Stoneridge Partners’ Home Health Stocks Start Strong And Post Acute Index Premiere

Home health stocks start strong in 2020

The latest Home Health Index (HHI) from mergers and acquisitions (M&A) advisory firm Stoneridge Partners shows home health stocks have continued their strong performance into 2020, handily outpacing the broader market in January.

The HHI was up nearly 6% in January compared to December 2019. That surge easily bested the S&P 500, which was down slightly — 0.16% — in January compared to the previous month.

January marked the first month home health providers have operated under the new Patient-Driven Groupings Model (PDGM). While the effect PDGM will have across the broader industry is still unclear, early returns seem to indicate that large providers like Amedisys and LHC Group have weathered the initial storm and may be looking for gains in the second half of 2020 as new M&A or patient-acquisition opportunities emerge.

“Small and mid-sized home health businesses may have cash flow challenges come March and April,” Stoneridge Partners President Rich Tinsley said. “That could set up a scenario where bigger players see opportunities for expansion in key markets moving forward, either through direct acquisitions or patient volume growth as competitors leave the market.”

Stoneridge’s HHI tracks the stock values for Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG). The HHI also follows stock prices for Frisco, Texas-based Addus HomeCare Corporation, but doesn’t include them in its final calculations due to the company’s focus on Medicaid-supported personal care services.

Amedisys stock values were up 5.83% in January compared to December, while LHC Group stocks were up 5.48% during the same period. Addus stock was up 4.25% in January compared to December.

Stoneridge premieres post-acute care index

New for 2020, Stoneridge Partners is rolling out a second index tracking the performance of key publicly-traded post-acute care providers. The new monthly report includes stock values for the companies traditionally monitored by the current HHI and adds results for the Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health Corporation (NYSE: EHC) and Brookdale Senior Living (NYSE: BKD).

The inaugural Post-Acute Care Index shows a mixed bag for providers. As noted above, stock values for Amedisys and LHC Group both climbed in January – and Encompass Health also performed well last month with stock values up more than 10%. Alternatively, The Pennant Group and Brookdale struggled to start off the year, with stock values down 25% and 10%, respectively.

Quote Of The Month

“As we turn the page to a new decade, 2020 will mark a major turning point in not only delivering care but in helping patients achieve greater wellness.  Health systems across the world are beginning to take a more dedicated focus on the social determinants of health, the non-medical elements contributing to someone’s health and wellness.” – Adrian Schauer, CEO of cloud-based home care technology provider AlayaCare

Read the Full Article Here:  How Technology is Driving Wellness in Home Care

Articles Featuring Stoneridge

Associate Partner Tom Lillis was featured in Home Health Care News on the PDGM impact.  Read the full article here: Voices: Tom Lillis, Associate Partner, Stoneridge Partners

CLOSED by Stoneridge

  • Partner Joe Lynch represented a Texas-based agency that closed since the last Home Health Index

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 February 2020 | Stoneridge Partners)

 

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

Company 1/31/20 1 mos change YTD change 1/31/19 1/31/18
Amedisys 176.49 +5.83% +6.19% 131.12 52.88
LHC Group 145.75 +5.48% +5.80% 104.11 63.60
HH Index* 161.12 +5.67% +6.01% 117.62 58.03
S&P 3225.52 -0.16% -.016% 2707.76 2825.09
Addus 94.34 +4.25% -2.96% 60.93 36.60

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) 1/31/20 1/31/19 1/31/18
Amedisys 6200 4170 1840
LHC Group 5000 3610 1280
HH Index Total 11200 7780 4017
Addus 1470 687 410


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

Company 1/31/20 1/31/19 1/31/18
Amedisys 328% 257% 125%
LHC Group 243% 227% 127%
HH Index Average* 286% 242% 124%
Addus 222% 141% 99%


Multiples of EV/EBITDA

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

Company 1/31/20 1/31/19 1/31/18
Amedisys 32.96 25.39 15.94
LHC Group 23.30 27.09 13.63
HH Index Average* 28.13 26.24 16.88
Addus 31.59 18.35 12.04

 

The Stoneridge Partners Post-Acute Care 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)
  • Addus (ADUS)
  • The Pennant Group, Inc. (PNTG)
  • Encompass Health (EHC)
  • Brookdale Senior Living Inc. (BKD)

This graph displays Post-Acute Care Index performance starting late 2019.
[visualizer id=”11962″]

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 February 2020 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Alayacare acquired New York-based Arrow Solutions to tackle US Medicaid market
  • Summit BHC, a Tennessee provider of addiction treatment and behavioral health services, has acquired Peak View Behavioral Health, which operates a 112-bed psychiatric hospital in northeast Colorado Springs
  • Hospice Care of South Carolina, a portfolio company of The Vistria Group, acquired Agapé Hospice

Exclusively Listed For Sale By Stoneridge Partners

Do you know of any acquisitions that have taken place?  We are interested in your comments.  Contact us; Stoneridge Partners

 

Another Cartoon Favorite 

   

 

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Home Health Index February 2020 | 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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