Post-Acute Care Sector Rebounds to Finish 2021 on a High Note
The last month of 2021 finally brought some good news for home health and post-acute care providers, with stock values rebounding after months of volatility caused by the ongoing effects of the COVID-19 pandemic.
“The HHI fell sharply in mid-Q4, then bounced back in December prior to year-end,” said Brian Bruenderman, Managing Partner of national mergers and acquisitions advisory firm Stoneridge Partners. “Home health fared better than the post-acute industry overall, but all care segments are likely to face an uncertain start to the new year as the Omicron variant continues to spread.”
With Omicron surging across the country – comprising 73% of COVID cases as of the week ending Dec. 18 – hospitals have once again approached maximum capacity. That has increased demand for post-acute care services, but with fewer labor resources available to meet the need, providers continue to decline referrals due to workforce shortages.
Home Health Index
Despite staffing shortages and COVID-19-related operating challenges, home health companies are bullish about the future as demand for their services continues to grow.
The Stoneridge Partners Home Health Index (HHI), which tracks the stock prices of national home health providers Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG), rose nearly 18% in December, strongly outpacing S&P gains of 4%. LHC Group’s share price rose by 20%, while Amedisys saw an increase of 16%.
The 2022 outlook for Amedisys will not only be shaped by Omicron in 2022, but also by changes at the very top of the organization. The company announced in early January that chairman and CEO Paul Kusserow will retire as CEO on April 15, with current president and COO Chris Gerard stepping into the role.
Post-Acute Care Index
Post-acute care providers saw more modest gains during December, with the Post-Acute Care Index (PAI) rising nearly 2%.
Almost all companies in the PAI — which 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 — saw increases in their share prices. The sole exception was Brookdale, which saw its share price fall nearly 12%.
While COVID-19, and the Omicron surge in particular, continues to impact the entire care landscape, many experts anticipate cases will soon fall as sharply as they rose during December and early January. This outlook is supporting a positive perspective for care providers as 2022 continues.
“With the strong demand for home-based care and pent-up demand that post-acute providers will experience in the near term, the market should see a bright future in the year ahead,” Bruenderman said.
Quote of the Month
“We’ve seen home care workers provide essential frontline care during the pandemic, but the reality is, they have been providing this type of care all along, but often not recognized for it.” – Dr. Madeline Sterling, Assistant Professor of Medicine at Weill Cornell Medicine
Read the Full Article Here: Paid Home Care Workers Go Well Beyond Standard Duties
Articles Featuring Stoneridge
Brian Bruenderman and Tom Lillis recently led a webinar for the National Association for Home Care & Hospice called “The State of the Market: From Valuations to Volume in 2022 and Beyond”, which was featured in the McKnight’s Home Care article, Home Care Sets Deal-Making Record in 2021 with 166 Transactions.
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)
Here are the results of the stock prices for the past two years:
||1 mos change
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)
|HH Index Total
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*
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 January 2022 | Stoneridge Partners)
Home Health Index January 2022 | Stoneridge Partners
From Brian Bruenderman, Publisher of “Home Health Index.” Brian 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