Home Health Stocks off To Hot Summer Start
Home Health Stocks off To Hot Summer Start
Home health stock prices rebounded in April after a short-lived decline in values in March.
Following a turbulent spring, home health stocks appear poised to enjoy a strong summer. The positive gains are reflected in the latest Home Health Index (HHI), which tracks the market values of the nation’s two largest publicly held home health care providers, published by Stoneridge Partners.
It’s now been two months since Almost Family (Nasdaq: AFAM) and LHC Group (Nasdaq: LHCG) completed their merger, which doubled the size of LHC Group. As a result, May represented the second month in which the HHI comprises two companies only, because Almost Family is no longer traded as an individual stock.
At the end of May, the HHI was up 11.4% month over month . Year to date, the index is up 36.4%. Comparatively, the S&P 500 slightly rose by 2.9% over the same time period.
The overall stock rally comes as a number of M&A deals are closing around the home health industry.
“Today’s M&A landscape is highly competitive and hotter than ever,” said Stoneridge Partners President Rich Tinsley. “As more deals take place, the future appears strong for companies that aggressively seek to be acquired or to grow through acquisition.”
Last month, LHC Group’s stock price increased 4.52%. Year-to-date, the company’s stock is up 26.1%. As May came to a close, LHC Group CEO Keith Myers discussed the industry’s energetic merger and acquisition landscape during the 2018 UBS Global Healthcare Conference in New York City. According to Myers, the mega-merger gives the Lafayette, Louisiana-based company a strong foundation for future mergers, particularly deals focused on personal care services.
May was also another strong month for Amedisys Inc. (Nasdaq: AMED); the Baton Rouge, Louisiana-based company’s stock price rose 17.7%. The home health care provider is also seeing its own stock as valuable. At the start of June, it was reported that Amedisys bought back $178 million worth of stock from the global investment firm, KKR (NYSE: KKR). Year-to-date, Amedisys’ stock is up 45.5%.
Elsewhere in the industry, Frisco,Texas-based Addus HomeCare (Nasdaq: ADUS) stock continued to rise in May, closing the month with a 12.5% rally. Year-to-date, Addus’ stock is up 67.4%. 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.
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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 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 June 2018 | Stoneridge Partners)
Here are the results of the stock prices for the past two years:
|Company||5/31/18||1 mos change||YTD change||5/31/17||5/31/16|
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)||5/31/18||5/31/17||5/31/16|
|HH Index Total||3940||3609||3213|
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*||137%||117%||110%|
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*||18.01||14.97||15.33|
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 June 2018 | Stoneridge Partners)
Recent Transactions From Around The Country
- Private equity firm, KKR acquired Nashville-based Envision Healthcare Corporation
SOLD!!! by Stoneridge
- Stoneridge Partners, Associate Partner Coley McDevitt, provided sell side M&A advisory services in the sale of Divine Home Healthcare, Inc to Pioneer Group, LLC.
- Stoneridge Partners, Partner Brian Bruenderman, provided sell side M&A advisory services in the sale of Christian Care Communities to Amedisys, Inc.
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|
|Arizona||Medicare/Medicaid certified Home Health Agency. $1.8 million in annual revenue. 90% Medicaid/10% Medicare. Phoenix metropolitan area. Accredited. 5 star rating.||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||$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|
|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|
|Colorado||65 bed full continuum treatment center in Mountain West. #1 million EBITDA. Motivated seller seeking timely close. Great census and solid numbers.||Available|
|Florida||Medicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.||Available|
|Florida||$2.5 million Medicare agency in Port St. Lucie. Great reputation and clinicals.||Available|
|Florida||$1.5 million non-skilled private duty home health business. Strong management team in place. District 1.||Available|
|Florida||Medicare certified home health agency. Accredited. Minimal census. District 3.||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||Greater Indy metro area. $6 million revenue. Medicare certified. Diverse payor mix. Long history in the community.||Available|
|Indiana||$2 million Medicare home health agency. Recent improvements, poised for growth. Great referral relationships.||Available|
|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|
|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|
|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|
|Ohio||Medicare/Medicaid home health agency. $250,000 annual revenue. Accredited.||Available|
|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|
|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|
|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|
|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|
|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|
|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|
|Tennessee||Great 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|
|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.||Available|
|Texas||$3.5 million home health agency in Houston (metro). Diversified agency - 70% Medicare, 30% private pay. Inherent capacity for growth.||Available|
|Texas||$3+ million hospice agency based in Dallas/Fort Worth. Well established. Clinically clean and growing. Full staff in place.||Available|
|Texas||$2 million run rate. 80% Medicare and profitable home health. Located in South Texas. Well staffed. Clean record of compliance.||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||$450,000+ Medicare certified Dallas area home care company. Fully staffed & clean clinically.||Available|
|Texas||Clean hospice provider number. Located in the Ft. Worth, TX area.||Available|
|Texas||Clean hospice provider number. Located in TX.||Available|
|Upper Midwest||$7.6 million revenue. Profitable home health and hospice. JCAHO accredited. 4-star rating. Ranked as a top performer in agency outcomes||Available|
|USA||Medicare 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|
|Virginia||$6 million Medicare certified agency in Northern Virginia.||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|
|Georgia||$2 million home health agency. Private duty in great location. Well-established business. Staff in place.||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. 5 star rating.||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||Non-skilled home care agency. $600,000 in annual revenue. Outstanding reputation and quality service. Key staff in place. District 5.||Under Contract||
|Florida||Medicare certified home health agency. District 10. Census: Minimal. Accredited.||Under Contract||
|Florida||Medicare certified home health agency. Accredited. Minimal census. District 9.||Under Contract||
|New Mexico||$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community. Staff in place.||Under Contract||
|Ohio||$2 million ID/DD Provider. Diversified services. Highly profitable (20%+). Tenured management with growth opportunities.||Under Contract||
|Pacific Northwest||$ 3 million full continuum of care substance abuse treatment facility. Long time, well established business. Mostly Medicaid. Great opportunity.||Under Contract||
|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.||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||
|Western Pennsylvania||$2.8 million Home Health agency in Western Pennsylvania. Family owned since 1994. Outstanding local reputation. CHAP certified.||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||
|Texas||$1 million Medicare certified agency. Licensed in 7 counties in the Houston area. 80% is traditional Medicare.||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 June 2018 | Stoneridge Partners