Stone Ridge Partners - Home Health Index - June 2011

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Home Health Index

This Home Health Index (HH Index) measures the performance of four publicly traded home health companies,

all listed on the NASDAQ Almost Family (AFAM),LHC Group (LHCG), Gentiva (GTIV) and

Amedisys (AMED). This index is updated monthly. See archived updates below. If you would like to receive a

monthly e-mail of this update, please e-mail us your name and e-mail address.

[email protected]

July 1st Update

Home Health Index (HH Index)drops 13.3% in June.

Although June was not a good month for the market in general with the S&P 500 dropping 1.8%, the drop in the

HH Index of 13.3% still leaves a huge difference of 11.5% between the two.

On June 20th Baird Equity Research issued a report that downgraded the entire sector (see remarks below), and

our HH Index immediately dropped a whopping 9.2%.

Our Home Health Index (HH Index) is now sitting at 24.48, down 23.8% for the year, while the S&P 500 is up

5%, a difference of close to 29%.

The S&P 500 is now up 20% on a trailing 12 months, while the HH Index is about flat.


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The HH Indexs high was set in September, 2008 at 41.75. which makes our index now down 41% from that

high.

For two months in a row, all stocks in our HH Index were down.

Results for June:

Almost Family -9.3%

Amedisys. -14.9%

LHC Group -14.5%

Gentiva.. -14.9%

This first graph shows the HH Index compared to the actual prices of the individual companies that make up the

chart through June 30, 2011.

This second chart compares the percentage change of the HH index to the percentage change in the S&P 500

index through June 30, 2011.


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This third graph is a 12 month trailing chart of the HH Index compared to the actual prices of the individual

companies that make up the chart, through June 30, 2011.


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The trend is clear..down. The question is whether or not the gloomy report from Baird will hold true. Their

report stated that the Street is too complacent on the upcoming CMS proposal. They have revised their 2012

numbers to assume a 5% rate cut, which they do not feel is aggressive.

BB&T Capital Markets issued their report on June 27 in which they state that we could see a reimbursement cut

that may exceed 5% for 2012. .we are of the belief that most analysts EPS expectations for 2012 are too

high and are likely to undergo a significant downward revision over the next few months.

As it turns out, on July 6 CMS released its proposed rule for home health for CY 2012. They proposed a rate

cut of 3.35%.

Even with this continued drop in stock prices, the EBITDA multiples for these public companies remain low,

making them possible take-over candidates as private equity groups continue to invest in this segment.

MERGER & ACQUISITION ACTIVITY

It was pretty quiet this past month with no major announcements. Private equity groups continue to show interest

in home health, and we expect to see some major announcements over the next couple of months.

Around the first of June we were successful in representing Texas-based Radiant Healthcare Services in the sale

of their agency.

Last month we saw the merger of Madison, TN-based SunCrest Healthcare, Inc. with Florida-based OMNI

Home Health Services. The combined home health care com an will continue to o erate out of Madision, TN


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under the SunCrest Healthcare name. Annual revenue is estimated at $200 million plus.

OTHER HOME HEALTH COMPANIES IN THE NEWS:

Addus is a public company that has not yet been added to our HH Index. Their stock closed out the month at

$5.43, down 4% for the month but up a whopping 32% YTD. They have recently added both a new CFO and

a new COO.

UPDATE: June 30, 2011 Results

For the month of June, the S&P 500 was down 1.8% while the Home Health Index was down 13.3%.

Percentage change in stock prices for these public companies for the month of June and Year to Date (YTD)

follows:

Company June YTD

Almost Family -9.3% -28.7%

Amedisys -14.9% -20.5%

Gentiva -14.9% -21.7%LHC Group -14.5% -23.1%

Home Health Index -13.3% -23.8%

S&P 500 -1.8% +5.0%

Multiples of EBITDA based upon the earnings results through the third quarter of 2010, with the stock prices as

of June 30, 2011.

Company Multiple of EBITDA

Almost Family 4.8Amedisys 3.8

Gentiva 2.9

However when annualizing the first quarters earnings the multiples are substantially higher due to the lower 1st

quarter earnings: Amedisys 5.3 Almost Family -6.0.

And for additional musings on the state of homecare and whats going on at Stoneridge Partners, visit

our blog, which is updated regularly:stoneridgepartners.com/blog

Stoneridge Partners, a merger and acquisition firm that focuses on brokering home health agencies

and hospices exclusively.

Cartoon of the month..


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Links to Google Finance: Almost Family | Amedisys | Gentiva | LHC Group

View Charts for Previous Months

Month/ Year HHI vs. Actua l Stock Pr ices HHI vs. S&P HHI vs. Actua l Stock Pr ices Trai l ing 12 Months

June 2010 View View View

July 2010 View View View

August 2010 View View View

September2010

View View View

October 2010 View View View

November 2010 View View View

December 2010 View View View

January 2011 View View View

February 2011 View View View

March 2011 View View View

April 2011 View View View

May 2011 View View View

June 2011 View View View

Stock Quotes

ADUS 5.82

+0.02


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AFAM 25.528 +0.528

AMED 26.2201 +0.1001

GTIV 18.28+0.26

LHCG 22.90

+0.45

2011-07-28 12:56

Useful Links

Benchmarking

Home Care Pulse

Blogs

Gilliland & Markette

Kinnser Health Blog


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Home Care Consultants

5 Star Consultants

Beth Carpenter & Associates

Boyd & Nicholas

CBIZ Valuation Group

Dixon Healthcare Solutions

Elizabeth Hogue

Fazzi Associates

Gilliland & Markette

Healthcare Market Research

Home Care Marketing Solutions

Laff Associates

Leading Home Care, Stephen Tweed

Medicare Training & Consulting

Simione Consultants

The Corridor Group

National Associations

CMS Medicare

Decision Health

National Association for Home Care & Hospice

National Hospice

National Private Duty

Public Companies

Almost Family

Amedisys

Gentiva

LHC Group

State Associations

Alabama

Alaska

Arizona

Arizona

Arkansas

California

Colorado

Connecticut

Florida


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Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

KentuckyLouisiana

Maine

Maryland/District of Columbia

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

OklahomaOregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

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Stone Ridge Partners - Home Health Index - June 2011