After a lackluster start to 2022, February was a blockbuster month for home health and post-acute care providers.
Most of the publicly-traded companies tracked by the Stoneridge Partners Home Health (HHI) and Post-Acute Care (PAI) Indices experienced solid stock gains. Stoneridge Managing Director and Partner Brian Bruenderman said the rebound was driven in part by improvements in the labor landscape.
“Make no mistake, workforce shortages still exist in the home health and post-acute industry, and likely will for some time to come,” said Bruenderman. “But we are seeing signs of recovery from COVID-related labor struggles. Providers are doing a better job of retaining existing employees and recruiting new ones – and right now, even the smallest improvements can substantially lift a provider’s operations.”
The HHI was up slightly more than 14% in February compared to January, while the PAI climbed just more than 13%. In comparison, the S&P 500 dropped nearly 3.5% during that same period.
Home Health Index
The stock values of home health giants Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG) were greatly improved in February, with Amedisys up nearly 19% and a more than 9% increase for LHC.
Investors have responded positively to Amedisys’ emphasis on core operations as President and COO Chris Gerard prepares to take over the CEO role on April 15. The company also announced recent M&A activity, buying the home health assets of AssistedCare Home Health and RH Homecare Services. But current progress on the workforce front was the major headline after months of labor challenges.
“As health care labor markets become more challenged nationwide, Amedisys was able to drive our clinical turnover down an additional 9% from 2020 to 2021,” Chairman and CEO Paul Kusserow said during a Q4 earnings call. “Additionally, to fuel our present and future growth, we increased our recruitment numbers by driving a 27% increase in recruited headcount.”
LHC Group also posted net-positive new hire numbers and continued to see a decline in the number of its clinicians in COVID-19 quarantine.
Post-Acute Care Index
PAI companies Addus HomeCare Corporation (Nasdaq: ADUS), Encompass Health Corporation (NYSE: EHC) and Brookdale Senior Living Inc. (NYSE: BKD) also saw their stock values rise in February. Addus and Encompass both improved by more than 6%, while Brookdale had a banner month with a 22% jump in its stock values as compared to January. The only provider that didn’t join the rally was The Pennant Group, Inc. (Nasdaq: PNTG), where stock values dipped – though only slightly – by just more than 1% in February.
After announcing that it planned to spin off its home health and hospice segment into a standalone, publicly-traded entity, Encompass Health now appears willing to explore strategic alternatives. According to recent reports, privately-held AccentCare, Inc. and Aveanna Healthcare Holdings (Nasdaq: AVAH) may be among the interested suitors.
Quote of the Month
”We have a real caregiver problem that’s going to last 20-plus years. This is the new normal, we’re going to have a workforce shortage that’s going to last forever.” – David Ellis, President and Founder of Home Care 100
Read the Full Article Here: Examining the Future of Homecare
Articles Featuring Stoneridge
Traditions Health Expands Reach with Acquisitions in 3 States. Ben Bogan, Partner and Managing Director of Stoneridge Partners served as the exclusive advisor.
Visit the Speaker Series Webinar Library on our website to watch our most recent Speaker Series discussing how to avoid common pitfalls when selling your healthcare business.
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 March 2022 | Stoneridge Partners)
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 at Stoneridge Partners.
Home Health Index March 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