Things are moving quickly in the home health index (HHI) and post-acute index (PAI).

In February, UnitedHealth Group’s (NYSE: UNH) Optum officially acquired LHC Group. In early June, Optum submitted a bid for Amedisys Inc. (Nasdaq: AMED).

In April of 2021, Humana Inc. (NYSE: HUM) fully acquired Kindred at Home after initially investing in the company in 2018. Leaders from Optum and Amedisys expect their deal to close at some point in 2024. If all goes as planned, the three largest home health providers will have all been bought up by large payers in just three years.

But there could be even more ahead. Last month, Enhabit Inc. (NYSE: EHAB), one of the only remaining independent home health and hospice providers on the public market, announced its launch of a strategic review process, which could result in a sale.

The bidders remain unknown publicly, and it will be interesting to see whether – if sold – it ends up with a payer, health system or financial sponsor.

“These acquisitions of some of the largest home health companies proves how valuable at-home care capabilities are in this day and age,” says Ben Bogan, partner and managing director at Stoneridge Partners. “It also proves that the current headwinds are strong, both for small and large providers.”

The S&P was down 1.7% in July. The HHI was up 1.9%, while the PAI was down marginally again, by less than 1%.

Home Health Index

Amedisys’ stock is likely to steadily fluctuate for the remainder of the year based on regulatory inquiries into its pending agreement with Optum. In August, the Department of Justice (DOJ) filed a request for additional information regarding the deal.

Meanwhile, home health insiders are keeping a close eye on Enhabit. The company first needed to resolve its Tax Matters Agreement with Encompass Health Corp. (NYSE: EHC), which it spun out of in July of last year. On Aug. 23, the company officially announced a strategic review process was underway.

“Enhabit is a leader in a valuable industry, providing a better way to care where patients prefer to receive their care,” the company wrote in a statement. “The Enhabit board and management team are aligned in their belief that the best way to enhance value for stockholders is to comprehensively review the company’s strategic alternatives, including a potential sale of Enhabit. We will pursue the pathway that enhances value for our stockholders and ensures we can continue to deliver exceptional care to our patients.”

Enhabit stock has been up and down. In August, its price decreased from July by 6.7%. Amedisys, on the other hand, was up 3.2% in that time.

Post-Acute Care Index

The Pennant Group (Nasdaq: PNTG) was up 4.17% in August. Addus Homecare Corporation (Nasdaq: ADUS) was down 4.41%

Pennant has continued hitting the M&A trail. It acquired an Idaho-based home health provider in June, and then acquired an Arizona-based hospice provider on the first day of September.

Afterward, the company suggested that M&A will remain a vital part of its growth strategy in the near-term future.

“[Pennant CEO Brent Guerisoli] reaffirmed that Pennant continues to pursue opportunities to acquire high quality home health, hospice and senior living businesses throughout the United States,” a press release read.

Pennant recently brought on a new CFO – Lynette Walbom – who also pointed to M&A as a current company focus.

“The [home health] industry is one where I think that there’s a lot of growth opportunity,” she told Home Health Care News in June. “I love the idea of being able to provide life-changing services, which is what Pennant is about.”

Quote of the Month

“It’s easy for us to pretend it’s not happening, but ignoring mental health conditions is not an option, because they have a potential serious outcome. The National Institute of Mental Health reports that more than 90% of people who die from suicide have depression and other mental disorders, or a substance abuse disorder. – Debbie Streier, Regional President/CEO of Avera Marshall Regional Medical Center

Read the Full Article Here: Let’s be Mindful of Mental Health, All Year Long

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:

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)

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

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:

Enterprise Value (EV)

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

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 September 2023 | Stoneridge Partners)

Recent Transactions From Around The Country

• Wellsky, a health and community care technology company acquired Experience Care, a technology company offering a suite of software solutions for post-acute and long-term care providers.

SOLD by Stoneridge!!!

• The Pennant Group, Inc., the parent company of the Pennant group of affiliated home health, hospice, home care and senior living companies, has acquired Valor HospiceCare (“Valor”), which provides skilled hospice services in Tucson, Green Valley, and Sierra Vista, Arizona. Stoneridge Partners, Ben Bogan and Ted Cohen, provided sell side M&A advisory services with this transaction. See press release here.

View Stoneridge closed transactions on our website

Home Health Index September 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.