Home Health Index | 2020 FEBRUARY UPDATE

Stoneridge Partners’ Home Health Stocks Start Strong And Post Acute Index Premiere

Home health stocks start strong in 2020

The latest Home Health Index (HHI) from mergers and acquisitions (M&A) advisory firm Stoneridge Partners shows home health stocks have continued their strong performance into 2020, handily outpacing the broader market in January.

The HHI was up nearly 6% in January compared to December 2019. That surge easily bested the S&P 500, which was down slightly — 0.16% — in January compared to the previous month.

January marked the first month home health providers have operated under the new Patient-Driven Groupings Model (PDGM). While the effect PDGM will have across the broader industry is still unclear, early returns seem to indicate that large providers like Amedisys and LHC Group have weathered the initial storm and may be looking for gains in the second half of 2020 as new M&A or patient-acquisition opportunities emerge.

“Small and mid-sized home health businesses may have cash flow challenges come March and April,” Stoneridge Partners President Rich Tinsley said. “That could set up a scenario where bigger players see opportunities for expansion in key markets moving forward, either through direct acquisitions or patient volume growth as competitors leave the market.”

Stoneridge’s HHI tracks the stock values for Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG). The HHI also follows stock prices for Frisco, Texas-based Addus HomeCare Corporation, but doesn’t include them in its final calculations due to the company’s focus on Medicaid-supported personal care services.

Amedisys stock values were up 5.83% in January compared to December, while LHC Group stocks were up 5.48% during the same period. Addus stock was up 4.25% in January compared to December.

Stoneridge premieres post-acute care index

New for 2020, Stoneridge Partners is rolling out a second index tracking the performance of key publicly-traded post-acute care providers. The new monthly report includes stock values for the companies traditionally monitored by the current HHI and adds results for the Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health Corporation (NYSE: EHC) and Brookdale Senior Living (NYSE: BKD).

The inaugural Post-Acute Care Index shows a mixed bag for providers. As noted above, stock values for Amedisys and LHC Group both climbed in January – and Encompass Health also performed well last month with stock values up more than 10%. Alternatively, The Pennant Group and Brookdale struggled to start off the year, with stock values down 25% and 10%, respectively.

Quote Of The Month

“As we turn the page to a new decade, 2020 will mark a major turning point in not only delivering care but in helping patients achieve greater wellness.  Health systems across the world are beginning to take a more dedicated focus on the social determinants of health, the non-medical elements contributing to someone’s health and wellness.” – Adrian Schauer, CEO of cloud-based home care technology provider AlayaCare

Read the Full Article Here:  How Technology is Driving Wellness in Home Care

Articles Featuring Stoneridge

Associate Partner Tom Lillis was featured in Home Health Care News on the PDGM impact.  Read the full article here: Voices: Tom Lillis, Associate Partner, Stoneridge Partners

CLOSED by Stoneridge

  • Partner Joe Lynch represented a Texas-based agency that closed since the last Home Health Index

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 February 2020 | Stoneridge Partners)

 

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

Company 1/31/20 1 mos change YTD change 1/31/19 1/31/18
Amedisys 176.49 +5.83% +6.19% 131.12 52.88
LHC Group 145.75 +5.48% +5.80% 104.11 63.60
HH Index* 161.12 +5.67% +6.01% 117.62 58.03
S&P 3225.52 -0.16% -.016% 2707.76 2825.09
Addus 94.34 +4.25% -2.96% 60.93 36.60

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) 1/31/20 1/31/19 1/31/18
Amedisys 6200 4170 1840
LHC Group 5000 3610 1280
HH Index Total 11200 7780 4017
Addus 1470 687 410


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

Company 1/31/20 1/31/19 1/31/18
Amedisys 328% 257% 125%
LHC Group 243% 227% 127%
HH Index Average* 286% 242% 124%
Addus 222% 141% 99%


Multiples of EV/EBITDA

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

Company 1/31/20 1/31/19 1/31/18
Amedisys 32.96 25.39 15.94
LHC Group 23.30 27.09 13.63
HH Index Average* 28.13 26.24 16.88
Addus 31.59 18.35 12.04

 

The Stoneridge Partners Post-Acute Care 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)
  • Addus (ADUS)
  • The Pennant Group, Inc. (PNTG)
  • Encompass Health (EHC)
  • Brookdale Senior Living Inc. (BKD)

This graph displays Post-Acute Care Index performance starting late 2019.

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 February 2020 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Alayacare acquired New York-based Arrow Solutions to tackle US Medicaid market
  • Summit BHC, a Tennessee provider of addiction treatment and behavioral health services, has acquired Peak View Behavioral Health, which operates a 112-bed psychiatric hospital in northeast Colorado Springs
  • Hospice Care of South Carolina, a portfolio company of The Vistria Group, acquired Agapé Hospice

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 established in 2003. $2 million annual revenue in 2018. PDGM revenue-neutral. Located in Southern California. Clean business with no ADRs. Available
SCM-7298
ColoradoOpportunity to establish Medicare home health agency. Denver market. ACHC accreditation until 2022.Available
SJL-7771
FloridaMedicare-certified home health agency. Approximately $3.8 million in revenue with 17% bottom line. Located in Districts 9 and 10. Revenues split evenly between districts. Accredited. 4.5-star quality of patient care rating.Available
SBA-3029
GeorgiaID/DD service provider with $1 million in revenue. Residential and day services offered, located in Atlanta suburb. Available
SBH-6806
Illinois$5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4.5-star rating by CMS.Available
SBA-2734

LouisianaBoutique full-service clinical laboratory specializing in preventative diagnostic testing. Medicare- and Medicaid- certified, with insurance contracts in more than 20 southeastern states. Available
SJD-6825
MassachusettsMedicare- and Medicaid-certified home health agency.
$13+ million in annual revenue with continued growth. Diverse payor mix. Strong management in place. Accredited.
Available
SBA-6010
MassachusettsMedicare- and Medicaid-certified home health agency. Motivated seller in western Massachusetts. $7.5 million annual revenue. Great add-on for existing provider. Available
SBB-7607
MichiganMedicare home health and hospice agency. $10 million in annual revenue with numerous referral relationships. Available
SBB-8684
Michigan$2 million ID/DD agency in the Detroit area. Profitable service provider with existing management team in place. 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 non-skilled home care agency. Primarily Medicaid reimbursed with 20% EBITDA margins. Strong management team in place. Available
SBH-9651
Multi-StateWell-established pediatric provider. Revenue more than $40 million. Medicaid and insurance accepted. Available
SBB-2138
NevadaMedicare-certified home health agency in Las Vegas area. Approximately $1 million in annual revenue. Accredited. Available
SBA-8367
New MexicoHome health and hospice with $15 million in annual revenue. Revenue split is 2/3 home health and 1/3 hospice. Medicare- and Medicaid-certified. Accredited. Available
SBA-5334
New YorkLicensed home care services agency with services in five boroughs. Approximately $20 million in revenue and a long-standing history in the community. Available
SBB-9207
New YorkLicensed home care services agency with $13 million in revenue. 30-year history. Licensed in all five boroughs.Available
SBB-8249
New Mexico$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community and existing staff in place.Available
SBA-5295
North Carolina$1 million ID/DD agency with real estate. Long-term client base, additional growth potential and strong margins. Available
SBH-9905
OklahomaMedicare-certified home health agency with $9.6 million in annual revenue. 98% traditional Medicare and other PPS payors. Medicare- and Medicaid-certified with multiple locations. Available
SBA-6607
SouthTreatment center with 28 beds, intensive outpatient program capacity of 40, full continuum of substance use disorder services and dual diagnosis treatment capability. JCAHO accreditation pending. $4+ million in revenue, highly competitive in-network contracts. Average census of 30. Existing relationships with county, parole, local hospitals, churches and universities. Solid business in desirable location with little area competition.Available
SJD-1118
SouthFull continuum, JCAHO-accredited substance use disorder treatment center on 100+ acre horse ranch. Dual diagnosis treatment capability with 16 beds and 22 staff. $1.5 million EBITDA on $3.5 million in revenue. In-network with great contracts/rates and strong census. Available
SJD-3485
SouthPartial hospitalization treatment program/intensive outpatient program seeking strategic partner. Strong census and revenue growth. No direct competition for niche market. Available
SJD-8349
Southwest$5+ million 37-bed outpatient treatment center. Fully accredited and recently revamped to increase growth and margin. Great census, UR, acquisition and solid numbers. Out of network but transitioning to some in-network.Available
SJD-3448
Southwest64 bed full continuum 64-bed full continuum treatment center in two southwestern US metropolitan cities. JCAHO-accredited and in-network. $4 million pro forma EBITDA run rate based on 30% occupancy with significant growth expected. Strong infrastructure to support growth trajectory.Available
SJD-4008
South-AtlanticHome health agency and adult day care center with $12+ million in annual revenue. Home health represents 85% of revenue while adult day represents 15% of revenue. Home health is primarily a Medicaid business but is Medicare-certified. Accredited. Available
SBA-9973
South TexasHospice with $3.5 million in annual revenue. Accredited. No cap or regulatory issues. Available
SBA-8064
TennesseeVery rare opportunity in a Certificate of Need state, located in Nashville, TN (Davidson County). 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 can remain 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. Available
SJL-3670
Texas$1.7 million Medicare home health agency located in Southwest Houston. Well-established with predictable referral sources and revenues. Available
SJL-6080
Texas$1 million Medicare-certified agency licensed in seven counties in the Houston area. 80% traditional Medicare. Available
SBA-1542
USANew software application helping build social connections among patients in recovery and giving them increased access to therapists. Potential investment opportunity. Facilitates total successful recovery and gathers important helpful data.Available
SJD-1777
Virginia$6 million Medicare-certified agency in Northern Virginia. Available
SBA-7366
VirginiaPhysical therapy and wellness operation with $2.3 million in revenue. 95% cash payors. Potential to franchise nationwide. 2018 EBITDA was $257,000. Available
SCM-7368
WestPremier provider of primary mental health services for adolescents aged 13-18 with two locations. Currently growing in-network contracts. Available
SJD-7984
EastHealthcare testing laboratory with $7 million in revenue and $4 million EBITDA. 16 employees, multiple state licenses. Under Contract
SJD-1067
Florida$9.5 million home health agency with strong management, clinical and financial operations. 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. Intensive outpatient program 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 grow. In-network contracts. Clients pay $150 per visit for counseling twice per month. Owners are near retirement and will help with the transition. Under Contract
STS-2658
North Carolina$5 million Medicaid agency. $5 million Medicaid agency. CAP/PCS services. Long history of providing quality services. Under Contract
SBB-4927
Pacific NorthwestFull continuum substance use disorder, mental health and gambling addiction treatment center in Washington state with $3,625,000 in revenue and $1,100,000 EBITDA. 40 bed facility with 40 employees. Strong census, full outpatient program and Medicaid payors. Under Contract
SJD-4921
SouthwestProvider of waiver and intermediate care facility ID/DD services with $25 million in annual revenue. Statewide platform with a strong management team and excellent reputation for quality services. Under Contract
SBH-2042
TexasThree Hospice companies with Three hospice companies with affiliated home health and $6 million in total revenue. Locations in south, southcentral, and southeast Texas. Under Contract
SJL-9650
TexasHome health and hospice covering 10 counties in west Texas/eastern New Mexico with $5 million in revenue. No clinical issues, under CAP. Very profitable. Easily separated. Under Contract
SJL-4994
Texas$4 million home health agency based in Dallas/Ft. Worth. Full staff in place. Medicare and managed care with great contacts.Under Contract
SJL-8406
Texas$3.5 million Medicare certified $3.5 million Medicare certified home health agency located in San Antonio, TX. Fully staffed and CHAP-accredited. Branch office is included in sale.Under Contract
SJL-4824
Texas$3+ million hospice agency based in Dallas/Ft. Worth. Well established with full staff in place. Clinically clean and growing. Under Contract
SJL-6009
Texas$1.4 million revenue pediatric Pediatric therapy business with $1.4 million in revenue. Provides physical therapy (PT), occupational therapy (OT) and speech therapy (ST) to disadvantaged and disabled children in a major Texas city and surrounding counties. Positive reputation for providing quality care in a child-friendly environment. 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.  Contact us; Stoneridge Partners

 

Another Cartoon Favorite 

   

 

More

Home Health Index February 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

Please follow us on Facebook  and Linkedin