Biden Chips in $400B for Home Healthcare: Stocks to Watch

·6 min read

President Joe Biden has proposed to spend $400 billion on expanding the Medicaid beneficiaries' access-to-home and community-based care for seniors and the disabled. This spending is part of the $2-trillion infrastructure package, which is called the “the American Jobs Plan”.

Other parts of the plan include spending on physical infrastructure projects including transportation, broadband, the electric grid and housing and efforts to kick-start advanced manufacturing among others

The $400-billion funds will be used to provide an expanded access to home- and community-based services (HCBS) while also aiding the largely underpaid frontline caregiving workforce.

President’s Plan Includes the Following:

Expand access to long-term care services under Medicaid: Biden believes that more people should have the opportunity to receive care at home in a supportive community or from a loved one. His plan will widen access to home and community-based services (HCBS) and extend the longstanding Money Follows the Person program that backs innovations in the delivery of long-term care.

Build an infrastructure to create decent middle-class jobs with a free and fair choice to join a union: The HCBS expansion under Medicaid can sustain well-paying caregiving jobs that include benefits and the ability to collectively bargain as well as create a state infrastructure to improve the quality of services and support workers. This will raise wages and better the quality of life for essential home health workers and yield significant economic benefits for low-income communities and the colored race.

Biden is steadfastly bent on overhauling the coverage for outpatient long-term care in particular. Back in July 2020, the then-Democratic nominee for presidentship had announced a $775-billion plan to fix up the home-based care landscape.

Long-Term Growth Looks Promising

The support from the government bodes well for the home health industry. Notably, this industry is poised for tremendous growth in the long term, driven by the aging U.S. population, patients’ desire for independence and the home health as a cheaper care modality. Players in the industry should continue to benefit from the demographics of U.S. senior citizens and the need for looking after higher acuity patients in a home-nursing environment.  

Per a Grand View Research report, the global home healthcare market was valued at $281.8 billion in 2019 and is expected to see a CAGR of 7.9% by 2027. Per research, North America dominated the home healthcare market with a share of around 42% in 2019. In North America, the United States held the largest market share in 2019, attributed to shifting trends toward in-home healthcare from nursing homes.

Against this backdrop, we pick three home healthcare stocks, which should gain over the medium to long term.

Our Picks

Addus HomeCare Corporation ADUS has been providing home care services since 1979. It operates under three segments: personal care, hospice and home health. Its services are principally provided in-home under agreements with federal, state and local government agencies, managed care organizations, commercial insurers and private individuals. The company’s consumers are predominantly “dual eligible,” meaning that they are eligible to receive both Medicare and Medicaid benefits.

Personal care services are a significant component of home and community-based services (HCBS), which have grown in significance and demand in recent years and during the COVID-19 pandemic. Demand for home-based services is expected to grow steadily owing to the greying U.S. populace, increased life expectancy and improved opportunities for individuals to receive home-based care as an alternative to institutional care.

The stock carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LGC Group, Inc. LHCG home health service locations offer a broad spectrum of services including skilled nursing, medically-oriented social services and physical, occupational and speech therapy. The company’s hospices provide end-of-life care to patients with terminal illnesses through interdisciplinary teams of physicians, nurses, home health aides, counselors and volunteers. Its home and community-based locations offer assistance with activities of daily living to the elderly, chronically ill and disabled patients through the services of skilled nursing and paraprofessional personnel.

LHC Group constantly gains from home health and hospice admissions with both witnessing organic growth on a year-over-year basis. Further, increase in the bottom line buoys optimism. The company is also anticipated to benefit from joint ventures (JV). Expansion in gross margin is encouraging too. It remains focused on acquisitions and JVs for inorganic expansion. Its pipeline of potential M&A growth opportunities remains robust and well balanced between Home Health and Hospice. The stock currently carries a Zacks Rank of 3.

Amedisys Inc. AMED provides home health and hospice services throughout the U.S. to the growing chronic, comorbid and aging American population.

The company is developing and acquiring new business lines that will complement its existing home care and hospice business. Besides, its growth-oriented actions will help people in their silver years manage their health more effectively and stay within the comforts of their homes longer. An In January 2021, Amedisys collaborated with alternate site infusion services provider to offer COVID-19 antibody infusion therapy within skilled nursing and assisted living facilities, collectively referred to as “long term care facilities”.

Moreover, the company is working on expanding its geographical presence in the Personal Care business space through inorganic growth. Amedisys is integrating tuck-in acquisitions like Bring Care Home, East Tennessee Personal Care Services and Intercity. According to the company, these buyouts will fortify its personal care footprint outside Massachusetts and Florida. This apart, the company’s deal with ClearCare (a popular web-based operating platform representing 4,000 Personal Care agencies) creates an opportunity to establish a partnership between Amedisys and Personal Care agencies using the ClearCare platform. The stock has a Zacks Rank # 3 at present.

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