A month has gone by since the last earnings report for LHC Group . Shares have added about 5.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is LHC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
LHC Group Q2 Earnings Beat Estimates, Revenues Miss
LHC Group second-quarter 2019 adjusted earnings per share (EPS) of $1.07 beat the Zacks Consensus Estimate of $1.00 and improved 27.4% year over year.
The Zacks Rank #3 (Hold) company reported revenues worth $517.8 million in the quarter, which missed the Zacks Consensus Estimate by 0.8%. However, the top line improved 3.2% on a year-over-year basis.
Q2 Highlights
In the quarter under review, total growth in home health admissions was 1.4% year over year and organic growth was 9.1%.
Total growth in home health revenues was 4.2% year over year and organic growth was 6.6%. While growth in hospice admissions was 2.4% year over year, organic growth advanced 9.6%.
Notably, the company realized approximately $7.8 million in pre-tax synergies in the second quarter from its acquisition of Almost Family. Year to date, the company agreed to acquire 15 home health, hospice or home and community-based services locations, the majority of which are hospital joint ventures.
Margin
Gross profit in the quarter totaled $191.9 million, up 6.1%. Gross margin in the quarter was 37.1%, up 100 bps.
Operating income came in at $42.4 million, up 36.6% from the year-ago quarter’s $31 million. Operating margin was 8.2%, up 200 bps.
Guidance Affirmed
LHC Group affirmed guidance for 2019.
The company expects revenues in the band of $2.09-$2.14 billion. The Zacks Consensus Estimate stands at $2.11 billion, within the guided range.
Adjusted EPS is expected between $4.25 and $4.35. The Zacks Consensus Estimate is pegged at $4.30, within the projected range.
Adjusted EBITDA is projected to be in the range of $214 million to $220 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -5.08% due to these changes.
VGM Scores
Currently, LHC has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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 #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is LHC (LHCG) Up 5.9% Since Last Earnings Report?
A month has gone by since the last earnings report for LHC Group . Shares have added about 5.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is LHC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
LHC Group Q2 Earnings Beat Estimates, Revenues Miss
LHC Group second-quarter 2019 adjusted earnings per share (EPS) of $1.07 beat the Zacks Consensus Estimate of $1.00 and improved 27.4% year over year.
The Zacks Rank #3 (Hold) company reported revenues worth $517.8 million in the quarter, which missed the Zacks Consensus Estimate by 0.8%. However, the top line improved 3.2% on a year-over-year basis.
Q2 Highlights
In the quarter under review, total growth in home health admissions was 1.4% year over year and organic growth was 9.1%.
Total growth in home health revenues was 4.2% year over year and organic growth was 6.6%. While growth in hospice admissions was 2.4% year over year, organic growth advanced 9.6%.
Notably, the company realized approximately $7.8 million in pre-tax synergies in the second quarter from its acquisition of Almost Family. Year to date, the company agreed to acquire 15 home health, hospice or home and community-based services locations, the majority of which are hospital joint ventures.
Margin
Gross profit in the quarter totaled $191.9 million, up 6.1%. Gross margin in the quarter was 37.1%, up 100 bps.
Operating income came in at $42.4 million, up 36.6% from the year-ago quarter’s $31 million. Operating margin was 8.2%, up 200 bps.
Guidance Affirmed
LHC Group affirmed guidance for 2019.
The company expects revenues in the band of $2.09-$2.14 billion. The Zacks Consensus Estimate stands at $2.11 billion, within the guided range.
Adjusted EPS is expected between $4.25 and $4.35. The Zacks Consensus Estimate is pegged at $4.30, within the projected range.
Adjusted EBITDA is projected to be in the range of $214 million to $220 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -5.08% due to these changes.
VGM Scores
Currently, LHC has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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 #2 (Buy). We expect an above average return from the stock in the next few months.