LAFAYETTE, La. (November 5, 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 and nine months ended September 30, 2014.
Financial Results for the Third Quarter
- Net service revenue for the third quarter of 2014 was $187.7 million, compared with $164.7 million for the same period in 2013.
- Net income attributable to LHC Group for the third quarter of 2014 was $6.2 million, compared with $5.3 million for the same period in 2013.
- Diluted earnings per share was $0.36 for the third quarter of 2014 as compared with $0.31 for the same period in 2013.
Financial Results for the Nine Months
- Net service revenue for the nine months ended September 30, 2014, was $540.3 million, compared with $493.0 million for the same period in 2013.
- Net income attributable to LHC Group for the nine months ended September 30, 2014, was $16.3 million, compared with $17.4 million for the same period in 2013.
- Diluted earnings per share was $0.94 for the nine months ended September 30, 2014, compared with $1.02 for the same period in 2013.
Commenting on the results, Keith G. Myers, LHC Group’s chairman and CEO, said, “I am extremely proud of the strong and well-balanced operating results our team delivered during the third quarter of 2014 and with our continued ability to execute our long-term growth strategy. In 2014, we have acquired 57 locations in 15 states, which consisted of $105 million in aggregate trailing twelve month revenues at the time of acquisition. As we look ahead to the remainder of 2014 and beyond, we are well positioned to continue increasing shareholder value by focusing on growing revenue, improving efficiencies and reducing costs.”
LHC Group is in the final phase of its company-wide conversion to point of care technology, which is anticipated to be completed during the fourth quarter of 2014. In conjunction with this final phase of its point of care conversion, LHC Group is in the process of eliminating certain general and administrative expenses, consolidating a limited number of locations in service area overlap markets and closing three underperforming providers during the fourth quarter of 2014. These initiatives are estimated to yield annual cost savings of $7 million to $8 million when fully implemented, beginning in 2015. As part of these efforts, LHC Group expects non-recurring costs in the fourth quarter of 2014 of $3 million to $4 million.
Myers added, “In the third quarter of 2010, we began our strategic and systematic conversion of all of our home health and hospice agencies to point of care technology. We are confident point of care will enhance our efforts in the areas of disease management, clinical decision support, medication management, transitions in care, quality measurements, compliance and clinical care improvement. We also expect it to expand our capability to electronically exchange key clinical information with hospitals, physicians and other providers of care. In the fourth quarter of 2014, we enter the final phase of the conversion, which demonstrates our commitment to continuously improving quality while becoming more efficient and reducing costs. We expect the completion of this plan will have a positive, material impact on our results of operations for 2015 and beyond.
“In closing, I would like to congratulate and thank the LHC Group family for their unwavering commitment to excellence. Their 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 Company’s healthcare professionals.”
Guidance
The Company is raising its full-year 2014 guidance for net service revenue, which was issued on August 6, 2014, in the range of $720 million to $730 million, to a range of $725 million to $735 million due to the Life Care Home Health acquisition that was completed on September 1, 2014. The Company is reaffirming its full-year 2014 guidance for fully diluted earnings per share in the range of $1.25 to $1.35. This guidance includes the negative impact from the Medicare Home Health Prospective Payment System for 2014 of approximately $0.17 per diluted share. This guidance does not take into account the estimated impact from the non-recurring costs in the fourth quarter of 2014 of $3 million to $4 million, 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 6, 2014, at 11 a.m. Eastern time to discuss its third 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, November 13, 2014, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 11054087. 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.
|
Sept. 30,
2014
|
Dec. 31,
2013
|
|
|
ASSETS
|
||
|
Current assets:
|
||
|
Cash
|
$ 4,876
|
$ 14,014
|
|
Receivables:
|
||
|
Patient accounts receivable, less allowance for uncollectible accounts of $17,463 and $14,334, respectively
|
99,652
|
88,964
|
|
Other receivables
|
828
|
608
|
|
Amounts due from governmental entities
|
990
|
1,234
|
|
Total receivables, net
|
101,470
|
90,806
|
|
Deferred income taxes
|
11,152
|
9,251
|
|
Prepaid income taxes
|
–
|
4,069
|
|
Prepaid expenses
|
8,160
|
6,966
|
|
Other current assets
|
4,205
|
4,449
|
|
Receivable due from insurance carrier
|
7,850
|
–
|
|
Total current assets
|
137,713
|
129,555
|
|
Property, building and equipment, net of accumulated depreciation
of $46,022 and $40,935, respectively
|
33,798
|
31,052
|
|
Goodwill
|
242,218
|
194,893
|
|
Intangible assets, net of accumulated amortization of $6,020
and $4,518, respectively
|
79,988
|
62,184
|
|
Other assets
|
1,914
|
4,542
|
|
Total assets
|
$ 495,631
|
$ 422,226
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||
|
Current liabilities:
|
||
|
Accounts payable and other accrued liabilities
|
$ 19,959
|
$ 17,217
|
|
Salaries, wages and benefits payable
|
30,946
|
31,927
|
|
Self-insurance reserve
|
6,858
|
5,862
|
|
Current portion of long-term debt
|
247
|
249
|
|
Amounts due to governmental entities
|
4,242
|
4,391
|
|
Legal settlement payable
|
7,850
|
–
|
|
Total current liabilities
|
70,102
|
59,646
|
|
Deferred income taxes
|
31,483
|
29,060
|
|
Income tax payable
|
3,415
|
3,415
|
|
Revolving credit facility
|
64,000
|
22,000
|
|
Long-term debt, less current portion
|
818
|
963
|
|
Total liabilities
|
169,818
|
115,084
|
|
Noncontrolling interest- redeemable
|
11,001
|
11,258
|
|
Stockholders’ equity:
|
||
|
Common stock – $0.01 par value: 40,000,000 shares authorized; 22,002,988 and 21,801,634 shares issued in 2014 and 2013, respectively
|
220
|
218
|
|
Treasury stock – 4,733,432 and 4,693,647 shares at cost, respectively
|
(35,638)
|
(34,715)
|
|
Additional paid-in capital
|
107,497
|
103,972
|
|
Retained earnings
|
239,837
|
223,534
|
|
Total LHC Group, Inc. stockholders’ equity
|
311,916
|
293,009
|
|
Noncontrolling interest- non-redeemable
|
2,896
|
2,875
|
|
Total equity
|
314,812
|
295,884
|
|
Total liabilities and stockholders’ equity
|
$ 495,631
|
$ 422,226
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||
|
2014
|
2013
|
2014
|
2013
|
|
|
Net service revenue
|
$ 187,713
|
$ 164,748
|
$ 540,261
|
$ 493,003
|
|
Cost of service revenue
|
113,122
|
97,966
|
321,983
|
288,223
|
|
Gross margin
|
74,591
|
66,782
|
218,278
|
204,780
|
|
Provision for bad debts
|
3,974
|
2,708
|
11,699
|
9,833
|
|
General and administrative expenses
|
58,432
|
53,047
|
172,658
|
158,827
|
|
Operating income
|
12,185
|
11,027
|
33,921
|
36,120
|
|
Interest expense
|
(643)
|
(430)
|
(1,861)
|
(1,555)
|
|
Non-operating income
|
235
|
54
|
159
|
184
|
|
Income before income taxes and noncontrolling interest
|
11,777
|
10,651
|
32,219
|
34,749
|
|
Income tax expense
|
3,924
|
3,782
|
11,199
|
12,236
|
|
Net income
|
7,853
|
6,869
|
21,020
|
22,513
|
|
Less net income attributable to
noncontrolling interests
|
1,679
|
1,572
|
4,717
|
5,140
|
|
Net income attributable to LHC Group, Inc.’s common stockholders
|
$ 6,174
|
$ 5,297
|
$ 16,303
|
$ 17,373
|
|
Earnings per share – basic:
|
||||
|
Net income attributable to LHC Group, Inc.’s common stockholders
|
$ 0.36
|
$ 0.31
|
$ 0.95
|
$ 1.02
|
|
Earnings per share – diluted:
|
||||
|
Net income attributable to LHC Group, Inc.’s common stockholders
|
$ 0.36
|
$ 0.31
|
$ 0.94
|
$ 1.02
|
|
Weighted average shares outstanding:
|
||||
|
Basic
|
17,260,078
|
17,083,201
|
17,213,648
|
17,035,541
|
|
Diluted
|
17,356,916
|
17,182,013
|
17,289,554
|
17,109,675
|
|
Nine Months Ended
September 30,
|
||
|
2014
|
2013
|
|
|
Operating activities
|
||
|
Net income
|
$ 21,020
|
$ 22,513
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
||
|
Depreciation and amortization expense
|
6,874
|
5,958
|
|
Provision for bad debts
|
11,699
|
9,833
|
|
Stock based compensation expense
|
3,086
|
2,879
|
|
Deferred income taxes
|
522
|
480
|
|
Loss on sale of assets
|
21
|
17
|
|
Changes in operating assets and liabilities, net of acquisitions:
|
||
|
Receivables
|
(12,868)
|
(18,462)
|
|
Prepaid expenses and other assets
|
280
|
(1,114)
|
|
Prepaid income taxes
|
4,005
|
4,262
|
|
Accounts payable and accrued expenses
|
(1,283)
|
645
|
|
Net amounts due to/from governmental entities
|
95
|
(631)
|
|
Net cash provided by operating activities
|
33,451
|
26,380
|
|
Investing activities
|
||
|
Purchases of property, building and equipment
|
(4,872)
|
(5,997)
|
|
Cash paid for acquisitions, primarily goodwill and intangible assets
|
(73,194)
|
(26,920)
|
|
Net cash (used in) investing activities
|
(78,066)
|
(32,917)
|
|
Financing activities
|
||
|
Proceeds from line of credit
|
72,000
|
64,500
|
|
Payments on line of credit
|
(30,000)
|
(60,000)
|
|
Proceeds from employee stock purchase plan
|
575
|
570
|
|
Proceeds from debt issuance
|
–
|
1,138
|
|
Payments on debt
|
(147)
|
–
|
|
Noncontrolling interest distributions
|
(5,086)
|
(6,286)
|
|
Payment of deferred financing fees
|
(900)
|
–
|
|
Excess tax benefits from vesting of stock awards
|
124
|
11
|
|
Redemption of treasury shares
|
(923)
|
(794)
|
|
(359)
|
(1,879)
|
|
|
Sale of noncontrolling interest
|
193
|
–
|
|
Net cash provided by (used in) financing activities
|
35,477
|
(2,740)
|
|
Change in cash
|
(9,138)
|
(9,277)
|
|
Cash at beginning of period
|
14,014
|
9,720
|
|
Cash at end of period
|
$ 4,876
|
$ 443
|
|
Supplemental disclosures of cash flow information
|
||
|
Interest paid
|
$ 1,827
|
$ 1,523
|
|
Income taxes paid
|
$ 6,946
|
$ 18,123
|
|
Three Months Ended September 30, 2014
|
||||
|
Home-
Based
Services
|
Hospice
Services
|
Facility-
Based
Services
|
Total
|
|
|
Net service revenue
|
$ 152,648
|
$ 17,071
|
$ 17,994
|
$ 187,713
|
|
Cost of service revenue
|
91,506
|
10,431
|
11,185
|
113,122
|
|
Provision for bad debts
|
3,753
|
269
|
(48)
|
3,974
|
|
General and administrative expenses
|
48,591
|
4,756
|
5,085
|
58,432
|
|
Operating income
|
8,798
|
1,615
|
1,772
|
12,185
|
|
Interest expense
|
(515)
|
(64)
|
(64)
|
(643)
|
|
Non-operating income
|
190
|
35
|
10
|
235
|
|
Income before income taxes and noncontrolling interest
|
8,473
|
1,586
|
1,718
|
11,777
|
|
Income tax expense
|
3,034
|
521
|
369
|
3,924
|
|
Net income
|
5,439
|
1,065
|
1,349
|
7,853
|
|
Less net income attributable to
noncontrolling interests
|
1,185
|
292
|
202
|
1,679
|
|
Net income attributable to LHC Group, Inc.’s common stockholders
|
$ 4,254
|
$ 773
|
$ 1,147
|
$ 6,174
|
|
Total assets
|
$ 424,780
|
$ 34,622
|
$ 36,229
|
$ 495,631
|
|
Three Months Ended September 30, 2013
|
||||
|
Home-
Based
Services
|
Hospice
Services
|
Facility-Based
Services
|
Total
|
|
|
Net service revenue
|
$ 132,739
|
$ 14,171
|
$ 17,838
|
$ 164,748
|
|
Cost of service revenue
|
78,307
|
8,775
|
10,884
|
97,966
|
|
Provision for bad debts
|
2,333
|
318
|
57
|
2,708
|
|
General and administrative expenses
|
44,002
|
3,967
|
5,078
|
53,047
|
|
Operating income
|
8,097
|
1,111
|
1,819
|
11,027
|
|
Interest expense
|
(348)
|
(39)
|
(43)
|
(430)
|
|
Non-operating income
|
33
|
3
|
18
|
54
|
|
Income before income taxes and noncontrolling interest
|
7,782
|
1,075
|
1,794
|
10,651
|
|
Income tax expense
|
3,028
|
394
|
360
|
3,782
|
|
Net income
|
4,754
|
681
|
1,434
|
6,869
|
|
Less net income attributable to
noncontrolling interests
|
1,077
|
202
|
293
|
1,572
|
|
Net income attributable to LHC Group, Inc.’s common stockholders
|
$ 3,677
|
$ 479
|
$ 1,141
|
$ 5,297
|
|
Total assets
|
$ 351,804
|
$ 27,536
|
$ 34,693
|
$ 414,033
|
|
Nine Months Ended September 30, 2014
|
||||
|---|---|---|---|---|
|
Home-
Based
Services
|
Hospice
Services
|
Facility-
Based
Services
|
Total
|
|
|
Net service revenue
|
$ 435,588
|
$ 49,361
|
$ 55,312
|
$ 540,261
|
|
Cost of service revenue
|
258,173
|
29,479
|
34,331
|
321,983
|
|
Provision for bad debts
|
10,475
|
467
|
757
|
11,699
|
|
General and administrative expenses
|
142,747
|
13,994
|
15,917
|
172,658
|
|
Operating income
|
24,193
|
5,421
|
4,307
|
33,921
|
|
Interest expense
|
(1,489)
|
(186)
|
(186)
|
(1,861)
|
|
Non-operating income
|
103
|
40
|
16
|
159
|
|
Income before income taxes and noncontrolling interest
|
22,807
|
5,275
|
4,137
|
32,219
|
|
Income tax expense
|
8,763
|
1,397
|
1,039
|
11,199
|
|
Net income
|
14,044
|
3,878
|
3,098
|
21,020
|
|
Less net income attributable to
noncontrolling interests
|
3,329
|
828
|
560
|
4,717
|
|
Net income attributable to LHC Group, Inc.’s common stockholders
|
$ 10,715
|
$ 3,050
|
$ 2,538
|
$ 16,303
|
|
Total assets
|
$ 424,780
|
$ 34,622
|
$ 36,229
|
$ 495,631
|
|
Nine Months Ended September 30, 2013
|
||||
|---|---|---|---|---|
|
Home-
Based
Services
|
Hospice
Services
|
Facility-
Based
Services
|
Total
|
|
|
Net service revenue
|
$ 394,453
|
$ 40,988
|
$ 57,562
|
$ 493,003
|
|
Cost of service revenue
|
229,466
|
25,458
|
33,299
|
288,223
|
|
Provision for bad debts
|
8,009
|
787
|
1,037
|
9,833
|
|
General and administrative expenses
|
131,048
|
11,860
|
15,919
|
158,827
|
|
Operating income
|
25,930
|
2,883
|
7,307
|
36,120
|
|
Interest expense
|
(1,268)
|
(136)
|
(151)
|
(1,555)
|
|
Non-operating income
|
94
|
21
|
69
|
184
|
|
Income before income taxes and noncontrolling interest
|
24,756
|
2,768
|
7,225
|
34,749
|
|
Income tax expense
|
9,993
|
1,069
|
1,174
|
12,236
|
|
Net income
|
14,763
|
1,699
|
6,051
|
22,513
|
|
Less net income attributable to
noncontrolling interests
|
3,417
|
677
|
1,046
|
5,140
|
|
Net income attributable to LHC Group, Inc.’s common stockholders
|
$ 11,346
|
$ 1,022
|
$ 5,005
|
$ 17,373
|
|
Total assets
|
$ 351,804
|
$ 27,536
|
$ 34,693
|
$ 414,033
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||
|
2014
|
2013
|
2014
|
2013
|
|
|
Key Data:
|
||||
|
Home-Based Services:
|
||||
|
Home Health
|
||||
|
Locations
|
283
|
255
|
283
|
255
|
|
Acquired
|
13
|
4
|
38
|
23
|
|
De novo
|
0
|
0
|
0
|
0
|
|
Total new admissions
|
33,962
|
30,142
|
98,725
|
92,185
|
|
Medicare new admissions
|
22,970
|
20,944
|
67,086
|
63,123
|
|
Average daily census
|
35,973
|
33,429
|
35,148
|
34,456
|
|
Average Medicare daily census
|
26,616
|
25,408
|
26,217
|
26,069
|
|
Medicare completed and billed episodes
|
46,633
|
42,191
|
136,529
|
127,761
|
|
Average Medicare case mix for completed and billed Medicare episodes(1)
|
0.99
|
1.28
|
0.98
|
1.27
|
|
Average reimbursement per completed and billed Medicare episodes
|
$ 2,392
|
$ 2,489
|
$ 2,375
|
$ 2,425
|
|
Total visits
|
998,533
|
908,718
|
2,898,616
|
2,682,906
|
|
Total Medicare visits
|
739,184
|
686,295
|
2,161,516
|
2,024,478
|
|
Average visits per completed and billed Medicare episodes
|
15.9
|
16.3
|
15.8
|
15.8
|
|
Organic growth:(2)
|
||||
|
Net revenue
|
1.1%
|
-2.4%
|
1.1%
|
-2.9%
|
|
Net Medicare revenue
|
-1.2%
|
1.5%
|
-0.2%
|
-0.6%
|
|
Total new admissions
|
2.2%
|
1.8%
|
0.6%
|
3.5%
|
|
Medicare new admissions
|
0.8%
|
4.2%
|
0.6%
|
4.1%
|
|
Average daily census
|
-1.7%
|
-2.2%
|
-4.0%
|
-1.0%
|
|
Average Medicare daily census
|
-3.1%
|
-0.6%
|
-4.4%
|
-0.1%
|
|
Medicare completed and billed episodes
|
2.2%
|
0.8%
|
1.6%
|
0.8%
|
|
Community-Based Services:
|
||||
|
Locations
|
13
|
5
|
13
|
5
|
|
Acquired
|
0
|
0
|
6
|
0
|
|
De novo
|
0
|
0
|
1
|
0
|
|
Average daily census
|
972
|
414
|
793
|
416
|
|
Billable hours
|
291,302
|
37,472
|
606,600
|
113,998
|
|
Revenue per billable hour
|
$ 30.80
|
$ 21.96
|
$ 30.10
|
$ 20.83
|
|
Hospice-Based Services:
|
||||
|
Locations
|
38
|
34
|
38
|
34
|
|
Acquired
|
0
|
0
|
6
|
2
|
|
Admissions
|
1,476
|
1,252
|
4,134
|
3,736
|
|
Average daily census
|
1,404
|
1,144
|
1,333
|
1,125
|
|
Patient days
|
127,832
|
105,274
|
362,619
|
305,962
|
|
Average revenue per patient day
|
$ 134
|
$ 135
|
$ 136
|
$ 134
|
|
Facility-Based Services:
|
||||
|
Long-term Acute Care
|
||||
|
Locations
|
8
|
9
|
8
|
9
|
|
Patient days
|
15,362
|
15,321
|
46,763
|
46,722
|
|
Average revenue per patient day
|
$ 1,124
|
$ 1,118
|
$ 1,135
|
$ 1,172
|