Home Health Index | 2017 AUGUST UPDATE

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:

Company 7/31/17 1 mos change YTD change 7/31/16 7/31/15
Almost Family 49.45 -19.79% +12.13% 40.30 43.76
Amedisys 47.36 -24.60% +11.10% 54.49 43.63
LHC Group 57.90 -14.71% +26.70% 45.39 40.27
HH Index* 51.57 -19.57% +16.82% 46.73 42.55
S&P 500 2470.30 +1.93% +10.34% 2173.60 2103.84
Addus 33.95 -8.74% -3.14% 18.45 27.14

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) 7/31/17 7/31/16
Almost Family 837 540
Amedisys 1556 1890
LHC Group 1137 911
HH Index Total 3530 3341
Addus 399 232


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

Company 7/31/17 7/31/16
Almost Family 125% 97%
Amedisys 105% 144%
LHC Group 121% 110%
HH Index Average* 117% 117%
Addus 97% 67%


Multiples of EV/EBITDA

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

Company 7/31/17 7/31/16
Almost Family 21.30 12.63
Amedisys 18.31 23.64
LHC Group 13.35 11.08
HH Index Average* 17.65 15.78
Addus 12.75 9.68

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
Arizona$2.2 million physical therapy business in Central Arizona. Started in 2005. Two locations and strong, clean financials.Available
SCM-7811

Arizona$2 million Medicare certified home health agency in Southern Arizona. 100% Medicare. Outstanding reputation. Available
SBA-5845
California$1.3 million home health agency located 2 1/2 hours Northeast of Sacramento. Opportunity to grow North from present location. No competition in area.Available
SCM-7009

California$1 million Medicare certified and JCAHO accredited home health agency located in the bay area. Growth opportunities abound for this long established agency (2004)Available
SCM-3055

Florida$4.5 million Medicare certified home health agency in Districts 6 and 7. Solid bottom line. Accredited and outstanding clinicals.Available
SBA-5272

FloridaLocated 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.Available
SDC-3739

Florida$2.5 million Medicare agency in Port St. Lucie. Great reputation and clinicals.Available
SCM-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.Available
SBA-4836

Florida$1.8 million Medicare certified home health agency in District 10. 100% Medicare. Accredited.Available
SBA-8577
IdahoMedicare Certified (ACHC) Hospice located in Idaho. 30 patients and growing. Expertly run by veteran operators with staff in place.Available
SJL-3261
Illinois$5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4 1/2 star rating by CMS.Available
SBA-2734

Illinois$1.5 million Medicare certified home health agency. Clean survey and deficiency free. Quality clinical operation with staff in place.Available
SBA-7425

Indiana$10 million behavioral health agency in Indiana. 30-year history providing quality services. Stable referral base.
Available
SBB-8795
IndianaMedicare home health agency located in the greater Indianapolis area. $4 million in annual revenue. Full staff in place will remain. Great referral relationships. Available
SBB-9315
KentuckyMedicare home health agency with large CON service area. $3 million annual revenue. Includes metropolitan areas.Available
SBB-6703
Kentucky$5 million Medicaid behavioral health agency. Great reputation for quality services. Staff in place.Available
SBB-4310
Michigan$1.8 million Medicare agency located in Western Michigan.Available
SBB-5471

Michigan$1.3 million and growing Medicare home health agency located in Southwestern Michigan. Local physical therapy school provides surplus of qualified employees. Stable referral base.
Available
SCM-8507
Missouri$2.8 million Medicaid agency in greater St. Louis area. Nice bottom line. Excellent add-on acquisition opportunity.Available
SBB-9001
New Mexico$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community. Staff in place.Available
SBA-5295
Ohio$3 million Medicare home health agency. Located in the Columbus area. Unique clinical specialty and well-established referral sources.Available
SBB-4884
OklahomaMedicare certified hospice located in Central Oklahoma. Approximately 50+ patients. Accredited.Available
SBA-3881

Oregon$1.4 million Private Duty business located in Central OR. Serving an affluent community near local resort for over 30 years. Long term employees in place with well-established referral base.Available
SCM-7208
OregonHome care company in Oregon. $1.1 million in annual revenue. Predominantly private pay. Well-established. Outstanding clinical.Available
SBA-5773

Pennsylvania$10 million Medicaid agency serves eastern part of the state. Long history in the community. Well established referral relationships.Available
SBB-8000
Pennsylvania$1.5 million profitable Medicaid business located in South Central Pennsylvania. Excellent relationships with all waiver service coordinators in the area. Primed for growth.Available
SCM-3353
PennsylvaniaMedicare and Medicaid certified home health agency in the Greater Pittsburgh area with a Census of 2Available
SBA-9634
Southwest$60 million agency providing home health, personal care and hospice services in the Southwest. Approximately 50% of revenue derived from hospice operations. Long history with great reputation for quality care. Consistent, strong growth. Multiple locations with strong presence in the markets served.Available
SBA-5050
Southwest$32 million hospice company with accompanying home health located in the southwest United States.Available
SJL-9650

Texas$3.5 million home health agency in Houston (metro). Diversified agency - 70% Medicare, 30% private pay. Inherent capacity for growth.Available
SJL-2000

Texas$3.5 million pediatric agency located in Dallas. Established 300 patient agency. Fully staffed with a clean compliance record.Available
SJL-6464
TexasProfitable $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.Available
SJL-9472


Texas$1.2 million established and profitable home health agency with two offices and service area from Conroe to Galveston.Available
SJL-6249
Wisconsin$1.2 million Medicare certified home health agency. Licensed in Wisconsin. Clean survey and deficiency free. Staff in place. Motivated seller.Available
SBA-5776

Florida$1.4 million growing private duty business in District 7. Well-run clinically and poised for growth FY 2017.Under Contract
SCM-5220
Mountain West$2 million private pay agency located in the Mountain West. Impressive growth patterns and very profitable.Under Contract
SJL-2549
Nevada$1.2 million Medicare home health agency located in Las Vegas, Nevada. Clean, profitable and family owned since 2004. HomeCare Elite recipient in 2010, 2012, 2013, 2016.Under Contract
SCM-6180

Multi-State$30 million behavioral health agency. Well-established, platform opportunity.Under Contract
SBB-8101

Nebraska$3.8 million Medicare agency located in the Omaha area. Consistent growth trend.Under Contract
SBB-1745
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.Under Contract
SBA-4227
Texas$7 million Houston-based Medicare home health agency. Accredited, expertly run and growing.Under Contract
SJL-1500

Texas$3.7 million East Texas Medicaid agency. Established business with a strong reputation in the community. Staff in place.Under Contract
SBA-6497
TexasGrowing $2.6 million West Texas Medicare certified home health agency. Accredited with a wide variety of referral sources.Under Contract
SJL-2892

Texas$1.1 million solid and clean Medicare home health agency located in the Fort Worth area.Under Contract
SJL-7530
Virginia$6+ million private pay home care agency for sale in Northern Virginia. Non-medical home care services. Recently surveyed. Strong profitability.Under Contract
SBA-9112

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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