Home Health Stocks Cool Off After Months of Growth
Home Health Stocks Cool Off After Months of Growth
After several months of robust growth, home health stocks have leveled off somewhat, though a plateau may be relatively short-lived.
Despite regulatory obstacles on the horizon, home health stocks saw strong growth in June, July and August. September yielded mixed results, however, according to Stoneridge Partners’ latest Home Health Index, updated monthly.
Overall, the Home Health Index was up by 0.74% in September over the previous month. Bucking summer’s recent trends, the Index slightly unperformed the broader market, as the S&P 500 climbed by 1.42% in September compared to the previous month.
Stoneridge Partners’ Home Health Index charts the market values of Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG), two of the largest publicly traded and independent home health care companies in the country.
“Home health stocks had been seeing double-digit levels of growth in some cases, so a slowdown was bound to happen at some point,” Stoneridge Partners President Rich Tinsley said. “Amedisys, in particular, had been seeing very strong growth of late, which really wasn’t the case last month.”
Amedisys’ stock dipped 1.12% in September compared to August, according to the Index. Amedisys maintains an executive office in Nashville, Tennessee, with a corporate headquarters in Baton Rouge, Louisiana.
While Amedisys’ stock value fell slightly, LHC Group’s stock rose. Lafayette, Louisiana-based LHC Group’s stock ticked upward by 3.08% in September compared to the previous month.
The Home Health Index was up 99.86% in September on a year-to-date basis.
Although home health stocks did see a slowdown, they’re primed to possibly rebound in months ahead, as industry stakeholders have partnered with legislators in both the U.S. House of Representatives and Senate to reshape the widely opposed behavioral adjustment aspect of the Patient-Driven Groupings Model (PDGM).
“The home health industry is facing some pressures, most notably in the form of PDGM, which could be the biggest change to home health care in years,” Tinsley said. “But the industry as a whole has proven it’s capable in terms of advocacy and outreach, so we’re optimistic.”
In addition to Amedisys and LHC Group, the Home Health Index also tracks Frisco, Texas-based Addus HomeCare Corporation (Nasdaq: ADUS), though it does not include the company in its monthly update. This is due to the fact that Addus’ revenue comes mainly from Medicaid rather than Medicare.
Addus’ stock jumped 6.76% in September compared to the previous month, according to the Index.
Quote Of The Month
“Today’s homecare professionals are incredibly skilled clinicians who are extremely self-reliant and detail-oriented. They can think critically and creatively to try and keep patients out of the hospital, and are the advocates for the patients – with the physician, caregivers, and other outside agencies. Nurses and other clinicians who are interested in home care need to be open to working in a setting that is different from the traditional clinical setting. Patients are able to remain at home because our clinicians make a difference in their lives.” ~ Marla Duerr, Vice President of Patient Care Services for Catholic Health Home and Community Based 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 October 2018 | Stoneridge Partners)
Here are the results of the stock prices for the past two years:
|Company||9/30/18||1 mos change||YTD change||9/30/17||9/30/16|
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)||9/30/18||9/30/17||9/30/16|
|HH Index Total||7510||4226||3005|
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*||256%||133%||102%|
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*||30.27||20.05||14.20|
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 October 2018 | Stoneridge Partners)
Recent Transactions From Around The Country
- Hospice Source, the National Leader in Hospice DME aquired Harrisburg, Pennsylvania based Dynamic Health Services, Inc.
- Bristol Hospice LLC, a portfolio company of Webster Capital acquired Optimal Health Services and Suncrest Hospice
- VITAS Healthcare, the nation’s leading provider of end-of-life care acquired Hospice of Citrus and the Nature Coast
SOLD!!! By Stoneridge
- Sonas Home Health Care, a portfolio company of Boyne Capital, acquired Advanced Nursing Solutions, a Tampa-based pediatric home-care provider. Sell side advisory services provided by Partner Ben Bogan.
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||$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|
|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||Medicare 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|
|California||Growing $1.9 million revenue. Private pay. Independently owned. Full staff in place.||Available|
|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|
|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|
|Connecticut||$6 million Medicaid/Medicare home care agency. 13-year history, clean surveys. Consistent growth.||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||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|
|Illinois||Hospice. Census in mid-70's. Accredited. Chicago area.||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||Medicare and Medicaid certified Home Health agency. |
$13+ million in annual revenue and growing. Diverse payor mix. Strong Management in place. Accredited.
|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|
|New York||$13 million revenue LHCSA. 30-year history. Licensed in all 5 boroughs.||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||Southeastern Ohio. $3.5 million annual revenue. Diverse referral source mix.||Available|
|Oklahoma||$1.7 million ID/DD agency. Long history in the community. Profitable/recent rate increase.||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||$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 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||$2.3 million Medicare revenue. 85% Traditional Medicare. Service area in 5 counties around Taylor County, as well as Region 2 & 9.||Available|
|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.||Available|
|Texas||$1.7 million Medicare home health agency. Located in Southwest Houston. Well-established with predictable referral sources. Very profitable.||Available|
|Texas||48 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|
|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||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||36 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|
|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||$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|
|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||
|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||$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||
|Florida||Medicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.||Under Contract||
|Florida||$1.5 million non-skilled private duty home health business. Strong management team in place. District 1.||Under Contract||
|Florida||Private pay home care agency. Approximately $1,000,000. in annual revenue. Medicare/Medicaid certification. Accredited. W-2 employees. District 8.||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||
|Minnesota||$8 million Medicaid agency. Well-established in metropolitan service area with staff in place.||Under Contract||
|Oklahoma||Home Care Agency. Approximately $1.5 million in annual revenue. Predominantly private pay with some LTC, VA, and WC. Outstanding clinical. Great reputation.||Under Contract||
|Pennsylvania||Private duty, non-medical home care company. $9.9 million current annual run rate. Eastern Pennsylvania. Highly profitable. 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||$3+ million hospice agency based in Dallas/Fort Worth. Well established. Clinically clean and growing. Full staff in place.||Under Contract||
|Virginia||$6 million Medicare certified agency in Northern Virginia.||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 October 2018 | Stoneridge Partners