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Here's Why You Should Hold on to LHC Group (LHCG) Stock Now

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·3 min read
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LHC Group, Inc. LHCG is well-poised for growth backed by strategic deals and wide array of services. However, stiff competition remains a concern.

The stock fell 12.1% compared with the industry’s decline of 38.8% in a year’s time. The S&P 500 Index has rallied 34.4% in the same time frame.

LHC Group — with a market capitalization of $5.72 billion — is a renowned post-acute healthcare service provider. It anticipates earnings to improve 14.1% over the next five years. The company has a trailing four-quarter earnings surprise 10.1%, on average.

Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).

Factor Hurting the Stock

LHC Group operates in a highly competitive industry characterized by a fragmented home health care market. Some of its competitors are MedTech bigwigs like Amedisys, Inc. AMED, who have greater resources and better access to capital. Even local and regional providers of home health service pose stiff competition. These include facility- and hospital-based providers, visiting nurse associations and nurse registries.

Key Catalysts

We are optimistic about LHC Group’s robust growth opportunities via buyouts and partnerships. In July 2021, the company inked deals to acquire three home health, hospice and palliative care providers across three states. It also completed previously announced buyouts, having locations in the states of Idaho, Oregon, Arizona and Texas. The announcement of these acquisitions and completion of prior ones is likely to provide a substantial boost to the company’s hospice and home health business lines.

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In the same month, the company formed a strategic partnership with SCP Health concerning the joint development and delivery of advanced clinical care services at home.

On a year-to-date basis, it has completed or announced the buyout of 26 hospice locations, three home health locations and one Home and Community Based Services (HCBS) location in 11 states, thereby exhibiting annualized revenues of $161.7 million.

LHC Group’s wide array of services through its diverse business segments, which have also been instrumental in driving the top line, buoy optimism. Within the home health services arm, nurses, home health aides and therapists work closely with patients and their families to design and implement individualized treatment plans in accordance with a physician-prescribed plan of care.
In second-quarter 2021, home health service revenues were $396.5 million, up 16.7% year over year, while home health admissions witnessed a rise of 16.4%.

The hospices segment offers a wide range of services including pain and symptom management, emotional and spiritual support, inpatient and respite care, homemaker services, and counseling. In the second quarter, hospice service revenues grew 4.5%, while organic growth in hospice admissions advanced 11%.

Estimates Trend

LHC Group has been witnessing an upward estimate revision trend for 2021. In the past 60 days, the Zacks Consensus Estimate for its earnings has moved north by 1.1% to $6.43.

The Zacks Consensus Estimate for the company’s third-quarter 2021 revenues is pegged at $580.1 million, suggesting growth of 9.3% from the year-ago reported number.

Stocks to Consider

Some better-ranked stocks from the broader medical space include Henry Schein, Inc. HSIC and Envista Holdings Corporation NVST, both currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Henry Schein’s long-term earnings growth rate is estimated at 13.9%.

Envista Holdings’ long-term earnings growth rate is estimated at 27.4%.


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Amedisys, Inc. (AMED) : Free Stock Analysis Report

Henry Schein, Inc. (HSIC) : Free Stock Analysis Report

LHC Group, Inc. (LHCG) : Free Stock Analysis Report

Envista Holdings Corporation (NVST) : Free Stock Analysis Report

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