Congress Delays Medicare Sequestration; Post-Acute Stocks Bounce Back from Difficult February

Home Health Index | 2021 April Update

Just days before Medicare sequestration payment reductions – temporarily halted during the COVID-19 pandemic – were set to resume, Congress approved another delay in March, postponing the cuts until the end of 2021.

This was fantastic news for home health providers, many of whom struggled through a complicated web of quarantines and lockdowns last year to continue providing their services. But according to Brian Bruenderman, Partner and Executive Vice President at Stoneridge Partners, the delay also has the potential to result in big benefits for operators looking to take their business to market.

“Medicare home health providers faced a lot of uncertainty last year, and I think you saw that reflected in a lower volume of transactions – even though the interest was still there from buyers,” Bruenderman said. “But savvy providers not only survived, they thrived in many instances. They adjusted to PDGM and to the demands of a post-COVID environment, which were two of the big question marks holding buyers back. Now, another uncertainty has been eliminated with the sequestration postponement. I think we can expect the pent-up demand for quality home health operations to result in substantially higher transaction volumes. For any owners who’ve been thinking about putting a home health business on the market, the time is right to get in on the front end of that wave.”

Home Health and Post-Acute Care Indices

March also brought good news for major home health and post-acute stock values.

Coming off a difficult month that saw significant drops for both the Home Health (HHI) and Post-Acute Care Indices (PAI), March roared in like a lion and erased any lingering February doubts. The Stoneridge Partners HHI was up by nearly 6% last month, and the PAI’s rebound was even stronger – increasing by more than 14% over February’s result.

Both indices outpaced the S&P 500, which was up almost 4% over the same time period.

Home Health Index

The Stoneridge Partners HHI tracks the stock values of Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED), and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG). Both companies bounced back in March after a lackluster February, with Amedisys stock rising by nearly 6% and LHC Group climbing by just more than 6%.

Post-Acute Care Index

The Post-Acute Care Index combines stock values for Amedisys and LHC Group with monthly results for Addus HomeCare Corporation (Nasdaq: ADUS), Encompass Health Corp. (NYSE: EHC), The Pennant Group, Inc. (Nasdaq: PNTG) and Brookdale Senior Living, Inc. (NYSE: BKD).

Brookdale saw its stock value climb the most – more than 15% from March to February, continuing its recent strong performance after the Brentwood, Tennessee-based company announced last month that it would sell a majority stake in its home health and hospice segment to HCA Healthcare Inc. (NYSE: HCA). Birmingham, Alabama-based Encompass Health also saw positive results in March, up almost 2% over February.

But it wasn’t all gains across the board for the PAI. Frisco, Texas-based Addus saw its stock dip by more than 2% in March, while Eagle, Idaho-based Pennant stock took a tumble of more than 12% during that time.

Quote of the Month

“We get calls all the time from providers in post-acute care, especially home health, to train and help people manage behavioral health, and I feel it’s due to the fact that individual clients are so isolated. They haven’t been able to get out to medical providers or see their families. We’ve seen a real increase in agencies, managing depression, anxiety and suicidal patients.” – Katherine Vanderhorst, president of C&V Senior Care Specialists

Read the Full Article Here: Why Home Health Providers Should Consider Offering Behavioral Health Services

Articles Featuring Stoneridge

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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 April 2021 | Stoneridge Partners)

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

Company 3/31/21 1 mos change YTD change 3/31/20 3/31/19
Amedisys 267.64 +5.52% -8.76% 183.54 122.94
LHC Group 193.23 +6.34% -9.42% 140.2 108.43
HH Index* 230.44 +5.86% -9.04% 161.87 115.69
S&P 3992.78 +3.95% +6.30% 2584.59 2567.19
Addus 104.95 -2.44% -10.37% 67.6 64.41

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) 3/31/21 3/31/20 3/31/19
Amedisys 8880 5680 3930
LHC Group 6050 4420 3800
HH Index Total 14930 10100 7730
Addus 1780 928 775

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

Company 3/31/21 3/31/20 3/31/19
Amedisys 428% 290% 237%
LHC Group 293% 213% 210%
HH Index Average* 361% 252% 224%
Addus 233% 155% 150%

Multiples of EV/EBITDA

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

Company 3/31/21 3/31/20 3/31/19
Amedisys 30.63 24.49 23.36
LHC Group 25.86 21.77 23.06
HH Index Average* 28.25 23.13 23.21
Addus 31.13 24.05 19.80

The Stoneridge Partners Post-Acute Care Index is updated monthly and measures the performance of these six publicly traded post-acute care 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 April 2021 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Valeo Home Health & Hospice has acquired Hearts for Hospice & Home Health in Utah.
  • Abode Healthcare, a provider of home health care and hospice services, was acquired by BrightSpring Health Services.
  • Charter Health Care Group has acquired Providence Home Health & Hospice in Houston, Texas.

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

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

 Home Health /  Kentucky

Opportunity to establish a Houston-based hospice.  Low-census provider licensed for regions 3, 4, 5 and 6.

 Hospice /  Texas

Opportunity to establish a Medicare hospice and Medicare home health agency.  Greater Salt Lake city area.  Clean provider number with management and field staff in...

 Home Health /  Utah

Large, established franchise territory.  $2.5 million revenue.  Two offices with strong leadership teams in place.

 Home Care /  Michigan

ABA in-home and community-based autism treatment for children and families.  Located in Northeastern VA.  $1M in revenue.  Completely self-sufficient staff to remain.

 Other /  Virginia

Home health with $8+M 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

Private duty home care franchise.  $5M in revenue.  Quality track record with strong management team.  Excellent 18-year history,

 Home Care /  Colorado

Home care franchisee.  $8.4M in revenue.  Highly profitable agency.  Medicaid/private pay.

 Home Care /  Kentucky

Skilled home health agency.  JCAHO accredited, zero deficiencies.  Excellent reputation and referral relationships.  $400k in revenue, impressive growth potential.

 Home Health /  Colorado

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

In-home DME manufacturer.  Patented mobility system.  $7.7M+ in revenue.  GSA/VA contract.  Strong industry supplier partnerships.

 Other /  California

Medicare-certified home health and hospice provider.  $19M in revenue.  Attractive strategic geography.

 Home Health /  Ohio

$1M in revenue.  Small Medicare home health agency.  Region 5.

 Home Health /  Florida

Private pay home care.  $1.6M in revenue.  Profitable, great reputation.  Tenured staff.

 Home Care /  Illinois

Medicare-certified home health agency.  District 3.  Approximately $700k in revenue.  Accredited.

 Home Health /  Florida

Medicare-certified home health agency.  District 5.  Minimal census.  Accredited.

 Home Health /  Florida

Co-occurring, dual-diagnosis, addiction and mental health treatment center, 13- year history.  PHP, IOP, OP levels of care, prime location and setting, treating SUD and multiple...

 Behavioral Health /  Arizona

$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

$2.5M private pay home care agency.  20-year history, diverse referral sources.  Competitive bill rates.  Unique and successful recruiting and retention strategy.

 Home Care /  Virginia

$27M highly profitable, tech-enabled health care staffing company.  Provides on-demand workers for LTC facilities.  Impressive growth trends with extraordinary upside

 Other /  Midwest

Well-established and profitable franchisee.  Revenue of $4.9M.  Medicaid and private pay.

 Home Care /  Southwest

ABA in-home autism therapy for children.  $2.4M in revenue.  Strong growth and bottom line.

 Other /  California

Opportunity to acquire a Medicare-certified home health agency. JCAHO-accredited.  Zero deficiencies.  Region 9.

 Home Health /  Florida

Opportunity to acquire a Medicare-certified home health agency.  JACHO-accredited.  Zero deficiencies.  Minimal census.

 Home Health /  Pennsylvania

Opportunity to acquire a Medicare-certified home health agency.  Zero deficiencies.  Minimal census.

 Home Health /  Kansas

Rare southern hospice/home health CON opportunity.  $3.5M in revenue, 60+ hospice ADC.  Strong staff recruiting and retention.

 Home Health /  South

Medicaid/private pay, Medicare-certified.  $3 million in revenue.  CHAP-accredited.


4-star home health agency.  $2.5 million revenue.  Experienced management team.  Strong financials with outstanding local reputation.  Huge growth opportunities.

 Home Health /  Michigan

$1.5 million revenue chiropractic/physical therapy business.  High profit margin/low operating costs.  Diverse referral sources.

 Other /  Maryland

$3.3 million in revenue.  Autism center providing ABA, OT, PT and ST.  In-clinic and in-home services.

 Other /  Michigan

Non-skilled licensed home care organization.  Approx. $2 million in annual revenue.  Strong management team in place.  Southern California.

 Home Care /  California

Joint Commission-accredited psychiatric treatment center.  Residential, PHP, IOP, OP and home health services.  National referral base; reputation for excellence, innovation.  $3M EBITDA on $7M revenue...

 Behavioral Health /  Midwest

Central Ohio-based home health company with private pay.  $2.3 million in revenue.  13.5% EBITDA.  Strong growth trends, full staff in place.

 Home Health /  Ohio

$2+ million private pay.  Profitable with great reputation.

 Home Health /  Pennsylvania

Profitable hospice agency with $600,000 in revenue.  Ready to grow with full complement of staff in place.

 Hospice /  Pennsylvania

Hospice with $3.5 million in annual revenue. Accredited. No cap or regulatory issues.

 Hospice /  Texas / Popular

$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community and existing staff in place.

 Home Health /  New Mexico

Home Health Index March 2021 | 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