Harris’s In-Home Care Plan Seen as Boost for Stocks Like Addus

(Bloomberg) - Hot on the heels of US Vice President Kamala Harris outlining her plan to cover in-home senior care if she becomes president, Wall Street analysts are predicting that companies involved with the business will benefit from her proposal.

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Shares of in-home care providers Addus HomeCare, Aveanna Healthcare and Pennant Group jumped sharply when Harris first announced the plan earlier this month. All three stocks are now among the top gainers in the Russell 2000 Growth Health Care Services index for the year.

Harris' proposal would expand Medicare — federal health insurance for elderly Americans — to cover expenses related to an in-home health aide, a service that is not currently covered. The initiative would open up the nearly $1 trillion Medicare budget to seniors using home-care companies to age at home.

Of the various in-home care companies, analysts expect Texas-based Addus HomeCare to have the most room to grow under Harris' proposal. Addus HomeCare shares have soared 43% this year, rising far above the S&P 600 Health Care Sector index which has risen 4.9% over the same period.

"With personal care at its core, we would expect Addus to be the most immediate beneficiary of the Harris proposal," RBC analyst Ben Hendrix wrote in an Oct. 8 report. Personal care comprised nearly 75% of the company's revenue in 2023, according to data compiled by Bloomberg.

The personal-care services market, which includes non-medical in-home care aides, could swell by nearly one-third to over $110 billion by 2031 if Harris' proposal goes through, according to an analysis from Macquarie.

"Many seniors are receiving unpaid care by family and friends," Macquarie analyst Tao Qiu wrote in an Oct. 9 note. "We think covering personal-care services under Medicare could materially improve access to personal-care services for many."

Medicare currently only covers short-term home care for qualified seniors who are homebound or recently discharged from the hospital.

There is one big uncertainty, though. Election Day is only weeks away, with polls showing Harris, a Democrat, and Republican candidate Donald Trump neck-and-neck. Harris' plan would be a moot point if she doesn't win.

Then, even if she does win, getting that kind of bill into law will likely be an uphill task. Whoever wins the presidency may still face a split Congress, which makes it harder to get significant legislation passed.

Harris' home-care plan draws inspiration from a Brookings Institution paper and is estimated to cost upwards of $40 billion a year.

"It will be very difficult for Harris to enact her plan, particularly since she likely will have to deal with a GOP-controlled Senate and the cost of the plan could be as much as half-a-trillion dollars over 10-years," said Spencer Perlman, an analyst at policy researcher Veda Partners.

Also, home-care providers may have to accept negotiated rates for services, said Chris Orestis, president of Retirement Genius, an online retirement resource for seniors. That means Harris's proposal — as embryonic as it is — would likely boost revenue while digging into profits for companies that now charge whatever they want.

Orestis characterized it as a "two-sided coin" for home-care providers, depending on how Harris' proposal would be implemented.

-With assistance from Esha Dey.

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