The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:
- Almost Family (AFAM)
- LHC Group (LHCG)
- Amedisys (AMED)
Quote of the Month:
“With the health care environment … I think the trends have been and continue to be more partnering, more collaboration,” Len Trainor, former owner of Heritage Healthcare Services , after announcing the sale of his company
The Stoneridge Partners Home Health Index Moves Up 2.7%
After a very difficult two months for the market as a whole, our HH Index moved up 2.7%, which is just about what we lost in September. The general market however did even better with the S&P 500 up 8.3%
All of the stocks in our HH Index were up with Amedisys leading the way…. plus 4.2%.
The record high of 42.55 for our HH Index was set just three months ago. It looks like we are now creeping back.
See It to Believe It!
This graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to January, 2002. It has been quite a ride.
This is a 12 month trailing chart of the HH Index compared to the actual prices of the individual companies that make up the chart, through October, 2015.
This graph compares our HH Index to the price of Addus stock (non-Medicare). As you can see, after their earnings release, their stock took a bit of a dive.
Here are the results of the stock prices for the past two years:
| Company | 9/30/15 | 1 mos change | YTD change | 1 yr change | 2 yr change |
|---|---|---|---|---|---|
| Almost Family | 41.50 | +3.6% | +43% | +41% | +116% |
| Amedisys | 39.58 | +4.2% | +35% | +52% | +143% |
| LHC Group | 45.06 | +0.6% | +45% | +85% | +118% |
| HH Index** | 42.05 | +8.3% | +41% | +58% | +125% |
| S&P 500 | 2079 | +8.3% | -1.0% | -3.0% | +18.3% |
| Addus | 24.98 | -19.8% | +3% | +26% | -3.4% |
Although we track the performance of Addus, they are not included in our HH Index because very little of their revenue comes from Medicare.
Enterprise Value (EV)
| EV (in M)) | 11/1/2015 | 10/1/15 | 9/1/15 | 8/1/15 | 7/1/15 |
|---|---|---|---|---|---|
| Almost Family | 430 | 462 | 454 | 458 | 4163 |
| Amedisys | 1,390 | 1,345 | 1,390 | NA | 1,420 |
| LHC Group | 832 | 827 | 817 | 775 | 742 |
| HH Index Total | 2,652 | 2,634 | 2,661 |
NA | 2,578 |
| Addus | 236 | 303 | 329 | 285 | 311 |
Enterprise Value (EV), aka Selling Price, as a Percent of Revenue.
| Company | 11/1/15 | 11/1/14 | 11/1/13 |
|---|---|---|---|
| Almost Family | 85% | 75% | 43% |
| Amedisys | 116% | 82% | 42% |
| LHC Group | 110% | 74% | 60% |
| HH Index Average | 104% | 81% | 52% |
| Addus | 71% | 69% | 93% |
Multiples of EV/EBITDA.
Think of this as selling price as a multiple of EBITDA.
| Company | 11/1/15 | 11/1/14 | 11/1/13 |
|---|---|---|---|
| Almost Family | 11.8 | 18.1 | 5.8 |
| Amedisys | 15.6 | 19.0 | 7.8 |
| LHC Group | 11.6 | 9.1 | 6.3 |
| HH Index Average | 13.0 | 14.7 | 6.6 |
| Addus | 9.6 | 10.6 | 12.3 |
The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ. EV has been calculated based on stock prices September 1. Enterprise value is defined as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. EBITDA is calculated using methodology that may differ from that used by a company it is reporting.
Hot off the Press!
Compassus Acquires Hospice Advantage.
“The joining of Compassus and Hospice Advantage offers a compelling opportunity to build on the progress of each company to create a leading organization focused on the highest quality hospice, palliative and post-acute services in the United States.” Jim Deal, CEO, Compassus.
The acquisition increases Compassus’ locations by 60, up from 90 in 25 states following the purchase of Life Choice Hospice earlier this year. The addition of Hospice Advantage brings Compassus services into Indiana, Minnesota and Wisconsin for the company’s first time.
As part of the deal, Hospice Advantage President Rod Hildebrandt will join the Compassus executive team, according to the release. Deal will remain as CEO of Compassus, which is based in Nashville, Tennessee.
Congratulations to Rod, a great guy, and a job well done!
Top 100 Home Health & Hospice Agencies
The LexisNexis 2015 Top 100 Home Health and Hospice Agencies Rankings were compiled by LexisNexis Risk Solutions using medical claims and patient volume data from the industry leading MarketView™ claims database.
Top 10 Home Health Agencies:
- Kindred Healthcare – Atlanta, Ga.
- Amedisys, Inc. – Baton Rouge, La.
- LHC Group – Lafayette, La.
- Almost Family, Inc. – Louisville, Ky.
- Encompass Home Health – Dallas, Texas
- Brookdale Senior Living – Brentwood, Tenn.
- Visiting Nurse Service of New York – New York, N.Y.
- Trinity Health – Livonia, Mich.
- Interim HealthCare – Sunrise, Fla.
- BAYADA Home Health Care – Moorestown, N.J.
The Top 10 Hospice Providers include:
- Kindred Healthcare – Atlanta, Ga.
- VITAS Healthcare – Miami, Fla.
- HCR Manor Care – Toledo, Ohio
- Amedisys, Inc. – Baton Rouge, La.
- Curo Health Services – Mooresville, N.C.
- Seasons Hospice & Palliative Care – Atlanta, Ga.
- Hospice Campassus – Nashville, Tenn.
- Compassionate Care Hospice – Newark, Del.
- Hospice of the Valley – Phoenix, Ariz.
- Aseracare – Atlanta, Ga.
To read the full list of 100 companies with estimated market share serving the home health and hospice communities, visit: LexiNexis Top 100
Almost Family in the News!
Here is another example of why strategic, synergistic buyers are so successful in home care M&A.
It was recently announced that Almost Family has acquired the stock of Black Stone Operations dba Home Care by Blackstone. Black Stone is a provider of in-home personal care and skilled home health services and has 2015 revenues approaching $50M through service locations in the western half of Ohio.
The total purchase price was $40 million. Approx. $29 million would be classified as personal care (non-Medicare) and $21 million in Medicare type plans. Their branch level contribution (before home office and one-time items) was $7.5 million. Their home office costs and one-time items were approx. $3.9 million.
Branch office synergies are expected to range between $2M and$2.5M. One-time transaction costs, severance, wind-down, lease abandonment and transition costs are expected to be between $0.5M and $1.0M incurred over the period from closing through mid-2016.
From these numbers let’s take a stab at multiples…taking into account synergies:
| Purchase Price | 40,000,000 |
| Revenue | 50,000,000 |
| Price as % of Revenue | 80% |
| Income | 3,600,000 |
| Multiple of Income | 11.1 |
| Branch Level Income | 7,500,000 |
| Multiple of Branch Level | 5.3 |
| Branch Level Income + Synergies | 9,500,000 |
| Multiple including Synergies | 4.2 |
Again, this is just taking an approximate stab based on their press release, but it shows the true power that large strategic buyers have in today’s market. To read the full press release go Here.
Amedisys in the News!
It was recently announced that Amedisys will acquire Florida Based Infinity HomeCare and its 15 care centers for $63 million. Infinity, whose headquarters are in Sarasota, Florida, provides care for more than 14,000 patients each year and has more than 600 employees. Infinity generated around $50 million in revenue a year.
That seems to work out to about 1.25 times revenue.
President and Chief Executive Officer Paul Kusserow states that the acquisition will expand the Amedisys footprint in Florida. The deal also “sends a strong signal” that Amedisys plans to resume growing through acquisitions in key markets.
In August, Kusserow said Amedisys has compiled a list of more than 200 potential targets for acquisitions, joint ventures and other partnerships. In September, the company announced it has $300 million in credit available to fund those deals.
And it looks like North Tide Capital is taking some chips off the table. Over the past thirty days they have unloaded over 500,000 shares of Amedisys stock. This still leaves them with a considerable position with over 10% of the company’s capitalization.
Addus in the News!
This past month Addus stock (NASDAQ:ADUS) surged to a 52 week high of $35.72, and then, when lower than expected third quarter results were announced, the stock dropped 25%. The culprit according to management was sluggish revenues at its two most recent acquisitions and certain other locations.
LHC Group in the News!
We read last month about the troubles at Lexington, KY based Nurse Registry and Home Health Corp. We now learn that a U.S. Bankruptcy Court has authorized the sale to LHC Group. To read the entire article go here: Nurse Registry goes to LHC Group
Merger & Acquisition Activity:
SOLD BY STONERIDGE PARTNERS!
Freeland, Washington – Island Home Nursing, Inc, a non-Medicare agency, sold to a national healthcare company. Brian Bruenderman and Ben Bogan, partners at Stoneridge, provided sell-side advisory services.
Maricopa County, Arizona – Sunlife Home Health, a Medicare agency located in the Phoenix metro area, sold to a regional home care company. Rhonda Gronberg, our Director of Development, provided sell-side advisory services.
OTHER SALES FROM AROUND THE COUNTRY!
Dallas, Texas – Epic Health Services, a provider of pediatric nursing, therapy and enteral services as well as adult home health care services, has acquired Medco, a medical supply company serving patients throughout Texas and in Shreveport.
Independence, Kansas –Mercy leaders have announced an agreement with Home Town Health Care, LLC, owned by Bobby and Debbie Shinkle and headquartered in Fredonia, for the transfer of Mercy’s home health and hospice services, assuring the continued provision of those services for the Independence community and surrounding area.
Albuquerque, New Mexico – Heritage Healthcare Services Inc. has been purchased by an affiliate of the Evangelical Lutheran Good Samaritan Society. The South Dakota-based Good Samaritan Society has 240 locations in 24 states, including eight in New Mexico. It operates assisted-living centers and nursing homes and offers in-home and skilled nursing care. Congratulations to Len and Liz Trainor on a job well done! To read the entire article click Here.
Join Us in Las Vegas….
Decision Health’s Annual Private Duty conference- November 16-18 at the newly remodeled Tropicana Resort. Come on out to ‘Vegas, have a great time and get an update on Private Duty M&A. Private Duty Conference. Give us a call to set up a confidential meeting.
Joe Lynch, One of our Partners, Authors a Book!
Joe’s new book, “Finding Dad”, combines amusing and interesting stories about his many years in home care, along with fascinating stories about his father, a World War II fighter pilot. If you are in home care, and/or have an interest in WWII history you will enjoy this book, which we are shamelessly promoting. For more information and to order Joe’s book click here: Finding Dad
Exclusively Listed for Sale by Stoneridge Partners:
- Minnesota – $14 million revenue Medicare certified home health agency with large Medicaid census, well established and deficiency free, SE Minnesota. Stoneridge file S-5268
- DFW Area – Approx. $3.5 million home care and hospice agency just listed. Stoneridge file S-6600.
- California- Approx. $2.6 million Medicare home health agency. Central coast region of Northern California. 90% Traditional Medicare. Strong gross profit with opportunities for immediate, sustained, long-term growth. Accredited. Stoneridge file S-5400
- Pennsylvania – Approx. $4 million Medicaid home care agency located in central PA. Accelerated and profitable growth trajectory with continued opportunity for future growth. Professionally run with outstanding clinical and excellent staff in place. ON CONTRACT! Stoneridge file S-1000
- Colorado – $2.5 million diversified home care agency and hospice, accredited with excellent books and records. Stoneridge file #S-1005
- Rhode Island – $2.5 million Medicare agency. Accredited in CON state. Stoneridge file #S-1100
- Texas – $4.8 million Medicare agency in Houston metro area with solid bottom line. 65% of revenue from traditional Medicare and the balance in private non-skilled care. Stoneridge file #S-2000.
- Oklahoma – $1.5 million Medicare agency. 89% of revenue from traditional Medicare. Stoneridge file S-4131
- Florida – $4 million in pure private pay. 15% bottom line. Accredited on the central east coast. Stoneridge file #S-3250.
- Illinois – $5 million plus Medicare agency with four offices. Strong management with excellent clinical. Stoneridge file #S-6550
- Kentucky – Certificate of Need for 3 counties in Northern KY, rare opportunity to establish or expand services in populous CON service area. Stoneridge file S-1121 ON CONTRACT
- Illinois – $3 million hospice in Chicago area. Average census 58. Stoneridge file #S-5325
- Texas – $4 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay. Stoneridge file S-3665
- Illinois – $2.3 million Chicago area Medicare agency, clean surveys, excellent clinical reputation. Stoneridge file #S-4300
- Massachusetts – $5 + million home health agency, primarily Medicaid, but also private pay and commercial insurance, plus Medicare certification. Zero deficiencies on last survey. Stoneridge file #S-9300 ON CONTRACT
- Washington State – $2 million revenue. This agency has a long history of profitability. Diverse payor sources includes Medicaid programs and private pay. Great reputation in a unique service area. Stoneridge file S-7010 SOLD!
- Florida – $5 million Medicare agency located in the Tampa – St. Pete area. Accredited, with solid bottom line. Stoneridge file S-4109, ON CONTRACT
- Texas – $8 million East Texas agency, Medicare certified with deficiency free survey, no audits, and top-of- the line software. Stoneridge file S-3001 ON CONTRACT
- Texas – $1.5 million East Texas Medicare certified home health agency, providing skilled care, approx 75% from traditional PPS Medicare. Last survey was deficiency free. Stoneridge file S-4088
- Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
- Texas – $3.3 million accredited Medicare home health agency. Profitable and still growing with approximately 87% of revenue coming from traditional Medicare. Strong marketing team in place with diversified referral sources. Stoneridge file S-1500 ON CONTRACT
- Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare.Stoneridge file S-2650
- Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare. Stoneridge file S-9000
- Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care. Stoneridge file S-5232.
- Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015
- Texas – $1 million Medicare agency in the DFW area – 99% of revenue from traditional Medicare. Stoneridge file #S-1015
To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale
Do you know of any acquisitions that have taken place? We would be interested in your comments. At the top of this column is a “Contact Tab” with a section for comments. These can be sent anonymously. The return email address can be left blank. We are interested in what you have to say, or acquisitions that you know about.
Another Favorite from the New Yorker
More
For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: https://www.stoneridgepartners.com/category/blog/.
From Don Cummins, Publisher of “The Home Health Index” [email protected] – 800-218-3944
Previous editions of this monthly newsletter can be searched for at the bottom of the home page of the Home Health Index. Links to Google Finance: Almost Family | Amedisys | LHC Group
