Post-Acute Care Stocks Cool Off
Home Health Index | 2021 February Update
Coming off a scorching performance in December, home health and post-acute care stocks gave back some of their impressive gains in January according to the latest Stoneridge Partners Home Health and Post-Acute Indices.
The Home Health Index (HHI) dipped by almost 4% last month; the Post-Acute Care Index (PAI) did slightly better, dropping by nearly 3.5%. The overall S&P also dropped by 0.6% last month, likely fueled by concerns about the new COVID-19 variants disrupting recovering economies, and raising – perhaps unfounded – fears about what the “January Barometer” means for the rest of 2021.
Nonetheless, the companies that make up the HHI and PAI are stronger than ever before.
“Home health and post-acute care providers performed incredibly well in 2020, and they are still in a much better position now than they were just a few months ago when we saw record numbers of new infections each day,” said Stoneridge Partners President Rich Tinsley. “That’s not to say they aren’t still dealing with a lot of operational challenges, so I think we will continue to see some ups and downs over the next several months. But we’ll learn more in the coming weeks as the companies start to discuss their Q4 financial results.”
Home Health Index
The monthly Stoneridge Partners HHI tracks stock values for Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG), two of country’s largest home-based care companies.
Amedisys saw its stock dip by almost 1.5% in January compared to December, though that had little effect on the company’s overall outstanding performance over the past year – its stock remained up by more than 63% at the end of last month compared to the prior 12 months. Similarly, LHC Group’s stock fell by nearly 6.7% in January, but was still up by more than 36% over the last 12 months.
“Executives from both LHC Group and Amedisys have talked about the historic levels of M&A activity they expect in 2021, so I think we’ll see their stock values surging as we head into March and beyond,” Tinsley said. “The wave of consolidation linked to the Patient-Driven Groupings Model (PDGM) may still be to come.”
Post-Acute Care Index
The PAI from Stoneridge combines the stock values for Amedisys and LHC Group with market performance results for Addus HomeCare Corporation (Nasdaq: ADUS), Brookdale Senior Living Inc. (NYSE: BKD), Encompass Health Corp. (NYSE: EHC) and The Pennant Group, Inc. (Nasdaq: PNTG).
Brookdale was the lone bright spot in January’s PAI, with its stock jumping up by nearly 12.5% in January. A sizable home health and hospice provider, the Brentwood, Tennessee-based Brookdale is also one of the largest owners and operators of senior living communities in the country.
In contrast, Frisco, Texas-based Addus’ stock was down 3.8% in January, and after months of consecutive gains, Eagle, Idaho-based Pennant saw its stock fall by 4.6% compared to the previous month. Birmingham, Alabama-based Encompass Health stocks dipped by just more than 2% during that same period.
Quote of the Month
“One of the things that PDGM did for us was promote continuous learning. The focus for PDGM was all about changing how we manage care. And then when COVID came along, it was a bit of a parallel; we switched to focusing on infection control and other wrinkles.” – MaineHealth Care at Home President Donna DeBlois
Read the Full Article Here: An Unexpected Savior: How PDGM Prep Helped Home Health Agencies Ease COVID-19’s Impact
Articles Featuring Stoneridge
National Healthcare M&A Firm Stoneridge Partners Announces Record Year, Expresses Optimism for 2021
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 2008.
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 February 2021 | Stoneridge Partners)
Here are the results of the stock prices for the past two years:
| Company | 1/31/21 | 1 mos change | YTD change | 1/31/20 | 1/31/19 |
| Amedisys | 289.07 | -1.45% | -1.45% | 176.49 | 131.12 |
| LHC Group | 199.11 | -6.66% | -6.66% | 145.75 | 104.11 |
| HH Index* | 244.09 | -3.65% | -3.65% | 161.12 | 117.62 |
| S&P | 3731.17 | -0.66% | -24.90% | 3225.52 | 27.07.76 |
| Addus | 112.67 | -3.77% | -3.77% | 94.34 | 60.93 |
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) | 1/31/21 | 1/31/20 | 1/31/19 |
| Amedisys | 10370 | 6200 | 4170 |
| LHC Group | 6760 | 5000 | 3610 |
| HH Index Total | 17130 | 11200 | 7780 |
| Addus | 1950 | 1470 | 687 |
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
| Company | 1/31/21 | 1/31/20 | 1/31/19 |
| Amedisys | 513% | 328% | 257% |
| LHC Group | 328% | 243% | 227% |
| HH Index Average* | 421% | 286% | 242% |
| Addus | 256% | 222% | 141% |
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
| Company | 1/31/21 | 1/31/20 | 1/31/19 |
| Amedisys | 39.29 | 32.96 | 25.39 |
| LHC Group | 31.17 | 23.30 | 27.09 |
| HH Index Average* | 35.23 | 28.13 | 26.24 |
| Addus | 32.25 | 31.59 | 18.35 |
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 February 2021 | Stoneridge Partners)
Recent Transactions From Around The Country
- Rethink First acquired Whil, a leading digital provider of mindfulness, stress resilience, mental well-being and sustainable performance solutions.
- Grant Avenue Capital recently acquired Salt Lake City-based Valeo Home Health & Hospice from Eduro Healthcare, an operator of skilled nursing facilities.
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
Central Ohio based home health company with private pay. $2.3 million in revenue. 13.5% EBITDA. Strong growth trends, full staff in place.
Large home care franchisee. $6.5 million in revenue. Private duty. Attractive market with great growth potential.
Non-medical home care franchisor. Platform opportunity with national footprint. Systemwide revenues more than $12 million. Franchise locations in 16 states.
$2+ million private pay. Profitable with great reputation.
Profitable hospice agency with $600,000 in revenue. Ready to grow with full complement of staff in place.
Medicare/Medicaid agency with $3.5 million in revenue. Established 20+ years. Great reputation in eastern Michigan.
$1.5 million home health agency. Approximately 70% traditional Medicare. Single location. Reputation for clinical excellence. Experienced administrative team.
CHAP-accredited private duty business. $2.8 million projected 2021 revenue. Workers' compensation primary source of revenue. Regions 9, 10 and 11.
$4 million I/DD provider. Great reputation and long history of profitability.
$25+ million home health agency. Medicaid/Medicare-certified. 95%+ Medicaid. Multiple locations. Experienced management team.
Very rare opportunity in a CON state. Located in Davidson County in Nashville, TN. 2020 revenue in excess of $650,000.
Non-skilled home care company. $10+ million in annual revenue. Predominantly Medicaid. Highly profitable. Accredited. Strong management team in place.
$1 million Medicare home health agency in northwest Minnesota. Well-established. Diverse referral sources. Long history of excellent care.
Non-skilled licensed home care organization. Approximately $2 million in annual revenue. Strong management team in place. Southern California.
$10 million Medicaid personal care provider. Large consumer-direct component. History of steady growth.
$50 million ID/DD platform opportunity. Multi-state, Midwest. Tenured management team to stay in place. Double digit year over year organic growth. Significant future opportunities for...
Clean and accredited hospice provider number in the coveted San Antonio marketplace. Current license is valid until the end of May 2022.
$8 million Midwest ID/DD agency. Highly profitable. Consistent staff and clients.
$4.9 million Medicare home health agency located in Phoenix, Arizona. Showing strong year over year revenue growth since 2018. Diverse referral sources, well run with...
$5 million Midwest-based ABA provider. Day supports and counseling. Highly profitable and respected. CARF accredited. Contracted with state and insurance companies.
$1.5 million private duty home health agency in eastern Michigan. Profitable and well-positioned for additional growth. Self-sufficient staff in place. 82 long-term clients.
Hospice with $3.5 million in annual revenue. Accredited. No cap or regulatory issues.
Home health agency and adult day care center with $12+ million in annual revenue. Home health represents 85% of revenue while adult day represents 15%...
Treatment center with 28 beds, intensive outpatient program capacity of 40, full continuum of substance use disorder services and dual diagnosis treatment capability. JCAHO accreditation...
$1 million ID/DD agency with real estate. Long-term client base, additional growth potential and strong margins.
$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community and existing staff in place.
$2 million ID/DD agency in the Detroit area. Profitable service provider with existing management team in place.
Medicare and Medicaid certified home health agency. $16.5 million in annual revenue with continued growth. 90%+ Medicaid. Strong management in place. Accredited.
ID/DD service provider with $1 million in revenue. Residential and day services offered, located in Atlanta suburb.
Home Health Index February 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
