Back to top

Image: Bigstock

LHC Group (LHCG) Reports Impressive Preliminary Q3 Revenues

Read MoreHide Full Article

LHC Group, Inc. (LHCG - Free Report) recently announced preliminary revenues for third-quarter 2021. The company expects to host a conference call to discuss its detailed financial results for the period on Nov 4.

As per the preliminary report, third-quarter 2021 net service revenues are estimated to be $565.5 million, up by 6.6% from the year-ago quarter.

LHC Group expects its third-quarter 2021 adjusted earnings per share (“EPS”) to be approximately $1.45, down 11% from the prior-year quarter. The Zacks Consensus Estimate of $1.65 remains above the preliminary figure.

Per the company, the third-quarter results experienced significant negative impacts due to the recent surge in new COVID-19 cases and Hurricane Ida. The company lost the equivalent of 120 operating days due to temporary location closures associated with the hurricane, whereas capacity constraints cropped up primarily due to the Delta variant's impact on clinicians having to quarantine.

Following this release yesterday, shares of the company are up by approximately 12% in today’s premarket trading.

2021 Financial Outlook

LHC Group, during its preliminary third-quarter 2021 results announcement, also provided a glimpse of its performance till date.

The company has been witnessing an uptick in average daily home health census for October, which currently stands at 85,420 (up by 1.4% sequentially from the third quarter of 2021). LHC Group continues to register year-over-year growth in traditional patient referrals on the back of growing preference by patients, referral sources and payors for high-quality at-home healthcare services unlike via inpatient post-acute settings.

Given the expected results for the third quarter and the improvement in operating trends in the fourth quarter, the company expects full-year 2021 net service revenue growth in the band of $2.200 billion-$2.205 billion (down from the previous outlook of $2.215 billion-$2.265 billion). The Zacks Consensus Estimate for the full-year reported revenues is currently pegged at $2.24 billion.

LHC Group projects its full-year adjusted EPS to lie in the range of $5.75-$5.85, down from the previously guided range of $6.30-$6.50. The Zacks Consensus Estimate for the same is currently pegged at $6.40.

A Brief Q3 Analysis

The significant surge in new COVID-19 cases due to the Delta strain is expected to weigh on LHC Group’s third-quarter results. Apart from the pandemic-led impacts, the company’s results are expected to be hampered by temporary closure of its home health and hospice locations, thereby hurting its revenues during the quarter.

On a positive note, continued strength in LHC Group’s home health and hospice services is likely to contribute to its quarterly results. In September, the company had finalized its previously announced (June) agreement to purchase Heart of Hospice from EPI Group, LLC, thereby expanding its hospice footprint in five states. LHC Group, in August, had finalized buyout deals for three home health, hospice and palliative care providers in Virginia, Indiana and Arkansas (announced in July). However, none of these deals is likely to have any material impact on the company’s third quarter results.

The company had entered into a partnership in July with acute unscheduled care provider — SCP Health — to jointly develop and deliver advanced clinical care services in the home. Per the company’s second-quarter earnings call in August, the expanded service offering was to be rolled out later this year. If rolled out, this is also likely to have driven LHC Group’s third-quarter results.

Meanwhile, the company’s preliminary projection of a robust improvement in revenues compared with the sequentially last-reported quarter raises optimism.

Price Performance

Shares of the company have lost 29.4% in the past three months versus the industry’s 9.6% fall and the S&P 500’s 3.6% rise.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

Currently, LHC Group carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .

Henry Schein’s long-term earnings growth rate is estimated at 13.9%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intuitive Surgical’s long-term earnings growth rate is estimated at 9.5%. It currently holds a Zacks Rank #2.

West Pharmaceutical’s long-term earnings growth rate is estimated at 27.3%. It currently carries a Zacks Rank #2.