Home Health Index | 2018 NOVEMBER UPDATE

Mirroring Market Trends, Home Health Stocks Dip

Mirroring Market Trends, Home Health Stocks Dip

Home health stocks had been showing signs of cooling off moving into October. They now appear to firmly be trending downward.

Home health stocks dropped 11.23% in October compared to the previous month, according to mergers-and-acquisitions firm Stoneridge Partners’ most recent Home Health Index (HHI). Updated on a monthly basis, the HHI monitors the market values of the two largest publicly traded and independent home health companies in the United States: Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG).

Year to date, the HHI is still up more than 77%, reflective of the strong momentum home health stocks had been seeing for most of 2018.

Although home health stocks were down in October, it’s difficult to say how much of that decline was tied to industry outlook, as opposed to a broader market dip, Stoneridge Partners President Rich Tinsley said. The S&P 500 was down 6.93% in October compared to the previous month, for example, experiencing its worst month since at least September 2011.

“U.S. markets lost nearly $2 trillion in October, so it wasn’t exactly a great month all around,” Tinsley said. “Home health stocks were down even more than the S&P,  so the dip could be industry-specific, perhaps, tied to investors’ not-so-optimistic outlook of what policymakers are doing.”

As expected, the Centers for Medicare & Medicaid Services issued its final home health payment rule at the end of October, increasing the Medicare payment rate to providers by 2.2% next year. The agency projects that increase to be about $420 million.

CMS also announced it was finalizing its Patient-Driven Groupings Model, including widely opposed behavioral adjustment components that some critics say will negatively affect home health agencies once the payment reform is implemented in 2020.

Baton Rouge, Louisiana-based Amedisys’ stock dipped 10.04% in October compared to September. Year to date, Amedisys stock was up 110.97%, according to the HHI. Amedisys also has an executive office in Nashville, Tennessee.

Lafayette, Louisiana-based LHC Group’s stock likewise dropped in October, falling by 12.67% compared to the previous month. LHC Group’s stock was up 45.50% year to date.

In addition to Amedisys and LHC Group, Stoneridge Partner’s HHI also tracks the stock activity of Addus HomeCare Corporation (Nasdaq: ADUS). The Frisco, Texas-based home care and hospice provider is not included in the final HHI analysis, however, because Addus derives most of its revenue from Medicaid sources.

Addus saw its stock drop by 5.05% in October compared to the previous month. Year to date, Addus stock was up 89.05%.

Quote Of The Month 

“You’re focused on medical and social issues because you know you can’t take care of people like the homebound unless you’re attending to both of those realms” – Bruce Leff, director of the Center for Transformative Geriatric Research and a professor of medicine at Johns Hopkins University

Read the Full Article Here: Full Care Spectrum Will One Day Be Provided in People’s Homes 

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 November 2018 | Stoneridge Partners)

 

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

Company 10/31/18 1 mos change YTD change 10/31/17 10/31/16
Amedisys 111.20 -10.04% +110.97% 46.45 49.49
LHC Group 89.06 -12.67% +45.40% 66.55 35.93
HH Index* 100.13 -11.23% +77.42% 53.13 40.68
S&P 500 2722.05 -6.93% +1.81% 2575.50 2179.98
Addus 65.79 -5.05% +89.05% 35.30 24.87

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) 10/31/18 10/31/17 10/31/16
Amedisys 3570 1660 1730
LHC Group 3220 1300 735
HH Index Total 6790 3712 2980
Addus 744 444 313


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

Company 10/31/18 10/31/17 10/31/16
Amedisys 226% 114% 113%
LHC Group 238% 135% 86%
HH Index Average* 232% 118% 97%
Addus 163% 108% 87%


Multiples of EV/EBITDA

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

Company 10/31/18 10/31/17 10/31/16
Amedisys 23.66 15.80 18.45
LHC Group 31.19 14.13 9.14
HH Index Average* 27.43 16.19 13.51
Addus 20.62 13.30 12.94

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 November 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Briggs Healthcare acquired Selman-Holman & Associates to expand Home Health Compliance Portfolio
  • Nova Leap Health Corp, an international provider of personal home care and support services, acquired the business assets of New Hampshire-based Living at Home SeniorCare

SOLD!!! By Stoneridge

  • Stoneridge Partners represented a Colorado based agency in a transaction that closed in October 2018
  • Stoneridge Partners represented an Ohio based agency in a transaction that closed in October 2018
  • Stoneridge Partners represented a Texas based agency in a transaction that closed in October 2018
  • Stoneridge Partners represented an Arizona based agency in a transaction that closed in October 2018
  • Stoneridge Partners represented a Georgia based agency in a transaction that closed in October 2018

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$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
SJL-6004
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$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
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
SCM-8429
FloridaMedicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.Available
SBA-8305
FloridaMedicare certified home health agency. $1.4 million annual revenue. 4.5-star & Home Care Elite 2 years running. Accredited. District 3. Motivated Seller. Available
SCJ-1730
FloridaPrivate pay home care agency. Approximately $1,000,000. in annual revenue. Medicare/Medicaid certification. Accredited. W-2 employees. District 8. Available
SBA-3041
FloridaMedicare certified home health agency. Approximately $400,000 in annual revenue. Accredited. District 7.Available
SBA-9008
FloridaMedicare certified home health agency. District 10. Census: Minimal. Accredited.Available
SBA-1233
Georgia$5 million annual revenue private duty agency. Metro Atlanta service area. Well-positioned for additional growth. Available
SBB-5907
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
Indiana$6 million annual revenue. Medicare/Medicaid home health agency. Serves Valparaiso and surrounding areas. CHAP accreditedAvailable
SBB-9361
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
Massachusetts$10+ million Medicare and Medicaid certified Home Health agency. Diverse payor sources. Strong Management in place.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$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
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
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
OklahomaHome Care Agency. Approximately $1.5 million in annual revenue. Predominantly private pay with some LTC, VA, and WC. Outstanding clinical. Great reputation. Available
SBA-2761
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
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
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. Available
SJD-7830
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 TexasHospice. $3.5 million in annual revenue. Accredited. Clean: No cap or regulatory issues. Available
SBA-8064
Texas$3+ million hospice agency based in Dallas/Fort Worth. Well established. Clinically clean and growing. Full staff in place. Available
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.Available
SJL-3670
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$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
Texas$450,000+ Medicare certified Dallas area home care company. Fully staffed & clean clinically.Available
SJL-3334
TexasPediatric therapy company in Houston, TX. Census if 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
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$6 million Medicare certified agency in Northern Virginia. Available
SBA-7366
Virginia$2.3 million revenue Physical Therapy and Wellness operation. 95% cash pay. Potential to franchise Nationwide. 2018 EBITDA $257,000. Available
SCM-7368
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
Washington DCOpportunity to establish a Medicare/Medicaid home health agency. Certificate of Need subject to regulatory approval. Rare offering. Available
SBB-6706
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
SJD-4380
Colorado65 bed full continuum treatment center in Mountain West. #1 million EBITDA. Motivated seller seeking timely close. Great census and solid numbers.Under Contract
SJD-1453
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
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
Florida$1.5 million non-skilled private duty home health business. Strong management team in place. District 1.Under Contract
SCM-1148
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
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
SCJ-5009
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
SBH-2042
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.Under Contract
SJL-5800
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$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

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 November 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: Amedisys | LHC Group

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