| Snowflake Score | |
|---|---|
| Valuation | 0/6 |
| Future Growth | 4/6 |
| Past Performance | 2/6 |
| Financial Health | 2/6 |
| Dividends | 0/6 |
LHCG Stock Overview
LHC Group, Inc., a health care provider, specializes in the post-acute continuum of care primarily for Medicare beneficiaries in the United States.
LHC Group Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$163.32 |
| 52 Week High | US$188.59 |
| 52 Week Low | US$108.42 |
| Beta | 0.48 |
| 1 Month Change | 3.60% |
| 3 Month Change | -0.93% |
| 1 Year Change | -9.91% |
| 3 Year Change | 35.18% |
| 5 Year Change | 150.38% |
| Change since IPO | 855.09% |
Recent News & Updates
LHC Group GAAP EPS of $0.35 misses by $0.95, revenue of $576.2M misses by $29.82M
LHC Group press release (NASDAQ:LHCG): Q2 GAAP EPS of $0.35 misses by $0.95. Revenue of $576.2M (+5.6% Y/Y) misses by $29.82M.
LHC Group: UnitedHealth Merger Is Worth Playing
UnitedHealth’s ongoing acquisition of LHC Group is an interesting merger arbitrage setup, potentially offering an annualized return of 10%. The spread has recently widened as the transaction has attracted the FTC’s attention. The merger still seems likely to close - both companies have a low overlap, the home healthcare market is highly fragmented and the Humana-Kindred merger is a closely comparable transaction. The main risks are antitrust concerns over vertical integration and legal challenges to UnitedHealth’s ongoing merger with Change Healthcare. This is one of the ongoing large-cap merger arbitrage cases where the spread has recently widened. Healthcare and insurance giant UnitedHealth Group (UNH) is buying in-home healthcare company LHC Group (LHCG) at $170 per share. Board/shareholder approvals are already in-the-pocket. The only remaining hurdle is antitrust approval. Until recently, the market was not pricing in any regulatory risk as the spread was around 2%. In June, however, the merger received a second information request from the FTC. Since the news, the spread has jumped and is currently at 5%. In early July, rumors appeared that the FTC’s probe is focused on workers’ pay. Regulatory investigation is currently ongoing and the FTC will have 30 days to finish the review once the companies submit all the required information. Red dot represents FTC’s second request date. Yellow dot is where rumors appeared that FTC’s request is focused on labor pay. FTC’s inquiry comes in light of several industry developments. Firstly, UNH’s other ongoing $13bn merger with Change Healthcare (CHNG) has received pushback from the DoJ. The trial is set for August. However, CHNG operates in a different industry (medical billing software) than LHCG and the UHN-CHNG transaction has a much higher business overlap compared to UNH-LHCG merger. Secondly, since Joe Biden’s executive order on promoting competition in 2021, antitrust regulators have been putting increasing attention on healthcare mergers, highlighting impact on workers’ wages and the degree of vertical integration. These two concerns could be at play in the LHCG-UNH transaction. Also, as of May, the FTC has shifted to a majority-democratic commission, possibly pointing to tighter regulatory scrutiny. Despite these risks, I see several reasons why the LHCG merger is likely to receive regulatory clearance: UNH and LHCG have a low service overlap. The home healthcare market is highly fragmented. The Kindred-Humana merger is a comparable transaction in the home healthcare space. Recent FTC ruling history suggests that healthcare mergers are blocked due to geographical overlap/dominant market shares - largely not applicable to UNH-LHCG. Moreover, seemingly no mergers were blocked solely on labor pay grounds. Let’s go through these one-by-one. Limited Business Overlap LHCG operates in the post-acute healthcare market. The primary focus is on home-based healthcare services which have historically made a lion’s share of revenues at ~80%. This includes two reportable segments - home health (~70%) and home-/community-based care (~10%). The company operates home nursing agencies through which it provides post-acute nursing, medically-oriented social services and therapy. Other segments (~20% of revenues) are hospices, facility-based healthcare services and other healthcare businesses. Meanwhile, UNH is a vertically-integrated multinational company - it runs both health insurance (UnitedHealthcare) and health services (Optum) businesses. The Optum arm provides a continuum of healthcare services, including primary care, virtual care, behavioral health and ambulatory surgery. Even so, the company’s presence in the post-acute in-home care market has been limited. Apparently, ever since the pandemic, UNH has sought to expand the segment. Still, some overlap with LHCG remains - UNH launched its own service HouseCalls as well as acquired start-ups Landmark Health and naviHealth. HouseCalls in an annual in-home medical assessment and not a post-acute care service. Having said that, the number of patient visits in 2021 were at ~2.1m compared to 12m+ patient encounters at LHCG, though the latter include hospice patients. NaviHealth is a software business. The company operates a platform which helps hospital systems and healthcare providers manage clinical decision-making and track patient data. It should be noted that the focus is also on post-acute healthcare services. Landmark Health provides in-home care, however, the focus is exclusively on the sickest and most complicated patients. Services are offered in addition to regular primary care providers, such as LHCG. As of 2019, the number of annual visits was at 400k. Home-Care Market The in-home care market in the US is highly fragmented. To illustrate this, the largest market share captured by Kindred at Home (not publicly-listed) in recent years has been stable at only around 6% while other largest peers (Amedisys and Encompass) have occupied only ~4%-~5%. Company LHCG AMED EHC Kindred at Home Market Cap 5.0 4.1 4.9 - Enterprise Value 5.8 4.5 8.0 - FY2021 Home Care Revenues ($bn) 1.6 1.4 0.9 - Market Share 4.4% 5.0% 3.9% 6.0% Sources: Company filings and HealthCare Appraisers. LexisNexis Visually, LHCG (top-right) appears to cover similar geographies as the largest peers Kindred, Amedisys and Encompass: AMED 8-K Filing, LHCG Investor Presentation, EHC Investor Reference Book, Kindred Healthcare Investor Presentation (Kindred acquired Gentiva in 2015) Looking more specifically, LHCG’s share of the number of home care agencies in several states is significant at ~70% in Mississippi and ~50% in Kentucky. However, these areas have relatively low numbers of total home care providers. Plus, total agency number includes only Medicare-registered providers whose count stands at ~11k compared to a rough estimate of ~35k+ including non-licensed agencies. With this in mind, the merger is unlikely to result in UNH obtaining any alarming market power other than in several specific geographies where divestitures, if needed, could be reasonable to expect. This makes any antitrust pushback very unlikely.
FTC second request in LHC Group/UnitedHealth said to probe pay, labor market
The FTC's second request into UnitedHealth's (NYSE:UNH) planned $5.4 billion purchase of LHC Group (NASDAQ:LHCG) is said to be centered on workers' pay in the home healthcare space. The companies received a second request early last month that was unexpected, according to a Dealreporter item, which cited sources familiar. Kindred Healthcare's sale to Apollo Global also received a second request from the FTC. The FTC is said to be looking at how pay in the healthcare space and how minimum wage workers have trouble bargaining for higher wages, according to the report. UnitedHealth (UNG) agreed to buy home health business LHC Group for $170/share in late March.
Shareholder Returns
| LHCG | US Healthcare | US Market | |
|---|---|---|---|
| 7D | -0.5% | 1.0% | 1.2% |
| 1Y | -9.9% | 15.8% | -11.6% |
Return vs Industry: LHCG underperformed the US Healthcare industry which returned 14.3% over the past year.
Return vs Market: LHCG exceeded the US Market which returned -13.5% over the past year.
Price Volatility
| LHCG volatility | |
|---|---|
| LHCG Average Weekly Movement | 1.8% |
| Healthcare Industry Average Movement | 8.9% |
| Market Average Movement | 7.9% |
| 10% most volatile stocks in US Market | 17.0% |
| 10% least volatile stocks in US Market | 3.2% |
Stable Share Price: LHCG is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 2% a week.
Volatility Over Time: LHCG's weekly volatility (2%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1994 | 23,000 | Keith Myers | https://www.lhcgroup.com |
LHC Group, Inc., a health care provider, specializes in the post-acute continuum of care primarily for Medicare beneficiaries in the United States. It operates through five segments: Home Health Services, Hospice Services, Home and Community-Based Services, Facility-Based Services, and Healthcare Innovations (HCI). The Home Health Services segment offers skilled nursing, medically oriented social services and physical, occupational, and speech therapy.
LHC Group Fundamentals Summary
| LHCG fundamental statistics | |
|---|---|
| Market Cap | US$5.07b |
| Earnings (TTM) | US$73.46m |
| Revenue (TTM) | US$2.30b |
69.0x
P/E Ratio2.2x
P/S RatioIs LHCG overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| LHCG income statement (TTM) | |
|---|---|
| Revenue | US$2.30b |
| Cost of Revenue | US$1.41b |
| Gross Profit | US$883.78m |
| Other Expenses | US$810.32m |
| Earnings | US$73.46m |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 2.37 |
| Gross Margin | 38.48% |
| Net Profit Margin | 3.20% |
| Debt/Equity Ratio | 45.2% |
How did LHCG perform over the long term?
See historical performance and comparisonValuation
Is LHCG undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
0/6Valuation Score 0/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast
Key Valuation Metric
Which metric is best to use when looking at relative valuation for LHCG?
Other financial metrics that can be useful for relative valuation.
| What is LHCG's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$5.07b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 2.6x |
| Enterprise Value/EBITDA | 35.7x |
| PEG Ratio | 2.7x |
Price to Earnings Ratio vs Peers
How does LHCG's PE Ratio compare to its peers?
| LHCG PE Ratio vs Peers |
|---|
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 20x | ||
AMED Amedisys | 28.3x | 13.7% | US$4.0b |
CHE Chemed | 25.9x | 1.6% | US$7.2b |
PINC Premier | 15.9x | -5.9% | US$4.5b |
DVA DaVita | 10x | 9.8% | US$8.3b |
LHCG LHC Group | 69x | 25.6% | US$5.1b |
Price-To-Earnings vs Peers: LHCG is expensive based on its Price-To-Earnings Ratio (69x) compared to the peer average (20x).
Price to Earnings Ratio vs Industry
How does LHCG's PE Ratio compare vs other companies in the US Healthcare Industry?
Price-To-Earnings vs Industry: LHCG is expensive based on its Price-To-Earnings Ratio (69x) compared to the US Healthcare industry average (19.6x)
Price to Earnings Ratio vs Fair Ratio
What is LHCG's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 69x |
| Fair PE Ratio | 39x |
Price-To-Earnings vs Fair Ratio: LHCG is expensive based on its Price-To-Earnings Ratio (69x) compared to the estimated Fair Price-To-Earnings Ratio (39x).
Share Price vs Fair Value
What is the Fair Price of LHCG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: LHCG ($163.32) is trading above our estimate of fair value ($103.8)
Significantly Below Fair Value: LHCG is trading above our estimate of fair value.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Insufficient data to show price forecast.
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Future Growth
How is LHC Group forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?
Future Growth Score
4/6Future Growth Score 4/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE
25.6%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: LHCG's forecast earnings growth (25.6% per year) is above the savings rate (1.9%).
Earnings vs Market: LHCG's earnings (25.6% per year) are forecast to grow faster than the US market (14.6% per year).
High Growth Earnings: LHCG's earnings are expected to grow significantly over the next 3 years.
Revenue vs Market: LHCG's revenue (9.1% per year) is forecast to grow faster than the US market (7.9% per year).
High Growth Revenue: LHCG's revenue (9.1% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: LHCG's Return on Equity is forecast to be low in 3 years time (10.7%).
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Past Performance
How has LHC Group performed over the past 5 years?
Past Performance Score
2/6Past Performance Score 2/6
Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE
18.4%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: LHCG has high quality earnings.
Growing Profit Margin: LHCG's current net profit margins (3.2%) are lower than last year (5.5%).
Past Earnings Growth Analysis
Earnings Trend: LHCG's earnings have grown by 18.4% per year over the past 5 years.
Accelerating Growth: LHCG's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.
Earnings vs Industry: LHCG had negative earnings growth (-37.3%) over the past year, making it difficult to compare to the Healthcare industry average (10.9%).
Return on Equity
High ROE: LHCG's Return on Equity (5.7%) is considered low.
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Financial Health
How is LHC Group's financial position?
Financial Health Score
2/6Financial Health Score 2/6
Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage
Financial Position Analysis
Short Term Liabilities: LHCG's short term assets ($459.6M) exceed its short term liabilities ($334.9M).
Long Term Liabilities: LHCG's short term assets ($459.6M) do not cover its long term liabilities ($923.4M).
Debt to Equity History and Analysis
Debt Level: LHCG's net debt to equity ratio (43.6%) is considered high.
Reducing Debt: LHCG's debt to equity ratio has increased from 18.5% to 45.2% over the past 5 years.
Debt Coverage: LHCG's operating cash flow is negative, therefore debt is not well covered.
Interest Coverage: LHCG's interest payments on its debt are well covered by EBIT (10x coverage).
Balance Sheet
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Dividend
What is LHC Group current dividend yield, its reliability and sustainability?
Dividend Score
0/6Dividend Score 0/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
Dividend Yield vs Market
Notable Dividend: Unable to evaluate LHCG's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.
High Dividend: Unable to evaluate LHCG's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if LHCG's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if LHCG's dividend payments have been increasing.
Earnings Payout to Shareholders
Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: Unable to calculate sustainability of dividends as LHCG has not reported any payouts.
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Management
How experienced are the management team and are they aligned to shareholders interests?
3.6yrs
Average management tenure
CEO
Keith Myers (63 yo)
28.58yrs
Tenure
US$4,307,489
Compensation
Mr. Keith G. Myers has been the Co-Founder, Chairman and Chief Executive Officer of LHC Group, Inc. since 1994 and served as its President since December 31, 2019 until June 2020. Mr. Myers has been Direct...
CEO Compensation Analysis
Compensation vs Market: Keith's total compensation ($USD4.31M) is below average for companies of similar size in the US market ($USD8.36M).
Compensation vs Earnings: Keith's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.
Leadership Team
Experienced Management: LHCG's management team is considered experienced (3.6 years average tenure).
Board Members
Experienced Board: LHCG's board of directors are considered experienced (8 years average tenure).
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
Ownership Breakdown
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Top Shareholders
Company Information
LHC Group, Inc.'s employee growth, exchange listings and data sources
Key Information
- Name: LHC Group, Inc.
- Ticker: LHCG
- Exchange: NasdaqGS
- Founded: 1994
- Industry: Health Care Services
- Sector: Healthcare
- Implied Market Cap: US$5.068b
- Shares outstanding: 31.03m
- Website: https://www.lhcgroup.com
Number of Employees
Location
- LHC Group, Inc.
- 901 Hugh Wallis Road South
- Lafayette
- Louisiana
- 70508
- United States
Listings
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/08/10 00:00 |
| End of Day Share Price | 2022/08/10 00:00 |
| Earnings | 2022/06/30 |
| Annual Earnings | 2021/12/31 |
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.