Home Health Index | 2018 MARCH UPDATE

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$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
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$1.6 million revenue. Pediatric Medicaid agency. Available
SBA-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

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
Minnesota$9 million Medicaid agency. Consistent growth & profitability. Recent rate increase. Attractive Medicaid margin. Available
SBB-7085
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$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
TexasThree Hospice companies with affiliated home health. $6 million total revenue. South, South Central, and South East Texas locations. Available
SJL-9650
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$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 million Medicare certified agency. Licensed in 7 counties in the Houston area. 80% is traditional Medicare. Available
SBA-1542
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$9.5 million Home Health Agency. Very strong operationally, clinically, and financially. 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
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
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. Under Contract
STS-2658
New York$13 million revenue LHCSA. 30-year history. Licensed in all 5 boroughs.Under Contract
SBB-8249
North Carolina$5 million Medicaid agency. CAP/PCS services. Long history, quality services. Under Contract
SBB-4927
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$5.3 million all Medicaid Home Care company located in Houston, TX. 20%+ year over year revenue growth since 2016. Nice bottom line.Under Contract
SJL-3670
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$1.7 million Medicare home health agency. Located in Southwest Houston. Well-established with predictable referral sources. Very profitable. Under Contract
SJL-6080
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 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

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