Home Health Index | 2016 February Update

The Home Health Index dips for the second straight month, down another 8.9% in January.

Quote of the Month:

“Addus is very well-positioned to continue providing high-quality services in the lowest-cost setting, the home, and to help reduce total system healthcare expenditures through the early identification of health care episodes.”

Dirk Allison who was named President and CEO of Addus HomeCare Corp.

-As reported by: Mullaney, Tim. “Addus Names New CEO'” Home Health Care News. January 18, 2016.

The Stoneridge Partners Home Health Index drops 8.9%

Despite weak performance over the last two months (down 13%), the Stoneridge Partners Home Health Index (HH Index) is up in both the trailing twelve months (+21%) and twenty-four month periods (+63.5%), settling in at 37.30.

Notably, the S&P 500 dipped 103.7 points over the last month, down 5.1%. Despite the S&P’s 8.8% gain over a twenty-four month period, its twelve month performance is a loss of 2.8%.

The biggest change among our HH Index stocks was seen by LHC Group, which had a dip of 7.4 points or 16.3%.  Almost Family, being about flat for the month, fared best.

Addus (which does not derive much of its revenue from Medicare) lost its last month increase of 2.1% when it dropped 2.1 points or 8.9% this month.

The record high of 42.55 for our HH Index was set in August.  We are now off over 12% from that high.

See it to Believe It!

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

Please note the graphs representing (1) HH Index to the percentage change in the S&P 500 Index for over 14 years, (2) 12 month trailing chart of the HH Index, and (3) HH Index to the price of Addus stock (non-Medicare) can be found in the most recent issue of the Home Health Index.


Here are the results of the stock prices for the past two years:

Company 1/31/16 1 mos change YTD change 1/31/15 1/31/14
Almost Family 38.24 +0.03% +0.03% 30.36 30.41
Amedisys 35.75 -9.08% -9.08% 28.18 15.09
LHC Group 37.92 -16.27% -16.27% 29.72 22.94
HH Index* 37.30 -8.90% -8.90% 29.42 22.81
S&P 500 1,940.24 -5.07% -5.07% 1,994.99 1,782.59
Addus 21.21 -8.89% -8.89% 22.18 23.64

Although we track the performance of Addus, they are not included in our HH Index because very little of their revenue comes from Medicare.

Enterprise Value (EV)

EV (in M)) 2/1/2016 1/1/2016 12/1/2015 11/1/15 10/1/15
Almost Family 453 453 493 430 462
Amedisys 1,250 1,370 1,418 1,390 1,345
LHC Group 712 845 867 832 827
HH Index Total 2,415 2,668 2,778 2,652 2,634
Addus 221 245 239 236 303

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

Company 2/1/16 2/1/15 2/1/14
Almost Family 89% 71% 73%
Amedisys 101% 88% 39%
LHC Group 92% 85% 39%
HH Index Average* 94% 83% 62%
Addus 66% 77% 87%

Multiples of EV/EBITDA.

Think of this as selling price as a multiple of EBITDA.

Company 2/1/16 2/1/15 2/1/14
Almost Family 12.35 15.22 11.28
Amedisys 14.00 20.32** 9.79
LHC Group 9.19 10.56 7.38
HH Index Average* 11.85 14.38 8.88
Addus 9.27 11.57 11.57

*Included Gentiva prior to its acquisition in February 2015 by Kindred.

**The spike in multiple of EBITDA for Amedisys may have been the result of increased earnings announced around that time. It seems that stock trades on current earnings but multiple of EBITDA is calculated on a trailing twelve months.

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices September 1. 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 that may differ from that used by a company it is reporting.

Addus in the News

This past month saw big changes in Adduss’ executive suite.  Mark Heaney, who served as their President and CEO since 2008, was replaced by Dirk Allison.   Mr. Allison has served on the Company’s board of directors since 2010 and has been chairman of the audit committee since 2013.

The Company also named Steve Geringer, a director of the Company since 2009, as chairman of its board of directors.

Welcome, Rich Tinsley, President and CEO

Tinsley, RichIt is with great excitement that Stoneridge Partners welcomes Rich Tinsley to the Stoneridge Partners team, as President and CEO. Our recent deal growth requires an increase in our back office support, marketing and deal origination efforts. Rich will oversee these functions and work transactions with our partners.

Don Cummins, our founder, will remain an active and integral part of the Stoneridge family for many years to come, continuing to work deal transactions; probably more than he has in the past.

In many ways, Rich is the ideal executive for this position. He is both an Attorney and CPA and has broad experience in the healthcare and business development fields.

For more, please see our January 18, 2016 blog posting and/or Rich’s bio.

Sold!

SOLD BY STONERIDGE PARTNERS!

Cooper, Texas:   Cooper Home Health, a Medicare certified agency, sold to a regional home health company.  Stoneridge Partners provided sell side advisory services.

Belleville, Illinois: BarberVoss Home Care, a non-medical home care provider, sold to a regional health care provider. Stoneridge Partners provided buyside advisory services.

OTHER SALES FROM AROUND THE COUNTRY!

Cincinnati, Ohio: Home Helpers Franchising, Inc., an in-home senior care franchiser with operations in 42 states, sold to private equity firm Linsalata Capital Partners.

Exclusively Listed for Sale by Stoneridge Partners:

  • North Carolina – Accredited $2 million North Carolina Innovations Waiver Provider for Individuals with I/DD located in Winston-Salem and surrounding areas with a strong reputation in the community. Stoneridge File S-4001
  • Florida – Accredited Medicare Home Health Agency with approx. $3 million revenue, 98% of which comes from traditional Medicare.  Very profitable, well established agency in Pinellas County.  Stoneridge File S-5218
  • Pennsylvania – $4+ million hospice located in Western Pennsylvania. Stoneridge File S-5001
  • Mid-Atlantic region – $30 million Medicare/Medicaid agency with multiple branches in several states, including CON service areas. Long history and great reputation for quality care. Stoneridge File S-8300
  • Ohio –  $4+ million Medicare/Medicaid agency located in NE Ohio. Stoneridge File S-8002
  • California – Approximately $8 million private duty home health and staffing company located in Northern California with multiple locations. Stoneridge File S-7500
  • California – $2.5 million private duty home care company located in Northern California. Motivated seller. Stoneridge File S-1572
  • North Carolina – Accredited $2 million North Carolina Innovations Waiver Provider for Individuals with I/DD located in Winston-Salem and surrounding areas with a strong reputation in the community. Stoneridge File S-8015
  • New York and New Jersey – Approximately $3 million private pay agency. Licensed in the 5 Boroughs of NY and the entire state of NJ with current operations predominantly in Central NJ. Stoneridge File S-8300
  • New Jersey $3.5 million Medicaid agency in Northern NJ. Great opportunity for existing operator to add revenue and service area. Motivated seller. Stoneridge File S-9254
  • Minnesota – $14 million revenue Medicare certified home health agency with large Medicaid census, well established and deficiency free, SE Minnesota. Stoneridge File S-5268
  • DFW Area – Approx. $3.5 million home care and hospice agency just listed.  Stoneridge File S-6600
  • Pennsylvania – Approx. $4 million Medicaid home care agency located in central PA. Accelerated and profitable growth trajectory with continued opportunity for future growth. Professionally run with outstanding clinical and excellent staff in place.  Stoneridge File S-1000. ON CONTRACT
  • Colorado – $2.5 million diversified home care agency  and hospice,  accredited with excellent books and records.  Stoneridge File S-1005
  • Rhode Island – $2.5 million Medicare agency.  Accredited in CON state.  Stoneridge File S-1100
  • Texas – $4.8 million Medicare agency in Houston metro area with solid bottom line. 65% of revenue from traditional Medicare and the balance in private non-skilled care. Stoneridge File S-2000
  • Oklahoma –  $1.5 million Medicare agency.  89% of revenue from traditional Medicare.  Stoneridge File S-4131
  • Florida – $4 million in pure private pay.  15% bottom line.  Accredited on the central east coast.  Stoneridge File S-3250
  • Illinois – $5 million plus Medicare agency with four offices. Strong management with excellent clinical.  Stoneridge File S-6550
  • Texas – $4 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge File S-3665
  • Massachusetts – $5 + million home health agency, primarily Medicaid, but also private pay and commercial insurance, plus Medicare certification. Zero deficiencies on last survey.  Stoneridge File S-9300. ON CONTRACT
  • Florida – $5 million Medicare agency located in the Tampa – St. Pete area.  Accredited, with solid bottom line.   Stoneridge File S-4109. ON CONTRACT
  • Texas – $8 million East Texas agency, Medicare certified with deficiency free survey, no audits, and top-of- the line software.  Stoneridge File S-3001. ON CONTRACT
  • Texas – $1.5  million East Texas Medicare certified home health agency, providing skilled care, approx 75% from traditional PPS Medicare.  Last survey was deficiency free. Stoneridge File S-4088
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge File S-1542
  • Texas – $3.3 million accredited Medicare home health agency. Profitable and still growing with approximately 87% of revenue coming from traditional Medicare. Strong marketing team in place with diversified referral sources. Stoneridge File S-1500. ON CONTRACT
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare. Stoneridge File S-2650. ON CONTRACT
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge File S-5232
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge File S-9015
  • Texas – $1 million Medicare agency in the DFW area – 99% of revenue from traditional Medicare.  Stoneridge File S-1015

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

More

From Don Cummins, Publisher of “The Home Health Index” don@stoneridgepartners.com – 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. Links to Google Finance: Almost Family | Amedisys | LHC Group

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