AMEDISYS INC, S-1, 1998-11-02

AMEDISYS INC
S-1, 1998-11-02
HOME HEALTH CARE SERVICES

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As filed with the Securities and Exchange Commission on November 2, 1998
Registration No. 333-____

====================================================================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________________________________
FORM S-1
Registration Statement
Under the Securities Act of 1933
______________________________
AMEDISYS, INC.

(Exact name of Registrant as specified in its charter)

<S> <C> <C>
DELAWARE 8082 11-3131700
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification Number)
organization) Code Number)

3029 S. SHERWOOD FOREST BLVD. WILLIAM F. BORNE,
SUITE 300 CHIEF EXECUTIVE OFFICER
BATON ROUGE, LOUISIANA 70816 AMEDISYS, INC.
(504)292-2031 3029 S. SHERWOOD FOREST BLVD.
(Address, including zip code, and SUITE 300
telephone number, including BATON ROUGE, LOUISIANA 70816
area code, of registrant's (504)292-2031
principal executive offices) (Name, address, including zip code,
and telephone number, including
area code, of agent for service)
Copy To:
THOMAS C. PRITCHARD
BREWER & PRITCHARD, P.C.
1111 BAGBY, SUITE 2450
HOUSTON, TEXAS 77002
PHONE (713) 209-2950
____________________________

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this registration statement
becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933. [_]

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration statement number of earlier effective registration statement for the same
offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and
list the Securities Act number of the earlier effective registration statement for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective registration statement for the same offering. [_]

If the delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]

CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF AMOUNT PROPOSED PROPOSED
SECURITIES TO BE BEING MAXIMUM MAXIMUM AMOUNT OF
REGISTERED REGISTERED/(1)/ OFFERING PRICE AGGREGATE REGISTRATION FEE
---------- --------------- -------------- ---------- ----------------
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Resale of Shares Underlying Preferred Stock 1,678,855 $1.75 $2,937,996 $817

Resale of Shares Underlying Warrants 117,520 $1.75 $ 205,660 $ 57

TOTAL 1,796,375 $1.75 $3,143,656 $874
====================================================================================================================================

_______________

(1) Pursuant to Rule 416(a), this registration statement also covers an indeterminate number of shares of common stock issuable
pursuant to adjustment provisions of the preferred stock designation and the warrant agreement.
(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c), based on the average of the high
and low sale prices for the common stock, as reported by the OTC Bulletin Board on October 30, 1998, or $1.75 per share.

____________________________

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER
BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SEC, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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AMEDISYS, INC.

Cross-Reference Sheet
Pursuant to Rule 404(a) of Regulation C and Item 501(b)
of Regulation S-K under the Securities Act of 1933

S-1 Item Number and Caption Heading In Prospectus
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1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus................................ Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus................. Inside Front and Outside Back Cover Pages
of Prospectus
3. Summary Information, Risk
Factors and Ratio of Earnings
to Fixed Charges.......................... Prospectus Summary; Risk Factors
4. Use of Proceeds........................... *
5. Determination of Offering Price........... *
6. Dilution.................................. *
7. Selling Security Holders.................. Plan of Distribution and Selling
Stockholders
8. Plan of Distribution...................... Outside Front Cover of Prospectus; Plan of
Distribution and Selling Stockholders
9. Description of Securities to be
Registered................................ Price Range of Common Stock and
Dividend Policy; Description of Securities
10. Interests of Named Experts and
Counsel................................... *
11. Information with Respect to
the Registrant............................ Business; Management; Description of
Securities; Principal Stockholders; Price
Range of Common Stock and Dividend
Policy; Selected Financial Data;
Capitalization; Management's Discussion
and Analysis of Financial Condition and
Results of Operation
12. Disclosure of Commission
Position on Indemnification
for Securities Act Liabilities............ *
_______________________
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(*) Not applicable.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
WE ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
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AMEDISYS, INC.

RESALE OF 1,796,375 SHARES OF COMMON STOCK

================================================================================

This prospectus relates to the resale of 1,796,375 shares of common stock, of
Amedisys, Inc., a Delaware corporation, which shall be offered for sale from
time to time by certain stockholders of the company. These shares relate to the
company's private placement of its series A convertible preferred stock. The
750,000 shares of preferred stock sold in the private placement are currently
convertible into 1,678,855 shares of common stock. In addition, the placement
agent in the private placement received warrants to purchase 52,500 shares of
preferred stock which are currently convertible into 117,520 shares of common
stock. Upon issuance, the 1,796,375 shares of common stock underlying the
preferred stock will represent 36% of the company's outstanding common stock.

================================================================================

The shares of common stock are quoted on the OTC Bulletin Board under
the symbol AMED. On October 30, 1998, the last reported sales price of the
common stock was $1.75 per share.
______________________________

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. SEE "RISKS FACTORS" ON
PAGE 9.
______________________________

NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.

WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ABOUT THE COMPANY THAT DIFFERS FROM, OR ADDS TO, THE INFORMATION
IN THIS PROSPECTUS OR IN OUR DOCUMENTS THAT ARE FILED WITH THE SEC.
ACCORDINGLY, IF ANYONE DOES GIVE YOU DIFFERENT OR ADDITIONAL INFORMATION YOU
SHOULD NOT RELY ON IT.

IF YOU ARE IN A JURISDICTION WHERE IT IS UNLAWFUL TO BUY THE SECURITIES
OFFERED BY THIS PROSPECTUS, OR IF YOU ARE A PERSON TO WHOM IT IS UNLAWFUL TO
DIRECT SUCH ACTIVITIES, THEN THE OFFER PRESENTED BY THE PROSPECTUS DOES NOT
EXTEND TO YOU.

THE INFORMATION IN THIS PROSPECTUS SPEAKS ONLY AS OF ITS DATE, UNLESS THE
INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.
___________________

The date of this prospectus is November 2, 1998
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TABLE OF CONTENTS
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PAGE
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Prospectus Summary............................................................... 2
The Company...................................................................... 2
Risk Factors..................................................................... 9
Disclosure Regarding Forward Looking Statements............................. 9
Continuing Operating Losses................................................. 9
Capital Requirements; Limited Sources of Liquidity; Need for Additional
Capital; Continuing Default on Lines of Credit......................... 9
Increased Working Capital Needs and Risks of Collection Relating to
Fee-for-Service Reimbursement Programs................................. 10
Classification of Physicians and Nurses as Independent Contractors;
Potential State and Federal Tax Liability.............................. 11
Risks Related to the Company's Acquisition Strategy......................... 11
Risks Related to Acquisition Financing...................................... 11
Dependence on Management.................................................... 12
Corporate Exposure to Professional Liabilities.............................. 12
Possible Insufficiency of Liability Coverage................................ 12
Potential Restructuring of Healthcare Delivery System
through Healthcare Reform Proposals.................................... 12
Risks Related to Long-Lived Assets.......................................... 12
Changes in Health Care Regulations and Technology........................... 13
Reimbursement by Third Party Payors......................................... 13
Competition................................................................. 13
Relationship with Other Organizations....................................... 13
Federal and State Regulation................................................ 13
Dividends Not Likely........................................................ 13
Future Sales of Common Stock................................................ 13
Possible Adverse Effect of Future Issuances of Preferred Stock.............. 14
Status of Persons Reselling Common Stock.................................... 14
Penny Stock Regulation...................................................... 14
Ratio of Earnings to Fixed Charges............................................... 14
Use of Proceeds.................................................................. 14
Determination of Offering Price.................................................. 15
Dilution......................................................................... 15
Selling Stockholders............................................................. 15
Plan of Distribution............................................................. 16
Description of Securities to be Registered....................................... 16
Interest of Named Experts and Counsel............................................ 17
Information with Respect to the Registrant....................................... 17

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SUMMARY INFORMATION, RISK FACTORS AND RATIO OF EARNINGS TO FIXED
CHARGES

PROSPECTUS SUMMARY

This summary highlights some information in this prospectus.

THE COMPANY

GENERAL

Amedisys, Inc., a Delaware corporation, is a fully integrated provider of
outpatient health services and operates in two basic industry segments:
alternate-site provider services and management services operations. The
company's alternate-site provider segment includes the following services:
alternate-site infusion therapy, ambulatory surgery centers and home health
care. Its management services operations encompasses home health care
management. The company operates 37 offices within a network of wholly owned
subsidiaries in the South and Southeastern United States.

The company operates through the following subsidiaries:

(1) its wholly-owned subsidiaries Amedisys Specialized Medical Services,
Inc., Amedisys Surgery Centers, L.C.; Alliance Home Health, Inc., Amedisys
Management Services Organization, Inc.; Amedisys Alternate-Site Infusion
Therapy Services, Inc., Amedisys Durable Medical Equipment, Inc.;

(2) its 60%-owned subsidiary Amedisys Physician Services, Inc.; and

(3) the wholly-owned and partially-owned subsidiaries of Amedisys
Specialized Medical Services, Inc., Amedisys Surgery Centers, L.C. and Amedisys
Alternate-Site Infusion Therapy Services, Inc., being MedAmerica, Inc. of Texas
and MedAmerica, Inc., each an 80%-owned subsidiary of Amedisys Specialized
Medical Services, Inc., Quality Home Health Care, Inc., Amedisys Home Health
Inc. of Texas and Home Health of Alexandria, Inc., each wholly-owned
subsidiaries of Amedisys Specialized Medical Services, Inc., Hammond Surgical
Care Center, L.C., a 56% owned subsidiary of Amedisys Surgery Centers, L.C. and
Infusion Care Solutions, Inc. and PRN, Inc., each wholly-owned subsidiaries of
Amedisys Alternate-Site Infusion Therapy Services, Inc.

References to the company include references to its subsidiaries. The
company's principal executive offices are located at 3029 South Sherwood Forest
Boulevard, Third Floor, Baton Rouge, Louisiana 70816, and its telephone number
is (504) 292-2031.

RECENT DEVELOPMENTS

Letter of Intent

On June 2, 1998, the Company signed a non-binding letter of intent to
purchase a portion of Columbia/HCA homecare operations subject to satisfactory
completion of due diligence and approval by the Board of Directors of both
companies. The homecare operations covered by the letter of intent are located
in the states of Alabama, Georgia, Louisiana, North Carolina, Oklahoma, and
Tennessee and may include up to 116 offices and 50 Medicare provider numbers.
The Company is currently conducting due diligence and negotiating with
investment banks to obtain financing for the purchase of these operations.

Acquisitions

In August 1997, the company acquired substantially all of the assets of
Allgood Medical Services, Inc. d/b/a Care Medical and Mobility Equipment
Company, a home medical equipment company, for $1,165,000. The purchase price
consisted of $465,000 in cash, a two year $100,000 note bearing interest at a
rate of 8% per annum, and 115,518 shares of company common stock having a value
of $600,000. This transaction has been accounted for as a purchase and the
excess of the total acquisition cost over the fair value of net assets acquired
(goodwill) of $852,000 is being amortized over 20 years using the straight-line
method. Subsequent to this purchase, certain reimbursement reductions were
announced to implement the Balanced Budget Act of 1997. Based on management's
estimate of the expected impact of these changes in reimbursement on future cash
flows, this goodwill was fully written off as other general and administrative
expenses at December 31, 1997 as required under SFAS No. 121.

On January 1, 1998, the company acquired all of the stock of Alliance Home
Health, Inc., a home health care business with locations throughout Oklahoma, in
exchange for $300,000 and 194,286 shares of common stock. The amount of
consideration was negotiated through an arm's length transaction. Of the
194,286 shares of company common stock issued to the former owners of Alliance
Home Health, Inc., 122,857 shares were placed in escrow as

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consideration for certain contingent liabilities which may be asserted against
the former stockholder of Alliance Home Health, Inc. to the extent such claims
exceed $500,000 (singularly and/or in aggregate). The contingent liabilities
include any material misstatement or omission in any representation or breach of
any warranty, covenant or agreement of Alliance Home Health, Inc. or its
stockholder, any Medicare liabilities, any liability from lawsuits or
arbitration, any payment to be made by Alliance Home Health, Inc. pursuant to a
previous acquisition, or any liability addressed in the purchase document. The
escrow period expires December 31, 2003. The majority stockholder of Alliance
Home Health, Inc. entered into a three year employment agreement and two year
non-compete and non-solicitation agreement with the company. The employment
agreement is for the position of vice president with duties incident to such
positions with the company. The non-compete and non-solicitation agreement is
for a period of two years after the termination of the employment agreement. The
non-compete and non-solicitation agreement provides that the employee will not
divert any business from the company or compete in the business area defined as
the State of Oklahoma. This restricted activity is in relation to home health
agencies or infusion-related business. Additionally, the non-compete and non-
solicitation agreement provides that the employee will not solicit employees or
clients from the company. This employee resigned in March 1998. The company does
not expect any material ramifications as a result of this action. The
acquisition of Alliance Home Health, Inc. was deemed "significant." Accordingly,
separate historical and pro forma financial statements were filed with the SEC
in a Current Report on Form 8-K, July 23, 1998.

In February 1998, the company acquired all of the issued and outstanding
capital stock of PRN, Inc., a home infusion pharmacy business located in San
Antonio, Texas, in exchange for $430,000 and the assumption of $71,000 in debt.
The company has agreed to pay additional consideration of up to $150,000 upon
PRN, Inc. reaching certain revenue goals. This additional consideration is to be
paid quarterly, bearing interest at 9% in proportion to target net revenue of
$625,000 annually. The assets of PRN, Inc. at fiscal year end, June 30, 1997,
were $219,526. Net revenues for the same period were $560,695 with pre-tax
income of $15,783. The company has retained the right to offset certain
indemnifiable liabilities against the additional consideration. The two majority
stockholders of PRN, Inc. entered into two year non-competition and non-
solicitation agreements with the company. The acquisition of PRN, Inc. was not
deemed to be "significant." Accordingly, the financial statements of PRN, Inc.
will be consolidated with the company's financial statements and separate
financial statements in a Current Report on Form 8-K will not be filed with the
SEC.

In February 1998, the company acquired all of the issued and outstanding
capital stock of Infusion Care Solutions, Inc., a home health care and infusion
business, based in Baton Rouge, Louisiana, in exchange for aggregate
consideration of $500,000, of which $375,000 was payable in cash at closing and
$125,000 was payable pursuant to a two year promissory note bearing interest at
a rate of prime plus 1% per annum. Infusion Care Solutions, Inc. had assets of
$251,996 at fiscal year end, December 31, 1997. Net revenues were $352,788 and
pre-tax income was $13,848 for the same period. The company has retained the
right to offset certain indemnifiable liabilities against the sums payable
pursuant to the promissory note. The majority stockholder of Infusion Care
Solutions, Inc. entered into a two year non-competition and non-solicitation
agreement with the company. The acquisition of Infusion Care Solutions, Inc.
was not deemed to be "significant." Accordingly, the financial statements of
Infusion Care Solutions, Inc. will be consolidated with the company's financial
statements and separate financial statements in a Current Report on Form 8-K
will not be filed with the SEC.

In February 1998, the company acquired substantially all of the assets of
Precision Health Systems, L.L.C., a home health care and infusion business,
based in Baton Rouge, Louisiana, in exchange for aggregate consideration of
$1,000,000, of which $750,000 was payable in cash at closing and $250,000 is
payable pursuant to a two year promissory note bearing interest at a rate of
9.5% per annum. The company has retained the right to offset certain
indemnifiable liabilities against the sums payable pursuant to the promissory
note. The majority stockholder of Precision Health Systems, L.L.C. entered into
a two year non-competition and non-solicitation agreement and a two year
consulting agreement with the company. The consulting agreement is in the
amount of $50,000 per year, payable in monthly increments. The majority
stockholder is to assist the company in developing referral sources and
retaining current referral sources. At fiscal year end, December 31, 1997,
assets were $383,340, net revenues were $1,120,839, and pretax income was
$121,249. The acquisition of Precision Health Systems, L.L.C. was not deemed to
be "significant." Accordingly, the financial statements of Precision Health
Systems, L.L.C. will be consolidated with the company's financial statements and
separate financial statements in a Current Report on Form 8-K will not be filed
with the SEC.

In April 1998, the company acquired all of the stock of Quality Home Health
Care, Inc., of Stilwell, Oklahoma. In exchange, the company paid $80,000 and
issued 4,897 shares of company common stock worth

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$20,000. A key employee and former stockholder executed an employment agreement
for two years in conjunction with a non-compete and non-solicitation agreement
for a period of two years after employment with the company is terminated. The
non-compete and non-solicitation agreement provides that the key employee will
not divert any business from the company or compete with the company; as well as
not solicit any employees or clients of the company. The business area covered
by the non-compete and non-solicitation agreement is for the Counties of Adair,
Cherokee, Delaware, Haskell, Leflore, Mayes, McIntosh, Muskogee, Sequoyah and
Wagoner in the State of Oklahoma and is relative to home health agencies.
Quality Home Health Care, Inc. is a state licensed, Medicare certified home
health agency with three locations serving eastern Oklahoma. The acquisition of
Quality Home Health Care, Inc. was not deemed to be "significant." Accordingly,
the financial statements of Quality Home Health Care, Inc. will be consolidated
with the company's financial statements and separate financial statements in a
Current Report on Form 8-K will not be filed with the SEC.

Each of the above transactions was accounted for as a purchase.

Private Placement of Preferred Stock

In March 1998, the company completed a private placement of 750,000 shares
of series A preferred stock to accredited investors at a purchase price of
$10.00 per share in reliance upon an exemption from registration under the
Securities Act. In December 1997, the board of directors established a series
of shares setting forth the preferences, rights, and limitations and authorizing
the issuance of up to 1,000,000 shares of series A preferred stock. The face
value of the series A preferred stock is $10 per share. The series A preferred
stock is convertible, at any time at the holder's option, initially into a
number of shares of common stock equal to the face value divided by 88% (the
conversion factor) of the average closing sales price of the common stock for
the 15 trading days immediately prior to the initial closing date which was
$5.2556818. Beginning June 1, 1998, the conversion factor decreases by .5% on
the first day of each month that any of the shares underlying the preferred
stock continue not to be publicly tradeable pursuant to an effective
registration statement under the Securities Act. To date, the conversion factor
is 85% resulting in a conversion rate of $2.2384737. The series A preferred
stock will automatically convert to shares of common stock if the average sales
price for the common stock exceeds $7.09 for fifteen consecutive trading days.
The series A preferred stock is not redeemable by the company. The holders of
the series A preferred stock will be entitled to receive dividends, if and when
they are declared by the board of directors. The liquidation preference of the
series A preferred stock is the face value, subject to adjustment. The series
A preferred stock is senior to all outstanding classes and series of the
company's capital stock. Each holder of shares of series A preferred stock is
entitled to one vote for each share of common stock underlying the series A
preferred stock. Net proceeds from the private placement were used to fund the
company's acquisition program.

Stock Purchase by Officers and Directors

In July 1998, the company announced that 500,000 shares of its
common stock would be purchased by certain of its officers and directors. To
date, this transaction has not been consummated.

Disposition

Effective September 21, 1998, the company sold certain assets, subject to
the assumption of certain liabilities, of its wholly-owned subsidiaries of
Amedisys Staffing Services, Inc., Amedisys Nursing Services, Inc. and Amedisys
Home Health, Inc. to Nursefinders, Inc. The company had no relationship with
Nursefinders, Inc. prior to this transaction. The purchase price of $7,200,000
was calculated using a multiple of earnings before interest, taxes, depreciation
and amortization. At closing, $6,480,000 was payable immediately with the
balance of $720,000 placed in an escrow account. The escrow funds are to be
held for an initial ninety (90) day period. The funds will be released at the
end of the period conditional upon a percentage of purchased accounts receivable
collected, independent audit of net income from operations, and the absence of
undisclosed liabilities. The escrow period may be extended an additional ninety
(90) days if collections on purchased accounts receivable don't equal at least
90% of total purchased accounts receivable. The assets being sold consist
primarily of all accounts and notes receivable; prepaid expenses; advances and
deposits; on-site hardware and software; furniture, fixtures and leasehold
improvements; office supplies; records and files; transferable government
licenses, permits and authorizations; and rights in, to and under specified
licenses, contracts, leases, and agreements. The liabilities being assumed are
the trade accounts payable, accrued expenses, and other liabilities as of the
closing date. The company has agreed to a

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five-year non-competition covenant. This covenant precludes the company from
directly engaging, or assisting other to engage, in supplemental staffing and/or
out of residence private duty staffing within a fifty mile radius of any
location included in the agreement. Additionally, the non-competition covenant
provides that Amedisys will not encourage any employees, customers, vendors or
agents to terminate or alter their relationship with Nursefinders, Inc. and its
respective subsidiaries or affiliates. The following presents consolidated pro
forma financial information regarding the sale.

The pro forma condensed consolidated balance sheet has been prepared by
applying certain pro forma adjustments to historical financial information,
assuming the Staffing Division sale occurred on June 30, 1998. The pro forma
condensed consolidated statement of operations for the year ended December 31,
1997 and the six-month period ended June 30, 1998 has been prepared based upon
certain pro forma adjustments to historical financial information, assuming the
Staffing Division sale occurred on January 1, 1997.

The pro forma data is not necessarily indicative of the operating results
or financial position that would have occurred had the transaction described
above been consummated at the dates indicated, nor necessarily indicative of
future operating results or financial position.

Basic net income (loss) per share of common stock is calculated by dividing
net income (loss) applicable to common stock by the weighted average number of
common shares outstanding during the year. Diluted net income (loss) per share
is not presented because stock options and convertible securities outstanding
during the periods presented were not dilutive.

AMEDISYS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(IN 000'S, EXCEPT PER SHARE AMOUNTS)
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HISTORICAL EFFECT OF SALE/(1)/ PRO FORMA
----------- -------------------- ----------
ASSETS
Current Assets:
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Cash $ 471 $ 5,075 $ 5,546
Accounts Receivable, Net of Allowance for Doubtful 4,292 (1,946) 2,346
Accounts
Prepaid Expenses 891 (28) 863
Other Current Assets 4,004 586 4,590
------- ------- -------
Total Current Assets 9,658 3,687 13,345
Notes Receivable from Related Parties 224 0 224
Property, Plant and Equipment, Net 6,056 (71) 5,985
Other Assets, Net 12,374 (46) 12,328
------- ------- -------
Total Assets $28,312 $ 3,570 $31,882
======= ======= =======
LIABILITIES
Current Liabilities:
Notes Payable $ 6,090 $(1,405) $ 4,685
Current Portion of Long-Term Debt 927 (45) 882
Accounts Payable 2,486 (346) 2,140
Accrued Expenses:
Payroll and Payroll Taxes 1,541 (145) 1,396
</TABLE>

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<TABLE>
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HISTORICAL EFFECT OF SALE/(1)/ PRO FORMA
----------- -------------------- ----------
<S> <C> <C> <C>
Insurance 1,020 (233) 787
Income Taxes 0 0 0
Other 1,398 (35) 1,363
------- ------- -------
Total Current Liabilities 13,462 (2,209) 11,253
Long-Term Debt 4,948 (4) 4,944
Other Long-Term Liabilities 1,136 0 1,136
------- ------- -------
Total Liabilities $19,546 $(2,213) $17,333
======= ======= =======
Minority Interest 3 0 3
------- ------- -------
STOCKHOLDERS' EQUITY
Common Stock 3 0 3
Preferred Stock 1 0 1
Additional paid-in capital 12,006 0 12,006
Treasury Stock (25) 0 (25)
Stock Subscriptions Receivable (1) 0 (1)
Retained Earnings (deficit) (3,221) 5,783 2,562
------- ------- -------
Total Stockholders' Equity 8,763 5,783 14,546
------- ------- -------
Total Liabilities and Stockholders' Equity $28,312 $ 3,570 $31,882
======= ======= =======
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AMEDISYS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN 000'S, EXCEPT PER SHARE AMOUNTS)
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HISTORICAL EFFECT OF SALE/(2)/ PRO FORMA
----------- -------------------- ---------
Income:
<S> <C> <C> <C>
Service Revenue $24,475 $(8,795) $15,680
Cost of Service Revenue 14,319 (5,933) 8,386
------- ------- -------
Gross Margin 10,156 (2,862) 7,294
------- ------- -------
General and Administrative Expenses:
Salaries and benefits 9,389 (1,309) 8,080
Other 7,098 (647) 6,451
------- ------- -------
Total General and Administrative Expenses 16,487 (1,956) 14,531
------- ------- -------
Operating Income (loss) (6,331) (906) (7,237)
------- ------- -------
Other Income and Expense:
Interest income 21 0 21
Interest expense (418) 51 (367)
Miscellaneous 25 (2) 23
------- ------- -------
Total Other income and Expense (372) 49 (323)
------- ------- -------
</TABLE>

6
<PAGE>
<TABLE>
<CAPTION>

HISTORICAL EFFECT OF SALE/(2)/ PRO FORMA
----------- -------------------- ---------
<S> <C> <C> <C>
Income (loss) before income taxes, minority interest, and
cumulative effect of change in accounting principle (6,703) (857) (7,560)
Provision (benefit) for Estimated Income Taxes (2,279) (343) (2,622)
------- ------- -------
Income (loss) before Minority Interest (4,424) (514) (4,938)
Minority Interest in Consolidated Subsidiary 0 0 0
------- ------- -------
Net Income(loss) before cumulative effect of
change in accounting principle $(4,424) $ (514) $(4,938)
======= ======= =======
Weighted Average Common Shares Outstanding 3,057 -- 3,057
Income (loss) per share before cumulative effect of
change in accounting principle $ (1.45) $ N/A $ (1.62)
</TABLE>

AMEDISYS, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN 000'S, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
HISTORICAL EFFECT OF SALE/(2)/ PRO FORMA
----------- -------------------- ---------

Income:
<S> <C> <C> <C>
Service Revenue $54,496 $(17,292) $37,204
Cost of Service Revenue 30,641 (11,545) 19,096
------- -------- -------
Gross Margin 23,855 (5,747) 18,108
------- -------- -------
General and Administrative Expenses:
Salaries and benefits 12,651 (1,622) 11,029
Other 11,792 (763) 11,029
------- -------- -------
Total General and Administrative Expenses 24,443 (2,384) 22,059
------- -------- -------
Operating Income (loss) (588) (3,363) (3,951)
------- -------- -------
Other Income and Expense:
Interest income 31 0 31
Interest expense (870) 136 (734)
Miscellaneous (123) (7) (130)
------- -------- -------
Total Other income and Expense (962) 129 (833)
------- -------- -------
Income (loss) before income taxes, minority interest, and
cumulative effect of change in accounting principle (1,550) (3,234) (4,784)
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Provision (benefit) for Estimated Income Taxes (382) (1,293) (1,675)
------- -------- -------
Income (loss) before Minority Interest (1,168) (1,940) (3,108)
Minority Interest in Consolidated Subsidiary 209 0 209
------- -------- -------
Net Income(loss) before cumulative effect of
change in accounting principle $ (959) $ (1,940) $(2,899)
======= ======== =======
Weighted Average Common Shares Outstanding 2,735 -- 2,735
Income (loss) per share before cumulative effect of
change in accounting principle $ (0.35) $ N/A $ (1.06)
</TABLE>

AMEDISYS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A. Basis of Presentation

On September 21, 1998, the Company sold certain assets, subject to the
assumption of certain liabilities, of its wholly-owned subsidiaries of Amedisys
Staffing Services, Inc., Amedisys Nursing Services, Inc., and Amedisys Home
Health, Inc. to Nursefinders, Inc.

The accompanying pro forma condensed consolidated balance sheet has been
prepared by applying certain pro forma adjustments to historical financial
information, assuming the Staffing Division sale occurred on June 30, 1998. The
pro forma condensed consolidated statement of operations for the year ended
December 31, 1997 and the six-month period ended June 30, 1998 has been prepared
based upon certain pro forma adjustments to historical financial information,
assuming the Staffing Division sale occurred on January 1, 1997.

B. Staffing Division Effect of Sale

(1) Reflects the Staffing Division financial position as of June 30, 1998
in the balance sheet in addition to the following adjustments:
a. Increase to Cash of $6,480,000 to reflect the portion of the
purchase price payable upon closing.
b. Decrease to both Cash and Notes Payable of $1,405,000 to
reflect the pay-down on the line of credit which is secured
by accounts receivable.
c. Increase to Other Current Assets of $720,000 to reflect the
portion of the purchase price placed in escrow.
(2) Reflects the Staffing Division operating results and direct overhead
operating costs for the six month period ending June 30, 1998 in the
statement of operations, with an adjustment to the Company's income
tax expense assuming an effective tax rate of 40%.

8
<PAGE>

(3) Reflects the Staffing Division operating results and direct overhead
operating costs for the fiscal year ended December 31, 1997 in the
statement of operations, with an adjustment to the Company's income
tax expense assuming an effective tax rate of 40%.

RISK FACTORS

AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS
INVOLVES A HIGH DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION IN THIS
PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE
MAKING A DECISION TO PURCHASE THE COMMON STOCK OFFERED HEREBY.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

This prospectus contains certain statements that are forward looking
statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. Those statements include, among other things,
the discussions of the company's operations, margins, profitability, liquidity
and capital resources. Forward looking statements are included in this section
under "Increased Working Capital Needs and Risks of Collection Relating to Fee-
for-Service Reimbursement Programs," "Classification of Physicians and Nurses as
Independent Contractors; Potential State and Federal Tax Liability," "Risks
Related to the Company's Acquisition Strategy," "Risks Related to Acquisition
Financing," "Dependence on Management," "Corporate Exposure to Professional
Liabilities," "Possible Insufficiency of Liability Coverage," "Potential
Restructuring of Healthcare Delivery System through Healthcare Reform
Proposals," "Changes in Health Care Regulations and Technology," "Reimbursement
by Third Party Payors," and "Relationship with Other Organizations." Although
the company believes that the expectations reflected in forward looking
statements are reasonable, they can give no assurance that such expectations
will prove to have been correct. Generally, these statements relate to business
plans or strategies, projected or anticipated benefits or other consequences of
such plans or strategies, or projections involving anticipated revenues,
expenses, earnings, levels of capital expenditures, liquidity or indebtedness or
other aspects of operating results or financial position. All phases of the
operations of the company are subject to a number of uncertainties, risks and
other influences, many of which are outside the control of the company and any
one of which, or a combination of which, could materially affect the results of
the company's operations and whether the forward looking statements made by the
company ultimately prove to be accurate. Important factors that could cause
actual results to differ materially from the company's expectations are
disclosed in this "Risk Factors" section.

CONTINUING OPERATING LOSSES

The company had losses from continuing operations before provisions for
income tax, minority interest and cumulative effect of change in accounting
principle of ($6,703,000) for the six months ended June 30, 1998, and
($1,550,000) and ($34,000) for the years ended December 31, 1997 and 1996,
respectively. The company's prospects, therefore, must be considered in light
of the risks, expenses and difficulties frequently encountered in operating a
business in a highly competitive industry.

CAPITAL REQUIREMENTS; LIMITED SOURCES OF LIQUIDITY; NEED FOR ADDITIONAL CAPITAL;
CONTINUING DEFAULT ON LINES OF CREDIT

The company requires substantial capital to pursue its operating strategy
and at June 30, 1998 had cash of $471,000. Until the company can maintain
operations sufficient to fund its working capital needs, the company will be
dependent on external sources of financing. To date, the company has no
internal sources of liquidity and it should be assumed that there will be no
internal sources of liquidity for the foreseeable future. Based on the

9
<PAGE>

company's current plan of operations, it is anticipated that its current cash
balance coupled with the sale of the staffing division will provide sufficient
working capital through the end of the fiscal year.

At June 30, 1998, the company had a working capital deficit of $3,804,000.
The company maintains two revolving lines of credit of $7,500,000 with Union
Planters Bank and $750,000 with Deposit Guaranty Bank, bearing interest at bank
prime plus 1.5% and 1%, respectively. The lines of credit are collateralized by
80% of eligible receivables in outpatient surgery, 75% of eligible receivables
in home health care, and 80% of physician notes receivable. Eligible receivables
are defined principally as accounts that are aged less than 90 days for
outpatient surgery, and 120 days for home health care. At June 30, 1998,
approximately $109,000 was available based on eligible receivables under the
combined lines of credit. The lines of credit are subject to certain covenants,
including a monthly borrowing base, a debt service coverage ratio, and a
leverage ratio. At December 31, 1997, March 31, 1998 and June 30, 1998, the
company was in default on the debt service ratio coverage requirement of 1.1:1.0
due to the losses incurred in these periods. This default was waived by the bank
through December 27, 1998. Other than the lines of credit, the company does not
have any other external sources for financing, nor does it have any commitments
for external sources of financing. There can be no assurance that such financing
will be available or, if it is available, that it will be available on
acceptable terms. Accordingly, no assurance can be given that the company will
be successful in obtaining financing sufficient to fund the company's working
capital requirements after the end of the fiscal year. Failure to obtain
sufficient funding will adversely impact the company's financial position, and
could cause the company to curtail operations, sell assets or take other actions
as necessary in order to meet cash flow requirements.

INCREASED WORKING CAPITAL NEEDS AND RISKS OF COLLECTION RELATING TO FEE-FOR-
SERVICE REIMBURSEMENT PROGRAMS

For the six months ended June 30, 1998, approximately 59% of the company's
revenue was derived from private insurers and patients, 37% from Medicare and 4%
from Medicaid. The percentage of revenues attributable to management services
contracts was 40% for the six months ended June 30, 1998. The portion of the
company's revenues attributable to provider services provided in connection with
fee-for-service agreements is expected to increase substantially. Management
believes that competitive trends will continue to increase the number and
percentage of the company's fee-for-service agreements.

Under fee-for-service agreements, the company assumes the financial risks
arising from changes in patient volume, payor mix and third party reimbursement
rates. Fee-for-service arrangements also involve a credit risk related to
services provided to uninsured individuals. In addition, fee-for-service
contracts also have less favorable cash flow characteristics than traditional
flat-rate contracts due to longer collection periods. Private and third party
fee-for-service arrangements can result in longer collection cycles than
government fee-for service agreements. The company has both types of contracts
in its payor mix.

The company's working capital needs are generally a function of the
acquisition of new contracts or the conversion of fixed fee contracts to fee-
for-service contracts. As a result, the company may require additional working
capital in the event of significant growth. The company may experience a net
use of cash in its operating activities in future periods if the growth in fee-
for-service contracts continues.

The company derives 37% of its revenues from the Medicare system. This
system is undergoing changes mandated by the congressional Balanced Budget Act
of 1997 which established the interim payment system for home health care. The
interim payment system was effective for home health agencies for cost reporting
periods beginning on or after October 1, 1997. Under the previous system, home
health agencies were reimbursed their costs-per-visit up to a specified limit,
which was based on geographic region. In the interim payment systems, home
health agencies will be reimbursed the lower of their actual cost-per-visit
limit or per-beneficiary limit. The per-

10
<PAGE>

beneficiary limits are 75% provider specific and based on 1994 cost reports.
Cost limits are also based on the area where the patient resides and not the
area of the home health agency's office. The reduction in reimbursement relating
to the interim payment system ranges between 15% to 40%. Management anticipates
there may be further legislation adjusting the per-beneficiary cost limits; such
adjustment, if any, would not be known until after the start of the cost
reporting period.

The public and private sectors are experiencing increasing pressures to
reduce health care costs and restrict reimbursement rates for medical services.
Any change in reimbursement amounts or practices could materially adversely
affect the operations of the company. In addition, while the company seeks to
comply with applicable Medicare and Medicaid reimbursement regulations, there
can be no assurance that the company would be found to be in compliance in all
respects with such regulations.

CLASSIFICATION OF PHYSICIANS AND NURSES AS INDEPENDENT CONTRACTORS; POTENTIAL
STATE AND FEDERAL TAX LIABILITY

The company contracts with certain physicians and nurses as independent
contractors, rather than employees, to fulfill some of its supplemental staffing
obligations. Therefore, the company has not historically, and the company does
not currently, withhold federal or state income taxes, make federal or state
unemployment tax payments or provide worker's compensation insurance with
respect to such independent contractors. The payment of applicable taxes is
regarded as the responsibility of such independent contractors. Management
believes that classification of physicians and nurses as independent contractors
is standard industry practice and proper for federal tax purposes. A contrary
determination by federal taxing authorities or a change in existing law could
materially adversely affect the company and its operations. Most state taxing
authorities either have not challenged or have accepted the classification of
contract physicians and nurses as independent contractors. The company's
records for independent contractors have been reviewed by federal taxing
authorities and no significant issues have been identified. In December 1995,
the Louisiana Department of Labor initiated an audit for the fiscal year ended
December 31, 1993 which resulted in an additional 341 nurses being listed as
employees of the company and holding that their earnings were taxable for
unemployment insurance purposes. The company appealed the Department of Labor's
ruling in December 1995, a hearing was held in September 1996, and the ruling
was upheld by the administrative law judge. The company timely filed an appeal
in the District Court of the Parish of East Baton Rouge. To date, there has
been no further action. Management believes that the ultimate resolution of
this review will not have a significant effect on the company's financial
position or results of operations. However, there are some states in which the
independent contractor classification of physicians and nurses is or has been
under administrative or judicial review.

RISKS RELATED TO THE COMPANY'S ACQUISITION STRATEGY

The company intends to grow significantly through the acquisition of
additional outpatient health care and complementary businesses. The company
expects to face competition for acquisition candidates, which may limit the
number of acquisition opportunities and may lead to higher acquisition prices.
There can be no assurance that the company will be able to identify, acquire or
manage profitably additional businesses or to integrate any acquired businesses
into the company without substantial costs, delays or other operational or
financial problems. Further, acquisitions involve a number of risks, including
possible adverse effects on the company's operating results, diversion of
management's attention, failure to retain key personnel of the acquired business
and risks associated with unanticipated events or liabilities, some or all of
which could have a material adverse effect on the company's business, financial
condition and results of operations. The company has entered into several
non-competition and non-solicitation agreements in connection with certain of
its acquisitions. If those agreements are found to be unenforceable,
competition by former owners of acquired companies could have an adverse effect
on the company's operations.

RISKS RELATED TO ACQUISITION FINANCING

The timing, size and success of the company's acquisition efforts and the
associated capital commitments cannot be readily predicted. The company
currently intends to finance future acquisitions by using shares of its common
stock for a portion of the consideration to be paid. In the event that the
common stock does not maintain a

11
<PAGE>

sufficient market value, or potential acquisition candidates are otherwise
unwilling to accept common stock as part of the consideration for the sale of
their businesses, the company may be required to utilize more of its cash
resources, if available, in order to initiate and maintain its acquisition
program. If the company does not have sufficient cash resources, its growth
could be limited unless it is able to obtain additional equity or debt
financing.

DEPENDENCE ON MANAGEMENT

The success of the company is dependent upon its management, including the
company's chief executive officer, William F. Borne, and president, James P.
Cefaratti. The company maintains key employee life insurance in the amount of
$4.5 million on the life of Mr. Borne and has entered into an employment
agreement with Messrs. Borne and Cefaratti. The loss to the company of the
services of Messrs. Borne or Cefaratti could materially adversely affect the
company's operations.

CORPORATE EXPOSURE TO PROFESSIONAL LIABILITIES

Due to the nature of its business, the company and certain physicians who
provided services on its behalf may be the subject of medical malpractice
claims, with the attendant risk of substantial damage awards. The company could
be exposed to liability based on the negligence of physicians operating in the
company's outpatient surgery centers. To the extent such physicians were
regarded as agents of the company in the practice of medicine, the company could
be held liable for any medical negligence of such persons. In addition, the
company could be found in certain instances to have been negligent in performing
its contract management services for hospital and clinics even if no agency
relationship between the company and such physician exists. There can be no
assurance that a future claim or claims will not exceed the limits of available
insurance coverage or that such coverage will continue to be available.

POSSIBLE INSUFFICIENCY OF LIABILITY COVERAGE

The company maintains two professional liability insurance policies
covering the Company and its subsidiaries; however, there can be no assurance
that any such claims will not be made in the future in excess of the limits of
such insurance, if any, or that any such claims, if successful and in excess of
such limits, will not have a material adverse effect on the company's assets and
its ability to conduct its business. There can be no assurance that the company
will continue to maintain such insurance or that such insurance can be
maintained at acceptable costs. The company's insurance coverage currently
includes fire, property damage and general liability with a $1,000,000 limit on
each wrongful act and a $3,000,000 limit in aggregate. There can be no
assurance that any claim will be within the scope of the company's coverage or
that such claims will not exceed the company's coverage.

POTENTIAL RESTRUCTURING OF HEALTHCARE DELIVERY SYSTEM THROUGH HEALTHCARE REFORM
PROPOSALS

President Clinton and members of Congress have made several additional
proposals for reform of the nation's health care system, including proposals
limiting payments under Medicaid and Medicare programs. Many of these proposals
contain measures intended to control public and private spending on health care
as well as to provide universal public access to the health care system. If
enacted, such proposals are expected to result in a substantial restructuring of
the health care delivery system. The company cannot predict what additional
health care reform legislation, if any, will be enacted. Significant changes in
the nation's health care system are likely to have a substantial impact over
time on the manner in which the company conducts its business. Such changes
could have a materially adverse effect on the results of operations of the
company.

RISKS RELATED TO LONG-LIVED ASSETS

In accordance with Statement of Financial Accounting Standard No. 121
("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets to Be Disposed
of", the company quarterly evaluates assets for events or changes in
circumstances that indicate the carrying amount of an asset may not be
recoverable. The company uses undiscounted expected future cash flows to assess
the recoverability of the asset. Due to the Medicare reimbursement reductions
finalized in March 1998 in association with the Balanced Budget Act of 1997,
there can be no assurance that the carrying amount of the company's long-lived
assets, particularly goodwill recorded in acquisitions, will be recoverable.

CHANGES IN HEALTH CARE REGULATIONS AND TECHNOLOGY

There can be no assurance that the company will not be adversely affected
by future possible changes in medical and health regulations, the use, cost and
availability of hospitals and other health care services and medical
technological developments.

12
<PAGE>

REIMBURSEMENT BY THIRD PARTY PAYORS

The company is generally reimbursed by a variety of third-party payors,
with outpatient surgery reimbursements coming primarily from insurance companies
and patients, and home care reimbursements coming primarily from Medicare and
Medicaid. Accordingly, the company may be materially adversely affected in the
event of future increased insurance premiums, increased insurance deductibles,
unavailability of insurance, changes in policy exclusions covering specific
types of disease or conditions or other changes in medical and health insurance.
The company typically receives payment between 15 and 120 days after rendering
an invoice, although such period can be longer. Accordingly, the company's cash
flow may at times be insufficient to meet its accounts payable requirements. The
company at times has been required to borrow funds to meet its ongoing
obligations and may be required to do so in the future, and the company would be
adversely affected if in the future it were unable either to borrow funds or to
borrow funds on terms deemed favorable by management.

COMPETITION

The business in which the company operates is highly competitive. The
company is in competition with hospitals, nursing homes, and other businesses
that provide home health care services, many of which are large and established
companies with significantly greater resources than the company.

RELATIONSHIP WITH OTHER ORGANIZATIONS

The development and growth of the company's business depends to a
significant extent on its ability to establish close working relationships with
health maintenance organizations, preferred provider organizations, hospitals,
clinics, nursing homes, physician groups, and other health care providers.
Although the company has established such relationships, there is no assurance
that existing relationships will be successfully maintained and that additional
relationships will be successfully developed and maintained in existing and
future markets.

FEDERAL AND STATE REGULATION

As a provider of health care services, the company is subject to laws and
regulations administered by the various states. The company is subject to
certain federal laws and regulations as a result of the certification of its
operations in the Medicare/Medicaid Program. Compliance with laws and
regulations could increase the cost and time necessary to allow the company to
operate successfully and may affect the company in other respects not presently
foreseeable. Loss of certification in the Medicare/Medicaid Program could
adversely affect the ability of the company to effectively market its services.

DIVIDENDS NOT LIKELY

The company has never paid cash dividends on its common stock, and it is
not anticipated that any will be paid in the foreseeable future.

FUTURE SALES OF COMMON STOCK

Approximately 3,000,000 shares of common stock are currently tradeable, or
eligible for trading pursuant to Rule 144 as promulgated under the Securities
Act, in the public market. Sales of common stock in the public market may have
a depressive effect on prevailing market prices for the common stock. There is
no assurance that the public market for the common stock will not be volatile,
sporadic or limited. Accordingly, purchasers may not be able to resell shares
of common stock at or above their respective purchase price, and a purchaser may
not be able to liquidate his investment even at a loss without considerable
delay.

13
<PAGE>

POSSIBLE ADVERSE EFFECT OF FUTURE ISSUANCES OF PREFERRED STOCK

The company's Certificate of Incorporation authorizes the issuance of
5,000,000 shares, par value $.001 per share, of "blank check" preferred stock
with such designations, rights and preferences as may be determined from time to
time by the board of directors. Accordingly, the board of directors is
empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting, or other rights that could adversely affect the
voting power or other rights of the holders of the common stock. In the event of
additional issuances, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the company. The company has no present intention to issue any
additional shares of its preferred stock. However, there can be no assurance
that additional preferred stock will not be issued at some time in the future.

STATUS OF PERSONS RESELLING COMMON STOCK

Holders who subsequently resell shares of common stock to the public
pursuant to this prospectus may be deemed to be underwriters with respect to
such shares for purposes of the Securities Act with the result that they may be
subject to certain statutory liabilities if the registration statement is
defective. The company has agreed to indemnify the selling stockholders
regarding such liability. In addition, any profit on the sale of shares of
common stock might be deemed underwriting discounts and commissions under the
Securities Act. See "Plan of Distribution."

PENNY STOCK REGULATION

The SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in penny stocks. Penny stocks generally are equity
securities with a price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on the Nasdaq system, provided
that current price and volume information with respect to transactions in such
securities is provided by the exchange system). The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document prepared by the
SEC that provides information about penny stocks and the nature and level of
risks in the penny stock market. The broker-dealer also must provide the
customer with bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules require that prior to a transaction
in a penny stock not otherwise exempt from such rules, the broker-dealer must
make a special written determination that a penny stock is a suitable investment
for the purchaser and receive the purchaser's written agreement to the
transaction. These disclosure requirements may have the effect of reducing the
level of trading activity in any secondary market for a stock that becomes
subject to the penny stock rules. The company's common stock is subject to the
penny stock rules, and accordingly, investors in this offering may find it
difficult to sell their shares, if at all.

RATIO OF EARNINGS TO FIXED CHARGES

Inapplicable.

USE OF PROCEEDS

In the event all of the placement agent warrants are exercised, the company
will receive $525,000 in net proceeds which will be utilized for working capital
purposes. However, there can be no assurance that any or all of the placement
agent warrants will be exercised. The selling shareholders will receive all of
the net proceeds from the sale of the common stock underlying the preferred
stock and placement agent warrants.

14
<PAGE>

DETERMINATION OF OFFERING PRICE

Inapplicable.

DILUTION

Inapplicable.

SELLING STOCKHOLDERS

The following table sets forth certain information concerning each selling
stockholder. Assuming that the selling stockholders offer all of their shares,
the selling stockholders will not have any beneficial ownership. The shares are
being registered to permit the selling stockholders and certain of their
respective pledgees, donees, transferors, or other successors in interest to
offer the shares for resale from time to time. See "Plan of Distribution."

RESALE OF COMMON STOCK BY SELLING STOCKHOLDERS
FOR SHARES TO BE ISSUED UPON CONVERSION OF PREFERRED STOCK ("P")
AND SHARES TO BE ISSUED, AFTER CONVERSION OF PREFERRED STOCK, UPON
EXERCISE OF WARRANTS ("W")

<TABLE>
<CAPTION>
AMOUNT
SHARES OFFERED SHARES
BENEFICIALLY (ASSUMING ALL BENEFICIALLY
OWNED BEFORE SHARES OWNED AFTER
STOCKHOLDER RESALE/(1)(2)(3)/ IMMEDIATELY RESALE PERCENTAGE
- ----------- ---------------- SOLD)/(2)(3)(4)/ ------ ----------
----------------
<S> <C> <C> <C> <C> <C>
Bank Hofmann AG 22,384 22,384 P - -

Bank Julius Baer & Co. Ltd. 223,847 223,847 P - -

Bank Sarasin & Cie 44,770 44,770 P - -

Care Invest AG 67,154 67,154 P - -

CIBC 156,693 156,693 P - -

Clariden Bank 111,923 111,923 P - -

Credit Lyonnaise (Schweiz) AG 89,539 89,539 P - -

Cresvale Far East Limited Hong Kong 44,770 44,770 P - -
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

15
<PAGE>

Delphic Global Opportunities Fund, 67,154 67,154 P - -
Ltd.

Rush & Co. 44,770 44,770 P - -

Sigler & Co. 22,384 22,384 P - -

Terra Healthy Living, Ltd. 783,467 783,467 P - -

Hudson Capital Partners, L.P. 117,520 117,520 W - -
</TABLE>

- ---------------------------------------
(1) The selling stockholders have sole voting and sole investment power with
respect to all shares owned.
(2) Calculated using the current conversion rate for the Preferred Stock of
2.225 shares of common stock for each share of preferred stock, subject
to adjustment.
(3) Ownership is determined in accordance with Rule 13d-3 under the Exchange
Act. The actual number of shares beneficially owned and offered for sale
hereunder is subject to adjustment and could be materially more than the
estimated amount indicated depending upon factors which cannot be
predicted by the company at this time.
(4) Assumes the sale of all shares offered hereby to persons who are not
affiliates of the selling stockholders.

PLAN OF DISTRIBUTION

Pursuant to this prospectus, the selling stockholders, or by certain
pledgees, donees, transferees or other successors in interest to the selling
stockholders, may sell shares from time to time in transactions on the OTC
Electronic Bulletin Board, in privately-negotiated transactions or by a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The selling stockholders may
effect such transactions by selling the shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders or the purchasers of
the shares for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation to a particular broker-dealer might be in
excess of customary commissions).

Other methods by which the shares may be sold include, without limitation:
(1) transactions which involve cross or block trades or any other transaction
permitted by the OTC Electronic Bulletin Board, (2) "at the market" to or
through market makers or into an existing market for the common stock, (3) in
other ways not involving market makers or established trading markets, including
direct sales to purchasers or sales effected through agents, (4) through
transactions in options or swaps or other derivatives (whether exchange-listed
or otherwise), (5) through short sales, or (6) any combination of any other such
methods of sale. The selling stockholders may also enter into option or other
transaction with broker-dealers which require the delivery to such broker-
dealers of the shares offered hereby which shares such broker-dealer may resell
pursuant to this prospectus.

The selling stockholders and any broker-dealers who act in connection with
the sale of shares hereunder may be deemed to be underwriters, as that term is
defined under the Securities Act, and any commissions received by them and
profit on any resale of the shares as principal may be deemed to be underwriting
discounts and commissions under the Securities Act.

There is no assurance that the selling stockholders will sell all or any of
the shares which may be offered hereby.

DESCRIPTION OF SECURITIES TO BE REGISTERED

SERIES A PREFERRED STOCK

In December 1997, the board of directors established a series of shares
setting forth the preferences, rights, and limitations and authorizing the
issuance of up to 1,000,000 shares of series A preferred stock. The face value
of the series A preferred stock is $10 per share. The series A preferred stock
is convertible, at any time at the holder's

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option, initially into a number of shares of common stock equal to the face
value divided by 88% (the conversion factor) of the average closing sale price
of the common stock for the 15 trading days immediately prior to the initial
closing date, which was $5.2556818. Beginning June 1, 1998, the conversion
factor decreases by .5% on the first day of each month that any of the shares of
series A preferred stock continue not to be publicly tradeable pursuant to an
effective registration statement under the Securities Act. To date, the
conversion factor is 85% resulting in a conversion rate of $2.22384737. The
series A preferred stock will automatically convert to shares of common stock if
the average sales price for the common stock exceeds $7.09 for fifteen
consecutive trading days. The series A preferred stock is not redeemable by the
company. The holders of the series A preferred stock will be entitled to receive
dividends, if and when they are declared by the board of directors. The
liquidation preference of the series A preferred stock is the face value,
subject to adjustment. The series A preferred stock is senior to all outstanding
classes and series of the company's capital stock. Each holder of shares of
series A preferred stock is entitled to one vote for each share of common stock
underlying the series A preferred stock. There are currently 750,000 shares of
series A preferred stock issued and outstanding.

PLACEMENT AGENT WARRANTS

In December 1997, the placement agent for the private placement of the
series A preferred stock was granted five year warrants to purchase 52,500
shares of series A preferred stock at an exercise price of ten dollars per
share.

INTERESTS OF NAMED EXPERTS AND COUNSEL

Inapplicable.

INFORMATION WITH RESPECT TO THE REGISTRANT

INDUSTRY OVERVIEW

The health care industry continues to undergo changes. The focus is on
managing cost and utilization, as opposed to the hospital/physician centered
focus that dominated healthcare since the early 1950's. Since the mid-1980's,
health care shifted from providing care at any cost to learning to manage costs.
It is predicted the next shift will require health care providers to truly learn
to manage care.

In an effort to manage health care expenditures, a strong focus has been
placed on moving the primary source of health care from the traditional
institutional settings (hospitals), causing home health care to play a more
dynamic role. As a result, the number of services that are provided safely and
effectively in alternate sites has dramatically increased.

Managed care, Medicare/Medicaid and payor reimbursement pressures continue
to drive patients through the continuum of care until they reach the setting
where the appropriate high quality care can be provided cost effectively. Over
the past several years, home care has evolved as a feasible (often preferred)
alternative in the continuum. In addition to patient comfort, substantial cost
savings can be realized through treatment at home as an alternative to
institutional settings.

To compete in this new environment, it is critical that providers not only
provide high quality, cost effective care, but implement clinically-based
management information systems to reduce costs, improve productivity, produce
and analyze clinical outcomes data, and position themselves as partners in risk
sharing.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

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The company operates principally in two business segments: Provider
Services (consisting of home health care and outpatient surgery) and Management
Services (consisting of physician support and home health care management). See
Note 14 of the attached audited financial statements for segment information.

STRATEGY

The company's business objective is to enhance its position in its market
areas as a leading provider of fully integrated alternate site health care
services. The company views its delivery system as a "hospital without walls"
and its strategy to accomplish this is as follows:

. Offer Patients, Physicians, Hospitals and Payors a Continuum of Fully
Integrated Care. A consistent quality of care at a reasonable cost will
most successfully occur when the care comes from one provider.

The company's strategy to employ this concept in each of its service areas
appeals to referral sources and payors, who prefer coordinating care
through a single source.

. Focus on selective Geographic Markets. The company is targeting selected
markets in the south and southeastern United States. Through start-ups,
acquisitions and expansion of existing services, the company plans to
dominate these markets, to increase utilization of its services by payors
and referral sources and to enhance its overall market position. The
majority of states in the south and southeast have a low penetration of
managed care. As the presence of managed care increases in its service
area, the company believes it is well positioned to provide the broad
geographic and service coverage required to contract with these payors. In
addition, since many of the areas in which the company operates are rural,
home health care is an ideal delivery system.

. Technology and Innovation Reduce Costs and Expand Business Lines. The
development of proprietary software systems not only reduces the company's
costs to operate its business, but provides an additional business line for
the company. Management believes Amedisys will be the first company of its
kind to operate with a virtually paperless system, expected to be in use
company-wide by the end of 1999. Care givers will be equipped with hand
held computers which will not only create greater efficiencies, but will
tie information into one centralized source. By enhancing its operations
through the use of information technology, the company is positioned to not
only operate more efficiently and deliver care in a more cost-efficient
manner, but to compete in an environment increasingly influenced by managed
care and subject to changes in reimbursement and government regulation.

. Manage Costs Through Disease State Management. Payors are focusing on the
management of patients who suffer from chronic disease states which
represent substantial costs. Some of these major disease states include:
asthma, cancer, diabetes, HIV, and congestive heart failure. The company's
disease state management program includes: patient education, frequent
monitoring and coordinated care from specialists. This approach has been
proven to enhance quality of life and reduce the overall cost of care.

. Develop Effective Synergies. Many patients require multiple services
provided by the company, thereby allowing cross referrals between Amedisys
divisions. This not only benefits patients, but referral sources and payors
as well, by allowing them to utilize one company whom they know and trust.
Finally, through the synergistic operation of its divisions, the company
can realize cost savings with sales personnel who are educated to cross-
sell product lines and by sharing office overhead between a number of
divisions.

BUSINESS DEVELOPMENT

The company is committed to growth in each of its ongoing service lines, as
well as developing new services such as alternate site infusion therapy. It has
an active team of professionals who support business development of

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ongoing and developing service areas. The team provides support services
including market analysis; planning; research; and community, public and media
relations which impact company wide and region specific budget goals.
Professionals on the team also provide advertising and educational campaigns.

Acquisition efforts are supported by business development professionals. A
specialized acquisition group works with the presidents of the company's service
lines to select and secure the best companies to meet the company's strategic
goals. Members of the acquisition team include operational, financial, legal,
and marketing specialists. After an acquisition is completed, the team
interfaces with other specialists from human resources and management
information systems to begin the integration process.

At the regional levels of the company, community relations and sales
professionals work with administrators and branch managers to capture additional
market share and enhance growth in each region and service sector.

PROVIDER SERVICES

Alternate-Site Infusion Therapy

Infusion therapy is the intravenous, intramuscular or subcutaneous
administration of medications and nutrition. These procedures were once
confined to hospital environments, however, with the portability of technology
and the expanded training and certification standards for registered nurses,
infusion procedures can be safely performed in the home setting, physician
office and ambulatory infusion suites. New therapies such as pain management
and first doses are often administered in ambulatory infusion suites to address
possible complications and adverse drug reactions.

According to Alex Brown in their Home Care Industry Perspective report, the
total home infusion therapy market is approximately $5 billion or 13% of the
total home health care expenditures, representing the second largest growing
segment of the home care industry. Beginning as a cottage industry in the
1970's, the home infusion business experienced explosive growth in the mid-
1980's. The industry became saturated in the 1990's. At that time, managed
care, which now represents approximately 2/3 of revenues in this segment, began
to negotiate lower pricing. This caused many companies to be driven out of
business or acquired by the large national providers. As a result of
questionable success in the integration of these combined companies, it appears
that regional and local providers have benefitted as the larger, most visible
companies continue to lose revenues and market share.

Among the therapies offered by the company are:

. Antibiotic therapy which is the infusion of antibiotic medications to
treat various infections and diseases.

. Total parenteral nutrition which is providing nutrients through
catheters for patients who cannot absorb nutrients through the
digestive tract due to chronic gastrointestinal conditions. This is
typically a long term therapy.

. Enteral nutrition which is the infusion of nutrients through a
feeding tube directly into the digestive tract. This can be a long
term therapy for patients who cannot eat or drink normally.

. Pain management which is the administration of infusion of drugs to
relieve chronic pain.

. Chemotherapy which is the infusion of drugs used to treat various
forms of cancer.

. Hydration therapy which is the infusion of fluids to patients who
have disease states which deplete their normal balance of fluids.

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In addition, the company offers high tech respiratory therapy and home
medical equipment.

The company opened its first infusion office in the 4th quarter of 1997.

Ambulatory Surgery Centers

Ambulatory Surgery Centers offer an alternative to hospital surgical
suites. The number of procedures offered in these centers has increased due to
advances in technology, including the use of endoscopic procedures and laser
equipment. These techniques are less invasive and require shorter recovery
periods than traditional hospital services. The centers offer a high quality,
cost effective benefit for insurers, as well as patients who are responsible for
co-payments for their procedures. Facility fees are lower than similar hospital
procedures and the atmosphere is less institutional. Physicians who operate at
the centers can participate in ownership, and enjoy block scheduling and faster
turnaround times, allowing them more time with their patients. The centers offer
a variety of surgical services utilizing state-of-the-art technology and
equipment. All are accredited by the Accreditation Association for Ambulatory
Care.

According to a report by SMG Marketing Group in 1997, the market share for
freestanding surgery centers has increased in comparison to the outpatient
surgical hospital market. Of the 32.1 million total surgical procedures
performed in the nation last year, hospitals performed an estimated
24.1 million, of which 14.1 million or 58% occurred on an outpatient basis. It
is projected that hospitals will perform 64% of all outpatient surgical
procedures for the nation this year, a significant decrease from the 76%
performed in 1990. Meanwhile, the shift in total outpatient surgical volume has
increased 50% from 14.5 million cases in 1990 to 22.1 million cases in 1996. The
shift is due, in large part, to technological advances which allow more
procedures to be done in outpatient settings and payors seeking cost effective
services for their health plans.

The company operates four centers. Two of the centers are solely owned by
the company and two are partnerships with physicians who utilize the facility.
A fifth center in which the company has a minority interest is expected to open
in March 1999.

Home Health Care Nursing

In 1996, home health care services was a $40 billion industry, growing 9-
11% annually, according to Alex Brown Research and the National Association of
Home Care. This does not include an additional $9-10 billion of low acuity or
companion care. Services provided in home health care include four broad
categories; (1) nursing and allied health services, (2) infusion therapy, (3)
respiratory therapy and, (4) home medical equipment. Accounting for $28 billion
in expenditures in 1997, nursing and allied services represent the largest
sector of 70% of all home health care services. Medicare reimbursements account
for approximately 65.2% of home care nursing. The Balanced Budget Act of 1997
established a new reimbursement system for Medicare home care nursing services
for cost reporting periods beginning on or after October 1, 1997. This change
will have a significant effect on the home care nursing industry since Medicare
is its largest payor source.

The company operates 15 home care nursing offices consisting of 10 Medicare
provider offices, 4 branch offices, and one office with state licensure.
Serving this market for the past 10 years, the company has built an excellent
reputation, based on quality care and specialty nursing services. Because its
services are comprehensive, cost-effective and can be accessed 24 hours a day,
seven days a week, the company's home care nursing services are attractive to
payors and physicians. Each of its offices are accredited by the Joint
Commission on Accreditation of Health Care Organizations ("JCAHO").

The company provides a wide variety of home health care services including:

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Registered nurses who provide specialty services such as infusion therapy,
skilled monitoring, assessments, and patient education. Many of the company's
nurses have advanced certifications.

Licensed practical (vocational) nurses who perform technical procedures,
administer medications and change surgical and medical dressings.

Physical and occupational therapists who work to strengthen muscles and
restore range of motion and help patients to perform the activities of daily
living.

Speech pathologists/therapists who work to restore communication and oral
skills such as swallowing.

Social workers who help families work through the problems associated with
acute and chronic illnesses.

Home health aides who provide personal care such as bathing or assistance
in walking.

MANAGEMENT SERVICES

Home Health Care Management

Amedisys Resource Management provides a full menu of management and
consulting services particularly designed to meet the needs of home health care
agencies. Changing government regulations will force home health care agencies
to become more efficient and information oriented. It will be critical to
measure costs more accurately and operate below current cost structures.

The company's services include: financial reporting systems, general agency
management, quality improvement programs, receivables financing, and business
development. In addition, a complete management information system is available
on a leased basis. This system is proprietary to Amedisys and gives the agency a
single entry system which integrates payroll and general ledger with the general
accounting system, reports clinical data and meets Medicare guidelines for
reporting, billing and collections. This division also offers consulting
services and educational seminars which provide continuing educational units for
medical personnel.

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BILLING AND REIMBURSEMENT

Revenues generated from the company's home health care services are paid by
private insurance carriers, managed care organizations, individuals, Medicare,
Medicaid and other local health insurance programs. Medicare is a federally
funded program available to persons with certain disabilities and persons aged
65 or older. Medicaid, a program jointly funded by federal and state
governments, and other local governmental health care programs, is designed to
pay for certain health care and medical services provided to low income
individuals without regard to age. Home health care management services are
paid through a contractual agreement between the company and the client home
health care agency. The company has several statewide contracts for negotiated
fees with insurers and managed care organizations.

The company submits all Medicare claims to a single insurance company
acting as a fiscal intermediary for the federal government. The Medicaid system
in Texas follows similar reimbursement guidelines. The state of Louisiana
adopted a fee-for-service payment method in 1995. Physician management fees are
collected directly from managed practices and networks. Outpatient surgery fees
are collected from commercial insurance systems, managed care organizations,
Medicare and Medicaid programs and individuals.

MEDICARE REIMBURSEMENT REDUCTIONS AND RELATED RESTRUCTURING

As of June 30, 1998, the company derived 37% of its revenues from the
Medicare system. In 1997, Congress approved the Balanced Budget Act of 1997 (the
"Budget Act"). The Budget Act established an interim payment system (the "IPS")
that provided for the lowering of reimbursement limits for home health visits.
For cost reporting periods beginning on or after October 1, 1997, Medicare-
reimbursed home health agencies will have their cost limits determined as the
lesser of (i) their actual costs, (ii) cost limits based on 105% of median costs
of freestanding home health agencies, or (iii) an agency-specific per-patient
cost limit, based on 98% of 1994 costs adjusted for inflation. The new IPS cost
limits will apply to the company for the cost reporting period beginning January
1, 1998. During the three months ended December 31, 1997, various regulations
and interpretations of the Budget Act were published which enabled the company
to calculate the potential impact on reimbursement of the new IPS cost limits.
Additionally, on March 31, 1998, the government released its final determination
and definitions of the new IPS cost limits. Management's analysis, without
giving effect for any cost reductions, estimated the aggregate reduction in
reimbursement in 1998 to exceed $8.0 million for certain of the company's
Medicare-certified nursing agencies. Management is reviewing potential cost
reductions to decrease the estimated impact of the IPS.

The Budget Act also provided for a 25% reduction in home oxygen
reimbursement from the 1997 fee schedule effective January 1, 1998 and a further
reduction of 5% effective January 1, 1999. Compounding these reductions was a
freeze on consumer price index increases in oxygen reimbursement rates until the
year 2003. Additionally, due to the above reimbursement changes affecting home
health agencies, the company's main referral sources for its durable medical
equipment business have decreased, as well as the referrals the company
anticipated capturing from its existing agencies. These changes may result in a
significant impact on the profitability of these services.

Based upon management's determination of the expected impact of these
changes in reimbursement on future cash flows, goodwill was written down by
$835,000 during the three months ended December 31, 1997, as required under
Statement of Financial Accounting Standard No. 121 ("SFAS 121"), "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
of". This write-down is reflected in the accompanying consolidated statements
of operations for the year ended December 31, 1997.

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DATA PROCESSING

The company maintains central computerized management information systems
including payroll, billing and other administrative functions at its corporate
headquarters. The information systems department has devised programs for
computerized scheduling, as well as a personnel system which monitors personnel
recruitment, evaluations and benefits. The information system also monitors
client utilization data.

The company has a proprietary home health care software program which
features a single entry system that allows data to flow through accounting,
general ledger, payroll and billing and meet the extensive cost reporting
requirements for Medicare reimbursement of home health care services. It also
provides clinical documentation for prospective pay and tracking of clinical
outcome results.

Each regional office site is linked electronically to the corporate
accounting and information systems. This feature allows management to monitor
daily business activities and produce management reports. The system promotes
accuracy in payroll and business systems and controls the daily pay system for
field nurses in staffing.

QUALITY CONTROL AND IMPROVEMENT

As a medical service business, the quality and reputation of the company's
personnel and operations are critical to its success. The company has
implemented quality assurance programs as well as policies and procedures in its
divisions at both the corporate and regional levels. The company strives to
meet guidelines set forth by the Joint Commission on Accreditation of Health
Care Organizations, as well as state and federal guidelines for Medicare and
Medicaid licensure.

The company maintains an active quality improvement team who make periodic
on-site inspections of regional offices to review systems and operations. An
educational division is also part of quality assurance operations and conducts
educational and training sessions at regional sites, as well as disseminating
continuing education materials to regional offices.

CORPORATE COMPLIANCE PROGRAM

The company has recently begun to formalize a Corporate Compliance Program.
The increasing complexity of the health care industry has driven the company to
adopt a program to assure that adequate systems are in place to facilitate
ethical and legal conduct. The laws and regulations affecting the industry and
reimbursement policies vary among each individual payor. In additional to these
regulations, the company must adhere to the guidelines established by the
Office of Inspector General. Being accustomed to operating in a highly
regulated environment, the company has a large number of policies, procedures,
and practices designed to ensure that the activities of the employees and the
company as a whole are in full compliance with relevant laws, standards, and
federal reimbursement guidelines.

RECRUITING AND TRAINING

The company's Human Resource Department coordinates recruiting efforts for
corporate and field personnel. Employees are recruited through newspaper
advertising, professional recruiters, the company's web page, networking and
word-of-mouth referrals. The company believes it is competitive in the industry
and offers its employees upward mobility, health insurance, an Employee Stock
Option program, an Employee Stock Purchase Plan, a 401K plan, and a cafeteria
plan.

Uniform procedures for screening, testing and verifying references,
including criminal checks where appropriate, have been established. All
employees receive a formalized orientation program, including familiarization
with the company's policies and procedures.

Continuing professional education and training programs are offered through
the Amedisys Institute, and advanced professional certifications are encouraged
and often underwritten by the company.

GOVERNMENT REGULATION

The company's home health care business is highly regulated by federal,
state and local authorities. Regulations and policies frequently change and the
company monitors changes through trade and governmental publications and
associations. Managers participate on various licensing and association boards.
As a provider of services under the Medicare and Medicaid programs, the company
is subject to the various "anti-fraud and abuse" laws, including the federal
health care programs anti-kickback statute. This law prohibits any offer,
payment, solicitation or receipt of any form of remuneration to induce the
referral of business reimbursable under a federal

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health care program or in return for the purchase, lease, order, arranging for,
or recommendation of items or services covered by any such program. (Federal
health care programs or any health care plans or programs that are funded by the
United States (other than certain federal employee health insurance benefits)
and certain state health care programs that receive federal funds under various
programs, such as Medicaid.) A related law forbids the offer or transfer of any
item or service for less than fair market value, or certain waivers of copayment
obligations, to a beneficiary of Medicare or a state health care program that is
likely to influence the beneficiary's selection of health care providers.
Violations of the anti-fraud and abuse laws can result in the imposition of
substantial civil and criminal penalties and, potentially, exclusion from
furnishing services under any federal health care programs. In addition, the
states in which the company operates generally have laws that prohibit certain
direct or indirect payments or fee-splitting arrangements between health care
providers where they are designed to obtain the referral of patients to a
particular provider.

Congress adopted legislation in 1989, known as the "Stark" Law, that
generally prohibits a physician ordering clinical laboratory services for a
Medicare beneficiary where the entity providing that service has a financial
relationship (including direct or indirect ownership or compensation
relationships) with the physician (or a member of his immediate family), and
prohibits such entity from billing for or receiving reimbursement for such
services, unless a specified exemption is available. Additional legislation
became effective as of January 1, 1993 known as "Stark II," that extends the
Stark Law prohibitions to services under state Medicaid programs, and beyond
clinical laboratory services to all "designated health services," including home
health services, durable medical equipment and supplies, and parenteral and
enteral nutrients, equipment, and supplies. Violations of the Stark Law may
also trigger civil monetary penalties and program exclusion. Pursuant to
Stark II, physicians who are compensated by the company are prohibited from
making referrals to the company, and the company will be prohibited from seeking
reimbursement for services rendered to such patients unless an exception
applies. Several of the states in which the company conducts business have also
enacted statutes similar in scope and purpose to the federal fraud and abuse
laws and the Stark Laws.

Various federal and state laws impose criminal and civil penalties for
making false claims for Medicare, Medicaid or other health care reimbursements.
The company believes that it bills for its services under such programs
accurately. However, the rules governing coverage of, and reimbursements for,
the company's services are complex. There can be no assurance that these rules
will be interpreted in a manner consistent with the company's billing practices.

In May 1995, the federal government instituted Operation Restore Trust, a
health care fraud and abuse initiative focusing on nursing homes, home health
care agencies and durable medical equipment companies located in New York,
Florida, Illinois, Texas and California, the five states with the largest
Medicare populations. The purpose of this initiative is to identify fraudulent
and abusive practices such as billing for services not provided, providing
unnecessary services and making prohibited referral payments to health care
professionals. Operation Restore Trust has been responsible for significant
fines, penalties and settlements. Operation Restore Trust was recently expanded
to cover twelve additional states for the next two years. The program was also
expanded to include reviews of psychiatric hospitals, certain independent
laboratories and partial hospitalization benefits. Further, there are plans
eventually to apply the program's investigation techniques in all fifty states
and throughout the Medicare and Medicaid programs. One of the results of the
program has been increased auditing and inspection of the records governing
reimbursement and other issues. Specifically, the government plans to double
the number of comprehensive home health agency audits it performs each year
(from 900 to 1800) and also to increase the number of claims reviewed by 25.0%
(from 200,000 to 250,000). In general, the application of these anti-fraud and
abuse laws is evolving.

During 1997, the home health care industry experienced several significant
regulatory and reimbursement changes. In February 1997, the Health Care Finance
Administration ("HCFA") announced that it intended to implement mileage
limitations restricting the distance between a nursing agency's principal office
and it branches. During 1998, as a result of a moratorium on new Medicare
provider numbers announced by President Clinton, HCFA imposed a delay in
permitting branch office transfers.

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Congress has also recently adopted a per-beneficiary limit on reimbursement
for nursing services based upon historical cost, and on March 31, 1998,
published regulations which set forth the national and regional medians on which
such limits will be based, but has not published regulations determining the
provider specific per-beneficiary limits. The company believes that the per-
beneficiary limits will have an adverse effect on the company's Medicare nursing
operations.

Other regulatory changes have reduced the level of reimbursement available
to the company. On January 2, 1998, HCFA published final Medicare nursing per-
visit cost limitation guidelines which reduce per-visit cost limitations for the
company by approximately 18%-20% for 1998. Also, regulations effective
February 1, 1998, eliminate venipuncture as a covered service Medicare nursing
visits, which will materially reduce the company's Medicare nursing revenues.

Recent other amendments affecting Medicare also require: (1) the imposition
of more stringent limits on reimbursable home health care costs; (2) the
establishment of a prospective payment system for home health care services to
be implemented in late 1999; (3) the separation of home health care services
into two distinct benefits under Medicare Part A and Medicare Part B; (4)
requiring billing by location of service rather than by location of the home
health care agency's headquarters; and (5) the establishment of guidelines for
the frequency and duration of reimbursable home health visits. Such provisions
may adversely affect reimbursement for Medicare home health services over the
next several years.

Recent Department of Health and Human Services ("DHHS") rule making
proposals affecting the home health care industry include: (i) a rule which
would revise Medicare's Conditions of Participation that home health agencies
must meet in order to participate in the Medicare program, and require that all
home health care agencies conduct background investigation of their employees;
(ii) a rule that would require home health care agencies to use standard
measurements of the quality and outcomes of patient care; and (iii) regulations
that require home health agencies to obtain surety bonds in order to continue to
participate in the Medicare nursing program. DHHS is expected to publish final
rules in these areas. The company believes that is has the capacity to comply
with changes in such rules.

The company's home health care subsidiaries are certified by HCFA and are
therefore eligible to receive reimbursement for services through the Medicare
system. Home health care offices have licenses granted by the health
authorities of respective states. Texas and Louisiana do not currently require
a Certificate of Need which some states require to establish a home health care
agency. Texas requires licensure and currently new licenses are being issued.
In both states, each location must be licensed and service areas are determined
by the state legislatures. Currently JCAHO accreditation of home health care
agencies is voluntary. However, Managed Care Organizations ("MCO's"), use JCAHO
accreditation as a minimum standard for regional and state contracts.

Ambulatory surgery centers require a Certificate of Need in some states and
are regulated by state and federal guidelines, as well as Medicare standards.
While accreditation is not mandatory, the majority of managed care companies
will only contract with accredited centers. All of the company's ambulatory
surgery centers have been accredited by the Accreditation Association for
Ambulatory Health Care ("AAAHC").

The company strives to comply with all federal, state and local regulations
and has satisfactorily passed all federal and state inspections and surveys.
The ability of the company to operate properly will depend on the company's
ability to comply with all applicable healthcare regulations.

COMPETITION

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The company's services are provided by a number of local, regional and
national companies and are highly competitive. Unlike the company, many of
these competitors do not offer the continuum of care and/or do not have the
geographical coverage to secure contracts with many of the payors. Home health
care providers compete for referrals based primarily on scope and quality of
services, geographic coverage, pricing, and outcomes data.

The company believes its favorable competitive position is attributable to
its reputation for nearly two decades of consistent, high quality care; its
broad menu of services; its state-of-the-art information management systems; and
its widespread service network.

SEASONALITY

The demand for the company's services are not typically influenced by
seasonal factors.

EMPLOYEES

As of June 30, 1998, the company had approximately 615 full-time employees,
excluding part time field nurses and other professionals in the field. Full
time employees include 12 Administrative Group Members consisting of product
line presidents and operational support personnel. The balance of the full time
employees include regional administrators, branch managers, general branch
managers, business development personnel, clerical support staff, clinical field
staff, information systems personnel, and accounting personnel.

All management and business development personnel are salaried. The company
complies with the Fair Labor Standards Act in establishing compensation methods
for its employees. Select positions within the company are deemed to be bonus
eligible based on the achievement of pre-determined budget criteria. The company
sponsors and contributes toward the cost of a group health insurance program for
its eligible employees and their dependents. The group health insurance program
is self-funded by the company; however, there is an aggregate stop loss policy
in place to limit the liability for the company. The company also provides a
group term life insurance policy and a long term disability policy for eligible
employees. In addition, the company offers a 401K retirement plan and encourages
all of its eligible employees to participate. The company has a Cafeteria 125
plan in place as well.

The company believes its employee relations are good. It successfully
recruits employees and many of its employees are shareholders.

INSURANCE

The company maintains casualty coverages for all of its operations,
including professional and general liability, workers' compensation, automobile,
property, and fiduciary liability. The insurance program is reviewed
periodically throughout the year and thoroughly on an annual basis to insure
adequate coverage is in place. The company is approved through the State of
Louisiana to self-insure its workers' compensation program. All other states
are covered on a fully insured basis through "A+" rated insurers. All of the
company's employees are bonded. The company is self-insured for its employee
health benefits.

PROPERTY

The company presently leases approximately 23,850 square feet for its
corporate office located at 3029 South Sherwood Forest Boulevard, Baton Rouge,
Louisiana. The lease provides for a basic monthly rental rate of approximately
$11 per square foot through the expiration date on September 30, 2002. The
company has an aggregate of 109,257 square feet of leased space for regional
offices pursuant to leases which expire between November 1998 and August 2005.
Rental rates for these regional offices range from $9 per square foot to $22 per

26
<PAGE>

square foot with an average of $13 per square foot, which terms and rates the
company believes to reflect market values. Some lease rates include utilities.
The company believes its facilities to be adequate for its current needs.

The company presently operates four ambulatory surgery centers, three
located in Texas and one in Louisiana. These centers occupy an aggregate of
47,304 square feet. Of the total square footage occupied by ambulatory surgery
centers, 35,304 square feet are leased, and the balance is owned. The company
believes the terms and lease rates reflect current market values. Space in the
ambulatory surgery centers encompasses fifteen surgical suites, pre-op and post-
op areas, business offices, consultation, and waiting areas. The ambulatory
surgery centers are equipped with modern technology and equipment to perform
surgery, laboratory studies and limited diagnostic testing. Construction has
recently begun on a fifth surgery center located in Lafayette, LA, with a
projected opening of March, 1999.

The following is a list of the company's offices. Unless otherwise
indicated, the company has one office in each city.

FLORIDA (1) MISSISSIPPI (1) TEXAS (9)

St. Petersburg Jackson Austin
Dallas (2)
LOUISIANA (16) Houston(2)
Alexandria Longview
Baton Rouge (4) NORTH CAROLINA (1) Nederland
Covington Morrisville Pasadena
Hammond (2) San Antonio
Harahan
Lafayette OKLAHOMA (7) TENNESSEE (1)
Lake Charles Ada
LaPlace Gore Bristol
Metairie Oklahoma City (2)
Monroe Stilwell SOUTH CAROLINA (1)
Prairieville Tahlequah Columbia
Shreveport Tulsa

LEGAL PROCEEDINGS

From time to time, the company and its subsidiaries are defendants to
lawsuits arising in the ordinary course of the company's business. While the
outcome of these lawsuits cannot be predicted with certainty, management
believes that the resolution of these matters will not have a material adverse
effect on the company's financial condition or results of operations.

MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

From August 1994 through August 1997, the company's common stock traded on
the Nasdaq Small Cap Market. From August 1997 until September 1998, the company
has been traded on the Nasdaq National Market. On September 28, 1998, the
company was notified by Nasdaq that its common stock would be traded on the OTC
Electronic Bulletin Board under the symbol AMED. The company's common stock
previously traded on the Nasdaq National Market, however, it failed the net
tangible asset requirement and was de-listed. The market for the company's
common stock is highly illiquid, sporadic and volatile.

27
<PAGE>

As of October 22, 1998, there were approximately 147 holders of record of
the company's common stock and the company believes there are approximately 980
beneficial holders. The company has not paid any dividends on its common stock,
and expects to retain any future earnings for use in its business development.

The following table provides the high and low prices of the company's
common stock during 1996 and 1997 and the first two quarters of 1998 as quoted
by Nasdaq. Such quotations reflect inter-dealer prices, without retail mark up,
mark down or commission, and may not represent actual transactions.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C> <C>
4/th/ Quarter 1996 8 1/2 4 1/2
1/st/ Quarter 1997 7 7/8 4 3/8
2/nd/ Quarter 1997 7 1/4 4 5/8
3/rd/ Quarter 1997 7 1/4 4 5/16
4/th/ Quarter 1997 7 4 5/16
1/st/ Quarter 1998 5 3/16 3 13/16
2/nd/ Quarter 1998 4 1/2 3 13/16
</TABLE>

SELECTED FINANCIAL DATA

The following table sets forth certain historical data relating to the
company. For the years of 1994, 1995, 1996, and 1997, the data was derived from
audited consolidated financial statements. Data for the year of 1993 is
unaudited, but in the opinion of management, presents fairly the financial
condition and results of operations for this period.

SELECTED HISTORICAL STATEMENT OF INCOME DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

1997 1996 1995/(1)/ 1994/(1)/ 1993/(1)/
---------- ---------- ---------- ---------- (UNAUDITED)

<S> <C> <C> <C> <C> <C>
Net Service Revenue........ $ 54,496 $ 46,060 $ 37,589 $ 28,902 $ 22,445
Cost of Service Revenue.... 30,641 26,405 22,424 16,996 14,674
---------- ---------- ---------- ---------- ----------

Gross Margin............... 23,855 19,655 15,165 11,906 7,771
General/Administrative
Expenses.................. 24,443 18,511 13,785 9,740 7,204
---------- ---------- ---------- ---------- ----------
Operating Income
(Loss).................... (588) 1,144 1,380 2,166 567
Other Income and
Expense................... (753) (1,123) (238) (248) (33)
Income Tax Expense
(Benefit)................. (382) 3 200 13 39
---------- ---------- ---------- ---------- ----------

Income (Loss) before

</TABLE>
28
<PAGE>

<S> <C> <C> <C> <C> <C>
Cumulative Effect of
Change in Account
Principle................. (959) 18 942 1,905 495

Cumulative Effect of
Change in Accounting
Principle................. (235) -- -- -- --
---------- ---------- ---------- ---------- ----------

Net Income (Loss).......... $ (1,194) $ 18 $ 942 $ 1,905 $ 495
========== ========== ========== ========== ==========

Earnings (Loss) per
Common Share.............. $(0.43) $0.01 $0.37 $0.75 $0.22
========== ========== ========== ========== ==========

Weighted Average
Common Shares
Outstanding................ 2,735,000 2,575,000 2,570,000 2,525,000 2,285,000
========== ========== ========== ========== ==========
</TABLE>

PROFORMA INFORMATION
(UNAUDITED)/(1)/
<TABLE>
<CAPTION>

1997 1996 1995/(1)/ 1994/(1)/ 1993/(1)/
--------- ------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Income (Loss)
(Historical)............ $(1,194) $ 18 $ 942 $ 1,905 $ 495

Proforma Adjustments:
Income Taxes on SCC
Results................. -- -- 191 646 155
------- ----- ---------- ---------- ----------

Proforma Net Income
(Loss).................. $(1,194) $ 18 $ 751 $ 1,259 $ 340
======= ===== ========== ========== ==========
Proforma Earnings
(Loss)/Common Share... $ (0.43) $0.01 $ 0.29 $ 0.50 $ 0.15
======= ===== ========== ========== ==========
</TABLE>

29
<PAGE>

BALANCE SHEET DATA
<TABLE>
<CAPTION>

1997 1996 1995/(1)/ 1994/(1)/ 1993/(1)/
------- ------- --------- --------- (UNAUDITED)
<S> <C> <C> <C> <C> <C>

Total Assets........ $22,870 $16,858 $ 11,537 $ 9,160 $ 7,190

Total Long-term
Obligations........ $ 3,129 $ 3,223 $ 1,490 $ 1,537 $ 642

Total Convertible
Preferred Stock.... $ 1 $ $ $ $ --
-- -- --
</TABLE>
- ---------------------------
(1) Surgical Care Centers of Texas, LC ("SCC"), acquired on June 30, 1995,
was a limited liability company. Prior to the transaction with Amedisys,
the individual owners were responsible for all income taxes and no income
tax expense was recorded on SCC through June, 30, 1995.

SUPPLEMENTARY FINANCIAL INFORMATION

Inapplicable.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following discussion should be read in conjunction with the financial
statements and notes thereto included elsewhere herein.

GENERAL

The company is a fully integrated provider of outpatient health services
and operates in two basic industry segments: alternate-site provider services
and management services operations. The company's alternate-site provider
segment includes the following services: alternate-site infusion therapy,
ambulatory surgery centers and home health care nursing. Its management services
operations encompass: home health care management, software systems, and
physician support services.

Gross revenue is recorded on an accrual basis based upon the date of
service at amounts equal to the company's established rates or estimated cost
reimbursement rates, as applicable. Allowances and contractual adjustments
representing the difference between the established rates and the amounts
estimated to be payable by third parties are also recorded on an accrual basis
and deducted from gross revenue to determine net service revenues.

Reimbursement for home health care nursing services to patients covered by
the Medicare program is based on cost reimbursement rates. Final reimbursement
is determined after submission of annual cost reports and audits thereof by the
fiscal intermediaries. Effective October 1, 1997, home health cost limits were
reduced and per beneficiary limits were established which may serve to reduce
payments to home health care nursing providers in the future. Additional
proposed regulations are expected to change the payment methodology for home
health care nursing providers to Medicare patients from a cost based
reimbursement system to a prospective payment system in the future.

30
<PAGE>

required under Statement of Financial Accounting Standard No. 121 ("SFAS 121"),
"Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to
Be Disposed Of." This write-down is reflected in the accompanying consolidated
statements of operations.

During the fourth quarter of 1997, the company also changed its accounting
policy relating to start-up costs. Prior to this change, costs incurred to
establish regional offices prior to beginning services were capitalized as other
assets and amortized over a five-year period based on accepted industry practice
and applicable Medicare regulations. Provisions of a proposed statement of
position ("SOP") expected to be issued by the American Institute of Certified
Public Accountants ("AICPA") in the second quarter of 1998 will require the
write-off of any start-up costs remaining on the balance sheet and expensing of
all start-up costs incurred in the future. The company chose to expense such
costs in 1997 to more properly reflect these costs as ongoing costs of expanding
the company's services.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items
included in the company's consolidated statements of operations as a percentage
of net revenues:
<TABLE>
<CAPTION>

YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
1995 1996 1997
Net services revenues..................................... 100.00% 100.00% 100.00%
Costs of service revenues................................. 56.23 57.33 59.66
------ ------ ------
Gross margin.............................................. 43.77 42.67 40.34
General and administrative expenses:
Salaries and benefits................................... 23.21 22.42 17.91
Other................................................... 21.64 17.77 18.76
------ ------ ------
Total general and administrative expenses................. 44.85 40.19 36.67
Operating Income (Loss)................................... (1.08) 2.48 3.67
Other Income and expense.................................. (1.38) (2.43) (0.63)
------ ------ ------
Net income (loss) before taxes and cumulative effect of
change in accounting principle........................... (2.46) 0.05 3.04
Income tax expense (benefit).............................. (0.70) 0.01 0.53
------ ------ ------
Net income (loss) before cumulative effect of change in
accounting principle..................................... (1.76) 0.04 2.51
Cumulative effect of change in
accounting principle..................................... (0.43) -- --
------ ------ ------
</TABLE>

YEARS ENDED DECEMBER 31, 1997 AND 1996

Net Service Revenues

For the year ended December 31, 1997 and the year ended December 31, 1996,
the company's revenues increased to $54,496,000 from $46,060,000, an 18%
increase. This change is primarily attributable to increased revenues in the
management services line.

31
<PAGE>

Provider services net revenues increased to $32,104,000 in 1997 from
$30,126,000 in 1996, an increase of 7%. The increase is primarily attributed to
continued growth in home health care nursing as well as a full year of
operations for St. Luke's SurgiCenter. Home medical equipment was added as a
product line in August 1997 with revenues of $465,000.

Management services net revenues increased to $22,392,000 in 1997 from
$15,934,000 in 1996, an increase of 41%. This increase is primarily attributed
to growth in staffing/professional services and home health care management.
Staffing/professional services revenues increased by 38% to $17,292,000 in 1997
from $12,538,000 in 1996. The increase in staffing services is attributed to
placement of private duty nursing, as well as the stabilization of hospital
consolidations in the markets the company services. Home health care management
revenues increased due to agencies seeking solutions to the expected changes in
Medicare reimbursement.

Cost of Service Revenues

Cost of service revenues include all costs directly associated with the
generation of net revenues, including salaries and employee benefits and medical
supply costs. In 1997, cost of service revenues increased 16% to $30,641,000
from $26,405,000 in 1996. As a percentage of net service revenues, cost of
service revenues decreased from 57% in 1996 to 56% in 1997. This decrease is
primarily a result of increased revenues in the home care management and
outpatient surgery divisions, which have lower direct costs.

General and Administrative Expenses

General and administrative expenses increased to $24,443,000 or 45% of
revenue in 1997 compared to $18,511,000 or 40% of revenue in 1996. This
increase is attributed to writeoff of previously recorded goodwill, increased
expenses resulting from the growth in the outpatient surgery division as well
as increased overhead expenses resulting from the development of the infusion
therapy division. Start-up costs related to the development of this new
division of $299,000 were expensed as incurred. The company also developed an
Employee Stock Ownership Plan (ESOP) for the home health care division with
accrued contributions of $721,000 for 1997.

Other Income/Expense

Other income/expense decreased from ($1,178,000) in 1996 to ($962,000) in
1997. This decrease is primarily attributed to a one-time charge to earnings in
1996 of $623,000 related to merger discussions with Complete Management, Inc.
("CMI"), offset by additional interest expense incurred in 1997.

Net Income (Loss)

Net loss for 1997 was ($1,194,000) or ($0.43) per share as compared to net
income of $18,000 or $.01 per share for 1996.

YEARS ENDED DECEMBER 31, 1996 AND 1995

Net Service Revenues

For the year ended December 31, 1996 and the year ended December 31, 1995,
the company's revenues increased to $46,060,000 from $37,589,000, a 23%
increase. This change is primarily attributable to increased revenues in the
provider services line.

Provider services net revenues increased to $30,126,000 in 1996 from
$21,232,000 in 1995, an increase of 42%. This increase is primarily attributed
to continued expansion of home health care nursing and growth in

32
<PAGE>

outpatient surgery. Home health care nursing increased 46% from $17,892,000 in
1995 to $26,057,000 in 1996. This increase resulted from expanding market share
in existing offices, opening branch offices, and increasing the scope of
services and the physician referral base.

Management services net revenues decreased to $15,934,000 in 1996 from
$16,357,000 in 1995, a decrease of 3%. This decrease is mainly attributable to
changes in the staffing/professional services division where revenues were
$12,538,000 in 1996 compared to $13,774,000 in 1995, a 9% decrease. The
majority of this decrease is the result of hospitals utilizing internal staffing
pools.

Cost of Service Revenues

Cost of service revenues increased 18% to $26,405,000 in 1996 from
$22,424,000 in 1995. As a percentage of net revenues, cost of service revenues
decreased from 60% in 1995 to 57% in 1996. This decrease is primarily
attributed to significant growth in the home health care nursing and outpatient
surgery divisions, which have lower direct costs.

General and Administrative Expenses

General and administrative expenses increased to $18,511,000 or 40% of
revenue in 1996 compared to $13,785,000 or 37% of revenue in 1995. The increase
is attributable to the expansion of the outpatient surgery division and
increased revenues in the home health care nursing division. As revenues
increased in the home health care nursing division, expenses also increased due
to the cost reimbursement method of home health care payments from the Medicare
system. General and administrative expenses also increased due to the addition
of three senior managers and additional personnel to enhance the information
system.

Other Income/Expense

Other income/expense increased to ($1,178,000) in 1996 from ($250,000) in
1995, a 371% increase. This increase is mainly attributable to a one-time
charge to earnings of $623,000. The charge was taken as a result of merger
discussions with CMI, a New York based provider of physician practice management
services. During discussions with the management of CMI, company management
decided to write off certain investments. These investments consisted primarily
of advances made to develop a proposed managed care organization and certain
non-operating equipment believed to have no realizable value to future
operations. The discussions with CMI began with a signed letter of intent in
October 1996 and were terminated in March 1997 because the companies could not
agree on terms.

Net Income

Net income decreased to $18,000 or $.01 per share for 1996 from $942,000 or
$.37 per share in 1995 mainly attributable to the one-time charge to earnings of
$623,000.

LIQUIDITY AND CAPITAL RESOURCES

The company's current capital resources are sufficient to fund current
operations for the foreseeable future. However, the company's business strategy
is to pursue the acquisition of complimentary business and expand current
operations which would increase its capital requirements. The timing, size and
success of the company's acquisition and expansion efforts and the associated
capital commitments cannot be readily predicted. The company currently intends
to finance future acquisitions by using shares of its common stock for a portion
of the consideration to be paid. In the event that the common stock does not
maintain a sufficient market value, or potential acquisition candidates are
otherwise unwilling to accept common stock as part of the consideration for the
sale of their businesses, the company may be required to utilize more of its
cash resources. If the company does not have sufficient cash resources, its
growth could be limited unless it is able to obtain additional equity or debt

33
<PAGE>

financing. Except for current lines of credit, the company has no firm
commitment for additional financings or borrowings.

At December 31, 1997, the company had revolving bank lines of credit of
$5,500,000 and $750,000 bearing interest at bank prime plus 1.5% and bank prime
plus 1%, respectively. Subsequent to year end, the $5,500,000 line of credit
was increased to $7,500,000 for 120 days. At December 31, 1997, approximately
$440,000 was unused under these lines of credit. These lines of credit are
collateralized by 80% of eligible receivables in the staffing and outpatient
surgery divisions and 75% in the home health care nursing division. Eligible
receivables are defined principally as trade accounts that are aged less than
90 days for the staffing and outpatient surgery divisions and 120 days for the
home health care nursing division. The line of credit is subject to certain
covenants, including a monthly borrowing base, a debt service coverage ratio,
and a leverage ratio. The company was not in compliance with the debt service
coverage ratio requirement at December 31, 1997, which default was waived by the
bank through June 30, 1998. The company was not in compliance with the leverage
ratio covenant at December 31, 1996, which default was waived by the bank. The
loan agreement was subsequently amended to increase the leverage ratio
requirement from 2.5 to 1 to 3.0 to 1, which the company complied with as of
December 31, 1996.

Net cash used by operating activities decreased from ($1,937,000) in the
year ended December 31,1996 to ($141,000) in the year ended December 31,1997.
The change was due to certain cash amounts related to the statutory requirements
of FutureCare being restricted at December 31, 1996 and unrestricted at
December 31, 1997 when petition for dissolution had been filed. Net cash used in
investing activities decreased from ($2,713,000) in the year ended December 31,
1996 to ($1,241,000) in the year ended December 31, 1997. This decrease is
attributed to a decrease in the fixed asset acquisitions in the current period.

Net cash provided by financing activities increased from $3,883,000 in the
year ended December 31, 1996 to $5,349,000 in the year ended December 31, 1997.
This increase is primarily attributed to a private placement of 400,000 shares
of $.001 par value convertible preferred stock pursuant to Regulation D of the
Securities Act of 1933 at $10 per share for gross proceeds of $4 million.

At December 31, 1997, the company had working capital of $3,137,000 and
stockholders equity of $8,274,000. The company's ratio of total liabilities to
equity at December 31, 1997 was 1.8 to 1.0.

INFLATION

The company does not believe that inflation has had a material effect on
its results of operations for the twelve months ended December 31, 1997. The
company expects that any increase in costs attributable to inflation in the
future would be offset by an increase in fees charged for services.

YEAR 2000 COMPLIANCE ISSUES

The company is currently evaluating its entire operation as a result of
potential problems associated with Year 2000. A task force has been established
within the company to evaluate all areas for compliance issues and develop
correction plans if necessary. Some internal areas and processes being
evaluated include initial charge entry through billing and collections; accounts
payable invoice receipt through processing and payment; bank processing of
receipts and disbursements; computer hardware and software functionality; and
time and/or date-sensitive office and medical equipment functionality. At
present, the company does not anticipate any material disruption in its
operations or significant costs to be incurred to attain compliance. There can
be no assurance, however, that the company will identify or adequately assess
all aspects of the business that may be affected. Due to this uncertainty, a
contingency plan will be developed as each area is evaluated to minimize any
negative impact to the company. The company is in the process of soliciting
information concerning the Year 2000 compliance status of its payors (including
the Medicare and Medicaid governmental programs), suppliers, and customers. In
the event that any of the company's significant payors, suppliers, or customers
do not successfully and timely achieve Year 2000 compliance, the company's
business and/or operations could be adversely affected.

34
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

In 1997, the Emerging Issues Task Force ("EITF") of the Financial
Accounting Standards Board ("FASB") reached a consensus on Issue 97-2,
"Application of FASB Statement No. 94 and APB Opinion No. 16 to Physician
Practice Management Entities and Certain Other Entities with Contractual
Management Arrangements." The guidance in Issue 97-2 applies to contractual
management relationships between physician practices in which the management
entity does not own a majority of the outstanding voting equity instruments of
the physician practice. The guidance in the issue is effective for the year
ended December 31, 1998 for arrangements existing at November 20, 1997 and
immediately for transactions occurring after November 20, 1997, and is not
expected to have any material impact on the company's financial statements.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

None.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Inapplicable.

DIRECTORS AND EXECUTIVE OFFICERS

The executive officers of the company are as follows:

Name Age Capacity
- ---------------------- --- --------

William F. Borne 40 Chief Executive Officer

Ronald A. LaBorde 41 Director

Jake L. Netterville 60 Director

David R. Pitts 58 Director

Peter F. Ricchiuti 41 Director

James P. Cefaratti 55 President, Chief Operating Officer and Secretary

Mitchel G. Morel 38 Chief Financial Officer

Cindy L. Doll 37 Vice President of Human Resources

Larry R. Graham 32 Senior Vice President of Operations

Michael D. Lutgring 28 General Counsel

35
<PAGE>

Joann B. Rushing 47 Executive Vice President
- ----------------

William F. Borne founded the company in 1982 and has served as chief
executive officer and a director since that time. In 1988, Mr. Borne also
founded and served as president and chief executive officer of Amedisys
Specialized Medical Services, Inc. until June 1993. Mr. Borne also founded and
served as chief executive officer of Amedisys Staffing Services, Inc. and
Amedisys Nursing Services, Inc.

Ronald A. LaBorde has been a director of the company since 1997. Since
1995, Mr. LaBorde has served as the president and chief executive officer of
Piccadilly Cafeterias, Inc. Mr. LaBorde has been a member of the Piccadilly
Cafeterias, Inc. board of directors since 1992. Prior to 1995, Mr. LaBorde held
various executive positions with Piccadilly Cafeterias, Inc. including executive
vice president and chief financial officer from 1992 to 1995, executive vice
president, corporate secretary and controller, from 1986 to 1992 and vice
president and assistant controller from 1982 to 1986. Mr. LaBorde is a
certified public accountant.

Jake L. Netterville has been a director of the company since 1997. Mr.
Netterville is the managing director of Postlethwaite & Netterville, A
Professional Accounting Corporation, one of the largest privately held
accounting firms in Louisiana. Mr. Netterville has held that position since
1977. Mr. Netterville is a Certified Public Accountant and has served as
chairman of the board of the American Institute of CPAs, the highest national
office in the accounting profession. Mr. Netterville is a permanent member of
the American Institute of CPAs' Governing Council. Mr. Netterville serves as a
member of the board of directors of the Wall Street Deli, a Nasdaq listed
company, and Catalyst Vidalia Corporation. Mr. Netterville holds a B.S. in
accounting from Louisiana State University.

David R. Pitts has been a director of the company since 1997. Mr. Pitts is
the president and chief executive officer of Pitts Management Associates, Inc.,
a national hospital and healthcare consulting firm. Mr. Pitts has over thirty-
five years' experience in hospital operations, healthcare planning and multi-
institutional organization, and has served in executive capacities in a number
of hospitals, multi-hospital systems, and medical schools. Since 1984, Mr.
Pitts has served as president and chief executive officer of HSLI, Inc., a
company managing self-insured trusts and providing insurance consulting services
to corporations. Mr. Pitts serves as a director of Union Planters Bank of
Louisiana. Mr. Pitts holds a B.S. degree in management and economics at Ohio
State University and Masters degrees in both hospital administration and public
administration at the University of Minnesota.

Peter F. Ricchiuti has been a director of the company since 1997. Mr.
Ricchiuti has been Assistant Dean and Director of Research at Tulane
University's A.B. Freeman School of Business since 1993, and an adjunct
professor of finance at Tulane since 1986. From 1993 to 1996, Mr. Ricchiuti was
the assistant dean and director of Career Development and Placement at the A.B.
Freeman School of Business at Tulane. From 1988 to 1993 Mr. Ricchiuti was
assistant state treasurer and chief investment officer for the Department of the
Treasury, State of Louisiana. Mr. Ricchiuti is a member of the board of
trustees for WYES-TV, the public broadcasting station in New Orleans, Louisiana.
Mr. Ricchiuti holds a B.S. degree from Babson College and a MBA from the
University of New Orleans.

James P. Cefaratti has served as president and chief operating officer of
the company since August, 1997, and secretary since April 1998. Mr. Cefaratti
was president and chief executive officer of Global Vision, Inc. from April 1995
to July 1997. From August 1993 until April 1995, Mr. Cefaratti was a private
investor involved in the purchase and sale of small health care companies. In
1989, Mr. Cefaratti joined Home Intensive Care, Inc. as president and chief
executive officer, until it was sold to W.R. Grace & Co. in June 1993.

Mitchel G. Morel has served as chief financial officer of the company since
June 1994 and also served as vice president of finance from February 1991. Mr.
Morel is responsible for directing financial activities and financial reporting
systems of the company. From October 1989 to January 1991, Mr. Morel served as
comptroller

36
<PAGE>

of Amedisys Staffing Services, Inc., a subsidiary of the company. Mr. Morel has
a Bachelor of Science degree in business administration with a major in
accounting from Louisiana State University and is licensed as a Certified Public
Accountant in the state of Louisiana.

Cindy L. Doll has served as vice president of human resources of the
company since March 1996. From March 1995 until March 1996, Ms. Doll was human
resources director of the company. From July 1995 until March 1995 Ms. Doll was
the benefits coordinator of the company. From January 1993 until July 1993, Ms.
Doll was office manager of MedAmerica, Inc., a subsidiary of the company. Ms.
Doll received a Bachelor of Arts degree from University of Pennsylvania.

Larry R. Graham has served as senior vice president of operations of the
company since December 1997. From April 1996 until December 1997, Mr. Graham was
vice president, finance of the company. From July 1993 until April 1996, Mr
Graham was director of financial services of General Health System. Mr. Graham
received a Bachelor of Science degree in business administration from the
University of Southern Mississippi.

Michael D. Lutgring has served as general counsel of the company since
November 1997. From October 1996 until November 1997 Mr. Lutgring operated his
own law practice. Mr. Lutgring received his Juris Doctorate from Louisiana
State University in May 1996.

Joann B. Rushing has served as executive vice president of the company
since October 1997. From June 1995 until June 1997, Ms. Rushing was officer and
vice president, marketing and public relations of Global Vision, Inc. From
January 1994 until June 1995, Ms. Rushing was executive vice president and
partner of Medical Data Resources. From June 1993 until January 1994, Ms.
Rushing was an independent consultant with various companies in the health care,
manufacturing and retail industries.

There is no family relationship between or among any executive officers and
directors.

EXECUTIVE COMPENSATION

The following table sets forth certain information regarding compensation
paid by the company to the chief executive officer and for all other executive
officers whose total annual salary and bonus exceeded $100,000 during 1997. The
company maintains a disability insurance policy and life insurance policy on Mr.
Borne under which the company is a beneficiary. These policies are pledged as
collateral for a bank loan of the company. The named executive officers
received perquisites and other personal benefits in amounts less than 10% of
their total annual salary and bonus.

37
<PAGE>

SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION

OTHER
ANNUAL ALL OTHER
YEAR SALARY BONUS COMPENSATION/(1)/ OPTIONS COMPENSATION

<S> <C> <C> <C> <C> <C> <C>
William F. Borne
Chief Executive Officer 1997 $ 190,000 $ 20,000 $1,987 34,525 -
1996 153,771 20,000 - 35,000 -
1995 133,519 - - 3,250 -

Lynne Shackelford-
Bernhard/(2)/, President, 1997 $ 100,000 $ 43,649 $3,450 14,644 -
Amedisys Resource 1996 90,645 17,500 - 18,500 -
Management 1995 78,958 - - 3,250 -

Mitchel G. Morel,
Chief Financial Officer 1997 $ 100,000 $ 12,500 $1,000 24,128 -
1996 87,698 17,500 - 18,500 -
1995 84,297 - - 3,250 -

Charles M. McCall/(2)/
President, Staffing and 1997 $ 82,812 $ 33,203 $4,501 13,612 -
Patient Care Services 1996 75,071 5,525 - 9,500 -
1995 - - - - -
</TABLE>
- -------------------
(1) Comprised solely of a car allowance.
(2) Ms. Shackelford-Bernhard and Mr. McCall were executive officers for the
fiscal year ended December 31, 1997. In April 1998, the board of directors
appointed new executive officers and declined to appoint Ms. Shackelford-
Bernhard and Mr. McCall as executive officers. Ms. Shackelford-Bernhard
remains an employee of the company.

EMPLOYMENT AGREEMENTS

Except for Messrs. Borne and Cefaratti, none of the officers of the company
is subject to an employment agreement. On October 1, 1996, Mr. Borne entered
into an employment agreement with the company with a term through December 31,
1997 which provides for successive one-year renewals unless either party gives
30-day written notice of its election not to renew prior to the expiration of
the term. The agreement provides for a base salary of $16,666 monthly, which
may be adjusted by the Board of Directors, and an annual bonus equal to the
greater of (i) 25% of the base salary for the applicable year if the company
achieves a 20% or greater increase in its stock price, or (ii) 100% of the base
salary for the applicable year if the company's earnings per share is at or
above the company's budgeted projection for such year or if the company achieves
a 50% or greater increase in its stock price. Mr. Borne is entitled to
participate in company benefit plans, receives 20 business days vacation, the
use of an automobile with a value of at least $50,000, plus reasonable expenses.
Pursuant to the agreement, Mr. Borne has the option to borrow up to $125,000 in
the form of a three year loan bearing interest at the company's best borrowing
rate, the outstanding balance of which is currently $64,000. In the event of
termination of employment for death or disability, Mr. Borne shall be entitled
to payment of salary and bonus for the lesser of one year or the remaining term
under the agreement. In the event of termination without cause or if Mr. Borne
resigns for good reason he shall be entitled to the payment of the full base
salary for the period of one year and an amount equal to the aggregate bonus
amount paid to Mr. Borne for the most recently completed calendar year.
Additionally, the

38
<PAGE>

agreement provides that during its term and for a one-year period thereafter,
Mr. Borne shall not compete with the company.

Effective January 1998, Mr. Cefaratti entered into an employment agreement
with the company for the position of president/chief operating officer. The
initial term of the agreement is through December 31, 2002, which will be
automatically extended for additional five-year terms unless either party
provides written notice of termination at least six (6) months prior to the
expiration of the initial or extended term. Commencing with the company's 1999
annual meeting of shareholders, the company will use its best efforts to
nominate and cause the election of Mr. Cefaratti to the company's board of
directors and its executive committee. If Mr. Cefaratti is not elected to the
board of directors, he shall be entitled to terminate the agreement.

The agreement provides for an annual base salary of $250,000 per year and
an automatic yearly cash increase on January 1 of the greater of: (1) six
percent (6%) or (2) the percentage increase of the Consumer Price Index for
Urban Wage and Earning and Clerical Workers (Greater Metropolitan Baton Rouge
Area, all items) issued by the Bureau of Labor Statistics of the U.S. Department
of Labor; or (3) $25,000. In addition, the company's board of directors may
grant yearly cash increases in excess of the amount provided for above. On
January 1, 1998 and January 1 of each year thereafter, the company shall issue
Mr. Cefaratti the number of shares of company common stock which will have a
market value equal to fifty percent (50%) of the yearly cash increase. The
market value of such yearly stock increase shall be cumulative and added to base
salary. Each year thereafter, common stock which represents an accumulation of
all previous yearly stock increases shall be issued by the company to Mr.
Cefaratti for that portion of the base salary on the first business day of each
year. Market value of the common stock issued in connection with the yearly
stock increase shall be calculated based upon the closing price per share for
the five (5) trading days preceding such date. Mr. Cefaratti shall be entitled
to receive a bonus payable within 120 days after the company's fiscal year end
and equal to 100% of his base salary in effect at the time the bonus is paid, if
the company attains or exceeds the operating income(loss) as presented in the
budget approved by the company's board of directors. Operating income shall be
calculated using EBITDA, as determined by generally accepted accounting
principles.

On January 1, of each year during the term of the agreement, the company
shall grant Mr. Cefaratti options to purchase shares of common stock equal to
the greater of (1) one and one-half percent (1 1/2%) of the number of shares of
common stock issued by the company during the preceding fiscal year or (2)
30,000 shares. Said options shall vest 100% at the time of grant and shall have
a term of ten (10) years from the date of grant. The exercise price shall be
the average closing price for the five (5) days prior to the date of grant.

In the event the company files a registration statement registering its
common stock with the SEC under the Act on any form other than S-4 or S-8, the
company will give written notice to Mr. Cefaratti at least thirty (30) days
prior to the filing of the registration statement. Mr. Cefaratti then has
twenty (20) days in which to notify the company of his intention to register any
common stock he owns. However, the company will not be required to include any
shares of common stock owned by Mr. Cefaratti if the offering is an underwritten
public offering, and (1) Mr. Cefaratti does not agree to sell his common stock
on the same terms and conditions as to which other common stock is being sold in
the offering by the company, (2) the managing underwriter determines and advises
the company in writing that the inclusion of such shares of common stock owned
by Mr. Cefaratti would jeopardize the success of the offering, and (3) in each
case all shares of common stock owned by Mr. Cefaratti which are not included in
the offering will be withheld from the market for no longer than three (3)
months after the effective date of the registration statement.

In the event that the company adopts a stock option plan, Mr. Cefaratti
shall be eligible to receive grants of stock options under such plan in such
amount as determined by the board of directors or any committee thereof. All
options granted to Mr. Cefaratti shall have a term of ten (10) years or such
lesser term as determined by the specific stock option plan under which options
are granted. All options so granted shall vest thirty-three and one-third
percent (33 1/3%) at the date of grant and thirty-three and one-third percent
(33 1/3%) at the end of each year thereafter, so long as Mr. Cefaratti remains
employed by the company and shall continue to vest during any deferred

39
<PAGE>

compensation period. Vesting of options shall immediately accelerate upon a
change of control. Mr. Cefaratti shall have the right to exercise vested
incentive stock options for up to ninety (90) days after termination of the
deferred compensation period and non-statutory stock options for up to twelve
(12) months after termination of the deferred compensation period. All other
terms of the options shall be subject to and determined by the stock option
plan.

Unless otherwise agreed by Mr. Cefaratti, Mr. Cefaratti's principal place
of employment shall be within fifteen (15) miles of the company's executive
offices located at 3029 S. Sherwood Forest Boulevard. If Mr. Cefaratti agrees
to relocation, the company shall (1) pay all out-of-pocket expenses incurred by
Mr. Cefaratti in connection with relocation; (2) if requested by Mr. Cefaratti,
purchase his residence at fair market value as determined by a real estate
appraisor; and (2) lend Mr. Cefaratti the sum of $100,000 to be used solely for
the purchase of a residence, which shall accrue interest at the prime rate as
published in The Wall Street Journal and shall be payable in sixty (60) equal
installments of principal, plus accrued interest. The loan amount shall be
increased as of January 1 of each year during the term of the agreement by the
same percentage increase as the base salary.

Mr. Cefaratti is entitled to the following additional benefits: (1) five
(5) weeks vacation; (2) company car; (3) reimbursement of reasonable travel and
other expenses; (4) participation in employee benefit plans; (5) company payment
of life insurance premiums, not to exceed $25,000 per year; (6) membership fees
and dues in (a) a country club, not to exceed $15,000 per year, subject to
adjustment, (b) two business luncheon clubs, (c) airline clubs and (d) one
personal credit card; (7) payment by the company of IRS penalties for anything
connected with the agreement other than base salary or bonuses; (8) payment for
tax preparation and financial planning, not to exceed $1,500 per year, as
adjusted; (9) participation in any new or additional compensation concepts or
programs for any officer of the company (other than compensation based on sales
or other commissions); (10) a one percent (1%) equity ownership interest in each
business combination regardless of whether the company is a 100% owner,
sponsored by the company and its affiliates (any person controlling, under
common control with or controlled by the company) to own, lease or operate
health care services which either open for business, or as to which the funds
necessary to open for business are raised, during the term of the agreement.

The company may terminate the agreement for cause, which is defined as:

(a) a material default or breach by Mr. Cefaratti of any of the
provisions of the agreement materially detrimental to the company
which is not cured within thirty (30) days following written notice
thereof;

(b) actions by Mr. Cefaratti constituting fraud, embezzlement or
dishonesty which result in a conviction of a criminal offense not
overturned on appeal;

(c) intentionally furnishing materially false, misleading, or omissive
information to the company's board of directors or any committee
thereof, that is materially detrimental to the company;

(d) actions constituting a breach of the confidentiality of the business
and/or trade secrets of the company which is materially detrimental
to the company; and

(e) willful failure to follow reasonable and lawful directives of the
company's board of directors, which are consistent with Mr.
Cefaratti's job responsibilities and performance which is not cured
within thirty (30) days following written notice thereof.

The company shall have the right to terminate the agreement without cause
on ninety (90) days written notice. Mr. Cefaratti may terminate the agreements
upon thirty (30) days written notice, after an occurrence of a material default
by the company which is not cured within thirty (30) days.

40
<PAGE>

Mr. Cefaratti may terminate the agreement upon thirty (30) days written
notice within eighteen (18) months following the occurrence of a change of
control, which is defined as:

(a) the acquisition by any person, entity or group within the meaning of
Section 13(d) or Section 14(d) of the Securities Exchange Act of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange act) of thirty percent (30%) or more of either the
then outstanding shares of the company's common stock or the combined
voting power of the company's then outstanding voting securities
entitled to vote generally in the election of directors, provided,
however, the purchase by underwriters in a firm commitment public
offering of the company's securities shall not constitute a change of
control;

(b) if the individuals who serve on the company's board of directors as
of the commencement date (the incumbent board) cease for any reason
to constitute at least a majority of the board of directors;
provided, however, any person who becomes a director subsequent to
the commencement date, whose election or nomination for election by
the company's shareholders was approved by a vote of at least a
majority of the directors then compiling the incumbent board, shall
for purposes of the agreement be considered as if such person was a
member of the incumbent board; or

(c) approval by the company's stockholders of: (1) a merger,
reorganization or consolidation whereby the company's shareholders
immediately prior to such approval do not, immediately after
consummation of such reorganization, merger or consolidation, own
more than fifty percent (50%) of the combined voting power entitled
to vote generally in the election of directors of the surviving
entity's then outstanding voting securities, or (2) liquidation or
dissolution of the company, or (3) the sale of all or substantially
all of the assets of the company.

Mr. Cefaratti shall be entitled to receive deferred compensation if his
employment is terminated for any of the following: (1) his death; (2)
termination by the company without cause; (3) termination by Mr. Cefaratti upon
default by the company; (4) termination by Mr. Cefaratti after a change of
control; (5) termination by the company pursuant to automatic extension; or (6)
termination by Mr. Cefaratti due to lack of board membership. Said deferred
compensation shall consist of the greater of: (i) the base salary payments Mr.
Cefaratti would have received had his employment continued for the remaining
term of the agreement (including yearly cash increases); or (ii) an amount equal
to one month's base salary for each $10,000 of total compensation (as
hereinafter defined) Mr. Cefaratti received in either (a) the highest of the
last five (5) fiscal years of the agreement or (b) an amount equal to 150% of
the total base salary (including yearly stock increases) for the previous fiscal
year, whichever is greater.

The agreement provides that during its term and for a two-year period
thereafter, Mr. Cefaratti shall not compete with the company.

STOCK OPTIONS

The company's amended stock option plan provides for the issuance of an
aggregate of 1,000,000 shares of common stock upon exercise of options granted
pursuant to such amended stock option plan. As of December 31, 1997, options to
purchase an aggregate of 957,065 shares were outstanding under the amended stock
option plan.

41
<PAGE>

<TABLE>
<CAPTION>
1997 STOCK OPTION GRANTS
------------------------
POTENTIAL
REALIZABLE
VALUE AT ASSURED
ANNUAL RATES OF
PERCENT OF STOCK PRICE
OPTIONS TOTAL APPRECIATION FOR
GRANTED OPTIONS EXERCISE PRICE EXPIRATION OPTION TERM
NAME (SHARES) GRANTED (PER SHARE) DATE 5% 10%
-- ---
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William F. Borne 34,525 3.6% $6.20 Feb 2007 $30,835 $43,071

Lynne Shackelford- 14,644 1.5% $6.20 Feb 2007 $13,079 $17,269
Bernhard

Mitchel G. Morel 24,128 2.5% $6.20 Feb 2007 $21,549 $30,099

Charles M. McCall 13,612 1.4% $6.20 Feb 2007 $12,158 $16,982
</TABLE>

AGGREGATED OPTION EXERCISES IN 1997
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES
ACQUIRED NUMBER OF SECURITIES
ON VALUE UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
NAME EXERCISE REALIZED OPTIONS MONEY OPTIONS/(*)/
- ---------------------------------------------------------------------------------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William F. Borne - - 26,425 46,330 $0 $0
Lynne Shackelford- - - 14,298 22,096 $0 $0
Bernhard
Mitchel G. Morel - - 17,459 28,419 $0 $0
Charles M. McCall - - 7,904 15,408 $0 $0
</TABLE>
_____________________
(*) Computed based on the differences between the fair market value and
aggregate exercise prices.

STOCK OWNERSHIP

The following table sets forth, as of October 22, 1998, certain information
with respect to the beneficial ownership of the company's common stock by (i)
each person known to the company who beneficially owns more than 5% of the
company's outstanding common stock, (ii) each director, (iii) all named
executive officers, and (iv) all directors and officers as a group:

42
<PAGE>

<TABLE>
<CAPTION>
SHARES OF PERCENT OF
NAME AND ADDRESS/(1)/ COMMON STOCK VOTING
POWER/(2)/
<S> <C> <C>
Terra Healthy Living, Ltd. 861,622/(3)/ 18.4%
William F. Borne 432,359/(4)/ 9.2%
Lynne Shackelford-Bernhard 56,606/(5)/ 1.2%
Mitchel G. Morel 39,155/(6)/ *
Charles M. McCall 33,754/(7)/ *
Cindy L. Doll 5,687/(8)/ *
David Pitts 5,000 *
Larry R. Graham 2,338/(9)/ *
Peter F. Ricchiuti 2,000 *
Ronald A. LaBorde 2,000 *
Jake Netterville 2,000 *
Michael D. Lutgring 793 *
James P. Cefaratti -- *
Joann B. Rushing -- *
All officers and directors as a group (11 persons) 491,332/(10)/ 10.4%
</TABLE>
_____________________________
(*) Less than one percent.
(1) Each address is the company, except for (i) Terra Healthy Living,
Ltd., at Bahnofplatz 9, 8001 Zurich, Switzerland, (ii) David Pitts,
at 7946 Goodwood Boulevard, Baton Rouge, LA 70806, and (iii) Peter F.
Ricchiuti, Associate Dean, Director of Research, A.B. Freeman School
of Business, Tulane University, New Orleans, LA 70118.
(2) Includes common stock and common stock equivalents.
(3) Includes 861,622 shares of company common stock underlying 380,000
shares series A preferred stock.
(4) Includes options to purchase 26,425 shares of common stock.
(5) Includes options to purchase 14,298 shares of common stock.
(6) Includes options to purchase 17,459 shares of common stock.
(7) Includes options to purchase 7,904 shares of common stock.
(8) Includes options to purchase 5,687 shares of common stock.
(9) Includes options to purchase 2,338 shares of common stock.
(10) Includes options to purchase 51,909 shares of common stock.

43
<PAGE>

CERTAIN TRANSACTIONS

In connection with the private placement, Terra Healthy Living, Ltd.
purchased 350,000 shares of series A preferred stock, which is currently
convertible into 783,467 shares of common stock. Terra Healthy Living, Ltd. is
only affiliated to the company through its stock ownership.

Notes receivable from related parties consist of unsecured and non-interest
bearing notes from the chief executive officer totaling approximately $64,000 at
December 31, 1997 and $65,000 at March 31, 1998. The maturity dates for the
notes receivable from the chief executive officer are as follows: (i) $8,000
payable in December 1998, (ii) $ 18,000 payable in December 1999, and (iii)
$38,000 payable in December 2000. Additional notes receivable from related
parties consist of receivables from the Internal Medicine Clinic of Tangipahoa,
Inc. which owns 40% of Amedisys Physician Services, Inc. totaling approximately
$150,000 at December 31, 1997. The fair value of the notes receivable from
related parties is equal to the recorded value due to the short term nature of
the notes.

In March, 1994, the company entered into agreements with Internal Medicine
Clinic of Tangipahoa, Inc. to form Rural Health Provider Network, Inc. ("RHPN")
of which the company owns 60% (the "Agreements"). The name of RHPN has
subsequently been changed to Amedisys Physician Services, Inc. ("APS"). APS
operated a lab, walk-in-clinic in Hammond, Louisiana, and managed the physician
practice of Internal Medicine Clinic of Tangipahoa, Inc. APS also invested in an
opthamology clinic in Hammond, Louisiana. Pursuant to the Agreements, the
company loaned APS $312,000. This amount was comprised of $112,000 for the
purchase of the fixed assets of Internal Medicine Clinic of Tangipahoa, Inc. and
a working capital loan of $200,000, collateralized by Internal Medicine Clinic
of Tangipahoa, Inc.'s accounts receivable. The company was responsible for
funding the operations of APS, including loaning additional funds to APS if APS
did not have adequate cashflow to meet its current obligations. The balance owed
to the company by Internal Medicine Clinic of Tangipahoa, Inc. for working
capital requirements at December 31, 1995 was $256,000. Two notes were issued on
January 1, 1996 to the company by Internal Medicine Clinic of Tangipahoa, Inc.
in the combined amount of $256,000. These notes bear interest at 9%, require
monthly principal and interest payments of $4,706 with the balance due on
maturity of January 1, 1999 and are secured by the accounts receivable of
Internal Medicine Clinic of Tangipahoa, Inc. During 1996, the company collected
approximately $6,000 from Internal Medicine Clinic of Tangipahoa, Inc. on the
outstanding notes. Because of a dispute between the owners of Internal Medicine
Clinic of Tangipahoa, Inc. and the company over the amounts outstanding, the
company determined that the probability of collecting $100,000 of the payable
was uncertain and therefore, elected to expense that amount in December 1996,
resulting in a remaining balance owed at December 31, 1996 of $150,000. The
current amount outstanding on the notes payable due from Internal Medicine
Clinic of Tangipahoa, Inc. is $143,723, and management believes these notes are
collectible. In addition to the outstanding notes payable due from Internal
Medicine Clinic of Tangipahoa, Inc., APS recorded management fees of $28,097 in
1996 and $541,441 in 1995 from Internal Medicine Clinic of

44
<PAGE>

Tangipahoa, Inc. As of December 31, 1996, management fees of $28,097 were still
outstanding. From January through August 1997, Internal Medicine Clinic of
Tangipahoa, Inc. made payments of varying amounts on the unpaid balance of
management fees. At August 1997, the entire balance of $28,097 was paid. The
company and Internal Medicine Clinic of Tangipahoa, Inc. terminated their
management relationship in August 1996, and have no other arrangements with
respect to management of physician practices or independent practice
associations.

In accordance with the terms of the Agreements, Internal Medicine Clinic of
Tangipahoa, Inc. has the right and option to sell its shares of APS back to APS
at a price equal to 3.5 times the earnings per share of APS attributable to each
share of APS stock, to be calculated based on the largest annual earnings per
share amount during the three-year period prior to the time such repurchase is
requested by Internal Medicine Clinic of Tangipahoa, Inc. This option became
exercisable in March 1997, and does not have an expiration date. In the
agreements, the company agreed to loan the funds to repurchase the stock to APS,
if necessary. In addition, the agreements provide that in the event the
management agreement between Internal Medicine Clinic of Tangipahoa, Inc. and
APS is terminated, Internal Medicine Clinic of Tangipahoa, Inc. shall be
required to repurchase all of the assets of Internal Medicine Clinic of
Tangipahoa, Inc. acquired by APS at fair market value within 45 days of such
termination. At this time, the option has not been exercised by Internal
Medicine Clinic of Tangipahoa, Inc. The company has been reformulating its
business to emphasize three divisions: infusion therapy services, ambulatory
surgery centers and home health nursing services. In light of these changes, APS
has become a diminished portion of the company's business and constitutes less
than 5% of the company's operations. Accordingly, the exercise of the company's
repurchase right has not been a top priority of management. The company intends
to exercise its right to have Internal Medicine Clinic of Tangipahoa, Inc.
repurchase the assets acquired by APS, and is currently in negotiations with
Internal Medicine Clinic of Tangipahoa, Inc. to determine the fair market value
of the assets. Management believes the fair market value of the assets will be
no more than $50,000.

Notes payable to related parties in 1996 consisted primarily of a note
issued in 1994 in the original amount of $1,080,000, bearing interest at 9% with
a fifteen year amortization, to Vista Maple, Ltd. During 1994, prior to its
acquisition by the company, Amedisys Surgery Centers, L.C. purchased a building
and land from Vista Maple, Ltd., a real estate partnership, whose owners were
also owners of Amedisys Surgery Centers, L.C., and are now stockholders of the
company. The company currently has a 15% interest in Vista Maple, Ltd. The note
was refinanced under a five year installment note in June 1997 with Merrill
Lynch in the amount of $973,000. The principal monthly payment is $5,403 and the
interest rate is the 30-day commercial paper rate plus 2.75%, with a balloon
payment of $648,401. The remaining balance of notes payable to related parties
($45,000) consists of unsecured notes to certain stockholders of the company
that are due on demand and bear interest at rates from 0%-12%. The fair value of
these notes approximates the recorded balance due to the short-term nature of
the notes.

45
<PAGE>

INDEX TO FINANCIAL STATEMENTS

AMEDISYS, INC.

For the Six Months Ended June 30, 1998

Consolidated Balance Sheets...................................... F-2
Consolidated Statements of Operations............................ F-3
Consolidated Statements of Cash Flows............................ F-4
Notes to Consolidated Financial Statements....................... F-5

Fiscal Year Ended December 31, 1997

Independent Auditor's Report..................................... F-11
Consolidated Balance Sheets...................................... F-12
Consolidated Statements of Operations............................ F-13
Consolidated Statement of Stockholders' Equity................... F-14
Consolidated Statements of Cash Flows............................ F-15
Notes to Financial Statements.................................... F-17

F-1
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED, IN 000'S)

ASSETS JUNE 30, DECEMBER 31,
1998 1997

CURRENT ASSETS:
Cash $ 471 $ 4,070
Accounts Receivable, Net of Allowance for Doubtful
Accounts of $2,957 in June 1998 and $1,617 in
December 1997 4,292 9,630
Prepaid Expenses 891 247
Other Current Assets 4,004 654
------- ------
Total Current Assets 9,658 14,601

Notes Receivable from Related Parties 224 252

Property, Plant and Equipment, Net 6,056 4,785

Other Assets, Net 12,374 3,232
------- ------
Total Assets $ 28,312 $ 22,870
======= ======
LIABILITIES

CURRENT LIABILITIES:
Notes Payable $ 6,090 $ 5,806
Current Portion of Long-Term Debt 927 927
Accounts Payable 2,486 1,338
Accrued Expenses:
Payroll and Payroll Taxes 1,541 2,025
Insurance 1,020 521
Other 1,398 847
------- ------
Total Current Liabilities 13,462 11,464

Long-Term Debt 4,948 3,129
Other Long-Term Liabilities 1,136 0
------- ------
Total Liabilities 19,546 14,593
------- ------
Minority Interest 3 3
------- ------
STOCKHOLDERS' EQUITY

Common Stock 3 3
Preferred Stock 1 1
Additional paid-in capital 12,006 7,092
Treasury Stock (25) (25)
Stock Subscriptions Receivable (1) 0
Retained Earnings (deficit) (3,221) 1,203
------- ------
Total Stockholders' Equity 8,763 8,274
------- ------
Total Liabilities and Stockholders' Equity $ 28,312 $ 22,870
======= ======

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

F-2
<PAGE>

Amedisys, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and six months ended June 30, 1998 and 1997
(Unaudited, in 000's except per share data)

THREE MONTHS ENDED SIX MONTHS ENDED
--------------------- ------------------
JUNE 98 JUNE 97 JUNE 98 JUNE 97
<S> <C> <C> <C> <C>
Income:
Service revenue $ 11,765 $ 13,880 $ 24,475 $ 27,264
Cost of service revenue 6,652 8,094 14,319 15,973
------- ------- ------- -------
Gross margin 5,113 5,786 10,156 11,291
------- ------- ------- -------
General and administrative expenses:
Salaries and benefits 4,151 2,763 9,389 5,497
Other 3,663 2,276 7,098 4,433
------- ------- ------- -------
Total general and administrative expenses 7,814 5,039 16,487 9,930
------- ------- ------- -------
Operating income (loss) (2,701) 747 (6,331) 1,361
------- ------- ------- -------
Other income and expense:
Interest income 9 15 21 18
Interest expense (215) (209) (418) (393)
Miscellaneous 17 58 25 76
------- ------- ------- -------
Total other income and expenses (189) (136) (372) (299)
------- ------- ------- -------
Income (loss) before income taxes and minority interest (2,890) 611 (6,703) 1,062

Provision (benefit) for estimated income taxes (987) 217 (2,279) 379
------- ------- ------- -------
Income (loss) before minority interest (1,903) 394 (4,424) 683

Minority interest in consolidated subsidiary 0 (21) 0 (9)
------- ------- ------- -------
Net income (loss) $ (1,903) $ 373 $ (4,424) $ 674
======= ======= ======= =======
Basic earnings (losses) per common share $ (0.62) $ 0.14 $ (1.45) $ 0.26
======= ======= ======= =======
Weighted average common shares outstanding 3,064 2,697 3,057 2,639
======= ======= ======= =======
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

F-3
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED, IN 000'S)

JUNE 1998 JUNE 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ (4,424) $ 674
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 870 581
PROVISION FOR BAD DEBTS 415 425
MINORITY INTEREST IN AFFILIATED COMPANY 0 9
(GAIN) LOSS ON DISPOSAL OF PROPERTY AND EQUIPMENT 4 (13)
LOSS ON SALE OF MARKETABLE SECURITIES 0 3

CHANGES IN ASSETS AND LIABILTIES:
(INCREASE) DECREASE IN ACCOUNTS RECEIVABLE 3,919 (974)
(INCREASE) IN PREPAID EXPENSES (644) (189)
(INCREASE) IN OTHER CURRENT ASSETS (3,217) (3)
(INCREASE) IN OTHER ASSETS (198) (391)
INCREASE (DECREASE) IN ACCOUNTS PAYABLE 170 (603)
INCREASE (DECREASE) IN ACCRUED EXPENSES (515) 723
--------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (3,620) 242
--------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
PURCHASE OF FURNITURE, FIXTURES & EQUIPMENT (1,625) (754)
PROCEEDS FROM SALE OF FURNITURE, FIXTURES & EQUIPMENT 0 56
CASH PAID FOR ACQUISITIONS (2,005) 0
(INCREASE) DECREASE IN NOTES RECEIVABLE FROM RELATED PARTIES 28 (5)
--------- --------
NET CASH (USED IN) INVESTING ACTIVITIES (3,602) (703)
--------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
PURCHASE OF TREASURY STOCK 0 (25)
CASH RECEIVED IN ACQUISITIONS 317 0
NET INCREASE IN BORROWINGS ON LINE OF CREDIT 284 672
PAYMENTS ON NOTES PAYABLE (704) (377)
PROCEEDS FROM NOTES PAYABLE 473 1,704
INCREASE (DECREASE) IN NOTES PAYABLE TO RELATED PARTIES 0 (988)
PROCEEDS FROM COMMON STOCK 0 831
DECREASE IN STOCK SUBSCRIPTIONS 0 1
PROCEEDS FROM PREFERRED STOCK 3,253 0
--------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,623 1,818
--------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,599) 1,357

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,070 1,104
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 471 $ 2,461
========= ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CASH PAYMENTS FOR:
INTEREST $ 426 $ 360
========= ========
INCOME TAXES $ 151 $ 22
========= ========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITY (SEE NOTE 9 TO FINANCIAL STATEMENTS):
VALUE OF STOCK ISSUED IN EXCHANGE $ 894
VALUE OF NOTE PAYABLE ISSUED IN EXCHANGE 1,575
CASH ACQUIRED IN EXCHANGE (317)
WORKING CAPITAL DEFICIT ACQUIRED NET OF CASH AND CASH EQUIVALENTS 3,553
FAIR VALUE OF PROPERTY, PLANT AND EQUIPMENT ACQUIRED (385)
FAIR VALUE OF OTHER ASSETS ACQUIRED (27)
LONG TERM DEBT ASSUMED 3,069
FAIR VALUE OF OTHER LIABILTIES ASSUMED 54
---------
NON CASH PORTION OF ACQUISITIONS 8,416
CASH PAYMENT FOR ACQUISITIONS 2,005
---------
GOODWILL RECORDED IN EXCHANGE $ 10,421
=========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

F-4
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. UNAUDITED FINANCIAL INFORMATION

The financial information as of June 30, 1998 and 1997, included herein is
unaudited; however, such information reflects, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) that are
necessary to present fairly the results of operations for such periods. Results
of operations for the interim periods are not necessarily indicative of results
of operations which will be realized for the year ending December 31, 1998.
These interim consolidated financial statements should be read in conjunction
with the Company's annual financial statements and related notes in the
Company's Form 10-K.

2. EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," which simplifies the computation of earnings per share (EPS). The
Company adopted SFAS No. 128 in the fourth quarter of 1997. SFAS No. 128
requires the restatement of prior years' EPS data; however, application of the
statement has no impact on the Company's prior years' EPS data.

Basic net income per share of common stock is calculated by dividing net
income applicable to common stock by the weighted-average number of common
shares outstanding during the year. Diluted net income per share is not
presented as stock options and convertible securities outstanding during the
periods presented were not dilutive.

3. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting for Start-up Costs. During April 1998, the Accounting Standards
Executive Committee of the AICPA issued Statement of Position 98-5 ("SOP"),
"Reporting on the Costs of Start-Up Activities." The SOP requires costs of
start-up activities and organization costs to be expensed as incurred. The SOP
is effective for financial statements for fiscal years beginning after December
15, 1998. The Company elected to write off start-up costs in the fourth quarter
of 1997 in anticipation of the issuance of the SOP.

Accounting for Derivative Instruments and Hedging Activities. In June
1998, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities". The Statement establishes accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
Statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's gains and losses
to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. SFAS 133 is
effective for fiscal years beginning after June 15, 1999 and must be applied to
instruments issued, acquired, or substantively modified after December 31, 1997.
The Company does not expect the adoption of the accounting pronouncement to have
a material effect on its financial position or results of operations.

4. MEDICARE REIMBURSEMENT REDUCTIONS AND RELATED RESTRUCTURING

The Company derives approximately 40% of its revenues from the Medicare
system. In 1997, Congress approved the Balanced Budget Act of 1997 (the "Budget
Act"). The Budget Act established an interim payment system (the "IPS") that
provided for the lowering of reimbursement limits for home health visits. For
cost reporting periods beginning on or after October 1, 1997, Medicare-
reimbursed home health agencies will have their cost

F-5
<PAGE>

limits determined as the lesser of (i) their actual costs, (ii) cost limits
based on 105% of median costs of freestanding home health agencies, or (iii) an
agency-specific per-patient cost limit, based on 98% of 1994 costs adjusted for
inflation. The new IPS cost limits will apply to the Company for the cost
reporting period beginning January 1, 1998. On March 31, 1998, the government
released its final determination and definitions of the new IPS cost limits.
These changes in the reimbursement of home health agencies will result in a
significant impact on the profitability of these services. There is currently
proposed legislation that may alter the determination of the IPS cost limits.

IPS was implemented to position the home care industry for a Prospective
Payment System (PPS) which is to be implemented for cost reporting periods
beginning on or after October 1, 1999. Although PPS is not defined at this
time, it will take into consideration an appropriate unit of service and number
of visits within that unit, variations in the acuity of patients and the related
costs, and a general system design that provides for continued access to quality
services.

During the 1st quarter of 1998, the Company initiated a restructuring plan
which included cost reductions and productivity enhancements to position the
Company to be successful under the new IPS, as well as PPS. The Company reduced
operational cost, increased operational efficiencies and enhanced marketing
efforts, which should result in projected annualized cost savings of
approximately $5 million. The restructuring was substantially completed as of
June 30, 1998.

The implementation of IPS and the strategic decisions made by management
has resulted in a decrease to net revenues in the first and second quarters of
1998. The Company also expects to report losses in the third quarter of 1998
due to IPS.

As the home care industry faces changes in reimbursement structure,
Amedisys is committed to improve and streamline systems and take appropriate
actions to combat these changes and create a company focused on long-term
growth.

5. ACCRUED PAYROLL AND PAYROLL TAXES

The Company currently has an Employee Stock Ownership Plan ("ESOP")
relating to a subsidiary of the Company. During the second quarter of 1998, the
Company issued stock in the subsidiary valued at $705,000 to the ESOP.

4. PLACEMENT OF PREFERRED STOCK

In March, 1998, Amedisys completed a secondary phase of its private
placement of $.001 par value convertible preferred stock pursuant to Regulation
D of the Securities Act of 1933. The Company issued an additional 350,000
shares at $10 per share for gross proceeds of $3.5 million. The Company has
used the proceeds of this placement to fund synergistic acquisitions within the
South East and South Central regions of the U.S. in order to accelerate the
growth of its fully integrated network of outpatient health care services
including the Alternate Site Infusion Therapy division. These shares are
convertible into 756,757 shares of common stock which is equivalent to $4.625
per share.

5. ACQUISITIONS

In January 1998, the Company acquired all of the stock of Alliance Home
Health, Inc. ("Alliance"), a home health care business with locations throughout
Oklahoma, in exchange for $300,000 and 194,286 shares of common stock. Of the
194,286 shares of Company common stock issued to the former owners of Alliance,
122,857 shares were placed in escrow as consideration for certain contingent
liabilities which may be asserted against the former stockholder of Alliance to
the extent such claims exceed $500,000 (singularly and/or in aggregate). The
contingent liabilities include any material misstatement or omission in any
representation or breach of any warranty, covenant or agreement of Alliance or
its stockholder, any Medicare liabilities, any liability from lawsuits or
arbitration, any payment to be made by Alliance pursuant to a previous
acquisition, or any liability specifically addressed in the

F-6
<PAGE>

purchase document. The escrow period expires December 31, 2003. The majority
stockholder of Alliance entered into a three year employment agreement and two
year non-compete and non-solicitation agreement with the Company. The employment
agreement was terminated in March 1998. The non-compete and non-solicitation
agreement is for a period of two years after the termination of the employment
agreement. The non-compete and non-solicitation agreement provides that the
employee will not divert any business from the Company or compete in the
business area defined as the State of Oklahoma. This restricted activity is in
relation to home health agencies or infusion-related business. Additionally, the
non-compete and non-solicitation agreement provides that the employee will not
solicit employees or clients from the Company. A Form 8-K was filed on July 23,
1998 relating to this acquisition and includes audited financial statements for
Alliance Home Health, Inc. as well as proforma financial statements for the
Company and Alliance Home Health, Inc. consolidated.

In February 1998, the Company acquired all of the stock of PRN, Inc.
("PRN"), a home infusion pharmacy business located in San Antonio, Texas, in
exchange for $430,000 and the assumption of $71,000 in debt. The Company has
agreed to pay additional consideration of up to $150,000 should PRN have annual
net revenues of $625,000 for the next two years. This additional consideration
is to be paid quarterly for a period of two years, bearing interest at 9% from
the date of acquisition. The sellers, a key employee and his spouse, executed a
non-compete and non-solicitation agreement at the date of closing for a period
of two years within Bexar County Texas, which includes San Antonio, and any
counties contiguous thereto. The non-compete and non-solicitation agreement
provides that the sellers will not divert any business from the Company or
compete with the Company; as well as, not solicit any employees or clients of
the Company. This restricted activity is in relation to home infusion pharmacy
business. The Company has retained the right to offset certain indemnifiable
liabilities against the additional consideration.

In February 1998, the Company acquired all of the stock of Infusion Care
Solutions, Inc. ("ICS") a home health care and infusion business, based in Baton
Rouge, Louisiana, in exchange for aggregate consideration of $500,000, of which
$375,000 was payable in cash at closing and $125,000 was payable pursuant to a
two year promissory note. The note bears interest at prime plus 1% with 24
equal monthly payments. The sole stockholder executed a non-compete and non-
solicitation agreement at closing for a period of two years from the date of the
exchange. The business area is defined as the Parishes of East Baton Rouge,
Assumption, West Baton Rouge, Livingston, and Ascension in the State of
Louisiana. The non-compete and non-solicitation agreement provides that the
sole stockholder will not divert any business from the Company or compete with
the Company, as well as, not solicit any employees or clients of the Company.
The restricted business activity is in relation to any infusion or pharmacy
business unless such business is related to nursing home patients or assisted
living patients. The Company has retained the right to offset certain
indemnifiable liabilities against the sums payable pursuant to the promissory
note.

In February 1998, the Company acquired substantially all of the assets of
Precision Health Systems, L.L.C. ("PHS") a home health care and infusion
business, based in Baton Rouge, Louisiana, in exchange for aggregate
consideration of $1,000,000, of which $750,000 was payable in cash at closing
and $250,000 is payable pursuant to a two year promissory note. The note bears
interest at 9.5% with equal payments due monthly. The Company has retained the
right to offset certain indemnifiable liabilities against the sums payable
pursuant to the promissory note. The majority stockholder of PHS entered into a
two year non-competition and non-solicitation agreement and a two year
consulting agreement with the Company. The non-compete and non-solicitation
agreement provides that the sole stockholder will not divert any business from
the Company or compete with the Company; as well as, not solicit any employees
or clients of the Company. The business area is defined as the Parishes of East
Baton Rouge, Assumption, West Baton Rouge, Livingston, and Ascension in the
State of Louisiana. The restricted business is in relation to any infusion or
pharmacy business unless such business is related to nursing home patients or
assisted living patients. The consulting agreement is in the amount of $50,000
per year, payable in equal monthly increments. The majority stockholder is to
assist the Company in developing referral sources and retain current referral
sources.

F-7
<PAGE>

In March 1998, the Company acquired certain assets and no liabilities,
contingent or certain, prior to the closing date, of StaffCor Staffing Services,
L.L.C. (StaffCor) in exchange for $30,000 cash and $20,000 in additional
consideration payable quarterly over two years, without interest. This
additional consideration is to be paid prorata based on net income of StaffCor
without any adverse changes due to purchaser's corporate headquarters expense,
additional capital expenditures or materially increased operating expense. The
assets acquired were a minimal amount of furniture and fixtures, the right to
the StaffCor Staffing Service name, and contracts to provide medical staffing to
hospitals and other health care providers. The seller entered into a two year
non-competition and non-solicitation agreement with the Company. The non-
compete and non-solicitation agreement is for the business area of Oklahoma,
Grady and Logan Counties in the State of Oklahoma relative to any supplemental
staffing business. The non-compete and non-solicitation agreement provides that
the sole stockholder will not divert any business from the Company or compete
with the Company; as well as, not solicit any employees or clients of the
Company. StaffCor is a medical staffing business located in Oklahoma City,
Oklahoma.

In April 1998, the Company acquired all of the stock of Home Health of
Alexandria, Inc., d/b/a Cornerstone Home Health (Cornerstone), a closely held
entity, in exchange for $20,000 cash. With this acquisition, the Company will
have home health agencies serving all the major metropolitan areas in Louisiana.
A key employee and former stockholder executed an employment agreement with the
Company for a two year period; along with a non-compete and non-solicitation
agreement. The non-compete and non-solicitation agreement provides that the key
employee will not divert any business from the Company or compete with the
Company; as well as, not solicit any employees or clients of the Company. The
business area covered by the non-compete and non-solicitation agreement is for
the Parishes of Allen, Avoyelles, Caldwell, Catahoula, Concordia, Evangeline,
Grant, LaSalle, Natchitoches, Rapides, St. Landry, and Winn and is relative to
home health agencies. The agreement is for a two year period after the key
employee is no longer employed by the Company. Cornerstone is a state
licensed, Medicare certified, JCAHO accredited home health agency in Alexandria,
Louisiana.

In April 1998, the Company acquired all of the stock of Quality Home
Health Care, Inc. (Quality), of Stilwell, Oklahoma. In exchange, the Company
paid $80,000 and issued 4,897 shares of Company common stock worth $20,000. A
key employee and former stockholder executed an employment agreement for two
years in conjunction with a non-compete and non-solicitation agreement for a
period of two years after employment with the Company is terminated. The non-
compete and non-solicitation agreement provides that the key employee will not
divert any business from the Company or compete with the Company; as well as,
not solicit any employees or clients of the Company. The business area covered
by the non-compete and non-solicitation agreement is for the Counties of Adair,
Cherokee, Delaware, Haskell, Leflore, Mayes, McIntosh, Muskogee, Sequoyah, and
Wagoner in the State of Oklahoma and is relative to home health agencies.
Quality is a state licensed, Medicare certified home health agency with three
locations serving eastern Oklahoma.

In April 1998, the Company acquired certain assets of Precision Home
Health Care, Inc., (Precision) in exchange for $1,250,000; consisting of an
$800,000 note payable at 9.5% due July 1, 1998, a $400,000 note payable at 9.5%
payable monthly for a period of two years, and $50,000 in liabilities for
capital improvements. The $800,000 note payable has subsequently been extended
to October 1, 1998. The assets acquired were furniture and fixtures, inventory,
rights to use the Precision business name, current patients, and leasehold
interests. At closing the sole stockholder (who was also the majority
stockholder in the February 1998 ICS and PHS acquisitions) executed a non-
compete and non-solicitation agreement. The sole stockholder entered into a two
year non-competition and non-solicitation agreement which provides that the sole
stockholder will not divert any business from the Company or compete with the
Company; as well as, not solicit any employees or clients of the Company. The
business area is defined as the Parishes of East Baton Rogue, Assumption, West
Baton Rouge, Livingston, and Ascension in the State of Louisiana. The
restricted business activity is in relation to any Medicare or Medicaid home
health care business unless such business is related to nursing home patients or
assisted living patients. Additionally, the stockholder executed a consulting
agreement with the Company to provided services related to patient advocation,
introduce the Company to referral sources, and advise and assist the Company
concerning Medicare regulations. The consulting agreement is for a period of
two years in the amount of $50,000, payable monthly. Precision is a state
licensed, Medicare certified home health agency operating in the Baton Rouge,
Louisiana area.

Each of the above transactions was accounted for as a purchase.

F-8
<PAGE>

8. INCOME TAXES

The Company recorded a tax benefit of 34% of pre-tax loss at June 30, 1998,
as the Company anticipates carrying back taxable losses to previous years in
which the Company paid income taxes or generating taxable income in future
periods to offset the first and second quarter 1998 losses.

9. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITY

The following unaudited table presents (in 000's) a summary of the
acquisitions completed during the first quarter of 1998 and a detail of the
acquisitions completed during the second quarter of 1998 as presented in the
supplemental schedule to the consolidated cash flow statement.
<TABLE>
<CAPTION>
Precision Quality Home
1st Quarter Home Home Health of
1998 Health, Health, Alexandria
Total Inc. Inc. Inc. Total
-------------- ----------- --------- ------------ -----------

<S> <C> <C> <C> <C> <C>
Supplemental schedule of non-cash investing activity:
Value of stock issued in exchange $ 874 $ 0 $ 20 $ 0 $ 894

Value of note payable issued in exchange 375 1,200 0 0 1,575

Cash acquired in exchange (123) (0) (132) (62) (317)

Working capital deficit acquired net of cash and cash
equivalents 3,272 0 306 (25) 3,553
Fair value of property, plant and equipment acquired (279) (102) 3 1 (385)

Fair value of other assets acquired (26) (0) 1 0 (27)

Long term debt assumed 2,998 0 2 69 3,069
Fair value of other liabilities assumed 54 0 0 0 54
------ ------- ----- ---- -------
Non cash portion of acquisitions 7,146 1,098 192 (20) 8,416
Cash payment for acquisition 1,905 0 80 20 2,005
------ ------- ----- ---- -------
Goodwill recorded in exchange $9,051 $ 1,098 $ 272 $ 0 $10,421
------ ------- ----- ---- -------
</TABLE>

10. NOTES PAYABLE

Notes payable consist primarily of borrowings under revolving bank lines of
credit of $7,500,000 and $750,000, bearing interest at bank prime plus 1.5% and
bank prime plus 1%, respectively. The lines of credit are collateralized by
80% of eligible receivables in staffing and outpatient surgery, 75% of eligible
receivables in home health care, and 80% of physician notes receivable.
Eligible receivables are defined principally as accounts that are aged less
than 90 days for staffing and outpatient surgery and 120 days for home health
care. At June 30, 1998, approximately $109,000 was available based on eligible
receivables under the combined lines of credit. The line of credit is subject to
certain covenants, including a monthly borrowing base, a debt service coverage
ratio, and a leverage ratio. At December 31, 1997, March 31, 1998, and June 30,
1998, the Company was in default on the debt service coverage ratio requirement
of 1.1 : 1.0 due to the losses incurred in these periods. This default was
waived by the bank through June 30, 1998.

11. OTHER CURRENT ASSETS

Included in Other Current Assets at June 30, 1998 is a deferred tax asset
of $2,279,000 resulting from the first and second quarter 1998 losses. The
Company anticipates carrying back taxable losses to previous years in which the
Company paid income taxes or generating taxable income in future periods to
offset the first and second quarter 1998 losses.

12. ACCOUNTS RECEIVABLE

Included in Accounts Receivable at June 30, 1998 is an accrual of
$2,600,000 for estimated Medicare reimbursement rate reductions for 1998 cost
reporting years related to the Home Health Nursing division.

F-9
<PAGE>

13. RECENT DEVELOPMENTS

On June 2, 1998, the Company signed a letter of intent to purchase a
portion of Columbia/HCA homecare operations subject to satisfactory completion
of due diligence and approval by the Board of Directors of both companies. The
homecare operations covered by the letter of intent are located in the states of
Alabama, Georgia, Louisiana, North Carolina, Oklahoma, and Tennessee and may
include up to 116 offices and 50 Medicare provider numbers. The Company is
currently conducting due diligence and negotiating with investment banks to
obtain financing for the purchase of these operations.

F-10
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of Amedisys, Inc. and Subsidiaries:

We have audited the accompanying consolidated balance sheets of Amedisys,
Inc. (a Delaware Corporation) and Subsidiaries (the Company) as of December
31, 1997 and 1996, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Amedisys,
Inc. and Subsidiaries as of December 31, 1997 and 1996, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted
accounting principles.

As explained in Note 5 to the financial statements, effective January 1,
1997, the Company changed its method of accounting for start-up costs.

ARTHUR ANDERSEN LLP HANNIS T. BOURGEOIS & CO., LLP
New Orleans, Louisiana Baton Rouge, Louisiana

April 15, 1998

F-11
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 1997 AND 1996

(IN 000'S EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.................................. $ 4,070 $ 103
Accounts receivable, net of allowance for doubtful accounts
of $1,617 in 1997 and $732 in 1996........................ 9,630 8,271
Prepaid expenses........................................... 247 264
Income tax receivable (Note 9)............................. 118 74
Inventory and other current assets......................... 536 442
------- -------
Total current assets................................... 14,601 9,154
NOTES RECEIVABLE FROM RELATED PARTIES (Note 10).............. 252 190
OTHER INVESTMENTS (Note 4)................................... 399 456
PROPERTY, PLANT AND EQUIPMENT, NET (Notes 3 and 8)........... 4,785 4,610
DEFERRED TAX ASSET (Note 9).................................. 926 447
OTHER ASSETS, NET (Note 5)................................... 1,907 2,001
------- -------
Total assets........................................... $22,870 $16,858
======= =======
CURRENT LIABILITIES:
Accounts payable........................................... $ 1,338 $ 1,416
Accrued expenses--
Payroll and payroll taxes................................ 2,025 1,033
Insurance (Note 12)...................................... 521 643
Other.................................................... 847 883
Notes payable (Note 6)..................................... 5,806 4,379
Current portion of notes payable to related parties (Note
10)....................................................... 45 90
Current portion of long-term debt (Note 7)................. 690 458
Current portion of obligations under capital leases (Note
8)........................................................ 192 231
------- -------
Total current liabilities.............................. 11,464 9,133
LONG-TERM DEBT (Note 7)...................................... 2,995 1,937
NOTES PAYABLE TO RELATED PARTIES (Note 10)................... -- 943
OBLIGATIONS UNDER CAPITAL LEASES (Note 8).................... 134 343
------- -------
Total liabilities...................................... 14,593 12,356
------- -------
COMMITMENTS AND CONTINGENCIES (Notes 8, 12 and 15) -- --
------- -------
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES............... 3 188
------- -------
STOCKHOLDERS' EQUITY (Note 11):
Common stock--$.001 par value; 10,000,000 shares
authorized; 2,850,067 and 2,576,191 shares outstanding in
1997 and 1996, respectively............................... 3 2
Preferred stock--$.001 par value; 2,500,000 shares
authorized and 400,000 shares outstanding in 1997......... 1 --
Additional paid-in capital................................. 7,092 1,916
Treasury stock--4,167 shares at $6.00 per share............ (25) --
Retained earnings.......................................... 1,203 2,397
Stock subscriptions receivable............................. -- (1)
------- -------
Total stockholders' equity............................. 8,274 4,314
------- -------
Total liabilities and stockholders' equity............. $22,870 $16,858
======= =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-12
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

(IN 000'S EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
INCOME:
Net service revenues..................... $ 54,496 $ 46,060 $ 37,589
Cost of service revenues................. 30,641 26,405 22,424
---------- ---------- ----------
Operating revenues..................... 23,855 19,655 15,165
---------- ---------- ----------
GENERAL AND ADMINISTRATIVE EXPENSES:
Salaries and benefits.................... 12,651 10,327 6,732
Other (Notes 2 and 5).................... 11,792 8,184 7,053
---------- ---------- ----------
Total general and administrative
expenses.............................. 24,443 18,511 13,785
---------- ---------- ----------
Operating income....................... (588) 1,144 1,380
---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense......................... (870) (579) (410)
Interest income.......................... 31 43 72
Write-off of investments (Note 4)........ -- (623) --
Miscellaneous............................ (123) (19) 88
---------- ---------- ----------
Total other expense.................... (962) (1,178) (250)
---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES, MINORITY
INTEREST AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE................... (1,550) (34) 1,130
INCOME TAX EXPENSE (BENEFIT) (Note 9)...... (382) 3 200
---------- ---------- ----------
Income (loss)before minority interest in
net income of consolidated subsidiaries
and cumulative effect of a change in
accounting principle...................... (1,168) (37) 930
MINORITY INTEREST IN (INCOME) LOSS OF
CONSOLIDATED SUBSIDIARIES................. 209 55 12
---------- ---------- ----------
Net income (loss) before cumulative
effect of change in accounting
principle............................. (959) 18 942
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE (Note 5)........................ (235) -- --
---------- ---------- ----------
Net income (loss)...................... $ (1,194) $ 18 $ 942
---------- ---------- ----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING. 2,735,000 2,575,000 2,570,000
---------- ---------- ----------
EARNINGS (LOSS) PER COMMON SHARE (Notes 1
and 2):
Income (loss) before cumulative effect of
change in accounting principle.......... $ (0.35) $ 0.01 $ 0.37
Cumulative effect of change in accounting
principle............................... (0.08) -- --
---------- ---------- ----------
Net income (loss)...................... $ (0.43) $ 0.01 $ 0.37
========== ========== ==========
PRO FORMA INFORMATION (UNAUDITED): (Note 2)
Historical net income (loss)............. $ (1,194) $ 18 $ 942
Pro forma adjustments--Income taxes on
Surgicare results....................... -- -- 191
---------- ---------- ----------
Pro forma net income (loss).............. $ (1,194) $ 18 $ 751
========== ========== ==========
PRO FORMA EARNINGS (LOSS) PER COMMON SHARE. $ (0.43) $ 0.01 $ 0.29
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-13
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

(IN 000'S, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PREFERRED
COMMON STOCK STOCK ADDITIONAL STOCK TOTAL
----------------- -------------- PAID-IN RETAINED SUBSCRIPTIONS TREASURY STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS RECEIVABLE STOCK EQUITY
--------- ------ ------- ------ ---------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31,
1994................... 2,546,721 $ 2 -- -- $1,653 $2,494 $(107) $ -- $ 4,042
Issuance of stock for
acquisitions (Note 2). 37,143 1 -- -- 324 -- -- -- 325
Pooled acquisition--
distributions to
owners (Note 2)....... -- -- -- -- -- (1,057) -- -- (1,057)
Payments received on
stock subscriptions... -- -- -- -- -- -- 23 -- 23
Net income............. -- -- -- -- -- 942 -- -- 942
--------- --- ------- --- ------ ------ ----- ---- -------
BALANCE, December 31,
1995................... 2,583,864 3 -- -- 1,977 2,379 (84) -- 4,275
Issuance of stock in
connection with
warrants (Note 11).... 1,190 -- -- -- 9 -- -- -- 9
Payments received on
and write-off of stock
subscriptions......... (8,863) (1) -- -- (70) -- 83 -- 12
Net income............. -- -- -- -- -- 18 -- -- 18
--------- --- ------- --- ------ ------ ----- ---- -------
BALANCE, December 31,
1996................... 2,576,191 2 -- -- 1,916 2,397 (1) -- 4,314
Payments received on
stock subscriptions... -- -- -- -- -- -- 1 -- 1
Issuance of stock in
connection with
private placement
stock, offering
acquisition, and 401K
plan (Notes 2 and 11). 273,876 1 -- -- 1,596 -- -- -- 1,597
Cost of private
placement............. -- -- -- -- (110) -- -- -- (110)
Purchase of treasury
stock................. -- -- -- -- -- -- -- (25) (25)
Issuance of preferred
stock (Note 11)....... -- -- 400,000 1 3,999 -- -- -- 4,000
Costs of preferred
stock issuance (Note
11)................... -- -- -- -- (309) -- -- -- (309)
Net loss............... -- -- -- -- -- (1,194) -- -- (1,194)
--------- --- ------- --- ------ ------ ----- ---- -------
BALANCE, December 31,
1997................... 2,850,067 $ 3 400,000 $ 1 $7,092 $1,203 $ -- $(25) $ 8,274
========= === ======= === ====== ====== ===== ==== =======
</TABLE>

The accompanying notes are an integral part of these statements.

F-14
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

(IN 000'S)

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................. $(1,194) $ 18 $ 942
Adjustments to reconcile net income to net cash
(used) provided by operating activities--
Depreciation and amortization..................... 1,240 945 647
Provision for bad debts........................... 1,427 878 483
Write-off of goodwill (Note 2).................... 1,028 -- --
(Gain) loss on disposal of property and equipment. (12) 8 7
Other, net........................................ 37 -- --
Deferred income tax benefit....................... (566) (240) (162)
Minority interest................................. (209) (55) (12)
Cumulative effect of change in accounting
principle........................................ 326 -- --
Changes in assets and liabilities--
Increase in accounts receivable.................. (2,549) (3,025) (1,012)
(Increase) decrease in inventory and other
current assets.................................. 46 (54) (330)
Increase in other assets......................... (406) (1,734) (114)
Increase (decrease) in accounts payable.......... (143) 1,014 (188)
Increase in accrued expenses..................... 834 308 1,292
------- ------- -------
Net cash (used) provided by operating
activities..................................... (141) (1,937) 1,553
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in notes receivable....................... -- -- 10
Proceeds from sale of property, plant and
equipment......................................... 191 12 42
Purchase of property, plant and equipment.......... (1,456) (2,965) (446)
Minority interest investment in subsidiary......... 24 240 --
------- ------- -------
Net cash used by investing activities........... (1,241) (2,713) (394)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash received in purchase acquisitions............. -- -- 11
Cash used in purchase acquisitions................. (465) -- --
Net borrowings on line of credit agreement......... 1,428 1,922 783
Proceeds from issuance of notes payable and capital
leases............................................ 992 2,596 661
Payments on notes payable and capital leases....... (1,037) (699) (574)
Decrease in notes payable--related parties......... (1) (44) (236)
(Increase) decrease in notes receivable--related
parties........................................... (62) 85 (40)
Proceeds from issuance of stock.................... 4,518 9 --
Payments received on stock subscriptions
receivable........................................ 1 14 23
Distributions to members (Note 2).................. -- -- (1,058)
Purchase of treasury stock......................... (25) -- --
------- ------- -------
Net cash provided (used) by financing
activities..................................... 5,349 3,883 (430)
------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS........................................ 3,967 (767) 729
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR...... 103 870 141
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF YEAR............ $ 4,070 $ 103 $ 870
======= ======= =======
</TABLE>

F-15
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

(IN 000'S)

<TABLE>
<CAPTION>
1997 1996 1995
----- ---- -----
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for--
Interest................................................. $ 846 $495 $ 366
===== ==== =====
Income taxes............................................. $ -- $586 $ 36
===== ==== =====
SUPPLEMENTAL SCHEDULES OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Acquisition of Health Care 24 Inc.--
Value of stock issued in exchange........................ $ -- $ -- $ 50
Value of note payable issued in exchange................. -- -- 50
Fair value of property and equipment acquired............ -- -- (15)
----- ---- -----
Client lists acquired.................................... $ -- $ -- $ 85
===== ==== =====
Acquisition of Home Care Plus, Inc.--
Value of stock issued in exchange........................ $ -- $ -- $ 274
Cash acquired in exchange................................ -- -- (11)
Working capital acquired net of cash and cash
equivalents............................................. -- -- (151)
Fair value of property and equipment acquired............ -- -- (30)
Long-term debt assumed................................... -- -- 230
----- ---- -----
Goodwill recorded in exchange............................ $ -- $ -- $ 312
===== ==== =====
Related party note payable refinanced with financing
company.................................................. $ 988 $ -- $ --
===== ==== =====
Issuance of stock to 401(k) plan.......................... $ 59 $ -- $ --
===== ==== =====
Acquisition of Allgood Medical Services, Inc.--
Cash paid in exchange.................................... $ 465 $ -- $ --
Value of stock issued in exchange........................ 600 -- --
Value of note payable issued in exchange................. 100 -- --
Working capital acquired net of cash and cash
equivalents............................................. (313) -- --
----- ---- -----
Goodwill recorded in exchange (Note 2)................... $ 852 $ -- $ --
===== ==== =====
</TABLE>

The accompanying notes are an integral part of these statements.

F-16
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1997, 1996 AND 1995

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Nature of Organization

Amedisys, Inc. (the Company) is incorporated in the state of Delaware and
operates in eight states including Louisiana, Texas, Tennessee, Missouri,
Kansas, Mississippi, North Carolina and Minnesota with a concentration of
business in Louisiana and Texas. During 1997, the Company purchased a durable
medical equipment supplier in Louisiana and Mississippi and launched an
infusion therapy division; in 1996, the Company opened a new ambulatory
surgery center in Louisiana in which it has a 56% ownership interest; in 1995,
the Company acquired an outpatient surgery center company in Texas and two
home care companies (see Note 2) in Louisiana. The Company provides a variety
of supplemental staffing, home health care, home care management, outpatient
surgery, infusion therapy, home medical equipment and primary care clinical
services. The Company's home care division serves all major metropolitan areas
in the state of Louisiana as well as the areas of Houston, Dallas and Beaumont
in Texas. The outpatient surgery centers are located in Houston, Texas, and
Hammond, Louisiana.

Nature of Operations

The Company provides services through a network of subsidiaries that
include:

AMEDISYS Staffing Services, Inc. (ASS) supplies highly trained critical care
registered nurses and licensed practical nurses to all types of health care
facilities. Independent contract nurses are utilized to meet the staffing
needs of client health care facilities.

AMEDISYS Nursing Services, Inc. (ANS) is an employee-based staffing agency
that provides a variety of relief personnel such as registered and licensed
practical nurses, and certified nurses' aides for staff relief in all types of
health care facilities.

Amerinurse, Inc. provides highly trained nurses who travel to client heath
care facilities and work on a contract basis. Effective January 1, 1996,
Amerinurse, Inc. was merged into ANS.

AMEDISYS Specialized Medical Services, Inc. (ASM), Amedisys Home Health,
Inc. and Amedisys Home Health, Inc. of Texas provide skilled nursing care,
home health aid, physical therapy, occupational therapy, speech therapy and
medical social workers to homebound patients.

AMEDISYS Surgery Centers, L. C. (ASC) operates two outpatient surgery
centers in Houston, Texas, and one surgery center in Hammond, Louisiana, which
commenced operation in November, 1996.

AMEDISYS Physician Services, Inc. (APS) provides management of physician
practices and networks including Independent Practice Associations. APS also
operates a laboratory.

AMEDISYS Resource Management (ARM) and Physician Practice Management
provides management services to home health agencies and physician practices.

AMEDISYS Durable Medical Equipment, Inc. (DME) provides durable medical
equipment to patients in home health care settings, medical facilities and
health maintenance organizations in southern Louisiana and Mississippi. DME
has a comprehensive spectrum of products, including specialized equipment such
as customized wheelchairs.

AMEDISYS Alternate Site Infusion Therapy, Inc. (AASI) provides patients an
opportunity to have intravenous drug therapy provided at home or at walk-in
centers.

F-17
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

Use of Estimates

The accounting and reporting policies of the Company and its subsidiaries
conform with generally accepted accounting principles. In preparing the
consolidated financial statements, the Company is required to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company,
and its wholly-owned subsidiaries as well as its 60%-owned subsidiary (APS)
and their wholly-owned and partially-owned subsidiaries; Amedisys Home Health,
Inc. and Amedisys Home Health, Inc. of Texas, both wholly-owned subsidiaries
of ASM; Jackson Rural Health Clinic, Inc. (clinic closed February, 1996),
Kentwood Rural Health Clinic, Inc. (clinic closed August, 1995), and Bastrop
Rural Health Clinic, Inc. (clinic sold in September, 1996), all 60%-owned
subsidiaries of ASM and Hammond Surgical Care Center, LLC, a 56% owned
subsidiary of ASC. All material intercompany accounts and transactions have
been eliminated in these financial statements.

The 1995 financial statements have been restated to include the accounts of
a business combination accounted for as a pooling-of-interests (See Note 2).
Business combinations accounted for as purchases are included from the
respective dates of acquisition.

Revenue Recognition Policy

Gross revenue is recorded on an accrual basis based upon the date of service
at amounts equal to the Company's established rates or estimated cost
reimbursement rates, as applicable. Allowances and contractual adjustments
representing the difference between the established rates and the amounts
estimated to be payable by third parties are also recorded on an accrual basis
and deducted from gross revenue to determine net service revenues.

Reimbursement for home health care services to patients covered by the
Medicare program is based on cost reimbursement rates. Final reimbursement is
determined after submission of annual cost reports and audits thereof by the
fiscal intermediaries. Effective January 1, 1998, home health cost limits were
reduced and per beneficiary limits were established which will reduce payments
to Home Health Service providers in the future. Additional proposed
regulations are expected to change the payment methodology for home health
care services to Medicare patients from a cost based reimbursement system to a
prospective payment system in the future.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash includes certificates of deposit
and all highly liquid debt instruments with maturities of three months or less
when purchased. The carrying amount approximates fair value because of the
short maturity of those instruments.

Inventory

Inventories consist of medical supplies that are utilized in the treatment
and care of home health and outpatient surgery patients. Inventories are
stated at the lower of cost (first-in, first-out method) or market.

F-18
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

Property and Equipment

Property and equipment is generally carried at cost except for certain
property purchased from related parties prior to 1995. Additions and
improvements are capitalized, but ordinary maintenance and repair expenses are
charged to income as incurred. The cost of property sold or otherwise disposed
of and the accumulated depreciation thereon are eliminated from the property
and related accumulated depreciation accounts, and any gain or loss is
credited or charged to income.

Capitalized leases, primarily of computer equipment, phone systems, and vans
used by the home care divisions, are included in property and equipment.
Capital leases are recorded at the present value of the future rentals at
lease inception and are amortized over the lesser of the applicable lease term
or the useful life of the equipment.

For financial reporting purposes, depreciation and amortization of property
including those subject to capital leases ($1,101,000 in 1997, $788,000 in
1996 and $468,000 in 1995) is included in other general and administrative
expenses and is provided utilizing the straight-line method based upon the
following estimated useful service lives:

<TABLE>
<S> <C>
Buildings....................................................... 40 years
Leasehold Improvements.......................................... 5 years
Equipment and furniture......................................... 5-7 years
Vehicles........................................................ 5 years
Computer software............................................... 5 years
</TABLE>

Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to
be Disposed of

Whenever there are recognized events or changes in circumstances that
indicate the carrying amount of an asset may not be recoverable, management
reviews the asset for possible impairment. In accordance with SFAS No. 121,
management uses undiscounted estimated expected future cash flows to assess
the recoverability of the asset. If the expected future net cash flows are
less than the carrying amount of the asset, an impairment loss, measured as
the amount by which the carrying amount of the asset exceeds the fair value of
the asset, would be recognized.

Earnings Per Share

Reclassifications

Certain amounts previously reported in the 1996 and 1995 financial
statements have been reclassified to conform to the 1997 presentation.

F-19
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

2. ACQUISITIONS:

On August 1, 1997, the Company acquired substantially all of the assets of
Allgood Medical Services, Inc. d/b/a Care Medical and Mobility Equipment
Company for $1,165,000. The purchase price consisted of $465,000 in cash,
$100,000 note payable, and $600,000 in common stock which represented 115,518
common shares. This transaction has been accounted for as a purchase and the
excess of the total acquisition cost over the fair value of net assets
acquired (goodwill) of $852,000 was being amortized over twenty years using
the straight-line method. Subsequent to this purchase, certain reimbursement
reductions were announced to implement the Balanced Budget Act of 1997. Based
on management's estimate of the expected impact of these changes in
reimbursement on future cash flows, this goodwill was fully written off as
Other General and Administrative Expense at December 31, 1997 as required
under Statement of Financial Accounting Standard No. 121.

The following unaudited pro forma information has been prepared as if the
acquisition had occurred at the beginning of each of the periods ended
December 31, 1997 and 1996. This pro forma information has been prepared for
comparative purposes only and is not necessarily indicative of what would have
occurred had the acquisition taken place on the dates indicated, nor does it
purport to be indicative of the future operating results of the Company
(000's, except share amounts):

<TABLE>
<CAPTION>
(UNAUDITED)
1997 1996
------- -------
<S> <C> <C>
Revenues................................................ $55,147 $47,270
Net income (loss)....................................... (1,356) 130
Net income (loss) per common share...................... (0.50) 0.05
</TABLE>

On June 30, 1995, the Company acquired all issued and outstanding membership
interests in ASC in exchange for 1,000,000 shares of Company common stock.
ASC's assets on June 30, 1995 were approximately $3,000,000. Upon closing of
the transaction, the former members of ASC owned approximately 40% of the
issued and outstanding stock of the Company. This transaction was accounted
for as a pooling of interests. ASC was a limited liability company and,
accordingly, had no income tax liabilities. The effect of providing for income
taxes on results of ASC operations prior to the 1995 acquisition is shown
under "Pro forma Information" in the accompanying statement of operations.

On May 31, 1995, the Company acquired all of the outstanding stock of Home
Care Plus, Inc. in exchange for 30,000 shares of its common stock valued at
$274,000. The $312,000 excess of the total acquisition cost over the fair
value of the liabilities assumed was recorded as goodwill and was being
amortized over seven years using the straight-line method. This operation was
closed in the second quarter of 1997 and the remaining $193,000 unamortized
balance of goodwill was written off in the fourth quarter of 1997. See Note 15
for restated operating results for the quarter ended June 30, 1997.

On March 19, 1995, the Company acquired all of the outstanding stock of
Health Care Services 24, Inc. in exchange for 7,143 shares of its common stock
valued at $50,000 and notes payable in the amount of $50,000, payable in
monthly installments through March, 1996. The Company acquired client lists
(See Note 5) and property and equipment with a fair value of $85,000 and
$15,000, respectively.

The acquisitions of Home Care Plus, Inc. and Health Care Services 24, Inc.
were accounted for as purchases and as a result, operations of these entities
subsequent to the date of acquisition have been included in the consolidated
financial statements. Unaudited pro forma consolidated results of operations
for the year ended December 31, 1995 as though these companies had been
acquired as of January 1, 1995 are as follows:

<TABLE>
<CAPTION>
1995
-----------
<S> <C>
Net service revenues......................................... $38,108,293
Net income................................................... $ 850,874
Earnings per common share.................................... $ 0.33
</TABLE>

F-20
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

The above amounts reflect adjustments for amortization of goodwill.

See Note 16 for additional acquisitions which occurred subsequent to
December 31, 1997.

3. PROPERTY AND EQUIPMENT:

Property and equipment consists of (000's):

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Land.................................................... $ 220 $ 220
Building and leasehold improvements..................... 717 607
Equipment, furniture and vehicles....................... 6,721 5,585
Computer software....................................... 114 95
------- -------
Total................................................. 7,772 6,507
Accumulated depreciation................................ (2,987) (1,897)
------- -------
Net................................................... $ 4,785 $ 4,610
======= =======
</TABLE>

4. OTHER INVESTMENTS:

The Company had made advances totaling $366,000 at December 31, 1997 in
connection with the acquisition of a 42% interest in a surgery center being
developed in Houston, Texas. The surgery center is expected to open in April
1998 and is to be managed by the Company under a long-term management
contract. The Company accounts for this investment using the equity method.

On June 30, 1995, the Company acquired an investment in a real estate
partnership in connection with the purchase of ASC (see Note 2), which has
certain partners who are also owners of the Company. This investment is
accounted for under the equity method.

Management concluded in December, 1996, that the realization of certain
previously recorded assets might not be assured and, accordingly, wrote off
the portion of these investments (approximately $623,000) believed to be
unrealizable through future operations. These investments were primarily
comprised of advances made to develop FutureCare, Inc., a proposed managed
care organization, of $391,000, certain non-operating equipment of $132,000
believed to be unrealizable through future operations, and $100,000 in notes
receivable due from a related party. The $391,000 advance to FutureCare, Inc.
was to be reimbursed upon completion of a securities offering of its stock.
Due to the uncertainty of a successful offering, the Company chose to expense
these amounts. The $132,000 was comprised of opthamology and processing
kitchen equipment that the Company was attempting to sell. None of these
assets were producing, or expected to produce, a benefit in current or future
years. The $100,000 was written off because of a dispute between the Company
and Internal Medicine Clinic of Tangipahoa, Inc. ("IMC").

5. OTHER ASSETS:

Other assets include the following for the years ended December 31, 1997 and
1996 (000's):

<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
NOTES RECEIVABLE........................................... $1,530 $ 119
RESTRICTED CASH............................................ -- 1,001
GOODWILL, net of accumulated amortization of $70 and $124.. 71 329
START-UP COSTS, net of accumulated amortization of $173 in
1996...................................................... -- 326
CLIENT LISTS, net of accumulated amortization of $158 in
1996...................................................... -- 10
OTHER...................................................... 306 216
------ ------
$1,907 $2,001
====== ======
</TABLE>

F-21
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

Notes receivable at December 31, 1997, consist primarily of advances of
$1,465,000 due from Alliance Home Health, Inc. which was acquired on January
1, 1998 (see Note 16).

Restricted cash at December 31, 1996, represents a minimum cash reserve
required by and pledged to the Louisiana Department of Insurance to guarantee
group member benefits associated with a proposed Health Maintenance
Organization project. In late 1996, the Company discontinued its efforts
related to this project and subsequently notified the Department of Insurance
of its intention to withdraw the minimum cash reserve balance.

Costs incurred to establish regional offices of ASM and ASC prior to
beginning services were capitalized as Other Assets and amortized over a five-
year period based on accepted industry practice and consistent with the
treatment required under Medicare regulations. Start-up costs consist
primarily of incremental salaries and wages directly related to the new
operation, consulting fees and financing and legal fees. Provisions of a
proposed Statement of Position (SOP) expected to be issued by the American
Institute of Certified Public Accountants (AICPA) in the second quarter of
1998 will require the write-off of any start-up costs remaining on the balance
sheet and expensing of all start-up costs incurred in the future. During the
fourth quarter of 1997, the Company changed its accounting policy to expense
such costs to more properly reflect these costs as ongoing costs of expanding
the Company's services. The Company has reflected this adjustment as a change
in accounting principle from one acceptable method to another acceptable
method. The cumulative effect of this change in accounting principle, as if
the change were made effective January 1, 1997, of $235,000 (net of a $91,000
tax benefit), is shown on the 1997 statement of operations. Start-up costs of
$299,000 incurred during 1997 were expensed as incurred in general and
administrative expense.

See Note 15 for the restatement of the Company's quarterly results of
operations for 1997 giving effect to the change in accounting principle as of
January 1, 1997.

The following reflects pro-forma net income for 1996 and 1995, net of the
related tax effects, as if the Company expensed start-up costs as incurred in
those years.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995
--------------- --------------
AS PRO AS PRO
REPORTED FORMA REPORTED FORMA
-------- ------ -------- -----
<S> <C> <C> <C> <C>
Net income (loss)......................... $ 18 $ (202) $ 942 $ 845
Net income (loss) per common share........ $0.01 $(0.08) $0.37 $0.33
</TABLE>

"Other" consists primarily of deposits on leased properties and advances
made in connection with various other business development projects.

6. NOTES PAYABLE:

Notes payable consist primarily of borrowings under $5,500,000 and $750,000
lines of credit that bear interest at bank prime plus 1.5% (10.0% at December
31, 1997) and bank prime plus 1% (9.5% at December 31, 1997), respectively.
Both lines are secured by accounts receivable, life insurance on the major
stockholder and personal guarantees of several stockholders. Subsequent to
year-end, the $5,500,000 line of credit was increased to $7,500,000 for 120
days bearing interest at bank prime plus 1.5%. As of December 31, 1997,
approximately $444,000 was unused under these lines of credit. The weighted
average monthly interest on short-term borrowings was 9.79% and 9.78% in 1997
and 1996, respectively.

The revolving line of credit is subject to certain covenants, including a
monthly borrowing base or margin requirement calculation, a debt service
coverage ratio and a leverage ratio. The Company was not in compliance

F-22
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

with the debt service ratio requirement at December 31, 1997, which default
was waived by the bank through June 30, 1998. The Company was not in
compliance with the leverage ratio covenant at December 31, 1996, which
default was waived by the bank. The loan agreement was subsequently amended to
increase the leverage ratio requirement from 2.5 to 1 to 3.0 to 1, which the
Company complied with as of December 31, 1996.

7. LONG-TERM DEBT:

Long-term debt consists of notes payable to banks and other financial
institutions that are due in monthly installments through 2003 (000's):

<TABLE>
<CAPTION>
PAYEE 1997 1996
----- ------ ------
<S> <C> <C>
Notes payable to finance and equipment companies that
accrue interest at 8.00-11.25%............................ $3,154 $1,502
Notes payable to banks that accrue interest at 8.00-14.39%. 531 893
------ ------
Total.................................................... 3,685 2,395
Current portion............................................ 690 458
------ ------
Long-Term.................................................. $2,995 $1,937
====== ======
</TABLE>

The fair value of long-term debt as of December 31, 1997, estimated based on
the Company's current borrowing rate of 10%, is approximately $3,582,000.

These borrowings are secured by equipment, vehicles and the personal
guarantee of a stockholder. Maturities of debt as of December 31, 1997, are as
follows (000's):

<TABLE>
<S> <C>
December 31 ,1998.................................................. $ 690
December 31, 1999.................................................. 484
December 31, 2000.................................................. 417
December 31, 2001.................................................. 277
December 31, 2002.................................................. 1,688
Thereafter......................................................... 129
------
$3,685
======
</TABLE>

8. CAPITAL LEASES:

The Company acquired certain equipment under capital leases for which
related liabilities have been recorded at the present value of future minimum
lease payments due under the leases. The present minimum lease payments under
the capital leases and the net present value of future minimum lease payments
are as follows (000's):

<TABLE>
<S> <C>
December 31, 1998................................................... $220
December 31, 1999................................................... 110
December 31, 2000................................................... 45
----
Total future minimum payments....................................... 375
Amount representing interest........................................ (49)
----
Present value of future minimum lease payments.................... 326
Current portion..................................................... 192
----
Long-term portion................................................... $134
====
</TABLE>

F-23
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

9. INCOME TAXES:

The Company files a consolidated federal income tax returns, including all
subsidiaries that are owned more than 80%. State income tax returns are filed
individually by the subsidiaries in accordance with state statutes.

The Company utilizes the liability approach to measuring deferred tax assets
and liabilities based on temporary differences existing at each balance sheet
date using currently enacted tax rates in accordance with SFAS No. 109.
Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.

The total provision (benefit) for income taxes consists of the following
(including $91,000 of tax benefit related to the cumulative effect of change
in accounting principle (see Note 5) ) (000's):

<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Current portion...................................... $ 93 $ 242 $ 361
Deferred portion..................................... (566) (239) (161)
----- ----- -----
$(473) $ 3 $ 200
===== ===== =====
</TABLE>

Net deferred tax assets consist of the following components (000's):

<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Deferred tax assets:
Receivable allowance...................................... $ 523 $ 285
Self-insurance reserves................................... 161 202
Losses of consolidated subsidiaries (not consolidated for
tax purposes)............................................ 57 42
Start-up costs and other.................................. 453 47
Deferred tax liabilities:
Property and equipment.................................... (268) (129)
----- -----
$ 926 $ 447
===== =====
</TABLE>

Total tax expense (benefit) on income before taxes resulted in effective tax
rates that differed from the federal statutory income tax rate. A
reconciliation of these rates is as follows for 1997, 1996 and 1995:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Income taxes computed on federal statutory rate. (34.00)% (34.00)% 34.00%
State income taxes.............................. 5.00 1.00 2.00
ASC income prior to merger (Note 2)............. -- -- (16.88)
Losses of unconsolidated subsidiaries........... -- -- 8.33
Write-off of notes receivable from
unconsolidated subsidiaries.................... -- -- (14.39)
Net operating losses utilized -- -- --
Nondeductible expenses and other................ 4.00 40.00 4.60
------ ------ ------
Total......................................... (25.00)% 7.00% 17.66%
====== ====== ======
</TABLE>

The Company has $147,000 of operating loss carryforwards related to losses
from unconsolidated subsidiaries for tax return purposes which expire
beginning in 2010.

F-24
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

10. RELATED PARTY TRANSACTIONS:

Notes Receivable

Notes receivable from related parties consist of unsecured and non-interest
bearing notes from the chief executive officer and certain stockholders of the
Company totaling approximately $102,000 and $40,000 at December 31, 1997 and
1996, and receivables from an internal medicine clinic totaling approximately
$150,000 at December 31, 1997 and 1996. The fair value of the notes receivable
from related parties is equal to the recorded value due to the short-term
nature of the notes.

Notes Payable

Notes payable to related parties in 1996 consisted primarily of a note
issued in 1994 in the original amount of $1,080,000, bearing interest at 9%.
The note was secured by all real estate and personal property of one of the
surgical care centers. The note was refinanced in 1997 with a financial
institution (See Note 7).

The remaining balance of notes payable to related parties at December 31,
1997 ($45,000) consists of unsecured notes to certain stockholders of the
Company that are due on demand and bear interest at rates from 0%-12%. The
fair value of these notes approximates the recorded balance due to the short-
term nature of the notes.

Other

The Companies paid medical directors fees to stockholders of $156,400 and
$116,000 in 1997 and 1996, respectively.

ASC paid fees associated with a medical foundation to a stockholder of
$12,000 and $3,000 in 1997 and 1996, respectively.

In 1997, ASC paid $10,800 for equipment rental to a stockholder of the
Company.

11. CAPITAL STOCK:

Common Stock

On April 17, 1997, the Company completed, in two phases, a placement of
common stock with Plymouth Partners, LP under which the Company issued 37,500
shares of Common Stock to Plymouth Partners, LP, pursuant to a shelf
registration statement for gross proceeds of $262,500 and also issued 112,500
shares of Common Stock to Plymouth Partners, LP, pursuant to a shelf
registration statement for gross proceeds of $675,000. The net proceeds from
both of these offerings was $831,000.

Preferred Stock

In December, 1997, Amedisys completed a private placement of 400,000 shares
of $.001 par value convertible preferred stock pursuant to Regulation D of the
Securities Act of 1933 at $10 per share for gross proceeds of $4 million. The
Company intends to use the proceeds of this placement to fund synergistic
acquisitions within the South East and South Central regions of the U.S. and
accelerate the growth of its fully integrated network of outpatient health
care services, including alternate site infusion therapy divisions and
outpatient surgery centers. These shares are convertible into 864,865 shares
of common stock which is equivalent to $4.625 per share. Warrants to purchase
52,500 shares of preferred stock at $10 per share, convertible into

F-25
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

113,514 shares of common stock, were issued to the placement agent, Hudson
Capital Partners, L.P. in connection with the offering.

Stock Options

The Company's Statutory Stock Option Plan provides incentive stock options
to key employees. The Plan is administered by a Compensation Committee
(appointed by the Board) which is to determine, within the provisions of the
Plan, those eligible employees to whom, and the times at which, options shall
be granted. Each option granted under the Plan is to be convertible into one
(1) share of common stock, unless adjusted in accordance with the provisions
of the Plan. Options may be granted for a number of shares not to exceed, in
the aggregate 1,000,000 shares of common stock at an option price per share of
no less than 85% of the fair market value of a share of common stock on the
date the option is granted. If the option is granted to any owner of 10% or
more of the total combined voting power of the Company and its subsidiaries,
the option price is to be at least 110% of the fair market value of a share of
common stock on the date the option is granted. Each option vests ratably over
a two-to-three year period and may be exercised during a period as determined
by the Compensation Committee, not to exceed 10 years from the date such
option is granted. The aggregate fair market value of common stock subject to
an option granted to a participant by the Committee in any calendar year shall
not exceed $100,000.

A summary of the Company's stock options as of December 31, 1997, 1996 and
1995, and changes during the year ended on those dates follows:

<TABLE>
<CAPTION>
1997 1996 1995
-------------------- ------------------ -----------------
WGTD. AVG. WGTD. AVG. WGTD. AVG.
EXER. EXER. EXER.
SHARES PRICE SHARES PRICE SHARES PRICE
-------- ---------- ------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
year....................... 288,723 $6.66 27,650 $7.00 -- $ --
Granted..................... 794,422 6.01 261,073 6.62 27,650 7.00
Exercised................... -- -- -- -- -- --
Cancelled/forfeited/expired. (126,080) (6.48) -- -- -- --
-------- ----- ------- ----- ------ -----
Outstanding at end of year.. 957,065 $6.14 288,723 $6.66 27,650 $7.00
======== ===== ======= ===== ====== =====
Exercisable at end of year.. 205,446 $6.49 88,741 $6.65 -- $7.00
======== ===== ======= ===== ====== =====
Weighted average fair value
of options granted during
the year................... $ 1.99 $ 3.11 $ 2.56
======== ======= ======
</TABLE>

Of the 957,065 options outstanding at December 31, 1997, 403,604 become
exercisable in 1998, 341,348 in 1999, and 6,667 in 2000.

The following table summarizes information about stock options outstanding
at December 31, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------- --------------------
WGTD. AVG. WGTD. WGTD.
NUMBER REMAINING AVG. NUMBER AVG.
OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
RANGE OF EXERCISE PRICES AT 12/31/97 LIFE PRICE AT 12/31/97 PRICE
------------------------ ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$5.38-$7.00............. 957,065 8 years $6.14 205,446 $6.49
</TABLE>

The Company applies APB Opinion No. 25 and related interpretations in
accounting for its stock option plans. FASB Statement No. 123 "Accounting for
Stock-Based Compensation" ("SFAS 123") was issued by

F-26
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

the FASB in 1995 and changes the methods for recognition of cost on plans
similar to those of the Company. Adoption of SFAS 123 is optional; however,
pro forma disclosures, as if the Company had adopted the cost recognition
requirements under SFAS 123 in 1997 and 1996, are presented below.

The fair value of each option granted during the periods presented is
estimated on the date of grant using the Black-Scholes option pricing model
with the following assumptions: (i) dividend yield of 0%, (ii) expected
volatility ranging from 51.23%-53.69% for the options issued in 1997, 40.02%
and 45.44% for options issued in 1996, and 27.63% for options issued in 1995,
(iii) risk-free interest rate ranging from 5.70%-6.22% in 1997, 6.22% in 1996
and 5.23% in 1995, respectively, and (iv) expected life of 3 to 5 years.

Had compensation cost for the Company's 1997, 1996 and 1995 options been
determined consistent with SFAS 123, the Company's net income (loss), net
income (loss) applicable to common stockholders' and net income (loss) per
common share for 1997 and 1996 would approximate the pro forma amounts below
(000's, except share amounts):

<TABLE>
<CAPTION>
1997 1996 1995
----------------- --------------- --------------
AS PRO AS PRO AS PRO
REPORTED FORMA REPORTED FORMA REPORTED FORMA
-------- ------- -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C>
Net income (loss)............ $(1,194) $(1,813) $ 18 $ (59) $ 942 $ 933
======= ======= ===== ====== ===== =====
Net income (loss) applicable
to common stockholders...... $(1,194) $(1,813) $ 18 $ (59) $ 942 $ 933
======= ======= ===== ====== ===== =====
Net income (loss) per common
share....................... $ (0.43) $ (0.66) $0.01 $(0.02) $0.37 $0.36
======= ======= ===== ====== ===== =====
</TABLE>

The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 does not apply to awards prior to 1995,
and additional awards in future years are anticipated.

Subsequent to year end the Board of Directors authorized, subject to
shareholder approval, issuing 500,000 options under the Stock Option Plan with
up to 50% issued at $6.25 to existing employees.

ASM Employee Stock Ownership Plan

ASM developed an Employee Stock Ownership Plan (ESOP) effective January 1,
1997 to enable participating employees of ASM to share in the ownership of
ASM. Under the ESOP, the Company may make annual contributions to a trust for
the benefit of eligible employees, in the form of either cash or common stock
of ASM. The amount of the annual contribution is discretionary. The Company's
contribution for the year ended December 31, 1997 was $721,000 which was
accrued, but unfunded as of December 31, 1997.

Other

A predecessor entity to the Company, M & N, completed its initial public
offering of 250,000 common shares for gross proceeds of $1,500,000 on August
26, 1993. In connection with the offering, M & N issued 25,000 warrants to the
Underwriter (the Underwriter's Warrants), which are exercisable at $7.20 per
common share for a period of four years commencing April 28, 1994.

F-27
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

12. COMMITMENTS AND CONTINGENCIES:

Leases

The Company and its subsidiaries have leased office space at various
locations under noncancelable agreements which expire between January 1, 1998,
and August 31, 2005, and require various minimum annual rentals. Total minimum
rental commitments at December 31, 1997, are due as follows (000's):

<TABLE>
<S> <C>
1998............................................................... $1,821
1999............................................................... 1,619
2000............................................................... 1,240
2001............................................................... 918
2002............................................................... 803
Due thereafter..................................................... 511
------
$6,912
======
</TABLE>

Rent expense for all non-cancelable operating leases was $1,706,000,
$1,351,000 and $1,084,000 for the years ended December 31, 1997, 1996 and
1995, respectively.

The Company has arranged a $500,000 line of credit with a financing company
to lease equipment; $80,000 of this line was used at December 31, 1997 leaving
available $420,000 for use on future equipment leases.

Self-Funded Insurance Plans

During 1995, the Company became self-insured for workers' compensation
claims in the State of Louisiana up to certain policy limits. Claims in excess
of $200,000 per incident and $1,300,000 in the aggregate over a two-year
policy period are insured by third party reinsurers. The Company has accrued a
liability for outstanding and incurred, but not reported claims based on
historical experience totaling approximately $509,000 and $519,000 at December
31, 1997 and 1996, respectively. In connection with the self-insurance and as
required by the State of Louisiana, the Company issued a $175,000 letter of
credit in favor of the Louisiana Department of Labor, which expired February
17, 1998, and was renewed to February, 1999.

During 1997, the Company became self-insured for health claims up to certain
policy limits. Claims in excess of $35,000 per incident and approximately
$64,000 aggregate per month are insured by third party reinsurers. The Company
has accrued a liability of approximately $78,000 at December 31, 1997 for
outstanding and incurred, but not reported claims based on historical
experience.

Planned Surgical Care Center and Other Projects

The Company is pursuing a number of planned surgical center and other
projects to be developed or purchased in the future. While negotiations are
being conducted in connection with a number of possible projects, the Company
has made no formal commitments in this area beyond the investments discussed
below and in Note 16.

The Company plans to proceed to develop a $3.6 million surgery center in
Lafayette, Louisiana. The Company plans to hold a 21% interest in this
development with a group of physician investors and to manage the development
under a management contract for a fee based on 4% of revenue.

F-28
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

Employment Contracts

The Company has commitments related to employment contracts with a number of
its top executives and executives involved in the management of businesses
acquired (see Note 16 also) by the Company. Such contracts generally commit
the Company to pay bonuses on the attainment of certain operating goals and
severance benefits under certain circumstances.

Other

The Company is subject to various types of claims and disputes arising in
the course of its businesses. While the resolution of such issues is not
presently determinable with certainty, management believes that the ultimate
resolution of such matters will not have a significant effect on the Company's
financial position or results of operations.

In 1997, the Company's Board of Directors approved the purchase of a point
of service device at an estimated cost of $1.5 million which will allow home
care providers to input patient information directly and electronically into
the Company's home care information system.

13. BENEFIT PLAN:

The Company adopted a plan qualified under Section 401(k) of the Internal
Revenue Code for all employees who are 21 years of age and have at least one
year of service. Under the plan, eligible employees may elect to defer a
portion of their compensation, subject to internal revenue service limits. The
Company may make matching contributions equal to a discretionary percentage of
the employee's salary reductions. No matching contribution was made for the
year ended December 31, 1995. A matching contribution of $59,000 for the year
ended December 31, 1996 was made in 1997 and a matching contribution of
$71,000 will be made for 1997 in 1998.

14. SEGMENT INFORMATION:

The Company operates principally in two business segments: Provider Services
(consisting of home health care and outpatient surgery) and Management
Services (consisting of staffing/professional services and physician support
and home health care management). The following shows industry segment
information for the fiscal years ended December 31, 1997, 1996 and 1995 (in
000's):

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Net Service Revenues:
Provider Services
Home health care...................................... $25,817 $25,500 $17,631
Outpatient surgery.................................... 6,287 4,626 3,601
Management Services
Staffing/professional services........................ 17,292 12,538 13,774
Physician support and home health care management..... 5,100 3,396 2,583
Corporate support..................................... -- -- --
------- ------- -------
Total............................................... $54,496 $46,060 $37,589
======= ======= =======
</TABLE>

F-29
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Operating Income (Loss):
Provider Services
Home health care.................................. $ 831 $ 2,038 $ 901
Outpatient surgery................................ (960) 1,175 1,152
Management Services
Staffing/professional services.................... 3,643 1,785 2,076
Physician support and home health care management. 1,494 347 193
Corporate support................................. (5,596) (4,201) (2,942)
------- ------- -------
Total........................................... (588) 1,144 1,380
Other expenses..................................... (962) (1,178) (250)
------- ------- -------
Income before income taxes, minority interest, and
cumulative effect of change in accounting
principle.......................................... $(1,550) $ (34) $ 1,130
======= ======= =======
<CAPTION>
CAPITAL EXPENDITURES
-------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Provider services
Home health care.................................. $ 348 $ 135 $ 96
Outpatient surgery................................ 631 2,233 284
Management services
Staffing/professional services.................... 21 7 12
Physician support and home health care management. 18 89 2
Corporate support................................. 438 501 52
------- ------- -------
Total........................................... $ 1,456 $ 2,965 $ 446
======= ======= =======
<CAPTION>
DEPRECIATION AND
AMORTIZATION
-------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Provider services
Home health care.................................. $ 344 $ 319 $ 246
Outpatient surgery................................ 609 271 148
Management services
Staffing/professional services.................... 16 60 77
Physician support and home health care management. 129 201 122
Corporate support................................. 142 94 54
------- ------- -------
Total........................................... $ 1,240 $ 945 $ 647
======= ======= =======
<CAPTION>
IDENTIFIABLE ASSETS
-------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Provider services
Home health care.................................. $ 5,243 $ 4,906 $ 4,537
Outpatient surgery................................ 6,180 6,541 3,341
Management services
Staffing/professional services.................... 1,924 1,820 1,745
Physician support and home health care management. 2,290 1,200 1,175
Corporate support................................. 7,233 2,391 739
------- ------- -------
Total........................................... $22,870 $16,858 $11,537
======= ======= =======
</TABLE>

F-30
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

15. UNAUDITED QUARTERLY FINANCIAL INFORMATION:

The following table reflects the restatement of the Company's quarterly
results of operations for 1997, giving effect to the change in accounting
principle as of January 1, 1997 (see Note 5) and the write-off of goodwill
associated with the Home Care Plus, Inc. acquisition in the second quarter
(see Note 2) (000's):

<TABLE>
<CAPTION>
QUARTER ENDED (UNAUDITED)
------------------------------------------------------------------
SEPTEMBER 30,
MARCH 31, 1997 JUNE 30, 1997 1997
----------------- ----------------- -----------------
AS AS AS AS AS AS DECEMBER 31,
REPORTED RESTATED REPORTED RESTATED REPORTED RESTATED 1997
-------- -------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) from
continuing operations.. $ 451 $ 473 $ 610 $ 415 $ 363 $ 344 $(2,782)
Net income (loss)....... $ 301 $ 116 $ 373 $ 179 $ 224 $ 214 $(1,703)
Net income (loss) per
common share........... $0.12 $0.04 $0.14 $0.06 $0.08 $0.08 $ (0.60)
</TABLE>

16. SUBSEQUENT EVENTS:

On January 1, 1998, the Company acquired all of the issued and outstanding
stock of Alliance Home Health, Inc. (Alliance), a home health business with
locations throughout Oklahoma, in exchange for $300,000 and 194,286 shares of
common stock. Of the 194,286 shares of Company common stock issued to the
former owners of Alliance, 122,857 shares were placed in escrow as
consideration for certain contingent liabilities which may be asserted against
the former stockholder of Alliance to the extent such claims exceed $500,000
(singularly and/or in aggregate). The escrow period expires December 31, 2003.
The Company performed management services for Alliance during 1997 and
received revenues totaling approximately $1.3 million of which $695,000 is
included in accounts receivable at December 31, 1997. In addition, the Company
had advanced $1,465,000 to Alliance for cash flow purposes which is included
in other assets at December 31, 1997.

On February 23, 1998, the Company acquired all of the issued and outstanding
capital stock of PRN, Inc. (PRN), a home infusion pharmacy business, in
exchange for $430,000 and assumption of $71,000 debt. The Company has agreed
to pay additional consideration of up to $150,000 upon PRN reaching certain
revenue goals ("Additional Consideration"). The Company has retained the right
to offset certain indemnifiable liabilities against the Additional
Consideration.

On February 27, 1998, the Company acquired all of the issued and outstanding
capital stock of Infusioncare Solutions, Inc. ("ICS") a home health care and
infusion business, based in Baton Rouge, Louisiana, in exchange for aggregate
consideration of $500,000, of which $375,000 was payable in cash at closing
and $125,000 was payable pursuant to a two year promissory note. The Company
has retained the right to offset certain indemnifiable liabilities against the
sums payable pursuant to the promissory note.

On February 27, 1998, the Company acquired substantially all of the assets
of Precision Health Solutions, L.L.C. ("PHS") a home health care and infusion
business, based in Baton Rouge, Louisiana, in exchange for aggregate
consideration of $1,000,000, of which $750,000 was payable in cash at closing
and $250,000 was payable pursuant to a two year promissory note. The Company
has retained the right to offset certain indemnifiable liabilities against the
sums payable pursuant to the promissory note.

F-31
<PAGE>

AMEDISYS, INC. AND SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

DECEMBER 31, 1997, 1996 AND 1995

Each of the above transactions was accounted for as a purchase.

On March 3, 1998, the Company completed a secondary phase of its private
placement of preferred stock (see Note 11) and issued an additional 350,000
shares for gross proceeds of $3.5 million. These shares are convertible into
756,757 shares of common stock which is equivalent to $4.625 per share.

F-32
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 12. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<S> <C>
SEC registration fee $ 874.00
Legal Fees and Expenses 10,000.00
Accounting Fees and Expenses 5,000.00
Miscellaneous $ 4,126.00
----------
Total $20,000.00

</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article XI of the Certificate of Incorporation of the company provides for
indemnification of officers, directors, agents and employees of the company as
follows:

(a) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner in which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.

II-1
<PAGE>

(b) The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.

(c) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.

(d) Any indemnification under subsections (a) and (b) of this Article
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
Article. Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.

(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
authorized by this Article. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the Board of Directors deems appropriate.

(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.

(g) The Corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under this Article.

(h) For purposes of this article references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had the power
and authority to indemnify its directors, officers, and employees or agents, so
that any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other

II-2
<PAGE>

enterprise, shall stand in the same position under this Article with respect to
the resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.

(i) The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.

The foregoing discussion of the company's Certificate of Incorporation, and
of the Delaware General Corporation Law is not intended to be exhaustive and is
qualified in its entirety by such Certificate of Incorporation and statutes,
respectively.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In December 1993, the company issued 351 shares of common stock to employees
in exchange for an aggregate offering price of $37,000 which was paid in cash.

In December 1993, the company issued 75,000 shares to two unaffiliated third
parties for services rendered valued at nominal consideration.

In March 1994, the company issued 29,721 shares of common stock to 38
purchasers pursuant to a private placement stock offering. An aggregate cash
consideration of $264,000 was received upon issuance of these shares.

In April 1994, the company issued 15,800 shares in exchange for all of the
outstanding stock of Priority Home Care, Inc. Consideration received for the
issuance of such shares was valued at $150,000.

In December 1994, the company issued 1,200 shares of common stock upon
exercise of an outstanding stock option. Cash consideration received upon
exercise of this option was $6,000.

In March 1995, the company issued 7,143 shares of common stock in exchange
for all of the outstanding stock of Health Care Services 24, Inc. The
consideration received for the issuance of these shares was valued at $50,000.

In May 1995, the company issued 30,000 shares of common stock in exchange
for all of the outstanding stock of Home Care Plus, Inc. The consideration
received for the issuance of these shares was valued at $274,000.

In June 1995, the company issued 1,000,000 shares of common stock in
connection with the acquisition of all of the outstanding membership interest in
Surgical Care Centers of Texas, LC. The consideration received for the issuance
of these shares was valued at $7 million.

In March 1998, the company issued 750,000 shares of preferred stock in
connection with a private placement offering. Consideration received for the
issuance of such shares was valued at $7.5 million.

In each case, the issuance of securities was exempt from registration under
the Securities Act pursuant to Section 4(2) as a transaction by an issuer not
involving any public offering. In each instance, the purchaser had a pre-
existing relationship with the company, the offers and sales were made without
public solicitation, the certificates bear restrictive legends, and appropriate
stop transfer orders have been given to the transfer agent. No underwriter was
involved in the transactions and no commissions were paid.

II-3
<PAGE>

ITEM 17. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. IDENTIFICATION OF EXHIBIT
- ----------- -------------------------
<C> <S>
2.1(1) -Acquisition Agreement dated December 20, 1993 between the company
and M&N Capital Corp. 2.2(3)-Plan of Merger dated August 3, 1994
between M&N Capital Corp. and the company
2.3(4) -Certificate of Merger dated August 3, 1994 between M&N Capital
Corp. and the company
2.4(7) -Acquisition Agreement dated August 1,1997 between the company
and Allgood Medical Services, Inc.
2.5(7) -Exchange Agreement dated January 1, 1998 between the company and
Alliance Home Health, Inc. and University Capital Corp. dated
December 10, 1997.
2.6(7) -Stock Purchase Agreement by and among Amedisys, Alternate-Site
Infusion Therapy Services, Inc., PRN, Inc. d/b/a Home IV Therapy,
Joseph W. Stephens, and Terry I. Stevens dated February 23, 1998.
2.7(7) -Agreement to Purchase by and between Amedisys, Alternate-Site
Infusion Therapy Services, Inc. and Precision Health Systems,
L.L.C. dated February 27, 1998.
2.8(7) -Promissory note in the amount of $250,000 to Precision Health
Solutions, L.L.C. in connection with the purchase of the company.
2.9(7) -Stock Purchase Agreement by and among Amedisys Alternate-Site
Infusion Therapy Services, Inc., Infusioncare Solutions, Inc. and
Daniel D. Brown dated February 27,1998.
2.10(7) -Promissory note in the amount of $125,000 to Daniel D. Brown in
connection with the purchase of the company.
2.11(8) -Exchange Agreement by and among Amedisys Specialized Medical
Services, Inc., Quality Home Health Care, Inc., Frances Unger
and James Unger dated May 1, 1998
2.12(9) -Asset Purchase Agreement by and among Nursefinders, Inc.,
Amedisys Staffing Services, Inc., Amedisys Nursing Services,
Inc., Amedisys Home Health, Inc. and Amedisys, Inc. dated as of
September 21, 1998.
3.1(4) -Certificate of Incorporation
3.2(4) -Bylaws
3.3(7) -Certificate of Designation for the series A preferred stock
4.1(4) -Common stock specimen
4.2(7) -Preferred stock specimen
4.3(7) -Form of Placement Agent's Warrant Agreement
5.1(10) -Opinion regarding Legality
10.1(4) -Master Note with Union Planter's Bank of Louisiana
10.2(4) -Merrill Lynch Term Working Capital Management Account
10.3(5) -Promissory Note with Deposit Guaranty National Bank
10.4(7) -Amended and Restated Stock Option Plan
10.5(7) -Registration Rights Agreement
21.1(10) -List of Subsidiaries
23.1(10) -Consent of Counsel (contained in Exhibit 5.1)
23.2(10) -Consents of Arthur Andersen, LLP and Hannis T. Bourgeois & Co.,
L.L.P., independent public accountants
- ---------------
</TABLE>

(1) Previously filed as an exhibit to the Current Report on Form 8-K dated
December 20, 1993, and incorporated herein by reference.
(2) Previously filed as an exhibit to the Current Report on Form 8-K dated
February 14, 1994, and incorporated herein by reference.
(3) Previously filed as an exhibit to the Current Report on Form 8-K dated
August 11, 1994, and incorporated herein by reference.

II-4
<PAGE>

(4) Previously filed as an exhibit to the Annual Report on Form 10-KSB for the
year ended December 31, 1994, and incorporated herein by reference.
(5) Previously filed as an exhibit to the Current Report on Form 8-K dated June
30, 1995, and incorporated herein by reference, and incorporated herein by
reference.
(6) Previously filed as an exhibit to the Registration Statement on Form S-1
(333-8329) dated July 18, 1996, and incorporated herein by reference.
(7) Previously filed as an exhibit to the Registration Statement on Form S-3
dated March 11,1998, and incorporated herein by reference.
(8) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the period ended June 30, 1998, and incorporated herein by
reference.
(9) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated September 21, 1998 and incorporated by herein by reference.
(10) Filed herewith.

ITEM 18. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

i. To include any prospectus required by Section 10(a)(3) of
the Securities Act;

ii. To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and

iii. To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.

Provided, however, that paragraphs (1) (i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15 (d) of the Exchange Act that are incorporated by
reference in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

II-5
<PAGE>

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13 (a) or 15 (d) of the Exchange
Act that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-6
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Baton Rouge, State of
Louisiana, on the 2nd day of November, 1998.

AMEDISYS, INC.

By /s/ WILLIAM F. BORNE
---------------------------------------------
WILLIAM F. BORNE, Chief Executive Officer

____________________________

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated:

Signature Title Date
- --------- ----- ----

//s// WILLIAM F. BORNE Chief Executive Officer November 2, 1998
- ------------------------------ and Director (Principal
WILLIAM F. BORNE Executive Officer)

//s// JAMES P. CEFARATTI President and Chief Operating November 2, 1998
- ------------------------------ Officer
JAMES P. CEFARATTI

//s// MITCHEL G. MOREL Chief Financial Officer November 2, 1998
- ------------------------------ (Principal Financial
MITCHEL G. MOREL and Accounting Officer)

//s// JAKE L. NETTERVILLE Director November 2, 1998
- ------------------------------
JAKE L. NETTERVILLE, CPA

Director November 2, 1998
- ------------------------------
DAVID R. PITTS

//s// RONALD A. LaBORDE Director November 2, 1998
- ------------------------------
RONALD A. LaBORDE

//s// PETER F. RICCHIUTI Director November 2, 1998
- ------------------------------
PETER F. RICCHIUTI

II-7

<PAGE>

EXHIBIT 5.1

November 2, 1998

Mr. William Borne
Amedisys, Inc.
3029 S. Sherwood Forest Blvd., Suite 300
Baton Rouge, Louisiana 70816

Dear Mr. Borne:

As counsel for Amedisys, Inc., a Delaware corporation ("Company"), you have
requested our firm to render this opinion in connection with the Registration
Statement of the Company on Form S-1 filed under the Securities Act of 1933, as
amended ("Act"), with the Securities and Exchange Commission relating to the
registration of the resale of (i) 1,669,037 shares of Common Stock issuable upon
conversion of series A preferred stock ("Preferred Stock"), and (ii) 116,833
shares of Common Stock underlying Preferred Stock pursuant to currently
exercisable warrants (" Placement Agent Warrants").

We are familiar with the registration statement and the registration
contemplated thereby. In giving this opinion, we have reviewed the registration
statement and such other documents and certificates of public officials and of
officers of the Company with respect to the accuracy of the factual matters
contained therein as we have felt necessary or appropriate in order to render
the opinions expressed herein. In making our examination, we have assumed the
genuineness of all signatures, the authenticity of all documents presented to us
as originals, the conformity to original documents of all documents presented to
us as copies thereof, and the authenticity of the original documents from which
any such copies were made, which assumptions we have not independently verified.

Based upon all the foregoing, we are of the opinion that:

1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.

2. The shares of Preferred Stock underlying the Placement Agent Warrants to
be issued upon exercise of such Placement Agent Warrants are validly
authorized and, upon exercise of the Warrants in accordance with their
terms, will be validly issued, fully paid and nonassessable.
<PAGE>

Mr. William Borne
October 30, 1998
Page 2

3. The shares of Common Stock underlying the Preferred Stock to be issued
upon conversion of such Preferred Stock are validly authorized and, upon
conversion of the Preferred Stock in accordance with their terms, will
be validly issued, fully paid and nonassessable.

We consent to the use in the registration statement of the reference to
Brewer & Pritchard, P.C. under the heading "Legal Matters."

Very truly yours,

BREWER & PRITCHARD, P.C.

<PAGE>

EXHIBIT 21.1

Subsidiaries of Amedisys, Inc.

1. Amedisys Specialized Medical Services, Inc.
2. Amedisys Surgery Centers, L.C.
3. Alliance Home Health, Inc.
4. Amedisys Management Services Organization, Inc.
5. Amedisys Alternate-Site Infusion Therapy Services, Inc.
6. Amedisys Durable Medical Equipment, Inc.
7. Amedisys Physician Services, Inc.
8. MedAmerica Inc. of Texas
9. MedAmerica, Inc.
10. Quality Home Health Care, Inc.
11. Home Health of Alexandria, Inc.
12. Hammond Surgical Care Center, L.C.
13. Infusion Care Solutions, Inc.
14. PRN, Inc.
15. Amedisys Home Health Inc. of Texas
16. Amedisys Home Health, Inc.

<PAGE>

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated April 15, 1998 included in this registration statement and to all
references to our Firm included in this registration statement.

Arthur Andersen LLP

New Orleans, Louisiana
November 2, 1998
<PAGE>

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated April 15, 1998 included in this registration statement of Amedisys, Inc.
on Form S-1.

Hannis T. Bourgeios & Co., LLP

Baton Rouge, Louisiana
November 2, 1998