{
  "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",
  "aspectRatio": 1.3333334,
  "pageNumber": 15,
  "pageCount": 41,
  "prevPage": 14,
  "nextPage": 16,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "dense",
  "nDataPoints": 48,
  "notes": "The slide uses a table to contrast management's pre-deal growth projections with actual declining performance.",
  "elementsJson": [
    "headline_text",
    "paragraph",
    "data_table",
    "callout_box"
  ],
  "metadataConfidence": 1,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b98-dbf69e8285f9/15",
  "deckHref": "/decks/019dd923-622c-750b-8b98-dbf69e8285f9",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b98-dbf69e8285f9.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-dbf69e8285f9#slide-15",
  "components": [
    {
      "bbox": {
        "h": 0.08,
        "w": 0.9,
        "x": 0.05,
        "y": 0.83
      },
      "kind": "callout",
      "text": "What happened to management's pre-deal 5-6% revenue growth estimate for Almost Family? What happened to “better, faster, stronger” growth?",
      "attrs": null,
      "subkind": "primary",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "cddfebdb-8d7e-418d-863f-f28f870114b3",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "metric",
      "text": "Revenue Growth: -6.3%",
      "attrs": null,
      "subkind": "primary",
      "toolName": "Quantification",
      "toolSlug": "quantification",
      "confidence": null,
      "componentId": "019dd953-2b66-7100-895a-e0046ea48713",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.9,
        "x": 0.05,
        "y": 0.16
      },
      "kind": "paragraph",
      "text": "It appears that Almost Family continues to underperform both management and Wall Street projections long after the deal was completed in Apr 2018. LHCG management stated that it expected Almost Family to generate $850M of revenue through FY18, up 9% from FY17. Sell-side analysts expected Almost Family to generate $822M prior to its acquisition by LHCG, up 5% from the prior year. Management disclosures, however, imply that Almost Family underperformed both estimates, generating $803M in revenue in FY18 – and that, through the first three quarters of FY19, its sales have been in significant decline. This rapid reversal in AFAM performance following its acquisition by LHCG gives us serious concerns both for the underlying health of AFAM itself and for the quality of LHCG management.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "bd957cf9-2fc7-47ba-b16b-07082762e1c0",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.9,
        "x": 0.05,
        "y": 0.72
      },
      "kind": "source-note",
      "text": "1. Spruce Point estimates derived from LHCG disclosures regarding total inorganic revenue from acquisitions (2Q18 thru 3Q19). See prior slide. Pro forma disclosure was used to deduce AFAM revenues for 1Q18\n2. Bad debt expense now deducted from revenue following LHCG's adoption of ASU 2014-09. Estimate derived from historical benchmarks.",
      "attrs": null,
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "c393d380-b907-4fef-a142-4acb32ed5812",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.35,
        "w": 0.9,
        "x": 0.05,
        "y": 0.36
      },
      "kind": "table",
      "text": "Almost Family Net Service Revenue – Spruce Point Estimate from LHCG Disclosures",
      "attrs": null,
      "subkind": "data",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "428bcad9-f858-4734-bad1-4d6487fa1f68",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.08,
        "w": 0.68,
        "x": 0.28,
        "y": 0.03
      },
      "kind": "title",
      "text": "Almost Family Appears To Be Performing Far Below Initial Estimates",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "15598453-ec2f-4db5-9d39-313e4024bdd2",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "expose_contradiction",
      "slug": null,
      "matchId": "4d52a1e9-7784-4242-aece-2169e947446b",
      "evidence": "Contrasts management's pre-deal growth projections with actual declining performance data.",
      "confidence": 1
    }
  ],
  "arcBeats": [
    {
      "to": 24,
      "from": 6,
      "beatId": "5e68455d-b779-4212-958f-b4a9362a2abe",
      "arcName": "Problem-Agitate-Solution",
      "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"
    }
  ],
  "loops": [
    {
      "to": 41,
      "from": 3,
      "name": "Cost Of Inaction",
      "slug": "27-cost-of-inaction",
      "bestFor": "Urgent budget requests, compliance, risk mitigation",
      "matchId": "100ad489-dbf4-43de-8e22-48ed5d7f68fc",
      "evidence": "The deck implies that investors will suffer financial losses if they do not heed Spruce Point's warning.",
      "position": 0,
      "objective": "The cost of inaction for investors who fail to recognize LHCG's true financial performance.",
      "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point",
      "confidence": 0.7,
      "description": "Quantify what happens if the audience does nothing"
    },
    {
      "to": 33,
      "from": 6,
      "name": "Hypothesis Test",
      "slug": "42-hypothesis-test",
      "bestFor": "Strategy validation, due diligence, research presentations",
      "matchId": "de4a5673-b092-41ab-b2cc-9f9019cdcb5c",
      "evidence": "The expose contradiction slides test this hypothesis and present evidence.",
      "position": 1,
      "objective": "Testing the hypothesis that LHCG's financial practices are aggressive and misleading.",
      "structure": "The Hypothesis -> Test 1 (Supports/Refutes) -> Test 2 (Supports/Refutes) -> Conclusion (Validated/Pivoted)",
      "confidence": 0.7,
      "description": "State a hypothesis upfront, then systematically prove or disprove it with evidence"
    }
  ],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}