The first month of 2022 was not kind to stock values across the board, as the Omicron variant swept across the country. And while home health and post-acute providers didn’t emerge unscathed, they fared considerably better than the S&P according to the latest Home Health (HHI) and Post-Acute Care (PAI) indices from national mergers and acquisitions advisory firm Stoneridge Partners.
“Home health and post-acute providers had a rough go of it in 2021, but stocks started to gain momentum at the end of the year – until Omicron hit,” said Stoneridge Managing Partner Brian Bruenderman. “The new variant really took a toll on providers, with record numbers of staff out of work and in quarantine.”
Yet both the HHI and PAI outperformed the market as a whole, dropping about 5% and 6%, respectively, in January — the S&P dropped close to 15% over that same time period.
Post-Acute Care Index
The number of Encompass Health Corporation (NYSE: EHC) employees with COVID-19 hit an all-time record in January, forcing the provider to turn away even more admissions after already losing 1,700 in the fourth quarter of 2021. Still, Encompass was down just 5% month-over-month. And Barb Jacobsmeyer, who helms Encompass Health’s home health and hospice segment — soon to be Enhabit Home Health & Hospice — says she is very optimistic about the company’s ability to start reining in those lost admissions in February and beyond.
Post-acute care companies are still bullish about the future, particularly as the Omicron wave has started to subside. Moving forward, providers indicate they will focus more on retention of current staff and recruitment of new staff, as opposed to plugging holes for quarantining workers.
Elsewhere in the PAI, Brookdale Senior Living Inc. (NYSE: BKD) performed admirably in January, up by 3%. Meanwhile, The Pennant Group, Inc. struggled, down 40% in January as compared to December.
Home Health Index
In January, Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG) were down by 9% and 13%, respectively.
Amedisys continued on its growth trajectory, announcing an agreement to acquire Evolution Health, a Dallas-based provider of home health, hospice and infusion therapy services. According to analysts, Amedisys paid anywhere from $70 to $75 million for Evolution, suggesting the company was reigniting its home health M&A engine as January came to a close.
LHC Group echoed its peers’ concerns about staffing issues in January, and leaders say mitigating those issues remains a priority.
“Labor pressures and shortages have been so much a focus for the industry, especially over the back half of 2021,” LHC Group President and COO Josh Proffitt told Home Health Care News in January. “I would say, in connection with that, improvements in recruiting and retention will be a main force moving forward. Providers are focused on mitigating those pressures.”
Even with all the difficulties home health providers have faced throughout the pandemic, their year-over-year performance has remained strong; compared to 12 months ago, the HHI is still up more than 21%.
Quote of the Month
“If we can deliver the right behavioral health response at the right time, then patients and their families don’t have to wait for a bad situation to get worse before receiving attention.” – Alyna T. Chien, MD, MS, the research director for the division of general pediatrics at Boston Children’s Hospital and assistant professor of pediatrics at Harvard Medical School.
Read the Full Article Here: Most practices struggle to support kids with behavioral health needs
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)
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 February 2022 | Stoneridge Partners)
Home Health Index February 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