Pre-Claim Does Not Trouble Home Health Investors

Pre-Claim Does Not Trouble Home Health Investors

 Despite looming challenges associated with a possible new pre-claim review demonstration and other regulatory uncertainties on the horizon, home health care stocks performed well in June, according to the latest update of the Home Health Index by Stoneridge Partners.

The Index tracks market values of Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG), two of the largest publicly traded and independent home health care companies in the United States.

Overall, the Index gained 11.79% in June compared to the previous month, substantially outperforming the S&P 500, which fell about 0.94% in the wake of international trade tariffs put in place by the Trump administration.

“There’s a lot of uncertainty out there for investors right now in terms of policy,” Stoneridge Partners President Rich Tinsley said. “Despite what’s going on internationally, though, investors seem pretty confident in the home health industry domestically.”

Baton Rouge, Louisiana-based Amedisys’ stock jumped by 13.08% in June compared to the previous month. Year to date, Amedisys’ stock climbed to an impressive 64.48%, according to the Index.

LHC Group’s stock also saw a spike in June, increasing by 10.50%. The Lafayette, Louisiana-based company’s year-to-date share value was up 39.33% as well.

Stock prices for both companies have been buoyed in the early part of July after the Centers for Medicare & Medicaid Services (CMS) proposed increasing Medicare payments to home health agencies by 2.1%, or $400 million, in calendar year 2019. The agency also released more information about a new payment framework coming in 2020, providing investors with more visibility into what that change will entail.

“Home health providers certainly have momentum moving forward into July,” Tinsley said.

In addition to Amedisys and LHC Group, the Index also highlights Addus HomeCare (Nasdaq: ADUS), though it does not include the Frisco, Texas-based company in its monthly report because most of its revenue comes from Medicaid rather than Medicare.

While stock prices for Amedisys and LHC Group rose in June, prices for Addus dipped slightly, falling by 2.66% compared to the previous month. Year to date, Addus’ stock prices were still up by 62.93%, however.

Quote Of The Month 

“This (At-home personal care) is not an out-of-control, costly benefit, it’s a pretty predictable benefit and one that’s pretty essential to ensuring people’s ability to maintain their independence and continue living at home.” – Researcher Karen Davis

Read the Full Article Here: Fresh Research Supports a Medicare Benefit for At-Home Personal Care

 

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 July 2018 | Stoneridge Partners)

 

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

Company 6/30/18 1 mos change YTD change 6/30/17 6/30/16
Amedisys 86.7 +13.08% +64.48% 62.81 50.48
LHC Group 85.34 +10.50% +39.33% 67.89 43.28
HH Index* 86.02 +11.79% +52.42% 64.12 45.46
S&P 500 2706.92 -0.94% +1.25% 2423.41 2098.86
Addus 56.7 -2.66% +62.93% 37.2 17.43

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) 6/30/18 6/30/17 6/30/16
Amedisys 2880 2157 1790
LHC Group 2950 1313 875
HH Index Total 5830 4479 3234
Addus 637 436 216


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

Company 6/30/18 6/30/17 6/30/16
Amedisys 186% 149% 136%
LHC Group 266% 141% 106%
HH Index Average* 226% 152% 115%
Addus 149% 110% 62%


Multiples of EV/EBITDA

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

Company 6/30/18 6/30/17 6/30/16
Amedisys 20.81 26.7 22.36
LHC Group 29.56 15.8 10.65
HH Index Average* 25.19 21.45 15.44
Addus 19.60 15.01 9.02

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 July 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Humana and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe acquired Curo Health Services in the latest effort by the insurer to grow its outpatient medical services for seniors.
  • Netsmart, one of the largest providers of behavioral health electronic records (EHR’s) in the United States, has acquired the home care and hospice solutions of Change Healthcare, formerly known as McKesson Homecare and McKesson Hospice.
  • Humana and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe completed their planned acquisition of Kindred Healthcare.
  • Insurer Anthem, Inc. has completed its acquisition of Aspire Health, the nation’s largest provider of non-hospice, community-based palliative care.

SOLD!!! by Stoneridge

  • Stoneridge Partners, Partner Benjamin Bogan, provided sell side M&A advisory services in the sale of Alpha Health in Kissimmee, Florida to Trilogy Healthcare.
  • Stoneridge Partners, Partner Joseph Lynch, provided sell side M&A advisory services in the sale of Accommodation Healthcare, LLC of Houston, TX to D&S Residential Holdings.

Exclusively Listed For Sale By Stoneridge Partners

Do you know of any acquisitions that have taken place?  We are interested in your comments.  At the top of this column is a “Contact Tab” with a section for comments.  These can be sent anonymously and the return email address can be left blank.

Another Cartoon Favorite from the New Yorker

     

More

Home Health Index July 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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