There’s arguably never been a more interesting time to analyze the home health and post-acute public markets.

By year’s end, the three largest providers of home health care might no longer be independent. Kindred at Home is now CenterWell Home Health and a part of Humana Inc. (NYSE: HUM). LHC Group is a part of UnitedHealth Group’s (NYSE: UNH) Optum.

Now, there’s a bidding war for Amedisys Inc. (Nasdaq: AMED). Option Care Health announced plans to merge with Amedisys in early May. A month later, Optum submitted its own all-cash bid for the company.

Amedisys is one of the last pure home health players on the public market, along with Enhabit Inc. (NYSE: EHAB). Companies like Aveanna Healthcare Holdings (Nasdaq: AVAH) and the Pennant Group (Nasdaq: PNTG) are home health providers, albeit with more diversified portfolios.

While Amedisys’ market cap is significantly lower than it was in 2021, it is still an at-scale provider of services that payers and other health care companies need.

It could be that every home health player ends up being consumed by a larger company. It also could be that those remaining — such as Enhabit Inc. — could have a leg up in health plan relationships if, and when, its peers are almost all a part of payer organizations.

“Optum and Option Care Health’s bids for Amedisys prove, again, the value of home health care services,” says Joe Lynch, Partner and Managing Director at Stoneridge Partners. “The companies still recognize that, even if CMS’s proposed payment rules for the subsector may not always reflect that.”

The HHI was down 6.33% in May, while the PAI was down 1.6%. The S&P outperformed both, as it was up 0.25% month over month.

Home Health Index

Amedisys was down 5.44% in April. Enhabit Inc. (NYSE: EHAB), on the other hand, was down 12.16%.

With Option Care Health and Optum dueling for Amedisys, Enhabit leaders are hoping they can benefit from remaining independent.

“I think, as we look forward, we’re kind of hopeful for the day that Humana wants CenterWell to see all of their patients and maybe United wants LHC Group and potentially Amedisys to [see theirs], because that would leave the fee for service for us, and would also give us opportunity to sit even closer at the table with the other payers for negotiations,” Enhabit CEO Barb Jacobsmeyer recently said at the Jefferies Healthcare Conference.

It makes sense.

Enhabit is trying to establish better relationships with MA plans. Meanwhile, two of the largest MA plans own their own home health capabilities now, through the acquisitions of CenterWell Home Health, LHC Group and potentially Amedisys.

The MA plans that don’t own home health entities themselves, then, may be more inclined to offer higher rates for an at-scale, independent provider like Enhabit.

At least that’s what Jacobsmeyer is hoping, but she did admit that hasn’t happened just yet.

“I think a lot of it is because, again, it’s such a fragmented industry, right?” she said at the conference. “So even though they’re large, it’s still — in any given market — just one of a large number of different providers.”

Post-Acute Care Index

Every provider on the post-acute care index was down month-over-month outside of Addus Homecare Corporation (Nasdaq: ADUS).

But that doesn’t tell the whole story. The Centers for Medicare & Medicaid Services’ (CMS) proposed Medicaid rule — which would mandate 80% of reimbursement for home- and community-based services go to caregivers and aides — caused Addus stock to tumble in April.

At the end of March, Addus stock was selling for $106.76 per share. At the end of April, that had tumbled to $81.74 per share. In May, it climbed back to $90.15.

Other providers in the PAI were affected by the proposed rule, namely Aveanna. But providers are still advocating for change to the rule before it becomes final.

“We don’t believe one-size-fits all is the way to go,” Addus CEO Dirk Allison also said at the Jefferies Healthcare Conference recently. “We believe that we need to continue to work to give [CMS] data, so that they can come up with a way to accomplish what they want, but at the same time, not hurt the industry.”

Allison believes that the proposed rule would especially hurt mom-and-pop providers, causing many of them to go out of business.

Quote of the Month

“When a patient is discharged from a hospital, it is important to provide their post-acute provider and caregivers as applicable with the appropriate patient information related to a patient’s treatment and condition in order to decrease the risk of readmission or an adverse event. – a recent CMS memo advises

Read the Full Article Here: CMS: Hospital-To-Home Discharge Process Still Plagued By Poor Communication, Incomplete Patient Information

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:

Company5/31/231 mos changeYTD change5/31/225/31/21
Amedisys75.93-5.44%-9.11%115.91258.37
Enhabit10.76-12.16%-18.24%
HH Index*43.35-6.33%-64.65%141.29227.61
S&P4179.83+0.25%+7.79%4137.754204.11
Addus90.15+10.29%-9.39%83.5096.17

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
Amedisys306044908670
Enhabit1220
HH Index Total42801053014720
Addus154014901640

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

Company202320222021
Amedisys137%202%410%
Enhabit115%
HH Index Average*126%235%351%
Addus157%169%211%

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 June 2023 | Stoneridge Partners)

Recent Transactions From Around The Country

  • The Pennant Group Inc. has acquired Idaho-based Bluebird Home Health, Bluebird Hospice and Bluebird Home Care

SOLD by Stoneridge!!!

  • Stoneridge Partners is proud to announce the successful sale of an addiction center 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.

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 June 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