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:

Company10/31/181 mos changeYTD change10/31/1710/31/16
Amedisys111.20-10.04%+110.97%46.4549.49
LHC Group89.06-12.67%+45.40%66.5535.93
HH Index*100.13-11.23%+77.42%53.1340.68
S&P 5002722.05-6.93%+1.81%2575.502179.98
Addus65.79-5.05%+89.05%35.3024.87

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)10/31/1810/31/1710/31/16
Amedisys357016601730
LHC Group32201300735
HH Index Total679037122980
Addus744444313


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

Company10/31/1810/31/1710/31/16
Amedisys226%114%113%
LHC Group238%135%86%
HH Index Average*232%118%97%
Addus163%108%87%


Multiples of EV/EBITDA

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

Company10/31/1810/31/1710/31/16
Amedisys23.6615.8018.45
LHC Group31.1914.139.14
HH Index Average*27.4316.1913.51
Addus20.6213.3012.94

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
ArizonaOpportunity to establish hospice in Phoenix area. ACHC accredited.Available
SBB-8218
California$11 million multi-location addiction treatment center. Located in Southern California. 21% bottom line. Strong growth trends. JCAHO accredited.Available
SJL-7229
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
ColoradoOpportunity to establish Medicare home health agency. Denver market. ACHC accreditation until 2022.Available
SJL-7771
FloridaMedicare certified home health agency. Approx. $3.8 million revenue with 17% bottom line. District 9 & 10. Revenues split evenly between districts. Accredited. 4.5 star quality of patient care ratingAvailable
SBA-3029
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

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
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
MassachusettsMedicare/Medicaid Home Health Agency. Motivated seller in western MA. $7.5 million annual revenue. Great add-on for existing provider.Available
SBB-7607
MichiganMedicare home health and hospice agency. $10 million annual revenue. Attractive referral relationships.Available
SBB-8684
Michigan$2 million ID/DD. Profitable. Existing management team in place. Greater Detroit area.Available
SBH-1697
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
Mid-Atlantic$10+ million home care agency. Non-skilled, primarily Medicaid reimbursed. 20% EBITDA margins. Strong management team in place.Available
SBH-9651
Multi-StateWell-established pediatric provider. Revenue over $40 million. Medicaid and insurance.Available
SBB-2138
NevadaMedicare certified home health agency. Approx. $1 million in annual revenue. Accredited. Las Vegas area.Available
SBA-8367
New MexicoHome health and hospice. $15 million annual revenue. Revenue split: 2/3 Home health and 1/3 Hospice. Medicare/Medicaid certified. Accredited.Available
SBA-5334
New YorkLHCSA in five boroughs. Approx. $20 million revenue. Long history in the community.Available
SBB-9207
New York$13 million revenue LHCSA. 30-year history. Licensed in all 5 boroughs.Available
SBB-8249
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
OklahomaMedicare certified home health organization. $9.6 million in annual revenue. 98% traditional Medicare and other PPS Payors. Medicare/Medicaid certification. Multiple locations.Available
SBA-6607
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
SouthFull continuum, JCAHO accredited, co-occurring, SUD treatment center on 100+ acre horse ranch. 16 beds, 22 staff. $1.5 million EBITDA on $3.5 million revenue. In-network. Good reputation, great contracts/rates, solid opportunity. Census is great.Available
SJD-3485
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$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
TennesseeVery rare opportunity in a CON state. Located in Davidson County in Nashville, TN. Projected 2019 revenue in excess of $800,000.Available
SCM-8651
Texas$5.3 million Medicaid agency in San Antonio, TX. 16.5% EBITDA. CHAP accredited. Staff in place for a smooth transition.Available
SJL-5322
Texas$5.3 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$5 million revenue. Home health and hospice covering 10 counties in West Texas/Eastern New Mexico. No clinical issues, under CAP. Very profitable. Easily separated.Available
SJL-4994
Texas$4 million home health agency. Dallas/Ft. Worth based. Full staff in place. Medicare and managed care with great contacts.Available
SJL-8406
Texas$3.5 million Medicare certified home health agency. Located in San Antonio, TX. Fully staffed & CHAP accredited. Branch office included in saleAvailable
SJL-4824
Texas$1.7 million Medicare home health agency. Located in Southwest Houston. Well-established with predictable referral sources. Very profitable.Available
SJL-6080
Texas$1 million Medicare certified agency. Licensed in 7 counties in the Houston area. 80% is traditional Medicare.Available
SBA-1542
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
WestPremier provider of primary mental health services for adolescents aged 13-18. 2 locations. In process of growing in-network contracts.Available
SJD-7984
EastHealthcare testing laboratory. $7 million revenue, $4 million EBITDA. 16 employees, multiple state licenses.Under Contract
SJD-1067
Florida$9.5 million Home Health Agency. Very strong operationally, clinically, and financially. 99% of revenue comes from traditional Medicare.Under Contract
SCM-6925
FloridaMedicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.Under Contract
SBA-8305
KentuckyMedication-assisted clinic. IOP counseling for substance abuse and co-occurring disorders. Profitable with strong team in place. 150 clients. 95% Medicaid.Under Contract
STS-1093
KentuckyMedication-assisted Treatment center. Suboxone only. Strategic location between Louisville and Lexington, Kentucky. Great reputation with strong clinical team in place. 110 clients with room to expand and grow, minimal marketing. In-network contracts. Clients come in twice a month and pay $150 per visit for counseling. Owners are near retirement and will help with the transition.Under Contract
STS-2658
North Carolina$5 million Medicaid agency. CAP/PCS services. Long history, quality services.Under Contract
SBB-4927
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.
Under Contract
SJD-4921
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
TexasThree Hospice companies with affiliated home health. $6 million total revenue. South, South Central, and South East Texas locations.Under Contract
SJL-9650
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$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.
Under Contract
SCM-3034

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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