Home Health Index | 2015 December Update

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

Quote of the Month:

“This quarter’s M&A report continues to see the pendulum shift to a seller’s market across all deal sizes.”  From M&A Source Market Pulse Survey Report Q3 2015

The Stoneridge Partners Home Health Index Sets a New Record High!

The difficult summer is over and now, over the past two months, the Stoneridge Partners Home Health Index (HH Index) has surged ahead 5.5% to a new record high of 43.17.

To be fair it should be noted that during this same two month period the market as a whole, as measured by the S&P 500, was up over 8%.

All of the stocks in our HH Index were up with LHC Group leading the way…. plus 3.3% for the month.

The former record high of 42.55 was set four months ago.  Prior to that one would have to go back to October of 2008 when the index was at 41.75. We then dropped all the way down to 11.64 on Dec. 1 of 2011.  We are now up 271% from that low….it’s been quite a ride.

See It to Believe It!

This graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to January, 2002. It has been quite a ride.

[visualizer id=”5727″]

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, through  November, 2015.

[visualizer id=”5731″]

This graph compares our HH Index to the price of Addus stock (non-Medicare).  As you can see, after their earnings release, their stock took a bit of a dive.

[visualizer id=”5730″]

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

Company 11/30/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 42.37 +2.1% +46% +52% +52%
Amedisys 40.59 +2.6% +38% +60% +149%
LHC Group 46.55 +3.3% +49% +98% +96%
HH Index** 43.17 +2.7% +45% +69% +91%
S&P 500 2080.41 +0.05% +1.0% +0.6% +15.2%
Addus 22.80 –8.73% -6% -1% -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)) 12/1/2015 11/1/2015 10/1/15 9/1/15 8/1/15
Almost Family 493 430 462 454 458
Amedisys 1,418 1,390 1,345 1,390 NA
LHC Group 867 832 827 817 775
HH Index Total 2,770 2,652 2,634 2,661
NA
Addus 239 236 303 329 285

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

Company 12/1/15 12/1/14 12/1/13
Almost Family 96% 68% 59%
Amedisys 115% 80% 40%
LHC Group 112% 69% 64%
HH Index Average 107% 76% 58%
Addus 72% 81% 93%

Multiples of EV/EBITDA.

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

Company 12/1/15 12/1/14 12/1/13
Almost Family 13.4 14.0 9.15
Amedisys 15.8 18.5 10.1
LHC Group 11.2 8.6 6.8
HH Index Average 13.5 13.1 8.4
Addus 10.0 10.6 13.2

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices September 1. 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 that may differ from that used by a company it is reporting.

Third Quarter Earnings!

Almost Family

In Thousands 2015* 2014 Difference %
Revenue 386,997 371,072 +15,925 +4.3%
Gross Margin 182,855 173,468 +9,387 +5.4%
Gross Margin % 47.2% 46.7% +0.5 10.7%
G&A Expenses 156,268 156,772 -544  -0.3%
Operating Income 26,587 16,696 +9,891 +59.2%
Stock Price 10/1 40.05 29.44 +10.6 +36%

Increases all around except for G&A, resulting in a nice 59% increase in Operating Income.

*2015: Due to an accounting change their 2015 quarter ended October 2.

To read their complete SEC 10Q click HERE

Amedisys

In Thousands 2015 2014 Difference %
Revenue 942,174 904,026 +38,148 +4.2%
Gross Margin 408,742 384,340 +24,402 +6.3%
Gross Margin % 43.4% 42.5 +0.9 +2.1%
G&A Expenses* 359,411 372,896 -13,485 -3.6%
Operating Income -25,862 9,236 -35,862 -380%
Stock Price 10/1 20.17  37.98 +17.8 +88%

*G&A Expenses – In the first quarter of 2015 Amedisys wrote off about $75M in “asset impairment charge”. For comparison purposes asset impairment charges were excluded.

To read their complete SEC 10Q click HERE

LHC Group

In Thousands 2015 2014 Difference %
Revenue 597,373 540,261 +57,112 +10.5%
Gross Margin 245,435 218,278 +27,157 +12.4%
Gross Margin % 41.1% 40.4% +0.7 +1.7%
G&A Expenses 180,416 172,499 +7,917 +4.6%
Operating Income 50,146 34,080 +16,066 +47.1%
Stock Price 10/1 44.77 23.20 +21.57 +93%

Nice performance all around.

To read the complete SEC 10Q click HERE

Totals for Almost Family, Amedisys & LHC Group

In Thousands 2015 2014 Difference %
Revenue 1,926,544 1,815,359 +111,185 +6.1%
Gross Margin 837,032 776,086 +60,946 +7.9%
Gross Margin % 43.9% 43.2% +0.7 +1.6%
G&A Expenses 696,055 702,167 -6,112 0.1%
Operating Income 126,064 62,220 +63,844 +103%
HH Index 9/30 40.93 23.51 +17.42 +74%

Merger & Acquisition Activity:

“This quarter’s report continues to see the pendulum shift to a seller’s market across all deal sizes.”  From M&A Source Market Pulse Survey Report Q3 2015

Q3 2015 Market Pulse

 

The above report is for general M&A activity, but we are surely seeing a sellers market in quality home health and hospices.  Agencies and hospices with strong earnings and good accounting and management records are in great demand, with prices higher than we have seen in years.

SOLD BY STONERIDGE PARTNERS!

Lafayette, LALHC Group, Inc. (NASDAQ;LHCG) announced that they have acquired substantially all of the assets of The Visiting Nurses Association of Greater Cincinnati and Northern Kentucky, Inc’s Kentucky home health operations.  Brian Bruenderman and Ben Bogan, partners at Stoneridge, provided sell side advisory services.

OTHER SALES FROM AROUND THE COUNTRY!

Lafayette, LA – LHC Group completed the previously announced acquisition of substantially all of the assets of Nurses Registry and Home Health Corp. (“Nurses Registry”), which became effective on November 11, 2015.

Dallas, TX – New Century Hospice has acquired Family Hospice, LLC based in Boulder.  New Century operates hospices in Castle Rock and Colorado Springs as well as 17 other locations in Georgia, Louisiana, Oklahoma, Texas and Virginia.

Earlier this month New Century Hospice also announced the acquisition of Autumn Bridge, LLC, a hospice provider located in Oklahoma City, Oklahoma, effective October 31, 2015.  Purchase price and terms were not disclosed.

Woodridge, VA – Addus HomeCare Corporation (NASDAQ: ADUS), a comprehensive provider of home and community-based services that are mainly provided in the home, personal in nature and concentrated on the dual eligible population, announced that it has acquired substantially all of the assets of the personal care business of Five Points Healthcare of Virginia, LLC, effective Nov. 9.

BestCare HomeCare serves individuals in 11 counties in Northern Virginia and reported annualized revenues of about $5.7 million for the first nine months of 2015.

Exclusively Listed for Sale by Stoneridge Partners:

  • North Carolina – Accredited $2 million North Carolina Innovations Waiver Provider for Individuals with I/DD located in Winston-Salem and surrounding areas with a strong reputation in the community. Stoneridge File S-4001
  • Mid-Atlantic region – $30 million Medicare/Medicaid agency with multiple branches in several states, including CON service areas. Long history and great reputation for quality care. Stoneridge File S-8300
  • California – Approximately $8 million private duty home health and staffing company located in Northern California with multiple locations. Stoneridge File S-7500
  • New Jersey $3.5 million Medicaid agency in Northern NJ. Great opportunity for existing operator to add revenue and service area. Motivated seller. Stoneridge File S-9254
  • Florida – $2.8 million Medicare certified home health agency in District 9 of Florida with a diverse referral base. Stoneridge File S-4148
  • Minnesota – $14 million revenue Medicare certified home health agency with large Medicaid census, well established and deficiency free, SE Minnesota. Stoneridge file S-5268
  • DFW Area – Approx. $3.5 million home care and hospice agency just listed.  Stoneridge file S-6600.
  • California- Approx. $2.6 million Medicare home health agency. Central coast region of Northern California. 90% Traditional Medicare. Strong gross profit with opportunities for immediate, sustained, long-term growth. Accredited.  Stoneridge file S-5400. ON CONTRACT
  • Pennsylvania – Approx. $4 million Medicaid home care agency located in central PA. Accelerated and profitable growth trajectory with continued opportunity for future growth. Professionally run with outstanding clinical and excellent staff in place.  Stoneridge file S-1000. ON CONTRACT
  • Colorado – $2.5 million diversified home care agency  and hospice,  accredited with excellent books and records.  Stoneridge file S-1005
  • Rhode Island – $2.5 million Medicare agency.  Accredited in CON state.  Stoneridge file S-1100
  • Texas – $4.8 million Medicare agency in Houston metro area with solid bottom line. 65% of revenue from traditional Medicare and the balance in private non-skilled care. Stoneridge file #S-2000.
  • Oklahoma –  $1.5 million Medicare agency.  89% of revenue from traditional Medicare.  Stoneridge file S-4131
  • Florida – $4 million in pure private pay.  15% bottom line.  Accredited on the central east coast.  Stoneridge file S-3250
  • Illinois – $5 million plus Medicare agency with four offices. Strong management with excellent clinical.  Stoneridge file S-6550
  • Kentucky – Certificate of Need for 3 counties in Northern KY, rare opportunity to establish or expand services in populous CON service area. Stoneridge file S-1121 SOLD
  • Illinois – $3 million hospice in Chicago area.  Average census 58.  Stoneridge file S-5325
  • Texas – $4 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge file S-3665
  • Massachusetts – $5 + million home health agency, primarily Medicaid, but also private pay and commercial insurance, plus Medicare certification. Zero deficiencies on last survey.  Stoneridge file S-9300 ON CONTRACT
  • Washington State – $2 million revenue. This agency has a long history of profitability. Diverse payor sources includes Medicaid programs and private pay. Great reputation in a unique service area. Stoneridge file S-7010 SOLD!
  • Florida – $5 million Medicare agency located in the Tampa – St. Pete area.  Accredited, with solid bottom line.   Stoneridge file S-4109, ON CONTRACT
  • Texas – $8 million East Texas agency, Medicare certified with deficiency free survey, no audits, and top-of- the line software.  Stoneridge file S-3001 ON CONTRACT
  • Texas – $1.5  million East Texas Medicare certified home health agency, providing skilled care, approx 75% from traditional PPS Medicare.  Last survey was deficiency free. Stoneridge file S-4088
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • Texas – $3.3 million accredited Medicare home health agency. Profitable and still growing with approximately 87% of revenue coming from traditional Medicare. Strong marketing team in place with diversified referral sources. Stoneridge file S-1500 ON CONTRACT
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare.Stoneridge file S-2650 ON CONTRACT
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015
  • Texas – $1 million Medicare agency in the DFW area – 99% of revenue from traditional Medicare.  Stoneridge file S-1015

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

DoctorsStrike

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.

From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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: Almost Family | Amedisys | LHC Group

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Home Health Index | 2015 November Update

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

Quote of the Month:

“With the health care environment … I think the trends have been and continue to be more partnering, more collaboration,” Len Trainor, former owner of Heritage Healthcare Services , after announcing the sale of his company

The Stoneridge Partners Home Health Index Moves Up 2.7%

After a very difficult two months for the market as a whole, our HH Index moved up 2.7%, which is just about what we lost in September.  The general market however did even better with the S&P 500 up 8.3%

All of the stocks in our HH Index were up with Amedisys leading the way…. plus 4.2%.

The record high of 42.55 for our HH Index was set just three months ago.  It looks like we are now creeping back.

See It to Believe It!

This graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to January, 2002. It has been quite a ride.

[visualizer id=”5727″]

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, through  October, 2015.

[visualizer id=”5731″]

This graph compares our HH Index to the price of Addus stock (non-Medicare).  As you can see, after their earnings release, their stock took a bit of a dive.

[visualizer id=”5730″]

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

Company 9/30/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 41.50 +3.6% +43% +41% +116%
Amedisys 39.58 +4.2% +35% +52% +143%
LHC Group 45.06 +0.6% +45% +85% +118%
HH Index** 42.05 +8.3% +41% +58% +125%
S&P 500 2079 +8.3% -1.0% -3.0% +18.3%
Addus 24.98 -19.8% +3% +26% -3.4%

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)) 11/1/2015 10/1/15 9/1/15 8/1/15 7/1/15
Almost Family 430 462 454 458 4163
Amedisys 1,390 1,345 1,390 NA 1,420
LHC Group 832 827 817 775 742
HH Index Total 2,652 2,634 2,661
NA 2,578
Addus 236 303 329 285 311

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

Company 11/1/15 11/1/14 11/1/13
Almost Family 85% 75% 43%
Amedisys 116% 82% 42%
LHC Group 110% 74% 60%
HH Index Average 104% 81% 52%
Addus 71% 69% 93%

Multiples of EV/EBITDA.

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

Company 11/1/15 11/1/14 11/1/13
Almost Family 11.8 18.1 5.8
Amedisys 15.6 19.0 7.8
LHC Group 11.6 9.1 6.3
HH Index Average 13.0 14.7 6.6
Addus 9.6 10.6 12.3

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices September 1. 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 that may differ from that used by a company it is reporting.

Hot off the Press!

Compassus Acquires Hospice Advantage.

“The joining of Compassus and Hospice Advantage offers a compelling opportunity to build on the progress of each company to create a leading organization focused on the highest quality hospice, palliative and post-acute services in the United States.”  Jim Deal, CEO, Compassus.

The acquisition increases Compassus’ locations by 60, up from 90 in 25 states following the purchase of Life Choice Hospice earlier this year. The addition of Hospice Advantage brings Compassus services into Indiana, Minnesota and Wisconsin for the company’s first time.

As part of the deal, Hospice Advantage President Rod Hildebrandt will join the Compassus executive team, according to the release. Deal will remain as CEO of Compassus, which is based in Nashville, Tennessee.

Congratulations to Rod, a great guy, and a job well done!

Top 100 Home Health & Hospice Agencies

The LexisNexis 2015 Top 100 Home Health and Hospice Agencies Rankings were compiled by LexisNexis Risk Solutions using medical claims and patient volume data from the industry leading MarketView™ claims database.

Top 10 Home Health Agencies:

  1. Kindred Healthcare – Atlanta, Ga.
  2. Amedisys, Inc. – Baton Rouge, La.
  3. LHC Group – Lafayette, La.
  4. Almost Family, Inc. – Louisville, Ky.
  5. Encompass Home Health – Dallas, Texas
  6. Brookdale Senior Living – Brentwood, Tenn.
  7. Visiting Nurse Service of New York – New York, N.Y.
  8. Trinity Health – Livonia, Mich.
  9. Interim HealthCare – Sunrise, Fla.
  10. BAYADA Home Health Care – Moorestown, N.J.

The Top 10 Hospice Providers include:

  1. Kindred Healthcare – Atlanta, Ga.
  2. VITAS Healthcare – Miami, Fla.
  3. HCR Manor Care – Toledo, Ohio
  4. Amedisys, Inc. – Baton Rouge, La.
  5. Curo Health Services – Mooresville, N.C.
  6. Seasons Hospice & Palliative Care – Atlanta, Ga.
  7. Hospice Campassus – Nashville, Tenn.
  8. Compassionate Care Hospice – Newark, Del.
  9. Hospice of the Valley – Phoenix, Ariz.
  10. Aseracare – Atlanta, Ga.

To read the full list of 100 companies with estimated market share serving the home health and hospice communities, visit: LexiNexis Top 100

 Almost Family in the News!

Here is another example of why strategic, synergistic buyers are so successful in home care M&A.

It was recently announced that Almost Family has acquired the stock of Black Stone Operations dba Home Care by Blackstone.   Black Stone is a provider of in-home personal care and skilled home health services and has 2015 revenues approaching $50M through service locations in the western half of Ohio.

The total purchase price was $40 million.  Approx. $29 million would be classified as personal care (non-Medicare) and $21 million in Medicare type plans.  Their branch level contribution (before home office and one-time items) was $7.5 million.  Their home office costs and one-time items were approx. $3.9 million.

Branch office synergies are expected to range between $2M and$2.5M. One-time transaction costs, severance, wind-down, lease abandonment and transition costs are expected to be between $0.5M and $1.0M incurred over the period from closing through mid-2016.

From these numbers let’s take a stab at multiples…taking into account synergies:

Purchase Price 40,000,000
Revenue 50,000,000
Price as % of Revenue 80%
Income 3,600,000
Multiple of Income 11.1
Branch Level Income 7,500,000
Multiple of Branch Level 5.3
Branch Level Income + Synergies 9,500,000
Multiple including Synergies 4.2

Again, this is just taking an approximate stab based on their press release, but it shows the true power that large strategic buyers have in today’s market. To read the full press release go Here.

Amedisys in the News!

It was recently announced that Amedisys will acquire Florida Based Infinity HomeCare and its 15 care centers for $63 million.  Infinity, whose headquarters are in Sarasota, Florida, provides care for more than 14,000 patients each year and has more than 600 employees. Infinity generated around $50 million in revenue a year.

That seems to work out to about 1.25 times revenue.

President and Chief Executive Officer Paul Kusserow states that the acquisition will expand the Amedisys footprint in Florida. The deal also “sends a strong signal” that Amedisys plans to resume growing through acquisitions in key markets.

In August, Kusserow said Amedisys has compiled a list of more than 200 potential targets for acquisitions, joint ventures and other partnerships. In September, the company announced it has $300 million in credit available to fund those deals.

And it looks like North Tide Capital is taking some chips off the table.  Over the past thirty days they have unloaded over 500,000 shares of Amedisys stock.  This still leaves them with a considerable position with over 10% of the company’s capitalization.

Addus in the News!

This past month Addus stock (NASDAQ:ADUS) surged to a 52 week high of $35.72, and then, when lower than expected third quarter results were announced, the stock dropped 25%.  The culprit according to management was sluggish revenues at its two most recent acquisitions and certain other locations.

LHC Group in the News!

We read last month about the troubles at Lexington, KY based Nurse Registry and Home Health Corp.  We now learn that a U.S. Bankruptcy Court has authorized the sale to LHC Group.  To read the entire article go here:  Nurse Registry goes to LHC Group

Merger & Acquisition Activity:

SOLD BY STONERIDGE PARTNERS!

Freeland, Washington – Island Home Nursing, Inc, a non-Medicare agency, sold to a national healthcare company.  Brian Bruenderman and Ben Bogan, partners at Stoneridge, provided sell-side advisory services.

Maricopa County, Arizona – Sunlife Home Health, a Medicare agency located in the Phoenix metro area, sold to a regional home care company.  Rhonda Gronberg, our Director of Development, provided sell-side advisory services.

OTHER SALES FROM AROUND THE COUNTRY!

Dallas, Texas – Epic Health Services, a provider of pediatric nursing, therapy and enteral services as well as adult home health care services, has acquired Medco, a medical supply company serving patients throughout Texas and in Shreveport.

Independence, KansasMercy leaders have announced an agreement with Home Town Health Care, LLC, owned by Bobby and Debbie Shinkle and headquartered in Fredonia, for the transfer of Mercy’s home health and hospice services, assuring the continued provision of those services for the Independence community and surrounding area.

Albuquerque, New Mexico – Heritage Healthcare Services Inc. has been purchased by an affiliate of the Evangelical Lutheran Good Samaritan Society. The South Dakota-based Good Samaritan Society has 240 locations in 24 states, including eight in New Mexico. It operates assisted-living centers and nursing homes and offers in-home and skilled nursing care.  Congratulations to Len and Liz Trainor on a job well done!  To read the entire article click Here.

Join Us in Las Vegas….

 Decision Health’s Annual Private Duty conference- November 16-18 at the newly remodeled Tropicana Resort.  Come on out to ‘Vegas, have a great time and get an update on Private Duty M&A.  Private Duty Conference.  Give us a call to set up a confidential meeting.

Joe Lynch, One of our Partners, Authors a Book!

Finding Dad

Joe’s new book, “Finding Dad”, combines amusing and interesting stories about his many years in home care, along with fascinating stories about his father, a World War II fighter pilot.  If you are in home care, and/or have an interest in WWII history you will enjoy this book, which we are shamelessly promoting.  For more information and to order Joe’s book click here:  Finding Dad 

 Exclusively Listed for Sale by Stoneridge Partners:

  • Minnesota – $14 million revenue Medicare certified home health agency with large Medicaid census, well established and deficiency free, SE Minnesota. Stoneridge file S-5268
  • DFW Area – Approx. $3.5 million home care and hospice agency just listed.  Stoneridge file S-6600.
  • California- Approx. $2.6 million Medicare home health agency. Central coast region of Northern California. 90% Traditional Medicare. Strong gross profit with opportunities for immediate, sustained, long-term growth. Accredited.  Stoneridge file S-5400
  • Pennsylvania – Approx. $4 million Medicaid home care agency located in central PA. Accelerated and profitable growth trajectory with continued opportunity for future growth. Professionally run with outstanding clinical and excellent staff in place.  ON CONTRACT! Stoneridge file S-1000
  • Colorado – $2.5 million diversified home care agency  and hospice,  accredited with excellent books and records.  Stoneridge file #S-1005
  • Rhode Island – $2.5 million Medicare agency.  Accredited in CON state.  Stoneridge file #S-1100
  • Texas – $4.8 million Medicare agency in Houston metro area with solid bottom line. 65% of revenue from traditional Medicare and the balance in private non-skilled care. Stoneridge file #S-2000.
  • Oklahoma –  $1.5 million Medicare agency.  89% of revenue from traditional Medicare.  Stoneridge file S-4131
  • Florida – $4 million in pure private pay.  15% bottom line.  Accredited on the central east coast.  Stoneridge file #S-3250.
  • Illinois – $5 million plus Medicare agency with four offices. Strong management with excellent clinical.  Stoneridge file #S-6550
  • Kentucky – Certificate of Need for 3 counties in Northern KY, rare opportunity to establish or expand services in populous CON service area. Stoneridge file S-1121 ON CONTRACT
  • Illinois – $3 million hospice in Chicago area.  Average census 58.  Stoneridge file #S-5325
  • Texas – $4 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge file S-3665
  • Illinois –  $2.3 million Chicago area Medicare agency, clean surveys, excellent clinical reputation.  Stoneridge file #S-4300
  • Massachusetts – $5 + million home health agency, primarily Medicaid, but also private pay and commercial insurance, plus Medicare certification. Zero deficiencies on last survey.  Stoneridge file #S-9300 ON CONTRACT
  • Washington State – $2 million revenue. This agency has a long history of profitability. Diverse payor sources includes Medicaid programs and private pay. Great reputation in a unique service area. Stoneridge file S-7010 SOLD!
  • Florida – $5 million Medicare agency located in the Tampa – St. Pete area.  Accredited, with solid bottom line.   Stoneridge file S-4109, ON CONTRACT
  • Texas – $8 million East Texas agency, Medicare certified with deficiency free survey, no audits, and top-of- the line software.  Stoneridge file S-3001 ON CONTRACT
  • Texas – $1.5  million East Texas Medicare certified home health agency, providing skilled care, approx 75% from traditional PPS Medicare.  Last survey was deficiency free. Stoneridge file S-4088
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • Texas – $3.3 million accredited Medicare home health agency. Profitable and still growing with approximately 87% of revenue coming from traditional Medicare. Strong marketing team in place with diversified referral sources. Stoneridge file S-1500 ON CONTRACT
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare.Stoneridge file S-2650
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232.
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015
  • Texas – $1 million Medicare agency in the DFW area – 99% of revenue from traditional Medicare.  Stoneridge file #S-1015

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

Another Favorite from the New Yorker

Moreaccessible

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.

From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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: Almost Family | Amedisys | LHC Group

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October 1 Update

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

Quote of the Month:

“Amedisys is committed to a disciplined capital allocation strategy. This announcement reflects the continued confidence of the Board and our management team in our long-term plan.”

Paul Kussow, CEO, after announcing a $75 million buy-back of Amedisys’ stock.

The Stoneridge Partners Home Health Index Takes Another Step Back!

Well it’s been a tough couple of months for the market in general.  The S&P 500 was down 2.6% for the month and is now down 6.7% YTD and 2% from a year ago, so the results for our Home Health Index don’t look too bad.  This past month our index dropped 2.7% but we are up 37% YTD and up 74% from a year ago.

While Almost Family led the way down in September with a 9.6% drop, LHC Group and Addus both broke the trend and were up nicely.

The record high set by our HH Index just two months ago, at the end of July at 42.55.  We are now off about 4% from that high.

See It to Believe It!

This graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to January, 2002. It has been quite a ride.

[visualizer id=”5727″]

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, through  September, 2015.  Look at the nice uptick for LHC Group.

[visualizer id=”5731″]

This graph compares our HH Index to the price of Addus stock (non-Medicare).  While the HH Index dropped, Addus had a nice month.

[visualizer id=”5730″]

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

Company 9/30/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 40.05 -9.6% +38% +47% +106%
Amedisys 37.98 -1.7% +29% +88% +121%
LHC Group 44.77 +3.4% +44% +93% +91%
HH Index** 40.93 -2.7% +37% +74% +104%
S&P 500 1920 -2.63% -6.7% -2.2% +14.1%
Addus 31.15 +8.4% +28% +59% +7.5%

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)) 10/1/15 9/1/15 8/1/15 7/1/15 6/1/15
Almost Family 462 454 458 4163 403
Amedisys 1,345 1,390 NA 1,420 1,170
LHC Group 827 817 775 742 666
HH Index Total 2,634 2,661
NA 2,578 2,239
Addus 303 329 285 311 302

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

Company 10/1/15 10/1/14 10/1/13
Almost Family 91% 69% 43%
Amedisys 111% 66% 43%
LHC Group 109% 69% 68%
HH Index Average 104% 68% 51%
Addus 83% 70% 107%

Multiples of EV/EBITDA.

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

Company 10/1/15 10/1/14 10/1/13
Almost Family 12.6 16.6 5.8
Amedisys 15.0 NA 8.0
LHC Group 11.5 8.6 6.4
HH Index Average 13.0 NA 6.8
Addus 12.4 11.0 14.1

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices September 1. 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 that may differ from that used by a company it is reporting.

Hot off the Press!

Lexington, Kentucky:  Nurse Registry and Home Health Corp. along with the estate of former owner, the late Lennie House, have agreed to the terms of a fraud settlement of $16 million owed to the federal government.

Under the terms, Nurses’ Registry will be sold within 90 days to an independent third party, and 70% of the proceeds will go to the federal government.

To read the entire article go Here

LHC Group in the News!

October 2, 2015 – LHC Group, Inc. announced today that it has completed the previously announced acquisition of Halcyon Hospice LLC for $58.5 million in cash or, net of tax benefit, for $51.5 million. The transaction is expected to be accretive to LHC Group’s 2016 earnings by between $0.15 and $0.20 per diluted share, while earnings for the fourth quarter of 2015 are expected to reflect transaction and integration costs totaling $0.06 per diluted share.

Based in Cumming, Georgia, Halcyon is one of the largest independent providers of hospice services in the southeastern United States. It operates 16 hospice locations across three states, including two inpatient hospice facilities, and has approximately 400 employees. Halcyon’s service area covers 183 counties across Georgia, Mississippi and South Carolina, including 59 counties in which LHC is licensed for home health. Annual revenue for Halcyon is approximately $41 million. This acquisition will increase LHC’s hospice service line to 53 locations in 12 states with over $110 million in annual revenue.

 Almost Family in the News!

Almost Family, Inc (NASDAQ:AFAM) announced that it has entered into an agreement to acquire the assets of the Medicare-certified home health agency owned by Bayonne Visiting Nurse Association in Bayonne, NJ.  The transaction is expected to close before the end of 2015, subject to regulatory approvals.

Included in this acquisition is a Certificate of Need to provide home care services in Hudson County, New Jersey.

Brain Bruenderman, one of our partners, provided sell-side advisory services.

Amedisys in the News!

Amedisys’ Board authorized the repurchase of up to $75M in stock during the next year. CEO Paul Kusserow says, “Amedisys is committed to a disciplined capital allocation strategy. This announcement reflects the continued confidence of the Board and our management team in our long-term plan.”

Merger & Acquisition Activity:

SOLD BY STONERIDGE PARTNERS!

Bayonne, NJ – Almost Family, Inc (NASDAQ:AFAM) announced that it has entered into an agreement to acquire the assets of the Medicare-certified home health agency owned by Bayonne Visiting Nurse Association in Bayonne, NJ.  The transaction is expected to close before the end of 2015, subject to regulatory approvals. Brian Bruenderman, one of our partners, provided sell-side advisory services.

Newton, NC – Epic Health Services Inc., a Dallas-based provider of pediatric skilled nursing and therapy, announced today that it has acquired pediatric and adult home care provider Unifour Nursing, based in Newton, North Carolina.  Brian Bruenderman and Benjamin Bogan, Partners here at Stoneridge Partners, provided sell-side advisory services.

Quincy, IL – CareLink, Inc. a private duty agency sold to a regional health care provider.  Rhonda Gronberg, our Director of Development, provided advisory services.

Visit us at these conferences:

Kansas: Join us October 15-16 at the 2015 Power Up InterHab Annual Conference in Wichita at the Hyatt Regency.InterHab Conference

NAHC Annual:  Join us in Nashville October 28-30.  For the 12th straight year we will be exhibiting at NAHCs Annual Conference & Exhbition. NAHC Annual Conference

South Carolina:  Join us at the South Carolina Home Care & Hospice annual conference at Hilton Head.  November 2-3 at the Sonesta Resort.  Ben Bogan, one of our partners, will be giving a presentation titled “Massive Mergers & Acquisitions – What Does it Mean to You?”   South Carolina Conference

Las Vegas – Decision Health’s Private Duty conference- November 16-18 at the newly remodeled Tropicana Resort.  Come on out to ‘Vegas, have a great time and get an update on Private Duty M&A.  Private Duty Conference

At all of these conferences we will be setting up confidential meetings with buyers and sellers of home care agencies and hospices.

Joe Lynch, One of our Partners, Authors a Book!

Finding Dad

Joe’s new book, “Finding Dad”, combines amusing and interesting stories about his many years in home care, along with fascinating stories about his father, a World War II fighter pilot.  If you are in home care, and/or have an interest in WWII history you will enjoy this book, which we are shamelessly promoting.  For more information and to order Joe’s book click here:  Finding Dad 

Exclusively Listed for Sale by Stoneridge Partners:

  • Minnesota – $12 million revenue Medicare certified home health agency with large Medicaid census, well established and deficiency free, SE Minnesota. Stoneridge file S-5268
  • DFW Area – Approx. $3.5 million home care and hospice agency just listed.  Stoneridge file S-6600.
  • California- Approx. $2.6 million Medicare home health agency. Central coast region of Northern California. 90% Traditional Medicare. Strong gross profit with opportunities for immediate, sustained, long-term growth. Accredited.  Stoneridge file S-5400
  • Pennsylvania – Approx. $4 million Medicaid home care agency located in central PA. Accelerated and profitable growth trajectory with continued opportunity for future growth. Professionally run with outstanding clinical and excellent staff in place.  Stoneridge file S-1000
  • Colorado – $2.5 million diversified home care agency  and hospice,  accredited with excellent books and records.  Stoneridge file #S-1005
  • Rhode Island – $2.5 million Medicare agency.  Accredited in CON state.  Stoneridge file #S-1100
  • Oklahoma –  $3.5 million revenue Oklahoma City Medicare certified home health agency.   90% of revenue from traditional Medicare. Stoneridge file S-3200
  • Florida – $4 million in pure private pay.  15% bottom line.  Accredited on the central east coast.  Stoneridge file #S-3250.
  • Illinois – $5 million plus Medicare agency with four offices. Strong management with excellent clinical.  Stoneridge file #S-6550
  • Kentucky – Certificate of Need for 3 counties in Northern KY, rare opportunity to establish or expand services in populous CON service area. Stoneridge file S-1121 ON CONTRACT
  • Illinois – $3 million hospice in Chicago area.  Average census 58.  Stoneridge file #S-5325
  • Texas – $5 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge file S-3665
  • Illinois –  $2.3 million Chicago area Medicare agency, clean surveys, excellent clinical reputation.  Stoneridge file #S-4300
  • Massachusetts – $5 + million home health agency, primarily Medicaid, but also private pay and commercial insurance, plus Medicare certification. Zero deficiencies on last survey.  Stoneridge file S-9300 ON CONTRACT
  • Washington State – $2 million revenue. This agency has a long history of profitability. Diverse payor sources includes Medicaid programs and private pay. Great reputation in a unique service area. Stoneridge file S-7010 ON CONTRACT
  • Florida – $5 million Medicare agency located in the Tampa – St. Pete area.  Accredited, with solid bottom line.  Stoneridge file S-4109 ON CONTRACT
  • Texas – $8 million East Texas agency, Medicare certified with deficiency free survey, no audits, and top-of- the line software.  Stoneridge file S-3001 ON CONTRACT
  • Texas – $1.5  million East Texas Medicare certified home health agency, providing skilled care, approx 75% from traditional PPS Medicare.  Last survey was deficiency free. Stoneridge file S-4088
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • North Carolina – $2.2 million Medicaid provider with two locations serving Charlotte, NC and surrounding areas. Service waiver programs include: PCS, PDN, and CAP. Accredited. Professionally run company with outstanding clinical. Great tuck-in opportunity. Stoneridge file S-2999 SOLD
  • Texas – $3.3 million accredited Medicare home health agency. Profitable and still growing with approximately 87% of revenue coming from traditional Medicare. Strong marketing team in place with diversified referral sources. Stoneridge file S-1500 ON CONTRACT
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare.Stoneridge file S-2650
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232.
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015
  • Texas – $1 million Medicare agency in the DFW area – 995 of revenue from traditional Medicare.  Stoneridge file #S-1015

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

Another Favorite from the New Yorker

 

Anothersonnet

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.
From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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: Almost Family | Amedisys | LHC Group

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September 1 Update

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

Quote of the Month:

“Changes to how the government pays for home healthcare for Medicare patients stands to benefit Amedisys, as weaker performers are driven out.  There is going to be a tremendous consolidation in this industry if these things come close to fruition.”  Paul Kuserow, President, Amedisys

The Stoneridge Partners Home Health Index Takes a Step Back!

As we all know, August was a punishing month for the the stock market in general with the S&P 500 dropping over 6%, now down over 4% YTD, so the small drop of 1.1% in our HH Index is rather easy to take.

What is amazing is that three home care stocks, LHC Group, Addus, and Almost Family were up for the month,  with only Amedisys being down.

This follows the record high set by our HH Index at the end of July at 42.55.  Going back one year the S&P 500 is now down 1.6% while our HH Index is up 70%.  Not too bad!

See It to Believe It!

This graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to January, 2002. It has been quite a ride.

[visualizer id=”5727″]

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, through  August, 2015.

[visualizer id=”5731″]

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

[visualizer id=”5730″]

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

Company 8/31/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 44.30 +1.2% +53.0% +58.3% +134.8%
Amedisys 38.64 -11.4% +31.6% +84.7% +137.2%
LHC Group 43.30 +7.5% +38.9% +68.21% +91.3%
HH Index** 42.08 -1.1% +41.1% +69.1% +118.5%
S&P 500 1972 -6.3% -4.2% -1.6% +20.7%
Addus 28.74 +5.9% +18.4% +31.2% +35.7

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)) 9/1/15 8/1/15 7/1/15 6/1/15
Almost Family 454 458 416 403
Amedisys 1,390 NA 1,420 1,170
LHC Group 817 775 742 666
HH Index Total 2,661   2,578 2,239
Addus 329 285 311 302

Enterprise Value (EV), aka Selling Price,  as a Percent of Revenue. Note that only two years ago these stocks were selling for 50% of EV.

Company 9/1/15 8/1/15 9/1/14 9/1/13
Almost Family 90% 91% 72% 42%
Amedisys 115% NA 70% 42%
LHC Group 108% 104% 77% 66%
HH Index Average 104% 73% 50%
Addus 83% 88% 77% 80%

Multiples of EV/EBITDA.

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

Company 9/1/15 8/1/15 9/1/14 9/1/13
Almost Family 12.4 14.0 17.3 5.7
Amedisys 15.5 NA 23.5 7.8
LHC Group 11.4 11.75 9.5 6.8
HH Index Average 13.1 16.7 6.8
Addus 11.2 12.2 13.3 10.5

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices September 1. 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 that may differ from that used by a company it is reporting.

Hot off the Press!

HealthSouth (HLS) announces its agreement to acquire home health operator, CareSouth, for $170 million in cash.

HealthSouth Corporation (NYSE: HLS) (“HealthSouth”), a leading provider of post-acute healthcare services, announced its Encompass Home Health operating unit (“Encompass”) has entered into a definitive agreement to acquire the home health agency operations of CareSouth Health System, Inc. (“CareSouth”) for a cash purchase price of $170 million. CareSouth operates a portfolio of 45 home health locations in 7 states and generated revenues of approximately $104 million in 2014. The transaction was approved by both companies’ boards of directors and is expected to close in the fourth quarter of 2015, subject to regulatory approval.

The CareSouth acquisition enables HealthSouth to leverage the operating platform of Encompass across home health locations in the new markets of Alabama, Georgia, North Carolina, South Carolina, and Tennessee. CareSouth also improves Encompass’ market share position in the key states of Florida and Virginia. Upon completion of this transaction, Encompass will become the third largest home health provider in Virginia and the ninth largest home health provider in Florida. These new home health locations will overlap with fourteen of HealthSouth’s existing inpatient rehabilitation hospitals. The addition of these assets will allow HealthSouth to better serve the post-acute needs of patients in those markets by offering both facility-based and home-based post-acute services.

Good News! In what we consider to be good news for home care stocks, Wells Fargo has initiated coverage on both Amedisys and LHC Group, with an outperform rating on both companies.   Meanwhile, Oppenheimer reissued their outperform rating on Addus.

LHC Group in the News!

LHC Group buys Halcyon for $59M in cash

  • LHC Group acquires Halcyon Hospice for $58.5M in cash.  Halcyon operates 16 hospices across three states. Annual revenues are ~$41M.  That price works out to about 1.4 times revenue.
  • LHC’s post-deal hospice business will consist of 53 sites in 12 states with over $110M in annual revenues.

 Almost Family in the News!

Almost Family pays $50.5 million for Willcare

  • Almost Family has completed the acquisition of the stock of Willcare Health Care. Almost Family will operate over 230 branches across 15 states and its annual net revenue run rate is expected to approach the $600 million mark.
  • The acquired operations generated total revenues of approximately $29.4 million ($27.5 million of which was in New York.

Amedisys in the News!

  • According to a recent press release, Amedisys has significantly amped up its acquisition ambitions, putting together a lengthy list of possible  targets as it looks to consolidate a fragmented industry.
  • New CEO Paul Kusserow says the company is looking at more than 200 candidates for outright M&A as well as joint ventures and partnerships: “We have a lot of firepower, a lot of powder, to go out and buy things on a large scale.”
  • To assist in funding acquisition opportunities, Amedisys has arranged for a $100 million loan and a $200 million line of credit.

Merger & Acquisition Activity:

SOLD BY STONERIDGE PARTNERS!

Elite Healthcare, Inc, a New Jersey Medicaid home care agency sold to a regional home care provider. Brian Bruenderman, one of our partners at Stoneridge, provided sell-side advisory services.

OTHER SALES FROM AROUND THE COUNTRY:

MISSION VIEJO, Calif., The Ensign Group, Inc., the parent company of the Ensign™ group of skilled nursing, rehabilitative care services, home health care, hospice care, assisted living and urgent care companies, announced today that Cornerstone Healthcare, Inc., Ensign’s home health and hospice portfolio subsidiary, had acquired Apismellis Homecare, a Medicare and Medicaid certified home health agency serving the communities of Lake Havasu City, Bullhead City, and Parker, Arizona, and Big River, California.

Join Us in Columbus, Ohio:

For   the Ohio Council for Home Care & Hospices’ annual conference and expo, September 15-16 at the Hyatt Regency Convention Center. On Tuesday at 1 pm we will be giving our popular and entertaining presentation “M&A Update for Home Care and Hospice Agencies”.  Ohio Conference & Expo

Join Us in Maryland:

For the Maryland National Capital Homecare Association’s annual conference.  On September 17 at 4:15 pm we will again be giving our popular and entertaining presentation “M&A Update for Home Care and Hospice Agencies”. Maryland Conference & Expo

Exclusively Listed for Sale by Stoneridge Partners:

  • Pennsylvania – Approx. $4 million Medicaid home care agency located in central PA. Accelerated and profitable growth trajectory with continued opportunity for future growth. Professionally run with outstanding clinical and excellent staff in place.  Stoneridge file S-1000
  • Colorado – $2.5 million diversified home care agency  and hospice,  accredited with excellent books and records.  Stoneridge file #S-1005
  • Rhode Island – $2.5 million Medicare agency.  Accredited in CON state.  Stoneridge file #S-1100
  • Oklahoma –  $3.5 million revenue Oklahoma City Medicare certified home health agency.   90% of revenue from traditional Medicare. Stoneridge file S-3200
  • Florida – $4 million in pure private pay.  15% bottom line.  Accredited on the central east coast.  Stoneridge file #S-3250.
  • Illinois – $5 million plus Medicare agency with four offices. Strong management with excellent clinical.  Stoneridge file #S-6550
  • New Mexico – $2.4 million Medicare agency with a long history of excellent care. 90% of revenue from traditional Medicare. Stoneridge profile S-5295.
  • Kentucky – Certificate of Need for 3 counties in Northern KY, rare opportunity to establish or expand services in populous CON service area. Stoneridge file S-1121
  • Illinois – $3 million hospice in Chicago area.  Average census 58.  Stoneridge file #S-5325
  • Texas – $5 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge file S-3665
  • Illinois –  $2.3 million Chicago area Medicare agency, clean surveys, excellent clinical reputation.  Stoneridge file #S-4300
  • Massachusetts – $5 + million home health agency, primarily Medicaid, but also private pay and commercial insurance, plus Medicare certification. Zero deficiencies on last survey.  Stoneridge file #S-9300
  • Washington State – $2 million revenue. This agency has a long history of profitability. Diverse payor sources includes Medicaid programs and private pay. Great reputation in a unique service area. Stoneridge file S-7010 ON CONTRACT
  • Florida – $5 million Medicare agency located in the Tampa – St. Pete area.  Accredited, with solid bottom line.  Stoneridge file S-4109 ON CONTRACT
  • Texas – $8 million East Texas agency, Medicare certified with deficiency free survey, no audits, and top-of- the line software.  Stoneridge file S-3001
  • Texas – $1.5  million East Texas Medicare certified home health agency, providing skilled care, approx 75% from traditional PPS Medicare.  Last survey was deficiency free. Stoneridge file S-4088
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • North Carolina – $2.2 million Medicaid provider with two locations serving Charlotte, NC and surrounding areas. Service waiver programs include: PCS, PDN, and CAP. Accredited. Professionally run company with outstanding clinical. Great tuck-in opportunity. Stoneridge file S-2999 ON CONTRACT
  • Texas – $3.3 million accredited Medicare home health agency. Profitable and still growing with approximately 87% of revenue coming from traditional Medicare. Strong marketing team in place with diversified referral sources. Stoneridge file S-1500
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare.Stoneridge file S-2650
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232.
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015
  • Texas – $1 million Medicare agency in the DFW area – 995 of revenue from traditional Medicare.  Stoneridge file #S-1015

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

Another Favorite from the New Yorker

how

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.
From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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: Almost Family | Amedisys | LHC Group

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August 1st Update

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

Quote of the Month:

Regarding Value Based Purchasing:

“In general, we are supportive of its goals. Home health providers that deliver the best quality care should be rewarded. Ultimately, we believe a well designed program like the proposed one will drive consolidation and ultimately benefit providers with scale, capital resources and clinical sophistication.”  Paul Kuserow, President, Amedisys

The Stoneridge Partners Home Health Index Hits All Time High!

Following a nice 11% gain in June, our home Health Index (HH Index) surged another 9% in July bringing our YTD increase to over 40%, and setting a new record at 42.55. Wow!

Our previous high was set in September, 2008 at 41.75.   To say the least its been quite a ride!

We started our HH Index back in 2002, near the beginning of the Medicare PPS reimbursement system.  Believe it or not….at that time our HH Index hovered around 5.  By 2008 our Index had risen to 41.75, but then a quick drop to  21.  Ouch!

One year later we were back to 40, then 18 months later, on December 1, 2011 we went all the way down to 11.  It was from that point that our current bull market began.

See It to Believe It!

This graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to January, 2002. It has been quite a ride.

[visualizer id=”5727″]

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, through July, 2015.  The stock prices converge!

[visualizer id=”5731″]

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

[visualizer id=”5730″]

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

Company 7/30/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 43.76 +9.85% +51.16% +86.69% +128.75%
Amedisys 43.63 +12.57% +48.65% +116.10% +248.76%
LHC Group 40.27 +5.50% +29.15% +71.51% +75.54%
HH Index** 42.55 +9.20% +42.67% +90.23% +133.90%
S&P 500 2103.84 +1.93% +2.18% +8.97% +24.80%
Addus 27.14 -2.57% +11.83% +21.98% +38.19

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)

For some reason unbeknownst to me, the Enterprise Value for Amedisys was not publicized this month.

EV (in M)) 8/1/15 7/1/15 6/1/15 5/1/15
Almost Family 458 416 403 463
Amedisys NA 1,420 1,170 1010
LHC Group 775 742 666 679
HH Index Total 2578 2,239 2,152
Addus 285.02 311 302.7 301.3

Enterprise Value (EV), aka Selling Price,  as a Percent of Revenue. Note that only two years ago these stocks were selling for 50% of EV.

Company 8/1/15 7/1/15 7/1/14 9/1/13
Almost Family 91% 83% 65% 42%
Amedisys NA 119% 51% 42%
LHC Group 104% 100% 69% 66%
HH Index Average 101% 62% 50%
Addus 88% 96% 82% 80%

Multiples of EV/EBITDA.

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

Company 8/1/15 7/1/15 7/1/14 9/1/13
Almost Family 14.04 12.77 16.96 5.66
Amedisys NA 16.02 19.72 7.82
LHC Group 11.75 11.26 8.60 6.83
HH Index Average 13.35 15.1 6.77
Addus 12.16 13.28 12.80 10.50

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices August 1. 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 that may differ from that used by a company it is reporting.

IN THE NEWS!

Last month we discussed Aetna’s plan to acquire Humana for $37 Billion! We also asked what the odds are of this  transaction actually happening?  Aetna’s purchase price is $230 per share for  Humana.  You can buy that same stock today for about $183.

We also asked if the rumored deal between Anthem and Cigna would be next….and guess what…..three weeks later Anthem announced their plans to buy Cigna Corp. in a deal valued at $54.2 billion.   The deal, valued at $183.36 per share is the biggest ever in health insurance.

The market appeared to yawn.  Cigna shares have continued to drop, and you can buy the stock now for around $145 per share.  It seems that both of these proposed transactions face stiff challenges from the antitrust regulators.

To read the Fortune article go here:  Anthem-Cigna

 Almost Family in the News!

Last week Almost Family issued their earnings report.  One of the headlines read “Almost Family beats by $0.04, but misses on revenue”.  Soon after Zack’s Investment Research issued a recommendation to “Sell”.  The result….their stock leaped from $40 to $48…..now isn’t that interesting.

We note that North Tide Capital, an activist investor, now owns about 13% of Almost Family stock valued at over $55M.  We also note that North Tide also owns about 12% of Amedisys stock valued at over $100M. Several months ago there was a rumor of a possible merger….just saying.

Almost Family Earnings Report – 2nd Quarter

In 000’s 2nd qtr 2015 2nd qtr 2014
Revenue 127,366 125,192
Gross margin 66,343 59,636
GM % 47.9% 47.6%
G&A Expenses 52,433 52,628
Operating Income 8,580 7,008

Also in their press release:

  • The pending closing of their recently announced acquisition of Willcare is the third quarter of 2015 pending final New York regulatory approval. WillCare operations are expected to continue under current management.
  • They announced their acquisition of Ingenios Health Co.  See below our M&A Activity section.

Amedisys in the News!

On July 28th Amedisys issued their 2nd quarter earnings report.

Excerpt:  “We reported revenue of $314 million, adjusted EBITDA of $32 million…. In home health, field level contribution increased $7 million or 22% over the second quarter last year. Same-store Medicare revenue was down 1% on flat admissions. We continue to see strong same-store Non-Medicare revenue growth at 16%, again, driven by our larger contracted relationships. In hospice, we posted our strongest quarterly same-store revenue growth in nearly three years. Same-store admissions continue to increase and cost per day is down more than 5% year-over-year leading to a healthy increase in margin. Hospice field level contribution was up almost $4 million or 28% versus the prior year.”

They also noted that they are moving 33 executives to Nashville.

To read the entire earnings report, courtesy of Seeking Alpha go here:  Amedisys Earnings Transcript

Amedisys Earnings Report – 2nd Quarter

In 000s 2nd qtr 2015 2nd qtr 2014
Revenue 314,152 305,006
Gross margin 138,453 132,486
Gross Margin % 44.07% 43.4%
G&A Expenses* 122,926 119,925
Operating Income 15,527 12,561

A nice increase in revenue, gross margin, gross margin percent and operating income.

LHC Group in the News!

Earnings Call Excerpt:  “Keith G. Myers, LHC Group’s chairman and CEO…..I am particularly pleased with our ability to continue with a solid organic growth rate in home health admissions of 4.4% in the first half of 2015 compared with the same period of 2014 and our ability to control and further reduce G&A cost as a percentage of revenue.”

LHC Group Earnings Report – 2nd Quarter

In 000s 2nd qtr 2015 2nd qtr 2014
Revenue 200,172 188,867
Gross margin 83,533 77,340
Gross Margin % 41.7% 40.9%
Provision for Bad Debt 4,805 4,363
G&A Expenses* 60,370 59,723
Operating Income 18,358 13,254

Nice increase in both Revenue and Operating Income.  A solid quarter that produced a nice pop in their share price.

We note that hedge fund Coliseum Capital Management owns about 12% of the stock ($75M).

Addus HomeCare in the News!

Excerpt from 2nd quarter earnings call, Mark Heaney, CEO – “Turning to the second quarter, we are pleased with our financial results for the quarter. We produced double digit growth in revenues, adjusted-EBITDA and earnings per diluted share. Our gross margin expended. We produced these results despite the lower than normal pace of referrals in our largest market, the State of Illinois.”

To read the entire transcript, courtesy of Seeking Alpha go here:  Addus Earnings Call

Addus Earnings Report – 2nd Quarter

In 000s 2nd qtr 2015 2nd qtr 2014
Revenue 85,809 76,965
Gross margin 23,682 20,580
Gross Margin % 27.6% 26.7%
G&A Expenses 17,423 15,399
Depreciation/Amort 1,161 1,083
Operating Income 5,098 4,098

A nice increase in revenue, gross profit, gross profit percent and operating income.

We note that Eos Private Equity owns about 36% of the stock valued at over $92M.

Merger & Acquisition Activity:

SOLD BY STONERIDGE PARTNERS:

Kindred divests their Utah home health agencies to a national homecare provider. Brian Bruenderman and Ben Bogan, Partners at Stoneridge, provided sell-side advisory services.

OTHER SALES FROM AROUND THE COUNTRY:

  • Louisville, KY –Almost Family, Inc. (NASDAQ:AFAM) announced the acquisition of Jacksonville, FL based Ingenios Health Co. (Ingenios). Ingenios is a leading provider of technology enabled in-home clinical assessments for Medicare Advantage, Managed Medicaid and Commercial Exchange lives in 7 states and Washington, D.C.
  • Lafayette, LA – EPI Group, LLC and Lafayette-based Heart of Hospice, LLC have acquired the hospice operations of Lakeshore Hospice Acquisition, LLC in Hammond and Heart of Hospice of New Orleans, LLC which together serve approximately 140 patients in southeast Louisiana.
  • Dallas/Ft. Worth – Village Health Partners has announced a deal with The Legacy at Home, bringing home health services to its patient pool of 75,000 residents.Legacy at Home is a Plano based home healthcare agency, the largest such nonprofit provider in Dallas-Fort Worth. Village Health Partners is a family medical practice made up of 31 providers that operates out of two care sites in Plano. Under the arrangement, the Legacy at Home will relocate its headquarters to the Independence Medical Village in Plano, where Village is an anchor.

Join Us in Texas:

Join us this week for a great time August 12 -13 in Galveston for TAHC’s 46th Annual Meeting…..and meet Joe Lynch, one of our partners, who manages our office in Dallas.  TAHC Annual Conference.

Exclusively Listed for Sale by Stoneridge Partners:

  • Rhode Island – $2.5 million Medicare agency.  Accredited in CON state.  Stoneridge file #S-1100
  • Florida – $4 million in pure private pay.  15% bottom line.  Accredited on the central east coast.  Stoneridge file #S-3250.
  • Illinois – $5 million plus Medicare agency with four offices. Strong management with excellent clinical.  Stoneridge file #S-6550
  • Kentucky – Certificate of Need for 3 counties in Northern KY, rare opportunity to establish or expand services in populous CON service area. Stoneridge file S-1121
  • Illinois – $3 million hospice in Chicago area.  Average census 58.  Stoneridge file #S-5325
  • Texas – $5 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge file S-3665
  • Pennsylvania – Approx. $4 million Medicaid home care agency located in central PA. Accelerated and profitable growth trajectory with continued opportunity for future growth. Professionally run with outstanding clinical and excellent staff in place.  Stoneridge file S-1000
  • Illinois –  $2.3 million Chicago area Medicare agency, clean surveys, excellent clinical reputation.  Stoneridge file #S-4300
  • Massachusetts – $5 + million home health agency, primarily Medicaid, but also private pay and commercial insurance, plus Medicare certification. Zero deficiencies on last survey.  Stoneridge file #S-9300
  • Washington State – $2 million revenue. This agency has a long history of profitability. Diverse payor sources includes Medicaid programs and private pay. Great reputation in a unique service area. Stoneridge file S-7010 ON CONTRACT
  • Florida – $5 million Medicare agency located in the Tampa – St. Pete area.  Accredited, with solid bottom line.  Stoneridge file S-4109 ON CONTRACT
  • Texas – $8 million East Texas agency, Medicare certified with deficiency free survey, no audits, and top-of- the line software.  Stoneridge file S-3001
  • Texas – $1.5  million East Texas Medicare certified home health agency, providing skilled care, approx 75% from traditional PPS Medicare.  Last survey was deficiency free. Stoneridge file S-4088
  • Texas – Houston $1.6 million revenue, pure private pay with strong bottom line.  Stoneridge file S-2766.
  • Virginia- $4 million Medicare agency located in Northern Virginia. 78% Traditional Medicare. Accredited. Stoneridge file S-6001
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • North Carolina – $2.2 million Medicaid provider with two locations serving Charlotte, NC and surrounding areas. Service waiver programs include: PCS, PDN, and CAP. Accredited. Professionally run company with outstanding clinical. Great tuck-in opportunity. Stoneridge file S-2999
  • Texas – $3.3 million accredited Medicare home health agency. Profitable and still growing with approximately 87% of revenue coming from traditional Medicare. Strong marketing team in place with diversified referral sources. Stoneridge file S-1500
  • California – $2.2 million revenue, JCAHO accredited, Medicare certified home health care agency serving Southern California. Stoneridge file S-1050
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare.Stoneridge file S-2650
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • New Mexico – $2.3 million Medicare provider serving the Roswell area. Clean surveys.  Stoneridge file S-5295
  • Oklahoma –  $6 million revenue Oklahoma City Medicare certified home health agency.   90% of revenue from traditional Medicare. Stoneridge file S-3200
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232.
  • Minnesota & Wisconsin – $2 million Medicaid & Medicare certified home health agency in MN and WI. Primarily Medicaid with great opportunity for Medicare growth. Well-run with excellent clinical. Stoneridge file S-3002
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

Another favorite cartoon…..

http://www.technologyinvestor.com/wp-content/uploads/2015/08/GreeceRuins1.jpg

And from the New Yorker

StThomas

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.
From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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: Almost Family | Amedisys | LHC Group

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July 1st Update

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

Quote of the Month:

“We believe that transaction prices will start to come down in the next couple of years. We think the opportunities in the market are going to be really good in the next two to three years.”  Paul Kusserow, CEO, Amedisys

The Stoneridge Partners Home Health Index surges 11%

Following a nice 3.3%  gain in May, our home Health Index (HH Index) surged another 11% in June bringing our YTD increase to over 30%, and we are now up 95% from one year ago. Wow!

This is particularly impressive when looking at the market as a whole.  The S&P 500 is now flat for the year, and up only 5% from one year ago..

Our HH Index has not been at this level since May of 2010, and we are now closing in on our all time high of 41.75 set in September, 2008.  After we hit that high our HH Index dropped all the way down to low of 11.77 at the end of 2011.  Quite a comeback and quite a story.

Again, averages don’t tell the whole story.  While Almost Family and LHC Group were up about 4% for the month, Amedisys zoomed ahead with over a 28% increase pulling the entire HH Index with them.  They are now up 240% in two years. More on Amedisys later in this column.

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

Company 6/30/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 39.91 +3.93% +37.86% +80.75% +109.06%
Amedisys 39.73 +28.08% +35.37% +137.34% +242.5%
LHC Group 38.25 +4.05% +22.67% +78.99% +95.35%
HH Index** 39.30 +11.03% +31.75% +95.86% +134.51%
S&P 500 2,063.11 -2.10% +0.20% +5.24% +28.44%
Addus 27.86 -0.54% +14.79% +23.93% +41.13

Although we track the performance of Addus, they  are not included in our HH Index because very little of their revenue comes from Medicare.

See It to Believe It

This first graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to November, 2002. It has been quite a ride. And what a great two year trend.

[visualizer id=”5727″]

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

[visualizer id=”5730″]

This third graph is a 12 month trailing chart of the HH Index compared to the actual prices of the individual companies that make up the chart, through June, 2015.  The stock prices converge!

[visualizer id=”5731″]

Enterprise Value (EV)

EV (000s) 7/1/15 6/1/15 5/1/15
Almost Family 416 403 463
Amedisys 1,420 1,170 1010
LHC Group 742 666 679
HH Index Total 2578 2,239 2,152
Addus 311 302.7 301.3

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

Company 7/1/15 7/1/14 9/1/13
Almost Family 83% 65% 42%
Amedisys 119% 51% 42%
LHC Group 100% 69% 66%
HH Index Average 101% 62% 50%
Addus 96% 82% 80%

Multiples of EV/EBITDA.

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

Company 7/1/15 7/1/14 9/1/13
Almost Family 12.77 16.96 5.66
Amedisys 16.02 19.72 7.82
LHC Group 11.26 8.60 6.83
HH Index Average 13.35 15.1 6.77
Addus 13.28 12.80 10.50

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices July 1. 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 that may differ from that used by a company it is reporting.

IN THE NEWS!

Aetna to Acquire Humana for $37 Billion!

July 3rd, 2015, Aetna and Humana Inc. today announced that they have entered into a definitive agreement under which Aetna will acquire all outstanding shares of Humana for a combination of cash and stock valued at $37 billion or approximately $230 per Humana share based on the closing price of Aetna common shares on July 2, 2015.

The combined company would have projected 2015 operating revenue of approximately $115 billion, with approximately 56 percent from government sponsored programs (including Medicare and Medicaid). The combined company will have over 33 million medical members…..

To read the entire article click:  Aetna to Acquire Human

Not exactly unexpected news.  On May 29th the Wall Street Journal reported that Humana was up for sale and that Aetna was the probable buyer.  We were just wondering what the hold-up was.  Perhaps it was negotiating the $1 billion break-up fee that will need to be paid if this deal is blocked on antitrust grounds.

Several years ago Humana purchased SeniorBridge, a leading private duty home care company.  We have been following their story as they have continued to increase their home health footprint.  Last year they expanded into Medicare with their purchase of Texas based ReachOut (with the help of our advisory services).   They have since change the name of their home care division to Humana At Home.

M&A activity among health insurance firms has been relatively quiet over the last few years, but now it appears to be heating up.  Will the rumored deal between Anthem and Cigna be next….and where is UnitedHealth Group in all of this?  And perhaps more important….what will the antitrust regulators have to say?

What are the odds of this transaction actually happening?  Aetna’s purchase price is $230 per share for  Humana.  You can buy that same stock today for less than $190.

Healthcare Insurers – Key Statistics

In billions Humana Aetna Cigna United Anthem
Revenue (ttm) 50.62 59.10 35.88 134.52 75.07
Enterprise Value 23.85 50.26 46.52 125.27 39.10
Multiple of EBITDA 8.85 10.15 11.97 10.50 6.50
EV/Revenue 47% 85% 130% 93% 52%

 Amedisys in the News!

With the great performance of Amedisys’ stock we thought it might be a good time to take a closer look.

Amedisys First Quarter Results:

In 1,000s 2015 2014 Change % Change
Revenue 301,572 298,739 +8,060 +0.9%
Gross margin 130,611 121,731 +8,880 +6.8%
Gross Margin % 43.3% +40.7% +2.6 +6.3%
G&A Expenses* 104,009 126,300 -22,291 -17.6%
Operating Income 26,602 -4,569 +31,171 +680Y%

* Not included in G&A is “Asset Impairment Charges”, which in the first quarter of 2015 amounted to over $75 million.

Yes they cut expenses, but its the increase in gross margin that is also impressive, and they expect this increase to continue due in part to their current transition to Homecare Homebase software.

Paul Kusserow, Amedisys’  new CEO, recently gave an interview to “Modern Healthcare”.  Some of the areas he covered:

  • Their acquisition search criteria.
  • Thoughts on industry consolidation
  • His thought on managed care and their willingness to take on full-risk contracts.

To read the entire interview click here:  Paul Kusserow – Q&A

Heard on the Street: Senior executives of Amedisys may be moving out of Baton Rouge, with New Orleans and Nashville as possible locations.  Our guess…..Nashville.

Merger & Acquisition Activity:

SOLD BY STONERIDGE PARTNERS:

  • Cherry Hill, New Jersey:  Lighthouse Hospice, Inc. sold to a regional hospice provider.  Congratulations to Elaine Ashby for building such a fine business.  Bran Bruenderman, one of our partners, provided sell-side advisory services.
  • Providence, Utah:  Access Home Care & Hospice sold to a regional healthcare provider.  Stoneridge Partners provided sell-side advisory services.

OTHER SALES FROM AROUND THE COUNTRY:

  • Mission Viejo, California -The Ensign Group, Inc. (NASDAQ:ENSG), announced today that Cornerstone Healthcare, Inc., Ensign’s home health and hospice portfolio subsidiary, had acquired Buena Vista Hospice, a Medicare and Medi-Cal certified hospice agency serving the Ventura County area from an office in Westlake Village, California. The acquisition was effective July 1, 2015.
  • Miami, Florida – Boyne Capital Partners, a Miami based private equity firm, announced that its affiliate, Family Private Care, Inc. completed the acquisition of Levin Home Care , a private duty registry in Florida. The combination of these two name brands gives the combined company a significantly broader footprint in Florida, access to a greater pool of talented caregivers to service customer needs, and the size, scale and resources to take advantage of the rapidly expanding home health services industry.
  • Jacksonville, Florida – Brooks Rehabilitation’s home healthcare division will soon become Brooks AmeriCare Home Health with the acquisition of a large Jacksonville-based agency serving 23 counties in Northeast and Central Florida. Brooks Rehabilitation, which has the larger administrative structure, will absorb AmeriCare Home Health and its assets, which includes 10 satellite office locations. The purchase is expected to close in July.

  • Chesterton, Indiana – Visiting Nurse Association of Porter County has agreed to sell its home healthcare program to the Porter Health Care System Home Health

Exclusively Listed for Sale by Stoneridge Partners:

  • Texas – $5 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge file S-3665
  • Pennsylvania – Approx. $4 million Medicaid home care agency located in central PA. Accelerated and profitable growth trajectory with continued opportunity for future growth. Professionally run with outstanding clinical and excellent staff in place.  Stoneridge file S-1000
  • Illinois –  $2.3 million Chicago area Medicare agency, clean surveys, excellent clinical reputation.  Stoneridge file #S-4300
  • Kentucky – Certificate of Need for 3 counties in Northern KY, rare opportunity to establish or expand services in populous CON service area.  Stoneridge file S-1121
  • Massachusetts – $5 + million home health agency, primarily Medicaid, but also private pay and commercial insurance, plus Medicare certification. Zero deficiencies on last survey.  Stoneridge file #S-9300
  • Washington State – $2 million revenue. This agency has a long history of profitability. Diverse payor sources includes Medicaid programs and private pay. Great reputation in a unique service area. Stoneridge file S-7010
  • Florida – $5 million Medicare agency located in the Tampa – St. Pete area.  Accredited, with solid bottom line.  Stoneridge file S-4109
  • Texas – $8 million East Texas agency, Medicare certified with deficiency free survey, no audits, and top-of- the line software.  Stoneridge file S-3001
  • Texas – $1.5  million East Texas Medicare certified home health agency, providing skilled care, approx 75% from traditional PPS Medicare.  Last survey was deficiency free. Stoneridge file S-4088
  • Texas – Houston $1.6 million revenue, pure private pay with strong bottom line.  Stoneridge file S-2766.
  • Virginia- $4 million Medicare agency located in Northern Virginia. 78% Traditional Medicare. Accredited. Stoneridge file S-6001
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • North Carolina – $2.2 million Medicaid provider with two locations serving Charlotte, NC and surrounding areas. Service waiver programs include: PCS, PDN, and CAP. Accredited. Professionally run company with outstanding clinical. Great tuck-in opportunity. Stoneridge file S-2999 On Contract
  • Texas – $3.3 million accredited Medicare home health agency. Profitable and still growing with approximately 87% of revenue coming from traditional Medicare. Strong marketing team in place with diversified referral sources. Stoneridge file S-1500
  • California – $2.2 million revenue, JCAHO accredited, Medicare certified home health care agency serving Southern California. Stoneridge file S-1050
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare.Stoneridge file S-2650
  • Utah – Approximately $3.5 million home health and hospice provider with multiple office locations. Good platform or add-on opportunity, motivated seller.  Stoneridge file S-2262 SOLD
  • Florida – Stable $1 million Florida district 4 Medicare home health agency, management team in place and accredited. Stoneridge file S-5542 On Contract
  • New Jersey – $4 million hospice serving southern New Jersey, well-established with a great reputation for quality care.  Stoneridge file S-1070  SOLD
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • New Mexico – $2.3 million Medicare provider serving the Roswell area. Clean surveys.  Stoneridge file S-5295
  • Oklahoma –  $6 million revenue Oklahoma City Medicare certified home health agency.   90% of revenue from traditional Medicare. Stoneridge file S-3200
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232.
  • Minnesota & Wisconsin – $2 million Medicaid & Medicare certified home health agency in MN and WI. Primarily Medicaid with great opportunity for Medicare growth. Well-run with excellent clinical. Stoneridge file S-3002
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

Another favorite New Yorker cartoon…..

http://stoneridgepartners.com/wp-content/uploads/2015/06/15_06-hippo-cartoon.jpg

And now a groaner I couldn’t resist including

FarmerINTheDell

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.
From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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: Almost Family | Amedisys | LHC Group

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June 1st Update

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

Quote of the Month:

“…..often times, a rising tide will lift all boats in an industry, as there can be broad trends taking place in a segment that are boosting securities across the board. This is arguably taking place in the Medical-Outpatient/Homecare space as it currently has a Zacks Industry Rank of 21 out of more than 250 industries, suggesting it is well-positioned…..”  

Zack’s Investment Research in their positive report of Amedisys.

The Stoneridge Partners Home Health Index gains 3.34%.

After taking a one month snooze, our Home health Index (HH Index) showed a nice gain in May ending at 35.39.  We have not been this high since May, 2010.  Our high was set in September, 2008 when we hit 41.75.

To go with the good news, the market as measured by the S&P 500 hit an all time end-of-month high at 2107.39, up about 10% over a year ago.

Again though we had mixed results.  Almost Family was down for the second straight month, but still up 86% YTD.   Amedisys was up for the 2nd straight month and both LHC Group and Addus were up.  However when looking back one year all stocks are up nicely, with our HH Index up 91%.  What a nice run!

Below in this column is a run down of first quarter numbers.  When combining the numbers from our HH Index stocks the results are impressive.  Revenue up 8.5% and gross margin percentage up 2.2%.

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

Company 5/31/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 38.40 -11.28% +32.64% +86.95% +94.23%
Amedisys 31.02 +11.54% -5.25% +113.20% +151.79%
LHC Group 36.76 +16.11% +1.54% +80.46% +67.17%
HH Index** 35.39 +3.34% +14.83% +91.45 +96.34%
S&P 500 2,201.39 +1.05% +1.29% +9.56% +29.23%
Addus 28.01 +4.36% +10.59% +23.07% +55.70%

Although we track the performance of Addus, they  are not included in our HH Index because very little of their revenue comes from Medicare.

See It to Believe It

This first graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to November, 2002. It has been quite a ride. And what a great two year trend.

[visualizer id=”5727″]

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

[visualizer id=”5730″]

This third graph is a 12 month trailing chart of the HH Index compared to the actual prices of the individual companies that make up the chart, through May, 2015.

[visualizer id=”5731″]

Enterprise Value (EV)

EV (000s) 6/1/15 5/1/15
Almost Family 403.0 463.3
Amedisys 1,170 1010
LHC Group 666.5 678.8
HH Index Total 2,239.5 2,152.1
Addus 302.7 301.3

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

Company 6/1/15 6/1/14 9/1/13
Almost Family 80% 60% 42%
Amedisys 98% 43% 42%
LHC Group 89% 67% 66%
HH Index Average 89% 56% 50%
Addus 94% 84% 80%

Multiples of EV/EBITDA.

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

Company 6/1/15 6/1/14 9/1/13
Almost Family 12.36 15.84 5.66
Amedisys 13.18 16.65 7.82
LHC Group 10.11 12.48 6.83
HH Index Average 11.88 15.0 6.77
Addus 12.91 13.07 10.50

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices May 1. 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 that may differ from that used by a company it is reporting.

IN THE NEWS!

Shares of Humana jumped 18% on Friday, May 29 after the Wall Street Journal reported that the health insurer is considering a sale.  This may just be the beginning, or, as one insider noted, this just may be the beginning of the beginning in health care insurance consolidation

As the WSJ noted, M&A among health insurance firms has been relatively quiet since 2011 and 2012 when several deals were inked, including Aetna’s $5.7 billion purchase of Coventry Health Care Inc. and Cigna’s $3.8 billion acquisition of HealthSpring Inc.

It has now been several years since Humana entered the home care space through the acquisition of SeniorBridge (now Humana at Home).  Over these past few years they have been very active in home care M&A, and, for now at least,  we have been told no change.

BY THE NUMBERS!

Quarterly earnings reports are out.  What follows is a thumb nail sketch of the results.

ALMOST FAMILY – First Quarter Results

In 1,000s 2015 2014 Change % Change
Revenue 128,399 120,339 +8,060 +6.7%
Gross margin 60,072 54,813 +5,259 +9.6%
Gross Margin % 46.7% +45.5% +1.3 +2.9%
G&A Expenses 52,701 52,495 +206 +0.4%
Operating Income 7,371 2,318 +5,053 +218%
Adjusted EBITDA 9,833 7,239 +2,594 +35.8%

It is interesting to note that, although revenue was up a modest 6.7%, their gross margin percentage  increased from 45.5% to 46.7%, and by keeping a tight watch over G&A expenses they were able to come up with a nice 35.8% increase in AEBITDA.

AMEDISYS:  First Quarter Results 

In 1,000s 2015 2014 Change % Change
Revenue 301,572 298,739 +8,060 +0.9%
Gross margin 130,611 121,731 +8,880 +6.8%
Gross Margin % 43.3% +40.7% +2.6 +6.3%
G&A Expenses* 104,009 126,300 -22,291 -17.6%
Operating Income 26,602 -4,569 +31,171 +680Y%

* Not include in G&A is “Asset Impairment Charges”, which in the first quarter of 2015 amounted to over $75 million.

We note that their gross margin increased from 40.7% to 43.3%, a 6.3% increase.  Also it should be noted that salaries in G&A decreased from $83 million in 2014 to $69 million in 2015. A very nice turn-around.

LHC GROUP – First Quarter Results

In 1,000s 2015 2014 Change % Change
Revenue 193,079 163,681 +29,398 +18.0%
Gross margin 78,653 66,347 +12,306 +18.5%
Gross Margin % 40.7% +40.5% +0.2 +0.5%
G&A Expenses* 64,557 57,941 +6,616 +11.4%
Operating Income 14,096 8,406 +5690 +67.7%

*Includes provision for bad debt

A very nice increase in both revenue, gross profit and operating income resulting in a nice increase in share price.  What is also impressive in that organic growth in home health Medicare admissions was up 6.5%

FIRST QUARTER TOTALS FOR ALMOST FAMILY, AMEDISYS AND LHC GROUP

In 1,000s 2015 2014 Change % Change
Revenue 632,050 582,759 +49,291 +8.5%
Gross margin 269,336 242,891 +26,445 +10.9%
Gross Margin % 42.6% +41.7% +0.9 +2.2%
G&A Expenses 221,267 236,736 -15,469 -6.5%
Operating Income 48,069 6,155 +41,914 681%

Revenue up, gross margin up, G&A expenses down, all going in the right direction and resulting in a very nice performance.

ADDUS HOMECARE – FIRST QUARTER RESULTS:

In 1,000s 2015 2014 Change % Change
Revenue 81,915 71,683 +10,232 +14.3%
Gross margin 21,926 18,668 +3,258 +17.5%
Gross Margin % 26.7% 26.0% +0.7 2.7%
G&A Expenses* 17,153 14,403 +2,750 +19.1%
Operating Income 4,773 4,265 +508 +11.9%

*Depreciation and amortization has been excluded from G&A expense.

Both revenue and gross margin percentages up…..makes a nice combination.

Merger & Acquisition Activity:

SOLD BY STONERIDGE PARTNERS:

  • Phoenix, AZ – Good Life Home Care of Arizona sold to a regional health care provider.  Benjamin Bogan, one of our partners, provided sell-side advisory services.

OTHER SALES FROM AROUND THE COUNTRY:

  • Burnesville, NC – PruittHealth Home Health announced today that it has officially acquired Toe River Home Health Agency in Burnsville, North Carolina.  PruittHealth Home Health, a member of the PruittHealth family of providers, will now offer quality care services and programs to residents in Avery, Mitchell and Yancey County as well as the immediate service area.
  • Kansas City – A pair of area’s most prominent nonprofit hospice organizations plan to merge. NorthCare Hospice & Palliative Care said Tuesday that it has signed a letter of intent to combine with Kansas City Hospice & Palliative Care. If approved, the merger would be effective July 1, according to a release.Plans call for NorthCare Hospice to keep its name and operate as a division of Kansas City Hospice in the Northland. The NorthCare Hospice House, which provides inpatient hospice and palliative care, would remain on the North Kansas City Hospital campus.
  • CVS Health Corp (NYSE:CVS) announced their planned acquisiton of pharmacy services provider Omnicare.  Under the terms of the deal,  CVS will purchase the pharmacy servies provider for $98 a share in cash. The $12.7 billion enterprise value of the deal includes about $2.3 billion in debt.The purchase will help CVS expand its ability to provide prescriptions to assisted-living and LTC facilities, serving the rapidly aging American senior patient population.

Exclusively Listed for Sale by Stoneridge:

  • Minnesota & Wisconsin – $2 million Medicaid & Medicare certified home health agency in MN and WI. Primarily Medicaid with great opportunity for Medicare growth. Well-run with excellent clinical. Stoneridge file S-3002
  • Florida– Clearwater/St. Pete area – $4 million Medicare home health agency. Excellent outcomes, strong clinical programs, excellent management team in place. $700K in adjusted EBITDA. Stoneridge file S-4109.
  • Texas – $5 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge file S-3665
  • Washington State – $2 million revenue. This agency has a long history of profitability. Diverse payor sources includes Medicaid programs and private pay. Great reputation in a unique service area. Stoneridge file S-7010
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015
  • Texas – $1.5 million East Texas Medicare certified home health agency, providing skilled care, approx 75% from traditional PPS Medicare.  Last survey was deficiency free. Stoneridge file S-4088
  • Virginia- $4 million Medicare agency located in Northern Virginia. 78% Traditional Medicare. Accredited. Stoneridge file S-6001
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • North Carolina – $2.2 million Medicaid provider with two locations serving Charlotte, NC and surrounding areas. Service waiver programs include: PCS, PDN, and CAP. Accredited. Professionally run company with outstanding clinical. Great tuck-in opportunity. Stoneridge file S-2999 On Contract
  • Texas – $3.3 million accredited Medicare home health agency. Profitable and still growing with approximately 87% of revenue coming from traditional Medicare. Strong marketing team in place with diversified referral sources. Stoneridge file S-1500
  • California – $2.2 million revenue, JCAHO accredited, Medicare certified home health care agency serving Southern California. Stoneridge file S-1050
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare.Stoneridge file S-2650
  • Utah – Approximately $3.5 million home health and hospice provider with multiple office locations. Good platform or add-on opportunity, motivated seller.  Stoneridge file S-2262 On Contract
  • Florida – Stable $1 million Florida district 4 Medicare home health agency, management team in place and accredited. Stoneridge file S-5542 On Contract
  • New Jersey – $4 million hospice serving southern New Jersey, well-established with a great reputation for quality care.  Stoneridge file S-1070 On Contract
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • New Mexico – $2.3 million Medicare provider serving the Roswell area. Clean surveys.  Stoneridge file S-5295
  • Oklahoma –  $6 million revenue Oklahoma City Medicare certified home health agency.   90% of revenue from traditional Medicare. Stoneridge file S-3200
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232.
  • Florida – Orlando area Medicare agency with about $900,000 revenue.  Stoneridge file S-2540.  On Contract

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

Another favorite from The New Yorkerhttp://www.technologyinvestor.com/wp-content/uploads/2015/03/Cage.jpg

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.
From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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: Almost Family | Amedisys | LHC Group

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May 1st Update

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

Quote of the Month:

“The final two years of re-basing of Medicare rates and the current stability in the Federal political environment provide better reimbursement visibility and predictability than we’ve had for some time.” Steve Guenthner, President, Almost Family

The Stoneridge Partners Home Health Index (HH Index) drops 1.7%.

After four straight months of increases, the Stoneridge Partners Home Health Index (HH Index) took a bit of a rest in April. While the S&P 500 increased 1.2%, the HH Index dropped 1.7%.

Again we had mixed results:  Almost Family down, Amedisys up, LHC Group down and Addus up nicely.  However when looking back one year the results have been impressive with our HH Index up 84%.

The first quarter earnings reports are coming in, and, as we look at the numbers, we continue to be very optimistic about these companies.

Note that the all-time high for our HH Index was set in September, 2008 at 41.75. Our low since then was set in October, 2011 at 11.65. Two years ago we were at 17.68. We now rest at 34.25.

Here are the results for the past two years:

Company 4/30/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 43.28 -3.2% +49.50% +101.58% +119.25%
Amedisys 27.81 +3.85% -5.25% +104.04% +176.99%
LHC Group 31.66 -4.15% +1.54% +52.36% +45.76%
HH Index** 34.25 -1.69% +14.83% +83.88 +99.51%
S&P 500 2,085.51 +1.23% +1.29% +10.70% +30.54%
Addus 26.84 +16.59% +10.59% +24.14% +126.69%

Although we track the performance of Addus, they  are not included in our HH Index because most of their revenue does not come from Medicare reimbursement.

See It to Believe It

This first graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to November, 2002. It has been quite a ride. And what a great two year trend.

[visualizer id=”5727″]

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

[visualizer id=”5730″]

This third graph is a 12 month trailing chart of the HH Index compared to the actual prices of the individual companies that make up the chart, through April, 2015.  Look at Almost Family take off.

[visualizer id=”5731″]

Enterprise Value (EV)

EV (000s) 5/1/15
Almost Family 463.6
Amedisys 1,010
LHC Group 678.8
Addus 301.3

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

Company 5/1/15 5/1/14
Almost Family 94% 69%
Amedisys 85% 39%
LHC Group 95% 58%
HH Index Average 91% 55%
Addus 96% 84%

Multiples of EV/EBITDA.

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

Company 5/1/15 5/1/14
Almost Family 16.71 14.17
Amedisys 15.26 10.63
LHC Group 11.38 6.68
HH Index Average 14.45 10.49
Addus 13.14 12.60

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices May 1. 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 that may differ from that used by a company it is reporting.

IN THE NEWS!

Quarterly earnings reports are coming out.  We will have a complete update in next month’s newsletter.  For now here are a few highlights:

AMEDISYS

  • Paul Kusserow, President and CEO, introduced his new executive team including, COO Dan McCoy, HR Larry Pernosky from Humana, and IT Marty Howard.
  • The selection of Homecare Homebase for their software platform
  • Revenue for the first quarter of $302 million vs 2014 revenue of $299 million
  • Adjusted EBITDA of 8.7% or $26 million

To read the complete transcript courtesy of Seeking Alpha:  Amedisys Earnings Call

ADDUS: 

  • Double digit census growth
  • Revenue increase of 14.3% to $81.9 million
  • Adjusted EBITDA increases 21.3% to $5.4 million
  • Announced a definitive agreement to purchase New York’s South Shore Health Services, see below for more details.

Addus Earnings call transcript courtesy of Seeking Alpha:  Addus Earnings Call

ALMOST FAMILY:

  • Investing up to 2 million in NavHealth, a development-stage enterprise that seeks to develop technology based tools and analytics to improve patient experiences and lower the overall costs of care.
  • A new credit facility providing up to $175 million in borrowing
  • Net revenues of $128 million vs 2014 revenue of $120 million
  • Net quarterly income of $4 million vs 2014 of $1.1 million

LHC GROUP

  • Revenue increased 18% to $193.1 million
  • Net income increased 62.5% to $6.8 million
  • Organic growth in home health Medicare admissions was up 6.5%

Merger & Acquisition Activity:

Burnsville, NC – PruittHealth Home Health announced today that it has officially acquired Toe River Home Health Agency in Burnsville, North Carolina.

Kennett Square, PA – Genesis HealthCare, one of the nation’s largest providers of post-acute care services, today announced that it has signed a definitive agreement to combine with Skilled Healthcare Group, Inc., based in Foothill Ranch, California. The combined company will be able to expand its core business lines and enhance its collective ability to provide the highest quality patient care while meeting the current challenges facing the healthcare industry. The combined company will provide scale and resources to continue investment for the future.

Markham, Ontario – Extendicare Inc. (“Extendicare” or the “Company”) (EXE) is pleased to announce that the Company has completed the acquisition of the Revera Home Health business from Revera Inc. (the “Vendor”), for $83 million in cash, before working capital adjustments.

Downers Grove, IL – Addus HomeCare (ADUS) has agreed to acquire South Shore Home Health Services for an undisclosed amount.  South Shore currently serves Suffolk, Nassau, Queens and Westchester counties. For 2014, South Shore produced revenue of approximately $47 million. Addus expects that, assuming satisfaction of all closing conditions (as to which no assurances can be made), including customary closing conditions for a transaction of this type (including New York regulatory approval), the purchase of South Shore is expected to be completed before year end or in early 2016 and that the purchase will be accretive to the Company’s 2016 financial results.

Exclusively Listed for Sale by Stoneridge:

  • Minnesota & Wisconsin – $2 million Medicaid & Medicare certified home health agency in MN and WI. Primarily Medicaid with great opportunity for Medicare growth. Well-run with excellent clinical. Stoneridge file S-3002
  • Florida– Clearwater/St. Pete area – $4 million Medicare home health agency. Excellent outcomes, strong clinical programs, excellent management team in place. $700K in adjusted EBITDA. Stoneridge file S-4109.
  • Texas – $5 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge file S-3665
  • Washington State – $2 million revenue. This agency has a long history of profitability. Diverse payor sources includes Medicaid programs and private pay. Great reputation in a unique service area. Stoneridge file S-7010
  • New Mexico – $4.4 million Medicaid and Medicare agency & hospice with a pediatric component. Excellent clinical results and financial records. Stoneridge file S-9160
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015
  • Colorado – $3.7 million Medicare certified home health agency in SW Colorado. Large service territory. Clean surveys and good clinical operations. Stoneridge file S-4161
  • Texas – $1.5 million East Texas Medicare certified home health agency, providing skilled care, approx 75% from traditional PPS Medicare.  Last survey was deficiency free. Stoneridge file S-4088
  • Virginia- $4 million Medicare agency located in Northern Virginia. 78% Traditional Medicare. Accredited. Stoneridge file S-6001
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • North Carolina – $2.2 million Medicaid provider with two locations serving Charlotte, NC and surrounding areas. Service waiver programs include: PCS, PDN, and CAP. Accredited. Professionally run company with outstanding clinical. Great tuck-in opportunity. Stoneridge file S-2999
  • Texas – $3.3 million accredited Medicare home health agency. Profitable and still growing with approximately 87% of revenue coming from traditional Medicare. Strong marketing team in place with diversified referral sources. Stoneridge file S-1500
  • California – $2.2 million revenue, JCAHO accredited, Medicare certified home health care agency serving Southern California. Stoneridge file S-1050
  • Texas – $2 million plus Medicare certified home health agency providing service to Region 2.  88% of revenue is from traditional Medicare. Stoneridge file S-3650
  • Pennsylvania – $7 million plus, Medicaid provider with multiple locations in southeastern Pennsylvania. Well-run, profitable agency with great year over year growth and reputation for quality services.  Stoneridge file S-8000
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare.Stoneridge file S-2650
  • Utah – Approximately $3.5 million home health and hospice provider with multiple office locations. Good platform or add-on opportunity, motivated seller.  Stoneridge file S-2262
  • Florida – Stable $1 million Florida district 4 Medicare home health agency, management team in place and accredited. Stoneridge file S-5542 On Contract
  • New Jersey – $4 million hospice serving southern New Jersey, well-established with a great reputation for quality care.  Stoneridge file S-1070 On Contract
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • New Mexico – $2.3 million Medicare provider serving the Roswell area. Clean surveys.  Stoneridge file S-5295
  • Oklahoma –  $6 million revenue Oklahoma City Medicare certified home health agency.   90% of revenue from traditional Medicare. Stoneridge file S-3200
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232.
  • Florida – Orlando area Medicare agency with about $900,000 revenue.  Stoneridge file S-2540.  On Contract

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

Another favorite from The New Yorker

TouchAnywhere

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.
From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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: Almost Family | Amedisys | LHC Group

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April 1st Update

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

Quote of the Month:

“Investors certainly have to be happy with Almost Family Inc.  and its short term performance. After all, the stock has jumped by 19.7% in the past 4 weeks, and it is also above its 20 Day Simple Moving Average as well. This is certainly a good trend…..” Zack’s Equity Research

The Stoneridge Partners Home Health Index (HH Index) up another 5.6%.

It was another good month for our Home Health Index, capping off four straight months of increases and now up near 17% YTD.  The stock market, as measured by the S&P 500, is a different story, dropping 2.2% for the month, and now about flat for the quarter.

This 5.6% increase in the HH Index for the month of March is however very misleading.  Almost Family was up 29.9% for the month with a good part of that increase occurring in the final few days of the month on above average volume.  Conversely, both Amedisys and LHC Group were down in March.

So what’s going on with Almost Family?  The stock is now up 30% for the month, over 50% for the first quarter, and close to 80% from a year ago.

Note that the all-time high for our HH Index was set in September, 2008 at 41.75. Our low since then was set in October, 2011 at 11.65. Two years ago we were at 17.68. We now rest at 34.84.  Are we headed to the 2008 high?

Here are the results for the past two years:

Company 3/31/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 44.71 +29.94% +54.44% +93.55% +118.84%
Amedisys 26.78 -12.03% -8.76% +79.85% +140.83%
LHC Group 33.03 -2.59% +5.93% +49.73% +53.63%
HH Index** 34.84 +5.59% +16.81% +74.05 +97.02%
S&P 500 2,060.25 -2.22% +0.07% +10.04% +31.29%
Addus 23.02 +5.05%% -5.15% -0.13% +74.53%

Although we track the performance of Addus, they  are not included in our HH Index because most of their revenue does not come from Medicare reimbursement.

ALMOST FAMILY:

On Monday morning Almost Family stock opened at 39.75 and by Tuesday’s close it was at 44.71 for a stellar  two day increase of 12.5% on heavy volume.  To see who owns shares of AFAM, go to the following link:  Almost Family Stock Ownership

See It to Believe It

This first graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to November, 2002. It has been quite a ride. And what a great two year trend.

[visualizer id=”5727″]

This second graph compares our HH Index to the price of Addus stock (non-Medicare).  A nice trend for our Index….not so good for Addus.

[visualizer id=”5730″]

This third graph is a 12 month trailing chart of the HH Index compared to the actual prices of the individual companies that make up the chart, through March, 2015.  Look at Almost Family take off.

[visualizer id=”5731″]

PERCENT OF REVENUE & MULTIPLE OF EBITDA:

Selling Price (Enterprise Value) as a Percent of Revenue.

Company 4/1/15 4/1/14
Almost Family 92% 74%
Amedisys 85% 42%
LHC Group 90% 61%
HH Index Average 89.0% 59.0%
Addus 77% 92%

Multiples of EV/EBITDA.

Think of this as selling price as a multiple of EBITDA. Take a look back just one year:

Company 4/1/15 4/1/14
Almost Family 16.51 15.1
Amedisys 15.24 11.32
LHC Group 10.87 7.04
HH Index Average 14.21 11.15
Addus 10.55 13.93

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices March 3. 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 that may differ from that used by a company it is reporting. * The spike in multiple of EBITDA for Amedisys may be a result of recently announced increased earnings. It seems that the stock trades on current earnings but the multiple of EBITDA is calculated on a trailing twelve months.

IN THE NEWS!

Home Care Public Companies from 15,000 feet – 2014 Results

 In 000s Almost Family Amedisys LHC Group HH Index Total Addus
Revenue 495,829 1,204,554  733,632 2,434,015 312,942
Gross Profit 231,835 513,493 298,857 1,044,185 83,735
Gross Profit % 46.8% 42.6% 40.7% 42.9% 26.8%
Operating Income* 24,642 52,354 45,486 122,482 21,901
Operating Income % 4.97% 4.35% 6.20% 5.03% 7.00%
Enterprise Value (millions) 4/2/2015 475 1,020 679 2,173 248

* Operating Income excludes depreciation & amortization

Merger & Acquisition Activity:

Sold by Stoneridge Partners:

Chicago, Illinois:  Home Health and Hospice of Illinois sold to a large regional home care provider.  Stoneridge Partners provided sell-side advisory services.

Other Transactions:

Dallas, Texas:  Epic Health Services, a home health provider,  is acquiring the Clarity Service Group, a provider that offers autism services for about 320 children throughout Pennsylvania, Maryland, Delaware, New Jersey, and Virginia. It is the first company that it has acquired that solely focuses on autism. An Epic spokesman says that Clarity’s focus on evidence-based care and applied behavior analysis made it appealing.

Last month, Epic named a new CEO who was charged with growing its home health services in other states, particularly in pediatric care.

Los Angeles, California: Patient Home Monitoring Corp. (PHM) (TSX VENTURE:PHM), a fast growing and profitable company focused on rolling-up annuity-based healthcare service companies in the US and Canada, announced it has executed a binding Purchase Agreement for the acquisition of West Home Health Care (“West”), a profitable Virginia-based company focused on providing home-based healthcare services, including mobility solutions for the home.

Franklin, Pennsylvania: University of Pittsburgh Medical Center (UPMC) and Presbyterian SeniorCare announced a plan to acquire Mt. Lebanon-based Family Hospice and Palliative Care, the state’s largest nonprofit provider of medical services to people with terminal illnesses.  Terms of the joint-venture deal, which is expected to close by the middle of this year, were not disclosed.

New Canaan, Connecticut:  J.H. Whitney Capital Partners, LLC a leading middle-market private equity firm, announced today that it has acquired Pediatric Services Holding Corporation, the parent company of Pediatric Services of America, Inc., known as PSA Healthcare. Financial terms of the transaction were not disclosed.

PSA is a leading provider of critically important home care services for medically fragile children. Recognized as an industry leader in quality that it developed over the Company’s 25 year history, PSA provides care to more than 2,500 patients across 17 states through over 65 offices. In addition to its core home-based pediatric private duty nursing platform, PSA provides a broad range of healthcare services, including home-based adult private duty nursing, home-based pediatric skilled nursing visits and therapies, outsourced school health programs, pediatric day treatment centers for medically fragile children and intellectual and developmental home care.

Exclusively Listed for Sale by Stoneridge:

  • Florida – $7 million revenue with 80% from traditional Medicare, three offices and three provider numbers, accredited with professional management in place. Stoneridge file S-7324
  • Minnesota & Wisconsin – $2 million Medicaid & Medicare certified home health agency in MN and WI. Primarily Medicaid with great opportunity for Medicare growth. Well-run with excellent clinical. Stoneridge file S-3002
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015
  • Colorado – $3.7 million Medicare certified home health agency in SW Colorado. Large service territory. Clean surveys and good clinical operations. Stoneridge file S-4161
  • Virginia- $4 million Medicare agency located in Northern Virginia. 78% Traditional Medicare. Accredited. Stoneridge file S-6001
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • North Carolina – $2.2 million Medicaid provider with two locations serving Charlotte, NC and surrounding areas. Service waiver programs include: PCS, PDN, and CAP. Accredited. Professionally run company with outstanding clinical. Great tuck-in opportunity. Stoneridge file S-2999
  • California – $2.2 million revenue, JCAHO accredited, Medicare certified home health care agency serving Southern California. Stoneridge file S-1050
  • Texas – $2 million plus Medicare certified home health agency providing service to Region 2.  88% of revenue is from traditional Medicare. Stoneridge file S-3650
  • Pennsylvania – $7 million plus, Medicaid provider with multiple locations in southeastern Pennsylvania. Well-run, profitable agency with great year over year growth and reputation for quality services.  Stoneridge file S-8000
  • New Jersey – $4 million private duty agency.  Primary payor is Medicaid, and the agency enjoys very good relationships with many referral sources.  Stoneridge file S-6700
  • Florida – $2.2 Million revenue Medicare agency in District 8, stretching from Naples to Sarasota.  90% of revenue from traditional Medicare, accredited with professional management and sales team in place. Stoneridge file S-6728
  • Utah – Approximately $3.5 million home health and hospice provider with multiple office locations. Good platform or add-on opportunity, motivated seller.  Stoneridge file S-2262
  • Florida – Stable $1 million Florida district 4 Medicare home health agency, management team in place and accredited. Stoneridge file S-5542 On Contract
  • New Jersey – $4 million hospice serving southern New Jersey, well-established with a great reputation for quality care.  Stoneridge file S-1070 On Contract
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • Colorado – $3 million revenue Medicare agency located in SW Colorado, accredited, stable and well run. Stoneridge file S-5542
  • New Mexico – $2.3 million Medicare provider serving the Roswell area. Clean surveys.  Stoneridge file S-5295
  • Texas – $2.3 million Houston Medicare home health agency, 90% traditional Medicare.  Strong bottom line, very well run with good books and records. Stoneridge file S-1542
  • Oklahoma –  $6 million revenue Oklahoma City Medicare certified home health agency.   90% of revenue from traditional Medicare. Stoneridge file S-3200
  • lllinois – Profitable $5.5 million revenue Medicare home care and hospice serving the northern Chicago MSA.  Mature management team in place, a diverse referral base and strong outcomes — exceeding state and national averages on 15 of 22 quality measures as measured by Medicare’s “home health compare”.  Stoneridge file S-5288. On Contract
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232.
  • Florida – Orlando area Medicare agency with about $900,000 revenue.  Stoneridge file S-2540.  On Contract
  • New Mexico – Private pay home care and care management agency with annual revenue approaching $1 million.  Stoneridge file S-5450

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

Another favorite from The New Yorker

http://www.technologyinvestor.com/wp-content/uploads/2015/04/TellYouWhatYouWanttoHear.jpg

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.
From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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: Almost Family | Amedisys | LHC Group

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March 1st Update

Quote of the Month:

“We are extremely pleased to announce the combination of WillCare and Almost Family. We have known Todd and Dave Brason and WillCare for a very long time and have been very impressed with the strong company and brand they have built. We are honored to have the opportunity to combine with a company of WillCare’s stature.”

William B. Yarmouth, Chairman and CEO for Almost Family, Inc.

Our Congratulations to Almost Family and WillCare. Nice Job!

The Stoneridge Partners Home Health Index (HH Index) is updated monthly and measures the performance of these three publicly traded home health companies, all listed on the NASDAQ:

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

The Stoneridge Partners Home Health Index (HH Index) takes off….up over 11%.

After slumbering for the month of January, February saw a big change. When Almost Family announced their acquisition of WillCare, their stock took off, pulling our entire index with them. (More on this acquisition later.). After ending both 2013 and 2014 each with gains of over 30%, our index is now up over 11% in just two months. The S&P 500 is up 2.2% YTD.

The all-time high for our HH Index was set in September, 2008 at 41.75. Our low since then was set in October, 2011 at 11.65. Two years ago we were at 17.42. We now rest at 29.42. (This month our HH Index discontinued using Gentiva, who was acquired by Kindred at the end of January.)

Here are the results for the past two years:

Company 2/28/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 35.62 +17.33% +23.04 +21.91% +73.00%
Amedisys 30.17 +8.94% +2.79% +77.89% +165.60%
LHC Group 33.80 +13.73% +8.40% +43.46% +66.34%
HH Index** 33.20 +12.92% +11.30% +46.58 +90.60%
S&P 500 2,104.50 +5.49% +2.21% +13.18 +38.94%
Addus 21.90 -1.26% -9.77% -23.85% +148.58%

Gentiva stock closed at $19.19 on February 2 at 4:00 pm, at which time Gentiva ceased public trading due to its acquisition by Kindred. As a result, beginning February, 2015, after twelve years of tracking, Gentiva will no longer be included in our HH Index.

Our HH Index for 2013 and 2014 was calculated without Gentiva for purposes of comparison.

As you can see, Almost Family stock was up over 17% with most of that increase coming after the announcement of the execution of a Definitive Agreement for the acquisition of WillCare.  Both LHC Group and Amedisys were also up nicely.

Addus continued a slide now down close to 10% for the year, but when looking back two years their results are impressive. Addus is not included in our index because the majority of their revenue does not come from Medicare reimbursement.

See It to Believe It

This first graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to November, 2002. It has been quite a ride. And what a great two year trend. Note that by placing your cursor over a point on the graph it will give you the percentage increase.

[visualizer id=”5727″]

This second graph shows the price of the HH Index going back to 2002.  Note that by placing your cursor over a point on the graph it will give you the price

[visualizer id=”5754″]

This third graph compares our HH Index to the price of Addus stock (non-Medicare).  A nice trend for our Index….not so good for Addus.

[visualizer id=”5730″]

This tfourth graph is a 12 month trailing chart of the HH Index compared to the actual prices of the individual companies that make up the chart, through February, 2015.

[visualizer id=”5731″]

PERCENT OF REVENUE & MULTIPLE OF EBITDA:

Selling Price (Enterprise Value) as a Percent of Revenue.

Company 3/1/15 3/1/14
Almost Family 79% 65%
Amedisys 93% 35%
LHC Group 91% 69%
HH Index Average 87.6% 56.3%
Addus 77% 108%

Multiples of EV/EBITDA.

Think of this as selling price as a multiple of EBITDA. Take a look back just one year:

Company 3/1/15 3/1/14
Almost Family 14.02 10.06
Amedisys 21.47 6.68
LHC Group 11.15 7.32
HH Index Average 15.55 8.02
Addus 11.55 14.40

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ.   EV has been calculated based on stock prices March 3. 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 that may differ from that used by a company it is reporting. * The spike in multiple of EBITDA for Amedisys may be a result of recently announced increased earnings. It seems that the stock trades on current earnings but the multiple of EBITDA is calculated on a trailing twelve months.

Saying Goodbye to Gentiva

On February 2 Gentiva ceased to trade as an independent public company, and is now owned by Kindred Healthcare, Inc. (NYSE:KND).

Gentiva was founded in 1999, when Olsten Corporation split off its healthcare assets to form an independent, public company. Olsten Corporation was founded in 1946 by William Olsten….a long history.

IN THE NEWS!

Almost Family Signs Agreement to Purchase WillCare:

Last week Almost Family (Nasdaq:AFAM) announced that they have signed a Definitive Agreement to acquire the stock of WillCare, with approximately $72 million in home care revenue. The purchase price is expected to range from $46 million to $53 million based on earnings prior to closing. Almost Family expects to close the Ohio portion in early March, and the New York portion in the second half of 2015.

This appears to be a nice acquisition for AFAM. Regarding geography, the combination provides them with a major entry into New York, where $52 million of WillCare’s 2014 revenues were generated and helps fill out their Northeast cluster. It also fits in nicely with AFAM’s Ohio operations.

In addition their revenue is about evenly split between their Visiting Nurse segment (primarily Medicare), and their Personal Care segment (non-Medicare), which also fits nicely with AFAM.

For WillCare, the synergies that Almost Family is able to bring to the table (and pay for), resulted in a much better price than if the price was based on EBITDA alone. Expected synergies that were announced are substantial ….estimated to be between $5.0 million and $7.5 million.

This is an example of the advantage strategic buyers have in the M&A marketplace, with their ability to use synergies to increase their bottom line, which allows them to pay prices considerably higher than newcomers  can pay.  We note that AFAM used the phrase “agency level contribution” which excludes many home office expenses.

Almost Family Earnings:

In 000s 4th Quarter 12 Months Ending 12/31
2014 2013 % Change 2014 2013 % Change
Revenue
  Visiting Nurse* 95,724 72,055 +32.8% 380,788 263,789 +44.4%
Personal Care* 28,850 24,336 +18.5% 112,497 92,927 +21.1%
Total Revenue 124,756 96,587 +28.8% 495,829 356,912 +38.9%
Gross Profit 58,366 45,007 +29.7% 231,835 166,364 +39.4%
Gross Profit % 46.8% 46.6% 0.4% 46.8% 46.6% .0001%
G&A & Other Expenses 50,415 43,723 15.3% 207,193 151,571 36.7%
Operating Income 7,951 1,284 +519.2% 24,642 14,793 66.6%
Adjusted EBITDA 9,148 6,477 41.2% 35,775 24,017 49.0%
Stock Price March 1 35.62 27.42 +30%

LHC Group (Nasdaq:LHCG):

On February 25, LHC Group  released their 2014 earnings report, followed by their earnings call.

Regarding M&A activity:  “…..we innovated 57 locations at $105 million in trailing revenue last year. Our operations team is poised, ready and excited to top that record-breaking year again in ’15.”

To read the entire transcript, courtesy of Seeking Alpha, go to the following link: 2014 LHC Group Earnings Call

LHC Earnings:

In 000s 4th Quarter 12 Months Ending 12/31
2014 2013 % Change 2014 2013 % Change
Revenue 193,371 165,280  17.0% 733,632 658,283 11.4%
Gross Profit 80,579 70,039 15.0% 298,857 274,819 8.7%
Gross Profit % 41.67% 42.38% -1.66% 40.73% 41.75% -2.42%
Operating Income 11,565 10,617 8.9% 45,486 46,737 -2.7%
Stock Price March 1 33.80 23.56 +43.4%

Amedisys (Nasdaq: AMED)

Amdisys has just released their earnings report……little change on the top line but a huge improvement on the bottom line. To read the transcript from their earnings call click:  2014 Amedisys Earnings Call

In 000s 4th Quarter 12 Months Ending 12/31
2014 2013 % Change 2014 2013 % Change
Revenue 300,528 303,497  -1.0% 1,204,554 1,249,344 -3.6%
Gross Profit 129,153 124,161 +4.0% 513,493 531,348 -3.4%
Gross Profit % 43.0% 41.0% +5.1% 42.6% 42.5% +0.2%
Operating Income 7,951 1,284 +519.2% 24,642 14,793 66.6%
Stock Price March 1 30.17 16.96 +78%

Merger & Acquisition Activity:

Sold by Stoneridge Partners:

Springfield, Virginia: Americare In Home Nursing, Inc., a leading Medicare-certified provider of skilled home health nursing and therapy services, with agencies in Springfield, VA, Ft. Washington, MD, and Washington, DC, sold to a regional home care provider.  Brian Bruenderman, one of our partners, provided sell-side advisory services.

Other Transactions:

Louisville, KY – Almost Family, Inc. (Nasdaq: AFAM), a leading provider of home health nursing services, today announced that it has signed a definitive agreement to acquire the stock of WillCare HealthCare, a provider of skilled home health and personal care services which generated $72 million in revenue in 2014 and currently operates 16 branch locations in three states.

Dallas, TX – New Century Hospice, one of the fastest growing regional hospices, based in Dallas, Texas, announced today that effective March 1, 2015, it has acquired 100% of the member interests in Legacy Hospice, LLC and Legacy Hospice of Colorado Springs, LLC, with locations in Colorado Springs and the greater Denver MSA in Castle Rock south of Denver.

Brentwood, TN – Hospice Compassus, has acquired Life Choice Hospital, a Pennsylvania hospice company. Though specific terms of the deal were not disclosed, Hospice Compassus has secured $210 million in a senior secured credit facility for the acquisition from CIT Bank.

“The combination of Hospice Compassus and Life Choice creates a leading hospice platform with a national scope” – Jim Deal, Hospice Compassus CEO, said in a statement.

“While the hospice sector continues to be highly fragmented, Hospice Compassus has grown to be a dominant provider” – Will Duke, Management Director of CIT Corporate Finance.

Dallas. TX – Epic Health Services, a portfolio company of Webster Capital and Dallas based provider of pediatric skilled nursing and therapy, announced today the completion of its acquisition of the parent company and pediatric division of Loving Care Agency, Inc. a provider of pediatric and adult home health care services based in Hasbrouck Heights, New Jersey.

The close of this transaction creates a leading pediatric health care company serving patients in 10 states, including Texas, Pennsylvania, Massachusetts, New Jersey, Missouri, Indiana, Delaware, Arizona, Illinois, and Colorado.

Exclusively Listed for Sale by Stoneridge:

  • Florida – $7 million revenue with 80% from traditional Medicare, three offices and three provider numbers, accredited with professional management in place. Stoneridge file S-7324
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • California – $2.2 million revenue, JCAHO accredited, Medicare certified home health care agency serving Southern California. Stoneridge file S-1050
  • Texas – $2 million plus Medicare certified home health agency providing service to Region 2.  88% of revenue is from traditional Medicare. Stoneridge file S-3650
  • Pennsylvania – $7 million plus, Medicaid provider with multiple locations in southeastern Pennsylvania. Well-run, profitable agency with great year over year growth and reputation for quality services.  Stoneridge file S-8000
  • New Jersey – $4 million private duty agency.  Primary payor is Medicaid, and the agency enjoys very good relationships with many referral sources.  Stoneridge file S-6700
  • Florida – $2.2 Million revenue Medicare agency in District 8, stretching from Naples to Sarasota.  90% of revenue from traditional Medicare, accredited with professional management and sales team in place. Stoneridge file S-6728
  • Utah – Approximately $3.5 million home health and hospice provider with multiple office locations. Good platform or add-on opportunity, motivated seller.  Stoneridge file S-2262
  • Florida – Stable $1 million Florida district 4 Medicare home health agency, management team in place and accredited. Stoneridge file S-5542
  • New Jersey – $4 million hospice serving southern New Jersey, well-established with a great reputation for quality care.  Stoneridge file S-1070 On Contract
  • Florida – $2.5 million Medicare certified agency serving District 8, Naples to Sarasota.  Very well established, good books, experience marketing team and management in place.  Stoneridge file S-6728
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • Colorado – $3 million revenue Medicare agency located in SW Colorado, accredited, stable and well run. Stoneridge file S-5542
  • New Mexico – $2.3 million Medicare provider serving the Roswell area. Clean surveys.  Stoneridge file S-5295
  • Texas – $2.3 million Houston Medicare home health agency, 90% traditional Medicare.  Strong bottom line, very well run with good books and records. Stoneridge file S-1542
  • Oklahoma –  $6 million revenue Oklahoma City Medicare certified home health agency.   90% of revenue from traditional Medicare. Stoneridge file S-3200
  • lllinois – Profitable $5.5 million revenue Medicare home care and hospice serving the northern Chicago MSA.  Mature management team in place, a diverse referral base and strong outcomes — exceeding state and national averages on 15 of 22 quality measures as measured by Medicare’s “home health compare”.  Stoneridge file S-5288. On Contract
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232.
  • Florida – Orlando area Medicare agency with about $900,000 revenue.  Stoneridge file S-2540.  ON CONTRACT
  • New Mexico – Private pay home care and care management agency with annual revenue approaching $1 million.  Stoneridge file S-5450

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

Do you know of any acquisitions that have taken place?  We would be interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously. The return email address can be left blank.  We are interested in what you have to say, or acquisitions that you know about.

Another favorite from The New Yorker

http://www.technologyinvestor.com/wp-content/uploads/2014/12/GetStick.jpg

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.
From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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: Almost Family | Amedisys | LHC Group

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