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LHC Group: A Leader With Plenty Of Growth Runway In $100 Billion Market

The Prospector profile picture
The Prospector


  • LHC Group continues to improve operations of recent acquisition Almost Family.
  • One of a few leaders in home health and hospice markets, with increasing stake in community-based services (PCS/HCBS) market. Combined value of addressable market = ~ $100 billion.
  • Has history of scoring high home health clinical quality scores with CMS.
  • As Medicare home health moves to value-based purchasing, LHC Group well positioned to meet CMS quality requirements and expand market share via acquisitions.
  • Though Medicare and its policies always come with risks, LHC Group's history of strong performance likely to continue.


LHC Group (LHCG) reported a solid Q3-18 with organic admissions growth in its home health (9 percent) and hospice segments (5 percent), in line with expectations of admissions volume growth of 5 to 7 percent per year. In addition to the solid organic growth, the company continues to improve the operational performance of its Almost Family acquisition, which closed earlier this year.

LHC Group is one of a handful of publicly traded companies that are prominent players in the home healthcare space. LHC Group is the second largest player in the Home Health market, the fourth largest player in Hospice, and the company has a small but growing presence in the Personal Care Services PCS market, which the company refers to as Home and Community-Based Services (HCBS). Each of these three markets is highly fragmented with thousands of tiny competitors and plenty of room for consolidation. Combined, these three markets are worth ~$100 billion. And LHC Group, a market leader, expects to generate $1.8 billion in revenue this year.

If the company can adjust to a value-based Medicare payment world and improve the clinical quality scores of its Almost Family operations, LHC Group should continue to perform well in a market that will never be short on demand for its services as the U.S. population continues to age. However, as a vendor susceptible to federal healthcare reimbursement policies and regulations, LHC Group comes with risks that investors should consider before investing.

Almost Family Acquisition Strengthens Market Position

Earlier this year, the company closed its $850 million acquisition of former competitor Almost Family. The purchase was an all-stock transaction. LHC Group increased its share count from 18.3 million to 32.8 million with the deal. The acquisition will be accretive to earnings.

"...we are anticipating 12% to 15% accretion from the Almost Family

This article was written by

The Prospector profile picture
Long-term focus, with some exceptions. Self-taught investor. I started investing my own money in 2010 and have outperformed the S&P 500 in the years since.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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