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LHC Group (LHCG) Q2 Earnings & Revenues Miss Estimates

·3 min read

LHC Group, Inc. LHCG reported second-quarter 2022 adjusted earnings per share (EPS) of 98 cents, which missed the Zacks Consensus Estimate of $1.32 by 25.8%. The bottom line declined 39.5% year over year.

GAAP EPS was 35 cents in the quarter, down 70.8% on a year-over-year basis.

Revenue Details

The company reported net service revenues of $576.2 million in the quarter, which missed the Zacks Consensus Estimate by 3.8%. However, the top line improved 5% on a year-over-year basis.

Q2 Highlights

In the second quarter, total home health admissions declined 4.3% year over year organically, while organic growth in hospice admissions rose 5.5%.

Home health service revenues were $392.8 million, down 0.9% year over year. Meanwhile, hospice services revenues amounted to $102.6 million, up 60.8%.

LHC Group, Inc. Price, Consensus and EPS Surprise

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

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 $222.3 million, down 2.5%. Gross margin was 38.6%, which contracted 320 basis points (bps) on a year-over-year basis.

Operating profit was $25 million, down 58.4% from the prior-year quarter. Operating margin was 4.3%, down 670 bps.

Financial Position

LHC Group exited the second quarter with cash amounting to $27.4 million, up from $7.7 million sequentially.

Net cash used in operating activities at the end of the second quarter totaled $2.3 million against net cash used in operating activities of $11.8 million in the year-ago quarter.

Wrapping Up

LHC Group exited the second quarter on a dismal note, wherein both earnings and revenues missed the Zacks Consensus Estimate. The company continues to gain from hospice admissions that witnessed organic growth on a year-over-year basis. However, home health admissions declined year over year, hurting top-line growth.

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 and Stocks to Consider

Currently, LHC Group carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the pharma/biotech sector include Lantheus LNTH, ShockWave Medical SWAV and Alkermes ALKS. While Lantheus and ShockWave Medical sport a Zacks Rank #1 (Strong Buy), Alkermes carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Estimates for Lantheus have improved from earnings of $3.04 to $3.08 for 2022 and $3.33 to $3.62 for 2023 in the past 60 days. LNTH stock has surged 146.6% so far this year.

Lantheus delivered an earnings surprise of 77.82%, on average, in the last four quarters.

ShockWave Medical’s earnings per share estimates have improved from $1.84 to $2.02 for 2022 and from $2.82 to $2.95 for 2023 in the past 60 days. SWAV has gained 23% so far this year.

ShockWave Medical delivered an earnings surprise of 189.99%, on average, in the last four quarters.

Alkermes’ earnings per share estimates have improved from loss of 17 cents to earnings of 20 cents for 2022 and from 31 cents to 33 cents for 2023 in the past 60 days. ALKS has gained 11.4% so far this year.

Alkermes delivered an earnings surprise of 325.48%, on average, in the last four quarters.


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