Home Health Care Stocks Weather Turbulent Market in February
Home Health Stocks Weather Turbulent Market in February
Home health stocks successfully withstood highly volatile late-January and early-February markets to rebound by month’s end. In fact, 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 4.86% last month. Home health stocks fared far better than the S&P 500, which actually declined 3.77% in February.
February was marked by a two-year budget deal that contained many health care provisions impacting the home health care industry. The deal was signed into law Feb. 9. The budget included provisions for a new payment model for home health by 2020 that was budget neutral, unlike the previous home health groupings (HHGM) model. The HHGM model, as it was originally proposed in 2017, would have potentially cut up to $950 million from in payments to the industry.
“The home health care sector was buoyed by overall good news within the Bipartisan Budget Act of 2018,” said Stoneridge Partners President Rich Tinsley. “The new payment reform revisions position the home health industry for a strong 2018. Despite significant regulatory changes, the market rewarded the sector’s increased stability in February.”
Baton Rouge, Louisiana-based Amedisys saw the largest gains in February. Stocks rose 11.97%. Year-to-date, Amedisys stock prices are up 12.33%.
Almost Family, based in Louisville, Kentucky, posted the second-largest gains last month, as stock prices increased 2.34%. Finally, LHC Group saw stocks rise 1.23%. The merger between Almost Family and LHC Group is back on track after hitting a road bump last month. The planned merger is now expected to close in the summer of 2018.
However, not all home health companies had good news to celebrate when February came to a close. Addus Homecare Corporation (Nasdaq: ADUS), which is not part of the HHI because very little of the company’s income comes Medicare, saw stocks fall 6.15%. Year-to-date, Addus stock is down 1.29%. Also in February, Addus HomeCare Corporation (NASDAQ: ADUS), a provider of comprehensive home care services, had positive news to announce with the signing of a definitive agreement to purchase Ambercare Corporation, Inc., a provider of personal care, hospice and home health services, headquartered in Albuquerque, New Mexico.
Quote Of The Month
“Home care can relieve pressure on hospitals where many patients are occupying hospital beds when they could and should be in the comfort of their own homes. Families go in desperation to the emergency room when they, as caregivers, have burned out and don’t know where else to turn. Hospitals run out of beds but can’t discharge a patient without knowing the person has a safety net.” said Sue VanderBent, CEO of Home Care Ontario.
Read the Full Article Here: Home Care could be answer to 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 March 2018 | Stoneridge Partners)
Here are the results of the stock prices for the past two years:
| Company | 2/28/18 | 1 mos change | YTD change | 2/28/17 | 2/28/16 |
| Almost Family | 58.95 | +2.34% | +6.50% | 49.85 | 38.58 |
| Amedisys | 59.21 | +11.97% | +12.33% | 51.2 | 38.2 |
| LHC Group | 64.38 | +1.23% | +5.11% | 48.52 | 36.84 |
| HH Index* | 60.85 | +4.86% | +7.81% | 49.86 | 37.87 |
| S&P 500 | 2718.5 | -3.77% | +1.68% | 2396.96 | 1948.05 |
| Addus | 34.35 | -6.15% | -1.29% | 33.7 | 23.41 |
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) | 2/28/18 | 2/28/17 | 2/28/16 |
| Almost Family | 948 | 645 | 456 |
| Amedisys | 2020 | 1700 | 1330 |
| LHC Group | 1310 | 949 | 693 |
| HH Index Total | 4278 | 3294 | 2480 |
| Addus | 410 | 352 | 246 |
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
| Company | 2/28/18 | 2/28/17 | 2/28/16 |
| Almost Family | 119% | 105% | 89% |
| Amedisys | 134% | 123% | 108% |
| LHC Group | 131% | 108% | 90% |
| HH Index Average* | 128& | 112% | 96% |
| Addus | 99% | 92% | 74% |
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
| Company | 2/28/18 | 2/28/17 | 2/28/16 |
| Almost Family | 26.99 | 13.87 | 12.44 |
| Amedisys | 16.08 | 21.47 | 14.92 |
| LHC Group | 13.99 | 11.52 | 8.94 |
| HH Index Average* | 19.02 | 15.62 | 12.10 |
| Addus | 12.02 | 13.28 | 10.28 |
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 March 2018 | Stoneridge Partners)
Recent Transactions From Around The Country
- Nova Leap Health Corp, based in Halifax, Nova Scotia, an international provider of personal home care and support services acquired Family Tree Home Care, based in Central Massachusetts.
- Traditions Healthcare Holding Company, LLC, a portfolio company of Dorilton Capital Advisors, LLC acquired ProCare Hospice Corp., based in Oxnard, California.
Signed Deal by Stoneridge
- Addus HomeCare increases presence in New Mexico with agreement to purchase Ambercare Corporation. Sell side advisory services during the acquisition was provided by Partner Ben Bogan and Associate Partner Charles Jantzi. See article here: Addus HomeCare increases presence in New Mexico
Exclusively Listed For Sale By Stoneridge Partners
| State | Agency Profile | Status | Reference Number |
|---|---|---|---|
| Arizona | Opportunity 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 |
| California | Medicare-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 |
| Colorado | Opportunity to establish Medicare home health agency. Denver market. ACHC accreditation until 2022. | Available | SJL-7771 |
| Florida | Medicare-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 |
| Georgia | ID/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 |
| Louisiana | Boutique 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 |
| Massachusetts | Medicare- 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 |
| Massachusetts | Medicare- 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 |
| Michigan | Medicare 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-State | Well-established pediatric provider. Revenue more than $40 million. Medicaid and insurance accepted. | Available | SBB-2138 |
| Nevada | Medicare-certified home health agency in Las Vegas area. Approximately $1 million in annual revenue. Accredited. | Available | SBA-8367 |
| New Mexico | Home 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 York | Licensed 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 York | Licensed 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 |
| Oklahoma | Medicare-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 |
| South | Treatment 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 |
| South | Full 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 |
| South | Partial 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 |
| Southwest | 64 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-Atlantic | Home 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 Texas | Hospice with $3.5 million in annual revenue. Accredited. No cap or regulatory issues. | Available | SBA-8064 |
| Tennessee | Very 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 |
| USA | New 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 |
| Virginia | Physical 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 |
| West | Premier provider of primary mental health services for adolescents aged 13-18 with two locations. Currently growing in-network contracts. | Available | SJD-7984 |
| East | Healthcare 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 |
| Florida | Medicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10. | Under Contract | SBA-8305 |
| Kentucky | Medication-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 |
| Kentucky | Medication-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 Northwest | Full 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 |
| Southwest | Provider 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 |
| Texas | Three 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 |
| Texas | Home 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.
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Home Health Index March 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