The companies on the Stoneridge Home Health Index (HHI) and the Post-Acute Index (PAI) are beginning to learn their payment-rates for CY2024 from the Centers for Medicare & Medicaid Services (CMS), and as usual, advocates and providers of each health care subsector are asking for more than proposed.

While home health providers will still have to wait a couple of months to see their proposed rule, industry insiders are expecting it to be harsh; but with that expectation, the rule might then have less impact on the publicly traded companies in the space than did last year’s proposed rule.

“CMS is likely to propose another cut to home health payments for 2024,” says Joe Lynch, Partner and Managing Director at Stoneridge Partners. “The final rule could be less harsh than the proposed, but either way, providers and advocates would like to avoid cuts completely.”

The HHI was up 4.2% in March, while the PAI was up nearly 12%. In the middle of the two is the S&P, which was up 9.7% in the month.

Home Health Index

Amedisys Inc. (Nasdaq: AMED) has a new leader. On April 10, Richard Ashworth began his role as CEO, taking over for longtime leader Paul Kusserow. Kusserow remains chairman of the board.

Ashworth is an experienced health care executive who has worked extensively with both decentralized health care organizations — at Walgreens Boots Alliance (Nasdaq: WBA) — and Medicare Advantage (MA) plans at Tivity Health.

What drew Ashworth to the company was the room for growth at Amedisys and its subsidiary, Contessa Health, a high-acuity care-at-home provider.

“I’m a big believer that we should maximize more out of institutions, and in the home [instead],” Ashworth told Home Health Care News last month. “I think it’s better for families. I think it’s better for patients. I think it’s better for payers. I think it’s green checks all around. And Contessa is starting to push the envelope on what can be done in the home. From an Amedisys’ standpoint, at some point, we can kind of take anything and everything that can be done in the home and be the primary contact for that for other providers and payers.”

Amedisys recently offloaded its personal care segment to the PE-backed HouseWorks. To deliver results, they will hone in on high-acuity care in the home and fruitful home health relationships with MA plans.

Whether they are successful in those initiatives will set the tone for the home health industry at large.

Amedisys stock rose 7.5% in March.

Post-Acute Care Index

The Pennant Group (Nasdaq: PNTG) remains a quiet, solid performer on the post-acute care market. In March, its stock was up 14.65%, a top gainer.

Though its portfolio is mixed between senior living and home health care, the company has focused more on the latter over the past few quarters. In the fourth quarter of 2022, home health and hospice revenue checked in at $90.7 million for Pennant, a 16.4% year-over-year increase.

In the near-term future, Pennant is a candidate for more M&A activity. The company has set itself up for success despite its struggles in staffing turnover.

Over the last two years, Pennant’s turnover rate has ticked up by 25%.

“While the pandemic has created a role in staffing difficulties in turnover across many industries, we are ultimately responsible for creating a life-changing employee experience,” Pennant COO John J. Gochnour said on the company’s fourth-quarter earnings call. “Our turnover results have not measured up to the highest standards we have set for ourselves.”

Quote of the Month

“NAHC applauds President Biden’s vigorous efforts to support home and community-based care through a series of executive orders affecting Medicaid, VA health benefits and more. We face significant and growing challenges to meet the needs of our country’s increasing aged population that warrants improved access to homecare. We commit to work with the Administration as it carries out the President’s plan to secure high-quality and accessible home care through dedicated caregivers. This is an investment that will benefit all Americans.” – William Dombi, president of the National Association for Home Care & Hospice (NAHC).

Read the Full Article Here: Biden Announces Actions to Improve, Expand Homecare Access

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:

Company 3/31/23 1 mos change YTD change 3/31/22 3/31/21
Amedisys 73.55 -20.01% -11.96% 172.29 267.64
Enhabit 13.91 -9.38% +5.70%
HH Index* 43.73 -18.49% -64.34% 340.89 460.87
S&P 4109.31 +3.51% +5.97% 4550.50 3992.78
Addus 106.76 -1.73% +7.31% 93.29 104.95

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) 2023 2022 2021
Amedisys 2810 6300 8880
Enhabit 1290
HH Index Total 4100 12340 14930
Addus 1760 1500 1780

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

Company 2023 2022 2021
Amedisys 126% 284% 428%
Enhabit 119%
HH Index Average* 123% 278% 361%
Addus 185% 174% 233%

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 April 2023 | Stoneridge Partners)

Recent Transactions From Around The Country

  • PurposeCare, a leading provider of coordinated home care and home health services in the Midwest, acquired Home Sweet Home In-Home Care, a St. Joseph, Michigan-based independent home health care agency that has provided high-quality services to southwest Michigan residents since its inception in 2011.

SOLD by Stoneridge!!!

  • Stoneridge Partners is proud to announce the successful sale of a pharmacy in Tennessee
  • Stoneridge Partners is proud to announce the successful sale of a home care franchise in Kentucky

View Stoneridge closed transactions on our website

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.

Non-medical home care franchisee.  $9.6+M in revenue.  50% Medicaid/30% Private Pay/ 14% VA/ 6% Misc.  Experienced management team to stay post-transition.

 Home Care /  Multi-State

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 / Popular

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 / Popular

Home Health Index April 2023 | Stoneridge Partners

From Joe Lynch, Publisher of “Home Health Index.” Joe 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