LHC Group (LHCG) Q1 Earnings Beat Estimates, Revenues Miss

LHC Group, Inc. LHCG reported first-quarter 2022 adjusted earnings per share (EPS) of $1.09, which beat the Zacks Consensus Estimate of $1.05 by 3.8%. The bottom line declined 21.6% year over year.

GAAP EPS was 64 cents in the quarter, down 41.8% on a year-over-year basis.

Revenue Details

The company reported net service revenues of $571.5 million in the quarter, which missed the Zacks Consensus Estimate by 0.3%. However, the top line improved 8.9% on a year-over-year basis.

Q1 Highlights

In the first quarter, total organic growth in home health admissions rose 1.6% year over year, while organic growth in hospice admissions rose 4%.

LHC Group, Inc. Price, Consensus and EPS Surprise

LHC Group, Inc. Price, Consensus and EPS Surprise

LHC Group, Inc. price-consensus-eps-surprise-chart | LHC Group, Inc. Quote

Home health service revenues were $387.9 million, up 3.8% year over year. Meanwhile, hospice services revenues amounted to $101.9 million, up 62.4%.

Strategic Update

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.

Margin Analysis

Gross profit in the quarter totaled $221.1 million, up 3%. Gross margin was 38.7%, which contracted 220 basis points (bps) on a year-over-year basis.

Operating profit was $35.5 million, down 30.5% from the prior-year quarter. Operating margin was 6.2%, down 350 bps.

Financial Position

LHC Group exited the first quarter with cash amounting to $7.7 million, down from $9.8 million sequentially.

Net cash used in operating activities at the end of the first quarter totaled $64.9 million against net cash provided in operating activities of $44.8 million in the year-ago quarter.

Wrapping Up

LHC Group exited the first quarter on a mixed note, wherein earnings beat the Zacks Consensus Estimate, but revenues missed the same. The company continues to gain from home health as well as hospice admissions that witnessed organic growth on a year-over-year basis. Robust revenue performance across home health and hospice is encouraging.

Nevertheless, contraction in both gross margin and operating margins is concerning. The year-over-year decline in the bottom line is a woe. A highly competitive home healthcare market remains a headwind.

Zacks Rank

LHC Group carries a Zacks Rank #3 (Hold).

Key Picks

Some better-ranked stocks in the broader medical space that have announced quarterly results are Omnicell, Inc. OMCL, UnitedHealth Group Incorporated UNH and Alkermes plc ALKS.

Omnicell, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of 83 cents, which beat the Zacks Consensus Estimate by 16.9%. Revenues of $318.8 million outpaced the consensus mark by 0.7%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Omnicell has an estimated long-term growth rate of 16%. OMCL's earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 13.4%.

UnitedHealth, carrying a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.7%.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which beat the Zacks Consensus Estimate of a penny. First-quarter revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. It currently sports a Zacks Rank #1.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS' earnings surpassed estimates in each of the trailing four quarters, the average surprise being 350.5%.

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