LHC Group, Inc.

NasdaqGS:LHCG Stock Report

Market Cap: US$5.3b

This company has been acquired

The company may no longer be operating, as it has been acquired. Find out why through their latest events.

LHC Group Management

Management criteria checks 3/4

Key information

Keith Myers

Chief executive officer

US$4.3m

Total compensation

CEO salary percentage23.12%
CEO tenure29.1yrs
CEO ownership2.9%
Management average tenure4.1yrs
Board average tenure8.5yrs

Recent management updates

Recent updates

Seeking Alpha • Aug 03

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.
Seeking Alpha • Jul 19

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.
Seeking Alpha • Jul 06

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.

CEO Compensation Analysis

How has Keith Myers's remuneration changed compared to LHC Group's earnings?
DateTotal CompensationSalaryCompany Earnings
Dec 31 2022n/an/a

US$40m

Sep 30 2022n/an/a

US$63m

Jun 30 2022n/an/a

US$73m

Mar 31 2022n/an/a

US$101m

Dec 31 2021US$4mUS$996k

US$116m

Sep 30 2021n/an/a

US$130m

Jun 30 2021n/an/a

US$117m

Mar 31 2021n/an/a

US$124m

Dec 31 2020US$3mUS$996k

US$112m

Sep 30 2020n/an/a

US$103m

Jun 30 2020n/an/a

US$119m

Mar 31 2020n/an/a

US$99m

Dec 31 2019US$5mUS$900k

US$96m

Sep 30 2019n/an/a

US$94m

Jun 30 2019n/an/a

US$86m

Mar 31 2019n/an/a

US$77m

Dec 31 2018US$4mUS$750k

US$64m

Sep 30 2018n/an/a

US$61m

Jun 30 2018n/an/a

US$51m

Mar 31 2018n/an/a

US$46m

Dec 31 2017US$3mUS$735k

US$50m

Sep 30 2017n/an/a

US$41m

Jun 30 2017n/an/a

US$40m

Mar 31 2017n/an/a

US$38m

Dec 31 2016US$3mUS$700k

US$37m

Compensation vs Market: Keith's total compensation ($USD4.31M) is below average for companies of similar size in the US market ($USD8.03M).

Compensation vs Earnings: Keith's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.

CEO

Keith Myers (63 yo)

29.1yrs
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...

Leadership Team

NamePositionTenureCompensationOwnership
Keith Myers
Co-Founder29.1yrsUS$4.31m2.91%
$ 154.0m
Joshua Proffitt
President & Chief Operating Officer2.7yrsUS$3.08m0.38%
$ 20.0m
Dale Mackel
Executive VP2.3yrsUS$627.34k0.058%
$ 3.1m
Nicholas Gachassin
Executive VP & General Counsel4.1yrsUS$887.44k0.051%
$ 2.7m
Bruce Greenstein
Executive VP and Chief Strategy & Innovation Officer4.4yrsUS$2.12m0.13%
$ 7.0m
John Indest
Consultant & Independent Director11.4yrsUS$211.28k0.11%
$ 6.0m
Kimberly Seymour
Senior VP & Chief Accounting Officer2.7yrsno data0.018%
$ 953.7k
Mohammad Ali
Chief Information Officer3.2yrsno datano data
Marcus Macip
Executive VP & Chief Administrative Officerno datano datano data
JoAnne Little
Senior VP & Chief Compliance Officer10.1yrsno datano data
Mark Willis
Senior VP & Chief Communications Officerno datano datano data
Melanie Kuehn
Division President of Operations – Acadia Division Home Healthno datano datano data
4.1yrs
Average Tenure
55yo
Average Age

Experienced Management: LHCG's management team is considered experienced (4.1 years average tenure).

Board Members

NamePositionTenureCompensationOwnership
Keith Myers
Co-Founder29.1yrsUS$4.31m2.91%
$ 154.0m
John Indest
Consultant & Independent Director22.7yrsUS$211.28k0.11%
$ 6.0m
Ronald Nixon
Independent Director21.6yrsUS$208.66k0.087%
$ 4.6m
Clifford Holtz
Lead Independent Director5.3yrsUS$553.66k0.039%
$ 2.0m
Jonathan Goldberg
Independent Director5.3yrsUS$218.66k0.19%
$ 9.8m
Tyree Wilburn
Transitional Advisory Council3.9yrsUS$164.95kno data
W. Reed
Independent Director5.3yrsUS$218.78k0.45%
$ 23.7m
William Turner
Independent Director8.5yrsUS$228.91k0.046%
$ 2.4m
Teri Fontenot
Independent Director3.9yrsUS$225.78k0.025%
$ 1.3m
Monica Azare
Independent Director15.3yrsUS$214.28k0.098%
$ 5.2m
Jake Delhomme
Member of Founder's Advisory Board9.2yrsno datano data
8.5yrs
Average Tenure
66yo
Average Age

Experienced Board: LHCG's board of directors are considered experienced (8.5 years average tenure).

Company Analysis and Financial Data Status

DataLast Updated (UTC time)
Company Analysis2023/02/23 12:44
End of Day Share Price 2023/02/21 00:00
Earnings2022/12/31
Annual Earnings2022/12/31

Data Sources

The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.

PackageDataTimeframeExample US Source *
Company Financials10 years
  • Income statement
  • Cash flow statement
  • Balance sheet
Analyst Consensus Estimates+3 years
  • Forecast financials
  • Analyst price targets
Market Prices30 years
  • Stock prices
  • Dividends, Splits and Actions
Ownership10 years
  • Top shareholders
  • Insider trading
Management10 years
  • Leadership team
  • Board of directors
Key Developments10 years
  • Company announcements

* Example for US securities, for non-US equivalent regulatory forms and sources are used.

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.

Analysis Model and Snowflake

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Learn about the world class team who designed and built the Simply Wall St analysis model.

Industry and Sector Metrics

Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.

Analyst Sources

LHC Group, Inc. is covered by 20 analysts. 8 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.

AnalystInstitution
Matthew GillmorBaird
Steven ValiquetteBarclays
Sarah JamesBarclays