A month has gone by since the last earnings report for LHC Group . Shares have lost about 14.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is LHC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
LHC Group Q3 Earnings and Revenues Beat Estimates
LHC Group, Inc.’s third-quarter 2020 adjusted earnings per share of $1.63 surpassed the Zacks Consensus Estimate of $1.32 by 23.5%. Moreover, the bottom line improved 29.4% year over year.
The company reported net service revenues of $530.7 million in the quarter, which beat the Zacks Consensus Estimate by 1.5%. Further, the top line inched up 0.4% on a year-over-year basis.
Q3 Highlights
In the quarter under review, total organic growth in home health admissions rose 4.7% year over year, while organic growth in hospice admissions climbed 12.8%.
However, home health service revenues were $373.5 million, down 0.6% year over year. Meanwhile, hospice services revenues amounted to $59.8 million, up 3.6%.
Business Update
On Aug 1, 2020, LHC Group finalized a joint venture with Orlando Health to boost home health and home and community based services (HCBS) in the state of Florida. The company anticipates this joint venture (JV) to account for almost $3.5 million in incremental annualized revenues.
On Oct 1, 2020, the company finalized a JV with University Health Care System to bolster home health and hospice services in Georgia and South Carolina. The company expects 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 joint venture to account for almost $2.1 million in incremental annualized revenues.
Margin Analysis
Gross profit in the quarter totaled $225.4 million, up 16.4%. Gross margin in the reported quarter was 42.5%, which expanded 580 basis points (bps) on a year-over-year basis.
Operating profit was $19.5 million, plunged 58.2% from the prior-year quarter. Operating margin was 3.7%, down 510 bps.
2020 Guidance Raised
LHC Group is raising its full-year 2020 guidance (that was withdrawn on May 7,2020) and then reinstated on Aug 5, 2020.
For full-year 2020, the company projects net service revenues between $2.06 and $2.07 billion (up from the previously guided range of $2 billion to $2.05 billion). The Zacks Consensus Estimate for the same is pegged at $2.06 billion.
Adjusted EPS is expected in the range of $4.90-$5.00 (up from the prior issued ranged of $4.60-$4.80). The consensus mark for the same is pegged at $4.76 per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -5.43% due to these changes.
VGM Scores
Currently, LHC has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, LHC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Image: Bigstock
Why Is LHC (LHCG) Down 14.2% Since Last Earnings Report?
A month has gone by since the last earnings report for LHC Group . Shares have lost about 14.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is LHC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
LHC Group Q3 Earnings and Revenues Beat Estimates
LHC Group, Inc.’s third-quarter 2020 adjusted earnings per share of $1.63 surpassed the Zacks Consensus Estimate of $1.32 by 23.5%. Moreover, the bottom line improved 29.4% year over year.
The company reported net service revenues of $530.7 million in the quarter, which beat the Zacks Consensus Estimate by 1.5%. Further, the top line inched up 0.4% on a year-over-year basis.
Q3 Highlights
In the quarter under review, total organic growth in home health admissions rose 4.7% year over year, while organic growth in hospice admissions climbed 12.8%.
However, home health service revenues were $373.5 million, down 0.6% year over year. Meanwhile, hospice services revenues amounted to $59.8 million, up 3.6%.
Business Update
On Aug 1, 2020, LHC Group finalized a joint venture with Orlando Health to boost home health and home and community based services (HCBS) in the state of Florida. The company anticipates this joint venture (JV) to account for almost $3.5 million in incremental annualized revenues.
On Oct 1, 2020, the company finalized a JV with University Health Care System to bolster home health and hospice services in Georgia and South Carolina. The company expects 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 joint venture to account for almost $2.1 million in incremental annualized revenues.
Margin Analysis
Gross profit in the quarter totaled $225.4 million, up 16.4%. Gross margin in the reported quarter was 42.5%, which expanded 580 basis points (bps) on a year-over-year basis.
Operating profit was $19.5 million, plunged 58.2% from the prior-year quarter. Operating margin was 3.7%, down 510 bps.
2020 Guidance Raised
LHC Group is raising its full-year 2020 guidance (that was withdrawn on May 7,2020) and then reinstated on Aug 5, 2020.
For full-year 2020, the company projects net service revenues between $2.06 and $2.07 billion (up from the previously guided range of $2 billion to $2.05 billion). The Zacks Consensus Estimate for the same is pegged at $2.06 billion.
Adjusted EPS is expected in the range of $4.90-$5.00 (up from the prior issued ranged of $4.60-$4.80). The consensus mark for the same is pegged at $4.76 per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -5.43% due to these changes.
VGM Scores
Currently, LHC has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, LHC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.