For the second consecutive month, the market value of three of the most prominent publicly traded home health companies hit a record high and outpaced the S&P 500 Index overall.
The Stoneridge Partners Home Health Index, which tracks the monthly average market performance of LHC Group (Nasdaq: LHCG), Almost Family (Nasdaq: AFAM) and Amedisys (Nasdaq: AMED), grew 0.63% in May 2016, compared with April 2016, when the Home Health Index hit its previous record high.
The Home Health Index recorded a year-to-date increase of 20.35%, and is up 26.84% for the trailing 12-month period.
Strong home health valuations have resulted in an active M&A market with robust activity and interest, according to Benjamin Bogan, partner with Stoneridge Partners.
“Valuations are strong for the large publicly traded home health companies with multiples north of 10 on average and selling prices above one times revenue,” Bogan said in a prepared statement. “While smaller, privately held companies won’t see equal valuations, they will track those of their larger brothers and sisters in direct proportion.”
Out of the three companies tracked by the Home Health Index, LHC Group saw the biggest increase in May, with its share price rising 4.12%.
Addus HomeCare (Nasdaq: ADUS), which is not tracked by the Home Health Index, saw its share price fall 3.11% in May.
The S&P 500, which is used as a benchmark for the Home Health Index, rose 1.53% in May.
Written by Mary Kate Nelson