Amedisys Inc. AMED reported adjusted earnings from continuing operations of 33 cents per share in the first quarter of 2016. Although the bottom line reflected a 10% improvement from the year-ago number, it lagged the Zacks Consensus Estimate by a penny.Solid year-over-year sales growth was primarily responsible for the increase in earnings in the quarter.Barring any adjustment, the company's reported earnings of 19 cents a share, a significant improvement from the year-earlier quarter net loss of $1.07. Amedisys Inc. - Earnings Surprise | FindTheCompany The Quarter in DetailAmedisys primarily derives revenues from its home health and hospice agencies. First-quarter 2016 net service revenues grossed $348.8 million, up 15.6% year over year. The top line also exceeded the Zacks Consensus Estimate of $340 million.Within the company's Home Health division, net service revenues totaled $272.7 million (up 12.9%) in the first quarter. Medicare revenues of $206.8 million improved 10.4% year over year while non-Medicare revenues climbed 21.8% to $65.9 million.Within the Hospice division, net service revenues grossed $73 million (up 21.2% year over year), including Medicare revenues of $68.7 million (up 21.6%) and non-Medicare revenues of $4.3 million (up 16.2%).The company reported a 117 basis point (bps) contraction in gross margin to 42.1% in the first quarter on an 18.1% rise in cost of service revenues. Expense on salaries and benefits scaled up 11.9% to $76.7 million. Other expenses also increased a huge 41.3% to $46.7 million. Amedisys posted adjusted operating income of $70.2 million in the reported quarter, reflecting a 13.2% year-over-year improvement. However, adjusted operating margin contracted 43 bps in the reported quarter.Amedisys exited the first quarter of 2016 with cash and cash equivalents of $7.8 million compared with $27.5 million in 2015. The company's long-term obligations (excluding current portion) were $90.5 million, down from $91.6 million at the end of 2015. Net operating cash flow was $12.2 million in the quarter compared to $14.4 million in the year-ago period.Our TakeAmedisys ended the first quarter of 2016 on a mixed note with earnings missing the Zacks Consensus Estimate and revenues surpassing the same. In Home Health, the company continued to generate strong organic growth in Medicare and non-Medicare revenues. Amedisys currently focuses on three priorities – clinical distinction, driving organic and inorganic growth, realizing operational efficiencies and becoming an employer of choice.In this regard, we note that Amedisys’ relative performance versus the rest of the industry remained strong in the first quarter. The company’s strong cash balance position further bolsters our confidence in the stock.Zacks RankCurrently, Amedisys has a Zacks Rank #3 (Hold). Some well-ranked stocks in the medical sector are Almost Family Inc. AFAM, HEALTHSOUTH Corp. HLS and Boston Scientific Corporation BSX. All the three stocks hold a Zacks Rank #2 (Buy).Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BOSTON SCIENTIF (BSX): Free Stock Analysis Report AMEDISYS INC (AMED): Free Stock Analysis Report HEALTHSOUTH CP (HLS): Free Stock Analysis Report ALMOST FAMILY (AFAM): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research