Stoneridge Partners’ Home Health Index Shows Continued Good News for Home Health Stocks; Firm to Launch New Post-Acute Industry Index in 2020

Stoneridge Partners’ Home Health Index Shows Continued Good News for Home Health Stocks; Firm to Launch New Post-Acute Industry Index in 2020

The newest Home Health Index (HHI) from Stoneridge Partners is in — and home health stocks were up once again.

Stock values rose 2.5% in December over November’s results according to the HHI. Even though December’s results were no match for November’s 19% surge, it still represents good news for home health companies heading into the launch of the Patient-Driven Groupings Model (PDGM) on January 1, 2020.

“December was another good month for Amedisys and LHC Group,” Stoneridge Partners President Rich Tinsley said. “Leadership from both companies said they were confident in their ability to weather the PDGM storm, and pre-implementation returns suggest they were right.”

The monthly index from healthcare mergers and acquisitions advisory firm Stoneridge Partners has traditionally tracked the stock values of Baton Rouge, La.-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, La.-based LHC Group, Inc. (Nasdaq: LHCG). The HHI has also monitored stock prices for Frisco, Tx.-based Addus HomeCare Corporation (Nasdaq: ADUS), though they are not included in the HHI’s final calculations due to its Medicaid-heavy revenue mix.

Amedisys stock values were up 1.95% in December. Meanwhile, LHC Group stock values were up 3.16% during the same period. Addus stock was up 4.12% in December compared to November. Overall, home health stocks were mostly aligned with the broader market’s performance in December, as the S&P 500 was up 2.78% compared to the previous month.

Stoneridge Partners Adds New Index Tracking Performance of Post-Acute Care Companies

With the ongoing changes to the operating landscape for home health companies and the burgeoning focus on coordinated care, Stoneridge Partners will introduce a new index starting in 2020 that also monitors the performance of select publicly-traded post-acute care providers. Starting in January, this new monthly compendium will not only include stock values for the current HHI companies, but also for Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health (NYSE: EHC) and Brookdale Senior Living (NYSE: BKD).

“The team at Stoneridge comes from all across the healthcare spectrum, and because of that we pride ourselves on being able to see the big picture,” Tinsley said. “Adding a post-acute index will help us get a clearer view of the rapidly-evolving healthcare landscape, which is meaningful both to us and our clients.”

Quote Of The Month

“Homecare continues to march forward with strong policy-based and political support as the preferred focus for health care innovations,” – William A. Dombi, president of the National Association for Home Care & Hospice (NAHC).

Read the Full Article Here:  Why Homecare is the Answer to 2020’s Big Health Care Questions

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 January 2020 | Stoneridge Partners)

 

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

Company 12/31/19 1 mos change YTD change 12/31/18 12/31/17
Amedisys 166.2 +1.95% +42.25% 116.84 52.71
LHC Group 137.76 +3.16% +47.43% 93.44 61.25
HH Index* 151.98 +2.50% +44.55% 105.14 56.44
S&P 3230.78 +2.78% +29.47% 2495.44 2673.61
Addus 97.22 +4.12% +42.84% 68.06 34.8

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) 12/31/19 12/31/18 12/31/17
Amedisys 5690 3700 1810
LHC Group 4750 3260 1200
HH Index Total 10440 6960 3888
Addus 1340 773 398


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

Company 12/31/19 12/31/18 12/31/17
Amedisys 301% 228% 123%
LHC Group 231% 205% 120%
HH Index Average* 266% 217% 120%
Addus 224% 158% 96%


Multiples of EV/EBITDA

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

Company 12/31/19 12/31/18 12/31/17
Amedisys 30.23 22.55 15.68
LHC Group 22.13 24.41 12.84
HH Index Average* 26.18 23.48 16.38
Addus 31.77 20.64 11.67

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 January 2020 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Care Advantage, Inc. acquired Amaisa Home Care in Leesburg, VA
  • Discovery Behavioral Health acquired Associated Behavioral Health Care of Seattle
  • AlayaCare acquired Procura, a division of Complia Health and one of AlayaCare’s largest global competitors
  • The Pennant Group, Inc. (NASDAQ: PNTG), the parent company of the Pennant group of affiliated home health, hospice and senior living companies, today announced that a subsidiary of Cornerstone Healthcare, Inc., Pennant’s home health and hospice portfolio subsidiary, has acquired the assets of Desert View Home Health, which provides home health services in Clark County, Nevada.
  • Traditions Health, LLC has purchased privately owned Round Rock, Texas-based Guiding Hospice, growing the company’s footprint in the Austin area.
  • HouseWorks, a Massachusetts-based agency acquired Extended Family
  • Discovery Behavioral Health has acquired Casa Palmera, a nationally recognized facility in San Diego that provides treatment for adults with drug and/or alcohol addiction.

CLOSED by Stoneridge

  • Stoneridge Partners, Partner Joe Lynch represented a Texas-based agency that closed January 2020
  • Stoneridge Partners, Partner Ben Bogan represented an Illinois hospice agency that closed January 2020
  • Stoneridge Partners, Associate Partner Coley McDevitt represented a Texas home health agency that closed January 2020

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 January 2020 | 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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