Home Health, Post-Acute Care Stocks Down Across the Board
In a variable year characterized by almost monthly swings in stock performance, August resulted in tough blows for both the Home Health and Post-Acute Care Indices tracked by national healthcare mergers and acquisitions firm Stoneridge Partners.
Thanks to America’s rapidly aging population and the overall demand for senior care services, home health and post-acute care companies have seen far more ups than downs when it comes to the stock market over the past several years – and even with August’s downturn, their trajectory over time remains impressive. But a host of factors, including staff shortages due to the COVID-19 pandemic that continue to limit growth, are keeping providers on their heels.
“Nearly all the home health and post-acute care companies we track saw their stock prices drop last month,” Stoneridge Partners President and CEO Rich Tinsley says. “There’s no single reason for the across-the-board downturn – a combination of factors is at play, including the ongoing pandemic, which has made a pre-existing staff shortage grow even larger.”
Home Health and Post-Acute Care Indices
The Home Health (HHI) and Post-Acute Care (PAI) Indices were both down in August compared to the previous month. The HHI fell more than 22%, while the PAI dropped more than 14%.
Both indices underperformed the S&P 500, which was up nearly 3% in August compared to July.
Home Health Index
The Stoneridge Partners HHI follows the stock values of Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG).
Amedisys saw its stock fall almost 30% in August compared to July, marking the Baton Rouge, Louisiana-based company’s worst-performing month in recent history. Because of the dip in August, Amedisys’ stock is now down more than 24% compared to 12 months ago.
LHC Group also saw its stock drop more than 13% on a month-over-month basis. The Lafayette, Louisiana-based provider’s price is down more than 10% over the last 12 months.
Amedisys, which adjusted its 2021 guidance after releasing second-quarter financial results, has attributed operational struggles to the company’s large hospice segment.
“While our performance in the first half of 2021 has produced strong EBITDA and expanded margins, our Hospice segment is behind in both admission and average daily census growth,” Amedisys noted in a press release on its Q2 results. “The COVID-19 pandemic has put pressure on our ability to hire and retain business development employees at a level needed to achieve our internal growth targets.”
LHC Group affirmed its 2021 guidance for revenue and adjusted EBITDA.
Post-Acute Care Index
In addition to Amedisys and LHC Group, Stoneridge tracks the stock performance of Addus HomeCare Corporation (Nasdaq: ADUS), Brookdale Senior Living Inc. (NYSE: BKD), Encompass Health Corp. (NYSE: EHC) and The Pennant Group, Inc. (Nasdaq: PNTG) in its PAI.
Of those companies, only Frisco, Texas-based Addus posted a gain in August, with stock prices up almost 4% month over month.
“Addus announced that it doubled its credit facility to $600 million in August, and the company has suggested much of that will go toward its M&A pipeline,” said Tinsley. “Addus has mostly worked in the Medicaid personal care space, but it’s steadily building out its home health and hospice footprints as well.”
Meanwhile, Eagle, Idaho-based Pennant saw its stock drop nearly 11% in August compared to July, and Encompass Health saw its stock decline by almost 6% month over month. Brentwood, Tennessee-based Brookdale, which sold 80% of its home health and hospice segment to HCA Healthcare, Inc. (NYSE: HCA) earlier this summer, saw its stock fall nearly 3% in August.
“Brookdale had a difficult time with its health care services segment for a few quarters, but they were able to cash in on the strong demand for home health and hospice with the HCA sale,” Tinsley said.
Quote of the Month
“This workforce is in extremely high demand, driven primarily by the growing population of older adults. We’ve seen this workforce add millions of jobs over the past decade, and we can expect a million more in the next decade — more new jobs than any other occupation.” – Stephen McCall, a PHI data and policy analyst
Read the Full Article Here: Home Care Workforce Still Facing Widespread Economic Instability
Articles Featuring Stoneridge
Stoneridge Buy-Side Associate Partner Jenna Schwartz Helps to Find Your “Diamond in the Rough”. Click here to view the article.
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
(Home Health Index September 2021 | Stoneridge Partners)
Here are the results of the stock prices for the past two years:
||1 mos change
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)
|HH Index Total
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*
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 September 2021 | Stoneridge Partners)