In April, the home health index was already a little bit lonely.

LHC Group no longer has a stock ticker next to its name now that it’s part of UnitedHealth Group’s (NYSE: UHG) Optum, and thus is no longer a part of the index.

Now, April looks like it could be one of the last months ever in which another legacy home health provider, Amedisys Inc. (Nasdaq: AMED), was a genuine part of the index. In the first week of May, Option Care Health (Nasdaq: OPCH) and Amedisys announced a planned merger that valued the latter at $3.6 billion.

Though Option Care Health and Amedisys shareholders — as well as regulators — still have to approve the deal, the companies expect to close in the back half of 2023.

But if another home health company does exit the public market, it could be representative of an overall trend in the industry at large. The payment landscape — both in traditional Medicare and Medicare Advantage (MA) — is uncertain, which could be a major reason why providers are willing to join forces with deep-pocketed partners.

“There’s undoubtedly labor pressures, but that has always been the case to some extent,” says Ben Bogan, partner and managing director at Stoneridge Partners. “Now, even the largest providers are struggling to navigate an increasingly difficult payment landscape that doesn’t seem to be easing up any time soon.”

The HHI was up 5.82% in April, while the PAI was up 8.45%. It was a good month for both, as the S&P was only up 1.46% during the same period.

Home Health Index

Amedisys was up 9.18% in April. Enhabit Inc. (NYSE: EHAB), on the other hand, was down 11.93%.

Since Enhabit’s IPO last year, the company’s stock price has been cut in half, from $25 per share to $12.25 per share.

At the middle of Enhabit’s woes are MA contracts. Enhabit had started to deny coverage to patients under MA plans that were paying what its leaders considered unfair rates. The company is announcing new deals with MA plans by the quarter, but in the interim, the financials remain rocky.

“To date, we have visited branch operations and sales teams covering 159 branches,” Enhabit CEO Barb Jacobsmeyer said on the company’s first-quarter earnings call. “We believe it’s important to take time to sit down and be transparent as we present not only how, but why, we must deselect certain payers and replace them with the new regional and national agreements.”

Beginning May 1, Enhabit has a new, more favorable deal with an unnamed national MA plan, as well as two unnamed conveners.

Post-Acute Care Index

While Enhabit is working on its payer innovation, it is also working on another key focus area: staffing.

That is precisely what has been holding Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) – which had its IPO in 2021 – back for the past couple of years.

“As a reminder, we do not have a demand problem,” Aveanna CEO Jeff Shaner said during the company’s first-quarter earnings call. “[Staffing] represents the primary challenge that we are aggressively addressing in 2023, to see Aveanna resume the growth trajectory that we believe our company can achieve.”

Aveanna was up 18.27% in April, but that only represented a 19-cent increase in its stock price. On its first day on the public market in 2021, its stock price was $12 per share.

Aveanna operates more in the Medicaid space, as does Addus Homecare Corporation (Nasdaq: ADUS). Addus was down a whopping 23.44% in April.

That could be due to the Medicaid proposed rule that the Centers for Medicare & Medicaid Services (CMS) recently released, which would mandate that 80% of all payment for home- and community-based services be spent on the workforce.

The proposed rule will likely be altered before it is finalized, but it has caused some concern for providers in the space.

Provider leaders argue that the threshold is nonsensical, mostly because Medicaid programs vary significantly state by state. They also wonder whether training costs will be included in that 80%.

“This proposed rule has a stated goal of improving access to services for Medicaid beneficiaries, which we strongly support,” Addus CEO Dirk Allison said on the company’s first-quarter earnings call. “But while we agree with the goal of broadening coverage, we question the specific approach proposed and the target threshold, as there are inherent challenges at setting a one-size-fits-all minimum percentage.”

Quote of the Month

“There’s still nothing more powerful than exercise for protecting the brain. It can help with depression as well as lowing the risk of many cancers, heart disease, and strokes. The American Heart Association recommends 30 minutes of cardiovascular activity five days a week and a few days a week of strength training.” – Ashtabula County Medical Center Family and Sports Medicine physician, Dr. Nathaniel Franley

Read the Full Article Here: Maintaining Good Mental Health Important for Seniors

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:

Company4/30/231 mos changeYTD change4/30/224/30/21
Amedisys80.30+9.18%-3.88%127.65269.85
Enhabit12.25-11.93%-6.91%
HH Index*46.28+5.82%-62.26%293.50478.12
S&P4169.48+1.46%+7.53%4117.754181.17
Addus81.74-23.44%-17.75%84.28105.8

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)202320222021
Amedisys312046609560
Enhabit1290
HH Index Total44101057015990
Addus191014501780

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

Company202320222021
Amedisys140%210%452%
Enhabit119%
HH Index Average*130%238%382%
Addus200%168%232%

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 May 2023 | Stoneridge Partners)

Recent Transactions From Around The Country

  • HouseWorks acquired Care and Help Home Care, a Pennsylvania home care company

SOLD by Stoneridge!!!

  • Stoneridge Partners is proud to announce the successful sale of a home health care agency in Colorado
  • Stoneridge Partners is proud to announce the successful sale of a therapeutics agency in New York

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.

Hospice.  100+ ADC.  Multi-location.  No CAP or regulatory issues.

 Hospice /  Texas / New

Large multi-discipline pediatric therapy practice.  $5+M in revenue.  Multiple offices with a wide geographical footprint.  Full compliment of management and staff in place.

 Other /  Multi-State / New

Medicare-certified home health.  Opportunity to establish home health presence in Texas.  Minimal census.

 Home Health /  Texas

$14.9M in revenue with $3M of EBITDA.  Second largest residential treatment provider for SUD in KY.  Over 350 beds for residential, PHP, IOP, and OP...

 Behavioral Health /  Kentucky

$4.1M+ in revenue with $1.7M+ of EBITDA.  Community-based outreach program offering mental health services to primarily children and adolescents.  High barrier to entry; accreditation required....

 Behavioral Health /  Ohio

$4.5+M Houston-based Medicaid home care company.  Established 13 years ago.  Excellent HHSC contracts are in place, resulting in an impressive bottom line.  Fully staffed.

 Home Care /  Texas

Non-medical home care franchise.  $2M in revenue.  60% private pay.  20% EBITDA.  Houston market.

 Home Care /  Texas

Medicare/Medicaid-certified home health agency.  $1.4M in revenue.  District 9.  Profitable.  Accredited.

 Home Health /  Florida

Behavioral health, therapy, and educational services business.  $1.8M in revenue with over $600,000 EBITDA.  Services include ABA, early intervention services to children aged 0-21, and...

 Behavioral Health /  Pennsylvania

Home Care Agency.  $12M in revenue.  97% Medicaid.  Highly profitable agency with strong growth trajectory.

 Home Care /  Kansas

$3.2 million in revenue.  JCAHO accredited Home Health company.  Showing remarkable growth trends and is very profitable.

 Home Health /  Texas

Home Health & Hospice with $4.5M in revenue.  Medicare/Medicaid certified.  Excellent growth potential in large service area.

 Other /  Arizona

Hospice with $2.4M+ in revenue.  Medicare/Medicaid certified.  Full complement of staff in place.

 Hospice /  Texas

Home care agency.  $30M+ in revenue.  95% Medicaid.  Platform opportunity.

 Home Care /  New Mexico

$3M pediatric agency in Chicago.  Long-term management in place.

 Home Health /  Illinois

Medicaid-certified home care.  Minimal census.  Opportunity to establish home care presence in Texas.

 Home Care /  Texas

Hospice business.  Low census.  The license covers all of Clark County (Las Vegas and Henderson)

 Hospice /  Nevada

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 / Popular

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

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 / Popular

Medicare-certified home health agency.  Houston-area.  Minimal census.

 Home Health /  Texas

Medicare-certified home health agency.  District 3.  Approximately $700k in revenue.  Accredited.

 Home Health /  Florida

Medicare-certified home health agency.  District 5.  Minimal census.  Accredited.

 Home Health /  Florida

Home Health Index May 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