The Wait is Over for Home Health Proposed Payment Rule; Home Health and Post-Acute Stocks Slightly Down Overall

U.S. Centers for Medicare & Medicaid Services (CMS) released the long-awaited FY 2022 home health proposed payment rule at the end of June, and while it took no action on the controversial PDGM behavioral adjustment, home health operators were reassured – and perhaps cautiously optimistic – that the Biden administration included a 1.7% Medicare payment increase. The rule also seeks to push the shift to value-based care by proposing a nationwide expansion of the Home Health Value-Based Payment Program (HHVBP), which in its pilot phase has shown an almost 5% increase in quality scores while saving Medicare more than $140 million.

“I think this is a real opportunity for home health to take a firm leadership role in the world of value-based care,” said Rich Tinsley, CEO and President of national healthcare mergers and acquisitions firm Stoneridge Partners. “Home health showed its worth to patients and payers alike during the pandemic as providers successfully managed more care needs than ever before in the home. I think the expansion of value-based payment is another opportunity for home health to shine – and another reason buyers will want to remain active in the home health market.”

Home Health and Post-Acute Care Indices

Though the Home Health (HHI) and Post-Acute Care Indices (PAI) were steady in the early spring of 2021, late spring has proven to be a different story.

Both the HHI and PAI fell nearly 5% in May, followed by a decrease of more than 2% in June. Each underperformed the S&P 500 yet again last month, which was up 2% on a month-over-month basis. That may all change now that the new proposed payment rule has been released – and industry watchers will certainly be watching July’s results closely.

Home Health Index

The Stoneridge Partners HHI follows the stock values of Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG), two of the nation’s largest home health providers.

Amedisys saw its stock drop more than 5% in June compared to the previous month, but the Baton Rouge, Louisiana-based company is still outperforming last year’s results, up nearly 35% year-over-year. Stock for Lafayette, Louisiana-based LHC Group rose nearly 2% compared to May, up more than 21% year-over-year.

Post-Acute Care Index

For a more wide-ranging analysis of the post-acute care industry, the Stoneridge PAI follows Addus HomeCare Corporation (Nasdaq: ADUS), Brookdale Senior Living Inc. (NYSE: BKD), Encompass Health Corp. (NYSE: EHC) and The Pennant Group, Inc. (Nasdaq: PNTG) in addition to Amedisys and LHC Group.

Brentwood, Tennessee-based Brookdale and Eagle, Idaho-based Pennant Group were both up significantly in June, increasing their stock values by more than 17% and 19%, respectively.

Brookdale has been aided by rebounding occupancy rates in its senior living facilities, and recently closed on the $400 million sale of most of its Health Services segment to HCA Healthcare (NYSE: HCA), one of the largest hospital networks in the U.S.

The Pennant Group, meanwhile, is hoping to continue its growth in home health across the western and southern parts of the country, most recently acquiring Pasco Southwest Home Health of Colorado in early April.

Frisco, Texas-based Addus and Birmingham, Alabama-based Encompass Health were both down in June by more than 9%. Encompass’ stock is still up more than 25% year-over-year, but Addus is down nearly 6% over the same period.

Both companies are considering major moves in the coming months. Encompass Health is undergoing an organizational shift as it looks at strategically separating its home health and hospice segment. And while Addus has traditionally gained most of its revenue from personal care services, the provider is intent on building out more markets with personal care, home health and hospice capabilities.

“We are focused on transactions that will allow us to enhance our service offerings in each of our operating segments in target makets. We are confident in our ability to drive value from our acquired operations and further strengthen our competitive position,” Dirk Allison, chairman and CEO of Addus, said recently in a statement.

Quote of the Month

“Our country is at a critical point regarding this workforce. The pandemic reinforced the enormous value of these workers, the challenges they continue to face, and how those problems endanger the lives of both workers and the people they support.” – Robert Espinoza, Vice President of Policy at PHI.

Read the Full Article Here: Crisis in Direct Care “Will Explode” Without Immediate Government Support, PHI Warns

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.

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 July 2021 | Stoneridge Partners)

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

Company 6/30/21 1 mos change YTD change 6/30/20 6/30/19
Amedisys 244.93 -5.20% -16.50% 198.54 121.41
LHC Group 200.26 +1.73% -6.12% 174.32 119.58
HH Index* 222.60 -2.20% -12.13% 186.43 120.50
S&P 4297.5 +2.22% +14.41% 3100.29 2941.76
Addus 87.24 -9.29% -25.49% 92.56 74.95

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) 6/30/21 6/30/20 6/30/19
Amedisys 8310 6730 4270
LHC Group 6260 5830 3770
HH Index Total 14570 12560 8040
Addus 1510 1280 945


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

Company 6/30/21 6/30/20 6/30/19
Amedisys 392% 340% 247%
LHC Group 302% 279% 206%
HH Index Average* 347% 310% 227%
Addus 193% 214% 173%


Multiples of EV/EBITDA

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

Company 6/30/21 6/30/20 6/30/19
Amedisys 26.08 27.90 24.27
LHC Group 24.90 27.87 21.67
HH Index Average* 25.49 27.89 22.97
Addus 25.48 33.11 23.05

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 July 2021 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Mission Healthcare has purchased three hospice and home health agencies in its continuing push for multi-state expansion. The company’s newly acquired assets include Tender Care Home Health & Hospice and Sun Tree Hospice in Utah, as well as Hands of Hope Home Care & Hospice in Idaho.
  • Help at Home acquired Illinois-based Community Care Systems.
  • South Carolina-headquartered Agape Care Group has acquired Integrity Hospice in Dublin, GA.

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 July 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