Home Health Stocks off To Hot Summer Start

Home Health Stocks off To Hot Summer Start

Home health stock prices rebounded in April after a short-lived decline in values in March.

Following a turbulent spring, home health stocks appear poised to enjoy a strong summer. The positive gains are reflected in the latest Home Health Index (HHI), which tracks the market values of the nation’s two largest publicly held home health care providers, published by Stoneridge Partners.

It’s now been two months since Almost Family (Nasdaq: AFAM) and LHC Group (Nasdaq: LHCG) completed their merger, which doubled the size of LHC Group. As a result, May represented the second month in which the HHI comprises two companies only, because Almost Family is no longer traded as an individual stock.

At the end of May, the HHI was up 11.4% month over month . Year to date, the index is up 36.4%. Comparatively, the S&P 500 slightly rose by 2.9% over the same time period.

The overall stock rally comes as a number of M&A deals are closing around the home health industry.

“Today’s M&A landscape is highly competitive and hotter than ever,” said Stoneridge Partners President Rich Tinsley. “As more deals take place, the future appears strong for companies that aggressively seek to be acquired or to grow through acquisition.”

Last month, LHC Group’s stock price increased 4.52%. Year-to-date, the company’s stock is up 26.1%. As May came to a close, LHC Group CEO Keith Myers discussed the industry’s energetic merger and acquisition landscape during the 2018 UBS Global Healthcare Conference in New York City. According to Myers, the mega-merger gives the Lafayette, Louisiana-based company a strong foundation for future mergers, particularly deals focused on personal care services.

May was also another strong month for Amedisys Inc. (Nasdaq: AMED); the Baton Rouge, Louisiana-based company’s stock price rose 17.7%. The home health care provider is also seeing its own stock as valuable. At the start of June, it was reported that Amedisys bought back $178 million worth of stock from the global investment firm, KKR (NYSE: KKR). Year-to-date, Amedisys’ stock is up 45.5%.

Elsewhere in the industry, Frisco,Texas-based Addus HomeCare (Nasdaq: ADUS) stock continued to rise in May, closing the month with a 12.5% rally. Year-to-date, Addus’ stock is up 67.4%. Even though Addus is a major personal care services provider, it’s not part of the HHI because little of its revenue comes from Medicare.

Quote Of The Month 

“Find the people you feel safe and comfortable enough with to talk about it. That’s one of the definite benefits of social media. There are all sorts of people who have been through similar situations and are easier to relate to. It’s important to say ‘This happened, and I’m struggling with it, and I need to work through it.” – Karen Zangerle, Executive Director of PATH (Providing Access to Help)

Read the Full Article Here: Reach out: Celebrity Suicides bring mental health issues to forefront

 

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 June 2018 | Stoneridge Partners)

 

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

Company 5/31/18 1 mos change YTD change 5/31/17 5/31/16
Amedisys 76.67 +17.736% +45.46% 59.92 50.87
LHC Group 77.23 +4.52% +26.09% 60.2 42.0
HH Index* 76.95 +11.37% +36.35% 59.17 44.89
S&P 500 2732.54 +2.95% +2.20% 2411.8 2096.96
Addus 58.25 +12.54% +67.39% 37.1 20.55

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) 5/31/18 5/31/17 5/31/16
Amedisys 2510 1780 1800
LHC Group 1430 1050 852
HH Index Total 3940 3609 3213
Addus 585 376 245


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

Company 5/31/18 5/31/17 5/31/16
Amedisys 162% 122% 137%
LHC Group 135% 112% 92%
HH Index Average* 137% 117% 110%
Addus 149% 91% 70%


Multiples of EV/EBITDA

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

Company 5/31/18 5/31/17 5/31/16
Amedisys 18.13 18.7 22.52
LHC Group 15.97 12.22 10.36
HH Index Average* 18.01 14.97 15.33
Addus 17.05 11.19 10.20

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 June 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Private equity firm, KKR acquired Nashville-based Envision Healthcare Corporation

SOLD!!! by Stoneridge

  • Stoneridge Partners, Associate Partner Coley McDevitt, provided sell side M&A advisory services in the sale of Divine Home Healthcare, Inc to Pioneer Group, LLC.
  • Stoneridge Partners, Partner Brian Bruenderman, provided sell side M&A advisory services in the sale of Christian Care Communities to Amedisys, Inc.

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

     

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Home Health Index June 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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