 18 may not be modified; provided, further, that no amendment may make any change in any option theretofore granted which adversely affects the rights of any Participant.

19. Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location or by the person, designated by the Company for the receipt thereof.

20. Conditions Upon Issuance of Shares.

a) Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such Shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may then be listed.

b) As a consideration to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.

c) Each Participant agrees, by entering the Plan, to promptly give the Company notice of any disposition of Shares purchased under the Plan where such disposition occurs within two (2) years after the Offering Date with respect to the Shares.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, William F. Borne, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, of Amedisys, Inc.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer(s) 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 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 the 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 control 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 control over financial reporting.

Date: April 26, 2011

/s/ William F. Borne

William F. Borne

Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Dale E. Redman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 of Amedisys, Inc.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer(s) 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 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 the 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 control 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 control over financial reporting.

Date: April 26, 2011

/s/ Dale E. Redman

Dale E. Redman

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED 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 quarter ended March 31, 2011 (the “Report”), I, William F. Borne, Chairman and Chief Executive Officer of the Company, hereby certify to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 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 results of operations of the Company.

Date: April 26, 2011

/s/ William F. Borne

William F. Borne

Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED 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 quarter ended March 31, 2011 (the “Report”), I, Dale E. Redman, Chief Financial Officer of the Company, hereby certify to my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 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 results of operations of the Company.

Date: April 26, 2011

/s/ Dale E. Redman

Dale E. Redman

Chief Financial Officer