Home Health Index January Update

A new year has arrived for the publicly traded post-acute care companies. Yet, most of the challenges remain the same.

Home health providers are adjusting to a landscape of Medicare Advantage (MA) penetration and constant tinkering of the fee-for-service structure from the U.S. Centers for Medicare & Medicaid Services (CMS), all of which undercut provider stability. In general, post-acute care providers are dealing with difficult payment dynamics.

Providers that deal heavily in the Medicaid home- and community-based services (HCBS) space, such as Addus HomeCare Corporation (Nasdaq: ADUS) and Aveanna Healthcare Holdings (Nasdaq: AVAH), are also awaiting a potentially monumental regulatory change. Proposed as the “ensuring access to Medicaid services” rule, CMS is considering implementing blanket wage mandates for HCBS workers.

Staffing, of course, remains a pain point for all home-based care providers, but there are signs that the labor market is softening.

In January, the home health index and post-acute index were mostly quiet, with the former down about 1% and the latter down 3.25%.

“While certain pain points do remain, there seems to be a bit more certainty in 2024 compared to recent years,” says Ben Bogan, partner and managing director at Stoneridge Partners. “Providers generally know what to expect, outside of impending final rules from CMS, and we are forecasting solid M&A activity in 2024 as buyer interest looks strong coming into the new year.”

Home Health Index

Enhabit Inc. (NYSE: EHAB) took longer than usual to announce its fourth-quarter earnings call in 2024 – that date was finally set for March 6.

By then, it’s more likely than not that there will be a resolution to the company’s strategic review, which was originally announced late last summer. The most probable outcome is a sale.

The last time the public heard from Enhabit leaders was their third-quarter earnings call, where they stated that their business was turning around.

“The strongest value proposition in our negotiations with payers continues to be our low 30-day hospital readmission rate, which is 20% better than the national average,” Enhabit CEO Barb Jacobsmeyer said during the call. “Our payer innovation team has continued to succeed in demonstrating this value proposition to Medicare Advantage payers. Since the inception of the payer innovation team last summer, we have successfully negotiated 48 new agreements — two-thirds of which are episodic rates.”

In January, Enhabit’s stock price fell by 2.5%, its second consecutive month-over-month drop.

Its home health peer Amedisys Inc. (Nasdaq: AMED), meanwhile, has already agreed to be acquired by UnitedHealth Group’s (NYSE: UNH) Optum.

That agreement was announced in June, but there seems to be some regulatory holdup. It’s still unclear whether the deal will be finalized by the second quarter of 2024.

Amedisys was down slightly in January, by less than 1%.

Post-Acute Care Index

Aveanna’s stock dropped significantly during its first couple of years on the public market. But the company underwent a turnaround recently that boosted its stock price modestly.

Even outside of the stock number, the company’s leaders are optimistic about the future.

“We took a very detailed, strong, honest look at ourselves about 15 months ago,” Aveanna CEO Jeff Shaner said in January at Home Care 100. “We didn’t necessarily like everything we saw. I had to make some very honest assessments of where we were as a company, and where we wanted to be. But, 15 months later, we can exhale now as an organization. Because we know where we’re going.”

Aveanna was down 16% in January but is still up considerably – by close to 100% – year over year.

The only company on the PAI that was up in January was The Pennant Group (Nasdaq: PNTG). Up over 7%, the company has been steady for the last couple of years.

On the other hand, Addus was down about 7% in January.

Quote of the Month

“One of the great confusions when seeking access to government health benefits is the similarity between the words “Medicare” and “Medicaid.” Even seasoned professionals in the field sometimes slip and use one word instead of the other. There are major differences between the two programs and one area where this becomes very clear is in the provision of home care services.” – Janet Colliton, Certified Elder Law Attorney practicing in Pennsylvania

Read the Full Article Here: Planning Ahead: Medicare, Medicaid or Hospice for at-home care

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 1/31/24 1 mos change YTD change 1/31/23 1/31/22
Amedisys 94.27 -0.84% -2.47% 96.66 135.04
Enhabit 10.09 -2.58% -34.31%
HH Index* 52.18 -1.01% -5912% 127.63 129.93
S&P 4845.65 +1.56% +18.86% 4076.60 4522.67
Addus 86.60 -7.22% -19.46% 107.52 79.74

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) 2024 2023 2022
Amedisys 3510 3510 4490
Enhabit 1110
HH Index Total 3620 9250 8540
Addus 1640 1650 1460

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

Company 2024 2023 2022
Amedisys 158% 158% 204%
Enhabit 105%
HH Index Average* 132% 204% 196%
Addus 152% 196% 153%

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 1/31/24 1 mos change YTD change 1/31/23 1/31/22
Amedisys 94.27 -0.84% -2.47% 96.66 135.04
Addus 86.60 -7.22% -19.46% 107.52 79.74
Pennant 15.01 +7.26% +16.00% 12.94 16.46
Brookdale 5.46 -6.59% +89.58% 2.88 5.37
Enhabit 10.09 -2.58% -34.31% 15.36
Aveanna 2.30 -16.52% +88.52% 1.22

Enterprise Value (EV)

EV (in M) 2024 2023 2022
Amedisys 3510 3510 4490
Addus 1570 1820 1280
Pennant 783 679 785
Brookdale 551 525 562
Enhabit 1110
Aveanna 1760

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

Company 2024 2023 2022
Amedisys 158% 158% 204%
Addus 152% 196% 153%
Pennant 150% 148% 180%
Brookdale 187% 195% 195%
Enhabit 105%
Aveanna 94%

This graph displays 24 months of Post-Acute Care Index performance.

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 January 2024 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Legacy Care Partners Acquires Superior Home Health and Superior Hospice of Texas Legacy Care Partners.

  • Nautic Partners has completed the acquisition of Angels of Care from Varsity Healthcare Partners.

SOLD by Stoneridge!!!

  • Stoneridge Partners is proud to announce the successful sale of two separate Home Care agencies in Pennsylvania.

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.

Home care provider with over 200 clients.  Holder of four recently renewed contracts with ASAP providers.  Fully burdened P&L offers room for profitability gains.  Growth...

 Home Care /  Massachusetts

Home health agency.  Opportunity to establish a presence in Tennessee.  Covers Davidson (Nashville) and 8 surrounding counties.  Certificate of need - very rate in Tennessee.

 Home Health /  Tennessee

Behavioral health services.  $25+M in revenue.  Residential care facilities, inpatient psych/outpatient mental health support services, and counseling for adults and elderly patients.  Platform opportunity with...

 Behavioral Health /  California

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

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

$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

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 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 January 2024 | 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.