President Trump has endorsed the passage of a tax credit for family caregivers. The tax credit would be given to caregivers who take care of a parent, family member, or a loved one. The AARP estimates that 48 million Americans help care for aging family members like parents, spouses, or loved ones. They estimate that 78% have also paid out-of-pocket for care-related expenses, which can add up to around $7,200 per year. The Credit for Caring Act is a bipartisan bill that offers a tax credit of up to $5,000 annually for caregivers to help cover long-term care costs. The credit covers 30% of expenses beyond $2,000 for caregivers with over $7,500 in income and paying for long-term care for a family member. Here are three stocks that can benefit from family caregiver tax credits.
BrightSpring: A Home and Community-Based Healthcare Platform
Home and community-based healthcare services platform BrightSpring Health Services Inc. (NASDAQ: BTSG) offers medical provider and pharmacy services. The medical sector leader delivers clinical and support care services to patients in home and community settings. The company serves over 400,000 seniors and specialty patients in 50 states daily. Each patient has an average of six chronic conditions and nine prescriptions, leading to over 37 million prescriptions prescribed daily. They also offer hospice and home care to seniors and long-term specialty care to behavioral and neurorehabilitation populations.
A Boom To BrightSpring’s Top and Bottom Line
A caregiver tax credit would help caregivers pay for BrightSpring services, easing the financial burden to some extent. This would be a boon to BrightSpring’s revenues. The company reported Q3 2024 EPS of 11 cents, missing consensus estimates of 15 cents by 4 cents. Revenues surged 28.8% YoY to $2.91 billion, firmly beating the $2.71 billion consensus estimates.
Segments Firing on All Pistons, But One-Time Expenses Hit Bottom Line
Its Home Healthcare, with revenues up 13% YoY, and Pharmacy Solutions segment, whose revenues surged 25% to $2.3 billion, were key growth drivers. Infusion and Specialty sales rose 42% YoY. The company had $10 million in non-recurring charges linked to onboarding a major customer involving over 200 facilities and a payer settlement that caused it to miss earnings estimates.
Upside Guidance After the One-Time Hit
BrightSpring issued upside guidance for the full year 2024 revenues of $11 billion to $11.3 billion versus $10.83 billion consensus estimates. Full year 2024, adjusted EBITDA is expected to be between $580 million and $585 million.
BrightSpring CEO Jon Russeau commented, “In the third quarter in home healthcare, revenue grew 13% year-over-year and average daily census grew 16% to over 46,000, supported by exceptional clinical quality scores, including 30-day readmission rates that are 60% lower than the national average in our emerging primary care services.”
Care.com: An Online Marketplace for Caregiving Services
Care.com is an online marketplace over 29 million families use to find caregivers, from childcare, pet care, housekeeping, and tutoring to senior care services. The business was acquired for $500 million in February 2020 by IAC Inc. (NASDAQ: IAC). IAC, formerly known as Interactive Corp., operates media and internet companies worldwide. It offers published digital and print content across entertainment, food, travel, health, and luxury areas.
It owns brands including People, Travel & Leisure, Brides, Daily Beast, InStyle, Food & Wine, Martha Stewart Living, Shape, Better Homes & Gardens and Southern Living to name a few. It also operates internet companies Angi.com, Investopedia.com, and Vivian.com, a healthcare job marketplace.
Amedisys: Home Health, Skilled Nursing and Hospice Care Giant
Home healthcare providers Amedisys Inc. (NASDAQ: AMED) operates in three segments: Home Health, High Acuity Care, and Hospice. The company serves over 418,000 people annually in 37 states and the District of Columbia.
Eligible seniors may get their hospice and home health care covered 100% by Medicare. All its 500+ care centers are certified by Medicaid and Medicare. Its care teams come to patient's homes to provide one-on-one care.
Steady Growth Attracts a Buyer
Amedisys reported Q3 2024 EPS of $1.00 per share, which actually missed estimates by 19 cents. Revenues rose 5.7% YoY to $587.67 million, beating the $586.75 million consensus estimates. In June 2023, Amedisys accepted the acquisition offer from UnitedHealth Group Inc. (NYSE: UNH) Optum Healthcare unit for $101 per share or $3.3 billion. This deal would further help transition UnitedHealth into an integrated healthcare system.
Justice Department Puts the Brakes On The Deal
In August 2023, the U.S. Department of Justice scrutinized the merger and asked for more information on the deal. The DOJ fears that this merger could increase home healthcare service prices. The companies offered to divest some of their clinics to VCG Luna LLC. The DOJ also expressed concerns about the far-reaching scale and influence of UnitedHealth’s reach across healthcare from both the insurer and provider side.
The potential to monopolize their foothold is a deep concern, considering UnitedHealth is a for-profit organization trying to keep growing its earnings. On November 16, 2024, the DOJ sued to block the acquisition of Amedisys by UnitedHealth. On December 26, 2024, the companies extended the timeline for completing the merger to December 31, 2025. The regulatory breakup fee for the merger is $275 million up to $325 million if certain conditions of asset sales aren't met.
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