LHC Group, Inc. – Value Analysis (NASDAQ:LHCG) : November 3, 2017

Capitalcube gives LHC Group, Inc. a score of 84.

Our analysis is based on comparing LHC Group, Inc. with the following peers – Amedisys, Inc., Almost Family, Inc., Chemed Corporation, National HealthCare Corporation, BioScrip, Inc. and American CareSource Holdings, Inc. (AMED-US, AFAM-US, CHE-US, NHC-US, BIOS-US and GNOW-US).

Investment Outlook

LHC Group, Inc. has a fundamental score of 84 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Compared to peers, relative outperformance over the last year has faded more recently.
  • It’s current Price/Book of 2.87 is about median in its peer group.
  • We classify LHCG-US as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • LHCG-US has relatively high profit margins while operating with median asset turns.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • LHCG-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • While LHCG-US‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • LHCG-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

LHCG-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 6.40% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 13.38%), and a well-cushioned interest coverage level of 24.83x, LHCG-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 6 peers for the company have an outstanding debt balance.

LHCG-US has maintained its Quick & Able profile from the recent year-end.

  • LHCG-US‘s interest coverage is less than (but within one standard deviation of) its five-year average interest coverage of 26.74x.
  • Though its interest coverage has remained relatively stable at 24.83x compared to 2016, its peer median has increased to 14.01x from 11.96x during this period.
  • Interest coverage fell 1.66 points relative to peers.
  • LHCG-US‘s debt-EV continues to trend downward and is below (but within one standard deviation of) its five-year average debt-EV of 8.20%.
  • Though its debt-EV decreased to 6.40% from 9.67% (in 2016), its peer median remained relatively stable during this period at 13.38%.
  • Relative to peers, debt-EV fell 3.11 percentage points.

Access the detailed analysis for LHC Group, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Amedisys, Inc. 4.23 1.21 17.7 144.37
Almost Family, Inc. 13.38 2.4 8.53 36.65
Chemed Corporation 4.04 0.5 52.32 189.71
National HealthCare Corporation 15.15 2.4 14.01 66.32
BioScrip, Inc. 70.97 1.91 0.18 -6.37
American CareSource Holdings, Inc. 82.58 0.28 -27.8 -96.29
LHC Group, Inc. 6.4 1.74 24.83 107.89
Peer Median 13.38 1.74 14.01 66.32
Best In Class 4.04 2.4 52.32 189.71

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Company Profile

LHC Group, Inc. provides post-acute health care services to patients through its home nursing agencies, hospices and long-term acute care hospitals. The company operates through the following business segments: Home Health Services, Hospice Services, Community-Based Services and Facility-Based Services. The Home Health segment offers a wide range of services, including skilled nursing, private duty nursing, physical, occupational and speech therapy, medically-oriented social services and hospice care. The Hospice Services segment offer a wide range of services, including pain and symptom management, emotional and spiritual support, inpatient and respite care, homemaker services, and counseling. The Community-Based Services segment are performed by paraprofessional personnel, and include assistance to the elderly, chronically ill, and disabled patients with activities of daily living. The Facility Based Services segment includes long-term acute care hospitals treats patients with severe medical conditions who require a high-level of care and frequent monitoring by physicians and other clinical personnel by operating an institutional pharmacy, which focuses on providing a full array of services to long term acute care hospitals. LHC Group was founded by Keith G. Myers in September 1994 and is headquartered in Lafayette, LA.


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