Home Health, Post-Acute Care Stocks Resume Climb Amid COVID-19 Spike
The latest Stoneridge Partners Home Health (HHI) and Post-Acute Care (PAI) Indices show steady gains for home health and post-acute care stock values in October, even in the midst of a nationwide spike in COVID-19 cases.
Rebounding from a small dip in September, the HHI rose nearly 6% in October compared to the previous month. The PAI posted an even stronger performance, rising by more than 7%. In contrast, the S&P 500 fell more than 3% during the same period.
“It’s encouraging to see home health and post-acute stock values are still making progress, even as our economy continues to be buffeted by the effects of COVID-19,” said Rich Tinsley, President and CEO of Stoneridge Partners. “And we expect a strong November moving forward. There weren’t many changes in the final home health payment rule for 2021, which added a sense of operational stability amid all the pandemic-related uncertainty.”
Home Health Index
The Stoneridge Partners HHI follows stock values for Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG), both of which had a strong showing in October.
Baton Rouge, Louisiana-based Amedisys saw its stock value jump by nearly 10%, coming back strong after a slight drop in the month of September. Amedisys CEO Paul Kusserow discussed his company’s run of success during a Q3 2020 earnings call on October 29th.
“I’m extremely proud of our performance this quarter, as we have once again generated prodigious clinical, operational and financial results, besting both our internal and external expectations in a tumultuous environment,” Kusserow said.
Lafayette, Louisiana-based LHC Group’s stock value repeated its solid September performance, increasing once again by almost 2% on a month-over-month basis.
Year to date, the HHI is up more than 56%; over the last 12 months it has risen by nearly 99%.
Post-Acute Care Index
The Stoneridge PAI combines the Amedisys and LHC Group stock values with results from Addus HomeCare Corporation (Nasdaq: ADUS), The Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health Corp. (NYSE: EHC) and Brookdale Senior Living Inc. (NYSE: BKD).
Brentwood, Tennessee-based Brookdale had the strongest showing last month. Its stock was up almost 16% in October as compared to September, representing a major turnaround after being battered for months by the effects of COVID-19 on senior living communities.
Stock values for Frisco, Texas-based Addus rose more than 3% in October according to the PAI, while Pennant stocks ticked up by more than 8% for the same period. Meanwhile, Encompass Health’s stock value dipped by almost 6%. The company’s home health and hospice segment has struggled recently to get access to patients in facility-based settings. Nonetheless, Encompass leadership remains optimistic about its long-term outlook.
“Since 2009, we have successfully managed through an economic recession, regulatory changes, sequestration and Medicare payment freezes and cuts,” Encompass Health President and CEO Mark Tarr said on October 29th during the company’s Q3 earnings call. “Now we can add a global pandemic to that list.”
Quote Of The Month
“Employment of home health aides and personal care aides is projected to grow 34% from 2019 to 2029, much faster than the average for all occupations, according to BLS. As the baby-boom generation ages and the elderly population grows, the demand for the services of home health aides and personal care aides will continue to increase.” – Robert Holly, Home Health Care News
Read the Full Article Here: Home Health Agencies Carving Out Bigger Role in US Economy
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.
The last Stoneridge Partners Speaker Series webinar of 2020 is tomorrow, and spots are going quickly for this in-depth conversation featuring our experienced advisors from the home health, home care, hospice and behavioral health industries. There’s still time for you to join us on Wednesday, November 18th at 1:30 pm ET – Register.
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 November 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 November 2020 | Stoneridge Partners)
Recent Transactions From Around The Country
- Spiro Health acquired Absolute Respiratory Care in Johnston, Rhode Island
- Idaho-based The Pennant Group acquired Riverside Home Health Care of Grants Pass, Oregon
- Help at Home — a Chicago-based home- and community-based services provider that operates across 13 states — has been acquired by a consortium of private equity buyers
Home Health Index November 2020 | Stoneridge Partners
From Rich Tinsley, Publisher of “Home Health Index.” Rich can be reached at firstname.lastname@example.org 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