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|
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.
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.
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.
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.
PERCENT OF REVENUE & MULTIPLE OF EBITDA:
Selling Price (Enterprise Value) as a Percent of Revenue.
|HH Index Average||89.0%||59.0%|
Multiples of EV/EBITDA.
Think of this as selling price as a multiple of EBITDA. Take a look back just one year:
|HH Index Average||14.21||11.15|
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|
|Gross Profit %||46.8%||42.6%||40.7%||42.9%||26.8%|
|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.
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.
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
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