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LHC Group Second Quarter Earnings Per Diluted Share Increase 16.7% to $0.63 on 15.1% Growth in Revenue to $260.2 Million

LAFAYETTE, La., Aug. 02, 2017 (GLOBE NEWSWIRE) -- LHC Group, Inc. (NASDAQ:LHCG) today announced its financial results for the three months and six months ended June 30, 2017.

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

  • Net service revenue increased 15.1% to $260.2 million for the second quarter of 2017 compared with $226.0 million for the second quarter of 2016.
  • Net income attributable to LHC Group’s common stockholders was $11.3 million, up 19.4% from $9.5 million for the second quarter of 2016, while earnings per diluted share attributable to LHC Group’s common stockholders increased 16.7% to $0.63 per diluted share from $0.54.
  • Total comparable-quarter growth in admissions for all service lines was 22.4%
  • Total comparable-quarter organic growth in home health admissions was 10.4%.
  • Total comparable-quarter organic growth in hospice admissions 4.6%.

Commenting on the announcement, Keith G. Myers, LHC Group’s chairman and CEO, said, “LHG Group continued to produce strong financial growth during the second quarter, which is reflected in the 22.4% growth in total admissions for all service lines for the quarter. A significant portion of this growth was again generated organically, much of which was driven by the 10.4% growth in organic home health admissions, which is our fourth consecutive quarter above 10%, complemented by 4.6% growth in organic hospice admissions. The steady, long-term trend of increasing acuity in our organic admissions continued in the second quarter of 2017, contributing to an increase in organic net home health revenues of 11.9% for the quarter.

“Our revenue growth is also attributable to the continued success of our acquisition strategy. In the trailing 12 months ended June 30, 2017, we acquired 55 home health, hospice or community-based locations and began to manage 10 additional locations. The joint venture we entered with LifePoint Health on January 1, 2017, accounts for 31 of the acquired locations and the 10 managed locations, which we are scheduled to convert from management to part of our joint venture in September.

“Earlier this week, we announced the signing of a definitive agreement for another significant new joint venture with CHRISTUS Health, which we are working to complete by the end of the third quarter, subject to customary closing conditions. This new agreement reflects the increasing interest we are seeing from hospitals and health systems in partnering with us for additional post-acute services beyond our core home health, hospice and community-based care services outside the hospital. Through this partnership with CHRISTUS Health, we will acquire and operate 21 service locations, including seven home health agencies, five hospice programs, two community-based home care services, one inpatient hospice unit, and six long-term acute-care hospitals (LTACH). When completed, we expect this joint venture – which will be our 75th hospital or health system joint venture – to generate approximately $80 million in annualized revenue and will not materially affect our 2017 diluted earnings per share. Including the CHRISTUS Health joint venture, we have announced agreements to acquire $106.8 million of annual revenue so far in 2017, which already surpasses any previous year.

“Looking forward, we expect the favorable market dynamics driving both our increased admissions and acquisition strategy to continue. The ongoing transition to value-based healthcare is highlighting our ability to provide high quality care for post-acute patients in less medically intensive and expensive venues. We are carefully studying the CMS’ proposed Home Health Groupings Model (HHGM). While it is too early to predict, with any precision or certainty, the effect of the proposed rule, if finalized, we note that certain aspects of the proposed model align with our current business model and strategic focus, namely how our joint venture strategy relates to HHGM’s positive view of admissions from institutional settings.

“We would like to also highlight our competitive differentiation as the leading high quality home health provider, based on the latest CMS Star ratings confirming that we have provided the highest quality and best patient satisfaction in the home health industry for the last five consecutive quarters, as well as our position as the only national home health provider that is 100% accredited by the Joint Commission. Our high-quality care, combined with our scale, financial strength and unmatched history in successful long-term joint ventures with hospitals and health systems, supports our core strategy of being the partner of choice for hospitals and health system joint ventures for post-acute healthcare regardless as to any changes in the federal reimbursement methodology.”

Mr. Myers concluded, “I and our Board of Directors are very proud of the long-term validation provided by the CMS Star ratings that our healthcare professionals, and the people who support them, are providing the highest quality care and achieving the best patient satisfaction in our industry. We congratulate all our colleagues throughout LHC Group for their excellent work and thank them for the skill, commitment and passion required to remain at the top in a competitive industry. We never forget the direct correlation between the quality of our team and the quality of the care we provide, or how each sustains the growth potential of LHC Group.”

FY 2017 Guidance

LHC Group today raised its fiscal year 2017 guidance for net service revenue to be in an expected range of $1.030 billion to $1.045 billion, from the previous range of $1.02 billion to $1.04 billion, and fully diluted earnings per share to be in an expected range of $2.30 to $2.40, from the previous range of $2.23 to $2.33.

The Company’s financial guidance does not take into account the recently announced definitive agreement with CHRISTUS Health, 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, August 3, 2017, at 11:00 a.m. Eastern time to discuss its second 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, August 10, 2017, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 40221056. 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 315 home health services locations, 87 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)
June 30,
2017
Dec. 31,
2016
ASSETS
Current assets:
Cash$6,968 $3,264
Receivables:
Patient accounts receivable, less allowance for uncollectible accounts of $26,020 and $29,036, respectively 130,948 124,803
Other receivables 6,749 5,115
Amounts due from governmental entities 830 942
Total receivables, net 138,527 130,860
Prepaid income taxes 3,296
Prepaid expenses 10,888 9,821
Other current assets 6,087 5,796
Total current assets 165,766 149,741
Property, building and equipment, net of accumulated depreciation of $39,111 and $35,226, respectively 43,885 43,251
Goodwill 345,179 307,317
Intangible assets, net of accumulated amortization of $12,143 and $10,968, respectively 114,966 102,006
Other assets 2,870 11,756
Total assets$672,666 $614,071
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities$38,513 $26,805
Salaries, wages, and benefits payable 37,259 34,265
Self-insurance reserve 13,627 10,691
Current portion of long-term debt 258 252
Amounts due to governmental entities 5,341 4,955
Income tax payable 3,499
Total current liabilities 94,998 80,467
Deferred income taxes 34,463 31,941
Revolving credit facility 84,000 87,000
Long-term debt, less current portion 409 544
Total liabilities 213,870 199,952
Noncontrolling interest – redeemable 13,420 12,567
Stockholders’ equity:
LHC Group, Inc. stockholders’ equity:
Common stock – $0.01 par value; 40,000,000 shares authorized; 22,617,280 and 22,429,041 shares issued in 2017 and 2016, respectively 226 224
Treasury stock – 4,884,497 and 4,828,679 shares at cost, respectively (41,879) (39,135)
Additional paid-in capital 123,456 119,748
Retained earnings 335,060 314,289
Total LHC Group, Inc. stockholders’ equity 416,863 395,126
Noncontrolling interest – non-redeemable 28,513 6,426
Total equity 445,376 401,552
Total liabilities and equity$672,666 $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
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Net service revenue$260,210 $226,031 $506,828 $448,583
Cost of service revenue 161,158 137,128 315,528 272,729
Gross margin 99,052 88,903 191,300 175,854
Provision for bad debts 2,675 3,782 5,044 8,383
General and administrative expenses 73,550 68,261 145,409 134,297
Loss on disposal of assets 2 1,043 154 1,247
Operating income 22,825 15,817 40,693 31,927
Interest expense (840) (466) (1,620) (1,351)
Income before income taxes and noncontrolling interest 21,985 15,351 39,073 30,576
Income tax expense 7,792 3,596 12,965 8,938
Net income 14,193 11,755 26,108 21,638
Less net income attributable to noncontrolling interests 2,889 2,291 5,337 4,488
Net income attributable to LHC Group, Inc.’s common stockholders$11,304 $9,464 $20,771 $17,150
Earnings per share attributable to LHC Group, Inc.’s common stockholders:
Basic$0.64 $0.54 $1.17 $0.98
Diluted$0.63 $0.54 $1.16 $0.97
Weighted average shares outstanding:
Basic 17,728,567 17,566,097 17,686,134 17,525,937
Diluted 17,964,387 17,685,147 17,911,723 17,649,620


LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Six Months Ended
June 30,
2017 2016
Operating activities:
Net income$26,108 $21,638
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense 6,348 5,911
Provision for bad debts 5,044 8,383
Stock-based compensation expense 3,077 2,236
Deferred income taxes 2,522 2,058
Loss on disposal of assets 154 1,247
Changes in operating assets and liabilities, net of acquisitions:
Receivables (6,970) (19,758)
Prepaid expenses and other assets (2,329) (6,446)
Prepaid income taxes (3,296) (4,364)
Accounts payable and accrued expenses 15,119 21,867
Income taxes payable (3,499)
Net amounts due to/from governmental entities 498 (1,900)
Net cash provided by operating activities 42,776 30,872
Investing activities:
Purchases of property, building and equipment (5,341) (13,712)
Cash paid for acquisitions, primarily goodwill and intangible assets (22,704) (11,515)
Advanced payments on acquisitions (523)
Other 273
Net cash used in investing activities (28,568) (24,954)
Financing activities:
Proceeds from line of credit 19,000 35,000
Payments on line of credit (22,000) (23,000)
Proceeds from employee stock purchase plan 469 445
Payments on debt (129) (115)
Noncontrolling interest distributions (5,167) (4,338)
Excess tax benefits from vesting of stock awards 1,218
Withholding taxes paid on stock-based compensation (2,744) (1,703)
Purchase of additional controlling interest (184)
Sale of noncontrolling interest 251 52
Proceeds from exercise of stock options 109
Net cash provided by (used in) financing activities (10,504) 7,668
Change in cash 3,704 13,586
Cash at beginning of period 3,264 6,139
Cash at end of period$6,968 $19,725
Supplemental disclosures of cash flow information:
Interest paid$1,762 $1,489
Income taxes paid$17,320 $10,635


LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
Three Months Ended June 30, 2017
Home
Health
Services

Hospice
Services

Community-
Based
Services

Facility-
Based
Services
Total
Net service revenue$194,061 $38,513 $10,845 $16,791 $260,210
Cost of service revenue 117,606 24,473 7,986 11,093 161,158
Provision for bad debts 1,652 662 99 262 2,675
General and administrative expenses 55,267 10,742 2,261 5,280 73,550
Loss on disposal of assets 1 1 2
Operating income 19,535 2,635 499 156 22,825
Interest expense (630) (126) (42) (42) (840)
Income before income taxes and noncontrolling interest 18,905 2,509 457 114 21,985
Income tax expense 6,757 849 180 6 7,792
Net income 12,148 1,660 277 108 14,193
Less net income attributable to noncontrolling interests 2,266 480 5 138 2,889
Net income (loss) attributable to LHC Group, Inc.’s common stockholders$9,882 $1,180 $272 $(30) $11,304
Total assets$466,308 $138,519 $33,292 $34,547 $672,666


Three Months Ended June 30, 2016
Home
Health
Services

Hospice
Services

Community-
Based
Services

Facility-
Based
Services
Total
Net service revenue$163,174 $33,905 $10,587 $18,365 $226,031
Cost of service revenue 97,590 20,966 7,829 10,743 137,128
Provision for bad debts 2,618 792 216 156 3,782
General and administrative expenses 51,182 9,425 2,215 5,439 68,261
Loss on disposal of assets 706 205 46 86 1,043
Operating income 11,078 2,517 281 1,941 15,817
Interest expense (350) (51) (23) (42) (466)
Income before income taxes and noncontrolling interest 10,728 2,466 258 1,899 15,351
Income tax expense 2,043 789 102 662 3,596
Net income 8,685 1,677 156 1,237 11,755
Less net income (loss) attributable to noncontrolling interests 1,555 498 (14) 252 2,291
Net income attributable to LHC Group, Inc.’s common stockholders$7,130 $1,179 $170 $985 $9,464
Total assets$429,780 $118,353 $33,247 $38,265 $619,645


LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION (Continued)
(Amounts in thousands)
(Unaudited)
Six Months Ended June 30, 2017
Home
Health
Services

Hospice
Services

Community-
Based
Services

Facility-
Based
Services
Total
Net service revenue$376,202 $74,958 $21,661 $34,007 $506,828
Cost of service revenue 229,692 47,746 15,934 22,156 315,528
Provision for bad debts 3,135 1,159 374 376 5,044
General and administrative expenses 109,171 21,141 4,572 10,525 145,409
Loss on disposal of assets 19 8 127 154
Operating income 34,185 4,904 781 823 40,693
Interest expense (1,215) (243) (81) (81) (1,620)
Income before income taxes and noncontrolling interest 32,970 4,661 700 742 39,073
Income tax expense 11,010 1,508 263 184 12,965
Net income 21,960 3,153 437 558 26,108
Less net income attributable to noncontrolling interests 4,294 766 13 264 5,337
Net income attributable to LHC Group, Inc.’s common stockholders$17,666 $2,387 $424 $294 $20,771


Six Months Ended June 30, 2016
Home
Health
Services

Hospice
Services

Community-
Based
Services

Facility-
Based
Services
Total
Net service revenue$324,561 $64,729 $21,030 $38,263 $448,583
Cost of service revenue 194,302 40,593 15,556 22,278 272,729
Provision for bad debts 6,073 1,567 298 445 8,383
General and administrative expenses 100,655 18,296 4,294 11,052 134,297
Loss on disposal of assets 791 324 46 86 1,247
Operating income 22,740 3,949 836 4,402 31,927
Interest expense (1,028) (142) (65) (116) (1,351)
Income before income taxes and noncontrolling interest 21,712 3,807 771 4,286 30,576
Income tax expense 5,893 1,209 330 1,506 8,938
Net income 15,819 2,598 441 2,780 21,638
Less net income (loss) attributable to noncontrolling interests 3,149 815 (57) 581 4,488
Net income attributable to LHC Group, Inc.’s common stockholders$12,670 $1,783 $498 $2,199 $17,150


LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Key Data:
Home-Health Services:
Home Health
Locations 315 283 315 283
Acquired 12 2 23 5
De novo 0 0 0 1
Divested/Consolidated 2 3 3 6
Total new admissions 47,625 38,949 95,000 78,073
Medicare new admissions 29,868 25,817 59,825 51,953
Average daily census 43,396 38,357 42,615 38,262
Average Medicare daily census 29,743 28,046 29,474 28,143
Medicare completed and billed episodes 53,304 50,479 105,142 98,965
Average Medicare case mix for completed and billed Medicare episodes 1.10 1.06 1.08 1.04
Average reimbursement per completed and billed Medicare episodes$2,818 $2,673 $2,780 $2,634
Total visits 1,399,195 1,149,895 2,726,906 2,276,729
Total Medicare visits 969,673 840,961 1,900,591 1,670,228
Average visits per completed and billed Medicare episodes 16.7 16.9
Organic growth:(1)
Net revenue 11.9% 4.6% 10.2% 6.4%
Net Medicare revenue 6.4% 4.2% 5.6% 4.8%
Total new admissions 10.4% 8.7% 11.0% 8.0%
Medicare new admissions 6.4% 6.4% 7.0% 4.9%
Average daily census 4.9% 2.2% 4.3% 2.5%
Average Medicare daily census -0.1% 0.7% -0.7% 1.2%
Medicare completed and billed episodes -0.8% 3.7% 0.4% 2.9%
Community-Based Services:
Locations 11 11 11 11
Acquired 0 0 0 0
De novo 0 0 0 0
Divested/Consolidated 0 0 0 2
Average daily census 1,746 1,619 1,688 1,613
Billable hours 342,337 330,350 686,522 634,837
Revenue per billable hour$31.68 $32.02 $31.55 $33.11
Hospice-Based Services:
Locations 87 62 87 62
Acquired 13 1 21 7
De novo 0 0 0 0
Divested/Consolidated 0 0 0 1
Admissions 3,227 2,523 6,279 4,986
Average daily census 3,031 2,615 2,927 2,520
Patient days 275,866 237,968 529,784 458,662
Average revenue per patient day$140 $142 $141 $141
Facility-Based Services:
Long-term Acute Care
Locations 8 8 8 8
Patient days 13,075 13,929 26,807 29,466
Average revenue per patient day$1,083 $1,239 $1085 $1,224

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

Source:LHC Group