Home Health Stocks Bloom in May Rally
Stoneridge Partners | Home Health Index June 2017: Home health stocks bloomed in May, rallying from the previous month, according to the latest Home Health Index published by Stoneridge Partners. The share prices of three of the largest publicly traded home health companies—Almost Family (Nasdaq: AFAM), Amedisys Inc. (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG)—rose 9.10% in May from the previous month and vastly outpaced the S&P 500 index.
The May uptick was the strongest monthly jump in home health values, on average, since the start of the year, while the S&P 500 climbed just under 1%, at 0.99% during the month. By comparison, the index rose 7% in April and 4.5% in March. Year over year, the index is up 31.81%, while the S&P 500 has risen 15.01% over the same time period.
“Home health shares rallied in May, signifying investors’ growing confidence in the sector during the month. May was also marked by some major transactions that added to the growing trend of home health and health and hospital system joint ventures,” said Rich Tinsley, president of Stoneridge Partners. “Stocks may have been further buoyed after federal agencies delayed some incoming regulatory changes in May, providing some potential relief for home health companies with a presence in select states.”
Almost Family saw the strongest gains during the month, with its share price rising 15.61% during May from April. Year to date, the Louisville-based company’s stock is up 30.16%.
Amedisys shares rose 3.97% during the month, a increase from the 12% gain in April following its first quarter earnings results. Year to date, the stock is up 40.56%.
LHC Group, which announced a major joint venture deal with a Texas hospital group in May, saw its share price jump 8.61% during the month. Compared to a year ago, the stock is up 43.33%, leading its peers in gains over the last 12 months. Year to date, the stock has risen 31.73%.
The stock price for Addus Homecare (Nasdaq: ADUS), based in Frisco, Texas, is not tracked by the index because little of its revenue comes from Medicare, rose 7.23% in May from April. Year to date, the stock has inched up 5.85%. However, compared to a year ago, the stock is has soared 80.54%.
Quote Of The Month
“Drastic Medicaid cuts like those included in this budget would jeopardize access to care for the most vulnerable in our society. Protecting the frail and elderly is important both today and in the coming years when demand will dramatically increase.” – American Health Care Association/National Center for Assisted Living (AHCA/NCAL)
Read the Full Press Release Here: AHCA/NCLA Responds to President Trump’s Proposed Budget for 2018
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)
This graph compares the percentage of the Home Health Index to the percentage change in the S&P 500 Index for over 14 years, going back to 2002.
This is a 12 month trailing chart of the HH Index compared to the actual prices of the individual companies that make up the chart.
This graph displays HH Index performance over the past 24 months.
This graph compares the HH Index to the price of Addus stock (non-Medicare).
(Home Health Index May 2017 | Stoneridge Partners)
Here are the results of the stock prices for the past two years:
|Company||5/31/17||1 mos change||YTD change||5/31/16||5/31/15|
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)||5/31/17||5/31/16|
|HH Index Total||3609||3213|
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*||110%||110%|
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*||14.97||15.33|
The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ. 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 which may differ from that used by a company it’s reporting. (Home Health Index June 2017 | Stoneridge Partners)
Recent Transactions From Around The Country
- Summit BHC, a leading provider of addiction treatment and behavioral health services, announced the acquisition of both English Mountain Recovery, an addiction treatment center in Sevierville, Tennessee and Women in Recovery an outpatient treatment center in Mesa, Arizona.
- LHC Group, one of the nation’s largest home health care providers, has entered into a definitive agreement to form a joint venture with Baptist Memorial Home Health Care, purchasing the majority of Baptist’s home health and hospice operations.
- Washington-based, Island Hospital, is selling it’s home health care division to Utah-based, Canyon Home Care & Hospice.
- Visiting Nurse Association Health Group, the largest nonprofit home health care provider in New Jersey, has signed an LOI to merge with the Visiting Nurse Association of Ohio.
- AccentCare, the Dallas-based in-home services provider, acquired Grace Visiting Nurses and Home Health Services, a health care and personal care services company based in Jacksonville, Texas.
- Sunny Days In-Home Care acquired Daly Care, a lifestyle management and in-home care provider.
- Caring People, a New York-based senior home care provider is acquiring Stellar Home Care, a Connecticut based home care agency.
- Mediware Information Systems, Inc. announced it has finalized an agreement to acquire Kinnser Software, Inc., the leading provider of software solutions for home health and hospice providers.
Exclusively Listed For Sale By Stoneridge Partners
|State||Agency Profile||Status||Reference Number
|Arizona||$2+ million home care agency in Southern Arizona. Diverse payor sources (Medicaid/Private Pay/ W/C. Diverse referral sources. Great reputation.||Available|
|Arizona||Opportunity to establish hospice in Phoenix area. ACHC accredited.||Available|
|California||$11 million multi-location addiction treatment center. Located in Southern California. 21% bottom line. Strong growth trends. JCAHO accredited.||Available|
|California||Medicare certified Home Health agency that was established in 2003. $2 million annual revenue in 2018. PDGM revenue neutral. Located in Southern California. Clean business with no ADR's.||Available|
|Colorado||Opportunity to establish Medicare home health agency. Denver market. ACHC accreditation until 2022.||Available|
|Connecticut||$6 million Medicaid/Medicare agency. Nice growth trend. Stable margins, great surveys.||Available|
|East||Opportunity to buy a leading franchisor in the assisted living referral space. 10+ existing franchisees. Perfect business for the entrepreneur who can scale a predictable, simple and low expense business. 3 year average income of $134,000. Owner near retirement.||Available|
|Florida||Medicare certified home health agency. Approx. $3.8 million revenue with 17% bottom line. District 9 & 10. Revenues split evenly between districts. Accredited. 4.5 star quality of patient care rating||Available|
|Florida||$1.5 million non-skilled private duty home health business. Strong management team in place. District 1. CHAP Accredited.||Available|
|Georgia||ID/DD Services. $1 million revenue. Residential and Day Services. Atlanta Suburb.||Available|
|Illinois||$5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4 1/2 star rating by CMS.||Available|
|Louisiana||Boutique full service clinical laboratory specializing in preventative diagnostic testing.|
Medicare & Medicaid certified, and insurance contracts in over 20 Southeast States. Several unique programs and innovative technologies.
|Maryland/DC/Virginia||Opportunity to establish a Medicare home health agency. N. Virginia with large service area. Low census, motivated seller.||Available|
|Massachusetts||Medicare and Medicaid certified Home Health agency. |
$13+ million in annual revenue and growing. Diverse payor mix. Strong Management in place. Accredited.
|Massachusetts||Medicare/Medicaid Home Health Agency. Motivated seller in western MA. $7.5 million annual revenue. Great add-on for existing provider.||Available|
|Michigan||Medicare home health and hospice agency. $10 million annual revenue. Attractive referral relationships.||Available|
|Michigan||$2 million ID/DD. Profitable. Existing management team in place. Greater Detroit area.||Available|
|Michigan||$1.5 million private duty home health agency in eastern Michigan. Profitable and well positioned for additional growth. Self-sufficient staff in place. 82 long-term clients.||Available|
|Minnesota||$9 million Medicaid agency. Consistent growth & profitability. Recent rate increase. Attractive Medicaid margin.||Available|
|Multi-State||Well-established pediatric provider. Revenue over $40 million. Medicaid and insurance.||Available|
|Nevada||Medicare certified home health agency. Approx. $1 million in annual revenue. Accredited. Las Vegas area.||Available|
|New York||LHCSA in five boroughs. Approx. $20 million revenue. Long history in the community.||Available|
|New Mexico||$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community. Staff in place.||Available|
|North Carolina||$1 million ID/DD Agency. Long-term client base. Growth potential with real estate. Strong margins.||Available|
|South||28 bed, IOP capacity of 40, full continuum SUD treatment center, dual diagnosis, pending JCAHO. $4+ million revenue, highly competitive in network contracts, average census of 30. Existing marketing relationships with county, parole, local hospitals, churches and universities. Solid business in desirable location, little competition, good opportunity.||Available|
|South||Full continuum, JCAHO accredited, co-occurring, SUD treatment center on 100+ acre horse ranch. 16 beds, 22 staff. $1.5 million EBITDA on $3.5 million revenue. In-network. Good reputation, great contracts/rates, solid opportunity. Census is great.||Available|
|South||National growth opportunity. No direct competition for niche market. Unique program and strong branding. PHP/IOP with census and revenue growth. Seeking strategic partner||Available|
|Southwest||$5+ million outpatient treatment center. Fully accredited. 37 beds. Recently revamped to increase growth and margin. Great census, UR, acquisition and solid numbers. Out of network and transitioning some in network.||Available|
|Southwest||64 bed full continuum treatment center in 2 Southwest US metropolitan cities.|
$4 million pro forma EBITDA run rate. 3rd location set to open May 2019. Run rate based on 30% occupancy with significant growth expected. Strong infrastructure to support growth trajectory.
|South-Atlantic||$12+ million in annual revenue. Home Health Agency (HHA) and Adult Day Care Center (ADC). HHA (represents 85% of revenue). ADC (represents 15% of revenue). HHA is primarily Medicaid business but is Medicare-certified. Accredited.||Available|
|South Texas||Hospice. $3.5 million in annual revenue. Accredited. Clean: No cap or regulatory issues.||Available|
|Tennessee||Very rare opportunity in a CON state. Located in Davidson County in Nashville, TN. Projected 2019 revenue in excess of $800,000.||Available|
|Texas||Three Hospice companies with affiliated home health. $6 million total revenue. South, South Central, and South East Texas locations.||Available|
|Texas||$5.3 million Medicaid agency in San Antonio, TX. 16.5% EBITDA. CHAP accredited. Staff in place for a smooth transition.||Available|
|Texas||$4 million home health agency. Dallas/Ft. Worth based. Full staff in place. Medicare and managed care with great contacts.||Available|
|Texas||$3.5 million Medicare certified home health agency. Located in San Antonio, TX. Fully staffed & CHAP accredited. Branch office included in sale||Available|
|Texas||Medicare home health agency and hospice. San Antonio, Dallas, Austin. $3 million revenue, multiple provider numbers. Great opportunity for existing Texas providers.||Available|
|Texas||$2.6 million revenue Home Health agency in East Texas. Great local reputation, with strong financials. 2018 adjusted EBITDA $606,000. Has second license with minimal census available.||Available|
|Texas||$1.7 million Medicare home health agency. Located in Southwest Houston. Well-established with predictable referral sources. Very profitable.||Available|
|Texas||$1 million Medicare certified agency. Licensed in 7 counties in the Houston area. 80% is traditional Medicare.||Available|
|Texas||Home Health agency in Texas. Near Sam Houston National Forest. Clean license with minimal census and minimal revenue.||Available|
|USA||New software application. Potential investment opportunity. Great test results.|
Helps connect those in recovery socially. Helps connect therapists to patients. Facilitates total successful recovery and gathers important helpful data.
|Virginia||$6 million Medicare certified agency in Northern Virginia.||Available|
|Virginia||$2.3 million revenue Physical Therapy and Wellness operation. 95% cash pay. Potential to franchise Nationwide. 2018 EBITDA $257,000.||Available|
|West||Premier provider of primary mental health services for adolescents aged 13-18. 2 locations. In process of growing in-network contracts.||Available|
|East||Healthcare testing laboratory. $7 million revenue, $4 million EBITDA. 16 employees, multiple state licenses.||Under Contract||
|Florida||$9.5 million Home Health Agency. Very strong operationally, clinically, and financially. 99% of revenue comes from traditional Medicare.||Under Contract||
|Florida||Medicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.||Under Contract||
|Illinois||Hospice. Census in mid-70's. Accredited. Chicago area.||Under Contract||
|Kentucky||Medication-assisted clinic. IOP counseling for substance abuse and co-occurring disorders. Profitable with strong team in place. 150 clients. 95% Medicaid.||Under Contract||
|Kentucky||Medication-assisted Treatment center. Suboxone only. Strategic location between Louisville and Lexington, Kentucky. Great reputation with strong clinical team in place. 110 clients with room to expand and grow, minimal marketing. In-network contracts. Clients come in twice a month and pay $150 per visit for counseling. Owners are near retirement and will help with the transition.||Under Contract||
|New York||$13 million revenue LHCSA. 30-year history. Licensed in all 5 boroughs.||Under Contract||
|North Carolina||$5 million Medicaid agency. CAP/PCS services. Long history, quality services.||Under Contract||
|Pacific Northwest||Full continuum in Washington State. $3,625,000. revenue with $1,100,000 EBITDA. States has moved from BHO to MCO for Medicaid. Co-occurring, Medicaid paid, 40 bed facility, 40 employees, census is very strong.|
Outpatient is full. Opportunity for marketing. SUD mental health gambling. Equine therapy and other perks.
|Southwest||$25 million in annual revenue. Provider of Waiver and ICF ID/DD Services. Statewide Platform. Strong management team. Excellent reputation for quality services.||Under Contract||
|Texas||$5.3 million all Medicaid Home Care company located in Houston, TX. 20%+ year over year revenue growth since 2016. Nice bottom line.||Under Contract||
|Texas||$3+ million hospice agency based in Dallas/Fort Worth. Well established. Clinically clean and growing. Full staff in place.||Under Contract||
|Texas||$2.2 million Dallas-area Medicare home health agency. 22% bottom line. Well-established with a very clean compliance record. Full management team in place.||Under Contract||
|Texas||$1.4 million revenue pediatric therapy business. Company provides Physical Therapy (PT), Occupational Therapy (OT), and Speech Therapy (ST) to disadvantaged and disabled children in near a major metropolitan city in Texas and the surrounding counties. Positive reputation for providing quality help in an environment comfortable to the child. Founded in January 2008 as an investment for the owner. Average census is 190 patients with a goal of 225 for calendar year 2019.||Under Contract||
Do you know of any acquisitions that have taken place? We are interested in your comments. At the top of this column is a “Contact Tab” with a section for comments. These can be sent anonymously and the return email address can be left blank.