{ "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": 28, "pageCount": 41, "prevPage": 27, "nextPage": 29, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 24, "notes": "Uses a red arrow to visually link the calculated 4.5% adjustment to the peer comparison table.", "elementsJson": [ "headline_text", "paragraph", "comparison_table", "kpi_table", "quote_block", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-dbf69e8285f9/28", "deckHref": "/decks/019dd923-622c-750b-8b98-dbf69e8285f9", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-dbf69e8285f9.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-dbf69e8285f9#slide-28", "components": [ { "bbox": null, "kind": "callout", "text": "we find that AFAM’s “true” bad debt expense was at least 4.5% of net service revenue – nearly 2.5x the figure reported by AFAM.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-2b66-7100-895c-ced1bd212fa6", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "bad debt expense: 4.5%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-2b66-7100-895c-d79e05e8e192", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.9, "x": 0.05, "y": 0.16 }, "kind": "paragraph", "text": "AFAM's aggregate bad debt expense over its final two years as a public company was reported as ~1.8% of net service revenue. However, when we add the apparent “bad debts” implied by LHCG’s subsequent purchase accounting adjustments, we find that AFAM’s “true” bad debt expense was at least 4.5% of net service revenue – nearly 2.5x the figure reported by AFAM.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6412ff28-f539-4c36-884c-52653b43b1b9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.63, "x": 0.32, "y": 0.72 }, "kind": "quote", "text": "No. We actually feel really good about that. There's -- I'll take Almost Family since it's the most current and pressing and the largest. They had a, as you would imagine being a public company, they had a very robust and sophisticated billing and collections back office support system in Louisville and although over time, we'll be able to kind of take the best of both worlds and make some enhancements, that is still running like clockwork like it was it before April 1, so don't really envision any hiccups there at all.", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "11cff877-00e9-41e3-982b-a5eca86f177a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.45, "x": 0.05, "y": 0.72 }, "kind": "quote", "text": "And then thinking about the big deals you did last year and now with Almost Family, are you expecting any -- I don't want to say issues or integration issues with billing and collections? Will it take a little bit of time?", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "45ed83f5-95c5-4e1c-8a30-55385bc1bf74", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“And then thinking about the big deals you did last year and now with Almost Family, are you expecting any -- I don't want to say issues or integration issues with billing and collections? Will it take a little bit of time?” — Kevin Ellich – Craig-Hallum Capital Group; “No. We actually feel really good about that. There's -- I'll take Almost Family since it's the most current and pressing and the largest. They have a, as you would imagine being a public company, they had a very robust and sophisticated billing and collections back office support system in Louisville and although over time, we'll be able to kind of take the best of both worlds and make some enhancements, that is still running like clockwork like it was it before April 1, so don't really envision any hiccups there at all.” — Joshua Proffitt – CFO & Treasurer, LHCG", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-2b66-7100-895c-d2fe556172fe", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.9, "x": 0.05, "y": 0.95 }, "kind": "source-note", "text": "Source: LHCG, AMED, ADUS, EHC, and AFAM Filings and Transcripts, Spruce Point Estimates", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "bb18b849-19fb-4348-9d1e-ef77af482288", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.4, "x": 0.55, "y": 0.31 }, "kind": "table", "text": "Home Health Peer Group table", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "13da4aa8-11d4-443b-bbd9-4346cd13b5fd", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.45, "x": 0.05, "y": 0.31 }, "kind": "table", "text": "AFAM \"True\" Bad Debt Expense table", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a887a05e-36ae-449d-b91c-aaf8fe395687", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.65, "x": 0.31, "y": 0.05 }, "kind": "title", "text": "AFAM's \"True\" Bad Debt Expense Dwarfs Peers", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8cbae560-c5e8-44bf-b994-77edf5e959c7", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "expose_contradiction", "slug": null, "matchId": "27b2198f-eefa-42ab-bec0-f9900bb8a0ac", "evidence": "Contrasts quantitative bad debt analysis with qualitative management quote.", "confidence": 1 } ], "arcBeats": [], "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 }