Home Care, Home Health Stocks Send 2020 Off with Rally

Home health and post-acute care stocks ended 2020 with a bang according to the latest Stoneridge Partners Home Health (HHI) and Post-Acute Care (PAI) Indices.

After falling in November, the HHI made up the ground it lost and more in December, jumping up by nearly 15% over the previous month. The PAI continued its recent turnaround in December, climbing by almost 10% and capping off a string of three consecutive months of solid gains.

Both the HHI and PAI outperformed the S&P 500, which was up more than 2% in December compared to November.

“Home health and post-acute care operators had such a difficult year, yet they still came out of 2020 stronger than ever,” said Stoneridge Partners President and CEO Rich Tinsley. “Even with the challenges associated with the pandemic, they managed to pull through and capitalize on their ability to provide what patients want – quality care at home. And I think we’re seeing investors are a lot more comfortable in the health care space now that the vaccines are on the way.”

Home Health Index

Each month, the Stoneridge Partners HHI tracks stock values for Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG).

Amedisys – which just announced a new strategic partnership with infusion therapy company Option Care Health – recorded a gain of almost 20% last month compared to November. LHC Group also had a stellar month, with its stock rising by nearly 9% in December as the home health giant continued executing its strategy of tri-locating core services in key markets.

Once 2020 was officially in the books, Amedisys’ stock was up more than 76% for the year compared to the prior 12-month period. LHC Group’s stock was up by almost 55% over that same stretch.

“Home health providers like Amedisys and LHC Group not only survived the pandemic – they thrived,” said Tinsley. “I’m eager to see how they fare in 2021.”

Post-Acute Care Index

The Stoneridge Partners PAI combines stock values for Amedisys and LHC Group with those from post-acute providers Addus HomeCare Corporation (Nasdaq: ADUS), The Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health Corp. (NYSE: EHC) and Brookdale Senior Living Inc. (NYSE: BKD).

Half of the PAI providers saw double-digit stock gains in December. Besides Amedisys, Frisco, Texas-based Addus also had a strong performance, recording an almost 18% gain last month over November’s results. And Eagle, Idaho-based Pennant saw its stock rise by almost 13%, helping the Ensign spinoff to a very successful first full year as its own public entity.

The remaining companies in the PAI also contributed to the overall rally. Stocks for Birmingham, Alabama-based Encompass Health were up by more than 2% after revealing its plans to explore strategic alternatives for its home health and hospice business, including a sale or spinoff. And Brentwood, Tennessee-based Brookdale was up more than 4% in December, a promising sign for the senior living operator on the heels of news from the National Investment Center for Seniors Housing & Care (NIC) that senior housing occupancy in the U.S. had hit a record low in the fourth quarter of 2020.

Quote of the Month

“If there is a silver lining to COVID-19 and long-term care, the pandemic will hopefully accelerate the decades-long push towards expanding HCBS while also causing a reconceptualization of nursing home care. These are not competing goals but rather complementary ones.” – David Grabowski, Harvard Professor and Researcher

Read the Full Article Here: Investing More Heavily in Home-Based Senior Care Shouldn’t Mean ‘Abolishing Nursing Homes’

Articles Featuring Stoneridge

Home Health Care News Voices featuring Brian Bruenderman, Partner and Executive Vice President, Stoneridge Partners

Hospice News: Traditions Health Acquires Four Companies, Two of them Hospices. Stoneridge Partners, Partner & Executive Vice President Ben Bogan, acted as the sell-side advisor to Traditions (OK)

Save the date – the first Stoneridge Partners Speakers Series webinar of 2021 is February 10 at 1:30pm. Sign up here: Speaker Series

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.

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 January 2021 | Stoneridge Partners)

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

Company 12/31/20 1 mos change YTD change 12/31/19 12/31/18
Amedisys 293.33 +19.83% +166.2% 166.2 116.84
LHC Group 213.32 +8.66% +146.36% 137.76 93.44
HH Index* 253.33 +14.86% +157.23% 151.98 105.14
S&P 3756.07 +2.62% +116.45% 3230.78 2495.44
Addus 117.09 +17.97% +124.11% 97.22 68.06

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) 12/31/20 12/31/19 12/31/18
Amedisys 9920 5690 3700
LHC Group 6610 4750 3260
HH Index Total 16530 10440 6960
Addus 1780 1340 773

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

Company 12/31/20 12/31/19 12/31/18
Amedisys 491% 301% 228%
LHC Group 320% 231% 205%
HH Index Average* 406% 266% 217%
Addus 234% 224% 158%

Multiples of EV/EBITDA

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

Company 12/31/20 12/31/19 12/31/18
Amedisys 37.58 30.23 22.55
LHC Group 30.46 22.13 24.41
HH Index Average* 34.02 26.18 23.48
Addus 29.54 31.77 20.64

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 January 2021 | Stoneridge Partners)

Recent Transactions From Around The Country

  • The Pennant Group Inc. acquired Sacred Heart Home Health Care, which provides home health services in Phoenix and Tucson, Arizona.
  • Traditions Health, LLC, has purchased two hospice companies in Louisiana as well as two home health operations in Oklahoma. The hospice acquisitions – Grace Hospice & Palliative Care and Heritage Hospice – mark the company’s entry to the Louisiana market.
  • Bristol Hospice, a portfolio company of Webster Equity Partners, has purchased the California operations of Companion Hospice.

Exclusively Listed For Sale By Stoneridge Partners

Do you know of any acquisitions that have taken place? We are interested in your comments. Contact us; Stoneridge Partners

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Home Health Index January 2021 | 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 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