Home Health, Post-Acute Stocks Follow S&P, Begin Autumn with a Fall
After two consecutive months of forward progress, home health and post-acute care stock values took a bit of a tumble in September according to the Stoneridge Partners Home Health (HHI) and Post-Acute Care (PAI) Indices.
The HHI was off just 0.3% in September compared to August – a fraction of the S&P’s drop of more than 3.5% for the same time period. Meanwhile, the PAI surpassed the S&P’s negative performance by more than two points, falling nearly 6% for the month.
“As the pandemic continues, there’s still a lot of uncertainty across both the home health and larger post-acute care landscapes,” said Stoneridge Partners President and CEO Rich Tinsley. “Still, I’m heartened by the fact that the month-to-month volatility we were seeing earlier in the year has slowed. And we’re continuing to see sustained M&A activity at Stoneridge, so that’s definitely a good sign.”
Home Health Index
The Stoneridge HHI, updated monthly, follows the stock values of Amedisys Inc. (Nasdaq: AMED) and LHC Group Inc. (Nasdaq: LHCG).
Both companies saw gains in August, but September told a different story. Baton Rouge, Louisiana-based Amedisys saw its stock value drop by almost 2.3% compared to August, while Lafayette, Louisiana-based LHC Group continued its steady climb, improving by nearly 2% on a month-over-month basis.
“Stockholders in the home health space have to be pleased overall with how these companies have performed during a tough year,” Tinsley said. “Even with the economy taking a wallop over the past six months, they’ve managed to stabilize and continue out-performing their 2019 results, thanks to a continued preference for home-based care during the pandemic.”
Year-to-date, the HHI is up almost 48%, and over the past 12 months it has risen by nearly 83%.
Post-Acute Care Index
The monthly PAI from Stoneridge Partners looks at the broader post-acute care market, combining Amedisys’ and LHC Group’s stock values with values for senior living and rehabilitation companies Addus HomeCare Corporation (Nasdaq: ADUS), The Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health Corp. (NYSE: EHC) and Brookdale Senior Living Inc. (NYSE: BKD).
Eagle, Idaho-based The Pennant Group kicked off the last quarter of 2020 with a strong performance – its stock value rose by more than 6% in September, and in early October the company completed its acquisition of Harmony Hospice, with the expectation of more deals on the horizon.
Frisco, Texas-based Addus also saw slight gains in September, adding just less than 1% to its stock value compared to the previous month. Birmingham, Alabama-based Encompass Health’s stock value dipped by almost 0.4% in September compared to August, while Brentwood, Tennessee-based Brookdale’s stock value dropped almost 7.6% over that same period.
Quote Of The Month
“There has been an increased awareness of the breadth and depth of care at home, and this will have a long-standing impact on policy and politics as well,. There has been an absolute, exponential increase in respect for what you do in the home care setting. We took the stresses of the pandemic head-on and proved that care in the home is not only essential but [the best option].” – William A Dombi, National Association for Home Care & Hospice (NAHC) President
Read the Full Article Here: NAHC Pushing for Palliative Care, SNF-at-Home Medicare Benefits
Articles Featuring Stoneridge
View our quarterly M&A webinars on current valuation trends, deal flow, and pertinent regulatory changes in home health, home care, hospice, ID/DD, and behavioral health industries. Visit the Speaker Series Webinar Library on our website.
Voices: Ben Bogan, Partner, Stoneridge Partners
Stoneridge Partners President & Chief Executive Officer, Rich Tinsley is featured in Home Health Buyers, Sellers Headed Toward Frenzied Finish to M&A in 2020
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 October 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 October 2020 | Stoneridge Partners)
Recent Transactions From Around The Country
- A+ Solutions, an Ohio-based educational and psychological provider, was acquired by Refresh Mental Health, Inc., the national clinical leader in providing psychiatric, psychological and therapy services.
- Bell Family, LLC, an Arizona-based home and community based-services (HCBS) provider, was acquired by The MENTOR Network, Inc., a national health care and human services company.
- Spectrum Home Healthcare, LLC, an Arizona-based home health care provider, was acquired by The MENTOR Network, Inc., a national health care and human services company.
- Hospice and home health provider LHC Group (NASDAQ: LHCG) has acquired Santa Rita Hospice in Aurora, Colo.
- Maryland-based Hospice of the Chesapeake has acquired Hospice of Charles County
Home Health Index October 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 at 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