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Greenberg: Buyback Announcement May Not Cure Amedisys

Just because a company loses more than half its value, as has been the case with Amedisys in recent months, doesn't mean it can't go lower.

But don't tell that to Amedisys , the leading provider of home health and hospice care.

The company's stock has been pummeled in the wake several Medicare-related government investigations, including one into Amedisys and several others by the SEC.

Enter today: Amedisys announced disappointing results and lowered guidance. The company hasn't reported a down quarter since the fourth quarter of 2005. But its stock was up on the news on impressive volume.

Why?

The best explanation: Amedisys did what many companies do when they're under fire: It announced a stock buyback. In this case it announced it was buying back $60 million worth of shares. In an earnings call, the company said that it believes that despite its earnings slide, it has strong enough cash flow to do a buyback.

That rankled CRT Capital analyst Sheryl Skolnick—a longtime critic of the company, who rates Amedisys as a sell with a $20 target.

In a note to her clients, she said: "Amedisys faces unknown and unknowable liabilities and has $40 million of its $200 million in debt due in 12 months." It's also in the midst of a restructuring, which in her mind is reason to preserve cash, not spend it.

Furthermore, she told me, "The company hasn't yet figured out that it is no longer a growth story. It's in survival mode and it doesn't even know it yet."

I asked the company about her comment; it didn't respond (but did respond to another question unrelated to her comment.)

My take: Let's see if they really buy back any shares. Announcing buybacks is one thing; doing them, another.

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(CORRECTION: An earlier version of this story said Amedisys was buying back 60 million shares instead of $60 million worth of shares.)