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Growth of Home Health, Post-Acute Care Stocks Continues in August

After a strong surge in July, stock values for home health and post-acute care providers moderated but continued their upward trajectory in August according to the new Home Health and Post-Acute Care Indices from national healthcare mergers and acquisitions firm Stoneridge Partners.

The home health sector has continued its steady rebound from the spring’s coronavirus-related disruption, while operators in the broader post-acute care landscape have also made positive gains in the face of persistent headwinds. Overall, the Home Health Index (HHI) added to July’s gains by nearly 5% in August, and the Post-Acute Care Index (PAI) grew by almost 2% over the same period.

“While gains like those we saw in July are exciting, I think this month’s numbers tell an even better story,” said Stoneridge Partner President and CEO Rich Tinsley. “Large swings – even in a positive direction – can mean volatility, but sustained, incremental gains show some stabilization in the market. Home health providers have pretty much said their volumes have recovered to pre-COVID-19 levels — or even higher. I’m hopeful this means we’re back on track for consistent growth.”

The S&P 500 also showed improved performance, up more than 7% in August compared to the previous month.

Home Health Index

The Stoneridge Partners HHI tracks the stock values of Amedisys Inc. (Nasdaq: AMED) and LHC Group Inc. (Nasdaq: LHCG), two of the country’s largest home health providers. Amedisys and LHC Group both have their headquarters in Louisiana.

In August, Amedisys saw its stock value rise more than 3% over July’s results. LHC Group’s stock value saw even larger gains — improving nearly 7% on a month-over-month basis.

“Both companies announced some interesting moves in August,” Tinsley said. “LHC Group announced another joint venture, this time with University Health Care System. On its end, Amedisys beefed up its personal care network by teaming up with BrightStar Care, a huge home care franchise company.”

Year to date, the HHI is up more than 48%.

Post-Acute Care Index

The PAI combines Amedisys and LHC Group stock values with values for Addus HomeCare Corporation (Nasdaq: ADUS), The Pennant Group Inc. (Nasdaq: PNTG), Encompass Health Corp. (NYSE: EHC) and Brookdale Senior Living Inc. (NYSE: BKD).

LHC Group and Amedisys helped to buoy the PAI in August, as Brookdale, Encompass Health and Addus all saw small dips in their stock values.

Birmingham, Alabama-based Encompass Health’s stock value was down just more than 4% in August compared to July, while Brentwood, Tennessee-based Brookdale’s stock value dropped less than a percent over that same period. Frisco, Texas-based Addus — which recently announced plans to exit the Nevada market due to Medicaid rate challenges — saw its stock dip almost 3% in August compared to the previous month.

But the strongest performance in the August PAI belonged to Eagle, Idaho-based The Pennant Group, which saw its stock value soar by almost 48% in August compared to July.

Quote Of The Month

“Many people living with serious medical illnesses also suffer from comorbid behavioral health issues,” according to a recent report from the Center to Advance Palliative Care (CAPC).

Read the Full Article Here: Providers Seek to Integrate Behavioral Health with Palliative Care

Articles Featuring Stoneridge

View our quarterly M&A webinars on current valuation trends, deal flow, and pertinent regulatory changes in home health, home care, hospice, ID/DD, and behavioral health industries. Visit the Speaker Series Webinar Library on our website.

Our Partner and Executive Vice President Benjamin Bogan discussed the current state of the health care M&A market in Home Health Care News.

Our Associate Partner Tony Siebel discusses the current state of the M&A market for Medication-Assisted Treatment Clinics in our most recent Stoneridge Q&A.

Traditions Health Acquires Physician’s Choice Hospice and Palladium Hospice. Our Partner and Executive Vice President Ben Bogan acted as sell side advisor to Palladium Hospice.

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 September 2020 | Stoneridge Partners)

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

Company 8/31/20 1 mos change YTD change 8/31/19 8/31/18
Amedisys 241.9 +3.31% +45.55% 128.71 125.01
LHC Group 208.44 +6.83% +51.31% 118.5 98.93
HH Index* 225.17 +4.91% +48.16% 123.61 111.97
S&P 3505 +7.15% +8.49% 2926.46 2884
Addus 93.66 -2.85% -3.66% 87.98 64.90

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) 8/31/20 8/31/19 8/31/18
Amedisys 8210 4490 3980
LHC Group 6440 4130 3430
HH Index Total 14650 8620 7410
Addus 1390 1150 804

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

Company 8/31/20 8/31/19 8/31/18
Amedisys 416% 248% 252%
LHC Group 308% 203% 253%
HH Index Average* 362% 226% 253%
Addus 188% 203% 176%

Multiples of EV/EBITDA

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

Company 8/31/20 8/31/19 8/31/18
Amedisys 33.92 24.92 26.41
LHC Group 30.79 20.33 33.19
HH Index Average* 32.36 22.63 29.80
Addus 24.93 27.74 22.30

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 September 2020 | Stoneridge Partners)

Recent Transactions From Around The Country

  • Jet Health Inc., a home health provider, acquired Carrington Hospice Care Inc.
  • Bristol Hospice acquired Irvine-based Remita Health, a hospice provider with six locations in Arizona.
  • Alleo Health System acquired Atlanta-based Angel Heart Hospice.
  • Actinium Healthcare Holdings – a Dallas, Texas-based private equity firm – acquired Central Home Health Services of Texas Inc.
  • Hometown Healthcare Management acquired Lane Nursing Home.

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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 September 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