LHC Group Slips 5.9% After-Hours On Tepid 1Q Outlook

LHC Group reported mixed 4Q results. Shares of the health care provider fell 5.9% in Thursday’s extended trading after issuing a 1Q outlook that came in below the Street’s estimates.

LHC Group (LHCG) posted adjusted earnings of $1.40 per share in 4Q, which grew 21.7% year-over-year and beat analysts’ expectations of $1.39 per share. The company’s net service revenues increased marginally to $532.3 million. However, analysts were expecting revenues of $534.9 million. Adjusted EBITDA rose 28.3% year-over-year to $68.4 million.

The company’s CEO Keith G. Myers said, “The swift, comprehensive approach we took to the public health emergency caused by COVID-19 had a positive impact on the evolution of healthcare delivery models, helped to protect our employees and patients, boosted our organic growth trajectory and strengthened our value proposition to patients, partners and payors.”

Looking ahead, the company projects 1Q net service revenues in the range of $515-$530 million, lower than analysts’ expectations of about $542 million. 1Q earnings are forecast to be between $1.20 and $1.30 per share, also lower than the consensus estimates of $1.37 per share. (See LHC Group stock analysis on TipRanks)

As for 2021, the company expects to generate net service revenue in the range of $2.2-$2.26 billion and adjusted earnings of between $5.65 and $5.90 per share. Analysts were expecting 2021 revenues of $2.26 billion and earnings of $5.90 per share.

Following the results, Oppenheimer analyst Michael Wiederhorn maintained a price target of $250 (33% upside potential) and a Buy rating on the stock.

In a note to investors, Wiederhorn said, “We favor home health due to its promising growth, led by a shift from the institutional setting into the home. Furthermore, we believe the larger providers will lead a consolidation of this fragmented industry, especially as reimbursement rates become tighter and reimbursement systems become more complex.”

Overall, consensus among analysts is a Strong Buy based on 6 unanimous Buy recommendations. The average analyst price target of $254.67 implies upside potential of about 35% to current levels. Shares have gained by around 25% over the past year.

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