LAFAYETTE, La. (March 5, 2014) – LHC Group, Inc. (NASDAQ: LHCG), a national provider of post-acute care services, today announced its financial results for the three months and year ended December 31, 2013.
Financial Results for the Fourth Quarter
- Net service revenue for the fourth quarter of 2013 was $165.3 million, compared with $161.8 million for the same period in 2012.
- Net income attributable to LHC Group for the fourth quarter of 2013 was $5.0 million, compared with $7.4 million for the same period in 2012.
- Diluted earnings per share was $0.29 for the fourth quarter of 2013, compared with $0.43 for the same period in 2012.
Financial Results for the Year
- Net service revenue for the year ended Dec. 31, 2013, was $658.3 million, compared with $637.6 million for the same period in 2012.
- Net income attributable to LHC Group for the year ended Dec. 31, 2013, was $22.3 million, compared with $27.4 million for the same period in 2012.
- Diluted earnings per share was $1.30 for the year ended Dec. 31, 2013, compared with $1.53 for the same period in 2012.
In commenting on the results, Keith G. Myers, LHC Group’s chairman and CEO, said, “We are pleased with our operating results and the overall performance of our company and our team in 2013 and in the first two months of 2014. Our intense focus on reducing overhead costs, combined with the investments we’ve made in point-of-care technology over the past several years, is allowing us to improve operational efficiencies without sacrificing quality.
“As we celebrate our first 20 years and look forward to the next chapter in our company’s story, our proven healthcare delivery model, combined with our unique hospital joint venture strategy, positions us well to take advantage of the unprecedented growth opportunities ahead and to be at the forefront of change as our country moves toward a more integrated healthcare delivery system.
“With regard to external growth, we recently announced a definitive stock purchase agreement with BioScrip®, Inc. to purchase two of its operating subsidiaries – doing business as Deaconess HomeCare and Elk Valley Health Services – with annual revenues of approximately $72.6 million. We look forward to more opportunities to join forces with other high-quality providers who share our values and commitment to excellence. Most importantly, our team of dedicated caregivers in communities throughout the country continues to provide the highest quality care to the patients, families and communities we serve day in and day out.”
FY 2014 Guidance
Fiscal year net service revenue is expected to be in the range of $700 million to $720 million, and fully diluted earnings per share are expected to be in the range of $1.15 to $1.35. This guidance includes
(1) the negative impact from the Medicare Home Health Prospective Payment System for 2014, which is an approximate $5 million reduction in Medicare revenue and $0.17 reduction in fully diluted earnings per share for 2014;
(2) the impact of the recently announced acquisition of the home health, hospice and community-based services operations of Deaconess HomeCare and Elk Valley Health Services, which is anticipated to be accretive to fully diluted earnings per share by between $0.05 and $0.10 for 2014; and
(3) an estimated $0.05 reduction in fully diluted earnings per share in the first quarter of 2014 due to the impact of inclement weather conditions in January and February, which caused agency closures.
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, March 6, 2014, at 11 a.m. Eastern time to discuss its fourth quarter and full-year 2013 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, March 13, 2014, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 33183871. 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 care, providing quality, cost-effective health care to patients within the comfort and privacy of their home or place of residence. LHC Group provides a comprehensive array of post-acute healthcare services through home health, hospice and community‑based service agencies in its home-based division 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, 2012, 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)
| Dec. 31,
2013 |
Dec. 31,
2012 |
|
| ASSETS | ||
| Current assets: | ||
| Cash | $ 14,014 | $ 9,720 |
| Receivables: | ||
| Patient accounts receivable, less allowance for uncollectible accounts of $14,334 and $11,863, respectively | 88,964 | 83,951 |
| Other receivables | 608 | 589 |
| Amounts due from governmental entities | 1,234 | 1,596 |
| Total receivables, net | 90,806 | 86,136 |
| Deferred income taxes | 9,251 | 7,671 |
| Prepaid income taxes | 4,069 | 7,436 |
| Prepaid expenses | 6,966 | 6,818 |
| Other current assets | 4,449 | 2,949 |
| Total current assets | 129,555 | 120,730 |
| Property, building and equipment, net of accumulated depreciation
of $40,935 and $34,331, respectively |
31,052 | 29,531 |
| Goodwill | 194,893 | 169,150 |
| Intangible assets, net of accumulated amortization of $4,518
and $3,054, respectively |
62,184 | 62,042 |
| Other assets | 4,542 | 5,441 |
| Total assets | $ 422,226 | $ 386,894 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
| Current liabilities: | ||
| Accounts payable and other accrued liabilities | $ 17,217 | $ 14,897 |
| Salaries, wages and benefits payable | 31,927 | 29,890 |
| Self insurance reserve | 5,862 | 5,444 |
| Current portion of long-term debt | 249 | – |
| Amounts due to governmental entities | 4,391 | 4,979 |
| Total current liabilities | 59,646 | 55,210 |
| Deferred income taxes | 29,060 | 25,129 |
| Income tax payable | 3,415 | 3,415 |
| Revolving credit facility | 22,000 | 19,500 |
| Long-term debt, less current portion | 963 | – |
| Total liabilities | 115,084 | 103,254 |
| Noncontrolling interest- redeemable | 11,258 | 11,426 |
| Stockholders’ equity: | ||
| Common stock – $0.01 par value: 40,000,000 shares authorized; 21,801,634 and 21,578,772 shares issued in 2013 and 2012, respectively | 218 | 216 |
| Treasury stock – 4,693,647 and 4,653,039 shares at cost, respectively | (34,715) | (33,846) |
| Additional paid-in capital | 103,972 | 100,619 |
| Retained earnings | 223,534 | 201,192 |
| Total LHC Group, Inc. stockholders’ equity | 293,009 | 268,181 |
| Noncontrolling interest- non-redeemable | 2,875 | 4,033 |
| Total stockholders’ equity | 295,884 | 272,214 |
| Total liabilities and stockholders’ equity | $ 422,226 | $ 386,894 |
LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)
(Unaudited)
| Three Months Ended
December 31, |
Year Ended
December 31, |
|||
| 2013 | 2012 | 2013 | 2012 | |
| Net service revenue | $ 165,280 | $ 161,827 | $ 658,283 | $ 637,569 |
| Cost of service revenue | 95,241 | 92,441 | 383,464 | 365,752 |
| Gross margin | 70,039 | 69,386 | 274,819 | 271,817 |
| Provision for bad debts | 4,096 | 3,480 | 13,929 | 11,875 |
| General and administrative expenses | 55,306 | 50,674 | 214,133 | 205,637 |
| Operating income | 10,637 | 15,232 | 46,757 | 54,305 |
| Interest expense | (440) | (578) | (1,995) | (1,550) |
| Non-operating income | 59 | 76 | 243 | 184 |
| Income from continuing operations before income taxes and noncontrolling interest | 10,256 | 14,730 | 45,005 | 52,939 |
| Income tax expense | 3,623 | 4,805 | 15,859 | 17,511 |
| Income from continuing operations | 6,633 | 9,925 | 29,146 | 35,428 |
| Less net income attributable to
noncontrolling interest |
1,664 | 2,525 | 6,804 | 7,988 |
| Net income attributable to LHC Group, Inc.’s common stockholders | $ 4,969 | $ 7,400 | $ 22,342 | $ 27,440 |
| Earnings per share – basic: | ||||
| Net income attributable to LHC Group, Inc.’s common stockholders | $ 0.29 | $ 0.43 | $ 1.31 | $ 1.54 |
| Earnings per share – diluted: | ||||
| Net income attributable to LHC Group, Inc.’s common stockholders | $ 0.29 | $ 0.43 | $ 1.30 | $ 1.53 |
| Weighted average shares outstanding: | ||||
| Basic | 17,096,360 | 17,056,611 | 17,049,794 | 17,853,321 |
| Diluted | 17,228,499 | 17,155,909 | 17,132,751 | 17,899,195 |
LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| Year Ended
December 31, |
||
| 2013 | 2012 | |
| Operating activities | ||
| Net income | $ 29,146 | $ 35,428 |
| Adjustments to reconcile net income to net cash provided by
operating activities: |
||
| Depreciation and amortization expense | 8,325 | 7,806 |
| Provision for bad debts | 13,929 | 11,875 |
| Stock based compensation expense | 3,886 | 4,390 |
| Deferred income taxes | 2,351 | 2,204 |
| Loss on sale of assets | 20 | 105 |
| Other intangibles impairment change | 500 | 650 |
| Changes in operating assets and liabilities, net of acquisitions: | ||
| Receivables | (18,961) | (4,497) |
| Prepaid expenses and other assets | (749) | 1,780 |
| Prepaid income taxes | 3,299 | 18,855 |
| Accounts payable and accrued expenses | 4,395 | (4,288) |
| Net amounts due to/from governmental entities | (226) | 464 |
| Net cash provided by operating activities | 45,915 | 74,772 |
| Investing activities | ||
| Cash paid for acquisitions, primarily goodwill and intangible assets | (26,920) | (6,758) |
| Proceeds from sale of assets | – | 33 |
| Purchases of property, building and equipment | (8,343) | (8,415) |
| Net cash used in investing activities | (35,263) | (15,140) |
| Financing activities | ||
| Proceeds from line of credit | 73,000 | 188,561 |
| Payments on line of credit | (70,500) | (203,881) |
| Proceeds from issuance of common stock under the employee stock purchase plan | 786 | 783 |
| Proceeds from debt issuance | 1,212 | – |
| Noncontrolling interest distributions | (8,126) | (8,444) |
| Excess tax benefits from vesting of restricted stock | 18 | – |
| Redemption of treasury shares to pay income tax | (869) | – |
| Purchase of additional controlling interest | (1,879) | (309) |
| Payments on repurchase of common stock | – | (26,958) |
| Sale of noncontrolling interest | – | 80 |
| Net cash used in financing activities | (6,358) | (50,168) |
| Change in cash | 4,294 | 9,464 |
| Cash at beginning of period | 9,720 | 256 |
| Cash at end of period | $ 14,014 | $ 9,720 |
| Supplemental disclosures of cash flow information | ||
| Interest paid | $ 1,961 | $ 1,550 |
| Income taxes paid | $ 21,606 | $ 8,645 |
LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
| Three Months Ended
December 31, 2013 |
Year Ended
December 31, 2013 |
|||||
| Home-Based
Services |
Facility-Based
Services |
Total | Home-Based
Services |
Facility-Based
Services |
Total | |
| Net service revenue | $ 147,450 | $ 17,830 | $ 165,280 | $ 582,891 | $ 75,392 | $ 658,283 |
| Cost of service revenue | 84,276 | 10,965 | 95,241 | 339,199 | 44,265 | 383,464 |
| Provision for bad debts | 4,047 | 49 | 4,096 | 12,843 | 1,086 | 13,929 |
| General and administrative expenses | 49,876 | 5,430 | 55,306 | 192,784 | 21,349 | 214,133 |
| Operating income | 9,251 | 1,386 | 10,637 | 38,065 | 8,692 | 46,757 |
| Interest expense | (396) | (44) | (440) | (1,800) | (195) | (1,995) |
| Non-operating income | 34 | 25 | 59 | 149 | 94 | 243 |
| Income from continuing operations before income taxes and noncontrolling interest | 8,889 | 1,367 | 10,256 | 36,414 | 8,591 | 45,005 |
| Income tax expense | 3,280 | 343 | 3,623 | 14,342 | 1,517 | 15,859 |
| Income from continuing operations | 5,609 | 1,024 | 6,633 | 22,072 | 7,074 | 29,146 |
| Less net income attributable to noncontrolling interest | 1,458 | 206 | 1,664 | 5,552 | 1,252 | 6,804 |
| Net income attributable
to LHC Group, Inc.’s common stockholders |
$ 4,151 | $ 818 | $ 4,969 | $ 16,520 | $ 5,822 | $ 22,342 |
| Total assets | $ 385,915 | $ 36,311 | $ 422,226 | $ 385,915 | $ 36,311 | $ 422,226 |
| Three Months Ended
December 31, 2012 |
Year Ended
December 31, 2012 |
|||||
| Home-Based
Services |
Facility-Based
Services |
Total | Home-Based
Services |
Facility-Based
Services |
Total | |
| Net service revenue | $ 143,894 | $ 17,933 | $ 161,827 | $ 563,741 | $ 73,828 | $ 637,569 |
| Cost of service revenue | 81,842 | 10,599 | 92,441 | 322,189 | 43,563 | 365,752 |
| Provision for bad debts | 2,967 | 513 | 3,480 | 10,593 | 1,282 | 11,875 |
| General and administrative expenses | 45,573 | 5,101 | 50,674 | 183,725 | 21,912 | 205,637 |
| Operating income | 13,512 | 1,720 | 15,232 | 47,234 | 7,071 | 54,305 |
| Interest expense | (482) | (96) | (578) | (1,356) | (194) | (1,550) |
| Non-operating income | 56 | 20 | 76 | 133 | 51 | 184 |
| Income from continuing operations before income taxes and noncontrolling interest | 13,086 | 1,644 | 14,730 | 46,011 | 6,928 | 52,939 |
| Income tax expense | 3,979 | 826 | 4,805 | 15,619 | 1,892 | 17,511 |
| Income from continuing operations | 9,107 | 818 | 9,925 | 30,392 | 5,036 | 35,428 |
| Less net income attributable to noncontrolling interest | 2,138 | 387 | 2,525 | 6,964 | 1,024 | 7,988 |
| Net income attributable
to LHC Group, Inc.’s common stockholders |
$ 6,969 | $ 431 | $ 7,400 | $ 23,428 | $ 4,012 | $ 27,440 |
| Total assets | $ 350,140 | $ 36,754 | $ 386,894 | $ 350,140 | $ 36,754 | $ 386,894 |
LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)
| Three Months Ended December 31, | Year Ended
December 31, |
|||
| 2013 | 2012 | 2013 | 2012 | |
| Key Data: | ||||
| Home-Based Services: | ||||
| Home Health | ||||
| Locations | 255 | 232 | 255 | 232 |
| Acquired | 0 | 1 | 23 | 3 |
| De novo | 0 | 0 | 1 | 0 |
| Total new admissions | 29,557 | 27,490 | 121,745 | 109,026 |
| Medicare new admissions | 20,424 | 18,679 | 83,565 | 73,990 |
| Average daily census | 32,981 | 32,897 | 34,056 | 32,750 |
| Average Medicare daily census | 25,245 | 24,653 | 25,860 | 24,618 |
| Medicare completed and billed episodes | 43,193 | 41,563 | 176,996 | 167,029 |
| Average Medicare case mix for completed and billed Medicare episodes | 1.30 | 1.27 | 1.27 | 1.25 |
| Average reimbursement per completed and billed Medicare episodes | $ 2,415 | $ 2,374 | $ 2,340 | $ 2,336 |
| Total visits | 896,385 | 902,275 | 3,579,291 | 3,580,231 |
| Total Medicare visits | 682,641 | 660,289 | 2,707,119 | 2,609,218 |
| Average visits per completed and billed Medicare episodes | 15.8 | 15.9 | 15.3 | 15.6 |
| Organic growth: (1) | ||||
| Net revenue | -5.6% | 1.3% | -2.9% | -0.5% |
| Net Medicare revenue | -3.0% | -1.3% | -0.7% | -3.7% |
| Total new admissions | -0.8% | 5.5% | 3.6% | 5.2% |
| Medicare new admissions | -0.3% | 3.2% | 3.7% | 1.5% |
| Average daily census | -4.9% | 2.2% | -1.1% | 1.5% |
| Average Medicare daily census | -3.3% | 0.3% | -0.5% | -1.5% |
| Medicare completed and billed episodes | -0.6% | -0.5% | 4.8% | -1.6% |
| Hospice | ||||
| Locations | 34 | 32 | 34 | 32 |
| Acquired | 0 | 0 | 2 | 0 |
| Admissions | 1,180 | 1,126 | 4,916 | 4,424 |
| Average daily census | 1,208 | 1,037 | 1,143 | 1,000 |
| Patient days | 111,107 | 95,374 | 417,069 | 364,874 |
| Average revenue per patient day | $ 137 | $ 139 | $ 135 | $ 138 |
| Facility-Based Services: | ||||
| Long-term Acute Care | ||||
| Locations | 9 | 9 | 9 | 9 |
| Patient days | 15,116 | 15,552 | 61,838 | 62,900 |
| Average revenue per patient day | $ 1,132 | $ 1,173 | $ 1,162 | $ 1,151 |
(1) 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.