Home Health Joint Ventures Lead to Stock Rally in May

Home health companies once again saw market gains in May, according to the latest Home Health Index tracked by Stoneridge Partners. The home health index, which tracks the stock prices of Amedisys (Nasdaq: AMED), Almost Family (Nasdaq: AFAM) and LHC Group (Nadaq: LHCG), rose 9.1% in May from the previous month. Year to date, the index has risen 34.05%, outpacing the S&P 500’s growth of 7.73%

The index also outpaced the S&P 500, which rose just 0.99%, for the month. The increase in May was the biggest gain overall for the index year to date. By comparison, the index rose 7% in April and 4.5% in March.

“Home health shares rallied in May, signifying investors’ growing confidence in the sector during the month. May was also marked by some major transactions that added to the growing trend of home health and health and hospital system joint ventures,” Rich Tinsley, president and CEO of Stoneridge, said in a statement. “Stock may have been further buoyed after federal agencies delayed some incoming regulatory changes in May, providing some potential relief for home health companies with a presence in select states.”

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Almost Family, based in Louisville, Kentucky, saw the biggest jump in its share price in May, rising 15.61% from the previous month. The company reported strong first quarter earnings in May after closing a joint venture with Community Health System (NYSE: CYH). The deal created the largest public home health-hospital joint venture in the nation, with a sticker price  of $128 million for Almost Family to acquire 80% of Community’s home health operations. The company’s stock is up 30.16% year to date.

LHC Group, based in Lafayette, Louisiana, also formed a joint venture in May with Baptist Memorial Health Care, and the company saw a 8.61% increase in its stock price during the month, according to the index. Year to date, LHC Group’s stock has risen 31.73%.

Baton Rouge-based Amedisys had solid earnings during the month, with its share price rising 3.97%. Year to date, Amedisys’s stock has seen the biggest gains of its peers, jumping 40.56%. The home health provider announced a major rebrand at the beginning of May and big gains in its hospice and personal care service lines in the first quarter of 2017.

Addus HomeCare, which is not tracked by the index because so little of its revenue come from Medicare, had a similarly strong month, with its share price increasing 7.23%. Year to date, however, the stock is up just 5.85%.

Written by Amy Baxter