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%.
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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|
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|
|HH Index Total||3888||3015||2668|
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*||120%||103%||103%|
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*||16.38||14.26||12.86|
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|
|Arizona||Medicare/Medicaid certified Home Health Agency. $1.8 million in annual revenue. 90% Medicaid/10% Medicare. Phoenix metropolitan area. Accredited. 5 star rating.||Available|
|California||$6 million revenue. Hyrbid payor mix - 70% in network, 20% out of network, 10% private cash pay. Destination oriented treatment facility. 48 residential beds and 6 detox beds. JCAHO accredited. Beautiful property with more adjacent available for purchase. Tons of amenities.||Available|
|California||$2+ million revenue. $550,000 net profit. 28 bed, 4 facilities. Full continuum of care treatment center in California. Growing quickly with a large wait list. 10 bed detox license. Gorgeous real estate for sale or lease. Great reputation and referrals.||Available|
|California||Growing $1.9 million revenue. Private pay. Independently owned. Full staff in place.||Available|
|California||32 bed detox and residential treatment center. Great location and setup. In network. Large growth with a waiting list. Seeking loan/debt investment. Attractive income option for investor.||Available|
|California||Trauma treatment facility. Searching for real estate partner to buy property and lease back, as well as further expansion. Great business plan and current growth and new contracts. Great results and outcomes.||Available|
|Florida||Medicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.||Available|
|Florida||$2.5 million Medicare agency in Port St. Lucie. Great reputation and clinicals.||Available|
|Florida||Private pay home care agency. Approximately $1,000,000. in annual revenue. Medicare/Medicaid certification. Accredited. W-2 employees. District 8.||Available|
|Florida||Medicare certified home health agency. Approximately $400,000 in annual revenue. Accredited. District 7.||Available|
|Florida||Medicare certified home health agency. District 10. Census: Minimal. Accredited.||Available|
|Florida||Medicare certified home health agency. Accredited. Minimal census. District 3.||Available|
|Georgia||$5 million annual revenue private duty agency. Metro Atlanta service area. Well-positioned for additional growth.||Available|
|Georgia||ID/DD Services. $1 million revenue. Residential and Day Services. Atlanta Suburb.||Available|
|Illinois||$5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4 1/2 star rating by CMS.||Available|
|Illinois||$2.8 million Home Health agency. 100% Medicare. Loyal caregiver and patient base.||Available|
|Indiana||$6 million annual revenue. Medicare/Medicaid home health agency. Serves Valparaiso and surrounding areas. CHAP accredited||Available|
|Maryland/DC/Virginia||Large Medicare & Medicaid home care agency. Poised for continued growth.||Available|
|Massachusetts||$10+ million Medicare and Medicaid certified Home Health agency. Diverse payor sources. Strong Management in place.||Available|
|Minnesota||$8 million Medicaid agency. Well-established in metropolitan service area with staff in place.||Available|
|New York||LHCSA in New York metro area. $10 million annual revenue. Consistent growth year over year.||Available|
|New York||Annualizing at $1.3 million revenue. 40% Non-Medicare/Private Insurance skilled nursing. 45% Managed LTC. Southern New York. Joint Commission Accreditation.||Available|
|New Mexico||$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community. Staff in place.||Available|
|North Carolina||$1 million ID/DD Agency. Long-term client base. Growth potential with real estate. Strong margins.||Available|
|Ohio||Medicare/Medicaid agency in Columbus area. $4.5 million annual revenue. Long-standing reputation in the community. Profitable.||Available|
|Ohio||Southeastern Ohio. $3.5 million annual revenue. Diverse referral source mix.||Available|
|Pacific Northwest||Full continuum in Washington State. $3,625,000. revenue with $1,100,000 EBITDA. States has moved from BHO to MCO for Medicaid. Co-occuring, 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.
|Pennsylvania||Private duty, non-medical home care company. $9.9 million current annual run rate. Eastern Pennsylvania. Highly profitable. Strong management team in place.||Available|
|Pennsylvania||$4.3 million revenue. Home health, home care and hospice agency. 18% bottom line.||Available|
|Southeastern US||$9+ million revenue with 16% bottom line. Home health with multiple locations. Regional presence with high star ratings. Nationally recognized for excellent patient outcomes. Lots of opportunity for growth.||Available|
|Southeast/Midwest||8 locations, 6 cities with over 100 employees. Mental health/Psych/Therapy/Counseling/School based/SUD IOP pilot. $4.5 million revenue. $750,000 EBITDA. Huge growth opportunity and great business, reputation, and numbers.||Available|
|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|
|Southwest||Full continuum campus setting treatment center in Southwest US. 200+ beds. In network. Census growing every month. Great reputation and valuable contracts. Numbers are very impressive and improving every day. Solid turnkey business.||Available|
|Texas||$3+ million hospice agency based in Dallas/Fort Worth. Well established. Clinically clean and growing. Full staff in place.||Available|
|Texas||$3 million all Medicaid Home Care company located in Houston, TX. 20%+ year over year revenue growth since 2016. Nice bottom line.||Available|
|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|
|Texas||$1 million revenue. Very clean and well established home health agency in the heart of West Texas. Fully staffed and ready for a new owner to step right in.||Available|
|Texas||$1 million Medicare certified agency. Licensed in 7 counties in the Houston area. 80% is traditional Medicare.||Available|
|Texas||$450,000+ Medicare certified Dallas area home care company. Fully staffed & clean clinically.||Available|
|Texas||165 patient pediatric home care company in Houston, TX. Diverse referral network. Systems and staff in place.||Available|
|Texas||Home Health agency in Texas. Near Sam Houston National Forest. Clean license with minimal census and minimal revenue.||Available|
|Texas||Clean hospice provider number. Located in West Texas.||Available|
|Upper Midwest||$7.6 million revenue. Profitable home health and hospice. JCAHO accredited. 4-star rating. Ranked as a top performer in agency outcomes||Available|
|Virginia||$6 million Medicare certified agency in Northern Virginia.||Available|
|Virginia||$2.3 million revenue Physical Therapy and Wellness operation. 95% cash pay. Potential to franchise Nationwide. 2018 EBITDA $257,000.||Available|
|Virginia||$1.2 million private duty/private pay home health business in Northern Virginia. Located in one of the most affluent counties in the country where the elderly population growth is outpacing the nations.||Available|
|Washington DC||Opportunity to establish a Medicare/Medicaid home health agency. Certificate of Need subject to regulatory approval. Rare offering.||Available|
|California||$5 million revenue with $1.25 million EBITDA. Full continuum treatment center. 3 residential houses, 2 sober living and 1 outpatient. JCAHO certified. Private pay and out of network.||Under Contract||
|Colorado||65 bed full continuum treatment center in Mountain West. #1 million EBITDA. Motivated seller seeking timely close. Great census and solid numbers.||Under Contract||
|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.||Under Contract||
|Florida||Medicare certified home health agency. $4.7 million in revenue. Accredited. 4.5 stars. District 7. Great management team in place.||Under Contract||
|Florida||$1.5 million non-skilled private duty home health business. Strong management team in place. District 1.||Under Contract||
|Florida||Non-skilled home care agency. $600,000 in annual revenue. Outstanding reputation and quality service. Key staff in place. District 5.||Under Contract||
|South Central US||$24 million annual revenue. Home health/Home care agency with small hospice operation. Well diversified payor mix. Medicare certified Multi State agency. Accredited. Strong management team in place.||Under Contract||
|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||
|Texas||Almost 100% Medicare. Texas based home health agency. $6+ million revenue. Extremely profitable. Perfect surveys with a 4-star rating and consistently ranked as a top agency in the country.||Under Contract||
|Texas||$3.6 million Hospice, home health and palliative care agency. 90% Traditional Medicare. Service area in 13 counties around Harris County. CHAP accredited. Staff in place.||Under Contract||
|Texas||$2.3 million Medicare revenue. 85% Traditional Medicare. Service area in 5 counties around Taylor County, as well as Region 2 & 9.||Under Contract||
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