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:

Company 4/30/23 1 mos change YTD change 4/30/22 4/30/21
Amedisys 80.30 +9.18% -3.88% 127.65 269.85
Enhabit 12.25 -11.93% -6.91%
HH Index* 46.28 +5.82% -62.26% 293.50 478.12
S&P 4169.48 +1.46% +7.53% 4117.75 4181.17
Addus 81.74 -23.44% -17.75% 84.28 105.8

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) 2023 2022 2021
Amedisys 3120 4660 9560
Enhabit 1290
HH Index Total 4410 10570 15990
Addus 1910 1450 1780

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

Company 2023 2022 2021
Amedisys 140% 210% 452%
Enhabit 119%
HH Index Average* 130% 238% 382%
Addus 200% 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.

Behavioral health specializing in PHP and IOP to high functioning patients.  $4.6M in revenue with $1.3M EBITDA.  In-network payor mix.  Three locations.  20+ year market...

 Behavioral Health /  Southeast

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

Hospice.  65+ ADC.  Expertly run with administrative tram willing to stay involved.  No CAP or regulatory issues.

 Hospice /  Arizona

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 9. $1.8M in revenue. Accredited.

 Home Health /  Florida

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

Established hospice organization on HCHB. 2 locations in greater Los Angeles/Southland area. Leadership team in place.

 Hospice /  California

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

Hospice agency.  6 counties in northern California.  Moratorium in place.  Minimal census.  Accredited.

 Hospice /  California

Medicare home health agency.  Health system relationship.  Rare KY CON opportunity, multiple counties

 Home Health /  Kentucky

Large, established franchise territory.  $2.5 million revenue.  Two offices with strong leadership teams in place.

 Home Care /  Michigan

Home health with $8+M 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

Skilled home health agency.  JCAHO accredited, zero deficiencies.  Excellent reputation and referral relationships.  $400k in revenue, impressive growth potential.

 Home Health /  Colorado

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

In-home DME manufacturer.  Patented mobility system.  $7.7M+ in revenue.  GSA/VA contract.  Strong industry supplier partnerships.

 Other /  California

$1M in revenue.  Small Medicare home health agency.  Region 5.

 Home Health /  Florida

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

$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

Well-established and profitable franchisee.  Revenue of $4.9M.  Medicaid and private pay.

 Home Care /  Southwest

4-star home health agency.  $2.5 million revenue.  Experienced management team.  Strong financials with outstanding local reputation.  Huge growth opportunities.

 Home Health /  Michigan

$3.3 million in revenue.  Autism center providing ABA, OT, PT and ST.  In-clinic and in-home services.

 Other /  Michigan

Non-skilled licensed home care organization.  Approx. $2 million in annual revenue.  Strong management team in place.  Southern California.

 Home Care /  California

Hospice with $3.5 million in annual revenue. Accredited. No cap or regulatory issues.

 Hospice /  Texas / Popular

$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community and existing staff in place.

 Home Health /  New Mexico / Popular

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