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LHC Group (LHCG) Q3 Earnings Surpass Estimates, Revenues Lag

Zacks Equity Research

LHC Group Inc.’s LHCG third-quarter 2019 adjusted earnings per share (EPS) of $1.26 beat the Zacks Consensus Estimate of $1.08 by 16.7% and improved 32.6% year over year.

The Zacks Rank #1 (Strong Buy) company reported revenues of $528.5 million in the quarter, which missed the Zacks Consensus Estimate by 0.7%. However, the top line improved 4.2% on a year-over-year basis.

Q3 Highlights

In the quarter under review, total growth in home health admissions was 5.6% year over year and organic growth was 11.1%.

Total growth in home health revenues was 4.3% year over year and organic growth was 7.9%. While growth in hospice admissions was 2.1% year over year, organic growth advanced 2.1%.

Year to date, the company agreed to acquire 17 home health, eight hospice and two home and community-based services locations, the majority of which are hospital joint ventures. These acquisitions represent around $86.7 million in annualized revenues.

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

Margin

Gross profit in the quarter totaled $193.7 million, up 4.8%. Gross margin in the reported quarter was 36.7%, up 20 bps.

Operating income came in at $46.7 million, up 33.7% from the year-ago quarter’s $34.9 million. Operating margin was 8.8%, up 190 bps.

2019 Guidance

The company raised 2019 earnings outlook and now projects adjusted EPS to range between $4.35 and $4.45 (up from the previously guided range of $4.25 and $4.35). The Zacks Consensus Estimate is pegged at $4.34, lower than the projected range.

LHC Group affirmed revenue guidance for 2019. The company expects revenues in the band of $2.09-$2.14 billion. The Zacks Consensus Estimate stands at $2.10 billion, within the guided range.

Adjusted EBITDA is projected to be in the range of $214 million to $220 million.

Wrapping Up

LHC Group exited the third quarter on a mixed note, wherein the earnings beat the consensus mark, while revenues missed the same. The company continues to gain from its home health services and hospice admissions, which rose year over year in the quarter. Substantial increase in the top and bottom lines also instill optimism. Management continues to remain optimistic about the Almost Family acquisition, which has proven accretive in the quarter. LHC Group is also anticipated to gain from joint ventures. Strong 2019 outlook paints a bright picture as well. Expansion in margins is an added positive.

However, a highly competitive home healthcare market adds to woes.

Earnings of Other MedTech Majors at a Glance

Some other top-ranked stocks that reported solid results this earning season are Edwards Lifesciences EW, Thermo Fisher Scientific Inc. TMO and ResMed Inc. RMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Edwards Lifesciences delivered fourth-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Fourth-quarter net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered fourth-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the Zacks Consensus Estimate by 1.3%.

ResMed reported fourth-quarter 2019 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues were $681.1 million, surpassing the Zacks Consensus Estimate by 3.6%.

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