Home Health Index | March 2012

Stoneridge Partners | Home Health Index March 2012: The Dow Jones closes out February at over 13,000 for the first time in about four years, and the S&P 500 is up 8.6% for the year. Nice results, but our Stoneridge Partners Home Health Index did even better, gaining 17% in February and is now up 28% for the year. (Please note: Graphs and charts from Stoneridge Partners | Home Health Index March 2012 are no longer available, but the data can still be seen in the recent issues of the Home Health Index.)

After nine straight months of decline, the HH Index has now been to the plus side for three straight months – very nice change. This past month’s increase was lead by Almost Family, up 21% in February and 38% YTD. LHC Group came in a close second, up 15% for February and 33% YTD.

February Results:

Almost Family, up 22.9%
Amedisys, up 22.4%
Gentiva, up 8.1%
LHC Group, up 15%
Home Health Index, up 17%
S&P 500 up 4.1%

The high for our HH Index was set in September, 2008 at 41.75, so we have quite a ways to go….but  we’re on the way.

We also note that Addus HealthCare’s stock closed out the month at $3.60/share, down 1.4% and up 0.8% YTD.  They are a public company (NASDAQ:ADUS) but not in our HH Index.

 

The month of February brought earnings results from all four companies for the year 2011.

Revenue Growth:  We totaled the revenue for all four companies for the fourth quarter and compared that to the third quarter to try to get some direction.

Total revenue for all four companies in the 4th quarter (000) equaled $1,067,000 compared to third quarter of $1,063,000, which works out to the plus side about $4M or 0.37%.

Almost Family lead with a 3.6% quarter to quarter increase, and LHC Group was up 2.8% quarter to quarter.  Amedisys and Gentiva were down slightly, which was probably to be expected as they closed or sold a number of under-performing branches.

Replays of the earnings reports are available on the individual company websites, certainly interesting comments. Almost Family discussed in detail the changes that took place in 2011, and their outlook for future reimbursement.

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 4.5% to 5.0% reduction in Medicare reimbursement in 2012.

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…..all of them were down.

Headline Dallas and perhaps the most important story of the monthA Dallas physician, the office manager of his medical practice, and five owners of home health agencies were arrested on charges related to their alleged participation in a nearly $375 million health care fraud scheme involving fraudulent claims for home health service.

CMS also announced the suspension of an additional 78 home health agencies associated with the Dallas physician based on credible allegations of fraud against them.   (Does anyone know who those 78 agencies are?  If so please let us know).

MERGER & ACQUISITION ACTIVITY

There as been very little in the way of public announcements regarding M&A.  The market appears to be a little muddied as Buyers may factor in future decreases in Medicare reimbursement, while Sellers want 2009 prices.

Susan Moyer, a partner in our office, completed that sale of a nice New Mexico non-Medicare agency.  Congratulations Susan.

Bayada Home Health Care acquired and transitioned 16 Nursefinders Home Care agencies, part of an AMD Health Care Company at the beginning of the month.

We recently attended (and sponsored) 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 (New York) for finalization. Perhaps June.

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

LaFayette, LA:  One of the more interesting announcements among our public companies this past month came from the LHC Group….the following as reported by the Associated Press:

“LHC Group said that they were in the process of a review that would involve an exploration and evaluation of a range of strategic alternatives to enhance stockholder value.

It did not detail what those options might be — and did not set a timetable for when the review might be finished.  Generally, when a company undertakes such a review, options include share buybacks, a share dividend or sale of the company.”

One has to wonder if a sale of the company is in the works, kind of a reverse IPO…..more like an FPS (Final Public Sale).  Increased regulations, Sarbanes-Oxley?  Get me out of here.  Perhaps the decrease in IPOs has to do with these very issues.

Visit Us: 

March 14-16 in Chicago at the Illinois HomeCare & Hospice annual conference, where we will be giving a presentation on increasing the value of a home health agency.

April 23-24 in Chicago for Decision Health’s M&A Home Health Conference.  There will be two full days of presentations by the industry leaders.  This is always a great conference and a must if you are considering a sale of your agency.

http://www.decisionhealth.com/homehealthmergers/index.html

UPDATE: February, 2012 Results

For the month of February, the S&P 500 was up 4.1% while the Home Health Index was up 17.0%.

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

Company February YTD
Almost Family +21.4% +21.4%
Amedisys +23.4% +17.8%
Gentiva +8.1% +16.3%
LHC Group +15.0% +32.7%
Home Health Index +17.0% +28.7%
S&P 500 +4.1% +8.6%

Multiples of EBITDA based upon the earnings results for the year 2011with the stock prices as of February 29, 2012.

Company Multiple of EBITDA
Almost Family 5.6
Amedisys 2.4
Gentiva 1.2

 

Quote: “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


 

And the next time you take a cruise ladies….pack a pair of these:

Stoneridge Partners | Home Health Index March 2012

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Stoneridge Partners | Home Health Index March 2012

US Debt:

As a final note we would like to point out that our national debt is now running more than 100% of our GDP, which puts us in the company of Greece, Italy, Ireland and Portugal…we’re all over 100% of GDP.  The only difference being that we print money, they can’t.  By way of comparison, Australia is at 27%.

Stoneridge Partners | Home Health Index March 2012


Stoneridge Partners | Home Health Index April 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.