Mirroring Market Trends, Home Health Stocks Dip
Mirroring Market Trends, Home Health Stocks Dip
Home health stocks had been showing signs of cooling off moving into October. They now appear to firmly be trending downward.
Home health stocks dropped 11.23% in October compared to the previous month, according to mergers-and-acquisitions firm Stoneridge Partners’ most recent Home Health Index (HHI). Updated on a monthly basis, the HHI monitors the market values of the two largest publicly traded and independent home health companies in the United States: Amedisys (Nasdaq: AMED) and LHC Group (Nasdaq: LHCG).
Year to date, the HHI is still up more than 77%, reflective of the strong momentum home health stocks had been seeing for most of 2018.
Although home health stocks were down in October, it’s difficult to say how much of that decline was tied to industry outlook, as opposed to a broader market dip, Stoneridge Partners President Rich Tinsley said. The S&P 500 was down 6.93% in October compared to the previous month, for example, experiencing its worst month since at least September 2011.
“U.S. markets lost nearly $2 trillion in October, so it wasn’t exactly a great month all around,” Tinsley said. “Home health stocks were down even more than the S&P, so the dip could be industry-specific, perhaps, tied to investors’ not-so-optimistic outlook of what policymakers are doing.”
As expected, the Centers for Medicare & Medicaid Services issued its final home health payment rule at the end of October, increasing the Medicare payment rate to providers by 2.2% next year. The agency projects that increase to be about $420 million.
CMS also announced it was finalizing its Patient-Driven Groupings Model, including widely opposed behavioral adjustment components that some critics say will negatively affect home health agencies once the payment reform is implemented in 2020.
Baton Rouge, Louisiana-based Amedisys’ stock dipped 10.04% in October compared to September. Year to date, Amedisys stock was up 110.97%, according to the HHI. Amedisys also has an executive office in Nashville, Tennessee.
Lafayette, Louisiana-based LHC Group’s stock likewise dropped in October, falling by 12.67% compared to the previous month. LHC Group’s stock was up 45.50% year to date.
In addition to Amedisys and LHC Group, Stoneridge Partner’s HHI also tracks the stock activity of Addus HomeCare Corporation (Nasdaq: ADUS). The Frisco, Texas-based home care and hospice provider is not included in the final HHI analysis, however, because Addus derives most of its revenue from Medicaid sources.
Addus saw its stock drop by 5.05% in October compared to the previous month. Year to date, Addus stock was up 89.05%.
Quote Of The Month
“You’re focused on medical and social issues because you know you can’t take care of people like the homebound unless you’re attending to both of those realms” – Bruce Leff, director of the Center for Transformative Geriatric Research and a professor of medicine at Johns Hopkins University
Read the Full Article Here: Full Care Spectrum Will One Day Be Provided in People’s Homes
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.
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 November 2018 | Stoneridge Partners)
Here are the results of the stock prices for the past two years:
|Company||10/31/18||1 mos change||YTD change||10/31/17||10/31/16|
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)||10/31/18||10/31/17||10/31/16|
|HH Index Total||6790||3712||2980|
Enterprise Value (EV), aka Selling Price, as Percent of Revenue
|HH Index Average*||232%||118%||97%|
Multiples of EV/EBITDA
Think of this as selling price as a multiple of EBITDA.
|HH Index Average*||27.43||16.19||13.51|
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 November 2018 | Stoneridge Partners)
Recent Transactions From Around The Country
- Briggs Healthcare acquired Selman-Holman & Associates to expand Home Health Compliance Portfolio
- Nova Leap Health Corp, an international provider of personal home care and support services, acquired the business assets of New Hampshire-based Living at Home SeniorCare
SOLD!!! By Stoneridge
- Stoneridge Partners represented a Colorado based agency in a transaction that closed in October 2018
- Stoneridge Partners represented an Ohio based agency in a transaction that closed in October 2018
- Stoneridge Partners represented a Texas based agency in a transaction that closed in October 2018
- Stoneridge Partners represented an Arizona based agency in a transaction that closed in October 2018
- Stoneridge Partners represented a Georgia based agency in a transaction that closed in October 2018
Exclusively Listed For Sale By Stoneridge Partners
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Another Cartoon Favorite
Home Health Index November 2018 | Stoneridge Partners