Home Health Index | 2019 DECEMBER UPDATE

Home Health Stocks Propelled by 2020 Final Rule

Home Health Stocks Propelled by 2020 Final Rule

The new Stoneridge Partners Home Health Index (HHI) shows home health stocks soaring in November, dramatically rebounding after a somewhat disappointing October. Home health stocks tracked by the HHI climbed more than 19% compared to the previous month, making November one of the strongest months in recent history.

“We saw an overall decline in home health stock values of more than 2.5% in October, but we knew that wouldn’t last long,” Stoneridge Partners President Rich Tinsley said. “We expected a solid rebound since the home health final payment rule for fiscal year 2020 included a significant improvement to the Patient-Driven Groupings Model, particularly when it comes to the overhaul’s behavioral adjustment component.”

Instead of the steep 8.01% behavioral adjustment included in a proposed version of PDGM, the final payment rule sets a more manageable 4.36% behavioral adjustment.

Mergers and acquisitions advisory firm Stoneridge Partners monitors the stock values of Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG) each month. The HHI also monitors stock prices for Frisco, Texas-based Addus HomeCare Corporation (Nasdaq: ADUS), but does not include its results in the monthly report due to differences in Addus’ patient base and its primary focus on personal care services.

Amedisys saw a more than 21% increase in its stock price in November, and LHC Group stock values climbed almost 17% during the same period. Addus stock was also up from October to November by nearly 10%. Home health stocks handily outperformed the broader market in November, as the S&P 500 was only up 3.29% compared to the previous month.

“Both Amedisys and LHC Group have some tailwinds in their favor moving forward – PDGM will likely create more merger and acquisition opportunities for both companies,” Tinsley said. “Their executives have repeatedly touted those opportunities during recent earnings calls.”

Thanks to November’s gains, Amedisys, LHC Group and Addus stock prices are also well outperforming their 2018 results. Year-to-date, Amedisys is up by almost 30%, LHC Group is up by almost 43%, and Addus has increased by nearly 37% over 2018. Additionally, the HHI is up almost 41% year-to-date.

Quote Of The Month

“I think there’s a stigma associated with mental health and a lot of attitudes that there’s something wrong with a person’s intellect or morality.  But mental illness has nothing to do with any of that, you know, it has to do with how your brain is working.” – Adriane Howard, a licensed independent clinical social worker with Empower Behavioral Health

Read the Full Article Here:  Dealing with grief during the holidays, mental health resources available

Webinar Announcement

What you need to know about buying and selling home care agencies

Date: December 19, 2019
Time: 10am Pacific / 11am Mountain / 12pm Central / 1pm Eastern
Location: Online (Go-to-Webinar)
Cost: FREE!

See More Information Here: What you need to know about buying and selling home care agencies

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 December 2019 | Stoneridge Partners)

 

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

Company 11/30/19 1 mos change YTD change 11/30/18 11/30/17
Amedisys 162.96 +21.13% +39.47% 137.93 54.0
LHC Group 133.4 +16.81% +42.77% 105.43 65.77
HH Index* 148.18 +19.19% +40.94% 121.68 59.72
S&P 3140.98 +3.29% +25.87% 2739.67 2637.37
Addus 93.21 +9.66% +36.95% 75.45 33.3

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) 11/30/19 11/30/18 11/30/17
Amedisys 5560 4060 1820
LHC Group 4200 3400 1280
HH Index Total 9760 7460 4046
Addus 1280 834 410


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

Company 11/30/19 11/30/18 11/30/17
Amedisys 294% 250% 125%
LHC Group 224% 214% 133%
HH Index Average* 259% 232% 130%
Addus 213% 171% 100%


Multiples of EV/EBITDA

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

Company 11/30/19 11/30/18 11/30/17
Amedisys 29.55 24.71 17.25
LHC Group 21.49 25.47 13.91
HH Index Average* 25.52 25.09 18.20
Addus 30.3 22.27 12.27

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 for its reporting. (Home Health Index December 2019 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Soleo Health, a provider of specialty infusion services, acquired Paragon Infusion Therapy’s pharmacy business located in Dayton, OH
  • Discovery Behavioral Health, a nationwide leader in mental health services, has acquired Authentic Recovery Center (ARC), located in West Los Angeles, CA

CLOSED by Stoneridge

  • Stoneridge Partners, Partner Joe Lynch represented a South Carolina hospice agency that closed December 2019
  • Stoneridge Partners, Partner Ben Bogan represented a Pennsylvania home health agency that closed November 2019

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
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
Connecticut$6 million Medicaid/Medicare agency. Nice growth trend. Stable margins, great surveys.Available
SBB-3697
EastOpportunity to buy a leading franchisor in the assisted living referral space. 10+ existing franchisees. Perfect business for the entrepreneur who can scale a predictable, simple and low expense business. 3 year average income of $134,000. Owner near retirement. Available
STS-7094
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
Florida$1.5 million non-skilled private duty home health business. Strong management team in place. District 1. CHAP Accredited.Available
SCM-1148
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
Maryland/DC/VirginiaOpportunity to establish a Medicare home health agency. N. Virginia with large service area. Low census, motivated seller. 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
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
Minnesota$9 million Medicaid agency. Consistent growth & profitability. Recent rate increase. Attractive Medicaid margin. Available
SBB-7085
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 YorkLHCSA in five boroughs. Approx. $20 million revenue. Long history in the community. Available
SBB-9207
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
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
TexasThree Hospice companies with affiliated home health. $6 million total revenue. South, South Central, and South East Texas locations. Available
SJL-9650
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$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
TexasMedicare home health agency and hospice. San Antonio, Dallas, Austin. $3 million revenue, multiple provider numbers. Great opportunity for existing Texas providers. Available
SBB-5337
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$1.7 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
TexasHome Health agency in Texas. Near Sam Houston National Forest. Clean license with minimal census and minimal revenue. Available
SCM-4098
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
IllinoisHospice. Census in mid-70's. Accredited. Chicago area.Under Contract
SBA-5325
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
New York$13 million revenue LHCSA. 30-year history. Licensed in all 5 boroughs.Under Contract
SBB-8249
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
Texas$5.3 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$3+ million hospice agency based in Dallas/Fort Worth. Well established. Clinically clean and growing. Full staff in place. Under Contract
SJL-6009
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
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.

 

Another Cartoon Favorite 

   

 

More

Home Health Index December 2019 | 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

Please follow us on Facebook  and Linkedin