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.

Post-Acute Index

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%.

Earnings Calls

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.”

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 May 2020 | Stoneridge Partners)

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

Company 4/30/20 1 mos change YTD change 4/30/19 4/30/18
Amedisys 184.16 +0.34% +10.81% 120.25 65.97
LHC Group 129.99 -7.85% -5.64% 111.19 74.45
HH Index* 157.08 -3.05% +3.35% 115.72 70.21
S&P 2912.43 +11.26% -9.85% 2931 2654.8
Addus 81.02 +16.56% -16.66% 67.65 52.15

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) 4/30/20 4/30/19 4/30/18
Amedisys 6470 4480 2260
LHC Group 4220 3800 1440
HH Index Total 10690 8280 3700
Addus 1130 832 607


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

Company 4/30/20 4/30/19 4/30/18
Amedisys 331% 259% 150%
LHC Group 203% 210% 136%
HH Index Average* 267% 235% 143%
Addus 189% 161% 145%


Multiples of EV/EBITDA

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

Company 4/30/20 4/30/19 4/30/18
Amedisys 27.04 25.43 17.59
LHC Group 20.78 23.07 16.08
HH Index Average* 23.91 24.25 16.84
Addus 29.32 21.23 18.44

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 May 2020 | Stoneridge Partners)

More

Home Health Index May 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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