Affirms established 2014 financial guidance
LAFAYETTE, La. (May 7, 2014) – LHC Group, Inc. (NASDAQ: LHCG), a national provider of home health, hospice and comprehensive post-acute healthcare services, today announced its financial results for the three months ended March 31, 2014.
Financial Results for the First Quarter
- Net service revenue for the first quarter of 2014 was $163.7 million, compared with $162.0 million for the same period in 2013.
- Net income attributable to LHC Group for the first quarter of 2014 was $4.1 million, compared with $6.3 million for the same period in 2013.
- Diluted earnings per share was $0.24 for the first quarter of 2014, which includes a negative $0.05 impact from weather related closures, as compared with $0.37 for the same period in 2013.
In commenting on the results, Keith G. Myers, LHC Group’s chairman and CEO, said, “We had a challenging start to 2014, as severe winter weather impacted over 48% of our agencies and accounted for a decline in same-store volume for the first quarter. However, our team did an outstanding job under the circumstances, and we ended the first quarter with strong momentum, which has continued into the second quarter. We are making significant progress on integrating our previously announced acquisition of Deaconess HomeCare and Elk Valley Health Services and are excited about additional opportunities in our pipeline. As we look ahead to the remainder of 2014 and beyond, we are well prepared and well positioned to continue improving our operating results by controlling cost and capitalizing on the opportunities we see ahead for both internal and external volume growth.”
FY 2014 Guidance
The Company is reaffirming its full year 2014 guidance issued on March 5, 2014, for net service revenue in the range of $700 million to $720 million and fully diluted earnings per share in the range of $1.15 to $1.35. This guidance includes the negative impact from the Medicare Home Health Prospective Payment System for 2014 (estimated to be an approximate $0.17 reduction in fully diluted earnings per share for 2014) and the positive impact of the recently closed acquisition of the home health, hospice and community-based services operations of Deaconess HomeCare and Elk Valley Health Services (estimated to be accretive to fully diluted earnings per share for 2014 of between approximately $0.05 and $0.10). This guidance, however, does not take into account the impact of other future reimbursement changes, if any, future acquisitions or share repurchases, if made, de novo locations, if opened, or future legal expenses, if necessary.
Conference Call
LHC Group will host a conference call Thursday, May 8, 2014, at 11 a.m. Eastern time to discuss its first quarter 2014 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 Thursday, May 15, 2014, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 25729418. 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 after the conclusion of the live broadcast.
About LHC Group, Inc.
LHC Group, Inc. is a national provider of post-acute healthcare services, providing quality, cost-effective healthcare to patients within the comfort and privacy of their home or place of residence. LHC Group provides a comprehensive array of healthcare services through home health, hospice and community‑based services agencies in its home-based and hospice-based divisions and long-term acute care hospitals in its facility-based division.
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements about the Company’s future financial performance and the strength of the Company’s operations. Such forward-looking statements may be identified by words such as “continue,” “expect,” and similar expressions. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements, including changes in reimbursement, changes in government regulations, changes in LHC Group’s relationships with referral sources, increased competition for LHC Group’s services, increased competition for joint venture and acquisition candidates, changes in the interpretation of government regulations and other risks set forth in Item 1A. Risk Factors in LHC Group’s Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission. LHC Group undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)
| March 31,
2014 |
Dec. 31,
2013 |
|
| ASSETS | ||
| Current assets: | ||
| Cash | $ 3,395 | $ 14,014 |
| Receivables: | ||
| Patient accounts receivable, less allowance for uncollectible accounts of $14,819 and $14,334, respectively | 84,470 | 88,964 |
| Other receivables | 730 | 608 |
| Amounts due from governmental entities | 1,166 | 1,234 |
| Total receivables, net | 86,366 | 90,806 |
| Deferred income taxes | 9,655 | 9,251 |
| Prepaid income taxes | 3,821 | 4,069 |
| Prepaid expenses | 7,361 | 6,966 |
| Other current assets | 4,186 | 4,449 |
| Total current assets | 114,784 | 129,555 |
| Property, building and equipment, net of accumulated depreciation
of $42,475 and $40,935, respectively |
31,273 | 31,052 |
| Goodwill | 196,358 | 194,893 |
| Intangible assets, net of accumulated amortization of $4,985
and $4,518, respectively |
62,047 | 62,184 |
| Other assets | 63,638 | 4,542 |
| Total assets | $ 468,100 | $ 422,226 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
| Current liabilities: | ||
| Accounts payable and other accrued liabilities | $ 17,587 | $ 17,217 |
| Salaries, wages and benefits payable | 24,521 | 31,927 |
| Self-insurance reserve | 6,502 | 5,862 |
| Current portion of long-term debt | 222 | 249 |
| Amounts due to governmental entities | 3,664 | 4,391 |
| Total current liabilities | 52,496 | 59,646 |
| Deferred income taxes | 29,859 | 29,060 |
| Income tax payable | 3,415 | 3,415 |
| Revolving credit facility | 70,000 | 22,000 |
| Long-term debt, less current portion | 953 | 963 |
| Total liabilities | 156,723 | 115,084 |
| Noncontrolling interest- redeemable | 10,797 | 11,258 |
| Stockholders’ equity: | ||
| Common stock – $0.01 par value: 40,000,000 shares authorized; 21,949,411 and 21,801,634 shares issued in 2014 and 2013, respectively | 219 | 218 |
| Treasury stock – 4,724,491 and 4,693,647 shares at cost, respectively | (35,442) | (34,715) |
| Additional paid-in capital | 105,476 | 103,972 |
| Retained earnings | 227,602 | 223,534 |
| Total LHC Group, Inc. stockholders’ equity | 297,855 | 293,009 |
| Noncontrolling interest- non-redeemable | 2,725 | 2,875 |
| Total equity | 300,580 | 295,884 |
| Total liabilities and stockholders’ equity | $ 468,100 | $ 422,226 |
LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)
(Unaudited)
| Three Months Ended
March 31, |
||
| 2014 | 2013 | |
| Net service revenue | $ 163,681 | $ 161,953 |
| Cost of service revenue | 97,334 | 93,248 |
| Gross margin | 66,347 | 68,705 |
| Provision for bad debts | 3,362 | 3,917 |
| General and administrative expenses | 54,612 | 51,623 |
| Operating income | 8,373 | 13,165 |
| Interest expense | (388) | (425) |
| Non-operating income | 33 | 65 |
| Income before income taxes
and noncontrolling interest |
8,018 | 12,805 |
| Income tax expense | 2,923 | 4,536 |
| Net Income | 5,095 | 8,269 |
| Less net income attributable to noncontrolling interests | 1,027 | 1,983 |
| Net income attributable to LHC Group, Inc.’s common stockholders | $ 4,068 | $ 6,286 |
| Earnings per share – basic and diluted: | ||
| Net income attributable to LHC Group, Inc.’s common stockholders | $ 0.24 | $ 0.37 |
| Weighted average shares outstanding: | ||
| Basic | 17,148,043 | 16,966,525 |
| Diluted | 17,268,716 | 17,073,543 |
LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| Three Months Ended
March 31, |
||
| 2014 | 2013 | |
| Operating activities | ||
| Net income | $ 5,095 | $ 8,269 |
| Adjustments to reconcile net income to net cash provided by
operating activities: |
||
| Depreciation and amortization expense | 2,125 | 1,830 |
| Provision for bad debts | 3,362 | 3,917 |
| Stock based compensation expense | 1,048 | 888 |
| Deferred income taxes | 395 | 846 |
| Loss on sale of assets | – | 14 |
| Changes in operating assets and liabilities, net of acquisitions: | ||
| Receivables | 956 | (1,237) |
| Prepaid expenses and other assets | (39) | (664) |
| Prepaid income taxes | 248 | 3,703 |
| Accounts payable and accrued expenses | (6,428) | (3,178) |
| Net amounts due to/from governmental entities | (659) | (319) |
| Net cash provided by operating activities | 6,103 | 14,069 |
| Investing activities | ||
| Cash paid for acquisitions, primarily goodwill and intangible assets and advance payments on acquisitions | (61,159) | (19,655) |
| Purchases of property, building and equipment | (1,520) | (1,151) |
| Net cash used in investing activities | (62,679) | (20,806) |
| Financing activities | ||
| Proceeds from line of credit | 60,000 | 41,500 |
| Payments on line of credit | (12,000) | (38,004) |
| Proceeds from employee stock purchase plan | 184 | 179 |
| Proceeds from debt issuance | – | 201 |
| Payments on debt issuance | (37) | – |
| Noncontrolling interest distributions | (1,768) | (2,509) |
| Excess tax benefits from vesting of restricted stock | 112 | 11 |
| Redemption of treasury shares | (727) | (607) |
| Purchase of noncontrolling interest | – | (350) |
| Sale of noncontrolling interest | 193 | – |
| Net cash provided by financing activities | 45,957 | 421 |
| Change in cash | (10,619) | (6,316) |
| Cash at beginning of period | 14,014 | 9,720 |
| Cash at end of period | $ 3,395 | $ 3,404 |
| Supplemental disclosures of cash flow information | ||
| Interest paid | $ 370 | $ 425 |
| Income taxes paid | $ 2,413 | $ 10,337 |
LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
| Three Months Ended
March 31, 2014 |
||||
| Home-Based
Services |
Hospice-Based
Services |
Facility-Based
Services |
Total | |
| Net service revenue | $ 128,680 | $ 15,222 | $ 19,779 | $ 163,681 |
| Cost of service revenue | 76,444 | 8,897 | 11,993 | 97,334 |
| Provision for bad debts | 2,654 | 105 | 603 | 3,362 |
| General and administrative expenses | 44,544 | 4,447 | 5,621 | 54,612 |
| Operating income | 5,038 | 1,773 | 1,562 | 8,373 |
| Interest expense | (310) | (39) | (39) | (388) |
| Non-operating income | 27 | 3 | 3 | 33 |
| Income before income taxes and
noncontrolling interest |
4,755 | 1,737 | 1,526 | 8,018 |
| Income tax expense | 2,293 | 346 | 284 | 2,923 |
| Net income | 2,462 | 1,391 | 1,242 | 5,095 |
| Less net income attributable to
noncontrolling interest |
607 | 201 | 219 | 1,027 |
| Net income attributable to LHC Group, Inc.’s common stockholders | $ 1,855 | $ 1,190 | $ 1,023 | $ 4,068 |
| Total assets | $ 402,455 | $ 28,919 | $ 36,726 | $ 468,100 |
| Three Months Ended
March 31, 2013 |
||||
| Home-Based
Services |
Hospice-Based
Services |
Facility-Based
Services |
Total | |
| Net service revenue | $ 129,076 | $ 12,911 | $ 19,966 | $ 161,953 |
| Cost of service revenue | 73,535 | 8,055 | 11,658 | 93,248 |
| Provision for bad debts | 3,019 | 258 | 640 | 3,917 |
| General and administrative expenses | 42,422 | 3,750 | 5,451 | 51,623 |
| Operating income | 10,100 | 848 | 2,217 | 13,165 |
| Interest expense | (353) | (34) | (38) | (425) |
| Non-operating income | 26 | 15 | 24 | 65 |
| Income before income taxes and
noncontrolling interest |
9,773 | 829 | 2,203 | 12,805 |
| Income tax expense | 3,825 | 262 | 449 | 4,536 |
| Net income | 5,948 | 567 | 1,754 | 8,269 |
| Less net income attributable to
noncontrolling interest |
1,367 | 232 | 384 | 1,983 |
| Net income attributable to LHC Group, Inc.’s common stockholders | $ 4,581 | $ 335 | $ 1,370 | $ 6,286 |
| Total assets | $ 335,541 | $ 22,600 | $ 36,766 | $ 394,907 |
LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)
| Three Months Ended March 31, | ||
| 2014 | 2013 | |
| Key Data: | ||
| Home-Based Services: | ||
| Home Health | ||
| Locations | 267 | 251 |
| Acquired | 2 | 19 |
| De novo | 1 | 0 |
| Total new admissions | 30,885 | 30,361 |
| Medicare new admissions | 21,135 | 20,581 |
| Average daily census | 33,023 | 35,175 |
| Average Medicare daily census | 24,965 | 26,603 |
| Medicare completed and billed episodes | 42,435 | 42,808 |
| Average Medicare case mix for completed and billed Medicare episodes(1) | 0.98 | 1.26 |
| Average reimbursement per completed and billed Medicare episodes | $ 2,355 | $ 2,297 |
| Total visits | 907,446 | 859,498 |
| Total Medicare visits | 681,523 | 653,796 |
| Average visits per completed and billed Medicare episodes | 16.1 | 15.3 |
| Organic growth:(2) | ||
| Net revenue | -5.1% | -2.9% |
| Net Medicare revenue | -5.4% | -2.1% |
| Total new admissions | -4.6% | 4.0% |
| Medicare new admissions | -4.2% | 3.3% |
| Average daily census | -11.4% | 0.5% |
| Average Medicare daily census | -11.7% | 0.1% |
| Medicare completed and billed episodes | -5.2% | 0.6% |
| Hospice-Based Services: | ||
| Locations | 33 | 33 |
| Acquired | 1 | 1 |
| Admissions | 1,232 | 1,275 |
| Average daily census | 1,223 | 1,071 |
| Patient days | 110,043 | 96,385 |
| Average revenue per patient day | $ 138 | $ 134 |
| Facility-Based Services: | ||
| Long-term Acute Care | ||
| Locations | 8 | 9 |
| Patient days | 16,462 | 16,118 |
| Average revenue per patient day | $ 1,154 | $ 1,194 |
(1) The Centers for Medicare and Medicaid Services (CMS) updated the Medicare Home Health Prospective Payment System effective January 1, 2014, which reduced the average case-mix weight for 2014 from 1.3464 to 1.0000. To offset the effect of resetting the case mix average to 1.000, CMS upwardly adjusted the national, standardized 60-day episode payment rate by the same factor that it used to decrease the weights from $2,137.73 in 2013 to $2,869.27 in 2014.
(2) Organic growth is calculated as the sum of same store plus de novo for the period divided by total from the same period in the prior year.