Home Health Index
THE STONERIDGE PARTNERS HOME HEALTH INDEX
This Home Health Index (HH Index) measures the performance of four publicly traded home health companies, all listed on the NASDAQ — Almost Family (AFAM), LHC Group (LHCG), Gentiva (GTIV) and Amedisys (AMED). This index is updated monthly. See archived updates below.
July 1st Update
It was another lousy month for the stock market in general. The S&P was down 8% in May and added another 5.4% decrease in June. The S&P, through June 30, is now down 7.6% for the year.
As bad as that was, for the year through June 30, our Home Health Index is now down 12.5%. Not included in these numbers is the decrease that these stocks suffered on July 1 when it was announced that the SEC issued subpoenas requesting information from both Amedisys and Almost Family.
This first graph shows the HH index compared to the actual prices of the individual companies that make up the chart through May, 2010.
This second chart compares the percentage change of the HH index to the percentage change in the S&P 500 index through June, 2010.
The Index hit its high in October, 2008 at 41.75, and is now down to 33.42, off 20%.
This third graph is a 12 month trailing chart through June, 2010 of the HH Index compared to the actual prices of the individual companies that make up the chart.
In the News:
In mid-May, the Senate Finance Committee announced that it was opening an inquiry into the public companies regarding therapy visits. Then on the first of July the SEC issued their subpoenas. These stocks were already under pressure from the possibility of reduced future Medicare reimbursement and the poor performance of the stock market in general. This new announcement has clearly exacerbated the situation.
As of July 1, all four stocks in our index are down for the year. The question now is whether or not these stocks are a bargain. EBITDA multiples based on 1st quarter earnings are down to near record lows. Amedisys is trading at 3.8 times EBITDA, Almost Family at 5.4 and Gentiva at 5.1.
ResCare is another public company involved in the consolidation of home care, however they seem to be focused more on private pay and state Medicaid programs, rather than Medicare, and therefore have not been added to our HH Index. Their stock has been trading in a very narrow range, beginning the year at 11.42 and ending June at 9.66, down 15.4% for the year.
Also in the News: And speaking of private equity in the acquisition hunt for home health agencies check out this press release….
GE Capital, Healthcare Financial Services provided and serves as administrative agent for $90 million in senior secured credit facilities to Guardian Healthcare, a leading Medicare-certified provider of professional home healthcare services. The credit facilities will be used for a significant acquisition and to refinance existing indebtedness. The remaining funds will be used for additional growth capital and general corporate purposes. GE Capital Markets served as the lead arranger for the credit facilities.
Based in McKinney, TX, Guardian Healthcare has been providing home health services for over a quarter of a century; it currently has 30 locations throughout Texas, Ohio and Oklahoma. Enhanced Equity Fund, which has over $500 million invested in the healthcare services market, has backed Guardian Healthcare since 2006.
Check it out: Our blog for further great thoughts…. http://stoneridgepartners.com/?page=1
UPDATE: June Results
For the month of June the S&P 500 was down 5.4% and the Home Health Index was down 7.5%.
Percentage change in stock prices for these public companies for the month of June and Year to Date (YTD) follows:
| Company | June | YTD |
| Almost Family | -4.0% | -13.7% |
| Amedisys | -11.5% | -13.0% |
| Gentiva | -2.2% | -1.8% |
| LHC Group | -9.9% | -18.7% |
| Home Health Index | -7.5% | -12.5% |
| S&P 500 | -5.4% | -7.6% |
Multiples of EBITDA based upon the earning results from three of these companies through the first quarter of 2009 and the stock prices as of July 5:
| Company | Multiple of EBITDA |
| Almost Family | 5.4 |
| Amedisys | 3.8 |
| Gentiva | 5.1 |
Links to Google Finance: Almost Family | Amedisys | Gentiva | LHC Group
View Charts for Previous Months
| Month/Year | HHI vs. Actual Stock Prices | HHI vs. S&P | HHI vs. Actual Stock Prices – Trailing 12 Months |
| January 2010 | View | View | View |
| February 2010 | View | View | View |
| March 2010 | View | View | View |
| April 2010 | View | View | View |
| May 2010 | View | View | View |
| June 2010 | View | View | View |
