Home Health Index | 2018 FEBRUARY UPDATE

Home Health Care Stocks Trend Up to Start 2018, Look to Weather Early Year Volatility

Home Health Stocks Trend Up to Start 2018, Look To Weather Early Year Volatility

Home health stocks rose across the board in January, signaling a strong start to the new year, though stock increases were still short of S&P 500 gains during the month.

The Home Health Index, which tracks the monthly market values of three of the biggest home health care companies—Almost Family (Nasdaq: AFAM), Amedisys (Nasdaq: AMED), and LHC Group (Nasdaq: LHCG)— increased 2.82% in January compared to the previous month. By comparison, the S&P 500 increased 5.67% in January. The Index ended 2017 up 18.68% year over year.

Almost Family, based in Louisville, Kentucky, saw the biggest gains for the month, with its share price increasing 4.07%. Lafayette, Louisiana-based LHC Group stock prices experienced gains of 3.84%. Baton Rouge, Louisiana-based Amedisys Inc. values also rose, but only saw a slight increase of 0.32%.

“As the new tax bill expectations set in, we saw index companies gain. Even with the late-month market volatility, stocks were in line with expectations, and we’ll continue to monitor how tax reform will affect future stock prices,” said Stoneridge President Rich Tinsley.

During the month, the planned merger of two of the companies tracked by the Index—LHC Group and Almost Family—hit a road bump, as LHC Group refiled its paperwork with the Securities and Exchange Commission (SEC), effectively restarting the clock for the regulatory approval process. The merger, which is expected to close in the summer of 2018, was announced in November 2017 and is estimated to have a transaction value of $1.8 billion.

While share prices were up overall across the home health industry for the month, volatility struck the stock market at the end of January, intensifying into wild market swings in early February.

Additionally, Addus Homecare (Nasdaq: ADUS) stock prices increased 5.17%. However, because very little of the company’s income comes from Medicare, it isn’t included in the index.

 

Quote Of The Month 

“We would like the public to know that more than between 20 and 25 percent of individuals, and their families, are affected by mental illness,” said Rhonda Thissen, executive director of NAMI Virginia.

Read the Full Article Here: Advocates will seek improvements in mental health services

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 February 2018 | Stoneridge Partners)

 

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

Company 1/31/18 1 mos change YTD change 1/31/17 1/31/16
Almost Family 57.60 +4.07% +4.07% 47.45 38.23
Amedisys 52.88 +0.32% +0.32% 45.47 39.32
LHC Group 63.6 +3.84% +3.84% 49.74 45.29
HH Index* 58.03 +2.82% +2.82% 47.55 40.95
S&P 500 2825.09 +5.67% +5.67% 2280.22 2043.94
Addus 36.60 +5.17% +5.17% 33.90 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) 1/31/18 1/31/17 1/31/16
Almost Family 897 623 453
Amedisys 1840 1610 1250
LHC Group 1280 985 713
HH Index Total 4017 3217 2416
Addus 410 371 222


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

Company 1/31/18 1/31/17 1/31/16
Almost Family 120% 101% 89%
Amedisys 125% 116% 101%
LHC Group 127% 112% 92%
HH Index Average* 124% 110% 94%
Addus 99% 97% 66%


Multiples of EV/EBITDA

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

Company 1/31/18 1/31/17 1/31/16
Almost Family 21.08 13.40 12.35
Amedisys 15.94 20.35 14.00
LHC Group 13.63 11.95 9.19
HH Index Average* 16.88 15.23 11.85
Addus 12.04 14.03 9.27

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 February 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Recover Health Inc., a Minnesota-based company has acquired State Home Care Services, an in-home health care company in Sioux Falls and other areas across South Dakota.
  • Greenville based InvestSouth acquired Interim HealthCare of Greenville.
  • Bridgestone Living LLC, the assisted and independent living portfolio of the Ensign Group acquired Cedar Hills Senior Living in Cedar Hill, Texas and Deer Creek Senior Living in DeSoto, Texas
  • Pennsylvania Hospice Holdings acquired Taylor Hospice of Ridley Park, Pennsylvania.

SOLD by Stoneridge!

  • Care Advantage, a leading provider of home healthcare services in the Mid-Atlantic and a BelHealth Investment Partners (“BelHealth”) portfolio company, acquired Ready Hands, Inc. of Alexandria, Virginia.  Partner, Ben Bogan and Associate Partner, Charles Jantzi, provided sell-side advisory services for this transaction.
  • Stoneridge represented a Medicaid waiver home health company in Texas in a transition that closed in January, 2018.  Partner, Ben Bogan and Associate Partner, Charles Jantzi, provided sell-side advisory services for this transaction.
  • Broadgate Capital acquired Abbi Home Care, Inc. of Benbrook, Texas in January 2018.  Partner, Joe Lynch, provided sell-side advisory services for this transaction.

Exclusively Listed For Sale By Stoneridge Partners

State
Agency Profile
Status
Reference Number
ArizonaOpportunity to establish hospice in Phoenix area. ACHC-accredited. Available
SBB-8218
California$11 million multi-location addiction treatment center. Located in Southern California. 21% bottom line. Strong growth trends. JCAHO-accredited. Available
SJL-7229
CaliforniaMedicare-certified home health agency established in 2003. $2 million annual revenue in 2018. PDGM revenue-neutral. Located in Southern California. Clean business with no ADRs. Available
SCM-7298
ColoradoOpportunity to establish Medicare home health agency. Denver market. ACHC accreditation until 2022.Available
SJL-7771
FloridaMedicare-certified home health agency. Approximately $3.8 million in revenue with 17% bottom line. Located in Districts 9 and 10. Revenues split evenly between districts. Accredited. 4.5-star quality of patient care rating.Available
SBA-3029
GeorgiaID/DD service provider with $1 million in revenue. Residential and day services offered, located in Atlanta suburb. Available
SBH-6806
Illinois$5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4.5-star rating by CMS.Available
SBA-2734

LouisianaBoutique full-service clinical laboratory specializing in preventative diagnostic testing. Medicare- and Medicaid- certified, with insurance contracts in more than 20 southeastern states. Available
SJD-6825
MassachusettsMedicare- and Medicaid-certified home health agency.
$13+ million in annual revenue with continued growth. Diverse payor mix. Strong management in place. Accredited.
Available
SBA-6010
MassachusettsMedicare- and Medicaid-certified home health agency. Motivated seller in western Massachusetts. $7.5 million annual revenue. Great add-on for existing provider. Available
SBB-7607
MichiganMedicare home health and hospice agency. $10 million in annual revenue with numerous referral relationships. Available
SBB-8684
Michigan$2 million ID/DD agency in the Detroit area. Profitable service provider with existing management team in place. 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
Mid-Atlantic$10+ million non-skilled home care agency. Primarily Medicaid reimbursed with 20% EBITDA margins. Strong management team in place. Available
SBH-9651
Multi-StateWell-established pediatric provider. Revenue more than $40 million. Medicaid and insurance accepted. Available
SBB-2138
NevadaMedicare-certified home health agency in Las Vegas area. Approximately $1 million in annual revenue. Accredited. Available
SBA-8367
New MexicoHome health and hospice with $15 million in annual revenue. Revenue split is 2/3 home health and 1/3 hospice. Medicare- and Medicaid-certified. Accredited. Available
SBA-5334
New YorkLicensed home care services agency with services in five boroughs. Approximately $20 million in revenue and a long-standing history in the community. Available
SBB-9207
New YorkLicensed home care services agency with $13 million in revenue. 30-year history. Licensed in all five boroughs.Available
SBB-8249
New Mexico$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community and existing staff in place.Available
SBA-5295
North Carolina$1 million ID/DD agency with real estate. Long-term client base, additional growth potential and strong margins. Available
SBH-9905
OklahomaMedicare-certified home health agency with $9.6 million in annual revenue. 98% traditional Medicare and other PPS payors. Medicare- and Medicaid-certified with multiple locations. Available
SBA-6607
SouthTreatment center with 28 beds, intensive outpatient program capacity of 40, full continuum of substance use disorder services and dual diagnosis treatment capability. JCAHO accreditation pending. $4+ million in revenue, highly competitive in-network contracts. Average census of 30. Existing relationships with county, parole, local hospitals, churches and universities. Solid business in desirable location with little area competition.Available
SJD-1118
SouthFull continuum, JCAHO-accredited substance use disorder treatment center on 100+ acre horse ranch. Dual diagnosis treatment capability with 16 beds and 22 staff. $1.5 million EBITDA on $3.5 million in revenue. In-network with great contracts/rates and strong census. Available
SJD-3485
SouthPartial hospitalization treatment program/intensive outpatient program seeking strategic partner. Strong census and revenue growth. No direct competition for niche market. Available
SJD-8349
Southwest$5+ million 37-bed outpatient treatment center. Fully accredited and recently revamped to increase growth and margin. Great census, UR, acquisition and solid numbers. Out of network but transitioning to some in-network.Available
SJD-3448
Southwest64 bed full continuum 64-bed full continuum treatment center in two southwestern US metropolitan cities. JCAHO-accredited and in-network. $4 million pro forma EBITDA run rate based on 30% occupancy with significant growth expected. Strong infrastructure to support growth trajectory.Available
SJD-4008
South-AtlanticHome health agency and adult day care center with $12+ million in annual revenue. Home health represents 85% of revenue while adult day represents 15% of revenue. Home health is primarily a Medicaid business but is Medicare-certified. Accredited. Available
SBA-9973
South TexasHospice with $3.5 million in annual revenue. Accredited. No cap or regulatory issues. Available
SBA-8064
TennesseeVery rare opportunity in a Certificate of Need state, located in Nashville, TN (Davidson County). 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 can remain 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. Available
SJL-3670
Texas$3.5 million Medicare certified $3.5 million Medicare certified home health agency located in San Antonio, TX. Fully staffed and CHAP-accredited. Branch office is included in sale.Available
SJL-4824
Texas$1.7 million Medicare home health agency located in Southwest Houston. Well-established with predictable referral sources and revenues. Available
SJL-6080
Texas$1 million Medicare-certified agency licensed in seven counties in the Houston area. 80% traditional Medicare. Available
SBA-1542
USANew software application helping build social connections among patients in recovery and giving them increased access to therapists. Potential investment opportunity. Facilitates total successful recovery and gathers important helpful data.Available
SJD-1777
Virginia$6 million Medicare-certified agency in Northern Virginia. Available
SBA-7366
VirginiaPhysical therapy and wellness operation with $2.3 million in revenue. 95% cash payors. Potential to franchise nationwide. 2018 EBITDA was $257,000. Available
SCM-7368
WestPremier provider of primary mental health services for adolescents aged 13-18 with two locations. Currently growing in-network contracts. Available
SJD-7984
EastHealthcare testing laboratory with $7 million in revenue and $4 million EBITDA. 16 employees, multiple state licenses. Under Contract
SJD-1067
Florida$9.5 million home health agency with strong management, clinical and financial operations. 99% of revenue comes from traditional Medicare. Under Contract
SCM-6925
FloridaMedicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.Under Contract
SBA-8305
KentuckyMedication-assisted clinic. Intensive outpatient program counseling for substance abuse and co-occurring disorders. Profitable with strong team in place. 150 clients. 95% Medicaid. Under Contract
STS-1093
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 grow. In-network contracts. Clients pay $150 per visit for counseling twice per month. Owners are near retirement and will help with the transition. Under Contract
STS-2658
North Carolina$5 million Medicaid agency. $5 million Medicaid agency. CAP/PCS services. Long history of providing quality services. Under Contract
SBB-4927
Pacific NorthwestFull continuum substance use disorder, mental health and gambling addiction treatment center in Washington state with $3,625,000 in revenue and $1,100,000 EBITDA. 40 bed facility with 40 employees. Strong census, full outpatient program and Medicaid payors. Under Contract
SJD-4921
SouthwestProvider of waiver and intermediate care facility ID/DD services with $25 million in annual revenue. Statewide platform with a strong management team and excellent reputation for quality services. Under Contract
SBH-2042
TexasThree Hospice companies with Three hospice companies with affiliated home health and $6 million in total revenue. Locations in south, southcentral, and southeast Texas. Under Contract
SJL-9650
TexasHome health and hospice covering 10 counties in west Texas/eastern New Mexico with $5 million in revenue. No clinical issues, under CAP. Very profitable. Easily separated. Under Contract
SJL-4994
Texas$4 million home health agency based in Dallas/Ft. Worth. Full staff in place. Medicare and managed care with great contacts.Under Contract
SJL-8406
Texas$3+ million hospice agency based in Dallas/Ft. Worth. Well established with full staff in place. Clinically clean and growing. Under Contract
SJL-6009
Texas$1.4 million revenue pediatric Pediatric therapy business with $1.4 million in revenue. Provides physical therapy (PT), occupational therapy (OT) and speech therapy (ST) to disadvantaged and disabled children in a major Texas city and surrounding counties. Positive reputation for providing quality care in a child-friendly environment. Average census is 190 patients with a goal of 225 for calendar year 2019.Under Contract
SCM-3034

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

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Home Health Index February 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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