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LHC Group Announces Second Quarter 2015 Results and Raises Full Year 2015 Guidance

LAFAYETTE, La., Aug. 5, 2015 (GLOBE NEWSWIRE) -- LHC Group, Inc. (NASDAQ:LHCG), a national provider of home health, hospice, and community-based and comprehensive post-acute healthcare services, today announced its financial results for the three months and six months ended June 30, 2015.

Financial Results for the Second Quarter

  • Net service revenue for the second quarter of 2015 was $200.2 million, an increase of 6.0% compared with net service revenue of $188.9 million in the same period of 2014.
  • Net income attributable to LHC Group for the second quarter of 2015 was $9.0 million, or $0.51 per diluted share, an increase of 47.7% compared with net income attributable to LHC Group of $6.1 million, or $0.35 per diluted share, in the same period of 2014.
  • Total growth in admissions for all service lines for the second quarter of 2015 was 5.3% compared with the second quarter of 2014.
  • Total organic growth in home health admissions for the second quarter of 2015 was 1.7% compared with the second quarter of 2014.

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 continues to deliver during 2015. I am particularly pleased with our ability to continue with a solid organic growth rate in home health admissions of 4.4% in the first half of 2015 compared with the same period of 2014 and our ability to control and further reduce G&A cost as a percentage of revenue. Most importantly, I would like to congratulate and thank our nearly 10,000 team members for their unwavering commitment to excellence and for consistently delivering high-quality care to the growing number of patients, families and communities we serve."

Financial Results for the Six Months

  • Net service revenue for the six months ended June 30, 2015, was $393.3 million, an increase of 11.5% compared with net service revenue of $352.5 million in the same period of 2014.
  • Net income attributable to LHC Group for the six months ended June 30, 2015, was $15.8 million, or $0.90 per diluted share, an increase of 55.5% compared with net income attributable to LHC Group of $10.1 million, or $0.59 per diluted share, in the same period of 2014.
  • Total growth in admissions for all service lines for the six months ended June 30, 2015, was 11.5% compared to the same period in 2014.
  • Total organic growth in home health admissions for the six months ended June 30, 2015, was 4.4% compared with the same period in 2014.

FY 2015 Guidance

The Company is raising its full year 2015 guidance for net service revenue to a new range of $780 million to $795 million from the previous range of $765 million to $780 million. In addition, the Company is raising its fully diluted earnings per share to a new range of $1.70 to $1.80 from the previous range of $1.55 to $1.70. This guidance does not take into account the impact of 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 on Thursday, August 6, 2015, at 11:00 a.m. Eastern time to discuss its second quarter 2015 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 Tuesday, August 11, 2015, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 58964889. 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 and provides inpatient care through long-term acute care hospitals.

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, 2014, 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)
June 30, Dec. 31,
2015 2014
ASSETS
Current assets:
Cash $ 18,270 $ 531
Receivables:
Patient accounts receivable, less allowance for uncollectible accounts of $23,900 and $18,582, respectively 100,124 97,498
Other receivables 1,419 1,334
Amounts due from governmental entities 979 1,164
Total receivables, net 102,522 99,996
Deferred income taxes 13,890 11,381
Prepaid income taxes 2,225 3,093
Prepaid expenses 10,799 8,724
Other current assets 5,430 3,777
Receivable due from insurance carrier 7,850
Total current assets 153,136 135,352
Property, building and equipment, net of accumulated depreciation of $47,873 and $44,683, respectively 34,765 34,787
Goodwill 240,214 240,019
Intangible assets, net of accumulated amortization of $7,538 and $6,560, respectively 79,027 79,685
Other assets 1,903 1,896
Total assets $ 509,045 $ 491,739
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued liabilities $ 23,444 $ 19,278
Salaries, wages and benefits payable 40,489 22,466
Self-insurance reserve 8,716 6,559
Current portion of long-term debt 235 230
Amounts due to governmental entities 3,559 4,459
Legal settlement payable 7,850
Total current liabilities 76,443 60,842
Deferred income taxes 37,109 33,592
Income tax payable 3,415 3,415
Revolving credit facility 40,000 60,000
Long-term debt, less current portion 660 778
Total liabilities 157,627 158,627
Noncontrolling interest – redeemable 11,981 11,517
Stockholders' equity:
Common stock – $0.01 par value: 40,000,000 shares authorized; 22,207,136 and 22,015,211 shares issued in 2015 and 2014, respectively 222 220
Treasury stock – 4,773,160 and 4,734,363 shares at cost, respectively (36,989) (35,660)
Additional paid-in capital 111,849 108,708
Retained earnings 261,126 245,371
Total LHC Group, Inc. stockholders' equity 336,208 318,639
Noncontrolling interest – non-redeemable 3,229 2,956
Total stockholders' equity 339,437 321,595
Total liabilities and stockholders' equity $ 509,045 $ 491,739
LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
Net service revenue $ 200,172 $ 188,867 $ 393,251 $ 352,548
Cost of service revenue 116,639 111,527 231,065 208,861
Gross margin 83,533 77,340 162,186 143,687
Provision for bad debts 4,805 4,363 10,064 7,725
General and administrative expenses 60,370 59,723 119,668 114,302
Operating income 18,358 13,254 32,454 21,660
Interest expense (554) (830) (1,099) (1,218)
Income before income taxes and noncontrolling interest 17,804 12,424 31,355 20,442
Income tax expense 6,220 4,352 10,949 7,275
Net income 11,584 8,072 20,406 13,167
Less net income attributable to noncontrolling interest 2,634 2,011 4,651 3,038
Net income attributable to LHC Group, Inc.'s common stockholders $ 8,950 $ 6,061 $ 15,755 $ 10,129
Earnings per share – basic:
Net income attributable to LHC Group, Inc.'s common stockholders $ 0.51 $ 0.35 $ 0.91 $ 0.59
Earnings per share – diluted:
Net income attributable to LHC Group, Inc.'s common stockholders $ 0.51 $ 0.35 $ 0.90 $ 0.59
Weighted average shares outstanding:
Basic 17,410,971 17,233,264 17,366,141 17,190,070
Diluted 17,529,100 17,277,224 17,528,101 17,268,556
LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Six Months Ended
June 30,
2015 2014
Operating activities
Net income $ 20,406 $ 13,167
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 5,801 4,413
Provision for bad debts 10,064 7,725
Stock based compensation expense 2,073 2,069
Deferred income taxes 1,008 844
Impairment of intangibles and other 248
Loss on disposal of assets 404 144
Changes in operating assets and liabilities, net of acquisitions:
Receivables (12,812) (8,625)
Prepaid expenses and other assets (3,735) (301)
Prepaid income taxes 868 512
Accounts payable and accrued expenses 24,341 4,249
Net amounts due to/from governmental entities (715) (401)
Net cash provided by operating activities 47,951 23,796
Investing activities
Purchases of property, building and equipment (5,205) (3,419)
Cash paid for acquisitions, primarily goodwill and intangible assets (566) (65,103)
Net cash used in investing activities (5,771) (68,522)
Financing activities
Proceeds from line of credit 2,000 68,000
Payments on line of credit (22,000) (21,000)
Proceeds from employee stock purchase plan 389 391
Payments on debt (113) (91)
Noncontrolling interest distributions (4,069) (3,122)
Payment of deferred financing fees (799)
Excess tax benefits from vesting of restricted stock 811 112
Redemption of treasury shares (1,329) (850)
Purchase of additional noncontrolling interest (275) (95)
Proceeds from exercise of stock options 145
Sale of noncontrolling interest 193
Net cash provided by (used in) financing activities (24,441) 42,739
Change in cash 17,739 (1,987)
Cash at beginning of period 531 14,014
Cash at end of period $ 18,270 $ 12,027
Supplemental disclosures of cash flow information
Interest paid $ 765 $ 1,177
Income taxes paid $ 8,208 $ 6,064
LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Three Months Ended June 30, 2015
Home-
Health
Services

Hospice
Services
Community-
Based
Services
Facility-
Based
Services


Total
Net service revenue $ 153,272 $ 18,632 $ 10,312 $ 17,956 $ 200,172
Cost of service revenue 87,045 10,844 7,456 11,294 116,639
Provision for bad debts 3,645 299 691 170 4,805
General and administrative expenses 47,576 5,111 2,068 5,615 60,370
Operating income 15,006 2,378 97 877 18,358
Interest expense (438) (61) (6) (49) (554)
Income before income taxes and noncontrolling interest 14,568 2,317 91 828 17,804
Income tax expense 4,740 723 215* 542 6,220
Net income (loss) 9,828 1,594 (124) 286 11,584
Less net income attributable to noncontrolling interest 2,251 253 (52) 182 2,634
Net income (loss) attributable to LHC Group, Inc.'s common stockholders $ 7,577 $ 1,341 $ (72) $ 104 $ 8,950
Total assets $ 400,906 $ 36,178 $ 33,131 $ 38,830 $ 509,045
Three Months Ended June 30, 2014
Home-
Health
Services

Hospice
Services
Community-
Based
Services
Facility-
Based
Services


Total
Net service revenue $ 145,861 $ 17,068 $ 8,399 $ 17,539 $ 188,867
Cost of service revenue 84,278 10,151 5,945 11,153 111,527
Provision for bad debts 3,701 93 367 202 4,363
General and administrative expenses 47,661 4,789 2,065 5,208 59,723
Operating income 10,221 2,035 22 976 13,254
Interest expense (657) (83) (7) (83) (830)
Income before income taxes and noncontrolling interest 9,564 1,952 15 893 12,424
Income tax expense 3,405 530 31 386 4,352
Net income (loss) 6,159 1,422 (16) 507 8,072
Less net income attributable to noncontrolling interest 1,541 335 (4) 139 2,011
Net income (loss) attributable to LHC Group, Inc.'s common stockholders $ 4,618 $ 1,087 $ (12) $ 368 $ 6,061
Total assets $ 390,542 $ 35,530 $ 34,712 $ 36,841 $ 497,625
* During the three months ended June 30, 2015, the Company's internal allocation methodology for recording income tax expense was changed to record each segment's respective tax expense on pretax net income at the Company's effective tax rate of 41.0%; the change was done on a year-to-date basis. Prior to this quarter, income tax expense was allocated to each segment based on their respective percentage of equity. There is no impact on the Company's consolidated income tax expense.
LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION (Continued)
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30, 2015
Home-
Health
Services

Hospice
Services
Community-
Based
Services
Facility-
Based
Services


Total
Net service revenue $ 299,864 $ 35,483 $ 20,085 $ 37,819 $ 393,251
Cost of service revenue 172,591 20,943 14,356 23,175 231,065
Provision for bad debts 8,121 646 871 426 10,064
General and administrative expenses 94,030 9,999 4,285 11,354 119,668
Operating income 25,122 3,895 573 2,864 32,454
Interest expense (868) (121) (12) (98) (1,099)
Income before income taxes and noncontrolling interest 24,254 3,774 561 2,766 31,355
Income tax expense 8,397 1,343 260 949 10,949
Net income 15,857 2,431 301 1,817 20,406
Less net income attributable to noncontrolling interest 3,772 499 (72) 452 4,651
Net income attributable to LHC Group, Inc.'s common stockholders $ 12,085 $ 1,932 $ 373 $ 1,365 $ 15,755
Six Months Ended June 30, 2014
Home-
Health
Services

Hospice
Services
Community-
Based
Services
Facility-
Based
Services


Total
Net service revenue $ 273,654 $ 32,290 $ 9,286 $ 37,318 $ 352,548
Cost of service revenue 160,078 19,048 6,589 23,146 208,861
Provision for bad debts 6,324 198 398 805 7,725
General and administrative expenses 91,855 9,233 2,388 10,826 114,302
Operating income (loss) 15,397 3,811 (89) 2,541 21,660
Interest expense (964) (122) (10) (122) (1,218)
Income (loss) before income taxes and noncontrolling interest 14,433 3,689 (99) 2,419 20,442
Income tax expense 5,675 876 54 670 7,275
Net income (loss) 8,758 2,813 (153) 1,749 13,167
Less net income attributable to noncontrolling interest 2,148 536 (4) 358 3,038
Net income (loss) attributable to LHC Group, Inc.'s common stockholders $ 6,610 $ 2,277 $ (149) $ 1,391 $ 10,129
LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
Key Data:
Home-Health Services:
Locations 276 277 276 277
Acquired 0 24 1 26
De novo 2 0 2 0
Divested/Consolidated 1 8 4 10
Total new admissions 35,211 33,850 71,176 64,763
Medicare new admissions 23,862 22,975 48,737 44,116
Average daily census 36,834 36,450 36,607 34,783
Average Medicare daily census 27,336 27,080 27,262 26,056
Medicare completed and billed episodes 47,825 47,164 94,509 89,539
Average Medicare case mix for completed and billed Medicare episodes 0.99 0.99 0.98 0.98
Average reimbursement per completed and billed Medicare episodes $ 2,462 $ 2,390 $ 2,449 $ 2,374
Total visits 1,041,777 992,637 2,031,912 1,900,083
Total Medicare visits 773,422 740,809 1,515,272 1,422,332
Average visits per completed and billed Medicare episodes 16.2 15.7 16 15.9
Organic growth:(1)
Net revenue 2.70% 2.10% 4.10% -1.40%
Net Medicare revenue 1.70% 0.30% 2.90% -2.50%
Total new admissions 1.70% -0.10% 4.40% -2.30%
Medicare new admissions 0.90% 2.10% 4.10% -1.00%
Average daily census -0.40% -3.80% -1.80% -10.00%
Average Medicare daily census -0.90% -3.80% -2.60% -10.30%
Medicare completed and billed episodes -0.60% -3.20% 0.30% -4.10%
Community-Based Services:
Locations 13 13 13 13
Acquired 0 5 1 6
De novo 0 0 0 1
Divested/Consolidated 1 0 1 0
Average daily census 1,297 851 1,224 697
Billable hours 316,598 274,235 610,615 315,298
Revenue per billable hour $33 $31 $33 $29
Hospice-Based Services:
Locations 38 37 38 37
Acquired 0 4 0 5
De novo 0 0 0 0
Divested/Consolidated 0 0 0 1
Admissions 1,497 1,426 2,978 2,658
Average daily census 1,446 1,371 1,402 1,298
Patient days 131,565 124,744 253,744 234,787
Average revenue per patient day $142 $137 $140 $138
Facility-Based Services:
Long-term Acute Care
Locations 8 8 8 8
Patient days 15,393 14,939 31,555 31,401
Average revenue per patient day $ 1,125 $ 1,124 $ 1,157 $ 1,140
(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.

CONTACT: Eric Elliott Investor Relations (337) 233-1307 eric.elliott@lhcgroup.com

Source:LHC Group