December 2018 was the worst December for stock values since the Great Depression era. The two biggest publicly traded home health companies in the U.S. — Amedisys Inc. (Nasdaq: AMED) and LHC Group Inc. (Nasdaq: LHCG) — saw a market dip in stock values as well.
That’s according to M&A advisory firm Stoneridge Partners’ latest Home Health Index (HHI). Updated monthly, HHI follows stock values for Baton Rouge, Louisiana-based Amedisys and Lafayette, Louisiana-based LHC Group. The HHI also keeps tabs on Frisco, Texas-based Addus HomeCare Corporation (Nasdaq: ADUS), though it does not include the home-based care provider in its final calculations due to the company’s Medicaid-heavy revenue mix.
The S&P 500, an index based on the market capitalizations of 500 large companies, took a nosedive of nearly 9% in December compared to November, according to HHI. Home health stocks dropped by slightly more than 13% during that same period.
Fueled by strong macroeconomic forces such as a rapidly aging population and a general demand among older adults to remain in their homes as they age, the HHI has regularly outperformed the broader U.S. stock market on a month-by-month basis since 2004.
“This is actually one of the very rare instances over the past several years where we’ve seen home health stocks actually fall behind the broader market,” Stoneridge Partners President Rich Tinsley said in a statement. “That’s somewhat surprising, though I don’t expect that trend to continue for long. Even with the Patient-Driven Groupings Model (PDGM) on the horizon, it’s a promising landscape for the home health industry due to macro-level factors, including consumer demand.”
The Centers for Medicare & Medicaid Services (CMS) finalized PDGM at the end of October. The payment overhaul takes effect Jan. 1, 2020, though the home health industry — including Amedisys and LHC Group — is attempting to alter or remove some of its more controversial provisions.
Those provisions include PDGM’s behavioral adjustments. Although PDGM is mandated to be budget neutral, aspects lumped into the behavioral adjustment category could pose a payment cut of about 6.4%, industry experts say.
Stock prices for both Amedisys and LHC Group dropped by double digits in December, according to Stoneridge Partners’ HHI. Amedisys saw its stock drop by more than 15% in December compared to November, while LHC Group saw its stock drop by more than 11%.
Similarly, Addus saw its stock go down by nearly 10% in December compared to November.
Home health stocks mostly began to recover and trend upward toward the end of December. So far in January, stock values for Amedisys and LHC Group are hovering around the $117.60 and $97.50 per share marks, respectively.
Addus stock, however, remains down.