Home Health Index | 2018 JANUARY UPDATE

Home Health Care Stocks Finish 2017 Strong

Home health care stocks posted double-digit growth in 2017, though they dipped slightly in the last month of the year.

The Home Health Index, which tracks market values of three of the largest publicly traded home health care companies in the U.S.—Almost Family (Nasdaq: AFAM), Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG) —rose 18.68%, year-over-year, between December 2016 and 2017. Still the index shed 5.82% in December compared to the previous month, and was bested by the S&P 500 Index, which rose 1.36% in December.

“This was another strong year for home health care investors and providers,” said Stoneridge President Rich Tinsley. “2018 will bring many new challenges and opportunities in the industry, especially as home health care giants Almost Family and LHC Group execute on their planned merger.”

The deal between LHC Group and Almost Family is expected to close in the first quarter of 2018 and results in a company with a combined revenue of $1.8 billion. The implied transaction value is roughly $2.4 billion, according to LHC Group.

The combined organization would trade on the NASDAQ exchange under the symbol “LHCG,” and will operate out of Lafayette, Louisiana, where LHC is currently based. When completed, the organization is projected to have 781 locations total in 36 states and more than 31,000 employees. The merger will also prompt the addition of Kindred Healthcare (NYSE: KND) to the Stoneridge Home Health Index.

Despite the buzz surrounding the merger, Lafayette, Louisiana-based LHC Group’s stock dropped 7.38% in December. Year to date, LHC Group’s share prices rose 23.14%, which clocked in as the largest yearly gain on the HHI.

Louisville, Kentucky-based Almost Family also stumbled in its December stock performance. The company’s share prices fell 7.32%, erasing some of the increases it saw this year. Still, the provider came out on top: Almost Family’s stocks gained 16.65% in 2017.

Amedisys, on the other hand, fared best in December. The Baton Rouge, Louisiana-based company’s stock value fell just 2.45% in the month. Year to date, its share prices rose 15.92%, according to the Index.

Share prices for Addus HomeCare (Nasdaq: ADUS), which is not included in the index because so little of its income comes from Medicare, bucked the trend and gained 4.31% in December. For the entire year, Addus’s stock price rose 2.65%.

Quote Of The Month 

“Aging is not a disease, If we support people as they get frail, they can safely do that in their own homes.” said France Gelinas

Read the Full Article Here: Improving home care will help hospital overcrowding

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  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 since 2002.


This graph compares the HH Index to the price of Addus stock (non-Medicare).
(Home Health Index January 2018 | Stoneridge Partners)

 

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

Company 12/31/17 1 mos change YTD change 12/31/16 12/31/15
Almost Family 55.35 -7.32% +16.65% 44.1 38.23
Amedisys 52.71 -2.45% +15.92% 42.63 39.32
LHC Group 61.25 -7.38% +23.14% 45.7 45.29
HH Index* 56.44 -5.82% +18.68% 44.14 40.95
S&P 500 2673.61 +1.36% +17.25% 2238.83 2043.94
Addus 34.8 4.31% +2.65% 35.05 23.28

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) 12/31/17 12/31/16 12/31/15
Almost Family 878 588 453
Amedisys 1810 1520 1370
LHC Group 1200 907 845
HH Index Total 3888 3015 2668
Addus 398 384 245


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

Company 12/31/17 12/31/16 12/31/15
Almost Family 117% 96% 89%
Amedisys 123% 109% 111%
LHC Group 120% 103% 110%
HH Index Average* 120% 103% 103%
Addus 96% 101% 73%


Multiples of EV/EBITDA

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

Company 12/31/17 12/31/16 12/31/15
Almost Family 20.63 12.66 12.34
Amedisys 15.68 19.10 15.35
LHC Group 12.84 11.01 10.90
HH Index Average* 16.38 14.26 12.86
Addus 11.67 14.50 10.22

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 January 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • New Directions Behavioral Health, headquarted in Kansas City, Missouri acquired E4 Health of Irving, Texas.
  • Stratum Health System, the Sarasota company that owns Tidwell Hospice, has acquired a Naples-based home health care company, Avidity Home Health.
  • Nurses Unlimited, a personal care services, home health and private duty nursing company was acquired by Texas Home Health, an AccentCare, Inc. company.
  • Noor Inc., based in New York City, acquired San Antonio, Texas-based home health care provider Restorative Health Care.
  • Humana announced it will acquire 40% stake in Kindred Healthcare’s home care business.
  • provider in the U.S., acquired A Place to Call Home, an Arizona based company providing foster care, respite, host home and related supports to children and individuals with intellectual and developmental disabilities.

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
SBA-6228
California$11 million multi-location addiction treatment center. Located in Southern California. 21% bottom line. Strong growth trends. JCAHO accredited. Available
SJL-7229
California$4.8 million neuroscience-driving recovery treatment center for traumatic brain injury and SUD. Has helped over 180 professional athletes from the NFL, NHL, NBA and MLB. $1.2 million AEBITDA. Great campus offering full continuum of care. Zero competition in this space.
Available
STS-1907
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
Connecticut$6 million Medicaid/Medicare agency. Nice growth trend. Stable margins, great surveys.Available
SBB-3697
EastHealthcare testing laboratory. $7 million revenue, $4 million EBITDA. 16 employees, multiple state licenses. Available
SJD-1067
EastOpportunity 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
STS-7094
Florida$9.5 million Home Health Agency. Very strong operationally, clinically, and financially. 99% of revenue comes from traditional Medicare. Available
SCM-6925
Florida$1.6 million revenue. Pediatric Medicaid agency. Available
SCJ-8520
FloridaMedicare certified home health agency. District 10. Census: Minimal. Accredited.Available
SBA-6994
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

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. Available
STS-2658
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
Maryland/DC/VirginiaOpportunity to establish a Medicare home health agency. N. Virginia with large service area. Low census, motivated seller. Available
SBB-7499
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
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
New YorkLHCSA in five boroughs. Approx. $20 million revenue. Long history in the community. Available
SBB-9207
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$5 million Medicaid agency. CAP/PCS services. Long history, quality services. Available
SBB-4927
North Carolina$1 million ID/DD Agency. Long-term client base. Growth potential with real estate. Strong margins. Available
SBH-9905
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$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
TexasMedicare home health agency and hospice. San Antonio, Dallas, Austin. $3 million revenue, multiple provider numbers. Great opportunity for existing Texas providers. Available
SBB-5337
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
SCM-9753
Texas$2 million Medicare home health agency in Austin, TX. Offers outstanding reputation and strong management & clinical teams. CHAP accredited & consistently Top 100 or Top 500 Home Care Elite for past 8 years. Available
SJL-5971
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
Texas$650,000 revenue. Medicare certified. Licensed in 6 counties North of Dallas, TX.Available
SBA-8417
TexasHome Health agency in Texas. Near Sam Houston National Forest. Clean license with minimal census and minimal revenue. Available
SCM-4098
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$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
Florida$3.5 million private duty home health agency on Florida's east coast. CHAP accredited. 26 years of outstanding service. Diversified pay mix; Private duty, Workers comp, Private pay, and Long-term care insurance. Strong management and support staff. Under Contract
SCM-8429
FloridaMedicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.Under Contract
SBA-8305
Florida$1.5 million non-skilled private duty home health business. Strong management team in place. District 1.Under Contract
SCM-1148
IllinoisHospice. Census in mid-70's. Accredited. Chicago area.Under Contract
SBA-5325
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
Minnesota$9 million Medicaid agency. Consistent growth & profitability. Recent rate increase. Attractive Medicaid margin. Under Contract
SBB-7085
New York$13 million revenue LHCSA. 30-year history. Licensed in all 5 boroughs.Under Contract
SBB-8249
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
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$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
SJL-2228
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
Virginia$6 million Medicare certified agency in Northern Virginia. Under Contract
SBA-7366

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 January 2018 | 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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