July Home Health, Post-Acute Care Stocks Rebound, Showing Highest Gains in Months
There’s good news for both home health and post-acute care stock values according to the latest Home Health (HHI) and Post-Acute Care (PAI) indices from national healthcare mergers and acquisitions firm Stoneridge Partners.
The HHI continued its upward trajectory after last month’s positive results, soaring more than 15% in July. And after taking a tumble last month, the PAI picked up some steam and improved by an impressive 10% over June’s results. The S&P, comparatively, rose about 5.5% from June to July.
“I think this shows that with time, home health and post-acute companies are adjusting as best they can to COVID-19,” said Stoneridge Partners President and CEO Rich Tinsley. “They’ve been able to secure some more PPE and make sure their protocols are operating effectively. I also think there’s a greater need for their services, and patients are less hesitant to access them. That bodes well for these companies.”
Home Health Index
The Stoneridge Partners HHI follows the stock values of Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG).
In July, Amedisys stock values jumped nearly 18% over June, while LHC Group stock ticked up nearly 12%. These strong performances pushed the HHI up nearly 15% — its biggest one-month improvement since November of 2019.
Even with the financial turmoil that has roiled the U.S. economy since the beginning of the year, the HHI has posted a year-over-year increase of more than 66%.
“All of us in the healthcare industry have known for years that home health is a critical component in the spectrum of care resources,” Tinsley said. “The pandemic seems to have shone an even brighter light on the importance of the work home health providers do.”
Post-Acute Care Index
Stoneridge also tracks stock values for leading post-acute care companies in its PAI.
Along with Amedisys and LHC Group, the PAI also includes Addus HomeCare Corporation (Nasdaq: ADUS), The Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health Corp. (NYSE: EHC) and Brookdale Senior Living (NYSE: BKD).
While the PAI’s July performance didn’t best the HHI, the 10% month-over-month increase is welcome news after last month’s 3% decline.
Stock values for Birmingham, Alabama-based Encompass — which operates a mix of inpatient rehabilitation hospitals, home health and hospice agencies — jumped nearly 10% between June and July. Meanwhile, Eagle, Idaho-based Pennant Group recorded an increase of nearly 11% during the same period. Pennant operates home health, hospice and senior living businesses. Additionally, Frisco, Texas-based Addus, which focuses on Medicaid home-based care, saw its stock prices tick up more than 4% last month.
Brentwood, Tennessee-based Brookdale was the only company in the PAI to trend downward between June and July. The company, focused largely on the senior living community model, saw its stock values fall just over 6%. Still, that’s a marked improvement over last month’s performance when Brookdale’s stock plummeted more than 19%.
“It’s no surprise that post-acute care companies offering home-based care are faring better than those with a less diversified portfolio of services during the pandemic,” Tinsley said. “Congregate living facilities have worked incredibly hard to avoid coronavirus outbreaks in their facilities, but it’s a much more challenging environment and I think the current stock values reflect that.”
Quote Of The Month
“Hospitals have been given permission — for patients that were actively in an outpatient [setting] for that facility — to send them to outpatient therapists by way of telehealth into patients’ homes.” – National Association for Home Care & Hospice (NAHC) President William A. Dombi
Read the Full Article Here: Dombi: Regulatory Flexibilities: Mean More Competition for Home Health Providers
Articles Featuring Stoneridge
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Stoneridge Partners has a new updated website. Visit it here: Stoneridge Partners
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
(Home Health Index August 2020 | Stoneridge Partners)
Here are the results of the stock prices for the past two years:
||1 mos change
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)
|HH Index Total
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*
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 August 2020 | Stoneridge Partners)
Recent Transactions From Around The Country
- Providence Treatment, an outpatient addiction treatment provider with three locations in the Greater Philadelphia area, has acquired Main Line Recovery, an outpatient facility in Haverford, Pennsylvania, offering comprehensive assessment for behavioral health concerns and psychotherapy for individuals, couples, families and groups.
- The Pennant Group Inc. announced that it has purchased two home health agencies with multiple locations throughout southeastern Idaho and northern Utah.
Home Health Index August 2020 | Stoneridge Partners
From Rich Tinsley, Publisher of “Home Health Index”. Rich can be reached at email@example.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