Home Health Care Stocks Plummet in July

Home Health Index August 2017 | Stoneridge Partners: After six months largely marked by market gains, home health care companies saw their share values sharply drop in July, according to the latest figures from the Home Health Index by Stoneridge Partners. The index, which tracks the market values of three of the largest publicly traded home health care companies—Almost Family (Nasdaq: AFAM), Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG)—dropped 19.57% in July compared to the previous month. The decline was in stark contrast to the S&P 500, which climbed 1.93% in July from June.

The stock market reaction among home health companies was influenced by a significant proposal issued during the month that is expected to have wide-ranging consequences for the sector. Compared to the first half of 2017, home health care stocks were on a hot streak, vastly outpacing the S&P 500.

“Investors in July reacted to the proposed Home Health Groupings Model (HHGM) from the Centers for Medicare & Medicaid Services (CMS),” said Stoneridge President Rich Tinsley. “The proposed rule would overhaul reimbursement payment to Medicare-certified home health care providers and has the potential to cut nearly $1 billion in payments to the industry. The drastic cuts sent investors scurrying from public companies in the sector.”

Amedisys, based in Baton Rouge, Louisiana, saw its share price drop the most amongst its peers during July, with a decline of 24.60%. Year to date, the stock is still up 11.10%, according to the Index. Amedisys CEO Paul Kusserow recently stated in the company’s second quarter 2017 earnings call that while the proposed rule is worrisome, there is still a process to undergo before the rule will be implemented.

Louisville-based Almost Family’s stock also took a big hit in July, dropping 19.79% from June. Almost Family has still seen gains throughout the year, and its share price remains up 12.13% year to date, despite monthly losses.

LHC Group fared the best of its peers in July, though also experienced a significant drop in its share value. The Lafayette, Louisiana-based company’s share price declined 14.71%. Year to date, LHC Group’s stock has risen 26.70%. Despite the proposed rule, the company is moving forward with acquisition and joint venture deals, CEO and chairman Keith G. Myers announced during the company’s most recent quarterly earnings report.

Addus HomeCare (Nasdaq: ADUS), which is not included in the index because so little of its income comes from Medicare, also felt the sting of the proposal, with its share price dropping 8.74%. Addus, which is based in Frisco, Texas, and is known as a personal care services provider, has maintained steady gains throughout the year; its stock is up 10.34% year to date.

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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 August 2017 | Stoneridge Partners)

 

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

Company7/31/171 mos changeYTD change7/31/167/31/15
Almost Family49.45-19.79%+12.13%40.3043.76
Amedisys47.36-24.60%+11.10%54.4943.63
LHC Group57.90-14.71%+26.70%45.3940.27
HH Index*51.57-19.57%+16.82%46.7342.55
S&P 5002470.30+1.93%+10.34%2173.602103.84
Addus33.95-8.74%-3.14%18.4527.14

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)7/31/177/31/16
Almost Family837540
Amedisys15561890
LHC Group1137911
HH Index Total35303341
Addus399232


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

Company7/31/177/31/16
Almost Family125%97%
Amedisys105%144%
LHC Group121%110%
HH Index Average*117%117%
Addus97%67%


Multiples of EV/EBITDA

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

Company7/31/177/31/16
Almost Family21.3012.63
Amedisys18.3123.64
LHC Group13.3511.08
HH Index Average*17.6515.78
Addus12.759.68

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 August 2017 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Boyne Capital Partners announced the acquisition of AmeriBest Home Care, Inc., a home care provider serving seniors and disabled residents in Pennsylvania.
  • ncgCare, a Richmond-based behavioral healthcare provider, has acquired Appalachian Community Services in North Carolina, a provider of mental health, substance abuse and ID/DD services.
  • Encompass Home Health and Hospice entered the state of Illinois with the acquisition of VNA Healthtrends.
  • Crossroads Treatment Centers has completed its acquisition of Center of HOPE, an opioid treatment program in Myrtle Beach, South Carolina.
  • JourneyPure, a Nashville, Tennessee-based addiction treatment provider has acquired The Center for Professional Excellence, a local provider of addiction and mental health services.
  • BayMark Health Services, Texas-based opioid treatment provider has acquired Valley Alliance Treatment Services, an opioid treatment center in Morgantown, West Virginia.
  • Berks Community Health Center announced they have signed an LOI to acquire All About Children Pediatric Partners in Reading, Pennsylvania.
  • MedEquities Realty Trust announced they have signed a definitive agreement with AAC Holdings to acquire four behavioral health and substance abuse treatment facilities in Las Vegas and Dallas.

Exclusively Listed For Sale By Stoneridge Partners

State
Agency Profile
Status
Reference Number
ArizonaOpportunity to establish hospice in Phoenix area. ACHC accredited.Available
SBB-8218
California$11 million multi-location addiction treatment center. Located in Southern California. 21% bottom line. Strong growth trends. JCAHO accredited.Available
SJL-7229
CaliforniaMedicare 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
SCM-7298
ColoradoOpportunity to establish Medicare home health agency. Denver market. ACHC accreditation until 2022.Available
SJL-7771
FloridaMedicare 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 ratingAvailable
SBA-3029
GeorgiaID/DD Services. $1 million revenue. Residential and Day Services. Atlanta Suburb.Available
SBH-6806
Illinois$5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4 1/2 star rating by CMS.Available
SBA-2734

LouisianaBoutique 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.
Available
SJD-6825
MassachusettsMedicare and Medicaid certified Home Health agency.
$13+ million in annual revenue and growing. Diverse payor mix. Strong Management in place. Accredited.
Available
SBA-6010
MassachusettsMedicare/Medicaid Home Health Agency. Motivated seller in western MA. $7.5 million annual revenue. Great add-on for existing provider.Available
SBB-7607
MichiganMedicare home health and hospice agency. $10 million annual revenue. Attractive referral relationships.Available
SBB-8684
Michigan$2 million ID/DD. Profitable. Existing management team in place. Greater Detroit area.Available
SBH-1697
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
SCM-6034
Mid-Atlantic$10+ million home care agency. Non-skilled, primarily Medicaid reimbursed. 20% EBITDA margins. Strong management team in place.Available
SBH-9651
Multi-StateWell-established pediatric provider. Revenue over $40 million. Medicaid and insurance.Available
SBB-2138
NevadaMedicare certified home health agency. Approx. $1 million in annual revenue. Accredited. Las Vegas area.Available
SBA-8367
New MexicoHome health and hospice. $15 million annual revenue. Revenue split: 2/3 Home health and 1/3 Hospice. Medicare/Medicaid certified. Accredited.Available
SBA-5334
New YorkLHCSA in five boroughs. Approx. $20 million revenue. Long history in the community.Available
SBB-9207
New York$13 million revenue LHCSA. 30-year history. Licensed in all 5 boroughs.Available
SBB-8249
New Mexico$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community. Staff in place.Available
SBA-5295
North Carolina$1 million ID/DD Agency. Long-term client base. Growth potential with real estate. Strong margins.Available
SBH-9905
OklahomaMedicare certified home health organization. $9.6 million in annual revenue. 98% traditional Medicare and other PPS Payors. Medicare/Medicaid certification. Multiple locations.Available
SBA-6607
South28 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
SJD-1118
SouthFull 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
SJD-3485
SouthNational growth opportunity. No direct competition for niche market. Unique program and strong branding. PHP/IOP with census and revenue growth. Seeking strategic partnerAvailable
SJD-8349
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
SJD-3448
Southwest64 bed full continuum treatment center in 2 Southwest US metropolitan cities.
JCAHO accredited.
In-network.
$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.
Available
SJD-4008
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
SBA-9973
South TexasHospice. $3.5 million in annual revenue. Accredited. Clean: No cap or regulatory issues.Available
SBA-8064
TennesseeVery rare opportunity in a CON state. Located in Davidson County in Nashville, TN. Projected 2019 revenue in excess of $800,000.Available
SCM-8651
Texas$5.3 million Medicaid agency in San Antonio, TX. 16.5% EBITDA. CHAP accredited. Staff in place for a smooth transition.Available
SJL-5322
Texas$5.3 million all Medicaid Home Care company located in Houston, TX. 20%+ year over year revenue growth since 2016. Nice bottom line.Available
SJL-3670
Texas$5 million revenue. Home health and hospice covering 10 counties in West Texas/Eastern New Mexico. No clinical issues, under CAP. Very profitable. Easily separated.Available
SJL-4994
Texas$4 million home health agency. Dallas/Ft. Worth based. Full staff in place. Medicare and managed care with great contacts.Available
SJL-8406
Texas$3.5 million Medicare certified home health agency. Located in San Antonio, TX. Fully staffed & CHAP accredited. Branch office included in saleAvailable
SJL-4824
Texas$1.7 million Medicare home health agency. Located in Southwest Houston. Well-established with predictable referral sources. Very profitable.Available
SJL-6080
Texas$1 million Medicare certified agency. Licensed in 7 counties in the Houston area. 80% is traditional Medicare.Available
SBA-1542
USANew 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.
Available
SJD-1777
Virginia$6 million Medicare certified agency in Northern Virginia.Available
SBA-7366
Virginia$2.3 million revenue Physical Therapy and Wellness operation. 95% cash pay. Potential to franchise Nationwide. 2018 EBITDA $257,000.Available
SCM-7368
WestPremier provider of primary mental health services for adolescents aged 13-18. 2 locations. In process of growing in-network contracts.Available
SJD-7984
EastHealthcare testing laboratory. $7 million revenue, $4 million EBITDA. 16 employees, multiple state licenses.Under Contract
SJD-1067
Florida$9.5 million Home Health Agency. Very strong operationally, clinically, and financially. 99% of revenue comes from traditional Medicare.Under Contract
SCM-6925
FloridaMedicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.Under Contract
SBA-8305
KentuckyMedication-assisted clinic. IOP counseling for substance abuse and co-occurring disorders. Profitable with strong team in place. 150 clients. 95% Medicaid.Under Contract
STS-1093
KentuckyMedication-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
STS-2658
North Carolina$5 million Medicaid agency. CAP/PCS services. Long history, quality services.Under Contract
SBB-4927
Pacific NorthwestFull 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.
Under Contract
SJD-4921
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
SBH-2042
TexasThree Hospice companies with affiliated home health. $6 million total revenue. South, South Central, and South East Texas locations.Under Contract
SJL-9650
Texas$3+ million hospice agency based in Dallas/Fort Worth. Well established. Clinically clean and growing. Full staff in place.Under Contract
SJL-6009
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
SCM-3034

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.

Another Cartoon Favorite from the New Yorker

 

Home Health Index August 2017 | Stoneridge Partners

 

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Home Health Index August 2017 | Stoneridge Partners

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