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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.

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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

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Associate Partner Discusses Behavioral Health Industry Response to COVID-19 and Planning for a Strategic Transaction

How has the COVID-19 pandemic affected the behavioral health industry? How have providers responded to the spread of the virus, and do you think any of those changes will be long-term?
The coronavirus has affected our industry in a number of ways, both positively and negatively. The most obvious is the need for greater safety precautions, like adding more protective gear for employees; accommodating social distancing requirements; incorporating technology for remote work, telemedicine and digital health; and putting new protocols and procedures in place to manage any contagious patients or employees.

But I think we’ve also seen an increase in patient demand for services, thanks both to the additional stress I think we’ve all felt during the quarantine, and the availability of new, “safer” – and possibly more cost effective – forms of communication and treatment providers have brought online in response to the nationwide shutdown. I think many of these new practices are likely to stick around. Some of the old ways may return – and should – but I think providers will keep telemedicine and some of their other new processes once things are back to “normal.”

From what I’ve seen, the majority of people I interact with in the industry transitioned very well. They were quick to get good advice, implement safety precautions, and adapt to new technology and procedures. I think we’ll see a more cost-effective business model going forward, but I think that will be accompanied by an increase in demand for services over time as the stress of the pandemic continues to affect our patients.

 

What does the market for behavioral health companies look like right now, and what do you predict for the rest of 2020/early 2021?
The behavioral health market is extremely attractive right now. Like I said, I believe patient demand will increase over the next two years in response to current stressors. We’re seeing new advances in treatment and technology, as well, and we’re getting better and better at tracking patient outcomes.

From an investor’s standpoint, this industry has quality margins, profit potential and longevity. For the rest of 2020, I think we’ll see an increase in census across most sectors in both digital and in-person treatment. The behavioral health field is well-suited to telemedicine, and I think our providers have set themselves up well to continue providing quality treatment regardless of quarantine or travel restrictions.

 

What are your recommendations for a behavioral health company that is poised for growth and ready to take the next step?
First of all, I think you need to have a good understanding of your own goals – for your company, and if you’re the owner, for your own personal future. Make some decisions about your timeframe and be honest with yourself about your company’s best and worst qualities.

If you’re ready to grow your company by opening additional locations, or by buying competing or complementary businesses you have synergies with, you need to decide which route you want to take. You can be very disciplined with your finances, save up and deploy those funds in the best way possible, or you can raise capital through loans or inviting investors to buy a portion of your business.

The main point is to think objectively and clearly, make plans and goals, and stick to them. Don’t be afraid to seek out expert advice. Make sure you have a solid roadmap that includes clear benchmarks and exit strategies. When you have a plan in place, you’ll be less likely to let personal emotions or what’s going on in the world or the industry affect your course of action.

If you’re thinking about taking that next step right now, let’s talk. It’s my job to take a look at your situation and help you determine whether you should find capital, try to grow organically, become more efficient on your own or buy your neighboring competition. There are plenty of both long- and short-term answers to consider. I can help you think through what’s best for you and which next step makes the most sense based on your goals.

 

What are potential buyers looking for in a behavioral health company right now?
Buyers want to be sure they can recreate the company’s same income and profitability once they have an ownership interest. That way, they know if they can recognize new synergies, identify cost savings or expand their footprint, they may be able to increase profitability while minimizing their risk.

Most buyers, regardless of market sector or service line, are looking for the same basic things – a solid business with a stable history, as few complaints or issues as possible, a positive culture with good human capital, and some potential runway for growth. Some may be looking for a distressed asset where they think they can provide better operations. Others are looking for something that’s already working extremely well that they can make stronger and add onto.

Part of what I love about my job is getting to know the buyers in our industry and what’s important to them. That way, I can seek out the best opportunities for my clients – when I have a client who’s a perfect fit for the right buyer, everybody wins. I can show that buyer why my client’s company would be a valuable asset for them to acquire and how it will maximize their synergies.

All in all, I think buyers are just looking for companies who do good work and do it well – keep your business reputation as spotless as possible, be honest and transparent about your operations and hire talented people that work well together. Be excellent and efficient at what you provide, and have the tools in place that will help you show your results.

 

What are some of the most important factors that affect valuations for behavioral health companies?
There are lots of factors that affect valuations, like your company’s size, geography, need for the services you provide in your area, census, income sources, etc. But I’m seeing an acceleration in consolidation right now, in my opinion, and that’s also affecting some valuations. I used to think it would take longer for the space to mature, but now I think that timeframe has moved up considerably. Buyers are more aggressive and want quality assets.

Two things seem to be happening – on one hand, buyers seem to be swarming around providers that operated on fairly thin margins and were just getting by prior to the quarantine shutdown, yet found a way to make it through a pandemic and are still surviving. Buyers know those businesses need help and capital, and the businesses know it makes sense for them to take on a partner and begin to compete and grow. But that may result in valuations that come in at a lower multiple than they would have a year ago.

On the other hand, the providers that were thriving pre-pandemic, had strong cash reserves, maybe even increased their census and made it through quarantine without any big problems are even more in demand than they previously were, have proven some of their stability and resiliency. I believe they will command an even higher multiple than this time last year.

In my opinion, the time is right for these businesses to take an attractive offer and start to build and grow to the next level. Large providers are beginning to get very aggressive in their growth. They’re consolidating amongst each other and buying up smaller operators and competitors. My recommendation would be, if you’re at all considering selling or growing your business over the next year or two, don’t wait. Team up with a quality buyer or find a partner for the future that fits into your culture so you’re not competing with these larger businesses at some point down the road.

 

If someone was thinking about the possibility of putting their behavioral health company on the market within the next year, what advice would you give them?
First off, I’d tell them I think they are hitting the market at a fantastic time. There’s a ton of investment begging to be deployed in the behavioral health space on a quality asset. So, if they have a solid business – combined with the influx of patients I think we’ll see over the next months and years – I think it’s a fantastic time to sell all or a portion of your business while increasing revenues and profits.

I would also advise them to decide what their goals are, and if after some thought they are ready to go to market or raise capital with the help of a growth partner, then it’s time to begin planning. Stoneridge will help them look at their business and identify its strengths and weaknesses. We’ll work with them to put the company in the best position for sale, with the help of our Strategic Consulting Group or other vendors if needed.

I can’t overstate how important it is to be prepared before you go to market. That’s the perfect time to make sure your expectations, timelines and goals are set, and that you’ve done all you can to make your business appear as strong as possible so it’s attractive to a potential buyer.

From there, my job is to streamline the process so owners can continue running the day-to-day operations of their business while I manage the transaction in the background. I sold my own company a few years ago, so I know it can be a stressful and time-consuming process. I wish I’d had someone to take on the responsibility of finding the right buyer, answering questions and helping with negotiations. That’s why I understand how important it is to have a trusted advisor on your side who can minimize your stress and give you objective advice so you can have peace of mind during the transaction process.

 

What do you see for the future of the behavioral health industry?
I do get a lot of folks who ask me what I think is comping up for the industry and how to prepare for it. In my opinion, there are a couple of key things we can expect to see.

First, I think we need to realize that telehealth and digital medicine are here to stay in some way, shape or form, and will likely grow substantially. I’m seeing a lot of companies right now offering tech-based apps or programs in the behavioral health space, but they’re still a little siloed. One might be focused on alumni, one on a directory of providers, one on telemedicine, etc. They all have their own value, but I think eventually someone will create good, comprehensive technology that will incorporate all these multiple functions and streamline how they’re used to provide quality care. There’s still definitely plenty of room for technology to change things in this space.

I also think we’ll see some changes in the way providers are paid for their services in the coming years. There’ve been some conversations about only paying for services that are considered “successful” and defining what success really means. I think those conversations will continue, particularly as the market further consolidates. Large providers and payors are used to collecting outcomes data and supporting programs or services that deliver results. They will lean towards setting expectations about certain goals that need to be achieved in order to get paid for your work. So this is a good time to start thinking differently about the care you provide and how you’re compensated for it.

Finally, I think we will need to continue educating the public about the vast spectrum of behavioral health services these companies provide and the positive influence they can have on clients and patients. For example, in the substance use disorder segment, we need the public to have a better understanding of how addiction works and how patients in recovery can live a life that’s full of potential.

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You’ll be speaking at Home Health Care News’ upcoming Capital + Strategy conference. Who is Capital + Strategy for – who should be thinking about adding this to their list of conferences to attend next year?
Capital + Strategy is sponsored by Home Health Care News, and it covers a whole spectrum of issues affecting home health and hospice providers. It’s for anyone who wants to know what’s going on in our industry, anyone who wants to know more about current trends. It’s one to keep an eye on for next year; this year’s event is already sold out.

 

What will you be discussing at Capital + Strategy?
I’ll be talking about the current state of the mergers and acquisitions industry, trends we’re seeing in 2020, and what kind of inventory is out there in home health and hospice from a deal perspective. It will be an update on the market generally and current deal flow.

 

Do you think mergers and acquisitions activity in any particular market segment will be “hotter” than the others in 2020, and if so, why?
I think hospice M&A will continue to be extremely hot, which is really a function of supply and demand. There are more providers who want to get into the hospice market than there are available hospice agencies for sale, so it’s a sellers’ market. Valuations and prices are very robust right now – and that’s just a continuation of something we’ve been seeing for the past couple of years.

 

In your recent M&A experience, have you noticed operators seeking to add different service lines in order to expand their continuum of care, or are they just looking to grow existing service lines? Which do you think will be most prevalent in 2020 and why?
Buyers are still seeking to add both to existing service lines and to expand services. But if you look back 15 years ago or so, providers were much more siloed. We are seeing more buyers who are looking to provide a continuum of services – episodic services, intermittent services, palliative and end-of-life care. They’re looking to build capacity in post-acute community care and crossing historical business lines. Many still want to increase their scope across geographies, but now we see more buyers trying to build size within one geography by investing in new services and growing their market penetration.

 

We’re two months into PDGM – what are you hearing from your industry contacts about how it’s affecting operators so far? How do you think it will affect M&A activity in 2020?
It’s still early, but from an operations perspective it is definitely having an impact. As far as how it will impact provider cash flow, we probably won’t know that until the end of this month, possibly even April or May. Providers still have cash coming in from the end of 2019, so any interruptions in cash flow probably haven’t hit the bottom line yet. I do think it’s had less of an impact, however, than the new regulations on skilled nursing facilities. I think we’re just in a wait-and-see mode right now. Providers are still just working hard and waiting to see how it all comes out – to be determined.

 

Has PDGM had a different effect on smaller providers vs. larger providers? If so, how?
I think from an M&A perspective, PDGM is going to create a bigger divide between the small and medium-sized providers and the larger providers. Impacts to cash flow may limit smaller providers from investing in growth opportunities, and reductions in RAP payments may convince some smaller agencies to sell. Newer transactions have been a little slow to come to market because everyone’s waiting to see what the valuations will look like. But I still think 2020 will be a good year for M&A, particularly a little later in the year.

 

Signs seem to indicate that the next step will be a unified post-acute care payment system. Is that on the horizon, in your opinion? If so, what do you predict the affect will be on the in-home care industry?
We’ve been talking about unified payments for a long time, and I think it will stay part of the conversation, but it’s probably three or more years out from being a reality. It’s going to take a lot of work to put such sweeping changes into place, but I think we’re heading in that direction – if we can get there. It’s not a sure thing. I think it’s probably the right way to go, but we won’t be there for likely three to five years.

 

If you’re in the early stages of determining the next steps for your home care, home health or hospice business or potentially considering a sale, where should you start?
If your horizon is less than five years at this point, I would start looking around the market now, because valuations are high and the future is uncertain. It’s time to be looking at potential exit strategies, or perhaps opportunities for partnerships. Reach out to people who do the kind of work we do at Stoneridge to begin managing your future – should you enter the buyers’ market and grow? Should you sell and move on? The time is right to ask. Staying the same may not be a viable answer with potential reimbursement changes like unified payments in our future. Now is the time to maximize your current value.

 

What is something operators are surprised by/don’t know/don’t expect about the M&A process?
It sounds simple, but the first thing sellers need to be sure of is that they really want to sell. It can be an emotional process – in many cases, sellers have put their lives and souls into their businesses, so you have to be sure you’re ready for the ups and downs of the negotiation process. And a lot of sellers are surprised at how intense that negotiation process can be. You’re not selling a house or a car – every transaction is different. These transactions are not cookie-cutter. Each one is multi-faceted and every distinct piece has to be negotiated. There’s a lot more to it than just finding a buyer, it’s finding the right buyer and negotiating the right terms. It can be a very time-consuming process. But that’s why I love the work we do at Stoneridge – we get to walk providers through this process step by step, advocate for them during negotiations and answer all their questions. We’re the advisors they can trust to help them achieve their goals.

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Senior Vice President and Associate Partner Talks About Challenges Facing ID/DD Providers and Effects of COVID-19 on Market Activity

You bring years of experience in working with Intellectual Disability/Developmental Disability (ID/DD) providers to Stoneridge. Tell us a little bit about your background.
I’ve spent more than a decade working in the ID/DD industry, most recently as the Vice President for Business Development at BrightSpring, formerly known as ResCare. I’ve done a little bit of everything – pipeline building, financial analysis, deal structuring, and integration. Deals I’ve helped to close range in revenue size from $500,000 to more than $40 million.

 

Obviously, the spread of coronavirus is on everyone’s minds. How do you see COVID-19 affecting ID/DD providers? Which of the changes they’re making in response to the virus are short-term vs. long-term? Are there any silver linings for ID/DD providers as the country grapples with the outcomes of this pandemic?
In the short-term, I think they’ll be dealing with the same problems facing all other healthcare providers – specifically, lack of PPE and figuring out how to provide their services in close confines while maintaining safety for staff and individuals. Additionally, they’ll have to contend with industry-specific issues, like lack of reimbursement for day supports and reduced availability (if at all) of non-medical transport and drop-in services.

 

Over the long-term we need to have a conversation about emergency preparedness. There needs to be a push for legislation providing alternative billing and funding mechanisms in the event of a pandemic. And we need to be thinking about cross-training staff to fill multiple roles, especially for residential/day supports.
I think if there’s a silver lining, it’s that in an industry where the biggest challenge for a long time has been recruiting and retaining Direct Support Professionals (DSPs), there has been a huge influx in employment applications from people with previous experience in food service, hospitality, manufacturing, etc. We have an opportunity to increase the workforce dramatically.

 

Beyond COVID-19 – what do you see as the biggest challenge facing the ID/DD field in 2020?
Just because we’re seeing an increase in employment applications today doesn’t mean we’re out of the woods. Retaining quality staff when the economy “opens back up” will still be a challenge. With stagnant reimbursement and ever-increasing fixed costs, it’s a challenge to pay staff what they’re truly worth in this industry. When Amazon can pay $3 to $5 more per hour than we can afford to pay DSPs who care for some of our most vulnerable citizens, there’s a problem.

 

Value-based care and coordination of care across a spectrum of services are hot topics among a variety of different healthcare industries – how do those conversations touch the ID/DD world?
We’ve seen several states go to managed care organization (MCO) models over the past five years, and I would expect to see that trend continue. Traditionally this leads to further consolidation and merger activity, and ultimately fewer providers in a state.

 

The market for ID/DD providers has been strong over the past few years – do you see that continuing in 2020, and if so, why?
With increasing state regulation, calls for more technology and reporting capabilities, the introduction of MCO models and stagnant reimbursement, I think the trend will only increase going forward. There has never been this much strategic interest, or so many financial/private equity buyers in the space.

 

If someone is thinking about selling an ID/DD agency right now, what do they need to know? What advice would you give them based on your knowledge of the market and understanding of the industry?
Right now, there are two main types of transactions occurring – “platform” acquisitions and “add-on” acquisitions. Platforms are typically $8-10 million in annual revenue, meaning most ID/DD providers are going to fall into the latter category. There are definitely different strategies for both of these kinds of companies when preparing for a sale, so sellers who turn to experienced advisors with a good understanding of those strategies will likely get better results. That’s our job – we’re here to help interested sellers get the information they need to start off on the right foot.

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When it comes to selling a home health care business, one of the hardest parts is often deciding on an accurate, unbiased value. The problem here is that you, as the business owner, will likely factor in things such as hard work, whereas a potential buyer won’t take this into account when examining the price of your home health care business for sale.

So, to make things easier all around, how do you accurately evaluate your home health care business? Which methods work the best? Here are a few of the tried and true methods that professionals use in today’s market.

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How to Value A Home Health Care Business

Liquidation Value Method

At its most basic, the liquidation value is the overall amount a person would receive for selling their business assets in an open market. Unfortunately, assets like used beds and furniture do not create much of a value for owners.

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Income Capitalization Method

Most applicable for larger businesses, this method is essentially the final result of dividing the expected business earnings by the capitalization rate. The idea behind this method is that the value is defined by the earnings and the capitalization rate is what’s used to relate the two factors.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

“Rule of Thumb” Method

This method of valuation is a very general method. The valuation is done based on what the buyer can expect to generate if it continues to run and generate income the way it has been historically. This method is a good place to start but is too general to go off indefinitely, so it’s good to use another method alongside this one.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Discounted Cash Flow Method

This method is one of the most accurate methods. It uses business value estimation that is based around both businesses earning power and risk. It also considers the projected income stream of a business and is ideal for businesses that have high growth.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Market Comparison Method

The market comparison valuation method is used widely among both experts and individuals, as it is said to be a great reflection of what a business is truly worth. This method uses a direct comparison between the sales of one business and the sales of similar businesses to generate a relatively accurate value.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Multiple of Discretionary Earnings Method


Using a business’s earnings and 14 operational and financial performance and risk factors, the MDE method is best suited for small businesses. The method is based on income and lets owners in on the ways in which various factors affect the value of their business. It can be used as a value measurement and business assessment tool.

There are a number of methods to choose from when coming up with a value for your small home health care business. The method that works for you will depend on your goals, financial history, assets, and business growth rate. Some are better for small businesses and others for larger businesses, which is something to consider when deciding which method to use from the ones suggested above.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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Selling any business can be daunting – but listing your home health care business for sale can be even more so. Many sellers fall victim to basic mistakes, which end up costing them dearly. To help you avoid these unfortunately common mishaps, here are 5 to look out for.

Telling your clients too soon

For your home health care clients, whom you’ve likely grown an attachment to, and who have grown to care for you, the sale of your business can be an upsetting time. With the sale comes many changes, which can be hard on the clients who depend on you.

Once you’ve secured a sale, you might be eager to share the news with your clients, if only to essentially “rip the band-aid off”. While this is a step you need to take eventually, telling the clients too soon is a mistake that many sellers make.

Sharing the information too soon can cause undue stress, so to avoid it, share the information later on in the sale process. By this time, you’ll know more and have a timeline to share.

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Breaking client confidentiality

When speaking with a potential buyer, it’s easy to slip up and reveal confidential client information. This is a mistake that can be made too easily but can have large legal consequences.

You’ll need to ensure that you don’t reveal too much about your clients until the sale has gone through and been confirmed.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Letting rumors loose

Rumors can run rampant throughout a business. In doing so, they can cause stress and unrest among employees and management.

Try to avoid leaking the potential of a sale until the decision has been made indefinitely. Then, you can speak with your team when you’re ready and prepared to deal with the situation instead of being blindsided with an uncomfortable conversation.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Neglecting risk management

Selling your home health care business should always include risk management consideration. Yes, you’re selling your business. However, this doesn’t mean that you’re no longer liable for your clients.

Take care to ensure that their privacy and care records are dealt with responsibility after the sale. You might also want to ensure that you have access to records in case a complaint about past care comes up.[/fusion_text][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

Being unsure

One of the most critical mistakes you can make selling your business is to be unsure. Selling is a big decision and as such, it shouldn’t be taken lightly or rushed. You should also take ample time to consider every aspect of the process and what they mean.

In addition, one you do make the final call to sell, you should take time to ensure you have everything in order. This will make the entire process easier and ensure fewer setbacks and lost money.

With the right strategies and intent, selling your carefully built home health care business can be a huge financial gain – not to mention a weight off your shoulders. It should be done carefully, though, with tons of attention paid and with the most common mistakes avoided.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container hundred_percent=”no” hundred_percent_height=”no” hundred_percent_height_scroll=”no” hundred_percent_height_center_content=”yes” equal_height_columns=”no” menu_anchor=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” status=”published” publish_date=”” class=”” id=”” link_color=”” link_hover_color=”” border_size=”” border_color=”” border_style=”solid” margin_top=”” margin_bottom=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_position=”center center” background_repeat=”no-repeat” fade=”no” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_blend_mode=”none” video_mp4=”” video_webm=”” video_ogv=”” video_url=”” video_aspect_ratio=”16:9″ video_loop=”yes” video_mute=”yes” video_preview_image=”” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ spacing=”” center_content=”no” link=”” target=”_self” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” hover_type=”none” border_size=”0″ border_color=”” border_style=”solid” border_position=”all” border_radius=”” box_shadow=”no” dimension_box_shadow=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” margin_top=”” margin_bottom=”” background_type=”single” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_image_id=”” background_position=”left top” background_repeat=”no-repeat” background_blend_mode=”none” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” filter_type=”regular” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″ last=”no”][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

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