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Having recently written about the significant headwinds pushing against Amedisys (AMED), I now turn to its smaller but more profitable rival LHC Group (LHCG). Like Amedisys, LHC Group is looking at an operating environment dominated by further cuts in Medicare reimbursement. Unlike Amedisys, though, I believe LHC Group may be able to leverage its strong network of hospital joint ventures and benefit from its exposure to rural locations and growing hospice revenue to offset this pressure.

Make no mistake, the next few years will not be easy ones for LHC Group. Although I believe that LHCG is likely to do better than most in terms of admissions and margins, the next couple of...

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