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LHC Group Reports First Quarter 2017 EPS of $0.53 on Revenue of $246.6 Million

LAFAYETTE, La., May 03, 2017 (GLOBE NEWSWIRE) -- LHC Group, Inc. (NASDAQ:LHCG) today announced its financial results for the three months ended March 31, 2017.

Financial Results for the First Quarter of 2017 Compared with the First Quarter of 2016

  • Net service revenue increased 10.8% to $246.6 million for the first quarter of 2017 compared with $222.6 million for the first quarter of 2016.
  • Net income attributable to LHC Group was $9.5 million, or $0.53 per diluted share, for the first quarter of 2017 compared with $7.7 million, or $0.44 per diluted share, for the first quarter of 2016. Results for the first quarter of 2017 included a lower tax expense for the quarter due to an excess tax benefit of $838,000, or $0.05 per diluted share, associated with the adoption of a new accounting standard for stock-based compensation.
  • Total comparable-quarter organic growth in home health admissions for the first quarter was 11.7%.
  • Total comparable-quarter organic growth in hospice admissions for the first quarter was 6.2%.

Commenting on the announcement, Keith G. Myers, LHC Group’s chairman and CEO, said, “LHC Group’s financial results for the first quarter have given us a strong start to 2017, as the momentum driving organic revenue growth and our productive acquisition strategy continued to lift our performance. Comparable-quarter growth in total admissions and organic home health admissions both increased at a double-digit pace for the third consecutive quarter, and this growth has accelerated for organic home health admissions for six consecutive quarters.

“Organic home health admissions growth remains relatively balanced between our joint venture locations and stand-alone locations. Due to the greater average acuity of our admissions combined with our strong organic admissions growth, our organic net home health revenues increased 8.0% for the quarter.

“We have also continued the momentum evident in 2016 in our acquisition strategy, especially through joint ventures with hospitals and health systems. On January 1, 2017, we finalized our previously announced joint venture with LifePoint Health, through which we will phase in the acquisitions of 41 LifePoint home health and hospice locations throughout 2017, beginning with 12 home health and eight hospice locations acquired effective January 1, 2017. We also began managing 10 additional LifePoint home health locations at the start of the year. On April 1, 2017, we completed the acquisition of seven additional home health and five hospice locations under the joint venture, and we are scheduled to acquire the 10 remaining home health locations we now manage on September 1, 2017.

“Since the end of the first quarter, we have also announced two additional joint ventures with high-quality hospitals. We have expanded our presence in West Virginia and Ohio through our joint venture with Pleasant Valley Hospital in Point Pleasant, West Virginia, which, among other services, offers co-located home health and hospices services through a location in Point Pleasant and one in Pomeroy, Ohio. We have also announced a definitive agreement to create a joint venture with Baptist Memorial Health Care system, to enhance home health and hospice care in Tennessee and Mississippi. Under this joint venture, which we expect to complete on June 1, 2017, subject to customary closing conditions, we will acquire three home health and five hospice locations in Tennessee and Mississippi.

“We believe the momentum we continue to experience in our organic growth and acquisition strategies reflects the healthcare industry’s rapidly growing recognition of our ability to provide high quality care for post-acute and sub-acute patients in highly cost-effective venues, such as the home and hospice. Our reputation for high quality has been further strengthened by the CMS Star ratings for quality and patient satisfaction for the home health industry, which after the April 2017 release, we have now led for the past year. Further, we believe our work with hospitals and health systems to reduce re-hospitalization and lower healthcare costs through home healthcare is receiving wider attention in the healthcare industry. We also continue to execute a long-term strategy of creating joint ventures with hospitals and health systems with a goal of becoming the industry’s home health and hospice partner of choice. Today, we are engaged in 73 joint ventures with hospitals and health systems that operate a total of 190 hospitals, a leadership position that is clear evidence of our ability to provide the high quality care that leading hospitals demand.”

Mr. Myers concluded, “LHC Group’s reputation for high quality and its leadership in home health rests on the skill and commitment of our healthcare professionals, and those who support them, who care for our patients and their families. Because of their capabilities and compassion, our patients can safely live exactly where they want to be, in the comfort of their own homes. We thank all our team members for their hard work and their commitment to making such an important difference in our patients’ lives.”

FY 2017 Guidance
LHC Group today raised its fiscal year 2017 guidance for net service revenue to be in an expected range of $1.02 billion to $1.04 billion, from the previous range of $1 billion to $1.03 billion, and fully diluted earnings per share to be in an expected range of $2.23 to $2.33, from the previous range of $2.07 to $2.23. As of January 1, 2017, the Company adopted a new accounting standard, ASU 2016-09, under which adjustments to the income tax effects of share-based awards are now recognized in the income statement as a component of the provision for income taxes when the awards vest, instead of through equity on the balance sheet. The Company’s financial guidance includes the $838,000 income tax benefit, or $0.05 per diluted share, related to the adoption of this new accounting standard.

The Company’s financial guidance does not take into account the recently announced definitive agreement with Baptist Memorial Health Care, the impact of future reimbursement changes, if any, future acquisitions, if made, de novo locations, if opened, or future legal expenses, if necessary.

Conference Call
LHC Group will host a conference call on Thursday, May 4, 2017, at 11:00 a.m. Eastern time to discuss its first quarter 2017 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 11, 2017, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 6053355. 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 following the conclusion of the live broadcast.

About LHC Group, Inc.
LHC Group, Inc. is a national provider of non-acute healthcare services, providing quality, cost-effective healthcare to patients primarily 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, community‑based services agencies and facility-based services. LHC Group operates 305 home health services locations, 73 hospice locations, 11 community-based service locations and six long-term acute care hospitals (LTACHs) with eight locations.

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, 2016, 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,
2017
Dec. 31,
2016
ASSETS
Current assets:
Cash$16,781 $3,264
Receivables:
Patient accounts receivable, less allowance for uncollectible accounts of $27,641 and $29,036, respectively 125,455 124,803
Other receivables 7,008 5,115
Amounts due from governmental entities 830 942
Total receivables, net 133,293 130,860
Prepaid expenses 10,769 9,821
Other current assets 6,289 5,796
Total current assets 167,132 149,741
Property, building and equipment, net of accumulated depreciation of $36,614 and $35,226, respectively 43,088 43,251
Goodwill 319,045 307,317
Intangible assets, net of accumulated amortization of $11,601 and $10,968, respectively 106,626 102,006
Other assets 6,834 11,756
Total assets$642,725 $614,071
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities$34,569 $26,805
Salaries, wages, and benefits payable 45,056 34,265
Self-insurance reserve 11,776 10,691
Current portion of long-term debt 255 252
Amounts due to governmental entities 3,858 4,955
Income tax payable 3,663 3,499
Total current liabilities 99,177 80,467
Deferred income taxes 32,416 31,941
Revolving credit facility 78,000 87,000
Long-term debt, less current portion 476 544
Total liabilities 210,069 199,952
Noncontrolling interest – redeemable 12,893 12,567
Stockholders’ equity:
LHC Group, Inc. stockholders’ equity:
Common stock – $0.01 par value; 40,000,000 shares authorized; 22,604,974 and 22,429,041 shares issued in 2017 and 2016, respectively 226 224
Treasury stock – 4,881,623 and 4,828,679 shares at cost, respectively (41,704) (39,135)
Additional paid-in capital 121,137 119,748
Retained earnings 323,756 314,289
Total LHC Group, Inc. stockholders’ equity 403,415 395,126
Noncontrolling interest – non-redeemable 16,348 6,426
Total equity 419,763 401,552
Total liabilities and equity$642,725 $614,071


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,
2017 % of
Revenue
2016 % of
Revenue
Net service revenue$ 246,618 100.0% $ 222,552 100.0%
Cost of service revenue 154,370 62.6 135,601 60.9
Gross margin 92,248 37.4 86,951 39.1
Provision for bad debts 2,369 1.0 4,601 2.1
General and administrative expenses 72,011 29.2 66,240 29.8
Operating income 17,868 7.2 16,110 7.2
Interest expense (780) (0.3) (885) (0.4)
Income before income taxes and noncontrolling interest 17,088 6.9 15,225 6.8
Income tax expense 5,173 41.1(1) 5,342 41.0(1)
Net income 11,915 4.8 9,883 4.4
Less net income attributable to noncontrolling interests 2,448 1.0 2,197 1.0
Net income attributable to LHC Group, Inc.’s common stockholders$ 9,467 3.8% $ 7,686 3.5%
Earnings per share attributable to LHC Group, Inc.’s common stockholders:
Basic$ 0.54 $ 0.44
Diluted$ 0.53 $ 0.44
Weighted average shares outstanding:
Basic 17,643,463 17,485,766
Diluted 17,817,880 17,633,549

(1) Effective tax rate as a percentage of income from continuing operations attributable to LHC Group, Inc.’s common stockholders, excluding the impact of adopting ASU 2016-09 "Improvements to Employee Share-Based Payment Accounting” of approximately $0.8 million for the three months ended March 31, 2017.

LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three Months Ended
March 31,
2017 2016
Operating activities:
Net income$11,915 $9,883
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 3,190 2,948
Provision for bad debts 2,369 4,601
Stock-based compensation expense 1,581 982
Deferred income taxes 475 (124)
Loss on disposal of assets 152 204
Changes in operating assets and liabilities, net of acquisitions:
Receivables (341) (12,446)
Prepaid expenses and other assets (2,413) (162)
Prepaid income taxes 374
Accounts payable and accrued expenses 18,524 13,110
Income taxes payable 164
Net amounts due to/from governmental entities (985) (2,209)
Net cash provided by operating activities 34,631 17,161
Investing activities:
Purchases of property, building and equipment (2,523) (2,622)
Cash paid for acquisitions, primarily goodwill and intangible assets (449) (10,577)
Advanced payments on acquisitions (4,487)
Other 273
Net cash used in investing activities (7,459) (12,926)
Financing activities:
Proceeds from line of credit 5,000 4,000
Payments on line of credit (14,000) (6,000)
Proceeds from employee stock purchase plan 256 230
Payments on debt (65) (56)
Noncontrolling interest distributions (2,391) (2,185)
Sale of noncontrolling interest 114
Excess tax benefits from vesting of stock awards 651
Withholding taxes paid on stock-based compensation (2,569) (1,421)
Net cash used in financing activities (13,655) (4,781)
Change in cash 13,517 (546)
Cash at beginning of period 3,264 6,139
Cash at end of period$16,781 $5,593
Supplemental disclosures of cash flow information
Interest paid$721 $749
Income taxes paid$4,580 $4,466


LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Three Months Ended March 31, 2017
Home
Health
Services
Hospice
Services
Community-
Based
Services
Facility-
Based
Services
Total
Net service revenue$182,141 $36,445 $10,816 $17,216 $246,618
Cost of service revenue 112,086 23,273 7,948 11,063 154,370
Provision for bad debts 1,483 497 275 114 2,369
General and administrative expenses 53,922 10,406 2,311 5,372 72,011
Operating income 14,650 2,269 282 667 17,868
Interest expense (585) (117) (39) (39) (780)
Income before income taxes and noncontrolling interest 14,065 2,152 243 628 17,088
Income tax expense 4,253 659 83 178 5,173
Net income 9,812 1,493 160 450 11,915
Less net income attributable to noncontrolling interests 2,028 286 8 126 2,448
Net income attributable to LHC Group, Inc.’s common stockholders$7,784 $1,207 $152 $324 $9,467
Total assets$447,807 $126,068 $32,961 $35,889 $642,725


Three Months Ended March 31, 2016
Home
Health
Services
Hospice
Services
Community-
Based
Services
Facility-
Based
Services
Total
Net service revenue$161,387 $30,824 $10,443 $19,898 $222,552
Cost of service revenue 96,712 19,627 7,727 11,535 135,601
Provision for bad debts 3,455 775 82 289 4,601
General and administrative expenses 49,558 8,990 2,079 5,613 66,240
Operating income 11,662 1,432 555 2,461 16,110
Interest expense (678) (91) (41) (75) (885)
Income before income taxes and noncontrolling interest 10,984 1,341 514 2,386 15,225
Income tax expense 3,850 420 228 844 5,342
Net income 7,134 921 286 1,542 9,883
Less net income attributable to noncontrolling interests 1,594 317 (43) 329 2,197
Net income attributable to LHC Group, Inc.’s common stockholders$5,540 $604 $329 $1,213 $7,686
Total assets$400,924 $111,308 $33,133 $37,488 $582,853


LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)
Three Months Ended
March 31,
2017 2016
Key Data:
Home-Health Services:
Home Health
Locations 305 284
Acquired 22 2
De novo 0 1
Divested/Consolidated 1 2
Total new admissions 47,375 39,124
Medicare new admissions 29,957 26,136
Average daily census 41,874 38,218
Average Medicare daily census 29,244 28,246
Medicare completed and billed episodes 51,838 48,486
Average Medicare case mix for completed and billed Medicare episodes 1.07 1.03
Average reimbursement per completed and billed Medicare episodes$2,749 $2,594
Total visits 1,327,711 1,126,834
Total Medicare visits 930,918 829,267
Average visits per completed and billed Medicare episodes 18.0 17.1
Organic growth:(1)
Net revenue 8.0% 8.1%
Net Medicare revenue 4.7% 5.3%
Total new admissions 11.7% 7.2%
Medicare new admissions 7.5% 3.3%
Average daily census 4.0% 2.8%
Average Medicare daily census -1.1% 1.4%
Medicare completed and billed episodes 1.5% 1.9%
Community-Based Services:
Locations 11 11
Acquired 0 0
De novo 0 0
Divested/Consolidated 0 2
Average daily census 1,678 1,608
Billable hours 344,186 304,487
Revenue per billable hour$31.42 $34.30
Hospice-Based Services:
Locations 73 61
Acquired 8 6
De novo 0 0
Divested/Consolidated 0 1
Admissions 3,112 2,463
Average daily census 2,861 2,425
Patient days 257,474 220,694
Average revenue per patient day$142 $140
Facility-Based Services:
Long-term Acute Care
Locations 8 8
Patient days 13,732 15,537
Average revenue per patient day$1,087 $1,211

(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.

Contact: Eric Elliott Senior Vice President of Finance (337) 233-1307 eric.elliott@lhcgroup.com

Source:LHC Group