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Home Health Stocks Continue to Rise as Post-Acute Care Stock Values Fall

More than three months after the beginning of the nationwide quarantine due to COVID-19, the U.S. economy has showed signs that it is stabilizing. But according to the latest Home Health (HHI) and Post-Acute Care (PAI) Indices from national healthcare mergers and acquisitions firm Stoneridge Partners, not all post-acute care providers have been as lucky.

The HHI for June rose by 5% over May’s results, but the PAI went in the opposite direction – dropping more than 3% last month as the coronavirus continues to affect the senior care industry.

“I’m not surprised that home health stocks continued to tick up last month,” said Stoneridge Partners President and CEO Rich Tinsley. “Post-acute care stocks, on the other hand, took a slight – but expected – tumble. It makes sense when you think about the impact this virus is having on the industry. People still have concerns about congregate care right now, but home-based care is looking good.”

Home Health Index

The Stoneridge HHI follows the stock values of Baton Rouge, Louisiana-based Amedisys, Inc. (Nasdaq: AMED) and Lafayette, Louisiana-based LHC Group, Inc. (Nasdaq: LHCG).

Amedisys stock values rose more than 3% in June over May, while LHC Group stock increased 7% during that same period, leading to a 5% improvement for the overall HHI in June. In comparison, the S&P 500 rose by just less than 3%.

Post-Acute Care Index

Stoneridge tracks stock values for post-acute care companies in its PAI, which also includes Amedisys and LHC Group, as well as Addus HomeCare Corporation (Nasdaq: ADUS), The Pennant Group, Inc. (Nasdaq: PNTG), Encompass Health Corp. (NYSE: EHC) and Brookdale Senior Living (NYSE: BKD).

Even including the positive results from Amedisys and LHC Group, the PAI still dropped just more than 3% overall in June. Brentwood, Tennessee-based Brookdale took the biggest month-over-month fall – with a business model that’s mostly centered around senior living communities, Brookdale’s stock value plummeted by more than 19% last month.

“Senior living operators like Brookdale have been hit hard by the coronavirus,” Tinsley said. “It’s going to take them longer to rebound than it will for home health companies.”

Meanwhile, Birmingham, Alabama-based Encompass saw its stock values fall by more than 15%. Encompass operates a mix of inpatient rehabilitation hospitals, home health and hospice agencies.

Eagle, Idaho-based Pennant Group — which operates home health, hospice and senior living businesses — saw its stock dip more than 11% in June compared to May. And stock values for Frisco, Texas-based Addus, which focuses on Medicaid home-based care, fell more than 6%.

“Post-acute providers offering a diverse mix of services have been better able to weather the pandemic overall, but they still don’t have the stability of in-home, Medicare-reimbursed providers like Amedisys or LHC Group right now,” Tinsley said.

Quote Of The Month

“Much of the burden of COVID-19 on older adults has rightly been focused on long-term care facilities, where the majority of deaths have taken place,” – Dr. Madhuri Reddy, co-founder and chief medical officer at CareAcademy.

Read the Full Article Here: Home Care Agencies Starting to ‘Wake Up’ to Infection Control

Articles Featuring Stoneridge

Stoneridge Partners has a new updated website. Visit it here: Stoneridge Partners

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 July 2020 | Stoneridge Partners)

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

Company 6/30/20 1 mos change YTD change 6/30/19 6/30/18
Amedisys 198.54 +3.27% +19.46% 121.41 86.7
LHC Group 174.32 +6.77% +26.54% 119.58 85.34
HH Index* 186.43 +4.91% +22.67% 120.50 86.02
S&P 3100.29 +1.81% -4.04% 2941.76 2706.92
Addus 92.56 -6.91% -4.79% 74.95 56.7

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) 6/30/20 6/30/19 6/30/18
Amedisys 6730 4270 2880
LHC Group 5830 3770 2950
HH Index Total 12560 8040 5830
Addus 1280 945 637

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

Company 6/30/20 6/30/19 6/30/18
Amedisys 340% 247% 186%
LHC Group 279% 206% 266%
HH Index Average* 310% 227% 226%
Addus 214% 173% 149%

Multiples of EV/EBITDA

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

Company 6/30/20 6/30/19 6/30/18
Amedisys 327.90 24.27 20.81
LHC Group 27.87 21.67 29..56
HH Index Average* 27.89 22.97 25.19
Addus 33.11 23.05 19.60

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 July 2020 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Tennessee-based Alleo Health System has acquired Upper Cumberland Hospice and Palliative Care Services.
  • Summit BHC, a leading provider of addiction treatment and behavioral health services, acquired Highland Hospital, a 131-bed psychiatric facility in Charleston, West Virginia.

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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

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Home Health Index July 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