{
  "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": 30,
  "pageCount": 41,
  "prevPage": 29,
  "nextPage": 31,
  "slideType": "expose_contradiction",
  "function": "expose_contradiction",
  "density": "overcrowded",
  "nDataPoints": 42,
  "notes": "The slide uses a combination of a grouped bar chart and a data table to highlight the growing delta between GAAP and non-GAAP metrics.",
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  "metadataConfidence": 1,
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  "slideHref": "/slides/019dd923-622c-750b-8b98-dbf69e8285f9/30",
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  "components": [
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      "kind": "callout",
      "text": "LHCG has added back AFAM-related M&A expenses for eight straight quarters, with the highest amount coming as recently as 3Q19. Why should investors continue to excuse management of these \"acquisition\" costs nearly two years after the deal was completed?",
      "attrs": null,
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      "kind": "callout",
      "text": "Closure-related expenses represent a normal, recurring cost for LHCG, which, like other home healthcare providers, must shutter locations from time to time. They should not be added back as \"one-time charges.\"",
      "attrs": null,
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    {
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      "kind": "callout",
      "text": "Why should investors continue to excuse management of these \"acquisition\" costs nearly two years after the deal was completed?",
      "attrs": null,
      "subkind": null,
      "toolName": "Visual emphasis",
      "toolSlug": "visual-emphasis",
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      "bbox": {
        "h": 0.42,
        "w": 0.51,
        "x": 0.03,
        "y": 0.27
      },
      "kind": "chart",
      "text": "Widening Spread Between GAAP and Non-GAAP EPS",
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      "subkind": "bar-grouped",
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      "componentId": "3285085e-ec2d-4988-8291-c0734f991e4f",
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    },
    {
      "bbox": null,
      "kind": "metric",
      "text": "Net Income: 50%",
      "attrs": null,
      "subkind": "primary",
      "toolName": "Quantification",
      "toolSlug": "quantification",
      "confidence": null,
      "componentId": "019dd953-2b66-7100-895b-f9375cf6a59d",
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      "kind": "paragraph",
      "text": "As is the case with many companies investigated by Spruce Point, LHCG shows an increasingly large spread between GAAP and Non-GAAP income. Since the beginning of FY18, one-time expenses associated with closures and mergers (almost exclusively AFAM) have ballooned. As acquisitions and closures represent normal on going expenses, we believe that GAAP income is a far better measure of LHCG's economic reality than is LHCG's non-GAAP income measure, which has exceeded GAAP earnings by ~50% since 2018.",
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        "h": 0.26,
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      "kind": "table",
      "text": "Financial table showing GAAP vs Adjusted Net Income and adjustments",
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      "kind": "title",
      "text": "Increasingly Divergent Non-GAAP Earnings Measure Presents Misleading Picture Of LHCG Performance",
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  "metrics": [],
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  "frameworks": [
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      "evidence": "The slide explicitly frames the company's accounting practices as misleading and designed to inflate performance metrics.",
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    {
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      "from": 3,
      "name": "Cost Of Inaction",
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      "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"
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      "to": 33,
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      "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,
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  "locked": true
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