Home Health, Post-Acute Stocks Follow S&P, Begin Autumn with a Fall

After two consecutive months of forward progress, home health and post-acute care stock values took a bit of a tumble in September according to the Stoneridge Partners Home Health (HHI) and Post-Acute Care (PAI) Indices.

The HHI was off just 0.3% in September compared to August – a fraction of the S&P’s drop of more than 3.5% for the same time period. Meanwhile, the PAI surpassed the S&P’s negative performance by more than two points, falling nearly 6% for the month.

“As the pandemic continues, there’s still a lot of uncertainty across both the home health and larger post-acute care landscapes,” said Stoneridge Partners President and CEO Rich Tinsley. “Still, I’m heartened by the fact that the month-to-month volatility we were seeing earlier in the year has slowed. And we’re continuing to see sustained M&A activity at Stoneridge, so that’s definitely a good sign.”

Home Health Index

The Stoneridge HHI, updated monthly, follows the stock values of Amedisys Inc. (Nasdaq: AMED) and LHC Group Inc. (Nasdaq: LHCG).

Both companies saw gains in August, but September told a different story. Baton Rouge, Louisiana-based Amedisys saw its stock value drop by almost 2.3% compared to August, while Lafayette, Louisiana-based LHC Group continued its steady climb, improving by nearly 2% on a month-over-month basis.

“Stockholders in the home health space have to be pleased overall with how these companies have performed during a tough year,” Tinsley said. “Even with the economy taking a wallop over the past six months, they’ve managed to stabilize and continue out-performing their 2019 results, thanks to a continued preference for home-based care during the pandemic.”

Year-to-date, the HHI is up almost 48%, and over the past 12 months it has risen by nearly 83%.

Post-Acute Care Index

The monthly PAI from Stoneridge Partners looks at the broader post-acute care market, combining Amedisys’ and LHC Group’s stock values with values for senior living and rehabilitation companies Addus HomeCare Corporation (Nasdaq: ADUS), The Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health Corp. (NYSE: EHC) and Brookdale Senior Living Inc. (NYSE: BKD).

Eagle, Idaho-based The Pennant Group kicked off the last quarter of 2020 with a strong performance – its stock value rose by more than 6% in September, and in early October the company completed its acquisition of Harmony Hospice, with the expectation of more deals on the horizon.

Frisco, Texas-based Addus also saw slight gains in September, adding just less than 1% to its stock value compared to the previous month. Birmingham, Alabama-based Encompass Health’s stock value dipped by almost 0.4% in September compared to August, while Brentwood, Tennessee-based Brookdale’s stock value dropped almost 7.6% over that same period.

Quote Of The Month

“There has been an increased awareness of the breadth and depth of care at home, and this will have a long-standing impact on policy and politics as well,. There has been an absolute, exponential increase in respect for what you do in the home care setting. We took the stresses of the pandemic head-on and proved that care in the home is not only essential but [the best option].” – William A Dombi, National Association for Home Care & Hospice (NAHC) President

Read the Full Article Here: NAHC Pushing for Palliative Care, SNF-at-Home Medicare Benefits

Articles Featuring Stoneridge

View our quarterly M&A webinars on current valuation trends, deal flow, and pertinent regulatory changes in home health, home care, hospice, ID/DD, and behavioral health industries. Visit the Speaker Series Webinar Library on our website.

Voices: Ben Bogan, Partner, Stoneridge Partners

Stoneridge Partners President & Chief Executive Officer, Rich Tinsley is featured in Home Health Buyers, Sellers Headed Toward Frenzied Finish to M&A in 2020

See It To Believe It!

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these two publicly traded home health companies, all listed on the NASDAQ:

  • LHC Group (LHCG)
  • Amedisys (AMED)
(Home Health Index October 2020 | Stoneridge Partners)

Here are the results of the stock prices for the past two years:

Company 9/30/20 1 mos change YTD change 9/30/19 9/30/18
Amedisys 236.43 -2.26% +42.26% 131.36 123.61
LHC Group 212.56 +1.98% +54.30% 114.28 101.98
HH Index* 224.50 -0.30% +47.71% 122.82 112.80
S&P 3380.75 -3.54% +4.64% 2983.69 2924.87
Addus 94.51 +0.88% -2.79% 79.19 69.29

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) 9/30/20 9/30/19 9/30/18
Amedisys 7610 4390 3990
LHC Group 6160 3980 3520
HH Index Total 13770 8370 7510
Addus 1330 1070 857

Enterprise Value (EV), aka Selling Price, as Percent of Revenue

Company 9/30/20 9/30/19 9/30/18
Amedisys 386% 242% 252%
LHC Group 299% 195% 260%
HH Index Average* 343% 219% 256%
Addus 181% 188% 188%

Multiples of EV/EBITDA

Think of this as selling price as a multiple of EBITDA.

Company 9/30/20 9/30/19 9/30/18
Amedisys 31.44 24.41 26.45
LHC Group 25.44 19.57 34.08
HH Index Average* 28.44 21.99 30.27
Addus 23.98 25.72 23.75

The Stoneridge Partners Post-Acute Care Index is updated monthly and measures the performance of these two publicly traded home health companies, all listed on the NASDAQ:

  • LHC Group (LHCG)
  • Amedisys (AMED)
  • Addus (ADUS)
  • The Pennant Group, Inc. (PNTG)
  • Encompass Health (EHC)
  • Brookdale Senior Living Inc. (BKD)

This graph displays Post-Acute Care Index performance starting late 2019.

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ. 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 which may differ from that used by a company for its reporting. (Home Health Index October 2020 | Stoneridge Partners)

Recent Transactions From Around The Country

  • A+ Solutions, an Ohio-based educational and psychological provider, was acquired by Refresh Mental Health, Inc., the national clinical leader in providing psychiatric, psychological and therapy services.
  • Bell Family, LLC, an Arizona-based home and community based-services (HCBS) provider, was acquired by The MENTOR Network, Inc., a national health care and human services company.
  • Spectrum Home Healthcare, LLC, an Arizona-based home health care provider, was acquired by The MENTOR Network, Inc., a national health care and human services company.
  • Hospice and home health provider LHC Group (NASDAQ: LHCG) has acquired Santa Rita Hospice in Aurora, Colo.
  • Maryland-based Hospice of the Chesapeake has acquired Hospice of Charles County

Exclusively Listed For Sale By Stoneridge Partners

Do you know of any acquisitions that have taken place? We are interested in your comments. Contact us; Stoneridge Partners

Non-medical home care franchisee.  $9.6+M in revenue.  50% Medicaid/30% Private Pay/ 14% VA/ 6% Misc.  Experienced management team to stay post-transition.

 Home Care /  Multi-State

Hospice.  45+ ADC.  Rio Grande Valley.  No CAP or regulatory issues.

 Hospice /  Texas

$2M revenue home care agency.  100% private pay.  Primarily non-medical.  Skilled designation, not Medicare-certified.  W-2 caregivers.  Region 8.  Accredited.

 Home Care /  Florida

Profitable private-duty home health agency in Northern Virginia.  $1.5M in revenue.  20+ years in the community.

 Home Health /  Virginia

Profitable home care franchise with consistent sales growth.  Revenue of $1.3M.  Great reputation within the community.

 Home Care /  Iowa

$40M+ home care agency with 20+% AEBITDA.  Primarily private-duty, non-medical (90%).  Medicaid waiver programs.  40% family caregivers.  Multiple locations.

 Home Care /  Pennsylvania

Colorado Springs and surrounding areas.  Opportunity to grow existing small hospice.  Motivated Seller

 Hospice /  Colorado

Medicare-certified home health agency.  Houston/Kingwood area.  Approximately $600k in revenue.  Accredited.

 Home Health /  Texas

I/DD provider offering SCL & FHP services.  $3M in revenue.  Recent rate increase.

 I/DD /  Kentucky

Hospice.  30+ADC.  No CAP or regulatory issues.

 Hospice /  Illinois

Behavioral Health/Suboxone Clinic.  $900k in revenue.  21 years in business with stellar reputation.  Single office, great opportunities for expansion.  All cash paying patient base.

 Behavioral Health /  Kentucky

I/DD residential services.  $11M in revenue.  Highly profitable agency with long-standing reputation.  Community Residential Services (CRS) 4-bed model & Integrated Community Supports (ICS) apartment settings.

 I/DD /  Minnesota

Well established home health agency.  $4M in revenue.  Fully staffed.  Profitable.  Good history of compliance.

 Home Health /  Missouri

Home Health CON in Montgomery County.  Profitable agency generating over $1.3M in revenue.  95%+ Medicare.  Built in marketing relationship and growth potential.

 Home Health /  Maryland

Skilled Home Health & Private Duty. $4.4 million in revenue. 22% census increase over last year. Established over 23 years.

 Home Health /  Florida

Medicare/Medicaid Home Health agency. $8 million in revenue. Long history in the community.

 Home Health /  Oklahoma

86 patient hospice located Northeast of Houston, TX. $4M+ in revenue with 20% + adjusted EBITDA. Full staff in place. Excellent record of compliance.

 Hospice /  Texas

Medicare-certified home health agency. District 7. Census of approximately 30 patients. Accredited.

 Home Health /  Florida

Hospice. 150 ADC. Strong growth. Expertly run with administrative team willing to stay involved. No CAP or regulatory issues.

 Hospice /  Southwest

Mental Health Treatment Center. $1.1M in revenue. Long-established, profitable practice. Full spectrum of medical treatment and therapy services.

 Behavioral Health /  Indiana

Medical Staffing Agency. $4.6M in revenue. Established over 25 years. Excellent rapport with regional hospital network.

 Other /  Kentucky

Medicare home health agency.  Health system relationship.  Rare KY CON opportunity, multiple counties

 Home Health /  Kentucky / Popular

Home health with $8M in revenue.  Medicare/Medicaid-certified.  90+% traditional Medicare/episodic.  Services central Texas and licensed for entire state.  Strong management team in place.

 Home Health /  Texas

Medicare-certified home health agency.  Houston-area.  Minimal census.

 Home Health /  Texas

Medicare-certified home health agency.  $1M+ in revenue.  Long-established agency with excellent community rapport.

 Home Health /  Texas

$19.5M large home care franchisee.  89% Medicaid.  Well-established company operating more than 20 years.  Phenomenal year-over-year revenue growth.

 Home Care /  Illinois / Popular

Home Health Index October 2020 | Stoneridge Partners

From Rich Tinsley, Publisher of “Home Health Index.” Rich can be reached at [email protected] or (239) 561-0826, and toll-free at 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: Amedisys | LHC Group