Stoneridge Partners | Celebrates 15th Anniversary Summer 2016Stoneridge Partners | Celebrates 15th Anniversary Summer 2016: As Stoneridge Partners celebrates its 15th anniversary this summer, we would like to share a little about us and our history with our longtime business partners and prospective clients.

Stoneridge Partners began 15 years ago when Founder Don Cummins recognized the need for a brokerage specifically focused on the home health market.

Through Cummins’ leadership and business savvy, Stoneridge Partners has brokered hundreds of home care, hospice and behavioral health transactions. Cummins personally has worked more than 140 deals and continues as a dealmaker today in his ongoing role with the company.

“Don is really easy going, but also very committed to always working on transactions,” says Stoneridge Partners President and CEO Rich Tinsley. “Though there are a lot of deal shops, one of the reasons I came on board is this one has the best reputation. It’s exciting to work with Don. He knows the companies across the country, inside and out.”

Cummins has been called one of the most influential members of the home care and hospice industry by Val Halamandaris, president of the National Association for Home Care and Hospice.

Today, Stoneridge Partners continues as the leading broker of home care, hospice and behavioral health businesses. “Not only do we envision a robust future as the industry changes and grows, we do not see any signs of business slowing,” reports Tinsley.

The Early Days

The year was 2001. Previously a licensed pharmacist, Cummins had founded and was operating a general brokerage in Florida that concentrated on mergers and acquisitions (M&A) in a variety of industries, including restaurants, manufacturers and more. Years later, Cummins joined a company that specialized in home care M&A. It was here that he saw an opportunity to expand this niche; and, Stoneridge Partners was born.

Stoneridge Partners began as a one-man operation in Ft. Myers, FL. “At the time Stoneridge began, the Interim Payment System (IPS) for Medicare had taken over,” Cummins explains. “This was devastating to the home care industry and thousands went out of business. The average stock price of a public home care company was around $5. Today, it is around $50.”

This was the beginning of the home care movement, particularly relating to Medicare. Cummins continues, “The changes during the early 2000s are not unlike the changes the industry is currently experiencing; only now, instead of one big cut, it is more like death by a thousand cuts… pre-claim reviews, value based purchasing, star ratings, managed care, etc. All present both a challenge and an opportunity.”

The Future of Home Care

As the home care, hospice and behavioral health industries have grown, Stoneridge Partners has expanded to 10 employees, including five dealmakers, and five locations in Ft. Myers, Dallas, Tucson, Baton Rouge and Louisville. Its approach, however, has remained the same: take time to know the clients and understand what they want to achieve. As an established industry expert, this is our approach for every transaction.

“Our team has worked with clients ranging in value from $100,000 to $48 million,” says Tinsley, “and, we see ongoing opportunity given several factors currently driving the market.”

First, demographics are driving healthcare in general and home care specifically. As part of the continuum of care, home care is a natural place for eager investors to explore. This includes new private equity investors who are looking more and more readily at home care acquisition targets.

Second, the fragmented nature of the market means consolidation pressures will continue, offering opportunities for both buyers and sellers. “Continued consolidation is coming down the pike as smaller players are bought and larger players continue to build” reiterates Cummins. “It’s a really fragmented industry and many smaller players are going to drop out.”

Across the home health care landscape, there are roughly 13,000 certified Medicare home care agencies. Among them, about 6,000 are doing less than $1 million in annual Medicare revenue and 10,000 are doing less than $2 million. “The business landscape has changed sharply since the early days, but for the better,” observes Cummins. “The industry has grown, providing opportunities to both companies already in and those looking to enter this marketplace. The market for home care will continue to grow as our nation continues its commitment to the health and well-being of the elderly.”

Ultimately, the industry has strong growth potential; and, Stoneridge Partners will continue to serve in a deal-making capacity with its longtime knowledge and expertise. From public companies to private ones, small to large, our deal-making team has a pulse on the market which it brings to each transaction.

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Stoneridge Partners | High Quality Hospices in DemandStoneridge Partners | High Quality Hospices in Demand – It’s hard to believe 2 months have passed since the NHPCO meeting in National Harbor, MD. Since then, we have continued to see increased consolidation among hospice agencies, especially in Certificate of Need States. If you are thinking of selling, now is the perfect time. There is an enormous demand for and not enough of high quality hospices in the market. As a result, many owners are receiving the highest valuations we’ve seen in recent years.

As you may know, Stoneridge Partners focuses exclusively on helping hospice and home care agencies as they consider an exit strategy. If you would like to know the worth of your hospice or home care agency, we can do a no-cost valuation and privately review your likely selling price in today’s market. Should you decide to proceed, we can discuss how to confidentially market your business to our group of qualified buyers.

There are no fees unless and until we produce a buyer at a price and terms you accept and a transaction is consummated. For more information, call (800) 218-3944 or email Rich Tinsley, President & CEO, [email protected], or Tina Mackin, Director of Business Development, [email protected].

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The Stoneridge Partners Home Health Index Increases To Another New High For Two Months Running

For the second month in a row, three of the largest publicly held home health companies are continuing to outpace the S&P 500 index. The companies’ market value reached a new all-time record index high in May, surpassing the previous record high, reached in April, by a margin of less than 1%.

The Stoneridge Partners Home Health Index (HH Index) tracks the monthly average market performance of Almost Family (NASDAQ: AFAM), LHC Group (NASDAQ: LHCG) and Amedisys (NASDAQ: AMED). The HH Index showed a 0.63% uptick in May versus April, a year-to-date increase of 20.35%, and is up 26.84% for the trailing 12-month period.

Demonstrating favorable economic conditions for home health companies, the value rose to overtake its previous record high during the course of May. Those home health operators marketing their businesses for sale are seeing the impact to their valuations as well as increased demand for acquisitions.

“Valuations are strong for the large publicly traded home health companies with multiples north of 10 on average and selling prices above one times revenue,” said Benjamin Bogan, partner with Stoneridge Partners, which publishes the monthly HH Index. “While smaller, privately held companies won’t see equal valuations, they will track those of their larger brothers and sisters in direct proportion. These strong valuations have led to an active M&A market with robust interest and activity.”

Among Almost Family, Amedisys and LHC Group, LHC Group saw the largest increase, mirroring its April performance. During May, the company’s share price rose 4.12%; a more modest increase versus its 11.85% increase during the previous month.

Outside of the HH Index, Addus, which is not tracked due to heavy reliance on Medicaid reimbursement-based revenue, saw its share price drop 3.11% during the month.

The S&P 500, used as a baseline for comparison, ticked up 1.53% in May.

 The Quote Of  The Month 

“As Compassus continues to grow, this further strengthens our ability and desire to provide greater access to a continuum of high-quality post-acute care, including hospice, palliative, and home health care services to even more patients, families and the health care professionals who serve them.”

-CEO James Deal, Compassus, on acquisition of Genesis’ home health and hospice business for 84 million announced in March 2016

See It to Believe It!

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)

Please note the graphs representing (1) HH Index to the percentage change in the S&P 500 Index for over 14 years, (2) 12 month trailing chart of the HH Index, and (3) HH Index to the price of Addus stock (non-Medicare) can be found in the most recent issue of the Home Health Index.


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

Company 5/31/16 1 mos change YTD change 5/31/15 5/31/14
Almost Family 41.81 -0.48% +9.34% 38.40 20.54
Amedisys 50.87 -1.20% +42.29% 31.02 14.55
LHC Group 42.00 +4.12% +10.76% 36.76 20.37
HH Index* 44.89 +0.63% +20.35% 106.18 18.49
S&P 500 2096.96 +1.53% +18.08% 2107.39 1923.57
Addus 20.55 +11.08% -3.11% 28.01 22.76

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

Enterprise Value (EV)

EV (in M) 6/1/2016 6/1/2015 6/1/2014
Almost Family 560 489 443
Amedisys 1800 1780 1670
LHC Group 852 756 670
HH Index Total 3213 3025 2783
Addus 245 192 180

 

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

Company 6/1/2016 6/1/2015 6/1/2014
Almost Family 100% 80% 60%
Amedisys 137% 98% 43%
LHC Group 92% 89% 67%
HH Index Average* 110% 89% 56%
Addus 70% 94% 84%

Multiples of EV/EBITDA.

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

Company 6/1/2016 6/1/2015 6/1/2014
Almost Family 13.11 12.36 15.84
Amedisys 22.52 13.18 16.65
LHC Group 10.36 10.11 12.48
HH Index Average* 15.33 11.88 15.00
Addus 10.20 12.91 13.07

*Included Gentiva prior to its acquisition in February 2015 by Kindred.

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 its reporting.

First Quarter Earnings!

Almost Family

In Thousands 2016 2015 Difference %
Revenue 153,698 128,399 +25,299 +19.7%
Gross Margin 71,466 60,072 +11,394 +19.0%
Gross Margin % 46.5% 46.8% +0.5 10.7%
G&A Expenses 63,730 52,609 +11,121  +21.1%
Operating Income 7,736 7,463 +273 +3.7%
Stock Price 2/(28,29) 38.58 35.62 +2.96 +8.3%

Nice increases in revenue and gross margin, but operating income increase is only marginal as G&A expenses slightly outpaced gross margin as a percent of revenue.

To read their complete SEC 10Q click here.

Amedisys

In Thousands 2016 2015 Difference %
Revenue 348,817 301,572 +47,245 +15.7%
Gross Margin 146,980 130,611 +16,369 +12.5%
Gross Margin % 42.1% 43.3% -1.2 -2.8%
G&A Expenses 135,917 188,715 -52,798 -28.0%
Operating Income 11,063 -58,104 +69,167 119%
Stock Price 2/(28,29) 36.84 30.17 +8.03 +26.6%

While gross margin decreased slightly as a percent of revenue, significant decrease in G&A expenses led to dramatic increase in operating income.

To read their complete SEC 10Q click here.

LHC Group

In Thousands 2016 2015 Difference %
Revenue 222,252 193,079 +29,173 +15.1%
Gross Margin 86,951 78,653 +8,298 +10.6%
Gross Margin % 39.1% 41.0% +1.9 +4.6%
G&A Expenses 66,240 59,298 +6,942 +11.7%
Operating Income 16,110 14,096 +2,104 +14.3%
Stock Price 2/(28,29) 44.77 33.8 +10.9 +32.2%

Nice performance all around.

To read the complete SEC 10Q click here.

Totals for Almost Family, Amedisys & LHC Group

In Thousands 2016 2015 Difference %
Revenue 724,767 623,050 +101,717 +16.3%
Gross Margin 305,397 269,336 +36,061 +13.4%
Gross Margin % 42.1% 43.2% -1.1 -2.5%
G&A Expenses 265,887 300,622 -34,735 -11.6%
Operating Income 34,909 -36,545 +71,454 +195.5%
HH Index 2/(28,29) 37.87 33.20 +4.67 +14.1%

SOLD!

SOLD BY STONERIDGE PARTNERS!

Texas: Ace Home Healthcare, a $1 million Medicare agency in the Dallas/Ft. Worth area sold to Aiding Home Healthcare. Joe Lynch, partner at Stoneridge, provided sell-side advisory services.

Exclusively Listed for Sale by Stoneridge Partners:

  • Central Midwest – $5 million Medicare certified home health agency with small hospice operations. Strong bottom line and continued growth opportunities. Management team in place and outstanding clinical. Stoneridge File SBA-9010
  • Pennsylvania – $2.8 million Medicare certified home health agency with small hospice operations in Eastern Pennsylvania. 72% traditional Medicare for home health. Great tuck-in opportunity for strategic buyer. Requires corporate support functions. Stoneridge File SBA-4227
  • Florida – $2.3 million home health agency in District 9. 100% traditional Medicare. Strong bottom line. 4.5 star rating. Stoneridge File SBA-3113
  • Texas – $1.9 million Medicare certified home health agency providing service to Region 2. More than 88% of revenue is from traditional Medicare. Stoneridge File SJL-3650
  • Florida – Accredited home health agency with approximately $850,000 in traditional Medicare revenue. Solid bottom line. 4.5 stars. Florida district 9. SDC-5177
  • Texas – $4.1 million Dallas based home care company. Well managed and showing strong growth trends for 2016. Stoneridge File SJL-6002
  • Pennsylvania – Approximately $2 million in revenue. Licensed for entire state of Pennsylvania, so ready for growth. Stoneridge File SJL-9991
  • Virginia – $2.5 million home health with hospice. Medicare & Medicaid provider. Full staff in place. Stoneridge File SJL-9002
  • New Jersey – Opportunity to enter much sought after New Jersey market via a small hospice in the southern part of the state. Stoneridge File SJL-9002a
  • Illinois – $5.5 million accredited Medicare agency located in northeastern Illinois. Strong bottom line. 4 1/2 star rating by CMS. Stoneridge File SDC-2734
  • Pennsylvania – $1.8 million Medicare agency located in eastern Pennsylvania.82% traditional Medicare. Growing agency with strong potential for future growth. Stoneridge File SBA-2745 ON CONTRACT
  • Florida – Orange County Medicare agency. $3.5 million in revenue. Diversified payor base includes private pay, Medicaid & Medicare. Florida District 7. Stoneridge File SDC-3739
  • Florida – Broward County Medicare Agency. $1.8 million in revenue. Diversified payor base includes private pay, Medicaid & Medicare. Accredited and established for many years. Florida district 10. Stoneridge File SDC-7120
  • Florida – Just under $2 million accredited Medicare home health agency in District 8. Stoneridge File SBA-5224 ON CONTRACT
  • Florida  – Lee County Medicare agency. Approximately $400,000 in revenue. Accredited. 4 1/2 star rating. Oasis quality assessment 97.7%. Florida district 8. Stoneridge File SBA-4186 ON CONTRACT
  • Texas – $4.9 million well established Medicare provider in the Dallas/Ft. Worth metroplex. Deficiency free and showing positive growth. Stoneridge File SJL-4918
  • Tennessee – CON for 5 counties in Southeastern TN. Estimated service area of more than 530,000 people with over 87,000 who are older than 65. Rare opportunity to establish or expand services in populous CON. Stoneridge File SBA-6338 ON CONTRACT
  • Alabama – CON for 7 counties in Northeastern AL. Estimated service area of more than 550,000 people with over 91,000 who are older than 65. Rare opportunity to establish or expand services in populous CON. Stoneridge File SBA-6777 ON CONTRACT
  • Pennsylvania – $4+ million hospice located in Western Pennsylvania. Stoneridge File SBA-5001 ON CONTRACT
  • 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 SBB-8300 ON CONTRACT
  • Ohio –  $4+ million Medicare/Medicaid agency located in NE Ohio. Stoneridge File SBA-8002
  • California – Approximately $8 million private duty home health and staffing company located in Northern California with multiple locations. Stoneridge File SBA-7500
  • New York and New Jersey – Approximately $3 million private pay agency. Licensed in the 5 Boroughs of NY and the entire state of NJ with current operations predominantly in Central NJ. Stoneridge File SBA-8015 ON CONTRACT
  • 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 SBB-9254
  • Colorado – $2.5 million diversified home care agency  and hospice,  accredited with excellent books and records.  Stoneridge File SJL-1005
  • Rhode Island – $2.5 million Medicare agency.  Accredited in CON state.  Stoneridge File SBB-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 SJL-2000 ON CONTRACT
  • Oklahoma –  $1.5 million Medicare agency.  89% of revenue from traditional Medicare.  Stoneridge File SJL-4131
  • Florida – $4 million in pure private pay.  15% bottom line.  Accredited on the central east coast.  Stoneridge File SDC-3250
  • Texas – $4 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge File SJL-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 SBA-9300. ON CONTRACT
  • Florida – $5 million Medicare agency located in the Tampa – St. Pete area.  Accredited, with solid bottom line.   Stoneridge File SBA-4109. 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 SJL-4088 ON CONTRACT
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge File SDC-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 SJL-1500. ON CONTRACT
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare. Stoneridge File SJL-2650. ON CONTRACT
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care. Diverse payor sources. Stoneridge File SBA-5232

 

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners click here.

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

HHI

 

 

 

 

 

 

 

 

 

 

 

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From Rich Tinsley, Publisher of “The Home Health Index”. Rich can be reached by email at [email protected] or at 1-800-218-3944

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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