The home health and post-acute public markets have been volatile, and fascinating, over the last year.

June was no exception. The presumed arms race between Option Care Health (Nasdaq: OPCH) and Optum for Amedisys Inc. (Nasdaq: AMED) didn’t turn out to be much of one. Optum’s all-cash deal, valuing Amedisys at about $3.3 billion, was enough to win shareholders over.

The biggest obstacle to the deal being finalized will likely be any potential Federal Trade Commission (FTC) challenges, as Optum – with Amedisys and LHC Group under its belt – would own two of the largest home health companies in the country and about 10% of the overall home health market.

While 10% of a market wouldn’t be considered much in most industries, in a fragmented home health space, it would be.

Elsewhere, there were rumors of potential sales and plenty of transaction activity.

“There are a lot of factors affecting the post-acute and home health markets right now, both positive and negative,” says Ben Bogan, partner and managing director at Stoneridge Partners. “By year end, the public market could look completely different than it looked just two or three years ago.”

The HHI was up 18.74% in June, while the PAI was up 3.96%. The S&P was up 6.47% month over month.

Home Health Index

Amedisys was up over 20% in June, edging toward Optum’s agreed-upon purchase price: $101 per share.

Enhabit Inc. (NYSE: EHAB) – one of the only true home health companies left on the market – was also up 6.88%, in part due to industry belief that the company might explore a sale.

Though Enhabit spun off from Encompass Health Corporation (NYSE: EHC) just a year ago, one of its shareholders is already urging it to explore strategic alternatives. AREX Capital Management wrote an open letter to the Enhabit board in June.

“Given Enhabit’s objectively challenged execution and share price performance, the board should fully explore the potential delivery of substantial and fair value to shareholders through a sale of the Company,” AREX wrote. “We are highly confident that a full and fair strategic alternatives review will make it very clear to the board that, as compared to the risks and potential rewards inherent in the status quo, a sale is the obvious way to maximize value for all shareholders.”

Enhabit’s leaders have not publicly responded to the letter, and it’s unclear whether they will explore a sale. If they did, there would likely be suitors.

One possible buyer is Option Care Health, which may be interested after losing out on Amedisys. CVS Health (NYSE: CVS) has hinted at further home-based care transactions. Optum may even be interested, though the FTC would likely block further home health consolidation underneath its umbrella.

If Enhabit did sell, virtually no more independent home health and hospice companies would exist on the public market.

Post-Acute Care Index

In June, companies across the post-acute care index were up marginally.

Addus Homecare Corporation (Nasdaq: ADUS) was up 2.83% and the Pennant Group (Nasdaq: PNTG) was up 2.33%. Aveanna Healthcare Holdings (Nasdaq: AVAH) was up a whopping 43.22%, though that only represented a 51-cent hike in its stock price.

Addus and Pennant were also responsible for two noteworthy transactions during the month.

The former acquired Tennessee Quality Care — a home health, hospice and private duty nursing provider – for $106 million.

Tennessee Quality Care serves an average daily census of about 1,800 patients through 17 locations. Though a diversified provider, the company’s biggest service line is home health care.

Conversely, home health care is Addus’ smallest service line. One of its core strategies is building out that home health segment to layer home health, hospice and personal care on top of each other in core markets.

Later in the month, the Pennant Group expanded its Idaho footprint by acquiring three agencies under the Bluebird brand: Bluebird Home Health, Bluebird Hospice and Bluebird Home Care. Terms of the deal were not disclosed. Pennant has remained one of the most active acquirers in the home health market over the last few years.

“Bluebird’s operations fit uniquely within the strong continuum of care we have successfully built in Idaho over the last 12 years,” Pennant President and COO John Gochnour said in a statement. “This transition brings with it a strong group of operational and clinical leaders and outstanding clinicians who have made a meaningful impact in Southwest Idaho’s health care continuum over the last few years.”

Quote of the Month

“We have done everything possible to get Medicare to understand the disastrous consequences of its actions. We have presented hard facts, deep legal analyses, and extensive data to Medicare that demonstrate the errors in its policies to no avail. As a last resort, we have filed this lawsuit to protect Medicare beneficiaries and the home health agencies that care for them.” – William A. Dombi, President of NAHC in regards to its lawsuit against the Centers for Medicare and Medicaid Services (CMS) and the United States Department of Health and Human Services (HHS) challenging the validity of a change in Medicare home health payment that reduced rates by 3.925% in 2023 with significant additional cuts expected over the next several years.

Read the Full Article Here: The National Association for Home Care & Hospice Sues Medicare to Preserve the Home Health Service Benefit

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 6/30/23 1 mos change YTD change 6/30/22 6/30/21
Amedisys 91.44 +20.43% +9.46% 105.12 244.93
Enhabit 11.50 +6.88% -12.61%
HH Index* 51.47 +18.74% -58.02% 130.43 222.60
S&P 4450.38 +6.47% +14.77% 3785.38 4297.50
Addus 92.70 +2.83% -6.79% 83.28 87.24

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 3420 4210 8310
Enhabit 1180
HH Index Total 4600 9890 14570
Addus 1600 1580 1510

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

Company 2023 2022 2021
Amedisys 153% 189% 392%
Enhabit 111%
HH Index Average* 132% 220% 347%
Addus 164% 178% 193%

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)
  • Enhabit (EHAB)
  • Brookdale Senior Living Inc. (BKD)

Here are the results of the Post-Acute stock prices for the past two years:

Company 6/30/23 1 mos change YTD change 6/30/22 6/30/21
Amedisys 91.44 +20.43% +8.17% 105.12 244.93
Addus 92.70 +2.83% -6.32% 83.28 87.24
Pennant 12.28 +2.33% +10.05% 12.81 40.90
Brookdale 4.22 +22.32% +51.74% 4.54 7.90
Enhabit 11.50 +6.88% -10.81% 22.97
Aveanna 1.69 +43.22% +74.59% 2.26

Enterprise Value (EV)

EV (in M) 2023 2022 2021
Amedisys 3420 4210 8310
Addus 1600 1580 1510
Pennant 689 703 1490
Brookdale 522 564 652
Enhabit 1180
Aveanna 1640

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

Company 2023 2022 2021
Amedisys 153% 189% 392%
Addus 164% 178% 193%
Pennant 142% 157% 369%
Brookdale 185% 210% 207%
Enhabit 111%
Aveanna 91%

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 July 2023 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Elara Caring, the only full-scale, multi-state home health provider of clinical and personalized services across the patient continuum, has closed on its acquisition of Assisted Daily Living, a 50-person, privately owned skilled home healthcare provider based in Warwick, Rhode Island.
  • Addus HomeCare Corporation has acquired Tennessee Quality Care – a home health, hospice and private duty nursing provider
  • The Pennant Group has acquired Bluebird Home Health, Bluebird Hospice and Bluebird Home Care — three agencies under the Bluebird brand — that offer home health, hospice and home care services in Idaho.

SOLD by Stoneridge!!!

  • Stoneridge Partners is proud to announce the successful sale of a home health in Florida.

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.  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

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

 Home Care /  Michigan

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

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

 Home Care /  Southwest

Home Health Index July 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