LHC Group (LHCG) and R1 RCM (RCM) Head-To-Head Analysis

LHC Group (NASDAQ: LHCG) and R1 RCM (NASDAQ:RCM) are both small-cap medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Valuation and Earnings

This table compares LHC Group and R1 RCM’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
LHC Group $914.82 million 1.24 $36.58 million $2.32 26.76
R1 RCM $592.56 million 0.76 $177.07 million ($0.28) -15.32

R1 RCM has lower revenue, but higher earnings than LHC Group. R1 RCM is trading at a lower price-to-earnings ratio than LHC Group, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

85.5% of LHC Group shares are owned by institutional investors. Comparatively, 47.7% of R1 RCM shares are owned by institutional investors. 14.8% of LHC Group shares are owned by company insiders. Comparatively, 62.0% of R1 RCM shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations and price targets for LHC Group and R1 RCM, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
LHC Group 0 1 9 0 2.90
R1 RCM 0 1 0 0 2.00

LHC Group currently has a consensus target price of $76.89, suggesting a potential upside of 23.83%. R1 RCM has a consensus target price of $5.00, suggesting a potential upside of 16.55%. Given LHC Group’s stronger consensus rating and higher possible upside, analysts plainly believe LHC Group is more favorable than R1 RCM.

Profitability

This table compares LHC Group and R1 RCM’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
LHC Group 4.09% 9.52% 6.19%
R1 RCM -1.32% -9.33% -1.50%

Risk & Volatility

LHC Group has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500. Comparatively, R1 RCM has a beta of -0.47, suggesting that its stock price is 147% less volatile than the S&P 500.

Summary

LHC Group beats R1 RCM on 11 of the 13 factors compared between the two stocks.

LHC Group Company Profile

LHC Group, Inc. is a holding company. The Company provides post-acute healthcare services to patients through its home nursing agencies, hospice agencies, community-based services agencies and long-term acute care hospitals (LTACHs). The Company operates through four segments: home health services, hospice services, community-based services and facility-based services. Through its home health services segment, the Company offers a range of services, including skilled nursing, medically oriented social services, and physical, occupational and speech therapy. Through its hospice services segment, the Company offers a range of services, including pain and symptom management, and emotional and spiritual support. Its community-based service operations offer a range of services to patients in their home or in a medical facility. The services range from assistance with grooming, medication reminders and meal preparation. It provides facility-based services principally through its LTACHs.

R1 RCM Company Profile

R1 RCM Inc., formerly Accretive Health, Inc., is a provider of revenue cycle management (RCM) and physician advisory services (PAS) to healthcare providers. The Company is engaged in providing management services of revenue cycle operations for the United States-based hospitals and other medical services providers. Its primary service offering consists of end-to-end RCM, which the Company deploys through a co-managed relationship or an operating partner relationship. The Company’s PAS offering assists hospitals in complying with payer requirements regarding whether to classify a hospital visit as an in-patient or an out-patient observation case for billing purposes. The Company also provides customers with retrospective appeal management service support for both governmental and commercial payers. Its physicians conduct detailed retrospective reviews of medical records to identify medical necessity for hospital services and the required documentation to support an appeal.

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