CMS Releases Final Payment Rule; Post-Acute Care Shows Signs of Improvement

After a surge in COVID-19 cases led to consecutive monthly losses for post-acute care stocks, providers are slowly starting to show signs of recovery. And with a reimbursement rate increase on tap for 2022, home health companies have reason to be optimistic.

The U.S. Centers for Medicare & Medicaid Services (CMS) released the final home health payment rule on Nov. 2, which includes a 3.2% payment boost for next year and finalizes the nationwide expansion of the Home Health Value-Based Purchasing (HHVBP) Model.

“This is the largest rate increase for the home health industry since 2002, which will help providers overcome the eventual return of Medicare sequestration,” said Rich Tinsley, President and CEO of Stoneridge Partners. “Value-based purchasing will also likely drive some consolidation among more advanced, high-performing home health companies.”

Home Health and Post-Acute Care Indices

The Stoneridge Partners Home Health (HHI) and Post-Acute Care Indices (PAI) were both down throughout most of the third quarter, but each started to show signs of life in October.

With the effects of the COVID-19 Delta variant waning, the HHI improved its recent performance, ending down less than 1% in October as compared to the previous month. In contrast, the PAI still struggled, down by 8% on a month-over-month basis. Both indices substantially underperformed the S&P 500, which was up nearly 7% in October.

One factor to watch in the coming months? The impact of the federal vaccine mandate on post-acute staffing levels. CMS and the U.S. Department of Labor (DOL) both released vaccination rules on Nov. 4, with vaccine requirements planned to take effect in January.

Home Health Index

The HHI from Stoneridge Partners follows the stock values of Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG). October saw varying results for the HHI companies, with Baton Rouge, Louisiana-based Amedisys’ stock rising almost 14% while Lafayette, Louisiana-based LHC Group saw its stock dip by more than 14% last month.

Both companies released their third-quarter financial results the week of Nov. 1 and detailed the pandemic-related headwinds they continue to face. But Amedisys, LHC Group and other home health providers will surely benefit from the 3.2% payment boost next year, and may also gain some stability around the Patient-Driven Groupings Model (PDGM) since CMS is keeping the payment model’s overall framework the same for 2022 apart from some minor recalibrations.

“On a more long-term basis, each could likewise see benefits from the Choose Home legislation currently making its way through Congress,” Tinsley added.

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.

October ended in a split decision for the four additional PAI companies. Frisco, Texas-based Addus was up more than 17%, and Brentwood, Tennessee-based Brookdale was up more than 3% last month. Meanwhile, Pennant was down nearly 9%, while Encompass was down more than 15%.

During its Oct. 28 earnings call, Encompass confirmed plans to do a public spinoff of its home health and hospice business. The company expects the spinoff to take place in the first half of 2022.

Quote of the Month

“It could be very beneficial for people to consider hospice as an option as soon as they get news of a terminal illness. Often people wait too long, and miss out on the benefits and support the patient and the family could have received.” – Ginger Marshall, Nurse Practitioner and CEO of the Hospice and Palliative Nurses Association

Read the Full Article Here: 5 Common Questions About Hospice Care, Answered

Articles Featuring Stoneridge

The Last Stoneridge Partners Speakers Series of 2021 is December 14th at 1:30pm ET. Stoneridge Partners President and CEO Rich Tinsley will moderate a virtual panel discussion about the current state of the markets, valuation trends in 2021 and industry expectations for the new year. Featured speakers will include David Baiada, CEO of Bayada Home Health Care; Brian Bruenderman, Partner and Executive Vice President, Stoneridge Partners; and Tom Lillis, Partner and leader of Stoneridge Partners Strategic Consulting. Register here!

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 2015.

This graph compares the HH Index to the price of Addus stock (non-Medicare).

(Home Health Index November 2021 | Stoneridge Partners)

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

Company 10/31/21 1 mos change YTD change 10/31/20 10/31/19
Amedisys 169.34 +13.57% -42.27% 259.00 128.52
LHC Group 134.59 -14.22% -36.91% 216.55 110.97
HH Index* 151.97 -0.68% -40.01% 237.78 119.75
S&P 4605.38 +6.91% +22.61% 3269.96 3037.56
Addus 93.50 +17.24% -20.15% 97.57 84.21

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) 10/31/21 10/31/20 10/31/19
Amedisys 5720 8520 4570
LHC Group 4610 6800 3970
HH Index Total 10330 15320 8540
Addus 1400 1460 1110

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

Company 10/31/21 10/31/20 10/31/19
Amedisys 260% 422% 242%
LHC Group 216% 330% 195%
HH Index Average* 238% 376% 219%
Addus 173% 198% 197%

Multiples of EV/EBITDA

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

Company 10/31/21 10/31/20 10/31/19
Amedisys 14.96 32.29 24.12
LHC Group 19.39 28.10 19.53
HH Index Average* 17.18 30.20 21.83
Addus 20.94 26.17 26.87

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 November 2021 | Stoneridge Partners)

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Medicare-certified home health agency.  Minimal census.  Region 6.  Accredited.

 Home Health /  Texas

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

 Home Care /  Connecticut

Clean and accredited Medicare provider number.  Zero deficiencies.

 Home Health /  Connecticut

Joint Commission-accredited psychiatric treatment center.  Residential, PHP, IOP, OP and home health services.  National referral base; reputation for excellence, innovation.  $3M EBITDA on $7M revenue...

 Behavioral Health /  Midwest

Central Ohio based home health company with private pay.  $2.3 million in revenue.  13.5% EBITDA.  Strong growth trends, full staff in place.

 Home Health /  Ohio

Large home care franchisee.  $6.5 million in revenue.  Private duty.  Attractive market with great growth potential.

 Home Care /  Florida

Non-medical home care franchisor.  Platform opportunity with national footprint.  Systemwide revenues more than $12 million.  Franchise locations in 16 states.

 Home Care /  Texas

$2+ million private pay.  Profitable with great reputation.

 Home Health /  Pennsylvania

Profitable hospice agency with $600,000 in revenue.  Ready to grow with full complement of staff in place.

 Hospice /  Pennsylvania

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.

 Home Health /  Ohio

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

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

$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

$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

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

 Hospice /  Texas

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.


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 November 2021 | Stoneridge Partners

From Rich Tinsley, Publisher of “Home Health Index.” Rich can be reached at 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