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:

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 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

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