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LHC Group (LHCG) Q4 Earnings Beat Estimates, Revenues Miss

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Zacks Equity Research
·4 min read
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LHC Group, Inc.’s LHCG fourth-quarter 2020 adjusted earnings per share (EPS) of $1.40 surpassed the Zacks Consensus Estimate of $1.37 by 2.2%. Moreover, the bottom line improved 21.7% year over year.

For the full-year 2020, the company reported adjusted EPS of 5.01, up 12.1% from the previous year. The figure beat the consensus mark by 0.2%.

Revenue Details

The company reported net service revenues of $532.3 million in the quarter, which missed the Zacks Consensus Estimate by 0.3%. Nonetheless, the top line inched up 0.2% on a year-over-year basis.

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

For the full-year 2020, the company delivered net service revenues of $2.06 billion, which matched the consensus mark but were down 0.8%.

Q4 Highlights

In the quarter under review, total organic growth in home health admissions rose 2.2% year over year, while organic growth in hospice admissions climbed 10.9%.

However, home health service revenues were $382.6 million, down 1.8% year over year. Meanwhile, hospice services revenues amounted to $62.4 million, up 7.4%.

Business Update

On Oct 1, 2020, the company finalized a joint venture (JV) with University Health Care System to bolster home health and hospice services in Georgia and South Carolina. The company anticipates this joint venture to account for almost $8.3 million in incremental annualized revenues. In the same month, the company finalized a JV with Northeast Georgia Health System in order to share ownership of SunCrest Home Health in Gainesville, GA.

On Nov 1, 2020, LHC Group finalized an expansion of JV with CHRISTUS Health via an agreement of adding a hospice provider in San Marcos, TX. The company anticipates this JV to account for almost $1.6 million in incremental annualized revenues.

On Dec 31, 2020, announced its decision to acquire Tulsa, OK-based Grace Hospice of Oklahoma and Mesa, AZ-based Valley Hospice and East Valley Palliative Care. The company anticipates the purchase Grace Hospice to generate almost $12.1 million in annualized revenues, while Valley Hospice and East Valley Palliative Care to generate about $4.8 million in annualized revenues.

Margin Analysis

Gross profit in the quarter totaled $215.1 million, up 14.4%. Gross margin in the reported quarter was 40.4%, which expanded 500 basis points (bps) on a year-over-year basis.

Operating profit was $50.9 million, up 56.8% from the prior-year quarter. Operating margin was 9.6%, down 350 bps.

2021 Guidance

For first-quarter 2021 the company anticipates net service revenues to be $515-$530 million. The Zacks Consensus Estimate for the same is pegged at $543.2 million.

Adjusted EPS is projected to be $1.20-$1.30. The consensus mark for the same is pegged at $1.39 per share.

For full-year 2021, the company projects net service revenues between $2.2 and $2.26 billion. The Zacks Consensus Estimate for the same is pegged at $2.24 billion.

Adjusted EPS is projected to be $5.65-$5.90. The consensus mark for the same stands at $5.99 per share.

Wrapping Up

LHC Group exited the fourth quarter on a mixed note. The company continues to gain from home health and hospice admissions with both witnessing organic growth on a year-over-year basis. Increase in the bottom line buoys optimism. LHC Group is also anticipated to benefit from JVs. Expansion is gross margin is encouraging.

However, the company witnessed decline in home health service revenues in the quarter under review. Also, contraction in operating margin raises concern. Further, a highly competitive home healthcare market remains a woe.

Zacks Rank

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

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Hologic, Inc. HOLX, Abbott Laboratories ABT and AngioDynamics, Inc. ANGO, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, which surpassed the Zacks Consensus Estimate by 33.6%.

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which beat the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.

AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.

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