Home Health Care Stocks Weather Turbulent Market in February
Home Health Stocks Weather Turbulent Market in February
Home health stocks successfully withstood highly volatile late-January and early-February markets to rebound by month’s end. In fact, the home health index, which tracks the monthly market values of three of the biggest home health care companies—Almost Family (Nasdaq: AFAM), Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG)—increased 4.86% last month. Home health stocks fared far better than the S&P 500, which actually declined 3.77% in February.
February was marked by a two-year budget deal that contained many health care provisions impacting the home health care industry. The deal was signed into law Feb. 9. The budget included provisions for a new payment model for home health by 2020 that was budget neutral, unlike the previous home health groupings (HHGM) model. The HHGM model, as it was originally proposed in 2017, would have potentially cut up to $950 million from in payments to the industry.
“The home health care sector was buoyed by overall good news within the Bipartisan Budget Act of 2018,” said Stoneridge Partners President Rich Tinsley. “The new payment reform revisions position the home health industry for a strong 2018. Despite significant regulatory changes, the market rewarded the sector’s increased stability in February.”
Baton Rouge, Louisiana-based Amedisys saw the largest gains in February. Stocks rose 11.97%. Year-to-date, Amedisys stock prices are up 12.33%.
Almost Family, based in Louisville, Kentucky, posted the second-largest gains last month, as stock prices increased 2.34%. Finally, LHC Group saw stocks rise 1.23%. The merger between Almost Family and LHC Group is back on track after hitting a road bump last month. The planned merger is now expected to close in the summer of 2018.
However, not all home health companies had good news to celebrate when February came to a close. Addus Homecare Corporation (Nasdaq: ADUS), which is not part of the HHI because very little of the company’s income comes Medicare, saw stocks fall 6.15%. Year-to-date, Addus stock is down 1.29%. Also in February, Addus HomeCare Corporation (NASDAQ: ADUS), a provider of comprehensive home care services, had positive news to announce with the signing of a definitive agreement to purchase Ambercare Corporation, Inc., a provider of personal care, hospice and home health services, headquartered in Albuquerque, New Mexico.
Quote Of The Month
“Home care can relieve pressure on hospitals where many patients are occupying hospital beds when they could and should be in the comfort of their own homes. Families go in desperation to the emergency room when they, as caregivers, have burned out and don’t know where else to turn. Hospitals run out of beds but can’t discharge a patient without knowing the person has a safety net.” said Sue VanderBent, CEO of Home Care Ontario.
Read the Full Article Here: Home Care could be answer to 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.
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.
This graph displays HH Index performance since 2002.
This graph compares the HH Index to the price of Addus stock (non-Medicare).
(Home Health Index March 2018 | Stoneridge Partners)
Here are the results of the stock prices for the past two years:
|Company||2/28/18||1 mos change||YTD change||2/28/17||2/28/16|
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)||2/28/18||2/28/17||2/28/16|
|HH Index Total||4278||3294||2480|
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*||128&||112%||96%|
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*||19.02||15.62||12.10|
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 March 2018 | Stoneridge Partners)
Recent Transactions From Around The Country
- Nova Leap Health Corp, based in Halifax, Nova Scotia, an international provider of personal home care and support services acquired Family Tree Home Care, based in Central Massachusetts.
- Traditions Healthcare Holding Company, LLC, a portfolio company of Dorilton Capital Advisors, LLC acquired ProCare Hospice Corp., based in Oxnard, California.
Signed Deal by Stoneridge
- Addus HomeCare increases presence in New Mexico with agreement to purchase Ambercare Corporation. Sell side advisory services during the acquisition was provided by Partner Ben Bogan and Associate Partner Charles Jantzi. See article here: Addus HomeCare increases presence in New Mexico
Exclusively Listed For Sale By Stoneridge Partners
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Another Cartoon Favorite from the New Yorker
Home Health Index March 2018 | Stoneridge Partners