The Stoneridge Partners Home Health Index Hits New High For Third Month Running
For the third month in a row, three of the largest publicly held home health companies continue to outpace the S&P 500 index. The companies’ market value reached an all-time record index high in June, surpassing the previous record high reached in May.
The Stoneridge Partners Home Health Index (HH Index) rose 1.25% in June versus May. The index tracks the monthly average market performance of Almost Family (NASDAQ: AFAM), LHC Group (NASDAQ: LHCG) and Amedisys (NASDAQ: AMED). The index is up year-to-date 11.01%, and 15.68% for the trailing 12-month period.
Despite an overall drop in home health share prices at the start of 2016, six months later the industry is back in full force, reporting another record high in June. The overall increases seen across Almost Family, Amedisys and LHC Group were even more robust compared to May, when the index saw an uptick of just 0.63% and was outpaced by the S&P 500.
“With back-to-back records set in May and June, the large publicly traded home health companies continue to drive valuations across the board, supporting a strong M&A market,” said Rich Tinsley, President and CEO of Stoneridge Partners, publisher of the monthly home health index. “Operators are continuing to respond to challenges ranging from new payment models to shifting patient mix, and investors are rewarding them.”
Among the three prominent home health companies, LHC Group saw the largest gains in June, following its increases over the previous two months. During June, LHC Group’s share price rose 3.05%, a drop from its huge increase of 4.12% in May and 11.85% in April. However, the company is still minus-4.44% for its year-to-date change.
Not all home health care companies were celebrating good numbers in June. Addus, which is not tracked in the HH index due to its heavy reliance on Medicaid reimbursement-based revenue, saw its share price drop 15.18% during the month.
By comparison, the S&P 500 ticked up 0.9% in June.
Quotes Of The Month
“Only a life lived in the service to others is worth living.”
“We believe volume cures all ills in our business,” said Amedisys CEO, Paul Kusserow, on June 8th during a presentation at the Jeffries 2016 Healthcare Conference in New York City. For the full article, click here: ‘Volume Cures All Ills’ in the Home Health Business
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||6/30/16||1 mos change||YTD change||6/30/15||6/30/14|
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)||7/1/2016||7/1/2015||7/1/2014|
|HH Index Total||3234||2578||2783|
Enterprise Value (EV), aka Selling Price, as a Percent of Revenue.
|HH Index Average*||115%||101%||62%|
Multiples of EV/EBITDA.
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*||15.43||13.35||15.1|
*Included Gentiva prior to its acquisition in February 2015 by Kindred.
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 its reporting.
SOLD BY STONERIDGE PARTNERS!
Arkansas: Kindred Healthcare, Inc. signed a definitive agreement to acquire the in-home health care operations for the Arkansas Department of Health for $39 million. Under the deal, Kindred would become licensed to provide home health, hospice and personal care services throughout the state of Arkansas. Stoneridge Partners Associate, Rhonda Gronberg, provided buy-side advisory services. For more on this article, click here: Kindred Expands It’s Home-Health Operations with $39 million Deal
Texas: Ace Home Healthcare, a $1 million Medicare agency in the Dallas/Ft. Worth area sold to Aiding Home Healthcare. Partner, Joe Lynch, provided sell-side advisory services.
OTHER RECENT TRANSACTIONS FROM AROUND THE COUNTRY:
- Addus HomeCare Corporation acquired South Shore Home Health Services, Inc., a New York state-licensed home care services agency providing personal care services.
- Heart of Hospice, LLC acquired the operations of Journey Hospice of Alexandria, LLC which serves hospice patients throughout Central Louisiana
- Almost Family has continued aggressively acquiring home health operations over the last year, including the expansion into Wisconsin last month resulting in about $140 million in acquired revenue over six transactions. For the full article, click here: Almost Family Will Be ‘Consolidator’ in Health Care
Exclusively Listed for Sale by Stoneridge Partners:
- Central Midwest – $5 million Medicare certified home health agency with small hospice operations. Strong bottom line and continued growth opportunities. Management team in place and outstanding clinical. Stoneridge File SBA-9010
- Colorado – $2.5 million diversified home care agency and hospice, accredited with excellent books and records. Stoneridge File SJL-1005
- Florida – Home care company in affluent area on west coast of Florida. $2.7 million run rate. Non-Medicare with 86% pure private pay. Consistent moderate growth. Caregivers are W-2 employees. Stoneridge File SDC-1253
- Florida – Orange County Medicare agency. $3.5 million in revenue. Diversified payor base includes private pay, Medicaid & Medicare. Florida District 7. Stoneridge File SDC-3739
- Florida – Broward County Medicare Agency. $1.8 million in revenue. Diversified payor base includes private pay, Medicaid & Medicare. Accredited and established for many years. Florida district 10. Stoneridge File SDC-7120
- Florida – Accredited home health agency with approximately $850,000 in traditional Medicare revenue. Solid bottom line. 4.5 stars. Florida district 9. SDC-5177
- Florida – Lee County Medicare agency. Approximately $400,000 in revenue. Accredited. 4 1/2 star rating. Oasis quality assessment 97.7%. Florida district 8. Stoneridge File SBA-4186
- Illinois – $5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4 1/2 star rating by CMS. Stoneridge File SDC-2734
- Minnesota – $14 million revenue Medicare/Medicaid home health agency. Well established and deficiency free. SJL-5268
- New Jersey – Opportunity to enter much sought after New Jersey market via a small hospice in the southern part of the state. Stoneridge File SJL-9002a
- 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 SBB-9254
- Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care. Diverse payor sources. Stoneridge File SBA-5232
- Ohio – $4+ million Medicare/Medicaid agency located in NE Ohio. Stoneridge File SBA-8002
- Oklahoma – $1.5 million Medicare agency. 89% of revenue from traditional Medicare. Stoneridge File SJL-4131
- Pennsylvania – $2.8 million Medicare certified home health agency with small hospice operations in Eastern Pennsylvania. 72% traditional Medicare for home health. Great tuck-in opportunity for strategic buyer. Requires corporate support functions. Stoneridge File SBA-4227
- Pennsylvania – Approximately $2 million in revenue. Licensed for entire state of Pennsylvania, so ready for growth. Stoneridge File SJL-9991
- Rhode Island – $2.5 million Medicare agency. Accredited in CON state. Stoneridge File SBB-1100
- Texas – $4 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay. Stoneridge File SJL-3665
- Texas – $4.9 million well established Medicare provider in the Dallas/Ft. Worth metroplex. Deficiency free and showing positive growth. Stoneridge File SJL-4918
- Texas – $4.1 million Dallas based home care company. Well managed and showing strong growth trends for 2016. Stoneridge File SJL-6002
- Texas – $1.9 million Medicare certified home health agency providing service to Region 2. More than 88% of revenue is from traditional Medicare. Stoneridge File SJL-3650
- Alabama – CON for 7 counties in Northeastern AL. Estimated service area of more than 550,000 people with over 91,000 who are older than 65. Rare opportunity to establish or expand services in populous CON. Stoneridge File SBA-6777 ON CONTRACT
- Florida – Just under $2 million accredited Medicare home health agency in District 8. Stoneridge File SBA-5224 ON CONTRACT
- Florida – $4 million in pure private pay. 15% bottom line. Accredited on the central east coast. Stoneridge File SDC-3250. ON CONTRACT
- Florida – $5 million Medicare agency located in the Tampa – St. Pete area. Accredited, with solid bottom line. Stoneridge File SBA-4109. ON CONTRACT
- 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 SBA-9300. ON CONTRACT
- Mid-Atlantic – $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 SBB-8300 ON CONTRACT
- 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 SBA-8015 ON CONTRACT
- Pennsylvania – $4+ million hospice located in Western Pennsylvania. Stoneridge File SBA-5001 ON CONTRACT
- Pennsylvania – $1.8 million Medicare agency located in eastern Pennsylvania. 82% traditional Medicare. Growing agency with strong potential for future growth. Stoneridge File SBA-2745 ON CONTRACT
- Tennessee – CON for 5 counties in Southeastern TN. Estimated service area of more than 530,000 people with over 87,000 who are older than 65. Rare opportunity to establish or expand services in populous CON. Stoneridge File SBA-6338 ON CONTRACT
- 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 SJL-2000 ON CONTRACT
- 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 SJL-1500. 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 SJL-4088 ON CONTRACT
- Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare. Stoneridge File SJL-2650. ON CONTRACT
To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners click here.
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.
Another Favorite from The New Yorker
From Rich Tinsley, Publisher of “The Home Health Index”. Rich can be reached by email at firstname.lastname@example.org or at 1-800-218-3944