Home health providers are gearing up for the Centers for Medicare & Medicaid Services’ (CMS) final payment rule for CY2024.

Though CMS generally releases the rule in late October or early November, a potential government shutdown could delay it. While some providers may want to rip the Band-Aid off and get the news sooner rather than later, others see a potential delay as an opportunity to advocate more on behalf of the industry before CMS sets the rates for next year.

Whenever the rates are set, they will offer stability to the industry. Whether there’s a negative or positive adjustment, the certainty will at least allow M&A to ramp up again.

“There’s no doubt that home health leaders and advocates have pushed hard over these last few months to mitigate rate cuts,” says Joe Lynch, partner and managing director at Stoneridge Partners. “We’ll see soon if they’re successful, but there’s definitely more confidence now than there was mid-summer.”

The S&P was down 4.8% in September. The HHI was down 1.8%, while the PAI was down more than both — by 5.18%.

Home Health Index

Amedisys Inc. (Nasdaq: AMED) stock was just down slightly in September, but the company remained in the headlines.

As UnitedHealth Group’s (NYSE: UNH) Optum tries to move closer to acquiring it, they’re having to hurdle a lot of roadblocks in Washington, D.C.

In August, the U.S. Department of Justice (DOJ) filed a request for additional information regarding the deal. Then in September, Sen. Elizabeth Warren (D-Mass.) and U.S. Rep. Pramila Jayapal (D-Wash.) urged antitrust regulators to take a closer look at the deal.

For now, the deal is still expected to close in early 2024.

Enhabit Inc. (NYSE: EHAB), on the other hand, was down 12.26% in September, and plummeted further at the start of October.

The downturn began when Enhabit entered into a limited waiver agreement with Wells Fargo Bank (NYSE: WFC) out of “an abundance of caution,” according to its CEO Barb Jacobsmeyer. Still, it was enough to sink the stock price. Enhabit is currently undergoing a strategic review that could end in a merger or sale.

At least one Enhabit investor — AREX Capital Management — is pleading with the Enhabit board to make sure the strategic review ends up in a sale, specifically.

“We strongly emphasize to the board that there should be absolutely no question that the highest bid received in a full and fair auction is Enhabit’s fair value,” AREX Capital wrote in an open letter on Oct. 5. “A sale of the company is the only acceptable outcome for this process.”

Post-Acute Care Index

September wasn’t a great month for the PAI overall. The Pennant Group (Nasdaq: PNTG) was down 7.10%. Addus Homecare Corporation (Nasdaq: ADUS) was down 2.86%, and Aveanna Healthcare Holdings (Nasdaq: AVAH) was down 17.36%.

But there are signs of optimism.

For instance, one of the pain points that has kept Aveanna from succeeding on the public market thus far has been staffing.

The company is hoping that, slowly but surely, it’s starting to figure that problem out — at least as much as one can in home-based care. Aveanna has invested significantly in its hiring tools, hoping to turn candidates into employees as quickly as possible.

“For us as an organization, this really comes down to speed to hire,” Elias Lee, regional director of talent acquisition at Aveanna, said at Home Health Care News’ FUTURE conference in late August. “We do spend advertising dollars attracting applicants to us, so making that speed-to-hire process where it’s timely and caregivers know what to expect, they are then able to move through the process quicker and ultimately be in our patients’ home sooner — which is the end goal.”

Turning the hiring process into one that’s data- and tech-driven has been what’s really worked out for Aveanna of late.

“There’s a lot more technology involved in our applicant tracking system,” Lee said. “That’s proved to have a real upside. We’re utilizing that technology, pulling the data and making decisions based on what it shows us. It’s been really beneficial to us to create the best onboarding process that we’ve streamlined across Aveanna.”

Quote of the Month

“We’re 10 years behind the eight-ball here already, and the pandemic only laid bare some of those disparities in care, access and care quality. We’re really thinking about mental health at every single table and every single key decision. Whether it’s from the policy or the primary [care] integration front, or in our emergency departments.” – Dr. Ron-Li Liaw, Mental Health Chief at Children’s Hospital Colorado

Read the Full Article Here: How Hospitals Are Prioritizing Community Support for Children’s Mental Health

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 9/30/23 1 mos change YTD change 9/30/22 9/30/21
Amedisys 93.40 -0.37% +11.80% 96.79 149.10
Enhabit 11.24 -12.26% -14.59%
HH Index* 52.32 +1.80% -57.33% 130.23 153.01
S&P 4288.15 -4.87% +10.59% 3858.62 4307.54
Addus 85.19 -2.86% -14.37% 95.24 79.75

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 3430 4450 5940
Enhabit 1170
HH Index Total 4600 9710 10830
Addus 1450 1570 1540

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

Company 2023 2022 2021
Amedisys 154% 171% 263%
Enhabit 111%
HH Index Average* 133% 215% 255%
Addus 145% 183% 182%

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 9/30/23 1 mos change YTD change 9/30/22 9/30/21
Amedisys 93.40 -0.37% +11.80% 96.79 149.10
Addus 85.19 -2.86% -14.37% 95.24 79.75
Pennant 11.13 -7.10% +1.37% 10.14 28.09
Brookdale 4.13 -2.82% +51.28% 4.27 6.30
Enhabit 11.24 -12.26% -14.59% 14.04
Aveanna 1.19 -17.36% +52.56% 1.50

Enterprise Value (EV)

EV (in M) 2023 2022 2021
Amedisys 3430 3790 5580
Addus 1450 5920 1480
Pennant 659 617 1230
Brookdale 221 556 616
Enhabit 1170
Aveanna 1540

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

Company 2023 2022 2021
Amedisys 154% 171% 263%
Addus 145% 258% 182%
Pennant 131% 136% 292%
Brookdale 181% 210% 203%
Enhabit 111%
Aveanna 84%

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 October 2023 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Wilmington-headquartered Well Care Health, a home health and hospice company, sold one of its three core services, Home Care, to Chicago-based home health care company Avid Health at Home.

  • Elara Caring, the only full-scale, multi-state home health provider of clinical and personalized services across the patient continuum, has acquired American Family Home Health, a 35-person, privately owned skilled home healthcare provider in Huntley, Illinois, within Winnebago County.

  • AMN Healthcare (NYSE: AMN), the leader and innovator in total talent solutions for healthcare organizations across the United States, today announced a definitive agreement to acquire MSDR for a purchase price of $300 million. MSDR consists of two healthcare staffing companies that specialize in locum tenens and advanced practices, Medical Search International (MSI) and DRW Healthcare Staffing (DRW).

  • Hospice of Northwest Ohio is buying the operations of ProMedica Ebeid Hospice Residence. Terms of the transaction, expected to close on or before Oct. 31, were not disclosed. Hospice of Northwest Ohio has two other inpatient centers: The Edward & Marion Knight Hospice Center and The Virginia Clifford Hospice Center. Combined, the inpatient centers have served more than 25,000 patients and their families, according to the end-of-life care provider.
  • KKR-backed autism therapy provider BlueSprig Pediatrics has acquired Lakewood, Colorado-based Trumpet Behavioral Health. Both companies offer outpatient services for autism spectrum disorders, chiefly applied behavior analysis (ABA).

SOLD by Stoneridge!!!

  • Stoneridge Partners is proud to announce the successful sale of an Arizona Home Health.
  • Stoneridge Partners is proud to announce the successful sale of a Texas Personal/Companion Care.

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.

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

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 / 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

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 / Popular

Home Health Index October 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.