Home Health Stocks Continue Summer Swell

Home Health Stocks Continue Summer Swell

 Home health care stocks have performed strongly this summer, with Stoneridge Partners’ monthly Home Health Index seeing double-digit growth across June and July. That growth came despite proposed regulatory hurdles introduced by health care policymakers, headlined by the Patient-Driven Groupings Model (PDGM).

August largely brought more of the same, as stocks continued their upward push, according to the latest Index update. Stoneridge Partners’ Home Health Index tracks the market values of Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG), two of the largest publicly traded and independent home health care companies in the United States.

Overall, the Home Health Index jumped by 13.23% in August over the previous month. Year to date, the Index was up 32.27%.

Once again, Index gains far outpaced the S&P 500. Compared to the double-digit growth home health stocks are seeing, the S&P 500 only gained 2.17% in August compared to the previous month.

“There’s a lot of change going on in the home health industry, whether we’re talking about PDGM, value-based purchasing or even greater opportunities for remote patient monitoring capabilities,” Stoneridge Partners President Rich Tinsley said. “Sometimes change can be a catalyst for businesses, though, which is certainly reflected by what we’re seeing in terms of stock values.”

Amedisys’ stock climbed 17.25% in August compared to the previous month. Year to date, Amedisys stock was up 137.17%. Amedisys is headquartered in Barton Rouge, Louisiana, with an executive office in Nashville, Tennessee.

Meanwhile, Lafayette, Louisiana-based LHC Group’s stock increased by 8.53% in August compared to July. Year to date, LHC Group stock was up 61.52%.

The Home Health Index was up 61.57% in August over the previous 24-month period.

“Broadly, a greater inclusion with the continuum of care and a rapidly aging population are a couple underlying reasons why the home health industry has a lot of momentum right now,” Tinsley said.

In addition to Amedisys and LHC Group, the Stoneridge Index also monitors Frisco, Texas-based Addus HomeCare Corporation (Nasdaq: ADUS). The Index does not include the company in its monthly update, however, as most of Addus’ revenue comes from Medicaid and not Medicare.

In contrast to Amedisys and LHC Group, Addus’ stock dropped 3.21% in August compared to the previous month. Year to date, Addus stock was up 86.49%.

Quote Of The Month 

“It’s no secret that the home health care industry is growing. It’s not just growing in the services and number of agencies and providers it offers, but also in demand. ” –  Valerie VanBooven, RN, BSN, Editor in Chief of HomeCareDaily.com

Read the Full Article Here: Growing Demands Within The Home Health Care Industry

See It To Believe It!

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

  • 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 September 2018 | Stoneridge Partners)

 

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

Company 8/31/18 1 mos change YTD change 8/31/17 8/31/16
Amedisys 125.01 +17.25% +137.17% 52.24 53.55
LHC Group 98.93 +8.53% +61.52% 65.25 45.26
HH Index* 111.97 +13.23% +98.40% 55.40 46.20
S&P 500 2884 +2.17% +7.78% 2471.65 2170.95
Addus 64.9 -3.21% +86.49% 34.05 18.86

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) 8/31/18 8/31/17 8/31/16
Amedisys 3980 1719 1890
LHC Group 3430 1299 911
HH Index Total 7410 3845 3341
Addus 804 424 232


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

Company 8/31/18 8/31/17 8/31/16
Amedisys 252% 116% 144%
LHC Group 253% 134% 110%
HH Index Average* 253% 122% 117%
Addus 176% 103% 67%


Multiples of EV/EBITDA

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

Company 8/31/18 8/31/17 8/31/16
Amedisys 26.41 20.30 23.64
LHC Group 33.19 14.06 11.08
HH Index Average* 29.80 18.28 15.78
Addus 22.30 12.99 9.68

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 September 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • AccentCare, a company for post-acute home healthcare services, bought Denton-based Accolade HomeCare and Hospice.
  • Hospice Source, the National Leader in Hospice DME aquired Oklahoma City, OK based Redrock Medical.

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 September 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: Amedisys | LHC Group

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