Stoneridge Partners’ Home Health Index Shows Continued Good News for Home Health Stocks; Firm to Launch New Post-Acute Industry Index in 2020

Stoneridge Partners’ Home Health Index Shows Continued Good News for Home Health Stocks; Firm to Launch New Post-Acute Industry Index in 2020

The newest Home Health Index (HHI) from Stoneridge Partners is in — and home health stocks were up once again.

Stock values rose 2.5% in December over November’s results according to the HHI. Even though December’s results were no match for November’s 19% surge, it still represents good news for home health companies heading into the launch of the Patient-Driven Groupings Model (PDGM) on January 1, 2020.

“December was another good month for Amedisys and LHC Group,” Stoneridge Partners President Rich Tinsley said. “Leadership from both companies said they were confident in their ability to weather the PDGM storm, and pre-implementation returns suggest they were right.”

The monthly index from healthcare mergers and acquisitions advisory firm Stoneridge Partners has traditionally tracked the stock values of Baton Rouge, La.-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, La.-based LHC Group, Inc. (Nasdaq: LHCG). The HHI has also monitored stock prices for Frisco, Tx.-based Addus HomeCare Corporation (Nasdaq: ADUS), though they are not included in the HHI’s final calculations due to its Medicaid-heavy revenue mix.

Amedisys stock values were up 1.95% in December. Meanwhile, LHC Group stock values were up 3.16% during the same period. Addus stock was up 4.12% in December compared to November. Overall, home health stocks were mostly aligned with the broader market’s performance in December, as the S&P 500 was up 2.78% compared to the previous month.

Stoneridge Partners Adds New Index Tracking Performance of Post-Acute Care Companies

With the ongoing changes to the operating landscape for home health companies and the burgeoning focus on coordinated care, Stoneridge Partners will introduce a new index starting in 2020 that also monitors the performance of select publicly-traded post-acute care providers. Starting in January, this new monthly compendium will not only include stock values for the current HHI companies, but also for Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health (NYSE: EHC) and Brookdale Senior Living (NYSE: BKD).

“The team at Stoneridge comes from all across the healthcare spectrum, and because of that we pride ourselves on being able to see the big picture,” Tinsley said. “Adding a post-acute index will help us get a clearer view of the rapidly-evolving healthcare landscape, which is meaningful both to us and our clients.”

Quote Of The Month

“Homecare continues to march forward with strong policy-based and political support as the preferred focus for health care innovations,” – William A. Dombi, president of the National Association for Home Care & Hospice (NAHC).

Read the Full Article Here:  Why Homecare is the Answer to 2020’s Big Health Care Questions

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 January 2020 | Stoneridge Partners)

 

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

Company 12/31/19 1 mos change YTD change 12/31/18 12/31/17
Amedisys 166.2 +1.95% +42.25% 116.84 52.71
LHC Group 137.76 +3.16% +47.43% 93.44 61.25
HH Index* 151.98 +2.50% +44.55% 105.14 56.44
S&P 3230.78 +2.78% +29.47% 2495.44 2673.61
Addus 97.22 +4.12% +42.84% 68.06 34.8

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) 12/31/19 12/31/18 12/31/17
Amedisys 5690 3700 1810
LHC Group 4750 3260 1200
HH Index Total 10440 6960 3888
Addus 1340 773 398


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

Company 12/31/19 12/31/18 12/31/17
Amedisys 301% 228% 123%
LHC Group 231% 205% 120%
HH Index Average* 266% 217% 120%
Addus 224% 158% 96%


Multiples of EV/EBITDA

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

Company 12/31/19 12/31/18 12/31/17
Amedisys 30.23 22.55 15.68
LHC Group 22.13 24.41 12.84
HH Index Average* 26.18 23.48 16.38
Addus 31.77 20.64 11.67

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 January 2020 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Care Advantage, Inc. acquired Amaisa Home Care in Leesburg, VA
  • Discovery Behavioral Health acquired Associated Behavioral Health Care of Seattle
  • AlayaCare acquired Procura, a division of Complia Health and one of AlayaCare’s largest global competitors
  • The Pennant Group, Inc. (NASDAQ: PNTG), the parent company of the Pennant group of affiliated home health, hospice and senior living companies, today announced that a subsidiary of Cornerstone Healthcare, Inc., Pennant’s home health and hospice portfolio subsidiary, has acquired the assets of Desert View Home Health, which provides home health services in Clark County, Nevada.
  • Traditions Health, LLC has purchased privately owned Round Rock, Texas-based Guiding Hospice, growing the company’s footprint in the Austin area.
  • HouseWorks, a Massachusetts-based agency acquired Extended Family
  • Discovery Behavioral Health has acquired Casa Palmera, a nationally recognized facility in San Diego that provides treatment for adults with drug and/or alcohol addiction.

CLOSED by Stoneridge

  • Stoneridge Partners, Partner Joe Lynch represented a Texas-based agency that closed January 2020
  • Stoneridge Partners, Partner Ben Bogan represented an Illinois hospice agency that closed January 2020
  • Stoneridge Partners, Associate Partner Coley McDevitt represented a Texas home health agency that closed January 2020

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 

   

 

More

Home Health Index January 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

Please follow us on Facebook  and Linkedin

Facebooktwitter