A Look at Proposed Tax Changes; Stock Values Stay Steady in April

Home Health Index | 2021 May Update

The Biden administration has proposed a number of changes to current tax laws, including potential increases to both the corporate and capital gains tax rates, in an effort to fund new infrastructure and social services priorities. While these proposed changes must still be approved by Congress, Stoneridge Partners President and CEO Rich Tinsley, JD, CPA says now is the time to consider how those changes might affect the future sale of your home health, home care, hospice or behavioral health company.

“The proposal essentially doubles the top federal tax rate on capital gains over $1 million, which could have a significant impact on sellers in the future,” said Tinsley. “Not only will it reduce how much an owner gets to keep after they leave the closing table, but it could give buyers more negotiating strength and have an effect on valuations.”

In a new article available at www.stoneridgepartners.com, Tinsley argues that owners thinking about a future exit strategy should keep a close eye on any upcoming tax moves – and reach out to an experienced advisor well in advance of a potential sale.

“Complex transactions like these take a lot of time and effort, and there’s always a risk that the sale won’t be completed before tax law changes go into effect,” he said.

Want to know more about how potential tax changes might affect a future sale of your home health, home care, hospice or behavioral health company? Click here to read the full article on the Stoneridge Partners website.

Home Health and Post-Acute Care Indices

After a strong rebound in March, stock values for the companies tracked by the Stoneridge Partners Home Health (HHI) and Post-Acute Care (PAI) indices continued their steady climb in April.

The HHI was up by nearly 4% compared to the previous month, and the PAI performed similarly – up nearly 5% for the same time period. Both indices closely mirrored the S&P 500, which climbed by almost 5% in April.

Home Health Index

The Stoneridge Partners HHI monitors the stock values of Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG). LHC Group outperformed its March results, with stock values rising by nearly 8% in April. Meanwhile, Amedisys stock stayed relatively flat, rising by less than 1%.

Post-Acute Care Index

Stock values for Amedisys and LHC Group are combined with monthly 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) to make up the Stoneridge Partners Post-Acute Care Index (PAI).

Like March, April was a mixed bag for the additional companies tracked by the PAI.

Birmingham, Alabama-based Encompass Health extended its gains from last month, with its stock values rising by nearly 4%. The next few months will likely prove to be crucial for Encompass; the company is exploring a potential sale or spinoff and searching for a new CEO to lead its home health and hospice business. Meanwhile, stocks for Frisco, Texas-based Addus also moved in the right direction this month, coming off a dip in March to post a gain of almost 1% in April.

However, Eagle, Idaho-based Pennant and Brentwood, Tennessee-based Brookdale found themselves on the other end of the spectrum in April. After tumbling by more than 12% in March, Pennant’s stock values took another hit last month, falling by another 13%.

And after a strong performance in March, April was a reversal of fortune for Brookdale, with its stock values falling by more than 2%.

Quote of the Month

“I think the pandemic has increased awareness in this area. Mental health is real, and it’s not something that just impacts other people. We all could be one traumatic experience away from trouble.” – Alicia Leslie, Behavioral Health Manager for Fort HealthCare

Read the Full Article Here: COVID-19 and Mental Health

Articles Featuring Stoneridge

Sign up for our next Speaker Series: June 8, 2021, 2:30pm.

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 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 May 2021 | Stoneridge Partners)

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

Company 4/30/21 1 mos change YTD change 4/30/20 4/30/19
Amedisys 269.85 +0.83% -8.00% 184.16 120.25
LHC Group 208.27 +7.78% -2.37% 129.99 111.19
HH Index* 239.06 +3.74% -5.63% 157.08 115.72
S&P 4181.17 +4.72% +11.32% 2912.43 2931
Addus 105.8 +.081% -9.64% 81.02 67.65

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) 4/30/21 4/30/20 4/30/19
Amedisys 9560 6470 4480
LHC Group 6430 4220 3800
HH Index Total 15990 10690 8280
Addus 1780 1130 832


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

Company 4/30/21 4/30/20 4/30/19
Amedisys 452% 331% 259%
LHC Group 312% 203% 210%
HH Index Average* 382% 267% 235%
Addus 232% 189% 161%


Multiples of EV/EBITDA

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

Company 4/30/21 4/30/20 4/30/19
Amedisys 30.03 27.04 25.43
LHC Group 27.49 20.78 23.07
HH Index Average* 28.76 23.91 24.25
Addus 31.08 29.32 21.23

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 May 2021 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Family Tree In-Home Care acquired HomeCare of the Rockies.
  • AMN Healthcare Services Inc. acquired full-service virtual care management company Synzi.
  • Senior Care Authority, a senior placement and elder care consulting franchise, has acquired Beyond Driving with Dignity.

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 May 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