{
  "docId": "019dd923-622c-750b-8b98-dbf69e8285f9",
  "docSlug": "c97bc876ffb7",
  "documentTitle": "LHC Group, Inc. (LHCG)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
  "documentKindSlug": "activist-deck",
  "documentKindLabel": "Activist deck",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2020-01-15 00:00:00",
  "orientation": "landscape",
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  "pageNumber": 10,
  "pageCount": 41,
  "prevPage": 9,
  "nextPage": 11,
  "slideType": "valuation_table",
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  "density": "dense",
  "nDataPoints": 36,
  "notes": "The slide uses a combination of a narrative thesis, a data table, and a concluding callout to frame the investment thesis.",
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  "slideHref": "/slides/019dd923-622c-750b-8b98-dbf69e8285f9/10",
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      "kind": "callout",
      "text": "Spruce Point sees little chance that these valuations will persist once investors gain a clearer view into LHCG's organic growth and earnings power, and once they understand the extent to which management has struggled to execute on its roll-up strategy.",
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      "kind": "metric",
      "text": "EV / EBITDA: 20.6x",
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      "kind": "paragraph",
      "text": "Spruce Point believes that LHCG's lofty valuation is driven by a broad misunderstanding of Company fundamentals among analysts and investors: its core growth trajectory, earnings power, and FCF profile all remain clouded behind discretionary accounting maneuvers which have obscured its recent missteps from plain view. However, as the most impactful of these maneuvers will persist only through the end of FY19, we believe that LHCG's multiples are likely to contract in coming quarters as investors gain a clearer understanding of LHCG's true financial performance. A company growing at less than half the organic rate reported by management, and with half as much earnings power and FCF generativity as would otherwise appear given management's aggressive add-backs, does not deserve such a generous valuation, and investors will reevaluate LHCG accordingly once its underlying economics are laid bare in FY20.",
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      "text": "Source: Bloomberg, Spruce Point Research",
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      "kind": "table",
      "text": "Street Valuation, FY19E, FY20E, FY21E, EV/EBITDA, Price/EPS, Price/FCF, Growth and Margins, Sales Growth, Adj. EBITDA Margin, Credit Metrics, Net Debt/EBITDA",
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      "kind": "title",
      "text": "LHCG Trading Above Sustainable Levels, But Multiples May Correct In The Near Term",
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      "arcSlug": "problem-agitate-solution",
      "beatName": "Agitate",
      "beatSlug": "problem-agitate-solution-agitate-make-it-worse",
      "evidence": "The expose contradiction slides detail various issues with LHCG's financials and management practices.",
      "position": 1,
      "confidence": 0.8,
      "parentBeatName": "Development",
      "parentBeatSlug": "development"
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      "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point",
      "confidence": 0.7,
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      "evidence": "The expose contradiction slides test this hypothesis and present evidence.",
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      "objective": "Testing the hypothesis that LHCG's financial practices are aggressive and misleading.",
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