Home Health Index | 2019 DECEMBER UPDATE

Home Health Stocks Propelled by 2020 Final Rule

Home Health Stocks Propelled by 2020 Final Rule

The new Stoneridge Partners Home Health Index (HHI) shows home health stocks soaring in November, dramatically rebounding after a somewhat disappointing October. Home health stocks tracked by the HHI climbed more than 19% compared to the previous month, making November one of the strongest months in recent history.

“We saw an overall decline in home health stock values of more than 2.5% in October, but we knew that wouldn’t last long,” Stoneridge Partners President Rich Tinsley said. “We expected a solid rebound since the home health final payment rule for fiscal year 2020 included a significant improvement to the Patient-Driven Groupings Model, particularly when it comes to the overhaul’s behavioral adjustment component.”

Instead of the steep 8.01% behavioral adjustment included in a proposed version of PDGM, the final payment rule sets a more manageable 4.36% behavioral adjustment.

Mergers and acquisitions advisory firm Stoneridge Partners monitors the stock values of Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG) each month. The HHI also monitors stock prices for Frisco, Texas-based Addus HomeCare Corporation (Nasdaq: ADUS), but does not include its results in the monthly report due to differences in Addus’ patient base and its primary focus on personal care services.

Amedisys saw a more than 21% increase in its stock price in November, and LHC Group stock values climbed almost 17% during the same period. Addus stock was also up from October to November by nearly 10%. Home health stocks handily outperformed the broader market in November, as the S&P 500 was only up 3.29% compared to the previous month.

“Both Amedisys and LHC Group have some tailwinds in their favor moving forward – PDGM will likely create more merger and acquisition opportunities for both companies,” Tinsley said. “Their executives have repeatedly touted those opportunities during recent earnings calls.”

Thanks to November’s gains, Amedisys, LHC Group and Addus stock prices are also well outperforming their 2018 results. Year-to-date, Amedisys is up by almost 30%, LHC Group is up by almost 43%, and Addus has increased by nearly 37% over 2018. Additionally, the HHI is up almost 41% year-to-date.

Quote Of The Month

“I think there’s a stigma associated with mental health and a lot of attitudes that there’s something wrong with a person’s intellect or morality.  But mental illness has nothing to do with any of that, you know, it has to do with how your brain is working.” – Adriane Howard, a licensed independent clinical social worker with Empower Behavioral Health

Read the Full Article Here:  Dealing with grief during the holidays, mental health resources available

Webinar Announcement

What you need to know about buying and selling home care agencies

Date: December 19, 2019
Time: 10am Pacific / 11am Mountain / 12pm Central / 1pm Eastern
Location: Online (Go-to-Webinar)
Cost: FREE!

See More Information Here: What you need to know about buying and selling home care agencies

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 December 2019 | Stoneridge Partners)

 

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

Company 11/30/19 1 mos change YTD change 11/30/18 11/30/17
Amedisys 162.96 +21.13% +39.47% 137.93 54.0
LHC Group 133.4 +16.81% +42.77% 105.43 65.77
HH Index* 148.18 +19.19% +40.94% 121.68 59.72
S&P 3140.98 +3.29% +25.87% 2739.67 2637.37
Addus 93.21 +9.66% +36.95% 75.45 33.3

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) 11/30/19 11/30/18 11/30/17
Amedisys 5560 4060 1820
LHC Group 4200 3400 1280
HH Index Total 9760 7460 4046
Addus 1280 834 410


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

Company 11/30/19 11/30/18 11/30/17
Amedisys 294% 250% 125%
LHC Group 224% 214% 133%
HH Index Average* 259% 232% 130%
Addus 213% 171% 100%


Multiples of EV/EBITDA

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

Company 11/30/19 11/30/18 11/30/17
Amedisys 29.55 24.71 17.25
LHC Group 21.49 25.47 13.91
HH Index Average* 25.52 25.09 18.20
Addus 30.3 22.27 12.27

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 for its reporting. (Home Health Index December 2019 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Soleo Health, a provider of specialty infusion services, acquired Paragon Infusion Therapy’s pharmacy business located in Dayton, OH
  • Discovery Behavioral Health, a nationwide leader in mental health services, has acquired Authentic Recovery Center (ARC), located in West Los Angeles, CA

CLOSED by Stoneridge

  • Stoneridge Partners, Partner Joe Lynch represented a South Carolina hospice agency that closed December 2019
  • Stoneridge Partners, Partner Ben Bogan represented a Pennsylvania home health agency that closed November 2019

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.

 

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Home Health Index December 2019 | 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

Please follow us on Facebook  and Linkedin

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Available Opportunities 12/5/19

AGENCIES FOR SALE

  • Rare opportunity, large MAT/Suboxone provider
  • 1400 patients, 3 offices
  • Great reputation, strong management
  • $2.5 million revenue, $1.2 million AEBITDA
  • $11 million revenue
  • Multi-location addiction treatment center
  • Southern California
  • 21% bottom line
  • Strong growth trends
  • JCAHO accredited
  • $5.3 million Medicaid agency in San Antonio, TX
  • 16.5% EBITDA
  • CHAP accredited
  • Staff in place for a smooth transition
  • $3.5 million Medicare certified home health agency
  • Located in San Antonio, TX
  • Fully staffed & CHAP accredited
  • Branch office included in sale

 

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Home Health Index | 2019 NOVEMBER UPDATE

Home Health Stocks Slump in October – But Likely Not for Long

Home Health Stocks Slump in October — But Likely Not for Long

 Home health stocks were down across the board in October, according to the latest Home Health Index (HHI) from Stoneridge Partners. That’s likely to change soon, however, thanks largely to the better-than-expected final payment rule for calendar year 2020, released by the Centers for Medicare & Medicaid Services (CMS) on Oct. 31.

The monthly HHI from Stoneridge Partners tracks the stock values of Amedisys Inc. (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG), two of the largest publicly traded home health companies in the U.S.

Stock values for Baton Rouge, Louisiana-based Amedisys were down 2.21% in October compared to September. Meanwhile, stock values for Lafayette, Louisiana-based LHC Group were down 2.98% in October compared to the previous month.

Those performances led to an HHI that was down 2.57%, marking one of the relatively rare instances this year when home health stocks fell behind the broader market. The S&P 500 was up 1.77% in October over September.

Already, stock values for Amedisys and LHC Group are showing signs of a November turnaround, rallying after CMS recently released the 2020 final rule.

“When CMS released the final rule, it also lowered the behavioral adjustment included in the Patient-Driven Groupings Model,” Stoneridge Partners President Rich Tinsley said. “Specifically, they reduced the behavioral adjustment from 8.01% to 4.36%. That’s still a hefty cut, but a much more manageable one, especially for the big home health providers like Amedisys and LHC Group.”

In addition to the decreased behavioral adjustment, Amedisys and LHC Group also stand to gain from CMS’s decision to eliminate home health pre-payments, which many smaller providers use to stay in business.

“Phasing out the Request for Anticipated Payment (RAP) is likely going to create a lot of M&A opportunities for the major home health players moving forward,” Tinsley said.

While it does not include the company in its monthly HHI, Stoneridge also tracks the stock performance of Frisco, Texas-based Addus HomeCare Corporation. Unlike Amedisys and LHC Group, Addus stock climbed 5.96% in October compared to September.

Despite the down month, the HHI was up still up 13.89% on a year-to-date basis, according to Stoneridge.

Quote Of The Month

“We need to define what palliative care is in the marketplace and whether it’s a community-based palliative care benefit, and it can’t be that you ask 10 different people what palliative care is and you get 13 different answers,” said Nick Westfall, CEO of VITAS Healthcare, the hospice subsidiary of Chemed Corp.

Read the Full Article Here:  Lack of Palliative Care Definition Impacts Patients, Hospice Business

 

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 November 2019 | Stoneridge Partners)

 

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

Company 10/31/19 1 mos change YTD change 10/31/18 10/31/17
Amedisys 128.52 -2.21% +10.00% 111.2 46.45
LHC Group 110.97 -2.98% +18.76% 89.06 66.55
HH Index* 119.75 -2.57% +13.89% 100.13 53.13
S&P 3037.56 +1.77% +21.72% 2722.05 2575.5
Addus 84.21 +5.96% +23.73% 65.79 35.3

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) 10/31/19 10/31/18 10/31/17
Amedisys 4570 3570 1660
LHC Group 3970 3220 1300
HH Index Total 8540 6790 3712
Addus 1110 744 444


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

Company 10/31/19 10/31/18 10/31/17
Amedisys 242% 226% 114%
LHC Group 195% 238% 135%
HH Index Average* 219% 232% 118%
Addus 197% 163% 108%


Multiples of EV/EBITDA

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

Company 10/31/19 10/31/18 10/31/17
Amedisys 24.12 23.66 15.8
LHC Group 19.53 31.19 14.13
HH Index Average* 21.83 27.43 16.19
Addus 26.87 20.62 13.3

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 for its reporting. (Home Health Index November 2019 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Optalis Healthcare acquired five Beaumont-affiliated nursing facilities to expand in SE Michigan
  • Discovery Behavioral Health, a national mental health services provider based in Orange County, California acquired New Life Addiction Counseling & Mental Health Services, an outpatient treatment facility near Baltimore
  • Missouri Home Hospice, LLC acquired Missouri-based Transitions Hospice

CLOSED by Stoneridge

  • Stoneridge Partners, Associate Partner Coley McDevitt represented a $3.5 million private care home health business in Miami, Florida that closed October 2019

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.

 

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Home Health Index November 2019 | 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

Please follow us on Facebook  and Linkedin

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Available Opportunities 11/7/19

AGENCIES FOR SALE

  • Medicare home health and hospice agency
  • $10 million annual revenue
  • Attractive referral relationships
  • Very rare opportunity in a CON State
  • Located in Davidson County in Nashville, TN
  • Projected 2019 revenue in excess of $800,000
  • $5.3 million Medicaid agency in San Antonio, TX
  • 16.5% EBITDA
  • CHAP accredited
  • Staff in place for a smooth transition
  • $3.5 million Medicare certified home health agency
  • Located in San Antonio, TX
  • Fully staffed & CHAP accredited
  • Branch office included in sale

 

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Available Opportunities 10/24/19

AGENCIES FOR SALE

  • Suboxone only Medication-Assisted treatment center
  • Strategic location between Louisville and Lexington, Kentucky
  • Great reputation with strong clinical team in place
  • 110 clients with room to expand and grow, minimal marketing
  • In-network contracts
  • Clients come in twice a month and pay $150 per visit for counseling
  • Owners are near retirement and will help with the transition
  • LHCSA in five boroughs
  • Approx. $20 million revenue
  • Long history in the community
NEW TENNESSEE: Stoneridge File #SCM-8651
  • Small Medicare home health agency includes Davidson County
  • $5.3 million Medicaid agency in San Antonio, TX
  • 16.5% EBITDA
  • CHAP accredited
  • Staff in place for a smooth transition
    Medicare home health agency and hospice

  • San Antonio, Dallas, Austin
  • $3 million revenue, multiple provider numbers
  • Great opportunity for existing Texas providers
  • $1.5 million private duty home health agency
  • Located in eastern Michigan
  • Profitable and well positioned for additional growth
  • Annualized AEBITDA $186k
  • Self-sufficient staff in place
  • 82 long-term clients
  • Motivated seller
  • $3.5 million home care company
  • 100% Medicaid
  • Houston based
  • 20%+ year over year revenue growth since 2016
  • Nice bottom line

 

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Home Health Index | 2019 OCTOBER UPDATE

Amedisys Bounces Back While Other Home Health Stocks Dip in September

Amedisys Bounces Back While Other Home Health Stocks Dip in September

The Stoneridge Partners Home Health Index (HHI) for September shows Amedisys, Inc. (Nasdaq: AMED) made up some of the ground it lost in August, despite a continued downward trend in the greater home health market.

Stoneridge Partners bases its monthly HHI on the stock values of Baton Rouge, Louisiana-based Amedisys and Lafayette, Louisiana-based LHC Group, two of the largest publicly-traded home health companies in the country. The M&A firm also tracks the performance of Addus HomeCare Corporation (Nasdaq: ADUS) stocks, but does not include the Frisco, Texas-based company in its final HHI calculations.

While Amedisys stock was up just more than 2%, LHC Group stock was down nearly 3.6% – leading to slight overall dip of almost 0.6% for home health stocks in September. But that figure also excludes a nearly 10% decline for Addus stock in September, giving back its impressive August gains and then some. In comparison, the S&P 500 rose in September, up nearly 2% from the prior month.

With a bevy of big news coming from Amedisys in the past several weeks, the success of its stock price isn’t surprising. The company announced a new agreement in July with ClearCare to develop a nationwide network of personal care partners, making it an attractive partnership target for Medicare Advantage plans. Then last month, news broke that Amedisys had entered a new partnership with Walmart to expand home health care access nationwide.

Some turmoil within the home health industry as 2020 approaches is also to be expected, according to Stoneridge Partners President Rich Tinsley.

“We’re inching closer to the Patient-Driven Groupings Model, which is making a lot of people nervous,” Tinsley said. “Even these big providers are going to be affected by it because PDGM is the biggest reimbursement shift the industry has seen in decades — and it could come with an 8% payment cut.”

Still, despite the uncertainty of a new payment model, home health stocks were up year-over-year and year-to-date in September. Stocks values tracked by the HHI have increased almost 9% compared to September 2018, and almost 17% since the start of this year. Additionally, Addus was up more than 14% year-over-year and almost 16.5% year-to-date in September.

Quote Of The Month

“One of the ways that digital solutions for behavioral health issues can reduce stigma is that it can be experienced in complete privacy, and it can make treatment for behavioral and emotional health issues much more accessible,” – Ellen Beckjord, associate vice president of population health and clinical affairs at UPMC Health Plan.

Read the Full Article Here:  The future of health care: How digital behavioral health interventions can support your workforce

 

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 October 2019 | Stoneridge Partners)

 

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

Company 9/30/19 1 mos change YTD change 9/30/18 9/30/17
Amedisys 131.36 +2.06% +12.43% 123.61 55.96
LHC Group 114.28 -3.56% +22.30% 101.98 70.92
HH Index* 122.82 -0.64% +16.82% 112.80 60.19
S&P 2983.69 +1.96% +19.57% 2924.87 2519.36
Addus 79.19 -9.99% +16.35% 69.29 35.3

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) 9/30/19 9/30/18 9/30/17
Amedisys 4390 3990 1928
LHC Group 3980 3520 1402
HH Index Total 8370 7510 4226
Addus 1070 857 438


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

Company 9/30/19 9/30/18 9/30/17
Amedisys 242% 252% 131%
LHC Group 195% 260% 144%
HH Index Average* 219% 256% 133%
Addus 188% 188% 106%


Multiples of EV/EBITDA

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

Company 9/30/19 9/30/18 9/30/17
Amedisys 24.41 26.45 22.77
LHC Group 19.57 34.08 15.18
HH Index Average* 21.99 30.27 20.05
Addus 25.72 23.75 13.44

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 for its reporting. (Home Health Index October 2019 | Stoneridge Partners)

Recent Transactions From Around The Country

  • TEAM Services, which is backed by Alpine Investors, has acquired AmeriBest Home Care, a portfolio company of Boyne Capital
  • Appriss Health, provider of the most comprehensive platform for opioid stewardship and substance use disorder (SUD) in the U.S. acquired OpenBeds
  • Arosa+LivHOME acquired LifeLinks, a provider of Aging Life Care services in North Carolina and Tennessee
  • Three Oaks Hospice acquired Total Hospice & Palliative Care, ABS Palliative and Hospice Care and Fellowship Hospice
  • Community Psychiatry Management, the largest outpatient mental health organization in California acquired Calabasas Behavioral Health and Gelbart and Associates

CLOSED by Stoneridge

  • Stoneridge Partners represented an Oklahoma based agency that closed October 2019
  • Stoneridge Partners represented an Illinois based agency that closed September 2019

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.

 

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Home Health Index October 2019 | 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

Please follow us on Facebook  and Linkedin

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Available Opportunities 10/9/19

AGENCIES FOR SALE

  • $4 million home health company
  • Dallas/Fort Worth based
  • Full staff in place
  • Medicare and managed care with great contracts
  • $3.5 million home care company
  • 100% Medicaid
  • Houston based
  • 20%+ year over year revenue growth since 2016
  • Nice bottom line
  • $1.7 million Medicare home health agency
  • Southwest Houston
  • Well-established with predictable referral sources
  • Very profitable
  • Medicare certified home health agency
  • District 10
  • Census: Minimal
  • Accredited

Conference News:

Brian Bruenderman, Partner and Executive Vice President of Stoneridge Partners is speaking at the National Association for Home Care & Hospice Conference in Seattle, Washington on Monday, 10/14 at 4:30 pm in Room 6E.  

 

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5 M&A Stakeholders and The Roles They Play

Similar to any major production, the M&A process requires that the right people are in the right places, and at the right time. Veteran deal makers understand that involving the right stakeholders at the proper time can have a significant impact on the M&A process, and possibly the ultimate value of the deal. For small and medium businesses who don’t regularly engage in merger and acquisitions activity and figuring out who should do what and when can become overwhelming. However, it’s essential to get this part of the process right from the beginning.

Five Merger & Acquisitions Stakeholders Groups

  • C-suite
  • Business unit leadership
  • Transaction lead
  • Corporate development
  • External advisors

Before engaging in any M&A activity, it’s essential to know who sits in the above groups.

The C-suite

The CEO and other c-suite executives will collectively make up the Investment Committee (IC). The IC is the ultimate decision-makers and retains responsibility for the success or lack thereof for every transaction.

The IC is responsible for ensuring that the right people are in the right seats in the other groups. They assist the various groups in maintaining focus and discipline throughout the process. The M&A deal process quickly gets messy if someone doesn’t help the aligned teams. The IC is the force which encourages teamwork and focuses on the objective.

The Business Unit Leadership

Once a transaction is complete, the newly acquired entity will be operating within the buyer’s organization. The majority of the time, this takes the form of working under an existing unit. The business unit team should be involved early in the process to provide strategic guidance. This includes when it will be time to pursue M&A activity and when to hold off.

The Corporate Development Team

The corporate development team is involved in the merger & acquisitions process from the beginning. For several acquires, a dedicated team may exist with the sole task of completing deals. For smaller entities, the corporate development team may be assembled when needed and disbanded once the deal is complete.

The Transaction Lead

If you’re are pursuing a transaction with the hopes of realizing such synergies, then be sure your transaction lead is involved in the process. The lead’s job is to help finalize the deal and facilitate integration. If you think your deal ends when documents are signed, and a wire is sent, then think again. The integration process can make or break the synergies that caused you to pursue the deal in the first place.

The External Advisors

You and your company are likely very talented, but most likely, you won’t have all the answers during the M&A process. Your outside advisors such as CPA’s, lawyers, and other deal makers may be able to provide valuable insight. It’s crucial that you seek out their assistance to make sure you’re going down the right path. Ask your advisors early on and throughout the process. They can help you to identify red flags, pitfalls, and good opportunities.

Conclusion

Running a proper M&A deal process requires discipline and having the right people in the appropriate seats. If you’re are new to the world of merger &acquisitions, learn as much as you can from successful deal makers. For smaller companies going down the path for the first time, it’s essential not to overlook specific parts of the process or make false assumptions. Build a quality team, seek outside advise, and be sure to learn from your experiences.

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Home Health Index | 2019 SEPTEMBER UPDATE

Amedisys, LHC Group Stocks Trend Downward in August

Amedisys, LHC Group Stocks Trend Downward in August

Home health stocks took a hit in August according to the Stoneridge Partners Home Health Index (HHI). Amid volatility in the broader market, stock values tracked by the Stoneridge HHI were down nearly 4.4% compared to the previous month. The S&P 500 was down just over 1.8%.

The Stoneridge Partners HHI monitors the stock values of Baton Rouge, Louisiana-based Amedisys, Inc. and Lafayette, Louisiana-based LHC Group, Inc., two of the country’s largest independent and publicly-traded home health companies. The mergers and acquisitions advisory firm also tracks but does not include stock values for Addus HomeCare Corporation in its final HHI calculations.

Amedisys (Nasdaq: AMED) stock values saw the biggest dip in August, down 4.7% compared to July. Still, the home health provider remains up nearly 3% year-over-year. LHC Group (Nasdaq: LHCG) stock was down nearly 4.1% compared to the previous month — but it still outpaced its performance in August of last year by nearly 19.8%.

The lone bright spot in August was Addus (Nasdaq: ADUS), stealing the show with an 8.6% increase in stock values month-over-month, and nearly 35.6% year-over-year.

“Companies released their second quarter results at the beginning of August, so that could have temporarily affected the continued growth we’ve seen from Amedisys and LHC Group,” Stoneridge Partners President Rich Tinsley said. “Plus, as Medicare-reimbursed providers, they are facing a host of regulatory changes in the months to come. That uncertainty might have been a factor. Addus, on the other hand, does mostly Medicaid-reimbursed home care — plus, it has Medicare Advantage changes working in its favor. So they may have been better positioned in August to continue leading the recent charge for home health stocks.”

Year over year, home health stocks were up about 10.4% while the S&P 500 was up less than 1.5%, according to the Stoneridge Partners HHI.

Quote Of The Month

“We shouldn’t be treating mental and physical health as two completely separate things. The way we tend to respond to psychological health issues is quite different from our responses to physical health issues. As a society, we don’t train proactively about mental health issues. We don’t teach early prevention strategies. There seems a lot of discomfort and stigma around people who disclose they have psychological health issues.” – Shelley MacDermid Wadsworth, Professor of human development and family studies and director of the Military Family Research Institute of Purdue

Read the Full Article Here:  Supporting the mental health of military personnel, families and veterans in times of war

 

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 2019 | Stoneridge Partners)

 

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

Company 8/31/19 1 mos change YTD change 8/31/18 8/31/17
Amedisys 128.71 -4.70% +10.16% 125.01 52.24
LHC Group 118.5 -4.06% +26.82% 98.93 65.25
HH Index* 123.61 -4.39% +17.56% 111.97 55.40
S&P 2926.46 -1.81% +17.27% 2884 2471.65
Addus 87.98 +8.55% +29.27% 64.90 34.05

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) 8/31/19 8/31/18 8/31/17
Amedisys 4490 3980 1719
LHC Group 4130 3430 1299
HH Index Total 8620 7410 3845
Addus 1150 804 424


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

Company 8/31/19 8/31/18 8/31/17
Amedisys 248% 252% 116%
LHC Group 203% 253% 134%
HH Index Average* 226% 253% 122%
Addus 203% 176% 103%


Multiples of EV/EBITDA

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

Company 8/31/19 8/31/18 8/31/17
Amedisys 24.92 26.41 20.3
LHC Group 20.33 33.19 14.06
HH Index Average* 22.63 29.80 18.28
Addus 27.74 22.30 12.99

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 for its reporting. (Home Health Index September 2019 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Unilever acquired Bolivian’s Personal and Home Care Business Asterix
  • Addus HomeCare Corp. acquired Hospice Partners of America LLC, which has 21 locations in Texas, Idaho, Kansas, Missouri, Oregon and Virginia
  • St. Paul, Minnesota based St. Croix Hospice acquired Hometown Hospice & Homecare
  • Care Advantage Inc., a Chesterfield County-based home health provider acquired Allegiance Home Care

CLOSED by Stoneridge

  • Stoneridge Partners, Partner Joe Lynch, assisted with the partnership of CAP Funds and Bayou Home Care in August 2019
  • Stoneridge Partners represented a New Mexico based  agency that closed August 2019

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.

Conference News

Brian Bruenderman, Partner and Executive Vice President of Stoneridge Partners is speaking at the National Association for Home Care & Hospice Conference in Seattle, Washington on Monday, October 14, 2019 at 4:30 pm in room 6E.

Another Cartoon Favorite 

   

 

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Home Health Index September 2019 | 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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Available Opportunities 9/18/19

AGENCIES FOR SALE

NEW NORTH CAROLINA: Stoneridge File #SBB-4927
  • $5 million Medicaid agency
  • CAP/PCS services
  • Long history, quality services
  • $2 million ID/DD
  • Profitable
  • Existing management team in place
  • Greater Detroit area
  • Opportunity to establish Medicare home health agency
  • Denver market
  • ACHC accreditation until 2022

Conference News:

Brian Bruenderman, Partner and Executive Vice President of Stoneridge Partners is speaking at the National Association for Home Care & Hospice Conference in Seattle, Washington on Monday, 10/14 at 4:30 pm in Room 6E.  

 

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