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
AlabamaHome care company in Alabama. Approx. $1.5 million in annual revenue. 95% private pay. Outstanding clinicalAvailable
SBA-1977

Arizona$2+ million home care agency in Southern Arizona. Diverse payor sources (Medicaid/Private Pay/ W/C. Diverse referral sources. Great reputation. Available
SBA-6228
ArizonaMedicare/Medicaid certified Home Health Agency. $1.8 million in annual revenue. 90% Medicaid/10% Medicare. Phoenix metropolitan area. Accredited. 5 star rating.Available
SBA-9188
California$6 million Drug and Alcohol Treatment facility. Inpatient & Outpatient. Joint Commission Accredited. Very unique operation with great referral sources. Available
SJD-1469
Florida$9.5 million Home Health Agency located on Florida's East Coast. Very strong operationally, clinically, and financially. 99% of revenue comes from traditional Medicare. 5 star rating. Available
SCM-6925

FloridaMedicare certified home health agency. $5 million in revenue. Accredited. 4.5 stars. District 7 with licensure and certification in District 6 as well. Available
SBA-8426
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
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
Massachusetts$10+ million Medicare and Medicaid certified Home Health agency. Diverse payor sources. Strong Management in place.Available
SBA-6010
MichiganMichigan Home Health and Private Pay Business. Home Health agency with $4.2 million revenue. Private pay business with $2.6 million revenue. Strong financials and outstanding local reputation. Growth opportunities. Available
SCM-2209
Michigan$2.4 million Medicare certified home health agency. Accredited. State under moratorium. Licensed for entire State. Excellent reputation. Strong array of specialty programs. State of the art software for scheduling, payroll, quality control, etc. Available
SBA-8009
Multi-StateApprox. $50 million in revenue. Several CON States. Medicare and Medicaid business mix.Available
SBB-2825
New Mexico$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community. Staff in place.Available
SBA-5295
New YorkOpportunity to establish a Medicare home health agency in NYC. Existing CON and provider number for 5 boroughs. Rare opportunity to enter this market. Available
SBB-9254
North Carolina$1 million ID/DD Agency. Long-term client base. Growth potential with real estate. Strong margins. Available
SBH-9905
OhioMedicare certified agency. Diverse payor mix - 50% Skilled Medicaid, 20% Medicare, 30% Commercial/Other. $5.5 million in annual revenue. Carve-out from larger existing business. Strong management team. Available
SBH-4128
Ohio$2 million ID/DD Provider. Diversified services. Highly profitable (20%+). Tenured management with growth opportunities.Available
SBH-3347
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
Oregon$1+ million home care company. Predominantly private pay. Well-established. Outstanding clinical.Available
SBA-5773
Pacific Northwest$ 3 million full continuum of care substance abuse treatment facility. Long time, well established business. Mostly Medicaid. Great opportunity. Available
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. Available
SBH-2042
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
Texas$3.5 million home health agency in Houston (metro). Diversified agency - 70% Medicare, 30% private pay. Inherent capacity for growth.Available
SJL-2000

TexasProfitable $3 million Medicare & Medicaid top 500 home care company in East Texas. CHAP accredited. 4.5 star rating. Full staff in place. Well-run with an excellent reputation. Available
SJL-9472


Texas$3+ million hospice agency based in Dallas/Fort Worth. Well established. Clinically clean and growing. Full staff in place. Available
SJL-6009
Texas$2.3 million Medicare revenue. 85% Traditional Medicare. Service area in 5 counties around Taylor County, as well as Region 2 & 9.Available
SBA-3650
Texas$1 million Medicare certified agency. Licensed in 7 counties in the Houston area. 80% is traditional Medicare. Available
SBA-1542
Texas$2 million run rate. 80% Medicare and profitable home health. Located in South Texas. Well staffed. Clean record of compliance.Available
SJL-6912
Texas$450,000+ Medicare certified Dallas area home care company. Fully staffed & clean clinically.Available
SJL-3334
Upper Midwest$7.6 million revenue. Profitable home health and hospice. JCAHO accredited. 4-star rating. Ranked as a top performer in agency outcomesAvailable
SJL-2770
Virginia$6 million Medicare certified agency in Northern Virginia. Available
SBA-7366
Arizona$2.2 million physical therapy business in Central Arizona. Started in 2005. Two locations and strong, clean financials.Under Contract
SCM-7811
Florida$4.5 million Medicare certified home health agency in Districts 6 and 7. Solid bottom line. Accredited and outstanding clinicals.Under Contract
SBA-5272
FloridaMedicare certified home health agency. $500,000+ in annual revenue. Accredited. District 3. Great opportunity in State under moratorium.Under Contract
SBA-8297
Georgia$1 million in revenue. CARF Accredited mental health and substance abuse treatment center. Located in Southeastern US. Offers Residential, PHP, IOP and Sober living. In network with all carriers. Great opportunity with referral sources.Under Contract
SJD-1764
Minnesota$8 million Medicaid agency. Well-established in metropolitan service area with staff in place.Under Contract
SBB-7085
Mountain State$20 million Medicaid agency. Steady growth for many years. Great client retention and reputation.Under Contract
SBB-7245
PennsylvaniaMedicare and Medicaid certified home health agency in the Greater Pittsburgh area. Minimal census. Clean.Under Contract
SBA-9634
TexasGrowing $2.6 million West Texas Medicare certified home health agency. Accredited with a wide variety of referral sources.Under Contract
SJL-2892

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.

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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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