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Here's Why You Should Retain LHC Group (LHCG) Stock Now
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LHC Group, Inc. is well poised for growth on a broad array of services as well as strategic acquisitions and joint ventures (JVs). However, intense competition continues to be a concern.
Shares of LHC Group have gained 24% compared with the industry’s growth of 3.2% in the past three months.
The company, with a market capitalization of $5 billion, serves as a post-acute care partner for hospitals, physicians and families in the United States. Its earnings are anticipated to improve 12.8% over the next five years. Moreover, it beat estimates in the trailing four quarters by 8.1%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
Broad Array of Services: LHC Group has been offering a wide array of services through its diverse business segments, which have also been instrumental in driving the top line.
Within home health services arm, nurses, home health aides and therapists work closely with patients and their families to design and implement individualized treatment plans in accordance with a physician-prescribed plan of care. Increased acquisition activities in this space have helped the company gain a competitive edge.In the first quarter, home health service revenues grew 1.3% year over year and organic growth in home health admissions was 7.1%.
The hospices segment offers a wide range of services, including pain and symptom management, emotional and spiritual support, inpatient and respite care, homemaker services, and counseling. In the first quarter, hospice service revenues grew 17% and organic growth in hospice admissions advanced 0.2%.
Through the first quarter, the company has been sourcing adequate PPE kits for patients and clinicians. These PPE kits include N95 mask, isolation gown, face shield, gloves, head and shoe covering, appropriate facemask, and a pair of gloves.
Acquisitions & Joint Ventures Look Strategic: LHC Group has long been focusing on acquisitions and joint ventures for inorganic expansion. The company’s pipeline of potential M&A growth opportunities is robust and is well balanced between Home Health and Hospice.
On Jan 6, 2020, the company announced that it has finalized a JV and expansion deal with partners in Texas, Arkansas, and Louisiana – all effective from Jan 1, 2020. These transactions account for annualized revenues of approximately $23.8 million. Strategic deals, such as this, are expected to keep driving growth for the company.
What’s Deterring the Stock?
The home health care market is highly fragmented. LHC Group faces stiff competition from MedTech bigwigs like Amedisys and Chemed, which have greater resources and better access to capital. Even local and regional providers of home health service pose stiff competition.
Which Way are Estimates Headed?
For the second quarter of 2020, the Zacks Consensus Estimate for revenues is pegged at $492.5, indicating a fall of 4.9% from the year-ago period. The same for 2020 earnings stands at $4.28, suggesting fall of 4.3% from the year-ago reported figure.
Aphria’s long-term earnings growth rate is estimated at 24.6%. The company presently carries a Zacks Rank #2 (Buy).
Surmodics’ long-term earnings growth rate is estimated at 10%. The company presently carries a Zacks Rank #1.
HMS Holdings’ long-term earnings growth rate is estimated at 10%. It currently carries a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Here's Why You Should Retain LHC Group (LHCG) Stock Now
LHC Group, Inc. is well poised for growth on a broad array of services as well as strategic acquisitions and joint ventures (JVs). However, intense competition continues to be a concern.
Shares of LHC Group have gained 24% compared with the industry’s growth of 3.2% in the past three months.
The company, with a market capitalization of $5 billion, serves as a post-acute care partner for hospitals, physicians and families in the United States. Its earnings are anticipated to improve 12.8% over the next five years. Moreover, it beat estimates in the trailing four quarters by 8.1%, on average.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
Broad Array of Services: LHC Group has been offering a wide array of services through its diverse business segments, which have also been instrumental in driving the top line.
Within home health services arm, nurses, home health aides and therapists work closely with patients and their families to design and implement individualized treatment plans in accordance with a physician-prescribed plan of care. Increased acquisition activities in this space have helped the company gain a competitive edge.In the first quarter, home health service revenues grew 1.3% year over year and organic growth in home health admissions was 7.1%.
The hospices segment offers a wide range of services, including pain and symptom management, emotional and spiritual support, inpatient and respite care, homemaker services, and counseling. In the first quarter, hospice service revenues grew 17% and organic growth in hospice admissions advanced 0.2%.
Through the first quarter, the company has been sourcing adequate PPE kits for patients and clinicians. These PPE kits include N95 mask, isolation gown, face shield, gloves, head and shoe covering, appropriate facemask, and a pair of gloves.
Acquisitions & Joint Ventures Look Strategic: LHC Group has long been focusing on acquisitions and joint ventures for inorganic expansion. The company’s pipeline of potential M&A growth opportunities is robust and is well balanced between Home Health and Hospice.
On Jan 6, 2020, the company announced that it has finalized a JV and expansion deal with partners in Texas, Arkansas, and Louisiana – all effective from Jan 1, 2020. These transactions account for annualized revenues of approximately $23.8 million. Strategic deals, such as this, are expected to keep driving growth for the company.
What’s Deterring the Stock?
The home health care market is highly fragmented. LHC Group faces stiff competition from MedTech bigwigs like Amedisys and Chemed, which have greater resources and better access to capital. Even local and regional providers of home health service pose stiff competition.
Which Way are Estimates Headed?
For the second quarter of 2020, the Zacks Consensus Estimate for revenues is pegged at $492.5, indicating a fall of 4.9% from the year-ago period. The same for 2020 earnings stands at $4.28, suggesting fall of 4.3% from the year-ago reported figure.
Some better-ranked stocks from the broader medical space are Aphria , Surmodics (SRDX - Free Report) and HMS Holdings . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aphria’s long-term earnings growth rate is estimated at 24.6%. The company presently carries a Zacks Rank #2 (Buy).
Surmodics’ long-term earnings growth rate is estimated at 10%. The company presently carries a Zacks Rank #1.
HMS Holdings’ long-term earnings growth rate is estimated at 10%. It currently carries a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>