Home Health Care Stocks Rise as LHC, Almost Family Announce Merger
Home health care stocks rose in November amid news that two home health care giants are joining forces, according to the latest update of the Home Health Index by Stoneridge Partners. The deal between LHC Group (Nasdaq: LHCG) and Almost Family (Nasdaq: AFAM) is expected to close at the beginning of 2018 and results in a company with a combined revenue of $1.8 billion. The implied transaction value is roughly $2.4 billion, according to LHC Group.
The Home Health Index, which tracks market values of three of the largest publicly traded home health care companies in the U.S.—Almost Family, Amedisys (Nasdaq: AMED) and LHC Group—gained 12.40% in November compared to the previous month. The index zoomed by the S&P 500, which rose 2.4% in November.
“When finalized, the merger between Almost Family and LHC Group will likely result in a big change for industry investors,” said Stoneridge President Rich Tinsley. “It will also change this Index, as we intend to add to it Kindred Healthcare.”
The combined organization will trade on the Nasdaq under the symbol “LHCG,” and operate out of Lafayette, Louisiana. When completed, the organization will have 781 locations total in 36 states and more than 31,000 employees.
News of the merger impacted share values: Lafayette, Louisiana-based LHC Group’s stock dropped 1.17% in November. Year to date, LHC Group’s share prices have climbed 43.92%, which is still the largest yearly gain on the Index.
Louisville, Kentucky-based Almost Family gained the most ground in November. The company’s share prices rose 28.02% that month. The latest gains pushed Almost Family’s year-to-date stock value up 34.69%.
Amedisys also saw big gains in November. The Baton Rouge, Louisiana-based company’s stock value grew 16.25% in the month. Year to date, its share prices have risen 26.67%, according to the Index.
Share prices for Addus HomeCare (Nasdaq: ADUS), which is not included in the index because so little of its income comes from Medicare, dipped 5.67% in November. Year to date, Addus’s stock price is down 4.99%.
Quote Of The Month
“Primarily, we are seeing people utilizing home care and a smaller and smaller percentage using nursing home care. People think, ‘While I might start out needing care at home, eventually I’ll need to be in a facility.’ But that’s not something we see in our data. For the most part, people are able to stay at home for the whole time.” said Beth Ludden, Senior Vice President for Genworth.
Read the Full Article Here: How to Get Long-Term Care at Home Without Busting the Bank
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)
This graph compares the percentage of the Home Health Index to the percentage change in the S&P 500 Index for over 14 years, going back to 2002.
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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.
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This graph displays HH Index performance over the past 24 months.
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This graph compares the HH Index to the price of Addus stock (non-Medicare).
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(Home Health Index December 2017 | Stoneridge Partners)
Here are the results of the stock prices for the past two years:
| Company | 11/30/17 | 1 mos change | YTD change | 11/30/16 | 11/30/15 |
| Almost Family | 59.4 | +28.02% | +34.69% | 41.3 | 42.37 |
| Amedisys | 54 | +16.25% | +26.67% | 41.44 | 40.59 |
| LHC Group | 65.77 | -1.17% | +43.92% | 42.88 | 46.55 |
| HH Index* | 59.72 | +12.40% | +35.29% | 41.87 | 43.17 |
| S&P 500 | 2637.37 | +2.40% | +17.80% | 2204.97 | 2080.41 |
| Addus | 33.3 | -5.67% | -4.99% | 34.7 | 22.8 |
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) | 11/30/17 | 11/30/16 | 11/30/15 |
| Almost Family | 946 | 548 | 493 |
| Amedisys | 1820 | 1410 | 1410 |
| LHC Group | 1280 | 841 | 868 |
| HH Index Total | 4046 | 2799 | 2771 |
| Addus | 410 | 313 | 239 |
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
| Company | 11/30/17 | 11/30/16 | 11/30/15 |
| Almost Family | 132% | 89% | 96% |
| Amedisys | 125% | 101% | 115% |
| LHC Group | 133% | 95% | 112% |
| HH Index Average* | 130% | 95% | 107% |
| Addus | 100% | 87% | 72 |
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
| Company | 11/30/17 | 11/30/16 | 11/30/15 |
| Almost Family | 23.43 | 11.81 | 13.43 |
| Amedisys | 17.25 | 17.77 | 15.83 |
| LHC Group | 13.91 | 10.21 | 11.19 |
| HH Index Average* | 18.20 | 13.26 | 13.48 |
| Addus | 12.27 | 12.94 | 10 |
The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ. Enterprise value is defined as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. EBITDA is calculated using methodology which may differ from that used by a company it’s reporting. (Home Health Index December 2017 | Stoneridge Partners)
SOLD by Stoneridge!
- Advanced Home Health Services of Moulton, TX was acquired by Excelin Home Health. Partner, Joe Lynch, provided sell-side advisory services.
- Home Therapeutic Solutions, Inc. of Houston, TX was acquired by Excelin Home Health. Partner, Joe Lynch, provided sell-side advisory services.
Recent Transactions From Around The Country
- Hospice Source, a full-service, national provider of medical equipment (“DME”), acquired Home Medical Professionals (HMP) in Gainesville, GA. This acquisition expands Hospice Source’s geographical footprint into the greater Atlanta and Georgia markets.
- ResCare, the largest diversified health and human services provider in the U.S., acquired A Place to Call Home, an Arizona based company providing foster care, respite, host home and related supports to children and individuals with intellectual and developmental disabilities.
- LHC Group of Lafayette, LA agreed to enter into an all-stock merger of equals transaction with Almost Family of Louisville, KY.
- Silver Oak Services Partners has agreed to acquire Caring People, a home healthcare agency that works with seniors in New York City.
Exclusively Listed For Sale By Stoneridge Partners
Do you know of any acquisitions that have taken place? We are interested in your comments. At the top of this column is a “Contact Tab” with a section for comments. These can be sent anonymously and the return email address can be left blank.
Another Cartoon Favorite from the New Yorker
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Home Health Index December 2017 | Stoneridge Partners
From Rich Tinsley, Publisher of “Home Health Index”. Rich can be reached at [email protected] or (239) 561-0826 and toll-free 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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