In September, the post-acute and home health indices were slightly outperformed by the S&P, with little movement.

Yet the companies that make up those indices are likely to see some change in their respective markets in the near-term future.

For one, the home health final payment rule is expected in early November, which will offer some clarity for providers moving forward. Providers are expecting a permanent but less harsh aggregate cut than what was proposed. In June the Centers for Medicare & Medicaid Services (CMS) proposed an aggregate 1.7% decrease in payments for 2025.

The Federal Reserve also slashed interest rates in September for the first time in years. All signs are pointing toward further cuts in the near-term future, though the Fed has promised not to rush anything.

High interest rates have somewhat suppressed dealmaking activity over the last couple of years in post-acute care.

Pent-up demand is likely to lead to a windfall of deals as interest rates come back down to a more bearable level.

“Quality home health and post-acute care providers still remain in high demand,” says Ben Bogan, Partner and Managing Director at Stoneridge Partners. “Inflation and subsequent high interest rates have kept deal totals a bit lower since 2022. That could change in the fourth quarter, which could impact how the post-acute space looks in 2025 and beyond.”

The home health index was down 1.92% in September, while the post-acute care index was up negligibly, by 0.26%. Comparatively, the S&P was up 1.82% month over month.

Home Health Index

Amedisys Inc. (Nasdaq: AMED) shareholders are still waiting for the UnitedHealth Group (NYSE: UNH) deal to close, now some 15 months after the deal agreement.

That deal is likely to close by the end of the year, assuming the Department of Justice (DOJ) does not intervene, or ask for any more information. The state of Oregon, however – where Amedisys has four locations – did say that its review of the deal would likely last through November.

Specifically, the Oregon Health Authority (OHA) is the entity that reviews large mergers and transactions taking place within the state. It is possible, though, that the OHA and other states could take the DOJ’s lead, if it does ultimately approve the deal.

When that deal does close, Amedisys will join LHC Group under UnitedHealth Group’s Optum. That would mean two of the largest home health providers in the country – and two former public companies – all underneath the UnitedHealth Group umbrella.

Amedisys stock dropped slightly in the month, by 1.53%.

Amedisys’ remaining peer on the home health index, Enhabit Inc. (NYSE: EHAB), was down 6.4% in September.

As Enhabit negotiates better payments from Medicare Advantage (MA) plans, its financial forecast is likely to improve. But for now, its payer innovation strategy has not yielded successful results on the public market. The company is down over 23% year to date.

Post-Acute Care Index

On the post-acute care index, a newcomer was the top performer: BrightSpring Health Services (Nasdaq: BTSG). The company was up 16.97% in the month.

BrightSpring joined the public market in January. Since then, it has steadily gained, with a stock price improved by nearly 40% since January 26. BrightSpring has executed a slew of deals this year, and most recently announced that it had finalized a $60 million acquisition of the assets of North Central Hospice and Haven Medical Group, which collectively make up Haven Hospice.

“We are excited to welcome Haven Hospice into BrightSpring, expanding our existing hospice services into the CON state of Florida,” BrightSpring President and CEO Jon Rousseau said in a statement. “The delivery of compassionate hospice care is critical for patients and their families, and we’re committed to delivering that to high-need Floridians. Our hospice services have been rated in the top five percent for quality in the industry, and with this expansion of services to Florida, we can provide high-quality care to more patients and their families during the most difficult time in their lives.”

Elsewhere on the post-acute care index, Addus Homecare Corp. (Nasdaq: ADUS) stayed mostly steady on the month, up 0.2%.

The Pennant Group (Nasdaq: PNTG) had another solid month, posting a 4.2% gain. Pennant has also had a great year, its stock price up over 156% year to date.

Pennant recently named a new CMO, in Dr. Derrel Walker. In an interview with Hospice News, Walker laid out his vision for Pennant’s home-based care future.

“Our vision is to focus on completing the health care continuum in the home space,” Walker said. “My belief, strongly, is that palliative care is needed very early in a patient’s lifetime. The way we view it at Pennant is that the post-acute care continuum is still too siloed, and it still has too many gaps. So, as we’ve designed our home visit programs, it’s been focused on what are those gaps, and how we fill them? Does a patient need palliative care, or do they need geriatrics, or do they need primary care? What is it that they need the most?”

Finally, Aveanna Healthcare Holdings (Nasdaq: AVAH) was down 7.96% in September.

Quote of the Month

“Home care elevates the quality of life across the board. Whether it’s being surrounded by loved ones, keeping pets nearby, or creating a care plan that fits the patient’s day-to-day reality. It’s about making care more personal and realistic, which patients and caregivers appreciate the most.” – Dr. Patrick Kneeland, Vice President of Medical Affairs at DispatchHealth

Read the Full Article Here: Study Shows Caregivers, Patients Prefer Hospital-At-Home Model

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:

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 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:

Enterprise Value (EV)

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

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 September 2024 | Stoneridge Partners)

Recent Transactions From Around The Country

• LiveWell Partners acquired Hope Home Care, an Ohio-based home health provider.
• Prime Home Health Services, a Brooklyn-based home health care agency, acquired the assets of the Visiting Nurse Association of Staten Island (VNASI)

SOLD by Stoneridge!!!

• Stoneridge Partners is proud to announce the successful sale of a Texas home health agency
• Stoneridge Partners is proud to announce the successful sale of an Oklahoma home health agency
• Stoneridge Partners is proud to announce the successful sale of an Indiana behavioral health agency.
• Stoneridge Partners, Ben Bogan and Ted Cohen, provided sell side M&A advisory services in the Help at Home and Caregiver Services (CSI) transaction. Read more here
• Stoneridge Partners, Tom Lillis and Joe Lynch, assisted OhioHealth in its partnership for home health and hospice services with Compassus. Read more here

View Stoneridge closed transactions on our Website.

Home Health Index September 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.