February was a noteworthy month for the companies that make up both the Stoneridge Home Health Index (HHI) and the Post-Acute Index (PAI).

LHC Group was officially delisted from the Nasdaq when UnitedHealth Group’s (NYSE: UNH) acquisition of it was finalized. Over the next year, LHC Group will be embedded into the Optum powerhouse, the health care services segment of UnitedHealth Group.

In July of 2005, LHC Group began its run on the public market at close to $18 per share. It left ceremoniously at $170 per share. And while LHC Group is officially out the door, new faces have joined its old peers on the indices.

“LHC Group is just the latest example of a large managed care player acquiring home-based care capabilities, just as Humana did with Kindred at Home,” says Ben Bogan, Partner and Managing Director at Stoneridge Partners. “That is of note itself, of course. What will be interesting to see is how that affects those that remain on the public market moving forward.”

The HHI and PAI were both down significantly month over month, though that was mostly attributable to LHC Group’s exit, which marks a new era for each.

Home Health Index

While one home health company is now gone from the HHI, another has been added in the past year.

Enhabit Inc. (NYSE: EHAB) — the home health and hospice spinoff of Encompass Health Corporation (NYSE: EHC) — has been listed for less than a year, but is already battle-tested.

Instead of immediately entering into growth mode, Enhabit leaders are first trying to navigate choppy waters.

“I don’t want to say that acquisitions are off the table,” Enhabit CFO Crissy Carlisle said on the company’s fourth-quarter earnings call. “I just want to say that we’re going to be very disciplined.”

Those choppy waters are mostly due to a shifting payer mix. The company is trying to get more — and better — contracts with Medicare Advantage (MA) plans, as the markets it operates gain more MA beneficiaries.

Specifically, MA enrollees have increased by 11% in Enhabit’s markets, while Medicare fee-for-service enrollees have decreased by 4%, Enhabit CEO Barb Jacobsmeyer said on the fourth-quarter earnings call.

“All in all, we estimate we have approximately $40 million of adjusted EBITDA headwinds to overcome in 2023,” Carlisle said.

Enhabit’s stock price stayed steady month over month, while Amedisys Inc. (Nasdaq: AMED) saw a 5.64% decrease.

Post-Acute Care Index

Like Enhabit, Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) held steady month over month.

Addus Homecare Corporation (Nasdaq: ADUS), on the other hand, was up 1% month over month. The bright spot in February was The Pennant Group (Nasdaq: PNTG), up 16% month over month.

Despite issues with staffing turnover, Pennant has succeeded in growing its home health segment of late. For instance, home health and hospice revenue was $90.7 million in the fourth quarter, a 16.4% year-over-year increase for Pennant.

Its turnover rate has ticked up by 25% over the past two years, however.

“While we are pleased with the progress, we know we can be much better and see tremendous opportunity to unlock additional value in the coming year,” Pennant President and CEO Brent Guerisoli said on the company’s fourth-quarter earnings call. “We are enhancing our efforts to find, train and develop world-class operational and clinical leaders.”

Like the HHI, the PAI was skewed by the exclusion of LHC Group and the inclusion of new companies, such as Enhabit and Aveanna.

Quote of the Month

“In-home support services are a really popular offering. Nearly a quarter of all the plans are offering in-home support services this year.” – ATI Advisory Principal Tyler Cromer

Read the Full Article Here: MA Plans Continue To Expand Home Care Friendly Supplemental Benefits

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:

*NOTE: LHC Group was officially delisted from the Nasdaq when UnitedHealth Group’s (NYSE: UNH) acquisition of it was finalized. While LHC Group is now gone from the HHI, Enhabit has been added in the past year. The numbers below are reflected as such.

• Amedisys (AMED)
• Enhabit (EHAB)

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

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)

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

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:

• Aveanna (AVAH)
• Amedisys (AMED)
• Addus (ADUS)
• The Pennant Group, Inc. (PNTG)
• Encompass Health (EHC)
• Enhabit (EHAB)
• 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 2023 | Stoneridge Partners)

Recent Transactions From Around The Country

• Legacy Hospice expanded in Missouri by acquiring Safe Harbor Hospice

View Stoneridge closed transactions on our website

Home Health Index March 2023 | Stoneridge Partners

From Ben Bogan, Publisher of “Home Health Index.” Ben 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