Home Health Stocks Continue Upward Trend in July

Home Health Stocks Continue Upward Trend in July

The Stoneridge Partners Home Health Index (HHI) showed continued strong performance for home health stocks in July, successfully shrugging off both expected headwinds from newly announced regulatory changes and a slight downturn in the broader market.

Home health stocks were up nearly 7.3% in July compared to the previous month. This growth comes despite speculation that industry performance would see weakened performance following the release of the new proposed payment rule by the Centers for Medicare and Medicaid Services (CMS) earlier in the month.

“The proposed rule threw some curveballs at the industry – like the potential phase out of requests for anticipated payments and the increase to the behavioral adjustment rate reduction under the Patient-Driven Groupings Model,” Stoneridge Partners President Rich Tinsley said. “So it’s even more impressive that stocks were able to build on June’s improved performance in the midst of these regulatory changes.”

The Stoneridge Partners HHI is based on the stock values for Amedisys, Inc. (Nasdaq: AMED) and LHC Group, Inc. (Nasdaq: LHCG), two of the country’s largest independent and publicly-traded home health companies. The mergers and acquisitions advisory firm also tracks, but does not include, stock results for Addus HomeCare Corporation (Nasdaq: ADUS) in its final HHI calculations.

Amedisys saw the biggest bump in July compared to the previous month, with stock values rising by 11.2%. The home health, hospice and personal care giant was up 26.7% year-over-year. LHC Group Inc. stock recorded a more modest 3.3% increase in July, but its overall strong performance throughout the year has led the company’s stock value up 35.5% over last year. Meanwhile, Addus stock values rose by 8.1% in July compared to June. On a year-over-year basis, Addus stock was up 20.9%.

Also according to the Stoneridge Partners HHI, home health stocks continue to outpace year-over-year results for the market at large, up about 30.7%.

Quote Of The Month

“Our goal is to keep seniors safe and happy in their own homes for as long as possible and many times that includes helping them with their own pet, taking them to dog parks or visiting pet-friendly businesses to gain that animal interaction they desire.” – Roger Ross, senior care expert and owner of the Home Instead Senior Care

Read the Full Article Here:  Senior care expert: Spending time with pets can aid older adults

 

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.
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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.
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This graph displays HH Index performance since 2002.

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This graph compares the HH Index to the price of Addus stock (non-Medicare).
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(Home Health Index August 2019 | Stoneridge Partners)

 

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

Company 7/31/19 1 mos change YTD change 7/31/18 7/31/17
Amedisys 135.06 +11.24% +15.59% 106.62 47.36
LHC Group 123.51 +3.29% +32.18% 91.55 57.9
HH Index* 129.29 +7.29% +22.96% 98.89 51.57
S&P 2908.38 +1.31% +18.36% 2822.74 2470.3
Addus 81.05 +8.14% +19.09% 67.05 33.95

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) 7/31/19 7/31/18 7/31/17
Amedisys 4770 3100 1556
LHC Group 4370 3010 1137
HH Index Total 9140 6110 3530
Addus 1020 634 399


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

Company 7/31/19 7/31/18 7/31/17
Amedisys 263% 201% 105%
LHC Group 216% 272% 121%
HH Index Average* 240% 237% 117%
Addus 186% 149% 97%


Multiples of EV/EBITDA

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

Company 7/31/19 7/31/18 7/31/17
Amedisys 26.49 22.41 18.31
LHC Group 22.83 30.17 13.35
HH Index Average* 24.66 26.29 17.65
Addus 24.84 19.51 12.75

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 for its reporting. (Home Health Index August 2019 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Care Advantage Inc., a Chesterfield County-based home health provider acquired Allegiance Home Care

CLOSED by Stoneridge

  • Stoneridge Partners represented a Florida based agency that closed in July 2019
  • Stoneridge Partners represented a Florida based agency that closed in July 2019
  • Stoneridge Partners, Partner Joe Lynch, assisted with the partnership of CAP Funds and Bayou Home Care in August 2019
  • Stoneridge Partners represented a New Mexico based  agency that closed August 2019

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 

   

 

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Home Health Index August 2019 | 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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