Home Health Stocks Cool Off After Months of Growth

Home Health Stocks Cool Off After Months of Growth

After several months of robust growth, home health stocks have leveled off somewhat, though a plateau may be relatively short-lived.

Despite regulatory obstacles on the horizon, home health stocks saw strong growth in June, July and August. September yielded mixed results, however, according to Stoneridge Partners’ latest Home Health Index, updated monthly.

Overall, the Home Health Index was up by 0.74% in September over the previous month. Bucking summer’s recent trends, the Index slightly unperformed the broader market, as the S&P 500 climbed by 1.42% in September compared to the previous month.

Stoneridge Partners’ Home Health Index charts the 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 country.

“Home health stocks had been seeing double-digit levels of growth in some cases, so a slowdown was bound to happen at some point,” Stoneridge Partners President Rich Tinsley said. “Amedisys, in particular, had been seeing very strong growth of late, which really wasn’t the case last month.”

Amedisys’ stock dipped 1.12% in September compared to August, according to the Index. Amedisys maintains an executive office in Nashville, Tennessee, with a corporate headquarters in Baton Rouge, Louisiana.

While Amedisys’ stock value fell slightly, LHC Group’s stock rose. Lafayette, Louisiana-based LHC Group’s stock ticked upward by 3.08% in September compared to the previous month.

The Home Health Index was up 99.86% in September on a year-to-date basis.

Although home health stocks did see a slowdown, they’re primed to possibly rebound in months ahead, as industry stakeholders have partnered with legislators in both the U.S. House of Representatives and Senate to reshape the widely opposed behavioral adjustment aspect of the Patient-Driven Groupings Model (PDGM).

“The home health industry is facing some pressures, most notably in the form of PDGM, which could be the biggest change to home health care in years,” Tinsley said. “But the industry as a whole has proven it’s capable in terms of advocacy and outreach, so we’re optimistic.”

In addition to Amedisys and LHC Group, the Home Health Index also tracks Frisco, Texas-based Addus HomeCare Corporation (Nasdaq: ADUS), though it does not include the company in its monthly update. This is due to the fact that Addus’ revenue comes mainly from Medicaid rather than Medicare.

Addus’ stock jumped 6.76% in September compared to the previous month, according to the Index.

Quote Of The Month 

“Today’s homecare professionals are incredibly skilled clinicians who are extremely self-reliant and detail-oriented. They can think critically and creatively to try and keep patients out of the hospital, and are the advocates for the patients – with the physician, caregivers, and other outside agencies. Nurses and other clinicians who are interested in home care need to be open to working in a setting that is different from the traditional clinical setting.  Patients are able to remain at home because our clinicians make a difference in their lives.” ~ Marla Duerr, Vice President of Patient Care Services for Catholic Health Home and Community Based Care

Read the Full Article Here: Demand Increasing for Home Health Professionals 

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 October 2018 | Stoneridge Partners)

 

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

Company 9/30/18 1 mos change YTD change 9/30/17 9/30/16
Amedisys 123.61 -1.12% +134.51% 55.96 47.44
LHC Group 101.98 +3.08% +66.50% 70.92 36.88
HH Index* 112.80 +0.74% +99.86% 60.19 40.36
S&P 500 2925 +1.42% +9.40% 2519.36 2168.27
Addus 69.29 +6.76% +99.11% 35.30 26.16

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) 9/30/18 9/30/17 9/30/16
Amedisys 3990 1928 1730
LHC Group 3520 1402 760
HH Index Total 7510 4226 3005
Addus 857 438 331


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

Company 9/30/18 9/30/17 9/30/16
Amedisys 252% 131% 128%
LHC Group 260% 144% 89%
HH Index Average* 256% 133% 102%
Addus 188% 106% 91%


Multiples of EV/EBITDA

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

Company 9/30/18 9/30/17 9/30/16
Amedisys 26.45 22.77 20.81
LHC Group 34.08 15.18 9.46
HH Index Average* 30.27 20.05 14.20
Addus 23.75 13.44 13.66

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 October 2018 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Hospice Source, the National Leader in Hospice DME aquired Harrisburg, Pennsylvania based Dynamic Health Services, Inc.
  • Bristol Hospice LLC, a portfolio company of Webster Capital acquired Optimal Health Services and Suncrest Hospice
  • VITAS Healthcare, the nation’s leading provider of end-of-life care acquired Hospice of Citrus and the Nature Coast

SOLD!!! By Stoneridge

  • Sonas Home Health Care, a portfolio company of Boyne Capital, acquired Advanced Nursing Solutions, a Tampa-based pediatric home-care provider.  Sell side advisory services provided by Partner Ben Bogan.

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 October 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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