Congress Delays Medicare Sequestration; Post-Acute Stocks Bounce Back from Difficult February

Home Health Index | 2021 April Update

Just days before Medicare sequestration payment reductions – temporarily halted during the COVID-19 pandemic – were set to resume, Congress approved another delay in March, postponing the cuts until the end of 2021.

This was fantastic news for home health providers, many of whom struggled through a complicated web of quarantines and lockdowns last year to continue providing their services. But according to Brian Bruenderman, Partner and Executive Vice President at Stoneridge Partners, the delay also has the potential to result in big benefits for operators looking to take their business to market.

“Medicare home health providers faced a lot of uncertainty last year, and I think you saw that reflected in a lower volume of transactions – even though the interest was still there from buyers,” Bruenderman said. “But savvy providers not only survived, they thrived in many instances. They adjusted to PDGM and to the demands of a post-COVID environment, which were two of the big question marks holding buyers back. Now, another uncertainty has been eliminated with the sequestration postponement. I think we can expect the pent-up demand for quality home health operations to result in substantially higher transaction volumes. For any owners who’ve been thinking about putting a home health business on the market, the time is right to get in on the front end of that wave.”

Home Health and Post-Acute Care Indices

March also brought good news for major home health and post-acute stock values.

Coming off a difficult month that saw significant drops for both the Home Health (HHI) and Post-Acute Care Indices (PAI), March roared in like a lion and erased any lingering February doubts. The Stoneridge Partners HHI was up by nearly 6% last month, and the PAI’s rebound was even stronger – increasing by more than 14% over February’s result.

Both indices outpaced the S&P 500, which was up almost 4% over the same time period.

Home Health Index

The Stoneridge Partners HHI tracks the stock values of Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED), and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG). Both companies bounced back in March after a lackluster February, with Amedisys stock rising by nearly 6% and LHC Group climbing by just more than 6%.

Post-Acute Care Index

The Post-Acute Care Index combines stock values for Amedisys and LHC Group with monthly results for Addus HomeCare Corporation (Nasdaq: ADUS), Encompass Health Corp. (NYSE: EHC), The Pennant Group, Inc. (Nasdaq: PNTG) and Brookdale Senior Living, Inc. (NYSE: BKD).

Brookdale saw its stock value climb the most – more than 15% from March to February, continuing its recent strong performance after the Brentwood, Tennessee-based company announced last month that it would sell a majority stake in its home health and hospice segment to HCA Healthcare Inc. (NYSE: HCA). Birmingham, Alabama-based Encompass Health also saw positive results in March, up almost 2% over February.

But it wasn’t all gains across the board for the PAI. Frisco, Texas-based Addus saw its stock dip by more than 2% in March, while Eagle, Idaho-based Pennant stock took a tumble of more than 12% during that time.

Quote of the Month

“We get calls all the time from providers in post-acute care, especially home health, to train and help people manage behavioral health, and I feel it’s due to the fact that individual clients are so isolated. They haven’t been able to get out to medical providers or see their families. We’ve seen a real increase in agencies, managing depression, anxiety and suicidal patients.” – Katherine Vanderhorst, president of C&V Senior Care Specialists

Read the Full Article Here: Why Home Health Providers Should Consider Offering Behavioral Health Services

Articles Featuring Stoneridge

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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 2010.

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 April 2021 | Stoneridge Partners)

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

Company 3/31/21 1 mos change YTD change 3/31/20 3/31/19
Amedisys 267.64 +5.52% -8.76% 183.54 122.94
LHC Group 193.23 +6.34% -9.42% 140.2 108.43
HH Index* 230.44 +5.86% -9.04% 161.87 115.69
S&P 3992.78 +3.95% +6.30% 2584.59 2567.19
Addus 104.95 -2.44% -10.37% 67.6 64.41

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) 3/31/21 3/31/20 3/31/19
Amedisys 8880 5680 3930
LHC Group 6050 4420 3800
HH Index Total 14930 10100 7730
Addus 1780 928 775


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

Company 3/31/21 3/31/20 3/31/19
Amedisys 428% 290% 237%
LHC Group 293% 213% 210%
HH Index Average* 361% 252% 224%
Addus 233% 155% 150%


Multiples of EV/EBITDA

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

Company 3/31/21 3/31/20 3/31/19
Amedisys 30.63 24.49 23.36
LHC Group 25.86 21.77 23.06
HH Index Average* 28.25 23.13 23.21
Addus 31.13 24.05 19.80

The Stoneridge Partners Post-Acute Care Index is updated monthly and measures the performance of these six publicly traded post-acute care 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 April 2021 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Valeo Home Health & Hospice has acquired Hearts for Hospice & Home Health in Utah.
  • Abode Healthcare, a provider of home health care and hospice services, was acquired by BrightSpring Health Services.
  • Charter Health Care Group has acquired Providence Home Health & Hospice in Houston, Texas.

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

$1.5 million home health agency.  Approximately 70% traditional Medicare.  Single location.  Reputation for clinical excellence.  Experienced administrative team.

 Home Health

CHAP-accredited private duty business.  $2.8 million projected 2021 revenue.  Workers' compensation primary source of revenue.  Regions 9, 10 and 11.

 Home Health /  Florida

$4 million I/DD provider.  Great reputation and long history of profitability.

 ID/DD /  Kentucky

$25+ million home health agency.  Medicaid/Medicare-certified.  95%+ Medicaid.  Multiple locations.  Experienced management team.

 Home Health /  Massachusetts

Very rare opportunity in a CON state.  Located in Davidson County in Nashville, TN.  2020 revenue in excess of $650,000.

 Home Health /  Tennessee

Substance use disorder treatment center, PHP, IOP, co-occurring disorders.  2019 EBITDA of $400k. 2020 revenue $1.5 million, over $200k EBITDA TTM.  2021 trending $175k EBITDA...

 Behavioral Health /  Mountain West

Non-skilled home care company.  $10+ million in annual revenue.  Predominantly Medicaid.  Highly profitable.  Accredited.  Strong management team in place.

 Home Care /  Northeast

$1 million Medicare home health agency in northwest Minnesota.  Well-established.  Diverse referral sources.  Long history of excellent care.

 Home Health /  Minnesota

Non-skilled licensed home care organization.  Approximately $2 million in annual revenue.  Strong management team in place.  Southern California.

 Home Care /  California

$10 million Medicaid personal care provider.  Large consumer-direct component.  History of steady growth.

 Home Care /  Minnesota

$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...

 ID/DD /  Midwest

Clean and accredited hospice provider number in the coveted San Antonio marketplace.  Current license is valid until the end of May 2022.

 Hospice /  Texas

$8 million Midwest ID/DD agency.  Highly profitable.  Consistent staff and clients.

 ID/DD /  Midwest

$2.1 million revenue.  Dallas/Ft. Worth based Medicaid pediatric therapy business.  16% EBITDA margin.  More than 300 patients.  Also services San Antonio and surrounding areas.

 Home Health /  Texas

$12 million Medicaid home care business.  Experienced management team in place.  Strong financials, long-term consistent growth.  EBITDA over $1 million.

 Home Care /  Pennsylvania

$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...

 Home Health /  Arizona

$5 million Midwest-based ABA provider. Day supports and counseling. Highly profitable and respected. CARF accredited. Contracted with state and insurance companies.

 Behavioral Health /  Midwest

$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.

 Home Health /  Michigan

New software application helping build social connections among patients in recovery and giving them increased access to therapists. Potential investment opportunity. Facilitates total successful recovery...

 Other

Hospice with $3.5 million in annual revenue. Accredited. No cap or regulatory issues.

 Hospice /  Texas

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%...

 Home Health /  South Atlantic

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...

 Behavioral Health /  Texas

$1 million ID/DD agency with real estate. Long-term client base, additional growth potential and strong margins.

 ID/DD /  North Carolina

$2.5 million New Mexico home health agency. 87% Medicare. Long history in the community and existing staff in place.

 Home Health /  New Mexico

$2 million ID/DD agency in the Detroit area. Profitable service provider with existing management team in place.

 Michigan

Medicare and Medicaid certified home health agency.  $16.5 million in annual revenue with continued growth. 90%+ Medicaid.   Strong management in place. Accredited.

 Home Health /  Massachusetts

ID/DD service provider with $1 million in revenue. Residential and day services offered, located in Atlanta suburb.

 ID/DD /  Georgia

Home Health Index March 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