896262--2/17/2009--AMEDISYS

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Risks Related to Our Business Because our revenue is substantially derived from Medicare, reductions in Medicare rates, rate increases that do not cover cost increases and/or significant changes to the Medicare payment methodology could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows. Because we are limited in our ability to control rates received for our services, our business and consolidated financial condition, results of operations and cash flows could be materially adversely affected if Medicare or any of our other payors reduce the amounts that are paid for our services and/or we are not able to maintain or improve upon our costs to provide such services. Our growth strategy depends on our ability to open agencies, acquire additional agencies on favorable terms and integrate and operate these agencies effectively. If our growth strategy is unsuccessful or we are not able to successfully integrate newly acquired or opened agencies into our existing operations, our business and consolidated financial condition, results of operations and cash flows could be materially adversely affected. We are subject to extensive government regulation. Any changes to the laws and regulations governing our business, or to the interpretation and enforcement of those laws or regulations, could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows. If an agency fails to comply with the conditions of participation in the Medicare program, that agency could be terminated from the Medicare program. Our industry is highly competitive, with few barriers to entry. Possible changes in the case mix of patients, as well as payor mix and payment methodologies, could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows. Our estimated revenue adjustments may not be adequate to adjust our Medicare net service revenue and associated patient accounts receivable to their net realizable amounts. Our allowance for doubtful accounts may not be sufficient to cover uncollectible amounts. A write off of a significant amount of intangible assets or long-lived assets could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows. If we are unable to maintain relationships with existing patient referral sources or to establish new referral sources, our business and consolidated financial condition, results of operations and cash flows could be materially adversely affected. A shortage of qualified registered nursing staff and other caregivers, such as therapists, could materially impact our ability to attract, train and retain qualified personnel and could increase operating costs. We are subject to Federal and state laws that govern our financial relationships with physicians and other health care providers, including potential or current referral sources; certain agencies acquired by us from Home Health Corporation of America ( HHCA ) are operating under a Corporate Integrity Agreement ( CIA ). The economic downturn, or any deepening of the economic downturn, and continued deficit spending by the Federal government and state budget pressures may result in a reduction in payments and covered services. Future cost containment initiatives undertaken by private third-party payors may limit our future revenue and profitability. Our hospice operations are subject to two annual Medicare caps calculated by Medicare. If such caps were to be exceeded by any of our hospice providers, our business and consolidated financial condition, results of operations and cash flows could be materially adversely affected. Start-up agencies can be delayed from opening in a timely manner due to processing of regulatory approvals. The volatility and disruption of the capital and credit markets and adverse changes in the United States and global economies could impact our ability to access both available and affordable financing, and without such financing, we may be unable to achieve our objectives for strategic acquisitions and internal growth. Our indebtedness could impact our financial condition and impair our ability to fulfill other obligations. The agreements governing our indebtedness contain various covenants that limit our discretion in the operation of our business and our failure to satisfy requirements in these agreements could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows. Our operations could be impacted by natural disasters or terrorist acts. Our business depends on our information systems. Our inability to effectively integrate, manage and keep our information systems secure and operational could disrupt our operations. Failure of, or problems with, our clinical software system could have a material adverse effect on our business and consolidated financial condition, results of operations and cash flows. Delays in payment may cause liquidity problems. State efforts to regulate the establishment or expansion of health care providers could impair our ability to expand our operations. Our insurance liability coverage may not be sufficient for our business needs. We may be subject to substantial malpractice or other similar claims. We depend on the services of our executive officers and other key employees. Risks Related to Ownership of Our Common Stock The price of our common stock may be volatile. Sales of substantial amounts of our common stock or preferred stock, or the availability of those shares for future sale, could materially impact our stock price and limit our ability to raise capital. Our board of directors may use anti-takeover provisions or issue stock to discourage a change of control.

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896262--2/17/2009--AMEDISYS_INC