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), 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
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$1.4 million growing private duty business in District 7. Well-run clinically and poised for growth FY 2017.Available
SCM-5220

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$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 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.Available
SDC-7429

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$2.5 million Medicare agency in Port St. Lucie. Great reputation and clinicals.Available
SCM-6191

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

Illinois$5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4 1/2 star rating by CMS.Available
SBA-2734

Michigan$1.8 million Medicare agency located in Western Michigan.Available
SBB-5471

Minnesota$14 million revenue Medicare/Medicaid home health agency. Well- established and deficiency free. A SE Minnesota location.On Hold
SJL-5268

Missouri$2.8 million Medicaid agency in greater St. Louis area. Nice bottom line. Excellent add-on acquisition opportunity.Available
SBB-9001
Mountain West$2 million private pay agency located in the Mountain West. Impressive growth patterns and very profitable.Available
SJL-2549
Nebraska$3.8 million Medicare agency located in the Omaha area. Consistent growth trend.Available
SBB-1745
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.Available
SCM-6180

New Jersey$1.6 million private duty home care and staffing agency. Central New Jersey and surrounding areas. Well-established with an outstanding reputation. Great growth opportunities.Available
SBA-4935
NorthwestHome care company in Northwestern US. $15 million in annual revenue. Multiple locations with a strong presence in the communities it serves. Non-Medicare services. Consistent, strong growth.Available
SBA-9523
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 for sale in Central Oklahoma. Approx. $2.5 million run rate. Accredited. Multiple locations.Available
SBA-3881

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
Southwest$32 million hospice company with accompanying home health located in the southwest United States.Available
SJL-9650

Texas$3.7 million East Texas Medicaid agency. Established business with a strong reputation in the community. Staff in place.Available
SBA-6497

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

TexasGrowing $2.6 million West Texas Medicare certified home health agency. Accredited with a wide variety of referral sources.Available
SJL-2892

Texas$2.6 million established home health agency in Dallas with both Medicare and Medicaid lines of business.Available
SJL-8335

Texas$2.5 million home care agency located in Southeast Houston. Mostly Medicare. Well established, growing and very profitable.Available
SJL-6080

Texas$2 million Medicare accredited home health care company located in Southeast Texas near Huntsville.  Strong financials, clinically clean with nice opportunity for growth.Available
SCM-9753

Texas$1.3 million profitable Medicare and Medicaid agency located in growing market just North of Dallas. Clean clinically with excellent financials.Available
SJL-1492

Texas$1.3 million all private pay agency located in Ft. Worth. Excellent reputation, excellent reviews and extremely profitable.Available
SJL-5115
Texas$1.2 million established and profitable home health agency with two offices and service area from Conroe to Galveston.Available
SJL-6249
Washington$2 million private care Medicaid business located in Puget Sound area. Opportunities abound with the local VA contract. Surrounding area has an eager and abundant supply of caregivers.
Available
SCM-3963
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

Arizona$3 million profitable home care agency in Phoenix, Arizona. 15-year history with great reputation and great staff in place.Under Contract
SBB-2113
FloridaHome 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.Under Contract
SBA-1253
Multi-State$30 million behavioral health agency. Well-established, platform opportunity.Under Contract
SBB-8101

Pacific NorthwestHome care company in the Pacific Northwest. $1.3 million in annual revenue. Predominantly private pay. Well-established. Outstanding clinical.Under Contract
SBA-5773
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
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.Under Contract
SBA-5050
Texas$7 million Houston-based Medicare home health agency. Accredited, expertly run and growing.Under Contract
SJL-1500

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.Under Contract
SJL-9472

Texas$1.1 million solid and clean Medicare home health agency located in the Fort Worth area.Under Contract
SJL-7530

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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