Home Health Index | 2018 APRIL UPDATE

Home Health Stocks Falter as Economic Uncertainties Linger

Home Health Stocks Falter as Economic Uncertainties Linger

After surviving market turbulence in January and February 2018, home health share prices failed to experience the same buffer in March. The Home Health Index by Stoneridge Partners, which tracks the market value of the three largest public home health companies — Almost Family (NASDAQ: AFAM), LHC Group (NASDAQ: LHCG) and Amedisys (NASDAQ: AMED) — fell 2.67% last month, roughly tracking the overall stock market. By comparison, the S&P declined 3.10% in March.

The good news: not every company in the HHI experienced stock price declines. Year to date, the HHI is up 5.07%. Amedisys, based in Baton Rouge, Louisiana, saw its stocks climb 2.14%. The increase may be a positive response to news in March that Amedisys received an average Quality of Patient Care Star Rating of 4.22 (out of a possible 5 stars total) from the Centers for Medicare & Medicaid Services. That rating is approximately 30% higher than the industry average.

Louisville Kentucky-based Almost Family’s stock fell 5.12%, while Lafayette, Louisiana-based LHC Group experienced a drop of 4.43% during March. On March 29, Almost Family and LHC Group completed their long-discussed merger. The all-stock merger created the second-largest home health provider in the country with an annual revenue of nearly $1.8 billion. Kindred Healthcare (NYSE: KND) remains the largest home health company in the industry, though its home health and hospice business is also undergoing an acquisition by Humana (NYSE: HUM).

However, home health companies may fare better following an April 2 announcement from CMS that non-skilled in-home care supports will be allowed as a supplemental benefit for Medicare Advantage plans in 2019.

“Home health providers surely welcome this change, and this announcement puts companies in a strong position for April and the remainder of 2018,” said Stoneridge Partners President Rich Tinsley. “That’s good news after a rocky March that saw declines in the HHI and S&P 500, as investors reacted to fears over major economic uncertainties, including a potential trade war with China and other countries rattled markets.”

Also of note in the home health industry, Frisco, Texas-based Addus HomeCare (NASDAQ: ADUS) stock prices rose 39% after it announced it achieved a new record for net service revenue during Q4 2017. Addus, a major personal care services provider, is not part of the HHI because little of the company’s revenue comes from Medicare.

Quote Of The Month 

“It’s easier for seniors to plan their own funerals than to budget and plan for assisted living.  I think the thought that they might not be able to care for themselves is frightening.  You know that death is going to happen. But you don’t know what you’re going to go through on the way there.” – Karen Hanson, the community service manager for Home Instead Senior Care.

Read the Full Article Here: Senior care planning should begin early

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 April 2018 | Stoneridge Partners)

 

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

Company 3/31/18 1 mos change YTD change 3/31/17 3/31/16
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) 3/31/18 3/31/17 3/31/16
Almost Family 879 750 444
Amedisys 2090 1790 1670
LHC Group 1280 1050 670
HH Index Total 4249 3590 2784
Addus 500 391 180


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

Company 3/31/18 3/31/17 3/31/16
Almost Family 110% 120% 87%
Amedisys 138% 126% 136%
LHC Group 120% 117% 87%
HH Index Average* 123% 121% 103%
Addus 120% 98% 54%


Multiples of EV/EBITDA

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

Company 3/31/18 3/31/17 3/31/16
Almost Family 25.02 19.05 12.09
Amedisys 16.29 21.96 18.76
LHC Group 14.27 12.51 8.64
HH Index Average* 18.53 17.84 13.16
Addus 15.21 12.54 7.52

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 April 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 the business assets of Home Health Solutions, Inc. located in Holyoke, Massachusetts.
  • LHC Group, a Louisiana-based home health care provider has become the second-largest in the United States with the completion of its acquisition of Almost Family, a Kentucky-based firm.

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
ArizonaMedicare/Medicaid certified Home Health Agency. $1.8 million in annual revenue. 90% Medicaid/10% Medicare. Phoenix metropolitan area. Accredited. 5 star rating.Available
SBA-9188
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
SJD-2579
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. Available
SJD-4380
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
SJD-8481
CaliforniaGrowing $1.9 million revenue. Private pay. Independently owned. Full staff in place. Available
SJL-4483
California32 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
SJD-2449
CaliforniaTrauma 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
SJD-6424
Colorado65 bed full continuum treatment center in Mountain West. #1 million EBITDA. Motivated seller seeking timely close. Great census and solid numbers.Available
SJD-1453
FloridaMedicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.Available
SBA-8305
Florida$2.5 million Medicare agency in Port St. Lucie. Great reputation and clinicals.Available
SCM-6191

Florida$1.5 million non-skilled private duty home health business. Strong management team in place. District 1.Available
SCM-1148
FloridaMedicare certified home health agency. Accredited. Minimal census. District 3.Available
SBA-7932
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

Illinois$2.8 million Home Health agency. 100% Medicare. Loyal caregiver and patient base. Available
SCM-3291
IndianaGreater Indy metro area. $6 million revenue. Medicare certified. Diverse payor mix. Long history in the community.Available
SBB-5251
Indiana$2 million Medicare home health agency. Recent improvements, poised for growth. Great referral relationships. Available
SBB-7667
Maryland/DC/VirginiaLarge Medicare & Medicaid home care agency. Poised for continued growth.Available
SBB-7499
Massachusetts$10+ million Medicare and Medicaid certified Home Health agency. Diverse payor sources. Strong Management in place.Available
SBA-6010
Minnesota$8 million Medicaid agency. Well-established in metropolitan service area with staff in place.Available
SBB-7085
New YorkLHCSA in New York metro area. $10 million annual revenue. Consistent growth year over year. Available
SBB-8249
New YorkAnnualizing at $1.3 million revenue. 40% Non-Medicare/Private Insurance skilled nursing. 45% Managed LTC. Southern New York. Joint Commission Accreditation.Available
SBA-6824
North Carolina$1 million ID/DD Agency. Long-term client base. Growth potential with real estate. Strong margins. Available
SBH-9905
OhioMedicare/Medicaid agency in Columbus area. $4.5 million annual revenue. Long-standing reputation in the community. Profitable.Available
SBB-9067
OhioSoutheastern Ohio. $3.5 million annual revenue. Diverse referral source mix.Available
SBB-4298
OhioMedicare/Medicaid home health agency. $250,000 annual revenue. Accredited.Available
SBA-3951
Oregon$1.4 million Private Duty business located in Central OR. Serving an affluent community near local resort for over 30 years. Long term employees in place with well-established referral base.Available
SCM-7208
PennsylvaniaPrivate duty, non-medical home care company. $9.9 million current annual run rate. Eastern Pennsylvania. Highly profitable. Strong management team in place.Available
SBA-1009
Pennsylvania$4.3 million revenue. Home health, home care and hospice agency. 18% bottom line. Available
SJL-7605
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.Available
SCJ-5009
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
SJL-5558
Southwest$25 million in annual revenue. Provider of Waiver and ICF ID/DD Services. Statewide Platform. Strong management team. Excellent reputation for quality services. Available
SBH-2042
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
TennesseeGreat opportunity for isolated campus setting full continuum SUD and mental health treatment center. Appalachian Mountain area. 8,700 square foot building currently on premises, professional kitchen, 6 bedrooms, 7 full baths, 4 half baths, swimming pool, tennis court. Hour away from metropolitan area.Available
SJD-8267
TexasAlmost 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.Available
SJL-5800
Texas$3.5 million home health agency in Houston (metro). Diversified agency - 70% Medicare, 30% private pay. Inherent capacity for growth.Available
SJL-2000

Texas$3+ million hospice agency based in Dallas/Fort Worth. Well established. Clinically clean and growing. Full staff in place. Available
SJL-6009
Texas$2 million run rate. 80% Medicare and profitable home health. Located in South Texas. Well staffed. Clean record of compliance.Available
SJL-6912
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
SJL-8770
Texas$450,000+ Medicare certified Dallas area home care company. Fully staffed & clean clinically.Available
SJL-3334
TexasClean hospice provider number. Located in the Ft. Worth, TX area.Available
SJL-5067
TexasClean hospice provider number. Located in TX.Available
SJL-2984
Upper Midwest$7.6 million revenue. Profitable home health and hospice. JCAHO accredited. 4-star rating. Ranked as a top performer in agency outcomesAvailable
SJL-2770
USAMedicare certified home health agency and hospice. Providing home health, personal care, and hospice services. $14.5 million current annual run rate. Strong financials. Accredited. Strong management team in place. Excellent reputation and outcomes. Multiple locations. Franchise to one of the nations top franchisors.Available
SCM-2994
Virginia$6 million Medicare certified agency in Northern Virginia. Available
SBA-7366
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
SCM-1483
Georgia$2 million home health agency. Private duty in great location. Well-established business. Staff in place. Under Contract
SBB-6772
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. 5 star rating. Under Contract
SCM-6925

FloridaMedicare certified home health agency. $4.7 million in revenue. Accredited. 4.5 stars. District 7. Great management team in place.Under Contract
SBA-8426
FloridaNon-skilled home care agency. $600,000 in annual revenue. Outstanding reputation and quality service. Key staff in place. District 5.Under Contract
SBA-3885
FloridaMedicare certified home health agency. District 10. Census: Minimal. Accredited.Under Contract
SBA-1233
FloridaMedicare certified home health agency. Accredited. Minimal census. District 9.Under Contract
SBA-5882
New Mexico$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community. Staff in place.Under Contract
SBA-5295
Ohio$2 million ID/DD Provider. Diversified services. Highly profitable (20%+). Tenured management with growth opportunities.Under Contract
SBH-3347
Pacific Northwest$ 3 million full continuum of care substance abuse treatment facility. Long time, well established business. Mostly Medicaid. Great opportunity. Under Contract
SJD-4921
Southeast/Midwest8 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. Under Contract
SJD-7830
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
SBA-7440
Western Pennsylvania$2.8 million Home Health agency in Western Pennsylvania. Family owned since 1994. Outstanding local reputation. CHAP certified. Under Contract
SCM-9210
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
SBA-3650
Texas$1 million Medicare certified agency. Licensed in 7 counties in the Houston area. 80% is traditional Medicare. Under Contract
SBA-1542

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 April 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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