HealthSouth Corporation (NYSE: HLS) and LifePoint Health (NASDAQ:LPNT) are both mid-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, dividends and valuation.

Insider and Institutional Ownership

93.0% of HealthSouth Corporation shares are owned by institutional investors. Comparatively, 99.5% of LifePoint Health shares are owned by institutional investors. 1.6% of HealthSouth Corporation shares are owned by company insiders. Comparatively, 8.8% of LifePoint Health shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for HealthSouth Corporation and LifePoint Health, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HealthSouth Corporation 1 3 3 0 2.29
LifePoint Health 2 8 2 0 2.00

HealthSouth Corporation presently has a consensus target price of $49.83, suggesting a potential upside of 9.16%. LifePoint Health has a consensus target price of $65.67, suggesting a potential upside of 13.71%. Given LifePoint Health’s higher probable upside, analysts plainly believe LifePoint Health is more favorable than HealthSouth Corporation.

Profitability

This table compares HealthSouth Corporation and LifePoint Health’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HealthSouth Corporation 6.70% 25.07% 5.51%
LifePoint Health 2.61% 7.40% 2.66%

Earnings & Valuation

This table compares HealthSouth Corporation and LifePoint Health’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
HealthSouth Corporation $3.77 billion 1.20 $817.10 million $2.72 16.78
LifePoint Health $6.42 billion 0.36 $760.40 million $4.48 12.89

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

Risk and Volatility

HealthSouth Corporation has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500. Comparatively, LifePoint Health has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Dividends

HealthSouth Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. LifePoint Health does not pay a dividend. HealthSouth Corporation pays out 36.8% of its earnings in the form of a dividend. LifePoint Health has raised its dividend for 3 consecutive years.

Summary

HealthSouth Corporation beats LifePoint Health on 9 of the 17 factors compared between the two stocks.

About HealthSouth Corporation

HealthSouth Corporation (HealthSouth) is a provider of post-acute healthcare services, offering both facility-based and home-based post-acute services in 35 states and Puerto Rico through its network of inpatient rehabilitation hospitals, home health agencies and hospice agencies. The Company manages its operations through segments, including inpatient rehabilitation, and home health and hospice. It is an owner and operator of inpatient rehabilitation hospitals. It provides specialized rehabilitative treatment on both an inpatient and outpatient basis. It offers its home health and hospice services through Encompass Home Health and Hospice business (Encompass). Encompass operates home health and hospice agencies in 25 states, with concentrations in the Southeast, Oklahoma, and Texas. As of December 31, 2016, the Company operated 123 inpatient rehabilitation hospitals. As of December 31, 2016, the Company managed five inpatient rehabilitation units through management contracts.

About LifePoint Health

LifePoint Health, Inc., through its subsidiaries, owns and operates community hospitals, regional health systems, physician practices, outpatient centers and post-acute facilities. As of December 31, 2016, the Company operated 72 hospital campuses in 22 states, having a total of 9,424 licensed beds. It offers a range of general and specialized healthcare services to patients through a network of hospitals and outpatient facilities. Its services include general surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, rehabilitation services and pediatric services, and in some of its hospitals, the Company offers specialized services, such as open-heart surgery, skilled nursing, psychiatric care and neuro-surgery. It provides outpatient services, such as same-day surgery, laboratory, x-ray, respiratory therapy, imaging, sports medicine and lithotripsy.

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