On the last day of June, The Centers for Medicare & Medicaid Services’ (CMS) released the home health proposed payment rule reducing aggregate home health payments by 2.2%, or $375 million less than 2023 levels.

CMS proposed severe cuts last year as well but ended up with a more watered-down version when the final rule was published. Rather than wait to see what will happen, The National Association for Home Care & Hospice has sued CMS over the cuts and The Preserving Access to Home Health Act of 2023 has been introduced in the Senate and the House.

With all this activity, providers are hopeful there will be no rate reduction at all, but at the very least a similar outcome to 2023 when the final rule is released in late October or early November.

“CMS continues to believe that home health providers have been overpaid prior to 2023,” says Joe Lynch, Partner and Managing Director at Stoneridge Partners. “Providers obviously feel differently and are advocating strongly against cuts through multiple efforts. In the end — if the cuts are finalized — the largest providers will likely be able to weather the storm better than the smaller ones.”

The S&P was up 3.11% in July and outperformed both the HHI and PAI. The HHI was up 1.58% while the PAI was up down marginally, by less than 1%.

Home Health Index

After UnitedHealth Group’s (NYSE: UNH) Optum agreed to acquire Amedisys in June, the latter’s stock price has mostly held steady. Its standing has become less of an indicator of how home health providers are faring overall.

Enhabit Inc. (NYSE: EHAB), on the other hand, had a very strong July. The company was up 19.39% month over month.

In June, one of Enhabit’s larger shareholders, AREX Capital Management, wrote a public letter to Enhabit’s board urging a sale. There has been no traction on that front since, but the company has climbed since that point.

The more likely reason for the rebound, however, is the company’s ability to finally get its feet underneath it. Enhabit’s payer innovation team has been working hard since it became a public company to get better and larger Medicare Advantage contracts. Those efforts are starting to pay off.

“One of the things I’ve learned the most is how slow progressing it is, as we have worked with the managed care companies, particularly the Medicare Advantage side of things,” Enhabit CEO Barb Jacobsmeyer said at the Jefferies Healthcare Conference in June. “It’s been nice to see the progress, … but that certainly has come with a lot of work and a lot of time.”

Receiving higher rates for home health services from MA plans, to some extent, helps offset the cuts to Medicare fee-for-service rates.

Post-Acute Care Index

The biggest risk for Addus Homecare Corporation (Nasdaq: ADUS) — which is primarily a personal home care provider — continues to be the proposed Medicaid rule that would mandate 80% of reimbursement go to workers.

Home- and community-based services providers across the country have advocated against that rule, suggesting that it would adversely affect smaller providers. These leaders have also argued that a blanket, national rule would not make sense given the differences in each state’s Medicaid program.

If the rule becomes final, Addus CEO Dirk Allison even suggested Addus could exit certain markets.

“Once we see what the final rule entails, there are things we can do,” Allison said on the company’s second-quarter earnings call. “We’ll look at states, which may be due to the rule, limit your ability to properly operate in that state. And we will potentially look at moving out of those states if necessary. We don’t really want that to be the way the operations end up. But certainly, if the rule forces that, we will look at it.”

Addus was down 1.22% month over month.

Though the Pennant Group (Nasdaq: PNTG) was down 6.51% month over month, it did execute on one of the biggest home health deals of the second quarter. Pennant acquired Bluebird Home Health, Bluebird Hospice and Bluebird Home Care — three agencies under one brand.

“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 know from our research that nearly 6 in 10 family caregivers assist with medical and nursing tasks such as injections, tube feedings, and changing catheters. But fewer than 30% of caregivers have conversations with health professionals about how to help loved ones. – Jason Resendez, President and CEO of the National Alliance for Caregiving.

Read the Full Article Here: A New Medicare Proposal Would Cover Training for Family Caregivers

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 7/31/23 1 mos change YTD change 7/31/22 7/31/21
Amedisys 90.84 -0.66% +8.74% 119.85 260.62
Enhabit 13.73 +19.39% +4.33%
HH Index* 52.29 +1.58% -57.36% 141.46 237.90
S&P 4588.96 +3.11% +18.34% 4130.29 4395.26
Addus 91.57 -1.22% -7.96% 92.81 86.79

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 3350 4450 8750
Enhabit 1270
HH Index Total 4620 10390 15380
Addus 1570 1690 1490

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

Company 2023 2022 2021
Amedisys 150% 201% 413%
Enhabit 119%
HH Index Average* 135% 232% 366%
Addus 161% 191% 192%

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 7/31/23 1 mos change YTD change 7/31/22 7/31/21
Amedisys 90.84 -0.66% +0.62% 119.85 260.62
Addus 91.57 -1.22% -1.05% 92.81 86.79
Pennant 11.48 -6.51% +6.18% 13.34 34.22
Brookdale 3.52 -16.59% +24.31% 4.82 7.52
Enhabit 13.73 +19.39% -14.52% 17.51
Aveanna 1.73 +2.37% -3.28% 2.12

Enterprise Value (EV)

EV (in M) 2023 2022 2021
Amedisys 3350 4450 8750
Addus 1570 1690 1490
Pennant 663 708 1300
Brookdale 509 563 634
Enhabit 1270
Aveanna 1640

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

Company 2023 2022 2021
Amedisys 150% 201% 413%
Addus 161% 191% 192%
Pennant 136% 158% 320%
Brookdale 181% 210% 207%
Enhabit 119%
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 August 2023 | Stoneridge Partners)

Recent Transactions From Around The Country

  • ABA Connect has acquired Colorado-based autism provider Bright Behavior LLC.

  • Washington-headquartered Family Resource Home Care acquired personal care provider Companion Care, Inc.
  • Help at Home acquired Ohio-based Berkshire Homecare.
  • Help at Home acquired Indiana-based My Care at Home.

SOLD by Stoneridge!!!

  • Stoneridge Partners is proud to announce the successful sale of a Hospice in Arizona.

  • Stoneridge Partners is proud to announce the successful sale of Homecare in Virginia.
  • Stoneridge Partners is proud to announce the successful sale of Homecare in Ohio.
  • Stoneridge Partners is proud to announce the successful sale of Home Health in Colorado.

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.

Skilled home health agency.  Servicing Central Florida for over 20 years.  Census approximately 35.

 Home Health /  Florida

Houston-based home health company.  $7+M in revenue.  Profitable.  Well established within the community.  Showing positive growth trends.

 Home Health /  Texas

Occupational therapy practice with 2 offices in Southern California. Hand and upper extremity specialists.  20-plus years in the community.  Strong referral relationships.  Management and staff...

 Other /  California

Hospice.  100+ ADC.  Accredited.  No CAP or regulatory issues.

 Hospice /  Pennsylvania

$5M in revenue.  Located in Northern/Richmond VA.  Health system-owned Medicare home health and hospice.  Growing organization.

 Home Health

Non-medical Home Care agency.  $2M+ in revenue.  Medicaid.  Profitable.

 Home Care /  Tennessee

Non-medical Home Care agency.  $3M+ in revenue.  Multiple offices.

 Home Care /  Pennsylvania

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

 Hospice /  Texas

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

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

$4.5+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

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

Medicare-certified home health agency. District 7. Census of approximately 30 patients. Accredited.

 Home Health /  Florida

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 / Popular

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 August 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