Home Health Index Lags Again in September
For the second consecutive month, the Home Health Index tracked by Stoneridge Partners declined, as the average market value of three of the largest public home health care companies pulled back. During September, market values sank for the three companies tracked in the index: Almost Family (Nasdaq: AFAM), Amedisys Inc. (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG). The index declined 12.63% during September, compared to a contraction of just 1.13% in August.
The index is now slightly below its year-to-date value by 1.42%. By comparison, the S&P 500 index pulled back just 0.12% in September. The Home Health Index decline comes after the four months of record all-time highs from May through August.
While publicly traded home health companies did not see gains in September, companies in the private market still experienced record valuations. Furthermore, valuations of the largest public home health companies are still up compared to the previous 24 months.
“Valuations are still at all-time highs for private companies, even given the public companies’ pullback this month,” said Rich Tinsley, president of Stoneridge Partners. “Over the last 24 months, valuations are still up 72%.”
During September, LHC Group saw its shares dip 18.52% from the previous month, pushing the stock down 18.57% year to date. The Lafayette, Louisiana-based company toned down its acquisition pipeline during September as a result of the Pre-Claim Review Demonstration from the Centers for Medicare & Medicaid (CMS), which is currently ongoing in Illinois.
Amedisys also saw a sharp drop in its share price in September; down 11.41% from the previous month. However, the stock is up 20.65% year to date and the company has experienced significant growth over the last 12 months, buoyed by high star ratings from the Centers for Medicare & Medicaid Services (CMS).
Almost Family’s stock price dipped 7.59% in September, bringing its year-to-date change to a 3.82% decline. The downturn is in contrast to a strong year overall for the Louisville, Kentucky-based company.
Not tracked in the index is Addus Homecare, which saw its share price soar in September, rising 38.71%. The company is not included in the index because very little of its revenue comes from Medicare.
Quote Of The Month
Lawmakers in Illinois are urging Centers for Medicare & Medicaid Services (CMS) to halt the Pre-Claim Review Demonstration (PCRD). In a letter to Andy Slavitt, acting administrator at CMS, Rep. Tammy Duckworth, U.S. Sens. Dick Durbin and Mark Kirk and the entire Illinois Delegation write:
“Seven weeks into the PCRD, the experience of this pilot in Illinois has resulted in severe burdens on patient access to care and provider capacity,” the letter reads. “Illinois’ experience under the PCRD has been alarmingly burdensome for home health providers, which is harming patient access to care.”
Read the Full Article Here: Lawmakers Urge CMS to Halt Pre-Claim in Illinois
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||10/31/16||1 mos change||YTD change||10/31/15||10/31/14|
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)||11/1/2016||10/1/2015||10/1/2014|
|HH Index Total||3005||2634||1546|
Enterprise Value (EV), aka Selling Price, as a Percent of Revenue.
|HH Index Average*||97%||104%||68%|
Multiples of EV/EBITDA.
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*||13.51||13.0||NA|
*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!
- Lighthouse Healthcare, Inc. in Springfield, VA was acquired by Encompass Home Health. Partner, Brian Bruenderman, provided sell side advisory services.
Recent Transactions From Around the Country:
- Cornerstone Healthcare, Inc., The Ensign Group’s home health and hospice subsidiary, acquired the assets of Kinder Hearts Home Health and Hospice in Abilene, Texas.
- Right at Home, the Nebraska-based home health care provider has been acquired by the North Carolina-based private equity company, Investors Management Corporation.
- Senior Helpers Boston, an in-home senior care provider, announced its expansion into the Greater Boston area by acquiring Senior Helpers South Shore.
- PSA Healthcare, a leading provider of pediatric home care for children with medical complexities, acquired Professional Pediatric Home Care, a leading provider of home care services to medically fragile children and their families.
Exclusively Listed for Sale by Stoneridge Partners:
- Colorado – $2.5 million diversified home care agency and hospice, accredited with excellent books and records. Stoneridge File SJL-1005
- Florida – Located in the huge east coast Florida District 9, this is a $6 million Medicare agency with approx. 98% of revenue coming from traditional Medicare. Very well run with excellent financial records and solid bottom line. Stoneridge File SDC-7429
- Florida – $4 million in pure private pay. 15% bottom line. Accredited on the central east coast. Stoneridge File SBA-3250.
- Florida – Located in the Orlando area this is a $4 million diversified home health agency. Payor sources include Medicare, Medicaid and private pay, 35% of which is traditional Medicare. Top management will assure smooth transition. Well run with excellent financial records and solid bottom line. Stoneridge File SDC-3739
- 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 SBA-1253
- Florida – $2.4 million Medicare certified home health agency in District 3. Outstanding clinical with highest star rating. Longtime Home Care Elite top agency. Excellent growth opportunities. Stoneridge File SBA-4836
- Florida – $1.4 million accredited Medicare home health agency in District 8. Stoneridge File SBA-5224
- Illinois – $5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4 1/2 star rating by CMS. Stoneridge File SBA-2734
- Illinois – $3.4 million Medicare deficiency free home health agency in Northern Illinois. This agency has built its success by concentrating on a very profitable and loyal market niche, and has an outstanding reputation with both their patients and community. Stoneridge File SCM-3291
- Illinois – $1.5 million Medicare certified home health agency. Clean survey and deficiency free. Quality clinical operation with staff in place. Stoneridge File SBA-7425
- Illinois – Opportunity to establish a Medicare certified home health agency. Pristine license in state under moratorium. Medicare certification. Accredited. Stoneridge File SBA-5000
- Minnesota – $14 million revenue Medicare/Medicaid home health agency. Well established and deficiency free. Stoneridge File SJL-5268
- Ohio – $4+ million Medicare/Medicaid agency located in NE Ohio. Stoneridge File SBA-8002
- Oklahoma – Medicare certified hospice for sale in Central Oklahoma. $2.1 million run rate. Accredited. Multiple locations. Stoneridge File SBA-3881
- 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
- Texas – $4.1 million Dallas based home care company. Well managed and showing strong growth trends for 2016. Stoneridge File SJL-6002
- Texas – $3.5 million home health agency in Houston (metro). Diversified agency – 70% Medicare, 30% private pay. Inherent capacity for growth. Stoneridge File SJL-2000
- Texas – $3.2 million hospice in McAllen, Texas. CHAP accredited with a solid reputation. Stoneridge File SJL-1112
- Texas – Profitable $3 million Medicare & Medicaid home care company in East Texas. Well-run with an excellent reputation, full staff in place and a 4.5 star rating. Stoneridge File SJL-9472
- Texas – Growing $3 million west Texas Medicare certified home health agency. Accredited with a wide variety of referral sources. Stoneridge File SJL-2892
- Texas – $2 million Medicare accredited home health care company located in East Texas. Strong financials, clinically clean with nice opportunity for growth. Stoneridge File SCM-9753
- Texas – $2.6 million established home health agency in Dallas with both Medicare and Medicaid lines of business. Stoneridge File SJL-8335
- Texas – $1.3 million profitable Medicare and Medicaid agency located in a growing market just north of Dallas. Clean clinically with excellent financials. Stoneridge File SJL-1492
- Texas – $1 million agency in Tyler, Texas. Excellent opportunity to break into the attractive market. Stoneridge File SJL-8967
- Virginia – $5 million Medicare certified home health agency. Great clinicals and reputation in the market for providing quality services. Stoneridge File SBB-8675
- Wisconsin – $1.2 million Medicare certified home health agency. Licensed in Wisconsin. Clean survey and deficiency free. Staff in place. Motivated seller. Stoneridge File SBA-5776
- Florida – $5 million Medicare agency located in the Tampa – St. Pete area. Accredited, with solid bottom line. Stoneridge File SBA-4109. ON CONTRACT
- 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. ON CONTRACT
- Florida – Accredited home health agency with approximately $850,000 in traditional Medicare revenue. Solid bottom line. 4.5 stars. Florida district 9. Stoneridge File SBA-5177 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 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 ON CONTRACT
- Pennsylvania – $14 million Medicaid provider with history of steady growth and terrific referral pipeline. Current management will stay if desired. Stoneridge File SBB-6722 ON CONTRACT
- Pennsylvania – $4+ million hospice located in Western Pennsylvania. Stoneridge File SBA-5001 ON CONTRACT
- Pennsylvania – Approximately $2 million in revenue. Licensed for entire state of Pennsylvania, so ready for growth. Stoneridge File SJL-9991 ON CONTRACT
- Texas – $7 million Houston-based Medicare home health agency. Accredited, expertly run and growing. Stoneridge File SJL-1500 ON CONTRACT
- Texas – $4.9 million well established Medicare provider in the Dallas/Ft. Worth metroplex. Deficiency free and showing positive growth. Stoneridge File SJL-4918 ON CONTRACT
- Texas – $1.5 million all private pay agency located in Fort Worth, Texas. Excellent reputation, excellent reviews and extremely profitable. Stoneridge File SJL-5115 ON CONTRACT
- Texas – $1.2 million established and profitable home health agency with two offices and service area from Conroe to Galveston. Stoneridge File SJL-6249 ON CONTRACT
- Texas – $1.1 million solid and clean Medicare home health agency located in the Fort Worth area. Stoneridge File SJL-7530 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 Cartoon Favorite From the New Yorker
Stoneridge Partners will be hosting a panel discussion on “Mergers & Acquisitions: Buying, Selling & Valuing” featuring leading M&A experts who will review market conditions and other issues key to closing transactions. Presenters will also go into the preparation for a merger or acquisition, including valuation issues, negotiation, initial offers and due diligence.
- Darby Anderson, EVP & Chief Development Officer, Addus HomeCare
- Cliff Blessing, SVP of Development, Encompass Home Health & Hospice
- Peter Sosnow, Director of Integration, SeniorBridge Humana at Home
- Brian Bruenderman, Partner, Stoneridge Partners
- Don Cummins, Founder & Partner, Stoneridge Partners
- Richard Tinsley, President & CEO, Stoneridge Partners
The format is open to encourage Q&A. To submit a topic or question for the panel, email email@example.com.
Stop by to meet our team and sample those famous Kentucky bourbon balls. We’ll also be available for confidential meetings throughout the conference.
Call us at (800) 218-3944 to schedule a private meeting with a member of our firm. We look forward to seeing you there.
From Rich Tinsley, Publisher of “The Home Health Index”. Rich can be reached at firstname.lastname@example.org, (502) 822-4510 and toll-free 800-218-3944