Home Health and Post-Acute Care Stock Values Stabilize in April Thanks to Stimulus Funds
Stock values for home health and post-acute care providers started clawing their way back in April from the significant hits they took in the previous month. That’s according to the new Home Health (HHI) and Post-Acute (PAI) Indices compiled by national healthcare mergers and acquisitions advisory firm Stoneridge Partners.
As the U.S. continues its response to the coronavirus pandemic, resulting in record unemployment and widespread shelter-in-place orders, multiple Congressional stimulus packages have helped reduce daily stock market downswings. Overall, the S&P 500 climbed more than 11% in April as compared to March; a comparatively dismal month that saw a drop in the S&P of roughly 14%.
Healthcare providers also benefitted from emergency financial relief in April, as the U.S. Centers for Medicare & Medicaid Services (CMS) sought to stabilize the industry on the frontlines of the country’s coronavirus response.
“Toward the middle of April, CMS began distributing $30 billion in funding created by the CARES Act to all types of Medicare providers to help sustain cash flow and cover COVID-19 costs,” said Rich Tinsley, President and CEO of Stoneridge Partners. “Policymakers already followed up on that $30 billion with additional emergency relief, too, with more likely coming in May.”
Home Health Index
The Stoneridge Partners HHI tracks monthly stock values for Amedisys Inc. (Nasdaq: AMED) and LHC Group Inc. (Nasdaq: LHCG). In April, Amedisys saw a slight gain over the previous month, with stock values climbing less just more than 0.3%. In contrast, LHC Group’s stock dipped by nearly 8% during that same period.
The Stoneridge Partners PAI includes both Amedisys and LHC Group, as well as Addus HomeCare Corporation (Nasdaq: ADUS), The Pennant Group (Nasdaq: PNTG), Encompass Health Corp. (NYSE: EHC) and Brookdale Senior Living Inc. (NYSE: BKD).
Stock values for the additional companies making up the PAI saw marked improvements in April. Addus stock rose by nearly 17% in April over March, while The Pennant Group bested even that performance with a more than 28% gain. Brookdale’s stock values increased by almost 14% during the same period, and Encompass Health saw a more than 3% gain compared to March.
Year to date, the stock values for Addus (13.70%), Brookdale (40.99%) Encompass Health (15.56%), LHC Group (11.44%) and The Pennant Group (19.99%) are all up, while Amedisys stock is down 4.61%.
Amedisys, Addus, Brookdale and LHC Group are all holding conference calls this week to discuss Q1 2020 financial results.
Encompass Health hosted its Q1 earnings call on April 29, using a portion of the call to specifically discuss the difficulties of working through the Patient-Driven Groupings Model (PDGM) and the coronavirus at the same time.
“We had a lot of momentum heading into 2020, and January and February were a strong start to the year,” Encompass Health CEO Mark Tarr said during the call. “In mid-March, we began experiencing a significant impact from the COVID-19 pandemic.”
Quote of the Month
“Many home health care agencies are overwhelmed by the COVID-19 pandemic while also attempting to address (Patient Driven Groupings Model) changes and staffing shortages. These forces are unfortunately disrupting agency operations and the ongoing delivery of care—while also putting an agency’s patients, staff and (personal protective equipment) supply at risk,” – Lee Horner, CEO of the digital health company Synzi
Read the full article here: Providing Care at Arm’s Length
Stoneridge Partners in the News
May 20, 2020 at 1:30 pm ET , Stoneridge Partners President and CEO Rich Tinsley will moderate the first quarterly installment of the new Stoneridge Partners Speakers Series. Featured speakers will include Mike Dordick, President of healthcare financial and clinical consulting firm McBee Associates; Brian Bruenderman, Partner and Executive Vice President of Stoneridge Partners; and Tom Lillis, Stoneridge Associate Partner and leader of its Strategic Consulting Group.
The webinar will focus on current valuation trends, deal flow, PDGM and regulatory changes affecting the home health, home care, hospice and behavioral health industries.
Check out the Q&A with Brian Heck, Senior Vice President and Associate Partner of Stoneridge
Stoneridge Partners Home Health Index and Post-Acute Index
The Stoneridge Partners Home Health Index (HHI) is updated monthly and measures the performance of these two publicly traded home health companies, both listed on the NASDAQ:
- LHC Group (LHCG)
- Amedisys (AMED)
This graph compares the percentage change of the Home Health Index to the percentage change of the S&P 500 Index going back to 2002.
This chart shows 12 month trailing results for the HHI compared to results during the same time period for Amedisys and LHC Group.
This graph compares the HHI to the price of Addus stock (non-Medicare).
(Home Health Index May 2020 | Stoneridge Partners)
Stock price results for 2018, 2019 and 2020:
|Company||4/30/20||1 mos change||YTD change||4/30/19||4/30/18|
Although we track the performance of Addus, they are not included in our HH Index because very little of their revenue comes from Medicare.
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
The Stoneridge Partners Post-Acute Index is updated monthly and measures the performance of these 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 Index performance since Fall 2019.
The above calculations are based on selling price 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 March 2020 | Stoneridge Partners)
Recent Transactions from Around the Country
- Post-acute company CareCentrix, headquartered in Hartford, Conn., has closed the acquisition of community-based palliative care provider Turn-Key Health.
- Choice Homecare of Texas, LLC (“Choice”), a hospice, rehab service, and home health provider in over 100 Texas counties, formally announced the acquisition of Nextgen Hospice LLC (“Nextgen”). Nextgen is a provider of hospice services based in Houston, TX.
Exclusively Listed for Sale by Stoneridge Partners
|State||Agency Profile||Status||Reference Number
|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 established in 2003. $2 million annual revenue in 2018. PDGM revenue-neutral. Located in Southern California. Clean business with no ADRs.||Available|
|Florida||Medicare-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|
|Georgia||ID/DD service provider with $1 million in revenue. Residential and day services offered, located in Atlanta suburb.||Available|
|Illinois||$5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4.5-star rating by CMS.||Available|
|Louisiana||Boutique full-service clinical laboratory specializing in preventative diagnostic testing. Medicare- and Medicaid- certified, with insurance contracts in more than 20 southeastern states.||Available|
|Massachusetts||Medicare- and Medicaid-certified home health agency. |
$13+ million in annual revenue with continued growth. Diverse payor mix. Strong management in place. Accredited.
|Michigan||Medicare home health and hospice agency. $10 million in annual revenue with numerous referral relationships.||Available|
|Michigan||$2 million ID/DD agency in the Detroit area. Profitable service provider with existing management team in place.||Available|
|Mid-Atlantic||$10+ million non-skilled home care agency. Primarily Medicaid reimbursed with 20% EBITDA margins. Strong management team in place.||Available|
|Nevada||Medicare-certified home health agency in Las Vegas area. Approximately $1 million in annual revenue. Accredited.||Available|
|New Mexico||$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community and existing staff in place.||Available|
|North Carolina||$1 million ID/DD agency with real estate. Long-term client base, additional growth potential and strong margins.||Available|
|Oklahoma||Medicare-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|
|Oklahoma||$5+ million home health, home care, case management, and hospice company. Approximately 15% revenue from hospice, other service line revenues distributed relatively evenly. Multiple locations. Diverse payor sources. Hospice accreditation. Projected PDGM impact of 30%+ for home health.||Available|
|South||Treatment 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|
|South||Full 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|
|South||Partial hospitalization treatment program/intensive outpatient program seeking strategic partner. Strong census and revenue growth. No direct competition for niche market.||Available|
|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|
|Southwest||64 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|
|South-Atlantic||Home 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|
|South Texas||Hospice with $3.5 million in annual revenue. Accredited. No cap or regulatory issues.||Available|
|South 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 can remain in place for a smooth transition.||Available|
|Texas||Home 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.||Available|
|Texas||$3.5 million all-Medicaid home care company located in Houston, TX. 20%+ year-over-year revenue growth since 2016.||Available|
|Texas||Home health agency located in Arlington, TX with $2.3 million in revenue. Growing and profitable company. Managed staff in place. No compliance issues.||Available|
|Texas||$1.7 million Medicare home health agency located in Southwest Houston. Well-established with predictable referral sources and revenues.||Available|
|Texas||$1 million Medicare-certified agency licensed in seven counties in the Houston area. 80% traditional Medicare.||Available|
|USA||New 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|
|Virginia||$6 million Medicare-certified agency in Northern Virginia.||Available|
|Virginia||Physical therapy and wellness operation with $2.3 million in revenue. 95% cash payors. Potential to franchise nationwide. 2018 EBITDA was $257,000.||Available|
|West||Premier provider of primary mental health services for adolescents aged 13-18 with two locations. Currently growing in-network contracts.||Available|
|Colorado||Opportunity to establish Medicare home health agency. Denver market. ACHC accreditation until 2022.||Under Contract||
|Florida||$9.5 million home health agency with strong management, clinical and financial operations. 99% of revenue comes from traditional Medicare.||Under Contract||
|Florida||South Florida staffing agency. $2 million + revenue. Approximately 30% gross margin. Licensed to service entire state of Florida. Systems and staff in place.||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 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||
|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.||Under Contract||
|Mid-west||$5 million Midwest-based ABA provider. Day supports and counseling. Highly profitable and respected. CARF accredited. Contracted with state and insurance companies.||Under Contract||
|Multi-State||Well-established pediatric provider. Revenue more than $40 million. Medicaid and insurance accepted.||Under Contract||
|New Mexico||Home 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.||Under Contract||
|New York||Licensed home care services agency with services in five boroughs. Approximately $20 million in revenue and a long-standing history in the community.||Under Contract||
|North Carolina||$5 million Medicaid agency. $5 million Medicaid agency. CAP/PCS services. Long history of providing quality services.||Under Contract||
|Pacific Northwest||Full 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||
|Southwest||Provider 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||
|Texas||Three 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||
|Texas||$4.2 million home health agency. 17.5% bottom line. Located in Houston, TX. Large coverage area. Diverse referral network. Fully staffed with no clinical issues.||Under Contract||
|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||
Do you know of any acquisitions that have taken place? We are interested in your comments. Contact us at Stoneridge Partners.
Another Cartoon Favorite
Home Health Index May 2020 | Stoneridge Partners
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