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Here's Why You Should Retain LHC Group (LHCG) Stock Now
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LHC Group, Inc. is well-poised for growth on strategic deals and a wide array of services. However, stiff competition remains a concern.
Shares of this Zacks Rank #3 (Hold) company lost 33.9% compared with the industry’s decline of 49.3% in a year’s time. The S&P 500 Index has rallied 28.7% in the same time frame.
LHC Group — with a market capitalization of $4.45 billion — is a renowned post-acute healthcare service provider. It anticipates earnings to improve by 12.4% over the next five years. The company has a trailing four-quarter earnings surprise of 4.3%, on average.
Key Catalysts
We are optimistic about LHC Group’s robust growth opportunities via buyouts and partnerships. In November 2021, the company finalized (inked purchase agreements in September) the buyout of 47 Brookdale Health Care agencies from the recently formed home health, hospice, and outpatient therapy venture between HCA Healthcare and Brookdale Senior Living Inc. In October, the company finalized its acquisition agreements for one home health and one hospice provider situated in Virginia Beach, effective Oct 1, 2021. The acquisition agreements for the two providers were announced on Sep 14, 2021.
In the same month, LHC Group completed its previously announced (Jun 2, 2021) deal to acquire Heart of Hospice from EPI Group, LLC, which is a Charleston, SC-based family-owned holding company. The buyout will enable LHC Group to expand its hospice footprint in five states. The transaction comprises 16 hospice agencies in Arkansas, Louisiana, Mississippi, Oklahoma and South Carolina.
Presently, LHC Group estimates acquired revenues worth $300 million in 2021. On a year-to-date basis, the company has completed a buyout of around $300 million in annualized revenues. The company’s mergers and acquisitions activity took its national footprint to 917 locations across 37 states and the District of Columbia.
Image Source: Zacks Investment Research
LHC Group’s wide array of services through its diverse business segments, which have been instrumental in driving the top line, buoy optimism. Within the home health services arm, nurses, home health aides and therapists work closely with patients and their families to design and implement individualized treatment plans in accordance with a physician-prescribed plan of care.
In third-quarter 2021, home health service revenues were $386.7 million, up 3.5% year over year, while home health admissions witnessed an improvement of 3.6%.
The hospices segment offers a wide range of services including pain and symptom management, emotional and spiritual support, inpatient and respite care, homemaker services, and counseling. In the third quarter, hospice service revenues grew 38.2%, while organic growth in hospice admissions inched up 0.1%.
Factor Hurting the Stock
LHC Group operates in a highly competitive industry characterized by a fragmented home health care market. Some of its competitors are MedTech bigwigs that have greater resources and better access to capital. Even local and regional providers of home health services pose stiff competition. These include facility- and hospital-based providers, visiting nurse associations and nurse registries.
Estimates Trend
The Zacks Consensus Estimate for the company’s fourth-quarter 2021 revenues is pegged at $581.1 million, suggesting growth of 9.2% from the year-ago reported number.
Stocks to Consider
Some better-ranked stocks in the broader medical space include Thermo Fisher Scientific Inc. (TMO - Free Report) , Abiomed, Inc. and Laboratory Corporation of America Holdings (LH - Free Report) .
Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
Abiomed beat earnings estimates in each of the trailing four quarters, the average surprise being 5.8%. The company currently carries a Zacks Rank #2.
Abiomed’s long-term earnings growth rate is estimated at 20%. The company’s earnings yield of 1.2% compares favorably with the industry’s (3.6%).
Laboratory Corporation surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.7%. The company currently carries a Zacks Rank #2.
Laboratory Corporation’s long-term earnings growth rate is estimated at 10.6%. The company’s earnings yield of 9.4% compares favorably with the industry’s 3.4%.
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Here's Why You Should Retain LHC Group (LHCG) Stock Now
LHC Group, Inc. is well-poised for growth on strategic deals and a wide array of services. However, stiff competition remains a concern.
Shares of this Zacks Rank #3 (Hold) company lost 33.9% compared with the industry’s decline of 49.3% in a year’s time. The S&P 500 Index has rallied 28.7% in the same time frame.
LHC Group — with a market capitalization of $4.45 billion — is a renowned post-acute healthcare service provider. It anticipates earnings to improve by 12.4% over the next five years. The company has a trailing four-quarter earnings surprise of 4.3%, on average.
Key Catalysts
We are optimistic about LHC Group’s robust growth opportunities via buyouts and partnerships. In November 2021, the company finalized (inked purchase agreements in September) the buyout of 47 Brookdale Health Care agencies from the recently formed home health, hospice, and outpatient therapy venture between HCA Healthcare and Brookdale Senior Living Inc. In October, the company finalized its acquisition agreements for one home health and one hospice provider situated in Virginia Beach, effective Oct 1, 2021. The acquisition agreements for the two providers were announced on Sep 14, 2021.
In the same month, LHC Group completed its previously announced (Jun 2, 2021) deal to acquire Heart of Hospice from EPI Group, LLC, which is a Charleston, SC-based family-owned holding company. The buyout will enable LHC Group to expand its hospice footprint in five states. The transaction comprises 16 hospice agencies in Arkansas, Louisiana, Mississippi, Oklahoma and South Carolina.
Presently, LHC Group estimates acquired revenues worth $300 million in 2021. On a year-to-date basis, the company has completed a buyout of around $300 million in annualized revenues. The company’s mergers and acquisitions activity took its national footprint to 917 locations across 37 states and the District of Columbia.
LHC Group’s wide array of services through its diverse business segments, which have been instrumental in driving the top line, buoy optimism. Within the home health services arm, nurses, home health aides and therapists work closely with patients and their families to design and implement individualized treatment plans in accordance with a physician-prescribed plan of care.
In third-quarter 2021, home health service revenues were $386.7 million, up 3.5% year over year, while home health admissions witnessed an improvement of 3.6%.
The hospices segment offers a wide range of services including pain and symptom management, emotional and spiritual support, inpatient and respite care, homemaker services, and counseling. In the third quarter, hospice service revenues grew 38.2%, while organic growth in hospice admissions inched up 0.1%.
Factor Hurting the Stock
LHC Group operates in a highly competitive industry characterized by a fragmented home health care market. Some of its competitors are MedTech bigwigs that have greater resources and better access to capital. Even local and regional providers of home health services pose stiff competition. These include facility- and hospital-based providers, visiting nurse associations and nurse registries.
Estimates Trend
The Zacks Consensus Estimate for the company’s fourth-quarter 2021 revenues is pegged at $581.1 million, suggesting growth of 9.2% from the year-ago reported number.
Stocks to Consider
Some better-ranked stocks in the broader medical space include Thermo Fisher Scientific Inc. (TMO - Free Report) , Abiomed, Inc. and Laboratory Corporation of America Holdings (LH - Free Report) .
Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
Abiomed beat earnings estimates in each of the trailing four quarters, the average surprise being 5.8%. The company currently carries a Zacks Rank #2.
Abiomed’s long-term earnings growth rate is estimated at 20%. The company’s earnings yield of 1.2% compares favorably with the industry’s (3.6%).
Laboratory Corporation surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.7%. The company currently carries a Zacks Rank #2.
Laboratory Corporation’s long-term earnings growth rate is estimated at 10.6%. The company’s earnings yield of 9.4% compares favorably with the industry’s 3.4%.