LAFAYETTE, La. (November 6, 2013) – LHC Group, Inc. (NASDAQ: LHCG), a national provider of post-acute care services, today announced its financial results for the three months and nine months ended September 30, 2013.
Financial Results for the Third Quarter
- Net service revenue for the third quarter of 2013 was $164.7 million, compared with $158.9 million for the same period in 2012.
- Net income attributable to LHC Group for the third quarter of 2013 was $5.3 million, compared with $6.3 million for the same period in 2012.
- Diluted earnings per share was $0.31 for the third quarter of 2013, compared with $0.36 for the same period in 2012.
In commenting on the results, Keith G. Myers, LHC Group’s chairman and CEO, said, “As usual, through the first nine months of 2013, our dedicated employees have once again exceeded expectations. Our ability to consistently deliver high-quality care to the growing number of patients, families and communities we serve is a testament to the collective talent, work ethic and experience of the growing number of healthcare professionals who make up our LHC Group family. Going forward, we expect the release of the final home health reimbursement rule and rebasing to provide greater clarity surrounding the long-term reimbursement environment. As a result, we believe a period of significant consolidation in the industry will occur over the next several years, and we are prepared to absorb this growth organically through a more diversified and comprehensive post-acute strategy in existing markets and through acquisitions and joint ventures in new markets. We have made significant investments in people and infrastructure over the past several years, and we are well positioned to efficiently and effectively deliver the superior care and service expected by those we serve. We look to the future with optimism and are prepared for the challenges and opportunities ahead.”
Financial Results for the Nine Months
- Net service revenue for the nine months ended September 30, 2013, was $493.0 million, compared with $475.7 million for the same period in 2012.
- Net income attributable to LHC Group for the nine months ended September 30, 2013, was $17.4 million, compared with $20.0 million for the same period in 2012.
- Diluted earnings per share was $1.02 for the nine months ended September 30, 2013, compared with $1.10 for the same period in 2012.
Guidance
The Company is reaffirming its full year 2013 guidance issued on August 7, 2013, for net service revenue of $660 million to $670 million and fully diluted earnings per share in the range of $1.25 to $1.35. This guidance includes the impact of sequestration, as well as the impact on the fourth quarter of 2013 from the proposed rule for the Medicare Home Health Prospective Payment System for 2014. The guidance also includes the announced acquisitions of the home health service lines of Addus HomeCare Corp. and AseraCare Home Health. 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, November 7, 2013, at 11 a.m. Eastern time to discuss its third quarter 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, November 14, 2013, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 69132646. 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.
|
Sept. 30,
2013
|
Dec. 31,
2012
|
|
|
ASSETS
|
||
|
Current assets:
|
||
|
Cash
|
$ 443
|
$ 9,720
|
|
Receivables:
|
||
|
Patient accounts receivable, less allowance for uncollectible accounts of $13,995 and $11,863, respectively
|
92,423
|
83,951
|
|
Other receivables
|
746
|
589
|
|
Amounts due from governmental entities
|
1,223
|
1,596
|
|
Total receivables, net
|
94,392
|
86,136
|
|
Deferred income taxes
|
11,098
|
7,671
|
|
Prepaid income taxes
|
3,125
|
7,436
|
|
Prepaid expenses
|
6,175
|
6,818
|
|
Other current assets
|
4,774
|
2,949
|
|
Total current assets
|
120,007
|
120,730
|
|
Property, building and equipment, net of accumulated depreciation
of $39,320 and $34,331, respectively
|
30,561
|
29,531
|
|
Goodwill
|
194,893
|
169,150
|
|
Intangible assets, net of accumulated amortization of $3,357
and $2,985, respectively
|
63,199
|
62,042
|
|
Other assets
|
5,373
|
5,441
|
|
Total assets
|
$ 414,033
|
$ 386,894
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||
|
Current liabilities:
|
||
|
Accounts payable and other accrued liabilities
|
$ 19,254
|
$ 14,897
|
|
Salaries, wages and benefits payable
|
25,134
|
29,890
|
|
Self insurance reserve
|
6,868
|
5,444
|
|
Amounts due to governmental entities
|
3,975
|
4,979
|
|
Total current liabilities
|
55,231
|
55,210
|
|
Deferred income taxes
|
29,036
|
25,129
|
|
Income tax payable
|
3,415
|
3,415
|
|
Revolving credit facility
|
24,000
|
19,500
|
|
Note payable
|
1,138
|
–
|
|
Total liabilities
|
112,820
|
103,254
|
|
Noncontrolling interest- redeemable
|
11,467
|
11,426
|
|
Stockholders’ equity:
|
||
|
Common stock – $0.01 par value: 40,000,000 shares authorized; 21,783,323 and 21,578,772 shares issued in 2013 and 2012, respectively
|
218
|
216
|
|
Treasury stock – 4,690,392 and 4,653,039 shares at cost, respectively
|
(34,640)
|
(33,846)
|
|
Additional paid-in capital
|
102,761
|
100,619
|
|
Retained earnings
|
218,565
|
201,192
|
|
Total LHC Group, Inc. stockholders’ equity
|
286,904
|
268,181
|
|
Noncontrolling interest- non-redeemable
|
2,842
|
4,033
|
|
Total equity
|
289,746
|
272,214
|
|
Total liabilities and stockholders’ equity
|
$ 414,033
|
$ 386,894
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||
|
2013
|
2012
|
2013
|
2012
|
|
|
Net service revenue
|
$ 164,748
|
$ 158,926
|
$ 493,003
|
$ 475,742
|
|
Cost of service revenue
|
97,966
|
91,234
|
288,223
|
273,311
|
|
Gross margin
|
66,782
|
67,692
|
204,780
|
202,431
|
|
Provision for bad debts
|
2,708
|
2,987
|
9,833
|
8,395
|
|
General and administrative expenses
|
53,047
|
52,464
|
158,827
|
154,313
|
|
Other intangibles impairment charge
|
–
|
650
|
–
|
650
|
|
Operating income
|
11,027
|
11,591
|
36,120
|
39,073
|
|
Interest expense
|
(430)
|
(405)
|
(1,555)
|
(972)
|
|
Non-operating income
|
54
|
94
|
184
|
108
|
|
Income before income taxes and noncontrolling interest
|
10,651
|
11,280
|
34,749
|
38,209
|
|
Income tax expense
|
3,782
|
3,388
|
12,236
|
12,706
|
|
Net income
|
6,869
|
7,892
|
22,513
|
25,503
|
|
Less net income attributable to
noncontrolling interest
|
1,572
|
1,556
|
5,140
|
5,463
|
|
Net income attributable to LHC Group, Inc.’s common stockholders
|
$ 5,297
|
$ 6,336
|
$ 17,373
|
$ 20,040
|
|
Earnings per share – basic:
|
||||
|
Net income attributable to LHC Group, Inc.’s common stockholders
|
$ 0.31
|
$ 0.36
|
$ 1.02
|
$ 1.11
|
|
Earnings per share – diluted:
|
||||
|
Net income attributable to LHC Group, Inc.’s common stockholders
|
$ 0.31
|
$ 0.36
|
$ 1.02
|
$ 1.10
|
|
Weighted average shares outstanding:
|
||||
|
Basic
|
17,083,201
|
17,656,842
|
17,035,541
|
18,121,217
|
|
Diluted
|
17,182,013
|
17,726,819
|
17,109,675
|
18,160,489
|
|
Nine Months Ended
September 30,
|
||
|
2013
|
2012
|
|
|
Operating activities
|
||
|
Net income
|
$ 22,513
|
$ 25,503
|
|
Adjustments to reconcile net income to net cash provided
by operating activities:
|
||
|
Depreciation and amortization expense
|
5,958
|
5,801
|
|
Provision for bad debts
|
9,833
|
8,395
|
|
Stock based compensation expense
|
2,879
|
3,398
|
|
Deferred income taxes
|
480
|
1,552
|
|
Loss on sale of assets
|
17
|
100
|
|
Other intangibles impairment change
|
–
|
650
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
||
|
Receivables
|
(18,462)
|
(7,084)
|
|
Prepaid expenses and other assets
|
(1,114)
|
2,247
|
|
Prepaid income taxes
|
4,262
|
13,960
|
|
Accounts payable and accrued expenses
|
645
|
(6,597)
|
|
Net amounts due to/from governmental entities
|
(631)
|
135
|
|
Net cash provided by operating activities
|
26,380
|
48,060
|
|
Investing activities
|
||
|
Purchases of property, building, and equipment
|
(5,997)
|
(6,508)
|
|
Proceeds from sale of assets
|
–
|
25
|
|
Cash paid for acquisitions, primarily goodwill and intangible assets
|
(26,920)
|
(6,764)
|
|
Net cash used in investing activities
|
(32,917)
|
(13,247)
|
|
Financing activities
|
||
|
Proceeds from line of credit
|
64,500
|
173,562
|
|
Payments on line of credit
|
(60,000)
|
(183,297)
|
|
Proceeds from employee stock purchase plan
|
570
|
587
|
|
Proceeds from debt issuance
|
1,138
|
–
|
|
Noncontrolling interest distributions
|
(6,286)
|
(6,582)
|
|
Excess tax benefits from vesting of restricted stock
|
11
|
–
|
|
Redemption of treasury shares
|
(794)
|
–
|
|
(1,879)
|
(126)
|
|
|
Payments on repurchase of common stock
|
–
|
(19,017)
|
|
Sale of noncontrolling interest
|
–
|
80
|
|
Net cash used in financing activities
|
(2,740)
|
(34,793)
|
|
Change in cash
|
(9,277)
|
20
|
|
Cash at beginning of period
|
9,720
|
256
|
|
Cash at end of period
|
$ 443
|
$ 276
|
|
Supplemental disclosures of cash flow information
|
||
|
Interest paid
|
$ 1,523
|
$ 972
|
|
Income taxes paid
|
$ 18,123
|
$ 8,644
|
|
Three Months Ended
September 30, 2013
|
Nine Months Ended
September 30, 2013
|
|||||
|
Home-Based
Services
|
Facility-Based
Services
|
Total
|
Home-Based
Services
|
Facility-Based
Services
|
Total
|
|
|
$ 146,910
|
$ 17,838
|
$ 164,748
|
$ 435,441
|
$ 57,562
|
$ 493,003
|
|
|
Cost of service revenue
|
87,082
|
10,884
|
97,966
|
254,924
|
33,299
|
288,223
|
|
Provision for bad debts
|
2,651
|
57
|
2,708
|
8,796
|
1,037
|
9,833
|
|
General and administrative expenses
|
47,969
|
5,078
|
53,047
|
142,908
|
15,919
|
158,827
|
|
Operating income
|
9,208
|
1,819
|
11,027
|
28,813
|
7,307
|
36,120
|
|
Interest expense
|
(387)
|
(43)
|
(430)
|
(1,404)
|
(151)
|
(1,555)
|
|
Non-operating income
|
36
|
18
|
54
|
115
|
69
|
184
|
|
Income before income taxes and noncontrolling interest
|
8,857
|
1,794
|
10,651
|
27,524
|
7,225
|
34,749
|
|
Income tax expense
|
3,422
|
360
|
3,782
|
11,062
|
1,174
|
12,236
|
|
Net income
|
5,435
|
1,434
|
6,869
|
16,462
|
6,051
|
22,513
|
|
Less net income attributable to noncontrolling interest
|
1,279
|
293
|
1,572
|
4,094
|
1,046
|
5,140
|
|
Net income attributable
to LHC Group, Inc.’s common stockholders
|
$ 4,156
|
$ 1,141
|
$ 5,297
|
$ 12,368
|
$ 5,005
|
$ 17,373
|
|
$ 379,340
|
$ 34,693
|
$ 414,033
|
$ 379,340
|
$ 34,693
|
$ 414,033
|
|
|
Three Months Ended
September 30, 2012
|
Nine Months Ended
September 30, 2012
|
|||||
|
Home-Based
Services
|
Facility-Based
Services
|
Total
|
Home-Based
Services
|
Facility-Based
Services
|
Total
|
|
|
Net service revenue
|
$ 140,256
|
$ 18,670
|
$ 158,926
|
$ 419,847
|
$ 55,895
|
$ 475,742
|
|
Cost of service revenue
|
80,579
|
10,655
|
91,234
|
240,347
|
32,964
|
273,311
|
|
Provision for bad debts
|
2,669
|
318
|
2,987
|
7,626
|
769
|
8,395
|
|
General and administrative expenses
|
47,110
|
5,354
|
52,464
|
137,902
|
16,411
|
154,313
|
|
Other intangibles impairment charge
|
250
|
400
|
650
|
250
|
400
|
650
|
|
Operating income
|
9,648
|
1,943
|
11,591
|
33,722
|
5,351
|
39,073
|
|
Interest expense
|
(364)
|
(41)
|
(405)
|
(874)
|
(98)
|
(972)
|
|
Non-operating income
|
74
|
20
|
94
|
77
|
31
|
108
|
|
Income before income taxes and noncontrolling interest
|
9,358
|
1,922
|
11,280
|
32,925
|
5,284
|
38,209
|
|
Income tax expense
|
3,213
|
175
|
3,388
|
11,641
|
1,065
|
12,706
|
|
Net income
|
6,145
|
1,747
|
7,892
|
21,284
|
4,219
|
25,503
|
|
Less net income attributable to noncontrolling interest
|
1,308
|
248
|
1,556
|
4,826
|
637
|
5,463
|
|
Net income attributable
to LHC Group, Inc.’s common stockholders
|
$ 4,837
|
$ 1,499
|
$ 6,336
|
$ 16,458
|
$ 3,582
|
$ 20,040
|
|
Total assets
|
$ 352,941
|
$ 34,557
|
$ 387,498
|
$ 352,941
|
$ 34,557
|
$ 387,498
|
|
Three Months Ended September 30,
|
Nine Months Ended
September 30,
|
|||
|
2013
|
2012
|
2013
|
2012
|
|
|
Key Data:
|
||||
|
Home-Based Services:
|
||||
|
Home Health
|
||||
|
Locations
|
255
|
238
|
255
|
238
|
|
Acquired
|
4
|
2
|
23
|
2
|
|
De novo
|
0
|
1
|
0
|
1
|
|
Total new admissions
|
30,221
|
27,301
|
92,260
|
81,495
|
|
Medicare new admissions
|
21,078
|
18,415
|
63,311
|
55,298
|
|
Average daily census
|
33,527
|
32,605
|
34,506
|
32,764
|
|
Average Medicare daily census
|
25,505
|
24,279
|
26,109
|
24,618
|
|
Medicare completed and billed episodes
|
45,804
|
41,699
|
133,803
|
125,466
|
|
Average Medicare case mix for completed and billed Medicare episodes
|
1.28
|
1.25
|
1.27
|
1.25
|
|
Average reimbursement per completed and billed Medicare episodes
|
$ 2,339
|
$ 2,337
|
$ 2,315
|
$ 2,337
|
|
Total visits
|
908,718
|
883,257
|
2,682,906
|
2,677,956
|
|
Total Medicare visits
|
686,295
|
637,310
|
2,024,478
|
1,948,929
|
|
Average visits per completed and billed Medicare episodes
|
15.0
|
15.3
|
15.1
|
15.5
|
|
Organic growth: (1)
|
||||
|
Net revenue
|
-2.4%
|
1.7%
|
-2.9%
|
-1.1%
|
|
Net Medicare revenue
|
1.5%
|
-1.9%
|
-0.6%
|
-4.5%
|
|
Total new admissions
|
1.0%
|
3.0%
|
3.0%
|
5.0%
|
|
Medicare new admissions
|
3.7%
|
-1.8%
|
3.7%
|
0.9%
|
|
Average daily census
|
-2.4%
|
3.2%
|
-1.0%
|
-1.4%
|
|
Average Medicare daily census
|
-0.7%
|
0.3%
|
-0.2%
|
-4.1%
|
|
Medicare completed and billed episodes
|
3.8%
|
0.7%
|
1.2%
|
-2.0%
|
|
Hospice
|
||||
|
Locations
|
34
|
32
|
34
|
32
|
|
Acquired
|
0
|
0
|
2
|
0
|
|
Admissions
|
1,252
|
1,117
|
3,736
|
3,298
|
|
Average daily census
|
1,144
|
1,021
|
1,121
|
984
|
|
Patient days
|
105,274
|
93,972
|
305,962
|
269,500
|
|
Average revenue per patient day
|
$ 135
|
$ 138
|
$ 136
|
$ 138
|
|
Facility-Based Services:
|
||||
|
Long-term Acute Care
|
||||
|
Locations
|
9
|
9
|
9
|
9
|
|
Patient days
|
15,321
|
15,335
|
46,722
|
47,348
|
|
Average revenue per patient day
|
$ 1,118
|
$ 1,172
|
$ 1,172
|
$ 1,143
|