The S&P outperformed the home health and post-acute care indices in November.

That, in part, was due to the Department of Justice’s (DOJ) decision to file a lawsuit to block UnitedHealth Group’s (NYSE: UNH) takeover of Amedisys (Nasdaq: AMED).

UnitedHealth Group originally agreed to acquire Amedisys for $3.3 billion in June of 2023. For nearly a year and a half, the DOJ was collecting more information around the pending deal. In November, after the election, the DOJ decided to file its lawsuit.

UnitedHealth Group and Amedisys appear to be focused on completing the deal and fighting the lawsuit.

While Amedisys had been hovering near the purchase price for a while — near $101 per share — the company’s stock finally stumbled this past month.

Overall, Amedisys shares were down 3.37% in the month. At $91.41 at the end of November, the stock is now about $10 off its pending purchase price.

Meanwhile, other home-based care companies began to execute more transactions, with both private and public providers opening their pipelines as interest rates continued to drop.

“The bottleneck in home-based care dealmaking is clearing toward the end of 2024,” says Ben Bogan, Partner and Managing Director at Stoneridge Partners. “The expectation is that that trend will continue into 2025 as well, which could be another landmark year for M&A.”

The home health index was down 2.3% in November. The post-acute care index was flat month over month. Comparatively, the S&P was up 5.7%.

Home Health Index

In mid-November, the DOJ officially filed a lawsuit to block UnitedHealth Group’s takeover of Amedisys, which was set to be one of the largest home health deals ever.

A larger one, UnitedHealth Group’s takeover of LHC Group, finalized in February 2023 at $5.4 billion.

“We are challenging this merger because home health and hospice patients and their families experiencing some of the most difficult moments of their lives deserve affordable, high quality care options,” U.S. Attorney General Merrick B. Garland said in a statement. “The Justice Department will not hesitate to check unlawful consolidation and monopolization in the health care market that threatens to harm vulnerable patients, their families, and health care workers.”

The DOJ’s complaint argued that home health prices would rise due to the merger; that home health workers would have less employment options, which would suppress pay and benefits; and that less competition between top home health providers would worsen patient care and reduce care options.

It remains unclear whether the DOJ’s arguments are sufficiently ironclad. In addition, the DOJ may see things differently under President-elect Donald Trump’s administration after he is inaugurated on January 20th.

In the end, the transaction saga is likely to continue for many months, if not years, which could lead to more volatility for Amedisys and the home health industry at large.

The other public company on the HHI, Enhabit Inc. (NYSE: EHAB), had a solid month after its stock sank significantly in the early autumn. Enhabit was up 12.19% in November but is still down significantly year to date.

Post-Acute Care Index

Addus HomeCare Corp. (Nasdaq: ADUS) is one of the companies that has executed deals of late. The company never stopped transacting; despite market downward pressure on M&A, and its latest deal is a big one. The company recently closed on its $350 million purchase of Gentiva’s personal care assets, becoming the largest personal care provider in Texas. In addition, Addus will expand its footprint in other current markets and will enter multiple other states.

“We are excited to add the personal care operations of Gentiva, which will significantly expand our market coverage in seven states, including the new markets of Texas and Missouri,” Addus CEO Dirk Allison recently said in a statement. “We welcome Gentiva’s experienced personal care operational leadership and caregivers to the Addus family. With our shared experience and expertise, we are well positioned to leverage the strength of the combined operations and provide more consumers and their families with safe, cost-effective care in the preferred home setting.”

The company was down slightly in November, by 1.27%.

BrightSpring Health Services (Nasdaq: BTSG) and The Pennant Group (Nasdaq: PNTG) have also kept the M&A train rolling during the downturn. Pennant was down marginally in November but is still up by over 100% year to date.

BrightSpring went public in January and is up significantly since its IPO. The company was also up by over 12% in November, making up for other companies’ losses in the month.

All three post-acute companies are expected to continue buying assets in the near-term future.

Quote of the Month

“Millions of older Americans, some of the most vulnerable patients in our healthcare system, benefit from receiving skilled healthcare in their homes. These patients, who may need extra assistance after a recent hospitalization or require help to manage chronic conditions like heart failure, diabetes, or lung disease, get the chance to recover at home instead of in hospitals or rehabilitation facilities. Millions more hospice patients choose to spend their final days in the comfort of their own homes. Receiving critical healthcare services, emotional support, therapy services, and quality-of-life assistance in the familiarity of their homes allows hospice patients to live out their last days with dignity as pain-free and peacefully as possible.” – Complaint filed by The Department of Justice against UnitedHealth Group and Amedisys

Read the Full Article Here: United States District Court For The District Of Maryland

See Stoneridge’s Latest Blog:

Read the second in a series of articles that will provide a unique and in-depth dive into home health and hospice valuations to provide answers to two of the most important questions that owners want to know, “What is the value of my business” and “How much will it sell for?”

Read the Full Article Here: Certificate-of-Need (CON) Laws and Their Effects on Healthcare Business Valuation

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:

• Addus (ADUS)
• Amedisys (AMED)
• Aveanna (AVAH)
• Brightspring (BTSG)
• Brookdale Senior Living Inc. (BKD)
• Enhabit (EHAB)
• The Pennant Group, Inc. (PNTG)

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 November 2024 | Stoneridge Partners)

Recent Transactions From Around The Country

• Sunrise, a leader in proprietary sleep disorder diagnostics technology, acquired Dreem Health, a California-based sleep clinic that offers diagnosis and treatment options for sleep conditions.
• Texas-based New Day Healthcare LLC acquired Good Samaritan Society’s hospice operations in Texas.

SOLD by Stoneridge!!!

• Stoneridge Partners is proud to announce the successful sale of a Texas hospice agency
• Stoneridge Partners is proud to announce the successful sale of a Pennsylvania home health agency

View Stoneridge closed transactions on our Website.

Home Health Index November 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.