Fueled by savvy moves from the United States’ two top independent and publicly traded home-based health care providers, home health stocks had seen strong month-after-month growth in 2018.

Those hot growth levels now appear to be cooling off.

Home health stocks were up just 0.74% in September compared to the previous month, according to the most recent Home Health Index (HHI) from health care mergers-and-acquisitions firm Stoneridge Partners. June, July and August all recorded growth rates that were near or at double-digit marks.

Updated monthly, the HHI tracks the market values of Baton Rouge, Louisiana-based Amedisys (Nasdaq: AMED) and Lafayette, Louisiana-based LHC Group (Nasdaq: LHCG). The HHI also keeps an eye on the stock activity of Frisco, Texas-based Addus HomeCare Corporation (Nasdaq: ADUS), but does not include the company in its final HHI analysis.

Counter to what investors had been seeing, home health stocks slightly underperformed the broader market last month. The S&P 500 was up 1.42% in September from August.

The possible plateau may be related to investor caution regarding the Patient-Driven Groupings Model (PDGM) and the dramatic overhaul to the home health payment system as the industry moves toward 2019. While there are other potential macroeconomic explanations as well, the reality is that home health stocks were bound to level off eventually, experts say.

“Home health stocks had been seeing double-digit levels of growth in some cases, so a slowdown was bound to happen at some point,” Stoneridge Partners President Rich Tinsley said in a statement. “Amedisys, in particular, had been seeing very strong growth of late, which really wasn’t the case last month.”

Amedisys’ stock dipped 1.12% in September compared to August, according to the Stoneridge HHI.

Amedisys — which maintains an executive office in Nashville, Tennessee — announced it had signed a definitive agreement to acquire New Jersey-based Compassionate Care Hospice for a fixed price of $340 million on Oct. 10. Analysts have heralded the deal as a major victory for Amedisys because of its relatively sparse portfolio overlap.

While Amedisys’ stock dropped, LHC Group’s jumped up by 3.08% in September over the previous month, according to the HHI.

Amedisys and LHC Group will both report their 2018 third quarter earnings at the end of October.

Overall, the Home Health Index was up 99.86% in September on a year-to-date basis.

“The home health industry is facing some pressures, most notably in the form of PDGM, which could be the biggest change to home health care in years,” Tinsley said. “But the industry as a whole has proven it’s capable in terms of advocacy and outreach, so we’re optimistic.”

Industry stakeholders have partnered with several members of Congress to reshape the behavioral adjustment aspect of PDGM, perhaps its most controversial and widely opposed part. In fact, LHC Group CEO and Chairman Keith Myers called the behavioral adjustment aspect “penny wise and pound foolish” in a September interview with Home Health Care News.

Stoneridge does not factor Addus’ stock performance in to its Home Health Index because the home-based care provider’s revenue comes mainly from Medicaid.

Addus’ stock increased by 6.76% in September over August.

Written by Robert Holly