Home Health Index | 2016 DECEMBER UPDATE

Home Health Index Increases 2.93%, Rallies in November

Stoneridge Partners | Home Health Index November 2016 increases 2.93%: During a month marked by a historic U.S. presidential election, the three largest publicly-traded home health care companies saw their market values rally in November. The Home Health Index tracked by Stoneridge Partners—which follows the market value of Almost Family (Nasdaq: AFAM), Amedisys Inc. (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG)—outpaced the S&P 500 by more than double, increasing 2.93% in November. By comparison, the S&P 500 ticked up by just 1.15%.

All three of the major home health care companies tracked by the index saw major gains during the month. The movement is welcome news for the industry, as the index has contracted somewhat in the past few months. By comparison, the index rose just 0.79% in October, after a decline of 12.63% in September. Despite this reversal, the home health index is down 2.26% year to date.

“Home health stocks were rewarded in November in light of the results of the presidential election,” said Rich Tinsley, president of Stoneridge Partners. “With an incoming Donald Trump Administration, the potential for home health regulations to scale back in 2017 may have markets rallying at the end of the year, with home health joining the rising tide.”

LHC Group saw the biggest gains during the month, with its stock price climbing 19.34% to $42.88. However, year-to-date, the stock is down 5.32%. The Lafayette, Louisiana-based home health care provider announced during November it was entering into a major joint venture with hospital company Lifepoint Health (Nasdaq: LPNT) to operate Lifepoint’s 20 home health and 10 hospice locations.

Amedisys Inc.’s stock rose 16.27% in November from the previous month, reaching $41.44. Year-to-date, the stock is up 5.39%. Amedisys, based in Baton Rouge, Louisiana, reported dismal earnings for the third quarter of 2016, and the results have dragged on the company’s stock as of late.

By contrast, Almost Family reported record-setting earnings in its most recent quarterly report. The stock rose 12.75% in November from October, and is up 8.03% year to date. The company has seen organic growth across its home health care business, and earnings beat analysts’ expectations.

Addus Homecare, which is not tracked in the home health index because little of its income comes from Medicare, saw huge gains during the month, with its stock spiking 39.53%. Year-to-date, Addus’ stock is up 49.05%. The company had a tremendously successful third quarter, after a year of ups and downs.

Quote Of  The Month 

“We’re limiting hours and shifts, and caregivers are actually making less,” said Phil Bongiorno, executive director of the Home Care Association of America, which represents 2,500 home-care providers

Read the Full Article Here: Overtime Pay Rules Will Affect Millions of Healthcare Workers

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 11/30/16 1 mos change YTD change 11/30/15 11/30/14
Almost Family 41.30 +12.75% +8.03% 42.37 27.61
Amedisys 41.44 +16.27% +5.39% 40.59 25.42
LHC Group 42.88 +19.34% -5.32% 46.55 23.51
HH Index* 41.87 +2.93% -2.26% 43.17 25.51
S&P 500 2204.97 +1.15% +7.88% 2080.41 2067.56
Addus 34.70 +39.53% +49.05% 22.80 23.08

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) 11/30/2016 11/30/2015 11/30/2014
Almost Family 548 493 309
Amedisys 1410 1410 957
LHC Group 841 868 482
HH Index Total 2799 2771 1748
Addus 313 239 240

 

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

Company 11/30/2016 11/30/2015 11/30/2014
Almost Family 89% 91% 69%
Amedisys 101% 111% 66%
LHC Group 95% 109% 69%
HH Index Average* 95% 104% 68%
Addus 87% 83% 70%

Multiples of EV/EBITDA.

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

Company 11/30/2016 11/30/2015 11/30/2014
Almost Family 11.81 12.6 16.6
Amedisys 17.77 15.0 NA
LHC Group 10.21 11.5 8.6
HH Index Average* 13.26 13.0 NA
Addus 12.94 12.4 11.0

*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.

Recent Transactions From Around the Country:

  • Care Finders Total Care, a home healthcare company based in New Jersey, announced the acquisition of Secura Home Health, LLC (formerly a division of Loving Care Agency), a portfolio company of MTS Health Investors, LLC.
  • Metro East Small Business Development Center (SBDC) helps partners, Jeff Stassi and Steve Boyd in acquiring, operating and expanding the non-medical home care business, Central Illinois Care Services, to provide home care services across Central and Southern Illinois.
  • The Ensign Group, Inc. announced that its home health and hospice portfolio subsidiary, Cornerstone Healthcare, completed the acquisition of certain assets of River City Hospice.

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 – $2.5 million Medicare agency in Port St. Lucie. Great reputation and clinicals. Stoneridge File SBB-6191
  • 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 growing private duty business in District 7. Well-run clinically and poised for growth FY 2017. Stoneridge File SCM-5220
  • 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
  • Michigan – $1.8 million Medicare agency located in high-end resort community. Stoneridge File SBB-5471
  • Missouri – $2.8 million Medicaid agency in greater St. Louis area. Nice bottom line. Excellent add-on acquisition opportunity. Stoneridge File SBB-9001
  • 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
  • Southwest – $30 million hospice company with accompanying home health located in the southwest United States. Stoneridge File SJL-9650
  • Texas – $7 million Houston-based Medicare home health agency. Accredited, expertly run and growing. Stoneridge File SJL-1500
  • 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 – $2.8 million private pay home care agency in a major metropolitan market. Pure private pay, no Medicaid, no Medicare. Approximately 10$ EBITDA. Stoneridge File SDC-8557
  • Texas – $2.6 million established home health agency in Dallas with both Medicare and Medicaid lines of business. Stoneridge File SJL-8335
  • 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 – $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 – $1.2 million established and profitable home health agency with two offices and service area from Conroe to Galveston. Stoneridge File SJL-6249 
  • Texas – Established and profitable $1.2 million private pay agency located in the Dallas/Fort Worth metroplex. Clean surveys with all appropriate staff in place. Stoneridge File SJL-1373
  • Texas – $1.1 million solid and clean Medicare home health agency located in the Fort Worth area. Stoneridge File SJL-7530 
  • Texas – $1 million agency in Tyler, Texas. Excellent opportunity to break into the attractive market. Stoneridge File SJL-8967
  • 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
  • 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
  • Pacific Northwest – $2+ million all private pay agency located in the pacific northwest. Established and profitable with employees, software systems and marketing in place. Stoneridge File SJL-3008ON 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
  • 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

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


 

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From Rich Tinsley, Publisher of “The Home Health Index”. Rich can be reached at rich@stoneridgepartners.com or (239) 561-0826 and toll-free 800-218-3944

Previous 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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Stoneridge Partners | Home Health Index November 2016 increases 2.93%