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|
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|
|HH Index Total||10440||6960||3888|
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*||266%||217%||120%|
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*||26.18||23.48||16.38|
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
|Arizona||Opportunity to establish hospice in Phoenix area. ACHC accredited.||Available|
|California||$11 million multi-location addiction treatment center. Located in Southern California. 21% bottom line. Strong growth trends. JCAHO accredited.||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|
|Colorado||Opportunity to establish Medicare home health agency. Denver market. ACHC accreditation until 2022.||Available|
|Florida||Medicare 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 rating||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|
|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.
|Massachusetts||Medicare and Medicaid certified Home Health agency. |
$13+ million in annual revenue and growing. Diverse payor mix. Strong Management in place. Accredited.
|Massachusetts||Medicare/Medicaid Home Health Agency. Motivated seller in western MA. $7.5 million annual revenue. Great add-on for existing provider.||Available|
|Michigan||Medicare home health and hospice agency. $10 million annual revenue. Attractive referral relationships.||Available|
|Michigan||$2 million ID/DD. Profitable. Existing management team in place. Greater Detroit area.||Available|
|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|
|Mid-Atlantic||$10+ million home care agency. Non-skilled, primarily Medicaid reimbursed. 20% EBITDA margins. Strong management team in place.||Available|
|Multi-State||Well-established pediatric provider. Revenue over $40 million. Medicaid and insurance.||Available|
|Nevada||Medicare certified home health agency. Approx. $1 million in annual revenue. Accredited. Las Vegas area.||Available|
|New Mexico||Home health and hospice. $15 million annual revenue. Revenue split: 2/3 Home health and 1/3 Hospice. Medicare/Medicaid certified. Accredited.||Available|
|New York||LHCSA in five boroughs. Approx. $20 million revenue. Long history in the community.||Available|
|New York||$13 million revenue LHCSA. 30-year history. Licensed in all 5 boroughs.||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|
|Oklahoma||Medicare certified home health organization. $9.6 million in annual revenue. 98% traditional Medicare and other PPS Payors. Medicare/Medicaid certification. Multiple locations.||Available|
|South||28 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|
|South||Full 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|
|South||National growth opportunity. No direct competition for niche market. Unique program and strong branding. PHP/IOP with census and revenue growth. Seeking strategic partner||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-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|
|South Texas||Hospice. $3.5 million in annual revenue. Accredited. Clean: No cap or regulatory issues.||Available|
|Tennessee||Very rare opportunity in a CON state. Located in Davidson County in Nashville, TN. Projected 2019 revenue in excess of $800,000.||Available|
|Texas||$5.3 million Medicaid agency in San Antonio, TX. 16.5% EBITDA. CHAP accredited. Staff in place for a smooth transition.||Available|
|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|
|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|
|Texas||$4 million home health agency. Dallas/Ft. Worth based. Full staff in place. Medicare and managed care with great contacts.||Available|
|Texas||$3.5 million Medicare certified home health agency. Located in San Antonio, TX. Fully staffed & CHAP accredited. Branch office included in sale||Available|
|Texas||$1.7 million Medicare home health agency. Located in Southwest Houston. Well-established with predictable referral sources. Very profitable.||Available|
|Texas||$1 million Medicare certified agency. Licensed in 7 counties in the Houston area. 80% is traditional Medicare.||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||$6 million Medicare certified agency in Northern Virginia.||Available|
|Virginia||$2.3 million revenue Physical Therapy and Wellness operation. 95% cash pay. Potential to franchise Nationwide. 2018 EBITDA $257,000.||Available|
|West||Premier provider of primary mental health services for adolescents aged 13-18. 2 locations. In process of growing in-network contracts.||Available|
|East||Healthcare testing laboratory. $7 million revenue, $4 million EBITDA. 16 employees, multiple state licenses.||Under Contract||
|Florida||$9.5 million Home Health Agency. Very strong operationally, clinically, and financially. 99% of revenue comes from traditional Medicare.||Under Contract||
|Florida||Medicare/Medicaid certified home health agency. $2.5 million annual revenue. 5-star. Accredited. District 10.||Under Contract||
|Kentucky||Medication-assisted clinic. IOP counseling for substance abuse and co-occurring disorders. Profitable with strong team in place. 150 clients. 95% Medicaid.||Under Contract||
|Kentucky||Medication-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||
|North Carolina||$5 million Medicaid agency. CAP/PCS services. Long history, quality services.||Under Contract||
|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.
|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||Three Hospice companies with affiliated home health. $6 million total revenue. South, South Central, and South East Texas locations.||Under Contract||
|Texas||$3+ million hospice agency based in Dallas/Fort Worth. Well established. Clinically clean and growing. Full staff in place.||Under Contract||
|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||
|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||
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
Home Health Index January 2020 | Stoneridge Partners