This article is sponsored by health care mergers and acquisitions (M&A) advisory firm Stoneridge Partners. In this Voices interview, Home Health Care News sits down with partner Ben Bogan and learns how the health care M&A market has shifted since the start of the COVID-19 pandemic, why some buyers have remained aggressive throughout the pandemic and why now is a good time to sell a home health care agency.

HHCN: In March, we interviewed your partner Joe Lynch in this series, just when COVID-19 was taking shape in the U.S. It was unclear at that point what impact the pandemic would have on health care M&A, but we have a clearer picture now. How has your outlook for buyers and sellers – and the insights you provide to them – changed these past four months?

Bogan: I don’t think the picture is much clearer now, because we’re still in the midst of dealing with COVID and so much is still up in the air and very fluid. The pandemic uncertainty made a number of buyers go on pause initially. I think they needed to stop, assess the situation and figure out what this was going to mean for them.

Most buyers we deal with are strategic. They needed time to focus their attention on their own operations. A lot of them put their M&A efforts on pause to work their way through the COVID situation and see how things played out before they were ready to get moving again.

Despite this, a smaller number of buyers decided to stay very aggressive during this time. They doubled down and committed to doing deals and because of that, we’ve seen a very active M&A space. It’s certainly been a smaller number of buyers, but they’ve accounted for significant activity.

Before this latest resurgence of COVID, I had many buyers who reached back out to say that they were ready to get moving again. They were ready to fill their pipelines and get deals going with the hopes of closing some transactions in 2020. Since those calls, we’ve seen a resurgence in the virus, so we’ll see if they’re rethinking their intentions at this point. Regardless, we still have a pool of buyers who are very aggressive.

 

For the aggressive buyers, is their aggressiveness combined with fewer buyers overall proving to be a winning strategy?

They’re getting deals done, but I think the real question is if those other buyers hadn’t paused their activity, would they have created a more competitive process? That’s an interesting question.

What I can tell you is that the aggressive buyers have full pipelines, are moving forward and getting deals done. Would they have fewer deals in their pipelines if the other buyers weren’t on pause? It’s hard to tell.

 

In light of what you’ve described, how are you advising sellers?

Keep in mind that not all sellers — and not all of our clients — look the same. They’re in different geographies, they’re in different service lines, they’re different sizes and they have different strengths. So, depending on their unique circumstances, the advice is always going to look different.

But in general, if you have a strong business and you’re interested in engaging with a potential buyer, COVID may impact negotiations but it isn’t necessarily a deal-breaker. I’m glad to discuss a seller’s specific situation to understand whether now would be a good time to engage in conversations with potential buyers.

 

You’re an attorney by education and training. What are the specific benefits of the legal background with regards to M&A health care transaction work?

A legal education provides a strong background of universal skills that help you operate in any industry including the M&A space, health care-related or not. It helps you develop strong writing and research skills to assist in understanding and managing complex issues. Regarding M&A work, my background helps me with negotiating terms and understanding legal documents.

 

What are smart sellers doing right now? What should they watch out for?

Owners should be focusing on providing quality care and surrounding themselves with good staff and advisors. They should focus not only in the business but on the business. Good financials are also key.

When it comes to a potential transaction, there are some things that are out of an owner’s control – geography, buyer interest at any particular time, etc. But if you’re running and building a strong business clinically and financially, with a strong team in place, there will always be interest from buyers.

And when the time comes, they should engage a good M&A advisor. The process is long, and an owner needs to continue to focus on their business without distraction. You’re looking at a six-to-12-month process, and you don’t want the business to falter during that time.

 

For potential sellers, is now a good time to sell?

The question should be, “Is now a bad time to sell?” There are certainly COVID-related issues impacting the M&A space, but as I said before, every situation is unique. Because of the aggressive buyers we discussed and the desire for buyers that were earlier on pause to get going again, we’re seeing a lot of deal activity.

 

But is it a good time?

Every situation is unique, but with active buyers, a market ripe for consolidation, and some experience with dealing with COVID under everyone’s belts, now might actually be a great time to consider selling. It’s certainly not a bad time to engage with potential buyers, or with advisors who can help you make sure your business is ready for a future transaction.

 

Editor’s note: This interview has been edited for length and clarity.

Stoneridge Partners is a national health care mergers and acquisitions advisory firm specializing in the brokerage of home care, home health, hospice and behavioral health companies. For more information about their services, contact their corporate office at 800-218-3944 or via email at [email protected]

The Voices Series is a sponsored content program featuring leading executives discussing trends, topics and more shaping their industry in a question-and-answer format. For more information on Voices, please contact [email protected]

To view the original article please click here

 

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COLLEGE STATION, TexasSept. 17, 2020 /PRNewswire/ — Traditions Health, LLC (“Traditions”), a multi-state hospice and home health provider, announced that it has acquired Physician’s Choice Hospice (“Physician’s Choice”) and Palladium Hospice and Palliative Care (“Palladium Hospice”).   These acquisitions will allow Traditions to provide a high quality of clinical care to a broader base of patients.

The acquisition of Physician’s Choice and its five locations in Oklahoma, alongside the recent acquisition of Faith Hospice, make Traditions a leading hospice provider in the state. “We are excited to be joining the Traditions family with its strong leadership team, highly regarded brand and leading Oklahoma industry position,” said Ginger Barsotti, Founder and President of Physician’s Choice.  “Building this company from the ground up has been one of the greatest joys of my life. This partnership will allow us to support our long-term growth initiatives, predicated on our rich history as a private company with a dedicated and loyal employee base.”

The acquisition of Palladium Hospice strategically strengthens Traditions’ footprint in the southeast.  In acquiring Palladium Hospice, Traditions is adding six locations in South Carolina and two in Mississippi.  Traditions is also bolstering its existing Georgia footprint. “We are proud to integrate our company’s experience and leadership into Traditions and helping them fortify their presence in the southeast. We look forward to joining the Traditions team,” said Diane Parker, CEO and President of Palladium Hospice.

As a leading provider of hospice and home health services, Traditions offers skilled nursing, therapy services, and both physical and spiritual end of life care. The announcement was made by Bryan Wolfe, the President and CEO of Traditions.  “I am extremely excited to expand our services to South Carolina and Mississippi and strengthen our existing presence in Oklahoma and Georgia. This is an enormous accomplishment for our organization, and we could not be more excited to welcome the employees and patients of both Physician’s Choice and Palladium Hospice into the Traditions family,” said Mr. Wolfe.

Infinity Capital Partners acted as the sell-side advisor to Physician’s Choice Hospice. Stoneridge Partners acted as the sell-side advisor to Palladium Hospice.

About Traditions Health
Headquartered in College Station, TX, Traditions Health is a leading provider of hospice care, home health care, consulting services and online policy manuals. The company provides care to over 3,250 patients across seven states. The company has recently been named to the 2020 Inc. Magazine’s Inc. 5000 list of fastest-growing businesses. Traditions Health is a portfolio company of Dorilton Capital. For more information, visit our website at www.traditionshealth.com.

About Dorilton Capital
Dorilton Capital is a private investment firm seeking to acquire, recapitalize and support the growth of middle market businesses across a range of industry sectors. Dorilton seeks control situations and prefers to partner with incumbent management to create value over the long term.  Please visit www.doriltoncapital.com.

For media inquiries or relevant opportunities, please contact [email protected]

SOURCE Traditions Health, LLC

Related Links

http://www.traditionshealth.com

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You’ll be speaking at Home Health Care News’ upcoming Capital + Strategy conference. Who is Capital + Strategy for – who should be thinking about adding this to their list of conferences to attend next year?
Capital + Strategy is sponsored by Home Health Care News, and it covers a whole spectrum of issues affecting home health and hospice providers. It’s for anyone who wants to know what’s going on in our industry, anyone who wants to know more about current trends. It’s one to keep an eye on for next year; this year’s event is already sold out.

 

What will you be discussing at Capital + Strategy?
I’ll be talking about the current state of the mergers and acquisitions industry, trends we’re seeing in 2020, and what kind of inventory is out there in home health and hospice from a deal perspective. It will be an update on the market generally and current deal flow.

 

Do you think mergers and acquisitions activity in any particular market segment will be “hotter” than the others in 2020, and if so, why?
I think hospice M&A will continue to be extremely hot, which is really a function of supply and demand. There are more providers who want to get into the hospice market than there are available hospice agencies for sale, so it’s a sellers’ market. Valuations and prices are very robust right now – and that’s just a continuation of something we’ve been seeing for the past couple of years.

 

In your recent M&A experience, have you noticed operators seeking to add different service lines in order to expand their continuum of care, or are they just looking to grow existing service lines? Which do you think will be most prevalent in 2020 and why?
Buyers are still seeking to add both to existing service lines and to expand services. But if you look back 15 years ago or so, providers were much more siloed. We are seeing more buyers who are looking to provide a continuum of services – episodic services, intermittent services, palliative and end-of-life care. They’re looking to build capacity in post-acute community care and crossing historical business lines. Many still want to increase their scope across geographies, but now we see more buyers trying to build size within one geography by investing in new services and growing their market penetration.

 

We’re two months into PDGM – what are you hearing from your industry contacts about how it’s affecting operators so far? How do you think it will affect M&A activity in 2020?
It’s still early, but from an operations perspective it is definitely having an impact. As far as how it will impact provider cash flow, we probably won’t know that until the end of this month, possibly even April or May. Providers still have cash coming in from the end of 2019, so any interruptions in cash flow probably haven’t hit the bottom line yet. I do think it’s had less of an impact, however, than the new regulations on skilled nursing facilities. I think we’re just in a wait-and-see mode right now. Providers are still just working hard and waiting to see how it all comes out – to be determined.

 

Has PDGM had a different effect on smaller providers vs. larger providers? If so, how?
I think from an M&A perspective, PDGM is going to create a bigger divide between the small and medium-sized providers and the larger providers. Impacts to cash flow may limit smaller providers from investing in growth opportunities, and reductions in RAP payments may convince some smaller agencies to sell. Newer transactions have been a little slow to come to market because everyone’s waiting to see what the valuations will look like. But I still think 2020 will be a good year for M&A, particularly a little later in the year.

 

Signs seem to indicate that the next step will be a unified post-acute care payment system. Is that on the horizon, in your opinion? If so, what do you predict the affect will be on the in-home care industry?
We’ve been talking about unified payments for a long time, and I think it will stay part of the conversation, but it’s probably three or more years out from being a reality. It’s going to take a lot of work to put such sweeping changes into place, but I think we’re heading in that direction – if we can get there. It’s not a sure thing. I think it’s probably the right way to go, but we won’t be there for likely three to five years.

 

If you’re in the early stages of determining the next steps for your home care, home health or hospice business or potentially considering a sale, where should you start?
If your horizon is less than five years at this point, I would start looking around the market now, because valuations are high and the future is uncertain. It’s time to be looking at potential exit strategies, or perhaps opportunities for partnerships. Reach out to people who do the kind of work we do at Stoneridge to begin managing your future – should you enter the buyers’ market and grow? Should you sell and move on? The time is right to ask. Staying the same may not be a viable answer with potential reimbursement changes like unified payments in our future. Now is the time to maximize your current value.

 

What is something operators are surprised by/don’t know/don’t expect about the M&A process?
It sounds simple, but the first thing sellers need to be sure of is that they really want to sell. It can be an emotional process – in many cases, sellers have put their lives and souls into their businesses, so you have to be sure you’re ready for the ups and downs of the negotiation process. And a lot of sellers are surprised at how intense that negotiation process can be. You’re not selling a house or a car – every transaction is different. These transactions are not cookie-cutter. Each one is multi-faceted and every distinct piece has to be negotiated. There’s a lot more to it than just finding a buyer, it’s finding the right buyer and negotiating the right terms. It can be a very time-consuming process. But that’s why I love the work we do at Stoneridge – we get to walk providers through this process step by step, advocate for them during negotiations and answer all their questions. We’re the advisors they can trust to help them achieve their goals.

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Senior Vice President and Associate Partner Talks About Challenges Facing ID/DD Providers and Effects of COVID-19 on Market Activity

You bring years of experience in working with Intellectual Disability/Developmental Disability (ID/DD) providers to Stoneridge. Tell us a little bit about your background.
I’ve spent more than a decade working in the ID/DD industry, most recently as the Vice President for Business Development at BrightSpring, formerly known as ResCare. I’ve done a little bit of everything – pipeline building, financial analysis, deal structuring, and integration. Deals I’ve helped to close range in revenue size from $500,000 to more than $40 million.

 

Obviously, the spread of coronavirus is on everyone’s minds. How do you see COVID-19 affecting ID/DD providers? Which of the changes they’re making in response to the virus are short-term vs. long-term? Are there any silver linings for ID/DD providers as the country grapples with the outcomes of this pandemic?
In the short-term, I think they’ll be dealing with the same problems facing all other healthcare providers – specifically, lack of PPE and figuring out how to provide their services in close confines while maintaining safety for staff and individuals. Additionally, they’ll have to contend with industry-specific issues, like lack of reimbursement for day supports and reduced availability (if at all) of non-medical transport and drop-in services.

 

Over the long-term we need to have a conversation about emergency preparedness. There needs to be a push for legislation providing alternative billing and funding mechanisms in the event of a pandemic. And we need to be thinking about cross-training staff to fill multiple roles, especially for residential/day supports.
I think if there’s a silver lining, it’s that in an industry where the biggest challenge for a long time has been recruiting and retaining Direct Support Professionals (DSPs), there has been a huge influx in employment applications from people with previous experience in food service, hospitality, manufacturing, etc. We have an opportunity to increase the workforce dramatically.

 

Beyond COVID-19 – what do you see as the biggest challenge facing the ID/DD field in 2020?
Just because we’re seeing an increase in employment applications today doesn’t mean we’re out of the woods. Retaining quality staff when the economy “opens back up” will still be a challenge. With stagnant reimbursement and ever-increasing fixed costs, it’s a challenge to pay staff what they’re truly worth in this industry. When Amazon can pay $3 to $5 more per hour than we can afford to pay DSPs who care for some of our most vulnerable citizens, there’s a problem.

 

Value-based care and coordination of care across a spectrum of services are hot topics among a variety of different healthcare industries – how do those conversations touch the ID/DD world?
We’ve seen several states go to managed care organization (MCO) models over the past five years, and I would expect to see that trend continue. Traditionally this leads to further consolidation and merger activity, and ultimately fewer providers in a state.

 

The market for ID/DD providers has been strong over the past few years – do you see that continuing in 2020, and if so, why?
With increasing state regulation, calls for more technology and reporting capabilities, the introduction of MCO models and stagnant reimbursement, I think the trend will only increase going forward. There has never been this much strategic interest, or so many financial/private equity buyers in the space.

 

If someone is thinking about selling an ID/DD agency right now, what do they need to know? What advice would you give them based on your knowledge of the market and understanding of the industry?
Right now, there are two main types of transactions occurring – “platform” acquisitions and “add-on” acquisitions. Platforms are typically $8-10 million in annual revenue, meaning most ID/DD providers are going to fall into the latter category. There are definitely different strategies for both of these kinds of companies when preparing for a sale, so sellers who turn to experienced advisors with a good understanding of those strategies will likely get better results. That’s our job – we’re here to help interested sellers get the information they need to start off on the right foot.

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When it comes to selling a home health care business, one of the hardest parts is often deciding on an accurate, unbiased value. The problem here is that you, as the business owner, will likely factor in things such as hard work, whereas a potential buyer won’t take this into account when examining the price of your home health care business for sale.

So, to make things easier all around, how do you accurately evaluate your home health care business? Which methods work the best? Here are a few of the tried and true methods that professionals use in today’s market.

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How to Value A Home Health Care Business

Liquidation Value Method

At its most basic, the liquidation value is the overall amount a person would receive for selling their business assets in an open market. Unfortunately, assets like used beds and furniture do not create much of a value for owners.

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Income Capitalization Method

Most applicable for larger businesses, this method is essentially the final result of dividing the expected business earnings by the capitalization rate. The idea behind this method is that the value is defined by the earnings and the capitalization rate is what’s used to relate the two factors.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

“Rule of Thumb” Method

This method of valuation is a very general method. The valuation is done based on what the buyer can expect to generate if it continues to run and generate income the way it has been historically. This method is a good place to start but is too general to go off indefinitely, so it’s good to use another method alongside this one.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Discounted Cash Flow Method

This method is one of the most accurate methods. It uses business value estimation that is based around both businesses earning power and risk. It also considers the projected income stream of a business and is ideal for businesses that have high growth.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Market Comparison Method

The market comparison valuation method is used widely among both experts and individuals, as it is said to be a great reflection of what a business is truly worth. This method uses a direct comparison between the sales of one business and the sales of similar businesses to generate a relatively accurate value.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Multiple of Discretionary Earnings Method


Using a business’s earnings and 14 operational and financial performance and risk factors, the MDE method is best suited for small businesses. The method is based on income and lets owners in on the ways in which various factors affect the value of their business. It can be used as a value measurement and business assessment tool.

There are a number of methods to choose from when coming up with a value for your small home health care business. The method that works for you will depend on your goals, financial history, assets, and business growth rate. Some are better for small businesses and others for larger businesses, which is something to consider when deciding which method to use from the ones suggested above.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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Selling any business can be daunting – but listing your home health care business for sale can be even more so. Many sellers fall victim to basic mistakes, which end up costing them dearly. To help you avoid these unfortunately common mishaps, here are 5 to look out for.

Telling your clients too soon

For your home health care clients, whom you’ve likely grown an attachment to, and who have grown to care for you, the sale of your business can be an upsetting time. With the sale comes many changes, which can be hard on the clients who depend on you.

Once you’ve secured a sale, you might be eager to share the news with your clients, if only to essentially “rip the band-aid off”. While this is a step you need to take eventually, telling the clients too soon is a mistake that many sellers make.

Sharing the information too soon can cause undue stress, so to avoid it, share the information later on in the sale process. By this time, you’ll know more and have a timeline to share.

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Breaking client confidentiality

When speaking with a potential buyer, it’s easy to slip up and reveal confidential client information. This is a mistake that can be made too easily but can have large legal consequences.

You’ll need to ensure that you don’t reveal too much about your clients until the sale has gone through and been confirmed.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Letting rumors loose

Rumors can run rampant throughout a business. In doing so, they can cause stress and unrest among employees and management.

Try to avoid leaking the potential of a sale until the decision has been made indefinitely. Then, you can speak with your team when you’re ready and prepared to deal with the situation instead of being blindsided with an uncomfortable conversation.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Neglecting risk management

Selling your home health care business should always include risk management consideration. Yes, you’re selling your business. However, this doesn’t mean that you’re no longer liable for your clients.

Take care to ensure that their privacy and care records are dealt with responsibility after the sale. You might also want to ensure that you have access to records in case a complaint about past care comes up.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Being unsure

One of the most critical mistakes you can make selling your business is to be unsure. Selling is a big decision and as such, it shouldn’t be taken lightly or rushed. You should also take ample time to consider every aspect of the process and what they mean.

In addition, one you do make the final call to sell, you should take time to ensure you have everything in order. This will make the entire process easier and ensure fewer setbacks and lost money.

With the right strategies and intent, selling your carefully built home health care business can be a huge financial gain – not to mention a weight off your shoulders. It should be done carefully, though, with tons of attention paid and with the most common mistakes avoided.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container hundred_percent=”no” hundred_percent_height=”no” hundred_percent_height_scroll=”no” hundred_percent_height_center_content=”yes” equal_height_columns=”no” menu_anchor=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” status=”published” publish_date=”” class=”” id=”” link_color=”” link_hover_color=”” border_size=”” border_color=”” border_style=”solid” margin_top=”” margin_bottom=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_position=”center center” background_repeat=”no-repeat” fade=”no” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_blend_mode=”none” video_mp4=”” video_webm=”” video_ogv=”” video_url=”” video_aspect_ratio=”16:9″ video_loop=”yes” video_mute=”yes” video_preview_image=”” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ spacing=”” center_content=”no” link=”” target=”_self” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” hover_type=”none” border_size=”0″ border_color=”” border_style=”solid” border_position=”all” border_radius=”” box_shadow=”no” dimension_box_shadow=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” margin_top=”” margin_bottom=”” background_type=”single” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_image_id=”” background_position=”left top” background_repeat=”no-repeat” background_blend_mode=”none” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” filter_type=”regular” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″ last=”no”][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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Dear Valued Customer/Supplier:

On March at 8 pm EST, Governor Wolf issued an extensive Executive Order for the State of Pennsylvania and it’s businesses.

West Penn Oil Co.,Inc. has been identified in this order as an “essential business” due to our manufacture and distribution of chemicals that support the transportation industry.

Our products are sold to retailers and distributors who support:

  • Vehicle fleets including state, local and federal police, EMT fleets, as well as to other essential personnel including doctors, nurses, healthcare workers, grocers, food delivery, pharmacy delivery and ambulances.
  • Public and private transportation necessary to ensure the public may complete essential trips for food, medicine and care of loved ones.
  • Repair facilities for a multitude of essential infrastructure sectors as identified by the US Federal Government.

We are continuing to produce product and ship orders as quickly as possible.

Our facilities will be open our regular stated hours for pick up’s as well as deliveries.

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Local Mergers and Acquisitions Firm Partners with New Affiliate Serving Small and Medium-Sized Businesses

SRP Bookkeeping & Tax Services to Offer Array of Financial Services to Business Owners

 

(LOUISVILLE, KY) – Stoneridge Partners, a national healthcare mergers and acquisitions advisory firm, is proud to announce a new affiliation with SRP Bookkeeping & Tax Services, a local company that specializes in providing secure, remote financial services to small and medium-sized businesses.

SRP assists business owners with a wide array of financial needs including general bookkeeping services such as preparation of income statements and balance sheets; tax planning and preparation; assistance with accounts payable, receivable and payroll; catch-up or clean-up of financial records; and exit strategies for businesses preparing for transition.

Each member of the team at SRP Bookkeeping & Tax Services has an extensive background in solving financial problems for companies both large and small. Managing Partner Jerry Dailey has worked as a Controller and Chief Financial Officer, and has special expertise in revenue cycle management and improving cash flow. Debbie Stucker has more than 30 years of experience in all aspects of business finance, serving as both a Financial Analyst and Controller and overseeing a number of general accounting functions.

Stoneridge Partners President and CEO Rich Tinsley says that while the services provided by SRP are much different than those provided by Stoneridge, developing a partnership made sense.

“The healthcare companies Stoneridge represents in transactions are traditionally multi-million dollar enterprises – but many of them started out as small businesses that needed expert financial help to allow them to focus on operations and grow to meet their goals. A company like SRP can provide that level of financial support for the multi-million dollar companies of tomorrow, or for a small family business that wants to keep the doors open for another generation.”

For more information about SRP Bookkeeping & Tax Services, go to www.srpbookkeeping.com or contact Managing Partner Jerry Dailey via email at [email protected].

 

SRP Bookkeeping & Tax Services offers a full menu of financial services for the small to medium-sized business owner and specializes in fast, accurate and personalized attention. If you’d like to learn more about SRP Bookkeeping & Tax Services, go to www.srpbookkeeping.com or call their corporate office at (502) 548-1610.

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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)

Quote of the Month:

“Amedisys is committed to a disciplined capital allocation strategy. This announcement reflects the continued confidence of the Board and our management team in our long-term plan.”

Paul Kussow, CEO, after announcing a $75 million buy-back of Amedisys’ stock.

The Stoneridge Partners Home Health Index Takes Another Step Back!

Well it’s been a tough couple of months for the market in general.  The S&P 500 was down 2.6% for the month and is now down 6.7% YTD and 2% from a year ago, so the results for our Home Health Index don’t look too bad.  This past month our index dropped 2.7% but we are up 37% YTD and up 74% from a year ago.

While Almost Family led the way down in September with a 9.6% drop, LHC Group and Addus both broke the trend and were up nicely.

The record high set by our HH Index just two months ago, at the end of July at 42.55.  We are now off about 4% from that high.

See It to Believe It!

This graph compares the percentage change of the HH Index to the percentage change in the S&P 500 Index for over 13 years, going back to January, 2002. It has been quite a ride.

[visualizer id=”5727″]

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, through  September, 2015.  Look at the nice uptick for LHC Group.

[visualizer id=”5731″]

This graph compares our HH Index to the price of Addus stock (non-Medicare).  While the HH Index dropped, Addus had a nice month.

[visualizer id=”5730″]

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

Company 9/30/15 1 mos change YTD change 1 yr change 2 yr change
Almost Family 40.05 -9.6% +38% +47% +106%
Amedisys 37.98 -1.7% +29% +88% +121%
LHC Group 44.77 +3.4% +44% +93% +91%
HH Index** 40.93 -2.7% +37% +74% +104%
S&P 500 1920 -2.63% -6.7% -2.2% +14.1%
Addus 31.15 +8.4% +28% +59% +7.5%

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)) 10/1/15 9/1/15 8/1/15 7/1/15 6/1/15
Almost Family 462 454 458 4163 403
Amedisys 1,345 1,390 NA 1,420 1,170
LHC Group 827 817 775 742 666
HH Index Total 2,634 2,661
NA 2,578 2,239
Addus 303 329 285 311 302

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

Company 10/1/15 10/1/14 10/1/13
Almost Family 91% 69% 43%
Amedisys 111% 66% 43%
LHC Group 109% 69% 68%
HH Index Average 104% 68% 51%
Addus 83% 70% 107%

Multiples of EV/EBITDA.

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

Company 10/1/15 10/1/14 10/1/13
Almost Family 12.6 16.6 5.8
Amedisys 15.0 NA 8.0
LHC Group 11.5 8.6 6.4
HH Index Average 13.0 NA 6.8
Addus 12.4 11.0 14.1

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 it is reporting.

Hot off the Press!

Lexington, Kentucky:  Nurse Registry and Home Health Corp. along with the estate of former owner, the late Lennie House, have agreed to the terms of a fraud settlement of $16 million owed to the federal government.

Under the terms, Nurses’ Registry will be sold within 90 days to an independent third party, and 70% of the proceeds will go to the federal government.

To read the entire article go Here

LHC Group in the News!

October 2, 2015 – LHC Group, Inc. announced today that it has completed the previously announced acquisition of Halcyon Hospice LLC for $58.5 million in cash or, net of tax benefit, for $51.5 million. The transaction is expected to be accretive to LHC Group’s 2016 earnings by between $0.15 and $0.20 per diluted share, while earnings for the fourth quarter of 2015 are expected to reflect transaction and integration costs totaling $0.06 per diluted share.

Based in Cumming, Georgia, Halcyon is one of the largest independent providers of hospice services in the southeastern United States. It operates 16 hospice locations across three states, including two inpatient hospice facilities, and has approximately 400 employees. Halcyon’s service area covers 183 counties across Georgia, Mississippi and South Carolina, including 59 counties in which LHC is licensed for home health. Annual revenue for Halcyon is approximately $41 million. This acquisition will increase LHC’s hospice service line to 53 locations in 12 states with over $110 million in annual revenue.

 Almost Family in the News!

Almost Family, Inc (NASDAQ:AFAM) announced that it has entered into an agreement to acquire the assets of the Medicare-certified home health agency owned by Bayonne Visiting Nurse Association in Bayonne, NJ.  The transaction is expected to close before the end of 2015, subject to regulatory approvals.

Included in this acquisition is a Certificate of Need to provide home care services in Hudson County, New Jersey.

Brain Bruenderman, one of our partners, provided sell-side advisory services.

Amedisys in the News!

Amedisys’ Board authorized the repurchase of up to $75M in stock during the next year. CEO Paul Kusserow says, “Amedisys is committed to a disciplined capital allocation strategy. This announcement reflects the continued confidence of the Board and our management team in our long-term plan.”

Merger & Acquisition Activity:

SOLD BY STONERIDGE PARTNERS!

Bayonne, NJ – Almost Family, Inc (NASDAQ:AFAM) announced that it has entered into an agreement to acquire the assets of the Medicare-certified home health agency owned by Bayonne Visiting Nurse Association in Bayonne, NJ.  The transaction is expected to close before the end of 2015, subject to regulatory approvals. Brian Bruenderman, one of our partners, provided sell-side advisory services.

Newton, NC – Epic Health Services Inc., a Dallas-based provider of pediatric skilled nursing and therapy, announced today that it has acquired pediatric and adult home care provider Unifour Nursing, based in Newton, North Carolina.  Brian Bruenderman and Benjamin Bogan, Partners here at Stoneridge Partners, provided sell-side advisory services.

Quincy, IL – CareLink, Inc. a private duty agency sold to a regional health care provider.  Rhonda Gronberg, our Director of Development, provided advisory services.

Visit us at these conferences:

Kansas: Join us October 15-16 at the 2015 Power Up InterHab Annual Conference in Wichita at the Hyatt Regency.InterHab Conference

NAHC Annual:  Join us in Nashville October 28-30.  For the 12th straight year we will be exhibiting at NAHCs Annual Conference & Exhbition. NAHC Annual Conference

South Carolina:  Join us at the South Carolina Home Care & Hospice annual conference at Hilton Head.  November 2-3 at the Sonesta Resort.  Ben Bogan, one of our partners, will be giving a presentation titled “Massive Mergers & Acquisitions – What Does it Mean to You?”   South Carolina Conference

Las Vegas – Decision Health’s Private Duty conference- November 16-18 at the newly remodeled Tropicana Resort.  Come on out to ‘Vegas, have a great time and get an update on Private Duty M&A.  Private Duty Conference

At all of these conferences we will be setting up confidential meetings with buyers and sellers of home care agencies and hospices.

Joe Lynch, One of our Partners, Authors a Book!

Finding Dad

Joe’s new book, “Finding Dad”, combines amusing and interesting stories about his many years in home care, along with fascinating stories about his father, a World War II fighter pilot.  If you are in home care, and/or have an interest in WWII history you will enjoy this book, which we are shamelessly promoting.  For more information and to order Joe’s book click here:  Finding Dad 

Exclusively Listed for Sale by Stoneridge Partners:

  • Minnesota – $12 million revenue Medicare certified home health agency with large Medicaid census, well established and deficiency free, SE Minnesota. Stoneridge file S-5268
  • DFW Area – Approx. $3.5 million home care and hospice agency just listed.  Stoneridge file S-6600.
  • California- Approx. $2.6 million Medicare home health agency. Central coast region of Northern California. 90% Traditional Medicare. Strong gross profit with opportunities for immediate, sustained, long-term growth. Accredited.  Stoneridge file S-5400
  • Pennsylvania – Approx. $4 million Medicaid home care agency located in central PA. Accelerated and profitable growth trajectory with continued opportunity for future growth. Professionally run with outstanding clinical and excellent staff in place.  Stoneridge file S-1000
  • Colorado – $2.5 million diversified home care agency  and hospice,  accredited with excellent books and records.  Stoneridge file #S-1005
  • Rhode Island – $2.5 million Medicare agency.  Accredited in CON state.  Stoneridge file #S-1100
  • Oklahoma –  $3.5 million revenue Oklahoma City Medicare certified home health agency.   90% of revenue from traditional Medicare. Stoneridge file S-3200
  • Florida – $4 million in pure private pay.  15% bottom line.  Accredited on the central east coast.  Stoneridge file #S-3250.
  • Illinois – $5 million plus Medicare agency with four offices. Strong management with excellent clinical.  Stoneridge file #S-6550
  • Kentucky – Certificate of Need for 3 counties in Northern KY, rare opportunity to establish or expand services in populous CON service area. Stoneridge file S-1121 ON CONTRACT
  • Illinois – $3 million hospice in Chicago area.  Average census 58.  Stoneridge file #S-5325
  • Texas – $5 million East Texas Medicare certified home health agency with diverse payor sources, including Medicare, Medicaid, pediatric and private pay.  Stoneridge file S-3665
  • Illinois –  $2.3 million Chicago area Medicare agency, clean surveys, excellent clinical reputation.  Stoneridge file #S-4300
  • 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 S-9300 ON CONTRACT
  • Washington State – $2 million revenue. This agency has a long history of profitability. Diverse payor sources includes Medicaid programs and private pay. Great reputation in a unique service area. Stoneridge file S-7010 ON CONTRACT
  • Florida – $5 million Medicare agency located in the Tampa – St. Pete area.  Accredited, with solid bottom line.  Stoneridge file S-4109 ON CONTRACT
  • Texas – $8 million East Texas agency, Medicare certified with deficiency free survey, no audits, and top-of- the line software.  Stoneridge file S-3001 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 S-4088
  • Texas – $2.3 million Medicare certified home health agency in Houston, Texas. 92% Traditional Medicare. Stoneridge file S-1542
  • North Carolina – $2.2 million Medicaid provider with two locations serving Charlotte, NC and surrounding areas. Service waiver programs include: PCS, PDN, and CAP. Accredited. Professionally run company with outstanding clinical. Great tuck-in opportunity. Stoneridge file S-2999 SOLD
  • 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 S-1500 ON CONTRACT
  • Texas – $2 million Fort Worth Medicare agency, approx 90% traditional Medicare.Stoneridge file S-2650
  • Florida – $2.8 million Medicare certified agency serving District 3. Solid operational team in place. 95% Medicare.  Stoneridge file S-9000
  • Ohio – $2.5 million Medicare agency in Columbus area, 75% traditional Medicare, long history of quality care.  Stoneridge file S-5232.
  • Texas $1.2 million Medicare certified home health care agency in the Galveston area. Stoneridge file S-9015
  • Texas – $1 million Medicare agency in the DFW area – 995 of revenue from traditional Medicare.  Stoneridge file #S-1015

To see more home care agencies and hospices exclusively listed for sale by Stoneridge Partners go to the following link: Agencies for Sale

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

 

Anothersonnet

More

For more cartoons and additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: http://stoneridgepartners.com/category/blog/.
From Don Cummins, Publisher of “The Home Health Index” [email protected] – 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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