Home Health, Post-Acute Care Stocks Resume Climb Amid COVID-19 Spike

The latest Stoneridge Partners Home Health (HHI) and Post-Acute Care (PAI) Indices show steady gains for home health and post-acute care stock values in October, even in the midst of a nationwide spike in COVID-19 cases.

Rebounding from a small dip in September, the HHI rose nearly 6% in October compared to the previous month. The PAI posted an even stronger performance, rising by more than 7%. In contrast, the S&P 500 fell more than 3% during the same period.

“It’s encouraging to see home health and post-acute stock values are still making progress, even as our economy continues to be buffeted by the effects of COVID-19,” said Rich Tinsley, President and CEO of Stoneridge Partners. “And we expect a strong November moving forward. There weren’t many changes in the final home health payment rule for 2021, which added a sense of operational stability amid all the pandemic-related uncertainty.”

Home Health Index

The Stoneridge Partners HHI follows stock values for Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG), both of which had a strong showing in October.

Baton Rouge, Louisiana-based Amedisys saw its stock value jump by nearly 10%, coming back strong after a slight drop in the month of September. Amedisys CEO Paul Kusserow discussed his company’s run of success during a Q3 2020 earnings call on October 29th.

“I’m extremely proud of our performance this quarter, as we have once again generated prodigious clinical, operational and financial results, besting both our internal and external expectations in a tumultuous environment,” Kusserow said.

Lafayette, Louisiana-based LHC Group’s stock value repeated its solid September performance, increasing once again by almost 2% on a month-over-month basis.

Year to date, the HHI is up more than 56%; over the last 12 months it has risen by nearly 99%.

Post-Acute Care Index

The Stoneridge PAI combines the Amedisys and LHC Group stock values with results from Addus HomeCare Corporation (Nasdaq: ADUS), The Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health Corp. (NYSE: EHC) and Brookdale Senior Living Inc. (NYSE: BKD).

Brentwood, Tennessee-based Brookdale had the strongest showing last month. Its stock was up almost 16% in October as compared to September, representing a major turnaround after being battered for months by the effects of COVID-19 on senior living communities.

Stock values for Frisco, Texas-based Addus rose more than 3% in October according to the PAI, while Pennant stocks ticked up by more than 8% for the same period. Meanwhile, Encompass Health’s stock value dipped by almost 6%. The company’s home health and hospice segment has struggled recently to get access to patients in facility-based settings. Nonetheless, Encompass leadership remains optimistic about its long-term outlook.

“Since 2009, we have successfully managed through an economic recession, regulatory changes, sequestration and Medicare payment freezes and cuts,” Encompass Health President and CEO Mark Tarr said on October 29th during the company’s Q3 earnings call. “Now we can add a global pandemic to that list.”

Quote Of The Month

“Employment of home health aides and personal care aides is projected to grow 34% from 2019 to 2029, much faster than the average for all occupations, according to BLS. As the baby-boom generation ages and the elderly population grows, the demand for the services of home health aides and personal care aides will continue to increase.” – Robert Holly, Home Health Care News

Read the Full Article Here: Home Health Agencies Carving Out Bigger Role in US Economy

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.

The last Stoneridge Partners Speaker Series webinar of 2020 is tomorrow, and spots are going quickly for this in-depth conversation featuring our experienced advisors from the home health, home care, hospice and behavioral health industries. There’s still time for you to join us on Wednesday, November 18th at 1:30 pm ET – Register.

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 November 2020 | Stoneridge Partners)

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

Company 10/31/20 1 mos change YTD change 10/31/19 10/31/18
Amedisys 259.00 +9.55% +55.84% 128.52 111.2
LHC Group 216.55 +1.88% +57.19% 110.97 89.06
HH Index* 237.78 +5.92% +56.45% 119.75 100.13
S&P 3269.96 -3.28% +1.21% 3037.56 2722.05
Addus 97.57 +3.24% +0.36% 84.21 65.79

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) 10/31/20 10/31/19 10/31/18
Amedisys 8520 4570 3570
LHC Group 6800 3970 3220
HH Index Total 15320 8540 6790
Addus 1460 1110 744

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

Company 10/31/20 10/31/19 10/31/18
Amedisys 422% 242% 226%
LHC Group 330% 195% 238%
HH Index Average* 376% 219% 232%
Addus 198% 197% 163%

Multiples of EV/EBITDA

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

Company 10/31/20 10/31/19 10/31/18
Amedisys 32.29 24.12 23.66
LHC Group 28.10 19.53 31.19
HH Index Average* 30.20 21.83 27.43
Addus 26.17 26.87 20.62

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 November 2020 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Spiro Health acquired Absolute Respiratory Care in Johnston, Rhode Island
  • Idaho-based The Pennant Group acquired Riverside Home Health Care of Grants Pass, Oregon
  • Help at Home — a Chicago-based home- and community-based services provider that operates across 13 states — has been acquired by a consortium of private equity buyers

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 November 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