This Home Health Index (HH Index) measures the performance of four publicly traded home health companies, all listed on the NASDAQ — Almost Family (AFAM), LHC Group (LHCG), Gentiva (GTIV) and Amedisys (AMED). This index is updated monthly. See archived updates below. If you would like to receive a monthly e-mail of this update, please e-mail us your name and e-mail address to partners@stoneridgepartners.com.
Quote of the Month:
“A government that robs Peter to pay Paul can always depend on the support of Paul”. George Bernard Shaw
May 1 Update
It was kind of a blah month for the stock market in general and a little worse for our home health index (HH Index). After a great first quarter, the S&P 500 was down 0.75% in April.
But after four straight months of terrific increases (up 44% in the first quarter alone), our HH Index lost about 4% in April….2% of which was on the final day of the month.
Our HH Index now sits at 16.27. The high was set in September, 2008 at 41.75.
The only company that showed an increase in their stock price was Amedisys, closing out the month at 14.73, up 1.87%.
April Results:
Almost Family, down 6.3%
Amedisys, up 1.9%
Gentiva, down 5.4%
LHC Group, down 4.4%
Home Health Index, down 3.9%
S&P 500 down 0.7%
We also note that Addus HealthCare’s stock, after a 37.5% increase in March, closed out April down 6.7%. They are a public company (NASDAQ:ADUS), but not in our HH Index.
Note: At the end of this column we have added a section for comments. These will not be published, and can be sent anonymously. The return email address can be left blank. If you know of any industry news or acquisitions that you feel we should be aware or if you have suggestions for our monthly column please let us know.
This first graph shows the HH Index compared to the actual prices of the individual companies that make up the chart through April, 2012.
Also note that we have updated the format of these graphs so that, by hovering your pointer over a spot, you will get the price at that point.
Stoneridge Partners Home Health Index vs. S&P 500 Index
This second chart compares the percentage change of the HH index to the percentage change in the S&P 500 index through April, 2012.
Stoneridge Partners Home Health Index 12 Months Trailing
This third graph is a 12 month trailing chart of the HH Index compared to the actual prices of the individual companies that make up the chart, through April, 2012.
HOT OFF THE PRESS:
Headline Florida: On May 2nd the feds charged 107 suspects with submitting $452 million in false bills to Medicare in seven U.S. cities. In Miami alone, 59 of those defendants — including three nurses and two therapists — were accused of trying to steal $137 million from the taxpayer-funded healthcare program.
Not surprisingly, “South Florida has the lion’s share of the cases,” U.S. Attorney Wifredo Ferrer told reporters after 22 indictments were unsealed in Miami federal court.
This follows up on last month’s announcement of the arrest of a Dallas physician, his office manager, and five owners of home health agencies who were arrested on charges related to their alleged participation in a nearly $375 million health care fraud scheme involving fraudulent claims for home health service.
Earnings Season: All four public companies will be announcing their 1st quarter earning this week. Almost Family led with their announcement on May 2. Genitva and LHC Group are next next up on May 3rd, then Amedisys on May 8.
To listen to their reports you can go to their websites (links below) for dial-in information. We will be giving a summary in next month’s update.
Revenue Growth: For the fourth quarter of 2011, we totaled the revenue for all four HH Index public companies and compared that to the third quarter. According to their earnings reports, total revenue for all four companies in the 4th quarter, 2011 equaled $1.067B compared to third quarter of $1.063B, which works out to the plus side a very modest $4M or 0.37%.
Revenue run rate based on the fourth quarter annualized follows, along with their market capitalization as of March 31, 2012 as published in Yahoo Finance:
| Annual Run Rate (M) | Market Cap (M) | |
| Almost Family | 357.3 | 243.6 |
| Amedisys | 1,483.0 | 433.8 |
| Gentiva | 1,796.8 | 270.1 |
| LHC Group | 630.8 | 348.7 |
To see our HH Index revenue worksheet just click on the following link:Download our Home Health Index Revenue worksheet
“THE PARTNERSHIP FOR QUALITY HOME HEALTH CARE” is a consortium of home health care providers including the large public companies and NAHC. Previously they put forth a proposal to limit “Outliers”, which was adopted and is reported to have produced savings to the Medicare program of $860 million.
The Partnership has made additional proposals to CMS for further controls. According to the Almost Family earnings report, “The Partnership couldn’t be more aligned with the government to put controls in place that will be effective in impacting fraud and abuse”.
THE SENATE FINANCE COMMITTEE met again last week for a hearing on Medicare fraud and abuse. Daniel Levinson, head of the Office of the Inspector General gave testimony that home health is an important ingredient in both delivering medical care and saving money. He went on to say that the government needs to develop better analytics to detect fraud, and to better regulate and monitor those that do get in.
MERGER & ACQUISITION ACTIVITY
There have not been any announcements from these public companies regarding any acquisition activity at all. The market appears to be a little muddied as buyers factor in future decreases in Medicare reimbursement, whiles Sellers want 2009 prices.
We believe this will soon change as there has been very little in the way of organic growth among these public companies. Acquisitions are an engine that can provide growth!
Announcements in the news:
Ancor Capital Partners sold Tritax Healthcare Services, a DFW home healthcare services provider to Jordan Health Services. Ancor will now focus on pediatric care.
Home Health International, Inc. (PINKSHEETS: HHI) announced that is has entered into a letter of intent to acquire Mount Aubern, Inc. dba Associated Home Health, a Medicare-certified home health agency based in Florida.
Hospice Advantage, a Michigan based hospice, announced its acquisition of HC Healthcare (formerly Hospice Complete) located in Alabama. Hospice Advantage now has over 50 locations nationwide.
Millenium Home Health Care, Broomall, PA announced that Saints Home Healthcare, a Medicare-certified home health care provider in Smyrna, Delaware is now part of their family of providers.
The Ensign Group, Inc. (NASDAQ:ENSG) announced their acquisition of Zion’s Way Home Health & Hospice based in St. George, Utah.
UPDATE: April, 2012 Results
For the month of April, the S&P 500 was down 0.75% while the Home Health Index was down 3.91%.
Percentage change in stock prices for these public companies for the month of April and Year to Date (YTD) follows:
| Company | April | YTD |
| Almost Family | -6.27% | +47.04% |
| Amedisys | +1.87% | +35.01% |
| Gentiva | -5.37% | +22.67% |
| LHC Group | -4.43% | +38.04% |
| Home Health Index | -3.91% | +38.30% |
| S&P 500 | -0.75% | +11.16% |
| Company | Multiple of EBITDA |
| Almost Family | 5.9 |
| Amedisys | 2.8 |
| Gentiva | 1.3 |
Multiples of EBITDA based upon the earnings results for the year 2011with the stock prices as of April 30, 2012.
And for additional musings on the state of homecare and what’s going on at Stoneridge Partners, visit our blog, which is updated regularly: stoneridgepartners.com/blog
Links to Google Finance: Almost Family | Amedisys | Gentiva | LHC Group
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