Home Health Care Stocks Trend Up to Start 2018, Look to Weather Early Year Volatility

Home Health Stocks Trend Up to Start 2018, Look To Weather Early Year Volatility

Home health stocks rose across the board in January, signaling a strong start to the new year, though stock increases were still short of S&P 500 gains during the month.

The Home Health Index, which tracks the monthly market values of three of the biggest home health care companies—Almost Family (Nasdaq: AFAM), Amedisys (Nasdaq: AMED), and LHC Group (Nasdaq: LHCG)— increased 2.82% in January compared to the previous month. By comparison, the S&P 500 increased 5.67% in January. The Index ended 2017 up 18.68% year over year.

Almost Family, based in Louisville, Kentucky, saw the biggest gains for the month, with its share price increasing 4.07%. Lafayette, Louisiana-based LHC Group stock prices experienced gains of 3.84%. Baton Rouge, Louisiana-based Amedisys Inc. values also rose, but only saw a slight increase of 0.32%.

“As the new tax bill expectations set in, we saw index companies gain. Even with the late-month market volatility, stocks were in line with expectations, and we’ll continue to monitor how tax reform will affect future stock prices,” said Stoneridge President Rich Tinsley.

During the month, the planned merger of two of the companies tracked by the Index—LHC Group and Almost Family—hit a road bump, as LHC Group refiled its paperwork with the Securities and Exchange Commission (SEC), effectively restarting the clock for the regulatory approval process. The merger, which is expected to close in the summer of 2018, was announced in November 2017 and is estimated to have a transaction value of $1.8 billion.

While share prices were up overall across the home health industry for the month, volatility struck the stock market at the end of January, intensifying into wild market swings in early February.

Additionally, Addus Homecare (Nasdaq: ADUS) stock prices increased 5.17%. However, because very little of the company’s income comes from Medicare, it isn’t included in the index.

 

Quote Of The Month 

“We would like the public to know that more than between 20 and 25 percent of individuals, and their families, are affected by mental illness,” said Rhonda Thissen, executive director of NAMI Virginia.

Read the Full Article Here: Advocates will seek improvements in mental health services

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 going back to 2002.
[visualizer id=”8359″]
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.
[visualizer id=”8361″]

This graph displays HH Index performance since 2002.

[visualizer id=”8363″]
This graph compares the HH Index to the price of Addus stock (non-Medicare).
[visualizer id=”8362″]

(Home Health Index February 2018 | Stoneridge Partners)

 

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

Company 1/31/18 1 mos change YTD change 1/31/17 1/31/16
Almost Family 57.60 +4.07% +4.07% 47.45 38.23
Amedisys 52.88 +0.32% +0.32% 45.47 39.32
LHC Group 63.6 +3.84% +3.84% 49.74 45.29
HH Index* 58.03 +2.82% +2.82% 47.55 40.95
S&P 500 2825.09 +5.67% +5.67% 2280.22 2043.94
Addus 36.60 +5.17% +5.17% 33.90 23.28

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) 1/31/18 1/31/17 1/31/16
Almost Family 897 623 453
Amedisys 1840 1610 1250
LHC Group 1280 985 713
HH Index Total 4017 3217 2416
Addus 410 371 222


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

Company 1/31/18 1/31/17 1/31/16
Almost Family 120% 101% 89%
Amedisys 125% 116% 101%
LHC Group 127% 112% 92%
HH Index Average* 124% 110% 94%
Addus 99% 97% 66%


Multiples of EV/EBITDA

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

Company 1/31/18 1/31/17 1/31/16
Almost Family 21.08 13.40 12.35
Amedisys 15.94 20.35 14.00
LHC Group 13.63 11.95 9.19
HH Index Average* 16.88 15.23 11.85
Addus 12.04 14.03 9.27

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 February 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Recover Health Inc., a Minnesota-based company has acquired State Home Care Services, an in-home health care company in Sioux Falls and other areas across South Dakota.
  • Greenville based InvestSouth acquired Interim HealthCare of Greenville.
  • Bridgestone Living LLC, the assisted and independent living portfolio of the Ensign Group acquired Cedar Hills Senior Living in Cedar Hill, Texas and Deer Creek Senior Living in DeSoto, Texas
  • Pennsylvania Hospice Holdings acquired Taylor Hospice of Ridley Park, Pennsylvania.

SOLD by Stoneridge!

  • Care Advantage, a leading provider of home healthcare services in the Mid-Atlantic and a BelHealth Investment Partners (“BelHealth”) portfolio company, acquired Ready Hands, Inc. of Alexandria, Virginia.  Partner, Ben Bogan and Associate Partner, Charles Jantzi, provided sell-side advisory services for this transaction.
  • Stoneridge represented a Medicaid waiver home health company in Texas in a transition that closed in January, 2018.  Partner, Ben Bogan and Associate Partner, Charles Jantzi, provided sell-side advisory services for this transaction.
  • Broadgate Capital acquired Abbi Home Care, Inc. of Benbrook, Texas in January 2018.  Partner, Joe Lynch, provided sell-side advisory services for this transaction.

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

Feb-HHI-2

     

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Home Health Index February 2018 | 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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