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LHC Group (LHCG) Q4 Earnings Miss Estimates, Revenues Beat

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LHC Group, Inc. reported fourth-quarter 2021 adjusted earnings per share (EPS) of $1.26, which missed the Zacks Consensus Estimate by 4.5%. The bottom line declined 10% year over year.

GAAP EPS was 50 cents in the quarter, down 48.5% on a year-over-year basis.

In full-year 2021, the company reported adjusted EPS of $5.73, up 14.4% from the previous year. The figure missed the consensus mark by 0.9%.

Revenue Details

The company reported net service revenues of $583.4 million in the quarter, which beat the Zacks Consensus Estimate by 0.2%. The top line improved 9.6% on a year-over-year basis.

In 2021, the company reported net service revenues of $2.22 billion, up 7.6% from the previous year. The figure matched the consensus mark.

Q4 Highlights

In the fourth quarter, total organic growth in home health admissions rose 3.8% year over year, while organic growth in hospice admissions declined 6.2%.

LHC Group, Inc. Price, Consensus and EPS Surprise

LHC Group, Inc. Price, Consensus and EPS Surprise

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

Home health service revenues were $394.5 million, up 3.1% year over year. Meanwhile, hospice services revenues amounted to $102 million, up 63.5%.

Strategic Update

On Dec 6, 2021, the company’s board of directors approved a share buyback program, wherein the company can repurchase up to $250 million worth of shares. During the quarter under review, LHC Group repurchased shares worth about $83.7 million.

On Nov 2, 2021, LHC Group finalized the buyout of selected home health, hospice and therapy assets from HCA Healthcare and Brookdale Health Care Services venture. This deal marks LHC Group’s entry into two new markets – Minnesota and New Mexico – while broadening service areas in 20 states where the company already operates. The buyout comprises 47 total locations, and incremental annualized revenues of around $130 million are expected from this transaction.

Margin Analysis

Gross profit in the quarter totaled $218.8 million, up 1.7%. Gross margin was 37.5%, which contracted 290 basis points (bps) on a year-over-year basis.

Operating profit was $29.1 million, down 42.8% from the prior-year quarter. Operating margin was 4.9%, down 470 bps.

Financial Position

LHC Group exited the fourth quarter with cash amounting to $9.8 million, down from $29.5 million sequentially.

Cumulative net cash used in operating activities at the end of the fourth quarter totaled $100.3 million against net cash provided in operating activities of $529.2 million in the year-ago quarter.

2022 Guidance

For the first quarter of 2022, the company projects net service revenue in the range of $560-$580 million. The Zacks Consensus Estimate for the same is pegged at $597.2 million.

Adjusted EPS for the same period is expected to range between $1 and $1.10. The Zacks Consensus Estimate is currently pegged at $1.31 per share.

For full-year 2022, the company estimates net service revenue between $2.50 billion and $2.55 billion. The Zacks Consensus Estimate is pegged at $2.47 billion.

The company projects adjusted EPS to be $5.60-$6. The consensus mark for the same stands at $6 per share.

Wrapping Up

LHC Group exited the fourth quarter on a mixed note, wherein earnings missed the Zacks Consensus Estimate, but revenues beat the same. The company continues to gain from home health admissions that witnessed organic growth on a year-over-year basis. Robust revenue performance across home health and hospice is encouraging.

Nevertheless, contraction in both gross margin and 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.

Zacks Rank

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

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have announced quarterly results are Henry Schein, Inc. (HSIC - Free Report) , Quidel Corporation (QDEL - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .

Henry Schein, carrying a Zacks Rank #1 (Strong Buy), reported fourth-quarter 2021 adjusted earnings of $1.07 per share, which beat the Zacks Consensus Estimate by 18.9%. Revenues of $3.33 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.5%.

Quidel reported fourth-quarter 2021 adjusted EPS of $7.29, which surpassed the Zacks Consensus Estimate by 49.1%. Fourth-quarter revenues of $636.9 million outpaced the Zacks Consensus Estimate by 0.3%. It currently carries a Zacks Rank #1.

Quidel’s earnings yield of 8.4% compares favorably with the industry’s (0.7%). QDEL surpassed earnings estimates in two of the trailing four quarters and missed twice, the average surprise being 129.4%.

Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. Fourth-quarter revenues of $732.8 million outpaced the Zacks Consensus Estimate by 0.5%. It currently has a Zacks Rank #2.

Bio-Rad has an earnings yield of 2.3%, which compares favorably with the industry’s negative yield. BIO surpassed earnings estimates in each of the trailing four quarters, the average surprise being 66.9%.


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