Reports Diluted EPS of $0.28 and Adjusted Diluted EPS of $0.63
Affirms 2018 Guidance and Expected Double-Digit Accretion from Merger with Almost Family
LAFAYETTE, La. (May 2, 2018) – LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the three months ended March 31, 2018.
Financial Results for the First Quarter of 2018
- Net service revenue increased 19.2% to $291.1 million compared with $244.2 million in the first quarter of 2017.(1)
- Net income attributable to LHC Group’s common stockholders was $5.0 million compared with $9.5 million in the first quarter of 2017, or $0.28 per diluted share compared with $0.53 per diluted share in the first quarter of 2017.
- Adjusted net income attributable to LHC Group’s common stockholders was $11.3 million, or $0.63 per diluted share, compared with $9.5 million, or $0.53 per diluted share, in the first quarter of 2017, for an increase of 18.9%.
- Adjusted results for the first quarter of 2018 exclude merger and other costs of $6.3 million after tax, or $0.35 per diluted share.(2)
- Total organic growth in home health admissions was 6.7%.
- Total organic revenue growth in home health was 9.0%.
- Total organic growth in hospice admissions was 4.6%.
(1) See “Reconciliation of Revenue After Adoption of ASU 2014-09” on page 9.
(2) See “Reconciliation of Non-GAAP Measures – Adjusted net income attributable to LHC Group” to GAAP results on page 9.
Operational and Strategic Highlights
- LHC Group quality and patient satisfaction results continue to exceed the national average with 98% of its same store locations having CMS Quality Star ratings of four stars or greater.
- Completed the merger with Almost Family, Inc., creating one of the largest and highest quality providers of in-home healthcare in the country with an expanded geographic service territory which now includes 37 states, covers over 60% of the U.S. population aged 65 and over and the only national home health, hospice and personal care provider with a long track record of successfully partnering with hospitals and health systems.
- Entered into a new $500 million five-year senior secured credit facility on April 1 led by JPMorgan Chase Bank, which includes an additional $200 million accordion expansion feature.
Commenting on the results, Keith G. Myers, LHC Group’s chairman and Chief Executive Officer, said, “As the partner of choice for leading health systems and hospitals across the country, we are proud to continue our record of outstanding quality measures as we fulfill the critical needs of our communities and partners for in-home healthcare. The attention to detail we bring daily in a clinical setting is evident in our quality scores as well as the preparation and diligence we have demonstrated with the ongoing integration of over 780 locations across the country. We have only begun to tap into the true potential of a much larger national in-home healthcare platform, and I am confident we will continue to see much more in the way of execution, service delivery, the capturing of synergies and the scaling of relationships with our provider partners.”
Mr. Myers concluded, “Our acquisition and joint venture pipeline remains robust. Based on the early success with the Almost Family integration and the ability to seamlessly integrate other acquisitions, we remain laser-focused on M&A as a key component of our overall growth strategy. The value proposition enhanced by a full spectrum of post-acute care is an important differentiator we can offer prospective partners. We also expect to generate additional organic growth and expanded capabilities through co-locating our service lines in markets we serve and capitalizing on the relatively untapped potential of our healthcare innovations segment.”
Almost Family Merger
The merger of LHC Group and Almost Family was effective on April 1, 2018. Each share of Almost Family common stock was automatically converted into the right to receive 0.9150 of a share of LHC Group common stock, resulting in approximately 31.2 million total shares of common stock outstanding for the combined company. Over the course of the next 12 to 18 months, the approximately 30,000 employees of LHC Group will be integrated into one “house of brands” with a shared culture based on an aligned vision, collaboration and commitment to quality local healthcare.
Fiscal Year 2018 Guidance
The Company re-affirmed its guidance for fiscal year 2018 previously issued on April 2, 2018 in conjunction with completion of the merger and inclusion of Almost Family’s financial results for the final three quarters of 2018. The guidance now includes the recent adoption of ASU 2014-09 regarding revenue recognition, which has an impact of approximately $22 million to $30 million on previously projected net service revenues but no effect on earnings per share. Net service revenue is expected to be in a range of $1.81 billion to $1.86 billion, and adjusted earnings per diluted share is expected to be in a range of $3.45 to $3.55. The guidance assumes the following:
(1) The Company expects to achieve a total of $25 million in pre-tax synergies with $8 million to $12 million realized in 2018;
(2) An estimated effective tax rate of 28% to 29%, which reflects the positive impact from passage of the Tax Cuts and Jobs Act of 2017; and
(3) Weighted average diluted shares of approximately 28.0 million.
Commenting on the 2018 outlook, Joshua L. Proffitt, LHC Group’s Chief Financial Officer, added, “Our strong start to the year, with solid organic growth and 19% adjusted earnings growth, is a direct result of a company-wide commitment to delivering the highest quality service to our patients, families and communities we are privileged to serve. We are squarely on pace to achieve the accelerated growth projected for 2018 and the double-digit accretion from our merger with Almost Family.”
The Company’s guidance ranges do not take into account the impact of future reimbursement changes, if any, future acquisitions, if made, de novo locations, if opened, or future legal expenses, if necessary. The adjusted earnings guidance for 2018 is presented on a non-GAAP basis, as it does not include the impact of transaction related costs, integration related expenses or other expenses related to the merger or other acquisitions. Given the difficulty in predicting the future amount and timing of merger related expenses, the Company cannot reasonably provide a full reconciliation of its fiscal year 2018 adjusted earnings per share guidance to GAAP earnings per share.
LHC Group will host a conference call on Thursday, May 3, 2018, at 11:00 a.m. Eastern time to discuss its first quarter 2018 results. The toll-free number to call for this interactive teleconference is (866) 393‑1608 (international callers should call (973) 890-8327). A telephonic replay of the conference call will be available through midnight on May 10, 2018, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 8398673.
A live broadcast of LHC Group’s conference call will be available under the Investor Relations section of the Company’s website, www.LHCgroup.com. A one-year online replay will be available approximately an hour following the conclusion of the live broadcast.