Home Health Care Stocks Finish 2017 Strong

Home health care stocks posted double-digit growth in 2017, though they dipped slightly in the last month of the year.

The Home Health Index, which tracks market values of three of the largest publicly traded home health care companies in the U.S.—Almost Family (Nasdaq: AFAM), Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG) —rose 18.68%, year-over-year, between December 2016 and 2017. Still the index shed 5.82% in December compared to the previous month, and was bested by the S&P 500 Index, which rose 1.36% in December.

“This was another strong year for home health care investors and providers,” said Stoneridge President Rich Tinsley. “2018 will bring many new challenges and opportunities in the industry, especially as home health care giants Almost Family and LHC Group execute on their planned merger.”

The deal between LHC Group and Almost Family is expected to close in the first quarter of 2018 and results in a company with a combined revenue of $1.8 billion. The implied transaction value is roughly $2.4 billion, according to LHC Group.

The combined organization would trade on the NASDAQ exchange under the symbol “LHCG,” and will operate out of Lafayette, Louisiana, where LHC is currently based. When completed, the organization is projected to have 781 locations total in 36 states and more than 31,000 employees. The merger will also prompt the addition of Kindred Healthcare (NYSE: KND) to the Stoneridge Home Health Index.

Despite the buzz surrounding the merger, Lafayette, Louisiana-based LHC Group’s stock dropped 7.38% in December. Year to date, LHC Group’s share prices rose 23.14%, which clocked in as the largest yearly gain on the HHI.

Louisville, Kentucky-based Almost Family also stumbled in its December stock performance. The company’s share prices fell 7.32%, erasing some of the increases it saw this year. Still, the provider came out on top: Almost Family’s stocks gained 16.65% in 2017.

Amedisys, on the other hand, fared best in December. The Baton Rouge, Louisiana-based company’s stock value fell just 2.45% in the month. Year to date, its share prices rose 15.92%, according to the Index.

Share prices for Addus HomeCare (Nasdaq: ADUS), which is not included in the index because so little of its income comes from Medicare, bucked the trend and gained 4.31% in December. For the entire year, Addus’s stock price rose 2.65%.

Quote Of The Month 

“Aging is not a disease, If we support people as they get frail, they can safely do that in their own homes.” said France Gelinas

Read the Full Article Here: Improving home care will help hospital overcrowding

See It To Believe It!

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

  • Almost Family (AFAM)
  • LHC Group (LHCG)
  • Amedisys (AMED)

This graph compares the percentage of the Home Health Index to the percentage change in the S&P 500 Index  going back to 2002.
[visualizer id=”8359″]
This is a 12 month trailing chart of the HH Index compared to the actual prices of the individual companies that make up the chart.
[visualizer id=”8361″]

This graph displays HH Index performance since 2002.

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

(Home Health Index January 2018 | Stoneridge Partners)

 

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

Company 12/31/17 1 mos change YTD change 12/31/16 12/31/15
Almost Family 55.35 -7.32% +16.65% 44.1 38.23
Amedisys 52.71 -2.45% +15.92% 42.63 39.32
LHC Group 61.25 -7.38% +23.14% 45.7 45.29
HH Index* 56.44 -5.82% +18.68% 44.14 40.95
S&P 500 2673.61 +1.36% +17.25% 2238.83 2043.94
Addus 34.8 4.31% +2.65% 35.05 23.28

Although we track the performance of Addus, they are not included in our HH Index because very little of their revenue comes from Medicare.

 

Enterprise Value (EV)

EV (in M) 12/31/17 12/31/16 12/31/15
Almost Family 878 588 453
Amedisys 1810 1520 1370
LHC Group 1200 907 845
HH Index Total 3888 3015 2668
Addus 398 384 245


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

Company 12/31/17 12/31/16 12/31/15
Almost Family 117% 96% 89%
Amedisys 123% 109% 111%
LHC Group 120% 103% 110%
HH Index Average* 120% 103% 103%
Addus 96% 101% 73%


Multiples of EV/EBITDA

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

Company 12/31/17 12/31/16 12/31/15
Almost Family 20.63 12.66 12.34
Amedisys 15.68 19.10 15.35
LHC Group 12.84 11.01 10.90
HH Index Average* 16.38 14.26 12.86
Addus 11.67 14.50 10.22

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 January 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • New Directions Behavioral Health, headquarted in Kansas City, Missouri acquired E4 Health of Irving, Texas.
  • Stratum Health System, the Sarasota company that owns Tidwell Hospice, has acquired a Naples-based home health care company, Avidity Home Health.
  • Nurses Unlimited, a personal care services, home health and private duty nursing company was acquired by Texas Home Health, an AccentCare, Inc. company.
  • Noor Inc., based in New York City, acquired San Antonio, Texas-based home health care provider Restorative Health Care.
  • Humana announced it will acquire 40% stake in Kindred Healthcare’s home care business.
  • provider in the U.S., acquired A Place to Call Home, an Arizona based company providing foster care, respite, host home and related supports to children and individuals with intellectual and developmental disabilities.

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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 January 2018 | Stoneridge Partners

From Rich Tinsley, Publisher of “Home Health Index”. Rich can be reached at [email protected] or (239) 561-0826 and toll-free 800-218-3944

Previous editions of this monthly newsletter can be searched for at the bottom of the home page of the Home Health Index. Links to Google Finance: Almost Family | Amedisys | LHC Group

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