Home Health Index March Update

The home health and post-acute care indices had a better-than-usual month on the public markets in March, the first time in a while since the majority of the public companies were all up in one month.

There are several factors that were contributing to the uncertainty – money is still sitting on the sidelines because of interest rates. Home care providers were in limbo regarding the Medicaid Access rule, which unfortunately was just finalized with the 80-20 provision in tact, having what industry experts believe will be catastrophic consequences to providers, especially smaller ones.

But for March, providers should be happy to have a month where the trajectory was pointed upward for basically the whole group.

“There will undoubtedly be shake-ups across home-based care, now that the Medicaid Access rule has been finalized,” says Ben Bogan, Partner and Managing Director at Stoneridge Partners. “Some of that M&A hesitation and turbulent stock movement had already occurred, but it seems certain that there will be more turbulence to come with the 80-20 provision making its way to the final rule.”

Certainly, some home-and community-based services (HCBS) providers – namely Addus HomeCare Corp. (Nasdaq: ADUS) and Aveanna Healthcare Holdings (Nasdaq: AVAH) – were hoping the Medicaid Access rule would be dismantled altogether, but that hope is now gone.

In a speech in early April, President Joe Biden himself seemed to foreshadow recent events while touting the looming rule.

“In the coming weeks, we plan to release new rules to strengthen staffing standards in nursing homes, to get home care workers a bigger share of Medicaid payments,” Biden said at Union Station in Washington, D.C., on April 9.

The home health index was up 1.7% in March, while the post-acute care index was up 6.77%. Comparatively, the S&P was up 4.38% month over month.

Home Health Index

The home health index numbers deserve some context.

Enhabit Inc. (Nasdaq: EHAB) was up over 22% on the month.

Amedisys, one of the only providers that ticked downward in the month, was down by just under 1%. But it holds greater weight than Enhabit.

Amedisys was likely down due to all the antitrust noise around UnitedHealth Group (NYSE: UNH), which agreed in June of last year to acquire Amedisys.

Though there were reports suggesting the deal would be scrutinized even more heavily in the coming months, it will likely go through, albeit with some caveats.

The probable scenario is Amedisys will be forced to divest some of its assets, particularly the ones that overlap with LHC Group, another home health company that UnitedHealth Group officially acquired early last year.

Enhabit remains in the late innings of its strategic review, and it’s unclear now what will ultimately be the result of that review. The result could be a sale, a merger or neither. Perhaps the company’s leaders will unveil more on a May 9 first-quarter earnings call.

“We are in the later stages of our strategic review, but don’t intend to disclose developments unless and until we determine further disclosure is appropriate or necessary. We will not be commenting beyond that,” Enhabit CEO Barb Jacobsmeyer said on the company’s first-quarter earnings call.

Post-Acute Care Index

In the post-acute care index, BrightSpring rebounded quickly from a rocky start on the public market. The company was up over 17% in March.

Meanwhile, The Pennant Group was up 4.99%; Addus was up 10.67%; and Aveanna was up 4.82%.

The Pennant Group has been one of the top gainers over the last year. Over the past year, the company is up over 50%. It has been one of the only companies that has continued regularly executing M&A deals, along with Addus.

One of the main keys to its success is its independence from the fee-for-service Medicare dollar. While others have been scrambling to adjust to a Medicare Advantage-dominated world, Pennant seems to have a solid plan and has adjusted well.

“Our model enables us to adapt and respond to changing circumstances and market needs on a macro and local level,” Pennant CEO Brent Guerisoli said last year. “It also allows us to be nimble and take advantage of unique opportunities, including payer relationships, preferred provider networks and localized reimbursement programs.”

Quote of the Month

“It is unfortunate that the final rule included a mandatory pass-through requirement. There are so many positive and necessary changes in the regulation, so it is disappointing that this one provision will undermine all the good things about the rule.” – David Totaro, President and Executive Director of Bayada’s Hearts for Home Care and NAHC MAC’s co-chair

Read the Full Article Here: Home Care Industry Slams Finalized 80-20 Rule, Warns Agency Closures are Coming

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:

  • Amedisys (AMED)
  • Enhabit (EHAB)

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

Company 3/31/24 1 mos change YTD change 3/31/23 3/31/22
Amedisys 92.16 -0.93% -3.05% 73.55 172.29
Enhabit 11.65 +22.83% +12.56% 13.91
HH Index* 51.91 +1.73% -1.52% 43.73 170.45
S&P 5329.75 +4.38% +11.30% 4109.31 4550.5

Enterprise Value (EV)

EV (in M) 2024 2023 2022
Amedisys 3370 2810 6300
Enhabit 1170 1290
HH Index Total 4540 4100 12340

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

Company 2024 2023 2022
Amedisys 151% 126% 284%
Enhabit 112% 119%
HH Index Average* 132% 123% 278%

The Stoneridge Partners Post-Acute Care Index is updated monthly and measures the performance of these seven 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)
  • Brightspring (BTSG)

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

Company 3/31/24 1 mos change YTD change 3/31/23 3/31/22
Amedisys 92.16 -0.93% -3.05% 73.55 172.29
Addus 103.34 +10.67% +11.30% 106.76 93.29
Pennant 19.63 +4.99% +41.02% 14.28 18.63
Brookdale 6.61 +13.62% +13.57% 2.95 7.05
Enhabit 11.65 +22.83% +12.56% 13.91
Brightspring

Aveanna

10.87

2.49

+17.30%

+2.95%

-7.09%

1.04

Enterprise Value (EV)

EV (in M) 2024 2023 2022
Amedisys 3370 2810 6300
Addus 1790 1760 1500
Pennant 913 727 1140
Brookdale 567 490 603
Enhabit 1170 1290
Brightspring

Aveanna

5520

1780

1550

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

Company 2024 2023 2022
Amedisys 151% 126% 284%
Addus 169% 185% 174%
Pennant 168% 154% 269%
Brookdale 189% 178% 219%
Enhabit 112% 119%
Brightspring

Aveanna

63%

94%

89%

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 March 2024 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Frontpoint Health has acquired High Plains Senior Care Group.
  • Waud Capital has acquired the home care franchise Senior Helpers.

SOLD by Stoneridge!!!

  • Stoneridge Partners is proud to announce the successful sale of a Home Care Agency in Maryland.
  • Stoneridge Partners is proud to announce the successful sale of a Behavioral Health Facility in Texas.

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 March 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.