LHC Group, Inc.( reported third-quarter 2022 adjusted earnings per share (EPS) of $1.06, which missed the Zacks Consensus Estimate of $1.37 by 22.6%. The bottom line declined 26.9% year over year.

GAAP EPS was 56 cents in the quarter, down 36.4% on a year-over-year basis.

Revenue Details

The company reported net service revenues of $576.9 million in the quarter, which missed the Zacks Consensus Estimate by 6.4%. However, the top line improved 2% on a year-over-year basis.

Q3 Highlights

Home health service revenues were $373.3 million, down 3.5% year over year. Meanwhile, hospice services revenues amounted to $103.8 million, up 25.6%. Revenues from Home and community-based services were up 4.8% to $48 million. Revenues from Facility-based services and HCI were $31.4 million (down 3%) and $20.4 million (up 13.8%), respectively.

Margin Analysis

Gross profit in the quarter totaled $229.1 million, up 3.4%. Gross margin was 39.7%, up approximately 500 basis points (bps) on a year-over-year basis.

Operating profit was $38 million, down 15.8% from the prior-year quarter. The operating margin was 6.6%, down approximately 140 bps.

LHC Group, Inc. Price, Consensus and EPS Surprise

LHC Group, Inc. price-consensus-eps-surprise-chart | LHC Group, Inc. Quote

Financial Position

LHC Group exited the third quarter with cash amounting to $10.5 million, down from $27.4 million sequentially.

Net cash provided by operating activities at the end of the third quarter totaled $10 million against net cash used in operating activities of $51.6 million in the year-ago quarter.

Wrapping Up

LHC Group exited the third quarter on a dismal note, wherein both earnings and revenues missed the Zacks Consensus Estimate. The company continues to gain from hospice admission revenues that witnessed growth on a year-over-year basis. However, home health admission revenues declined year over year, hurting top-line growth.

Nevertheless, the contraction in operating margins is concerning. The year-over-year decline in the bottom line is a woe. A highly competitive home healthcare market remains a headwind.

LHC Group’s acquisition by UnitedHealth Group, announced in March, is still pending.

Zacks Rank and Stocks to Consider

Currently, LHC Group carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health, Inc. (ELV Quick QuoteELV - Free Report) , Medpace Holdings, Inc. (MEDP Quick QuoteMEDP - Free Report) and Merit Medical Systems, Inc. (MMSI Quick QuoteMMSI - Free Report) .

Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Elevance Health has an earnings yield of 5.5% against the industry’s (2.3%). ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.

Medpace Holdings, having a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $384 million outpaced the consensus mark by 8.1%.

Medpace Holdings has an estimated growth rate of 22.7% for 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 22.04%.

Merit Medical, flaunting a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.

Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.