Stoneridge Partners releases January 2015 home health index

Don Cummings, President of Stoneridge Partners

The Stoneridge Partners Home Health Index (HH Index) ended 2014 on another strong note—up 30% for the second straight year. In a bourgeoning home health care market, the index is rapidly gaining followers as the comprehensive source to follow for information about mergers and acquisitions in the home health care and hospice markets.

The HH Index is updated monthly and measures the performance of four publicly traded home health companies—all listed on the NASDAQ. The index releases the year-end results of 2014, updates on major acquisitions that have taken place over the year, and looks at projections for 2015.

When the home health care industry was hit with bad news regarding the Medicare re-basing, many field experts forecasted a blow in NASDAQ numbers, but we’ve seen just the opposite—higher consistent numbers, says Don Cummins, president and founder of Stoneridge Partners.

The all-time high for the HH Index was set in September, 2008 at 41.75. The low since then was set in October, 2011 at 11.65. Two years ago, the index was at 15.85, and now it rests at 27.13.

“Because of the upswing over the past two years, we continue to be optimistic about the future of homecare and hospice,” says Cummins.

Following the trends, it looks like home health and hospice consolidation will only continue to grow. With both industries experiencing financial challenges from reimbursement pressure to government payer and competition, the consolidation trend is up and driven by the need for scale and better operating leverage to maintain and increase profits.

The growth in the senior population, numbered 39.6 million in 2009 (the latest year for which data is available), will, by 2030, be up to about 72.1 million, more than twice the number in 2000, according to the U.S. Department of Health and Human Services.

HH Index 2015 predictions:

  •     Public companies will continue to increase in price and will be selling for a minimum of 100% of revenue.
  •     The index will end the year at 33.
  •     There will be at least two very sizable transactions, as large integrated healthcare companies expand their home health presence.
  •     Skilled nursing companies will continue to expand into home health.
  •     After years of increases, the total number of Medicare home health agencies will decrease.

Stoneridge Partners is a mid-market healthcare merger & acquisition advisory firm that sells home health agencies, hospices, and other healthcare companies. Stoneridge Partners is a member of the National Association for Home Care, the National Private Duty Association and many state home care associations.

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