Home Health Index May Update

The home health and post-acute care indices followed two separate paths in May, as the former dipped and the latter posted their biggest gains in months.

On the home health front, providers are anxiously awaiting the proposed payment rule, which is set to be released in late June or early July. As of today, the expectation is more proposed cuts to provider payments.

Those presumed cuts and persistently high interest rates are among the reasons why some in the industry have predicted slower home health M&A coming into 2024. With payment cuts looming over the last few years, some buyers may be waiting for certainty before moving forward on deals. Other buyers, however, are forging ahead at full steam, resulting in significant M&A interest and activity.

Elsewhere, while home- and community-based services (HCBS) providers were vocal in their criticism of the Medicaid Access Rule and its 80-20 provision, the provision itself hasn’t seemed to spook them too much, given the likely legal challenges and the six-year delay before implementation.

“Home health cuts and the 80-20 provision are both ongoing factors that providers are paying close attention to,” says Ben Bogan, Partner and Managing Director at Stoneridge Partners. “But, to some extent, providers are operating business as usual. Cuts and the provision were both expected, and both will be challenged in one form or another.”

The home health index was down 1.79% in April, while the post-acute care index was up 7.84%. Comparatively, the S&P was down 4.85% month over month.

Home Health Index

The home health index remains in a state of flux.

It appeared that UnitedHealth Group (NYSE: UNH) and Amedisys (Nasdaq: AMED) had figured out a way to divest over 100 Amedisys locations to a private-equity buyer, allowing the two to finalize their $3.3 billion deal. However, at the end of May a report surfaced suggesting that the presumed buyer of those locations had walked away from the deal — at least for now.

There likely aren’t a ton of willing or able buyers out there for more than 100 Amedisys locations, which means one buyer walking away is of major significance. UnitedHealth Group and Amedisys are also likely to try to close this deal in short order, with antitrust issues cropping up at UnitedHealth Group. The initial deal agreement is coming up on its one-year anniversary.

Amedisys was down by about 1% in May, almost $11 dollars below its agreed-upon purchase price of $101 per share.

Meanwhile, Enhabit (NYSE: EHAB) concluded its strategic review in May — electing to remain a public company — and is still not out of the woods.

The activist investor AREX Capital Management, which owns 4.9% of Enhabit shares, has nominated new board members in hopes of replacing the current Enhabit board at the company’s annual meeting. Enhabit then wrote an open letter to its shareholders, urging them to side with their board over AREX Capital’s wishes.

“At our upcoming 2024 Annual Meeting of Stockholders, you will have an important decision to make about the future of Enhabit Home Health & Hospice — whether our Board should be replaced and control of Enhabit handed to one of our stockholders, AREX Capital Management,” Enhabit wrote in a letter to its shareholders. “Your current Board unanimously believes the answer to this question is emphatically, no.”

Answers will arrive soon, as the annual meeting is coming up, toward the end of summer. Enhabit was down nearly 10% in May.

Post-Acute Care Index

Addus HomeCare Corp. (Nasdaq: ADUS) has been busy.

In May, the company decided to exit the New York personal care market entirely, offloading operations to HCS-Girling.

“It wasn’t a stable environment … we felt we could take our capital and move it to other states that were more appropriate for our programs,” Addus CEO Dirk Allison said at Jefferies Global Healthcare Conference. “When we were approached to look at selling it, we decided to make that move. While we hate to leave New York, from a standpoint of financial implication, and the time we’ve had to put in, it’s a good move for us.”

Addus had already said that in the wake of the 80-20 provision, it would consider leaving unviable state markets, and had already pulled the trigger on New York. But shortly thereafter, it expanded its reach, acquiring Gentiva’s personal care business for $350 million. This allowed Addus to enter Texas, North Carolina and Missouri.

In other words, although Addus left New York, its footprint will be far bigger heading into the back half of 2024 than it was at the beginning of the year. Investors seem to approve, as Addus was up by over 16% in May.

The Pennant Group (Nasdaq: PNTG), meanwhile, was up by over 11% on the month. BrightSpring Health Services (Nasdaq: BTSG) was up 4.98%, and Aveanna Healthcare Holdings (Nasdaq: AVAH) was up 13.79%.

Quote of the Month

“The Administration has repeatedly expressed its support for care in the home, recognizing it as a high quality, lower cost alternative to institutional care settings that expands access to Medicare beneficiaries in the location in which they prefer to receive care: Their homes. The home health community has repeatedly offered solutions to CMS that would reduce spending, while at the same time maintaining payment levels for those agencies that deliver high quality care and play by the rules. Yet CMS persists in its mathematical gymnastics that will give rise to nothing short of inferior health outcomes, lower patient satisfaction and stranding at-risk, older adults in higher cost, institutional care settings.” – Stacey Smith, the vice president of public policy at AccentCare.

Read the Full Article Here: CMS Proposes 4% Cut To Home Health Medicare Payments in 2025

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 5/31/24 1 mos change YTD change 5/31/23 5/31/22
Amedisys 91.15 -0.99% -4.11% 75.93 115.91
Enhabit 9.19 -9.79% -11.21% 10.76
HH Index* 50.17 -1.79% -4.81% 43.35 141.29
S&P 527.51 +4.58% +10.64% 4179.83 4137.75

Enterprise Value (EV)

EV (in M) 2024 2023 2022
Amedisys 3350 3060 4490
Enhabit 1030 1220
HH Index Total 4380 4280 10530

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

Company 2024 2023 2022
Amedisys 149% 1137% 202%
Enhabit 99% 115%
HH Index Average* 124% 126% 235%

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 5/31/24 1 mos change YTD change 5/31/23 5/31/22
Amedisys 91.15 -0.99% -4.11% 75.93 115.91
Addus 114.81 +16.25% +23.65% 90.15 83.50
Pennant 23.54 +11.17% +69.11% 12.0 19.13
Brookdale 6.71 -1.19% +15.29% 3.45 5.7
Enhabit 9.19 -9.79% -11.21% 10.76
Brightspring

Aveanna

11.25

2.61

-1.19%

+13.79%

-2.61%

1.18

Enterprise Value (EV)

EV (in M) 2024 2023 2022
Amedisys 3350 3060 4490
Addus 1950 1540 1490
Pennant 1050 689 832
Brookdale 572 521 576
Enhabit 1030 1220
Brightspring

Aveanna

4760

1800

1550

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

Company 2024 2023 2022
Amedisys 149% 137% 202%
Addus 179% 157% 169%
Pennant 182% 142% 186%
Brookdale 188% 185% 215%
Enhabit 999% 115%
Brightspring

Aveanna

51%

94%

86%

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 Yahoo Finance. 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 May 2024 | Stoneridge Partners)

Recent Transactions From Around The Country

  • NeuroFlow acquired Owl, a provider of measurement-based behavioral health care.
  • Bristol Hospice has acquired Mississipi-based Mid-Delta Hospice.

SOLD by Stoneridge!!!

  • Stoneridge Partners is proud to announce the successful sale of a Home Hare Agency in Kansas
  • Stoneridge Partners is proud to announce the successful sale of a Healthcare Company 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 May 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.