HealthSouth Corp (HLS), Kindred Healthcare, Inc. (KND): The Real Healthcare Killer

Page 2 of 2
Pain and gain
AMN Healthcare Services, Inc. (NYSE:AHS) stands to gain the most from the industry’s collective pain. This company provides highly skilled medical staffing services for businesses like Kindred Healthcare, Inc. (NYSE:KND) and HealthSouth.
Much of AMN Healthcare Services, Inc. (NYSE:AHS)’s business is based on temporary or long-term temporary placement of nurses, which should see a boost at some point. Many nurses are temporary or part-time workers, a lot of stay at home parents pick up shifts in this field. So when the recession hit, an influx of nurses who had been “on the sidelines” came back to work. That trend was actually pretty consistent in most areas of health care that offer flexible schedules such as nursing, pharmacy, and therapy. The jobs all became much more scarce when the temps came off the sidelines.
Now many of those nurses and pharmacists are cutting back on their shifts at a time when other factors are causing demand to increase anyway. That’s good news for AMN Healthcare Services, Inc. (NYSE:AHS) and its army of skilled healthcare workers. I believe that this demand should help AMN Healthcare Services, Inc. (NYSE:AHS) charge higher margins to hospitals and rehab facilities in the coming years.
The stock has been on a tremendous run, tripling just this year. But at 34 times earnings, it’s probably too hot to buy today. Remember that this is a long-term trend, supposedly going through 2020. AMN Healthcare Services, Inc. (NYSE:AHS) is a wonderful business with great long-term growth potential. I recommend putting it on your “short-list” for a pull-back–I know it’s on mine!
Investing from the outside
So there you have it Foolish Investor, this little labor report has enough in it to change the face of healthcare. Isn’t that amazing?
To me it’s just a clear reminder that sometimes what happens to a company matters more than what happens inside of it. You should be aware of all the outside factors that can impact the stocks that you own. If you own stocks in a “people business,” like healthcare, labor reports are a great place to start.

Adem Tahiri has no position in any stocks mentioned. The Motley Fool owns shares of AMN Healthcare Services (NYSE:AHS). Adem is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article The Real Healthcare Killer originally appeared on is written by Adem Tahiri.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2