Financial Contrast: Accretive Health (RCM) and LHC Group (LHCG)

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

Analyst Recommendations

This is a summary of current ratings and price targets for Accretive Health and LHC Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Accretive Health 0 1 0 0 2.00
LHC Group 0 1 9 0 2.90

Accretive Health presently has a consensus price target of $5.00, indicating a potential upside of 26.26%. LHC Group has a consensus price target of $76.89, indicating a potential upside of 20.33%. Given Accretive Health’s higher probable upside, research analysts clearly believe Accretive Health is more favorable than LHC Group.

Earnings & Valuation

This table compares Accretive Health and LHC Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Accretive Health $592.56 million 0.70 $177.07 million ($0.28) -14.14
LHC Group $914.82 million 1.28 $36.58 million $2.32 27.54

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

Volatility & Risk

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

Profitability

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

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

Insider and Institutional Ownership

47.7% of Accretive Health shares are owned by institutional investors. Comparatively, 85.5% of LHC Group shares are owned by institutional investors. 62.0% of Accretive Health shares are owned by insiders. Comparatively, 14.8% of LHC Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

LHC Group beats Accretive Health on 10 of the 13 factors compared between the two stocks.

About Accretive Health

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.

About LHC Group

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.

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