March was not as kind to the share prices of publicly traded home health care companies as the the previous few months. Economic uncertainties finally caught up with stocks, causing them to drop across the board during the month, though share prices could bounce back in April in the wake of an announcement from the Centers for Medicare & Medicaid Services (CMS).
The Home Health Index, managed by Stoneridge Partners, tracks the market value of the three largest home health companies: Amedisys (NASDAQ: AMED), LHC Group (NASDAQ: LHCG) and Almost Family (NASDAQ: AFAM), which merged with LHCG at the end of March. Last month, the HHI declined 2.67%, in line with the overall stock market, as the S&P 500 fell 3.10%.
Louisville, Kentucky-based Almost Family’s share prices dropped 5.12% in March. Lafayette, Louisiana-based LHC Group stocks experienced a 4.43% drop. The all-stock merger between the two created the second-largest home health provider in the country (behind Kindred Healthcare (NYSE: KND), with an annual revenue just below $2 billion.
While two of the three HHI companies saw declines in share prices, Baton Rouge, Louisiana-based Amedisys was the exception. Stocks climbed 2.14% on the heels of Amedisys receiving an average Quality of Patient Care Star Rating of 4.22 stars (out of a possible five) from the CMS. Amedisys’ rating is about 30% higher than the industry average.
March might have been rough, but April’s forecast may make up for the turbulence. On April 2, CMS announced that non-skilled in-home care supports will be allowed as a supplemental benefit for Medicare Advantage plans in 2019, a move widely praised throughout the industry.
“Home health providers surely welcome this change, and this announcement puts companies in a strong position for April and the remainder of 2018,” said Stoneridge Partners President Rich Tinsley in the April 2018 update. “That’s good news after a rocky March that saw declines in the HHI and S&P 500, as investors reacted to fears over major economic uncertainties, including a potential trade war with China and other countries rattled markets.”
Although it’s not part of the HHI because little of its revenue comes from Medicare, Frisco, Texas-based Addus HomeCare (NASDAQ: ADUS) share prices jumped significantly in March, rising 39%. Last month, Addus announced it set a new record for net service revenue during Q4 2017.
Additionally, the HHI may undergo a slight makeover starting in April. With the finalized merger between LHC Group and Almost Family, the HHI may be composed of just two companies moving forward, Tinsley told HHCN.
Written by Erik Prado