The Wait is Over for Home Health Proposed Payment Rule; Home Health and Post-Acute Stocks Slightly Down Overall

U.S. Centers for Medicare & Medicaid Services (CMS) released the long-awaited FY 2022 home health proposed payment rule at the end of June, and while it took no action on the controversial PDGM behavioral adjustment, home health operators were reassured – and perhaps cautiously optimistic – that the Biden administration included a 1.7% Medicare payment increase. The rule also seeks to push the shift to value-based care by proposing a nationwide expansion of the Home Health Value-Based Payment Program (HHVBP), which in its pilot phase has shown an almost 5% increase in quality scores while saving Medicare more than $140 million.

“I think this is a real opportunity for home health to take a firm leadership role in the world of value-based care,” said Rich Tinsley, CEO and President of national healthcare mergers and acquisitions firm Stoneridge Partners. “Home health showed its worth to patients and payers alike during the pandemic as providers successfully managed more care needs than ever before in the home. I think the expansion of value-based payment is another opportunity for home health to shine – and another reason buyers will want to remain active in the home health market.”

Home Health and Post-Acute Care Indices

Though the Home Health (HHI) and Post-Acute Care Indices (PAI) were steady in the early spring of 2021, late spring has proven to be a different story.

Both the HHI and PAI fell nearly 5% in May, followed by a decrease of more than 2% in June. Each underperformed the S&P 500 yet again last month, which was up 2% on a month-over-month basis. That may all change now that the new proposed payment rule has been released – and industry watchers will certainly be watching July’s results closely.

Home Health Index

The Stoneridge Partners HHI follows the stock values of Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG), two of the nation’s largest home health providers.

Amedisys saw its stock drop more than 5% in June compared to the previous month, but the Baton Rouge, Louisiana-based company is still outperforming last year’s results, up nearly 35% year-over-year. Stock for Lafayette, Louisiana-based LHC Group rose nearly 2% compared to May, up more than 21% year-over-year.

Post-Acute Care Index

For a more wide-ranging analysis of the post-acute care industry, the Stoneridge PAI follows Addus HomeCare Corporation (Nasdaq: ADUS), Brookdale Senior Living Inc. (NYSE: BKD), Encompass Health Corp. (NYSE: EHC) and The Pennant Group, Inc. (Nasdaq: PNTG) in addition to Amedisys and LHC Group.

Brentwood, Tennessee-based Brookdale and Eagle, Idaho-based Pennant Group were both up significantly in June, increasing their stock values by more than 17% and 19%, respectively.

Brookdale has been aided by rebounding occupancy rates in its senior living facilities, and recently closed on the $400 million sale of most of its Health Services segment to HCA Healthcare (NYSE: HCA), one of the largest hospital networks in the U.S.

The Pennant Group, meanwhile, is hoping to continue its growth in home health across the western and southern parts of the country, most recently acquiring Pasco Southwest Home Health of Colorado in early April.

Frisco, Texas-based Addus and Birmingham, Alabama-based Encompass Health were both down in June by more than 9%. Encompass’ stock is still up more than 25% year-over-year, but Addus is down nearly 6% over the same period.

Both companies are considering major moves in the coming months. Encompass Health is undergoing an organizational shift as it looks at strategically separating its home health and hospice segment. And while Addus has traditionally gained most of its revenue from personal care services, the provider is intent on building out more markets with personal care, home health and hospice capabilities.

“We are focused on transactions that will allow us to enhance our service offerings in each of our operating segments in target makets. We are confident in our ability to drive value from our acquired operations and further strengthen our competitive position,” Dirk Allison, chairman and CEO of Addus, said recently in a statement.

Quote of the Month

“Our country is at a critical point regarding this workforce. The pandemic reinforced the enormous value of these workers, the challenges they continue to face, and how those problems endanger the lives of both workers and the people they support.” – Robert Espinoza, Vice President of Policy at PHI.

Read the Full Article Here: Crisis in Direct Care “Will Explode” Without Immediate Government Support, PHI Warns

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.

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 July 2021 | Stoneridge Partners)

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

Company 6/30/21 1 mos change YTD change 6/30/20 6/30/19
Amedisys 244.93 -5.20% -16.50% 198.54 121.41
LHC Group 200.26 +1.73% -6.12% 174.32 119.58
HH Index* 222.60 -2.20% -12.13% 186.43 120.50
S&P 4297.5 +2.22% +14.41% 3100.29 2941.76
Addus 87.24 -9.29% -25.49% 92.56 74.95

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) 6/30/21 6/30/20 6/30/19
Amedisys 8310 6730 4270
LHC Group 6260 5830 3770
HH Index Total 14570 12560 8040
Addus 1510 1280 945

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

Company 6/30/21 6/30/20 6/30/19
Amedisys 392% 340% 247%
LHC Group 302% 279% 206%
HH Index Average* 347% 310% 227%
Addus 193% 214% 173%

Multiples of EV/EBITDA

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

Company 6/30/21 6/30/20 6/30/19
Amedisys 26.08 27.90 24.27
LHC Group 24.90 27.87 21.67
HH Index Average* 25.49 27.89 22.97
Addus 25.48 33.11 23.05

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 July 2021 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Mission Healthcare has purchased three hospice and home health agencies in its continuing push for multi-state expansion. The company’s newly acquired assets include Tender Care Home Health & Hospice and Sun Tree Hospice in Utah, as well as Hands of Hope Home Care & Hospice in Idaho.
  • Help at Home acquired Illinois-based Community Care Systems.
  • South Carolina-headquartered Agape Care Group has acquired Integrity Hospice in Dublin, GA.

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 July 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