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Here's Why You Should Retain LHC Group (LHCG) Stock Now

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LHC Group, Inc. LHCG is well-poised for growth on strategic deals and a wide array of services. However, stiff competition remains a concern.

Shares of this Zacks Rank #3 (Hold) company lost 21.6% compared with the industry’s decline of 54.7% in a year’s time. The S&P 500 Index has fallen 14.1% in the same time frame.

LHC Group — with a market capitalization of $4.89 billion — is a renowned post-acute healthcare service provider. It anticipates earnings to improve by 11.3% over the next five years. The company beat earnings estimates in three of the trailing four quarters and missed once, the average surprise being 0.9%.

Key Catalysts

LHC Group has been focusing on acquisitions and joint ventures for inorganic expansion. The company's pipeline of potential M&A growth opportunities remains robust and is well balanced between Home Health and Hospice. On May 3, 2022, the company made an announcement that it has finalized a joint venture partnership for in-home services with Thomasville, GA-based Archbold Medical Center. In March 2022, the company inked a deal with Archbold Medical Center to form a new joint venture to bolster home health services in Thomasville, GA and across the greater region. This joint venture will include two locations catering to Thomas, Brooks, Grady, Colquitt, Mitchell, Decatur, and Seminole counties, thereby expanding the LHC Group service area to five additional counties.

In November 2021, the company finalized (inked purchase agreements in September) the buyout of 47 Brookdale Health Care agencies from the recently formed home health, hospice, and outpatient therapy venture between HCA Healthcare and Brookdale Senior Living Inc. In October, the company finalized its acquisition agreements for one home health and one hospice provider situated in Virginia Beach, effective Oct 1, 2021. The acquisition agreements for the two providers were announced on Sep 14, 2021.

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LHC Group’s wide array of services through its diverse business segments, which have 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 first-quarter 2022, home health service revenues were $387.9 million, up 3.8% year over year, while home health admissions witnessed an increase of 1.6%.

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 first quarter of 2022, hospice service revenues surged 62.4%, while hospice admissions rose 4% organically.

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 that have greater resources and better access to capital. Even local and regional providers of home health services pose stiff competition. These include facility- and hospital-based providers, visiting nurse associations and nurse registries.

Estimates Trend

The Zacks Consensus Estimate for 2022 revenues is pegged at $2.51 billion, suggesting growth of 13% from the year-ago reported number. The same for earnings stands at $5.77, indicating an improvement of 0.7% from the prior-year quarter.

Stocks to Consider

Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, Masimo Corporation MASI and ShockWave Medical, Inc. SWAV.

AMN Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 15.6%. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare’s long-term earnings growth rate is estimated at 1.1%. The company’s earnings yield of 11.4% compares favorably with the industry’s (0.8%).

Masimo beat earnings estimates in each of the trailing four quarters, the average surprise being 4.4%. The company currently carries a Zacks Rank #2 (Buy).

Masimo’s estimated earnings growth rate for second-quarter 2022 is pegged at 22.3%. The company’s earnings yield is 3.8% against the industry’s (8.5%).

ShockWave Medical surpassed earnings estimates in each of the trailing four quarters, the average surprise being 189.9%. The company currently flaunts a Zacks Rank #1.

ShockWave Medical’s earnings growth rate for 2022 is estimated at 807.7%. The company’s earnings yield of 0.9% compares favorably with the industry’s (8%).


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