Thursday, February 28, 2019

This is not financial advice, continued

House of cards?

These are the publicly-traded companies I've identified that are currently working the hospice space. You can read more about them at their respective websites.

I've decided to buy one (1) share in each of these companies.

I'm doing it in order to be able to obtain information and ask questions as a shareholder. This is not investment advice, and I'm not suggesting that anyone else go out and do this.

At the market close on February 28, 2019 I own AMED, EHC, and ENSG. I entered limit orders, and am waiting for my price on HUM, CHE, and LHCG.

Humana (NYSE: HUM) is 40% (minority) owner of a 3-way investment consortium whose other two (majority) owners split the remaining 60% - private equity firms Welsh, Carson, Anderson & Stowe and TPG Capital. They're trying to combine the hospice operations of three former companies: Kindred, Gentiva, and Curo.

It's also the story behind the amazing blog, Generic Hospice.

Amedisys (NSDQ: AMED) is pursuing "non-organic growth."

CHEMED Corporation (NYSE: CHE) has two divisions, Vitas and Roto Rooter.

Encompass Health (NYSE: EHC) is the re-branding of the scam and scandal-ridden HealthSouth, leveraging its 2015 acquisition of Encompass Home Health and Hospice based in Dallas.

LHC Group (NSDQ: LHCG) is one company where I haven't quite got a handle on their business model yet.

The Ensign Group (NSDQ: ENSG) is also a little difficult to figure out. It looks like they own a bunch of nursing homes and different sorts of rehab and retirement facilities, as well as a home care and hospice business of some kind. But they also refer to "affiliate entities" in a vague, unhelpful way (to me).

And, can someone please tell me what the 2:42 video on their main page (scroll) is supposed to mean?

meanwhile, back in 2005...

That's a screen snap of the abstracted results and conclusions from McCue,M. Thompson,J. (2005). Operational and Financial Performance of Publicly Traded Hospice Companies. Journal of Palliative Medicine,8(6),1196-1206. DOI: 10.1089/jpm.2005.8.1196

On PubMed.

The 2005 study by McCue and Thompson examined the performance of four publicly-traded hospice companies. 

Odyssey Healthcare - 65 hospices

VistaCare - 38 hospices

Heartland* - 89 hospices

Vitas Healthcare** - 22 hospices

Total: 214 hospices

* subsidiary of Manor Care 

** division, CHEMED Corporation (NYSE: CHE)

Since 2005, Odyssey bought VistaCare in 2009 for $147.1M, before itself being bought by Gentiva for $1B in 2010, which was subsequently bought by Kindred for $1.8B in 2015, which itself was sold to the Humana/TPG/WCAS consortium in 2017 for $4B, which had since gone on to also acquire Curo for $1.4B in 2018. 

Since 2005, Heartland/HCR Manor Care became privately-held, underwent various spinoffs, reorgs, and other financial transactions, entered bankruptcy protection in 2018, and was acquired in 2018 by ProMedica Health System.

Thanks for reading. See you next time.

2 comments:

  1. I worked for Odyssey back in the early 2000s. Went from there to a NFP that was part of a large regional health organization. Difference was pretty dramatic. Both places were focused on cost containment, of course, but Odyssey was really at the core a corporate entity intended to do exactly what it did. It's reason for existing was to be sold and traded, and could have been producing anything at all. My manager would have been perfectly at home selling vacuum cleaners, and certainly would have improved the lives of our patients if she had gone that route. While the NFP certainly expected our division to contain costs and tracked the donations to the foundation that our work inspired, the overarching REASON for our organization and our hospice was to serve the dying. Which meant that we had more resources, more support, and were a LOT more invested in the organization as a result. The for-profit hospices I have worked in attract a lot of new nurses. The NFPs I have encountered and worked for have folks on the teams in all capacities who have been there over a decade.

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    1. Thanks for your perspective. Yeah, that world is sales-driven to grow census, though salespeople seldom provide care. The language is commerce, and the best situation seems to be 'same store' growth ('comps' measured QTQ/YTY) combined with 'inorganic growth,' aka buying up other hospices.

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