The onset of the COVID-19 pandemic in March 2020 impacted all aspects of the U.S. health care system to varying degrees.

Some providers, including physician and dental offices, experienced practice closures (with the exception of emergency procedures) for several months, and, to the extent they were unable to pivot to virtual care, saw revenues decline precipitously (e.g., by as much as 80% in April, according to one account). Others, such as acute care hospitals, saw elective procedures, which typically generate a large portion of hospital profits, cancelled entirely to prepare the hospitals for the expected wave of COVID-19 admissions through their ERs. It was feared, and in some cases the fear was borne out by experience, that patients experiencing COVID-19 symptoms severe enough to warrant visits to emergency rooms and subsequent inpatient admissions would outstrip available hospital beds and other resources.

On the other hand, the home health and hospice experience has been, in general, quite different. All things considered, home based care and care “brought in” to senior care communities (independent living, assisted living) has proven to be very resilient in the COVID-19 environment.

Home Health Care, Hospice and Personal Care Services

In addition to the introduction of CMS’s Patient Driven Groupings Model (“PDGM”, effective January 1, 2020), the COVID-19 pandemic presented significant challenges to home health and hospice operators, though the impact on operational and financial performance has varied depending on size and scale of the company, service line, geography, site of care, and the preventative actions taken.

Home health care (i.e., skilled care) experienced, in general, a significant decline in patient admissions (as much as a 33%, according to some estimates) as many referral sources, such as acute care hospitals, were locked down or limited as to the procedures they could perform, thus reducing or eliminating the patients that would otherwise have been discharged to home with physician orders for home care services. Broadly speaking, hospice care experienced only a modest decline in volumes (estimated 10% reduction in weekly admissions) but has, for the most part, recovered to pre-COVID-19 levels.

Personal care services also experienced a modest decline in volumes based on anecdotal evidence of (i) visit cancellations by patients due to fears over COVID-19 exposure from caregivers, (ii) decline in available caregivers due to, among other things, schools being closed down and caregivers having to take care of their children, and (iii) senior care communities preventing visits due to COVID-19 lockdown. Even well-resourced strategics saw a dip, with Addus Homecare witnessing a 5% to 10% decline in admissions.

In general, providers with access to adequate supplies of personal protective equipment, good controls in place with respect to their clinical and non-clinical staff, and well-developed contingency plans, seem to have rebounded quickly from any softness in their businesses. Additionally, to the extent that they were already utilizing, or able to quickly adopt, technology (e.g., remote patient monitoring and telemedicine) as part of patient care, health care interventions occurred sooner. As a result, patients were able to stay in place through medical episodes as opposed to having to transfer to the emergency room.

It is no surprise that, like PDGM, the impact of COVID-19 on home care services providers was most acutely felt by the smaller, less sophisticated industry participants.

Amherst Home Health Client

In terms of providing specific evidence of the performance of some home health care companies through COVID-19, we can look anecdotally at a current Amherst client, a multi-state, geographically diverse, Medicare provider of home health and hospice care, as well as personal care services, which Amherst expects to bring to market in the coming months.

As it relates to the home health and hospice business, the overall patient volumes remained relatively steady. Some the Company’s agencies saw slight declines in patient volumes, primarily due to the inability to visit patients in certain senior communities whose operators did not allow outside care providers to enter their facilities during COVID-19, and the reduction of referrals related to elective surgical rehabilitation. However, other agencies experienced an uptick in patient volumes. Management attributes the Company’s overall steady performance during the COVID-19 pandemic to the strength of its referral relationships, the confidence those referral sources have in its clinical outcomes, and the commitment of the front-line workers to care for its patients. With respect to the personal care services, the Company experienced a modest decline in volume in March and April but has seen patient volume return to pre-COVID levels in May and June.

The Company’s performance under the new PDGM reimbursement model has been net positive, as the Company was well prepared to operate profitably within the new therapy guidelines of PDGM, while still providing high quality of care for its patients to ensure positive clinical outcomes.

The Company has a strong, experienced management team, robust clinical and administrative systems, and an extensive referral network across all agencies. As a result, it was well prepared for the commencement of PDGM and was able to address the issues created by COVID-19 rapidly and with good effect.


While parts of home health and hospice have been negatively impacted by COVID-19, overall performance has been good, and, to the extent that volumes took a hit in the March to May timeframe, they have shown signs of a strong rebound.

Home based services, including those brought into senior living communities, continue to grow because of their cost advantage relative to traditional institutional facility-based care, such as skilled nursing facilities. Technology, such as telemedicine and remote patient monitoring, as well as advances in bio-pharmaceuticals and medical devices, enable seniors to live at home for much longer than was previously possible.

Importantly, consumer preferences on the part of both seniors and their families are to have patient care, including skilled care and hospice, as well as assistance with activities of daily living, provided in the home, assuming that is the most appropriate site of care. This trend to keep patients and residents out of facilities and in the home will only grow stronger as the younger Baby Boomers, Gen X and Millennials reach the ages where the need for medical and personal care assistance makes delivery of services in the home an important option.

Like other areas of health care, the future appears to favor providers with scale, geographic diversification, service line/revenue diversification, consistently strong clinical outcomes, sophisticated administrative operating systems, and multi-pronged growth strategies. Fueled by the strong industry tailwinds that have been further amplified by COVID-19 (i.e., preference for aging in place combined with providing care in a lower cost setting), Amherst expects to continue to see significant consolidation within the home health and hospice industry for the foreseeable future.


John Patterson

Managing Director, Healthcare Industry Team Leader

Marc Gondek

Director, Investment Banking

The US Small Business Administration’s (“SBA”) Paycheck Protection Program (the “PPP”) funding began on April 16, 2020 and has since distributed more than $500 billion to more than 4.6 million companies.

Now, two months later, many companies have utilized most or all of their funds, leaving them without a safety net and uncertain of what to do next.

The SBA’s initial guidance dictated that recipients had to deploy the funding within eight weeks and utilize a minimum of 75% of the funds for payroll to qualify for forgiveness. While the timeframe to use the funds has now been extended to 24 weeks, this change came after many companies (relying on the initial framework) already spent most, if not all, of their funds. Payroll, rent, and utilities were effectively covered by the PPP funding, allowing many companies to generate positive cash flow during this period and increase their cash reserves and availability on lines of credit. In fact, despite the precipitous downturn created by COVID-19, many commercial bankers recently reported that a number of their customers are borrowing less and have more liquidity right now than they did at the beginning of the year.

But what to do now as the money runs out? The impact of the pandemic on businesses will vary widely based on industry and geography and, for many, the pace of the recovery and return to profitability will not come before the current liquidity cushion runs out. Businesses will fail as a result. In other cases, the need to pay down past-due suppliers and restart operations after extended shut-downs may be creating liquidity issues, even though revenue may have returned to profitable run-rates.

The excess liquidity from the PPP should provide a cushion even after the disbursement period ends, but now is the time to develop strategies to mitigate economic risk. Many businesses have been hesitant to prepare detailed plans because of the economic uncertainty, e.g., “Why bother putting together a forecast? We might as well just throw darts at a board!” While pursuing a “wait-and-see” approach is an understandable reaction, the amount of economic uncertainty we currently face is exactly why businesses should be throwing some darts, so to speak, and developing contingency plans (plural). Those who wait until the dust settles to evaluate strategy will probably be too late.

Earlier this year, we were in a position with several of our clients to proactively lay out strategic plans prior to receipt of their PPP funds, allowing them to work within the (then existing) parameters for loan forgiveness, while developing action plans to adjust and “right-size” infrastructure and operations immediately upon hitting the forgiveness requirements. This advanced planning allowed our clients to be in the best possible position for their new, post-COVID economic reality. Our recommended approach is the same whether a business just received its PPP funding or has already completed its eight-week (now extended to 24 weeks) expenditure period:

Management should first assess their current and short-term future liquidity, making sure to consider current cash on hand (net of all outstanding checks), current borrowing availability, expected receivable collections, and required disbursements. This is best accomplished through the financial industry standard “thirteen-week cash flow forecast,” which is a comprehensive, weekly cash forecast incorporating all of the previously noted variables. Multiple scenarios should be considered and, in businesses with significant seasonality, a longer outlook will probably be necessary.

Next, if liquidity appears to be an upcoming potential issue, management should immediately:

  • Review expected disbursements and distinguish “want-to-pay” from “need-to-pay” items
    • Be sure to include any new post-COVID costs (e.g., PPE, more frequent cleaning, increased employee compensation due to competing with unemployment compensation, etc.)
    • There should be no sacred cows when considering what expenditures can be eliminated or deferred
  • Assess labor mix and overall staffing levels to maximize net positive cash flow, and consider staff adjustments that can or should be made (likely implemented after the PPP expenditure period ends)
  • Reconsider upcoming capital expenses
  • Look for opportunities to increase and accelerate cash inflows
  • Investigate sources of new capital (e.g., increase in line of credit and/or more generous formula terms, new financing arrangements, etc.)

Finally, with their short-term liquidity issues resolved, management can turn their attention to ensuring long-term financial stability by ensuring profitable, cash-flow positive operations at new, post-COVID revenue level.

  • Post-COVID profit and loss forecasts should be created, with multiple scenarios considered
  • Focus on how to reduce fixed costs and achieve break-even or better profitability at various revenue levels
  • Consider selling underutilized equipment/facilities, and renegotiating and/or rejecting unprofitable revenue streams
  • Consider any possible opportunities to generate new revenue (e.g., craft breweries making hand sanitizer)
  • Review vendor relationships
    • Maintain good communication with vendors, especially if payables are being stretched
    • Management should pay close attention to the financial condition of its key vendors, since their financial problems can quickly become your problems

Throughout the process, it is important to ensure a stable relationship with lenders. This is especially important in the current environment where lending standards are getting tighter, pricing is increasing, and collateral valuations for machinery and equipment and real estate are under pressure.

  • Management should reach out to their lender(s) proactively, especially when loan modifications may be needed. Bankers tend to assume the worst in the absence of good communication and current information, so keeping them informed is key.
  • Present a comprehensive, realistic plan with well thought out, documented assumptions
  • Be prepared to offer accommodations to the lender (e.g., providing additional collateral or personal guarantees in exchange for lender accommodations). Lenders will typically not respond well to a plan where they are being asked to carry the bulk of the financial risk.

The most important take-away we can leave you with is that the sooner you begin planning, the better. Revisions to strategy are inevitable but are much more easily managed than trying to develop a strategy after a crisis has arisen. Businesses need to manage day-to-day operations, stay on top of the changing economic and regulatory conditions, and manage customers, vendors, lenders and employees – a challenge even during the best economic times.

You are not in this alone, though. Everyone is trying to weather the same storm to a greater or lesser extent, and we can take heart from past experiences that promise that this, too, shall eventually pass. In the meantime, please don’t hesitate to reach out to any of Amherst’s professionals to discuss questions you may have on this article, or any other matters for which you may require assistance.


Bruce Goldstein
Managing Director, Restructuring Advisory Services

Shareef Simaika
Director, Restructuring Advisory Services

Is there a liquidity event in your company’s future? Prepare now to tell your COVID-19 story.

While many organizations are still in crisis mode, most business owners and management teams are starting to think about what their operations will look like in the new, post-COVID-19 normal. For many companies, that future will eventually include some type of capital transaction – whether that be a liquidity event (e.g., sale of the business) or raising new capital.

We know from our experiences advising other companies that have come through turbulent times – including the Great Recession of 2008/2009 – these types of liquidity events will involve investors who will expect management to provide detailed explanations of how the business was impacted by COVID-19, management’s actions to mitigate the worst effects of the crisis, the financial impacts on the company’s performance, and the lingering effects on post-crisis operations.

Developing a process to identify and gather this information is best done on a real-time basis, rather than trying to look back at some point after operations have returned to normal.

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Ready to get started? Download our guide on preparing to tell your company’s COVID-19 story and then contact our investment banking team to help define and address your specific questions and concerns.


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While the effects of COVID-19 are being felt throughout the economy, few groups will encounter greater headwinds than those operating in the sports and entertainment world. Companies operating in this industry often feature a unique combination of high fixed costs, an inflexible workforce, and seasonal revenue. With the sudden elimination of revenue due to corona virus restrictions and little ability to solidify a cash position prior to this unexpected event, many companies will be left trying to determine how to meet their short-term obligations. Additionally, the uncertainty of returning demand after quarantine periods will provide further challenges in the management of operations.

Many of our professionals at Amherst Partners have considerable experience working with organizations in this industry. While this disruption is like nothing we’ve seen before, we can apply what we know from past experience to help draw a picture of what the future may hold for businesses in this space.

Major League Sports and Arena Entertainment Organizations

Professional sports organizations are an interesting case study. Major sources of income include television revenue, gate receipts, and advertising, but with most teams being owned by entertainment companies or holding companies with outright ownership or de facto control of arenas and other venues, ultimate owners’ bottom lines are also impacted by other events offered at the venue, along with parking and a portion of concession revenues. Owners rely upon the fixed revenue from TV rights and advertising, supplemented by the variable revenue driven by event volume to cover high fixed costs of operations. In normal times, players’ and coaches’ salaries, the largest portion of payroll, are fixed and combine with debt service, maintenance costs, and rent to make up the fixed costs to be covered. COVID-19 challenges this traditional paradigm and brings up some interesting questions.

One of the more interesting dynamics to watch will be how the cancellation of sporting events impacts previously fixed television revenues. While TV contracts may not have clear clauses accounting for such an occurrence, most likely include force majeure clauses that may become a point of contention if networks choose to dispute their liability for broadcast right payments. That may be moot if the networks are concerned with alienating powerful league partners, locking them out from future TV deals.

Another interesting factor is how player compensation will be affected by an elongated suspension of activities. Some leagues compensation structures feature a locked in split of revenues to players, such that if revenues cease coming in, players’ salaries drop in correlation with the revenue loss. Additionally, some leagues have force majeure clauses that would apply and allow them to cut payments to players. The question of alienating a key constituency arises here again, as cuts in player pay may lead to significant issues in the future for ownership and the leagues.

A situation where player salaries were still owed in full and TV rights were withheld would lead to dire consequences for many owners.

Should games be played and other events be held, significant issues will still be faced. Variable gate related revenues for sports and other arena/stadium events will see a meaningful drop off for months due to concerns over future virus transference and a reduction in disposable income, while administrative and event staff will have to be brought back online. Minor league sports are facing an even greater crisis than those struggling major league organizations, as they rely mostly, or solely, on gate related revenues to maintain operations. Teams previously challenged to cover their fixed costs with this volume will fall behind. Cash conservation, strategic cost cuts, and managing relationships with creditors and lenders during this period will become crucial.

Music and Theatre

Orchestras and theatre groups rely upon gate receipts, as well as donations, to cover their costs of operations. These groups will face the same gate challenges as sports leagues, though maintaining their level of donations will also be a concern on two fronts. First, short term economic challenges will likely reduce excess income from some who might have previously donated. Second, there may be some level of donor fatigue.

Over the last 10 years, the fiscal assistance required for metropolitan arts groups has been considerate. Coming out of the last recession, the music world saw the closure of the Albuquerque, Syracuse, and Honolulu orchestras, as well as the bankruptcies of the Philadelphia Orchestra and the New York City Opera. The 2010’s were rife with conflict with unions, and a constant battle has existed between maintaining the quality and number of the artists and keeping out of the red. All through this period, donors have been helping keep the boat afloat. The continued call for support, as well as the myriad other causes that will be requiring assistance coming out of COVID-19 economic distress, may exhaust donors’ ability to give.

At the same time, the largest expenses for an arts group – location costs and artistic personnel are highly inflexible. It costs just as much to play to a full or a sparse crowd, and the latter may be the norm for the foreseeable future.

Amusement Parks

Another sector of the entertainment world that will suffer from COVID-19 effects is amusement parts. Three major obstacles await them. First, should quarantines continue, parks could remain completely shutdown during the summer season, which is heavily relied upon to cover lower volumes during other parts of the year. Second, after opening, gate reductions due to concern over virus contraction in a densely crowded area and lower disposable income will factor in here as well. Third, several parks are destination locations, rather than local operations, and may be affected by customer concerns over air travel in a post-quarantine world.


Cinemas will also face significant challenges from COVID-19. Small cinemas have begun filing for bankruptcy and some larger chains are scrambling to raise debt to cover losses. Cinemas run on very slim margins and a long-term quarantine would be catastrophic. When starting back up, they will see a reduction in ticket and concession revenues, as consumers will be wary to be in a tightly packed location for hours and government mandated capacity limits may be imposed. Premium Video on Demand offerings, where studios simultaneously release films in the theater and in-home, may also become more prevalent after studios assess results achieved from such actions during quarantine. Disposable income drops should not be as significant an issue here as in other entertainment options, as theatres have seen increased rates of attendance during six of the last eight depressions.

Most major releases planned in recent months have been moved back in the calendar year. Crowded release schedules will provide an incentive for theatergoers to return, but for those willing to attend, they are unlikely to see as many films over a short period compared to a wider release schedule.

Another factor to consider is the revenue sharing model of theaters. Theaters share a large portion of ticketing receipts with studios. Theaters’ retained share of ticket prices typically correlates to the length of time which the movie has been running. With a crowded release slate, films will be staying in theaters for a shorter period or more quickly facing competition from other new releases, reducing the amount of tickets with the greatest financial benefit to the theaters. Given the typical drop of attendance after the first few weeks of release, and the fact that ticket margin is dwarfed by that of concessions, the level of impact this have may not be highly significant, but this is another headwind all the same.

One of the most interesting interplays in the industry to watch over the coming year will be lease negotiations between theaters and lessors. Given the difficulty in repurposing or re-leasing a cinema space, as well as the glut of commercial real estate currently available and that expected to become available because of COVID-19, theaters may have some leverage in negotiating agreements that may help them to continue operations.


There will always be a market for entertainment. Customers will return to the arena, the concert hall, the roller-coaster rides, and the movies. The mission for entertainment providers in fighting through the short term is to make sure theirs’ is the company to meet that need at the end of the tunnel.

A prolonged quarantine period may be fatal to companies with a seasonal business model, high fixed costs, and a meaningful debt load. Sports organizations will face difficult contract discussions and will be more challenged then ever to get people in the stands. Metropolitan art groups will be forced to rely even more heavily upon donations for survival at a time when those donations will be hardest to solicit. Cinemas will face yet another industry hurdle.

Most of these operations can demonstrate healthy long-term viability, but the short-term will be trying. As they look to cover debt and other fixed and semi-fixed costs in an attendance-limiting environment, these businesses will need to work with creditors and lenders to navigate a path through to a mutually beneficial outcome, and to avoid destruction of value to all parties.


Sheldon Stone
Restructuring Practice Leader

James Morden
Managing Director, Restructuring Advisory Services