In Strong Year for Home Health Stocks, LHC Group Gains Most
LHC Group (Nasdaq: LHCG) had a big year in 2017, growing its share price 23.14%.
That’s the largest yearly increase among the companies tracked on the Home Health Index (HHI), which is updated each month by health care merger and advisory firm Stoneridge Partners. The Index keeps tabs on the share prices of the largest publicly traded companies in the home health sector, and compares the performance of these organizations to the market as a whole.
Lafayette, Louisiana-based LHC Group not only had a good year on the stock market, it had a transformative year in terms of the future of the business. In mid-November, LHC announced that it would merge with rival Almost Family (Nasdaq: AFAM) in an all-stock transaction with an implied value of $2.4 billion.
In the wake of this news, both companies had a down month in December, with LHC Group dropping 7.38% and Louisville-based Almost Family dropping 7.32%, according to the recently released January update to the HHI. However, the other home health company tracked by the Index, Baton Rouge, Louisiana-based Amedisys (Nasdaq: AMED), also saw its share price slide a bit to close out 2017, dropping 2.45% in December.
Still, the sector as a whole had reason to celebrate as the year came to a close. In addition to LHC Group’s big yearly gains, Almost Family shares were up 16.65% and Amedisys’ share price increased 15.92% over the 12-month period.
This puts home health in a strong place to start a big year for the industry. In addition to the LHC Group-Almost Family merger, insurance giant Humana (NYSE: HUM) is poised to take a 40% stake in the home health business of Kindred Inc. (NYSE: KND), as part of a $4.1 billion deal. Kindred at Home is the nation’s largest home health care provider. Stoneridge plans to add Kindred to the HHI in 2018.
“This was another strong year for home health care investors and providers,” said Stoneridge President Rich Tinsley, in the HHI update. “2018 will bring many new challenges and opportunities in the industry, especially as home health care giants Almost Family and LHC Group execute on their planned merger.”
Written by Tim Mullaney