Home Health Index | 2012 February Update

Stoneridge Partners | Home Health Index February 2012: What a nice start to the year.  The S&P 500, after being flat in 2011,  charged ahead over 4% in January alone.  Even better, our Home Health Index (HH Index) more than doubled that, up 9.2% in January. We had a hint of this positive development last month when, after nine straight months of decline, the HH Index for the month of December ended up plus 1%.  Now, after two months, our index is up over 10%…. a very nice change.  (Please note: Graphs from 2012 are no longer available, but the data can still be seen in the recent issues of the Home Health Index.)

Could it be that most of the bad news has been factored in by the investment community?

The only company not showing an increase was Amedisys, down 3.7%.  Results for January are as follows:

Almost Family, up 13.6%, this on top of a 10.7% increase in December.

Amedisys, down 3.7%
Gentiva, up 7.6%
LHC Group, up a nice 15.3%
Home Health Index, up 9.26%

The high for our HH Index was set in September, 2008 at 41.75, so we have quite a way to go….but perhaps we’re on the way. We also note that Addus HealthCare’s stock closed out the month at $3.65/share, up 2.2%.  They are a public company (NASDAQ:ADUS) but not in our HH Index.

In January all four of these public companies presented at the JP Morgan Global Health Care Conference in San Francisco. Replays of those presentations are available on their individual company web sites. Certainly worth listening to.

Almost Family discussed in detail the changes that took place in 2011, and their outlook for future reimbursement. They are estimating a 5% to 5.5% rate cut in Medicare reimbursement for their company in 2012 with a 4th quarter 2011 phase in. Their computation takes into account, not only an increase in the market basket update and a downward adjustment of the case mix creep, but also the effect of reduced payments for high therapy episodes, the removal of two hypertension codes, re-calibrated case-mix weights, and a case-mix adjustment shifted to 2013.

The end result is an estimate that they feel the end result to them will be a 5% to 5.5% Medicare rate cut in 2012, and this is certainly one of the numbers that stock market investors will be hearing.

Of course each agency’s numbers will differ somewhat. Different numbers; different results. And, in speaking with knowledgeable owners and executives around the country, we have heard a wide range of estimates for 2012…..however all of them were down.

The next expected news from these companies will be their earnings reports for 2011.  It looks like first up to bat will be Gentiva, with their announcement set for February 7 at 9 am ET.

Amedisys has also announced their earnings report will take place on February 28 at 10 am ET. Details of these up-coming calls are on their web pages.  Always interesting listening.

MERGER & ACQUISITION ACTIVITY

  • Effective Jan. 1, 2012, Knoxville-based Caris Healthcare completed the purchase of Solaris Hospice, a South Carolina provider of outpatient hospice services.
  • On January 30, Bayada Home Health Care, based in NJ, announced that they have acquired 16 Nursefinders Home Care agencies, part of an AMD Health Care Company.
  • Fulcrum Equity Partners funded the $3.2 million acquisition of AAA Home Health, Inc. by Partners Healthcare Group, LLC (“PHG”).  PHG will serve as the platform to build a home health and hospice company throughout the Southeast.  We provided sell-side representation through Cory Mertz, one of our partners.
  • Merger Announced in New Hampshire:  Visiting Nurse & Hospice Care Services merged with Carroll County Health and Home Care Service to form Visiting Nurse Home Care & Hospice of Carroll County.
  • We note that SouthernCare has recently appeared as a portfolio company on the web site of Kohlberg & Company.  If you will recall, SouthernCare settled a “whistle blower” fraud charge for $24.7M back in 2009.

In January we attended NAHC’s private duty conference in Las Vegas and had the opportunity to speak with Peter Sosnow of SeniorBridge to discuss the recent sale of their company to Humana.  He states that this is a “done-deal” only waiting for regulatory approvals for finalization. We feel that this is one of the more interesting of recent acquisitions, esp. in non-Medicare.

On another interesting front it appears that Arkansas based Aseracare Home Care & Hospice has completely pulled out of Florida, closing down all of their locations.

VISIT US AT HOME CARE 100:  From February 4 – 7 we will be in Orlando, again attending this premier event, where we will be meeting with many of the top industry leaders discussing among other things their acquisition strategies. www.homecare100.com

We have also been invited and will participate in NAHC’s 2012 Home Care & Hospice Strategic Planning Congress, which is being held on February 3rd, just prior to Home Care 100, and at the same Orlando location.

UPDATE: January, 2012 Results

For the month of January, the S&P 500 was up 4.4% while the Home Health Index was up 9.2%. What a nice change.

Percentage change in stock prices for these public companies for the month of January and Year to Date (YTD) follows:

Company December YTD
Almost Family +13.6% +13.6%
Amedisys -3.8% -3.8%
Gentiva +7.6% +7.6%
LHC Group +15.3% +15.3%
Home Health Index +9.2% +9.2%
S&P 500 +4.4% +4.4%

Multiples of EBITDA based upon the earnings results for the annualized 9 months earnings ended Sept. 30, 2011, with the stock prices as of January 31, 2012.

Company Multiple of EBITDA
Almost Family 4.8
Amedisys 2.3
Gentiva 1.1

Stoneridge Partners | Home Health Index February 2012 – Cartoon of the month

 

Stoneridge Partners | Home Health Index February 2012

 

Previous Favorite Cartoon:

 

Stoneridge Partners | Home Health Index February 2012

 

Quote of the Week: “In the long term, we believe it will ultimately prove economically impossible for our nation to meet its commitment to provide health care for our elderly without a strong and vibrant home health industry.”  William Yarmouth, CEO Almost Family


Stoneridge Partners | Home Health Index February 2012: 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. If you would like to receive a monthly e-mail of this update, please e-mail us your name and e-mail address to partners@stoneridgepartners.com.