Home Health Index | 2018 MAY UPDATE

Home Health Stocks Rebound as Home Health Index Narrows to Two Comapnies

Home Health Stocks Rebound as HHI Narrows To Two Companies

Home health stock prices rebounded in April after a short-lived decline in values in March.

The bounce-back came on the heels of major changes in the sector at the beginning of 2018, including the completion of a mega-merger that will change the scope of the Home Health Index (HHI) created by Stoneridge Partners moving forward.

The HHI, which has long tracked the market values of Almost Family (Nasdaq: AFAM), Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG), has narrowed to two companies following the merger of AFAM and LHCG at the start of April 2018. Almost Family will no longer be included in the HHI because it is no longer traded as an individual stock.

The mega-merger makes LHC Group the second-largest home health care company in the nation, with 775 locations in 36 states and combined annual revenue of nearly $2 billion. The merger also had a profound impact on the company’s stock price, which jumped 20.9% in April from the previous month. Year to date, the stock is up 21.5%.

Despite having closed this enormous transaction, LHC Group seemingly isn’t slowing down on its mergers and acquisitions activity. The company has an active pipeline of 24 ongoing discussions with health systems and hospitals to form home health joint ventures, CEO Keith Myers stated during the company’s recent first quarter earnings call.

Also in April, Amedisys’s (NASDAQ: AMED) stock price rose 9.3%. Amedisys is based in Baton Rouge, Louisiana. During Q1 2018, Amedisys saw its margins swell to their highest levels since 2015, according to quarterly earnings results published in early May. Year to date, the stock is up 25.2%.

Removing Almost Family from the HHI led to significant change in the index. At the end of April, the HHI was up 18.4%, with the recalculation of the index playing a role in the uptick. By comparison, the HHI declined 2.7% in March. Year to date, the index is up 24.4%. Home health stocks weren’t the only ones to rebound from a tough March; the S&P 500 slightly recovered, rising 0.90%.

Share value gains may have been partly buoyed by the announcement that non-skilled in-home care supports will be allowed as a supplemental benefit for Medicare Advantage plans in 2019, the Centers for Medicare & Medicaid Services said in a proposal at the beginning of April. Medicare Advantage is a growing opportunity for the large home health care providers.

“On top of the completion of a major transaction that changed the face of the home health care industry, the news from CMS definitely helped companies overcome a turbulent March,” said Stoneridge Partners President Rich Tinsley. “And with strong first quarter earnings, the coming months may be even better for home health companies.”

Elsewhere in the industry, Frisco,Texas-based Addus HomeCare (Nasdaq: ADUS) continues its positive stock streak. As April ended, Addus’ stock price rose 7.19%. Year-to-date, Addus stock is up 49.86%. Even though Addus is a major personal care services provider, it’s not part of the HHI because little of its revenue comes from Medicare.

Quote Of The Month 

Gone are the days of visiting hours and restricted call times; home health care means friends and family can visit whenever they want. “Receiving care at home allows patients to stay in their own environment within close range to loved ones.  We know this can have a positive impact on mental well being.” – Rebecca Bell, General Manager – Member Health at Medibank

Read the Full Article Here: Five Benefits of Home Health Care

See It To Believe It!

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these two publicly traded home health companies, all listed on the NASDAQ:

  • 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 May 2018 | Stoneridge Partners)

 

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

Company 4/30/18 1 mos change YTD change 4/30/17 4/30/16
Amedisys 65.97 +9.33% +25.16% 57.63 51.49
LHC Group 74.45 +20.94% +21.55% 55.43 40.34
HH Index* 70.21 +18.40% +24.40% 54.24 44.61
S&P 500 2654.8 -.90% -.70% 2388.13 2065.3
Addus 52.15 +7.19% +49.86% 34.6 18.5

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) 4/30/18 4/30/17 4/30/16
Amedisys 2260 1950 1780
LHC Group 1440 1010 756
HH Index Total 3700 3739 3025
Addus 607 409 192


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

Company 4/30/18 4/30/17 4/30/16
Amedisys 150% 137% 145%
LHC Group 136% 122% 98%
HH Index Average* 143% 128% 113%
Addus 145% 102% 57%


Multiples of EV/EBITDA

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

Company 4/30/18 4/30/17 4/30/16
Amedisys 17.59 23.92 19.95
LHC Group 16.08 13.06 9.75
HH Index Average* 16.84 18.92 14.34
Addus 18.44 13.1 8.02

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 May 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Amedisys enlarged its personal care footprint with its subsidiary Associated Home Care’s close of the acquisition of East Tennessee Personal Care Services based in Knoxville, Tennessee.
  • Delphi Behavioral Health Group has merged with Summit Behavioral Health in a deal that brings with it facilities in New Jersey, Massachusetts and Pennsylvania—three new markets for Delphi.
  • National Home Health Care of Cromwell merged with Great Lakes Caring of Jackson and Jordan Health Services of Dallas.

SOLD!!! by Stoneridge

  • Stoneridge Partners, Partner Ben Bogan and Associate Partner Charles Jantzi, provided sell side M&A advisory services in the Addus Homecare & Ambercare transaction with revenue of approximately $57,000,000.

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$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$4.8 million neuroscience-driving recovery treatment center for traumatic brain injury and SUD. Has helped over 180 professional athletes from the NFL, NHL, NBA and MLB. $1.2 million AEBITDA. Great campus offering full continuum of care. Zero competition in this space.
Available
STS-1907
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
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
CaliforniaGrowing $1.9 million revenue. Private pay. Independently owned. Full staff in place. Available
SJL-4483
California$1.6 million Hospice located in Los Angeles County. Consistent census of 25 patients over the last 3 years. Joint commission accredited. Strong bottom line with staff in place. Available
SCM-9679
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
Connecticut$6 million Medicaid/Medicare agency. Nice growth trend. Stable margins, great surveys.Available
SBB-3697
Florida$1.6 million revenue. Pediatric Medicaid agency. Available
SCJ-8520
FloridaMedicare certified home health agency. District 10. Census: Minimal. Accredited.Available
SBA-1233
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
IllinoisHospice. Census in mid-70's. Accredited. Chicago area.Available
SBA-5325
KentuckyMedication-assisted clinic. IOP counseling for substance abuse and co-occurring disorders. Profitable with strong team in place. 150 clients. 95% Medicaid. Available
STS-1093
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/VirginiaLarge Medicare & Medicaid home care agency. Poised for continued growth.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
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 York$13 million revenue LHCSA. 30-year history. Licensed in all 5 boroughs.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
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
OhioSoutheastern Ohio. $3.5 million annual revenue. Diverse referral source mix.Available
SBB-4298
Oklahoma$1.7 million ID/DD agency. Long history in the community. Profitable/recent rate increase. Available
SBB-8891
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.
Available
SJD-4921
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
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$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
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
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$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$1.7 million Medicare home health agency. Located in Southwest Houston. Well-established with predictable referral sources. Very profitable. Available
SJL-6080
Texas48 bed full continuum treatment campus, all in-network. Established management team, 3-year CARF Accredited. $1.7 million of AEBITDA on $6 million of revenue. Major metropolitan market. Great asset for a strategic buyer.
Available
STS-5370
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.
Available
SCM-3034
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$1 million Medicare certified agency. Licensed in 7 counties in the Houston area. 80% is traditional Medicare. Available
SBA-1542
TexasPediatric therapy company in Houston, TX. Census of 165. 75% Medicaid reimbursed. Systems and staff in place. Available
SJL-4615
TexasHome Health agency in Texas. Near Sam Houston National Forest. Clean license with minimal census and minimal revenue. Available
SCM-4098
Texas36 bed full continuum treatment center located near a major metropolitan market. State-of-the-art campus with growth potential. Growing census, in-network for most insurance. Motivated seller
Available
STS-6078
TexasClean hospice provider number. Located in West Texas.Available
SJL-2984
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
Florida$9.5 million Home Health Agency. Very strong operationally, clinically, and financially. 99% of revenue comes from traditional Medicare. Under Contract
SCM-6925
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. Under Contract
SCM-8429
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
FloridaMedicare certified home health agency. $1.4 million annual revenue. 4.5-star & Home Care Elite 2 years running. Accredited. District 3. Motivated Seller. Under Contract
SCJ-1730
FloridaPrivate pay home care agency. Approximately $1,000,000. in annual revenue. Medicare/Medicaid certification. Accredited. W-2 employees. District 8. Under Contract
SBA-3041
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
OklahomaHome Care Agency. Approximately $1.5 million in annual revenue. Predominantly private pay with some LTC, VA, and WC. Outstanding clinical. Great reputation. Under Contract
SBA-2761
Pennsylvania$4.3 million revenue. Home health, home care and hospice agency. 18% bottom line. Under Contract
SJL-7605
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
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$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$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
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.

Another Cartoon Favorite from the New Yorker

May-HHI

     

More

Home Health Index May 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

Please follow us on Facebook  and Linkedin