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
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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|
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|
|HH Index Total||4249||3590||2784|
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*||123%||121%||103%|
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*||18.53||17.84||13.16|
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|
|California||$11 million revenue southern California home health and hospice showing double digit revenue growth the last two years. Very well established, highly profitable and JCAHO accredited.||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||$3.5 million private duty home health agency on Florida's east coast. CHAP accredited. 26 years of outstanding service. Diversified pay mix; Private duty, Workers comp, Private pay, and Long-term care insurance. Strong management and support staff.||Available|
|Florida||Medicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.||Available|
|Florida||Medicare certified home health agency. $1.4 million annual revenue. 4.5-star & Home Care Elite 2 years running. Accredited. District 3. Motivated Seller.||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|
|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|
|Kentucky||Medication-assisted clinic. IOP counseling for substance abuse and co-occurring disorders. Profitable with strong team in place. 150 clients. 95% Medicaid.||Available|
|Louisiana||Boutique 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.
|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|
|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|
|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|
|Oklahoma||Home Care Agency. Approximately $1.5 million in annual revenue. Predominantly private pay with some LTC, VA, and WC. Outstanding clinical. Great reputation.||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-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.
|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|
|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||64 bed full continuum treatment center in 2 Southwest US metropolitan cities.|
$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.
|South Texas||Hospice. $3.5 million in annual revenue. Accredited. Clean: No cap or regulatory issues.||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||Pediatric therapy company in Houston, TX. Census if 165. |
75% Medicaid reimbursed. Systems and staff in place.
|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|
|USA||New 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.
|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 April 2018 | Stoneridge Partners