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:

Company 12/31/21 1 mos change YTD change 12/31/20 12/31/19
Amedisys 161.88 +15.92% -44.81% 293.33 166.2
LHC Group 137.23 +19.62% -35.67% 213.32 137.76
HH Index* 149.56 +4.36% -40.96% 253.33 151.98
S&P 4766.18 +4.36% +26.89% 3756.07 3230.78
Addus 93.51 +7.21% -20.14% 117.09 97.22

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) 2021 2020 2019
Amedisys 5240 9920 5690
LHC Group 4220 6610 4750
HH Index Total 9460 16530 10440
Addus 1460 1780 1340

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

Company 2021 2020 2019
Amedisys 257% 491% 301%
LHC Group 215% 320% 231%
HH Index Average* 236% 406% 266%
Addus 188% 234% 224%

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)

Exclusively Listed For Sale By Stoneridge Partners.

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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

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

 Home Care /  Michigan

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

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

 Home Care /  Southwest

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