Home Health Stocks Shake Recent Slumps

Home Health Stocks Shake Recent Slumps

As expected, home health stocks are once again trending upward, shaking off the minor slumps they experienced during September and October.

Home health stocks rose 21.52% in November over the previous month, according to the most recent Home Health Index (HHI) from mergers and acquisitions firm Stoneridge Partners. The HHI, updated monthly, monitors the market values of Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG).

Baton Rouge, Louisiana-based Amedisys and Lafayette, Louisiana-based LHC Group are the two largest publicly traded and independent home health companies in the country.

“There was a broader dip to U.S. markets in September and October, which is likely why we saw a slight drop in home health stock values,” Stoneridge Partners President Rich Tinsley said. “Home health stocks are back up, more in line with what we had been seeing on a regular basis throughout much of 2018.”

While the HHI was up by more than 21%, the S&P 500 stayed relatively flat, increasing by just 0.65% in November compared to October.

Stock prices for Amedisys and LHC Group each performed strongly.

Amedisys, which maintains an executive office in Nashville, Tennessee, saw its stock jump 24.04% in November compared to the previous month.

Meanwhile, LHC Group’s stock similarly climbed 18.38% in November compared to the previous month.

Amedisys and LHC Group posted solid third-quarter 2018 financial results at the end of October and at the beginning of November, respectively, suggesting the HHI boost could be linked to that success. Additionally, home health stakeholders have been encouraged by the final home health payment rule from the Centers for Medicare & Medicaid Services (CMS) for 2019, despite ongoing concerns associated with the Patient-Driven Groupings Model (PDGM) for 2020.

Besides Amedisys and LHC Group, Stoneridge Partner’s HHI also keeps tracks the stock value of Frisco, Texas-based Addus HomeCare Corporation (Nasdaq: ADUS). Stoneridge does not include Addus in the final HHI calculation, however.

Addus saw its stock increase by 14.68% in November over October.

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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 2018 | Stoneridge Partners)

 

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

Company 11/30/18 1 mos change YTD change 11/30/17 11/30/16
Amedisys 137.93 +24.04% +161.68% 54 41.44
LHC Group 105.43 +18.38% +72.13% 65.77 42.88
HH Index* 121.68 +21.52% +115.60% 59.72 41.87
S&P 2739.67 -+0.65% +2.47% 2637.37 2238.83
Addus 75.45 +14.68% +116.81% 33.3 34.7

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) 11/30/18 11/30/17 11/30/16
Amedisys 4060 1820 1410
LHC Group 3400 1280 841
HH Index Total 7460 4046 2799
Addus 834 410 313


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

Company 11/30/18 11/30/17 11/30/16
Amedisys 250% 125% 101%
LHC Group 214% 133% 95%
HH Index Average* 232% 130% 95%
Addus 171% 100% 87%


Multiples of EV/EBITDA

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

Company 11/30/18 11/30/17 11/30/16
Amedisys 24.71 17.25 17.77
LHC Group 25.47 13.91 10.21
HH Index Average* 25.09 18.20 13.26
Addus 22.27 12.27 12.94

The above calculations are based on selling price being defined as Enterprise Value (EV), with data provided by Capital IQ. Enterprise value is defined as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. EBITDA is calculated using methodology which may differ from that used by a company it’s reporting. (Home Health Index December 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Prestige Adult Foster Care, a Worcester home health care agency, has acquired the Westborough home health agency Around the Clock.
  • Discovery Behavioral Health acquired Ambrosia Treatment Center, a residential drug and alcohol addiction treatment center in Medford, NJ.
  • Advantage In-Home Services, a provider of personal home care, was acquired by Alpine Investors.

SOLD!!! By Stoneridge

  • Stoneridge Partners represented a Florida based Home Healthcare agency that closed November 2018

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 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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