Labor Challenges Stifle Post-Acute Care Growth

A difficult labor market continues to dampen post-acute care growth. Nonetheless, many of the nation’s home health giants are optimistic about their 2022 outlook due to skyrocketing demand for their services.

Currently, the biggest question mark surrounding the post-acute care sector’s future is the COVID-19 Omicron variant, which began spreading across the globe in November. If it proves to be as contagious as the Delta variant, Omicron could create yet another hurdle for operators to clear on their road to normalcy.

“It’s the same story we’ve heard all year,” said Stoneridge Partners President Rich Tinsley. “Demand for post-acute care — especially home health care — is at an all-time high. But labor shortages mean providers can’t accept new referrals, and Omicron may just end up exacerbating clinician burnout further.”

Home Health and Post-Acute Care Indices

The Stoneridge Partners Home Health (HHI) and Post-Acute Care Indices (PAI) showed signs of life in October after a mostly sluggish third quarter – but that recovery came to a halt in November.

The HHI dropped more than 16% in November as compared to the previous month, while the PAI fell almost 6%. Both indices underperformed the S&P 500, which was down by less than 1% during the same period.

To combat workforce shortages and build capacity to take on new referrals, post-acute care operators have turned to higher-than-normal levels of contract labor. Doing so comes at a steep price, Tinsley noted.

“Some larger providers are reporting that they’re using three or four times more contract labor than usual to complete visits,” Tinsley said. “That can translate into hundreds of thousands of dollars each quarter, which has a big impact on stock prices.”

Home Health Index

Updated monthly, the HHI tracks the stock prices of Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG).

Stocks for Baton Rouge, Louisiana-based Amedisys fell more than 17% in November; similarly, stock prices for Lafayette, Louisiana-based LHC Group fell almost 15% over the same time period.

LHC Group is attempting to beef up its staffing strength by leveraging more extenders, such as licensed practical nurses (LPNs) and physical-therapy assistants (PTAs). Amedisys is taking a similar approach while investing in predictive analytics to better track key staffing metrics.

“We’re going to have to continue improving our recruitment and retention efforts — and recruitment and retention are equally as important,” LHC Group Chairman and CEO Keith Myers said during a Dec. 3 investor presentation. “We have to make it easier for nurses to work here.”

Amedisys stock is down more than 52% on a year-to-date basis, while LHC Group stock is down more than 46%.

Post-Acute Care Index

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

Brentwood, Tennessee-based Brookdale saw its stock dip by almost 10% in November, but overall, the company’s stock is still up more than 32% on a year-to-date basis. Stocks for Frisco, Texas-based Addus dipped nearly 7% last month, and year to date, its stock is down by more than 25%. Birmingham, Alabama-based Encompass Health — which is planning to spin off its home health and hospice segment next year — saw its stock drop by more than 9% in November compared to October; its stock is down slightly more than 30% on a year-to-date basis. Finally, stock prices for Eagle, Idaho-based Pennant fell by almost 21% last month, bringing the company’s stock values down by a total of 65% year to date.

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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 December 2021 | Stoneridge Partners)

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

Company 11/30/21 1 mos change YTD change 11/30/20 11/30/19
Amedisys 139.65 -17.53% -52.39% 244.79 162.96
LHC Group 114.72 -14.76% -46.22% 196.32 133.40
HH Index* 127.19 -16.31% -49.79% 220.56 148.18
S&P 4567 -0.83% +21.59% 3660.25 3140.98
Addus 87.22 -6.72% -25.51% 99.25 93.21

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) 11/30/21 11/30/20 11/30/19
Amedisys 5140 8190 5560
LHC Group 4260 6140 4200
HH Index Total 9400 14330 9760
Addus 1520 1450 1280


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

Company 11/30/21 11/30/20 11/30/19
Amedisys 233% 405% 294%
LHC Group 196% 298% 224%
HH Index Average* 215% 352% 259%
Addus 182% 191% 213%


Multiples of EV/EBITDA

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

Company 11/30/21 11/30/20 11/30/19
Amedisys 13.70 31.03 29.55
LHC Group 16.11 28.28 21.49
HH Index Average* 14.91 29.66 25.52
Addus 21.11 24.09 30.30

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 December 2021 | Stoneridge Partners)

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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

$4M revenue run rate.  ID/DD Services.  Recent rate increase.

 ID/DD /  Kentucky

$1M in revenue.  Medicare-certified home health agency.  Minimal census.

 Home Health /  Minnesota

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

$2.8M home health agency.  Medicare and Medicaid-certified.  Approximately 70% skilled: 10% Medicare, 25$ Medicaid, 65% MA and HMO.  Approximately 30% non-medical; 100% private pay.  Accredited.

 Home Health /  Colorado

$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.

 Massachusetts

$1.5 million home health company.  Medicare/Medicaid-certified.  Primarily skilled services.  80+% HMO.  15+% Medicare.

 Home Health /  Massachusetts

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

CHAP-accredited private duty business.  $2.8 million projected 2021 revenue.  Workers' compensation primary source of revenue.  Regions 9, 10 and 11.

 Home Health /  Florida

$1 million Medicare home health agency in northwest Minnesota.  Well-established.  Diverse referral sources.  Long history of excellent care.

 Home Health /  Minnesota

$4.9 million Medicare home health agency located in Phoenix, Arizona.  Showing strong year over year revenue growth since 2018.  Diverse referral sources, well run with...

 Home Health /  Arizona

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

 Hospice /  Texas

$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 December 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