Home Health Stocks Rebounded in September, But HHGM Looms

Though home health investors appear to have regained confidence in the industry last month, uncertainty over the Home Health Groupings Model (HHGM) lies ahead.

The market value of the three largest publicly traded home health companies rose 8.66% in September, according to the Home Health Index October update from M&A advisory firm Stoneridge Partners.

The share price of Lafayette, Louisiana-based LHC Group (Nasdaq: LHCG) increased 8.69% in September, while shares of Baton Rouge, Louisiana-based Amedisys (Nasdaq: AMED) rose 7.12%. Almost Family (Nasdaq: AFAM), which is based in Louisville, Kentucky, also posted gains with an increase of 10.27%.


The Index beat the S&P 500, which rose 1.93% in September.

“Investors seem to have regained confidence in the home health care industry after a brief downturn,” said Stoneridge President Rich Tinsley, on the firm’s website. “No company lost value in this month’s Index.”

Source: Stoneridge Partners Home Health Index

The numbers added credence to the idea that the home health industry found its footing after a turbulent summer. Shares plunged in July on investors’ reactions to the Centers for Medicare & Medicaid Services’ (CMS) proposed HHGM.


The rule would include changes such as shortening the standard episode of care from 60 days to 30 days. HHGM would also cut $950 million from home health in 2019 if implemented in a non-budget neutral manner, according to CMS. And the cuts could prove to be even be deeper than that, ElevatingHome said in September.

The home health industry could still be in for another regulatory jolt despite September’s gains—the chances of HHGM being finalized are now as good as a coin toss, according to Bill Dombi, president of NAHC.

“We are concerned about whether this rule will be finalized in the next week or two,” Dombi said during the association’s national conference in Long Beach, California, last week. “We think the chances are not even 50/50 that [CMS] will pull the rule. We believe CMS cares but doesn’t have control over this particular aspect [of payment regulations].”

CMS will likely post a final decision on the proposal on Nov. 1, Dombi said.

Written by Tim Regan

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