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LHC Group Announces Second Quarter 2013 Results

Stocks in this article: LHCG

LAFAYETTE, La., Aug. 7, 2013 (GLOBE NEWSWIRE) -- LHC Group Inc. (Nasdaq:LHCG), a national provider of post-acute care services, today announced its financial results for the three months and six months ended June 30, 2013.

Financial Results for the Second Quarter

  • Net service revenue for the second quarter of 2013 was $166.3 million, compared with $158.1 million for the same period in 2012.
  • Net income attributable to LHC Group for the second quarter of 2013 was $5.8 million, compared with $6.0 million in the prior year quarter.
  • Diluted earnings per share was $0.34 for the second quarter of 2013, compared with $0.32 for the same period in 2012.
  • Organic growth in new home health admissions in the second quarter of 2013 was 4.4% compared with the same period in 2012.

In commenting on the results, Keith G. Myers, LHC Group's chairman and CEO, said, "Our team's performance in the first half of 2013 has been outstanding. Once again, the collective talent, work ethic and experience of the more than 8,500 healthcare professionals who make up our LHC Group family have proven to be our greatest competitive advantage. Our people truly are our greatest asset. Even as we continue to drive efficiencies throughout the organization, our quality scores and total patient admissions are at all-time highs, and our employee turnover rate has reached an all-time low. This underpins our continued belief in our successful operating model and growth strategy. Our company's proven ability to grow admissions while simultaneously improving quality, retaining high-caliber employees and becoming more efficient in our operations is the key to long-term success in today's healthcare environment."

Financial Results for the Six Months

  • Net service revenue for the six months ended June 30, 2013, was $328.3 million, compared with $316.8 million for the same period in 2012.
  • Net income attributable to LHC Group for the six months ended June 30, 2013, was $12.1 million, compared with $13.7 million for the same period in 2012.
  • Diluted earnings per share was $0.71 for the six months ended June 30, 2013, compared with $0.74 for the same period in 2012.

Guidance

The Company is raising its full year 2013 fully diluted earnings per share guidance issued on March 6, 2013, to the range of $1.25 to $1.35 from the previous range of $1.10 to $1.30. The Company is also adjusting its full year 2013 net service revenue guidance to the range of $660 million to $670 million from the previous range of $660 million to $680 million. 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, August 8, 2013, at 11 a.m. Eastern time to discuss its second 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, August 15, 2013, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 99399036. 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.

LHC GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
(unaudited)
     
  June 30, Dec. 31,
  2013 2012
     
ASSETS    
Current assets:    
Cash $7,046 $9,720
Receivables:    
Patient accounts receivable, less allowance for uncollectible accounts of $13,602 and $11,863, respectively 87,677 83,951
Other receivables 575 589
Amounts due from governmental entities 1,223 1,596
Total receivables, net 89,475 86,136
Deferred income taxes 9,898 7,671
Prepaid income taxes 3,912 7,436
Prepaid expenses 7,383 6,818
Other current assets 3,942 2,949
Total current assets 121,656 120,730
Property, building and equipment, net of accumulated depreciation of $37,558 and $34,331, respectively 30,062 29,531
Goodwill 190,258 169,150
Intangible assets, net of accumulated amortization of $3,263 and $2,985, respectively 63,535 62,042
Other assets 9,877 5,441
Total assets $415,388 $386,894
     
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:    
Accounts payable and other accrued liabilities $20,249 $14,897
Salaries, wages and benefits payable 31,676 29,890
Self insurance reserve 6,261 5,444
Amounts due to governmental entities 4,174 4,979
Total current liabilities 62,360 55,210
Deferred income taxes 28,626 25,129
Income tax payable 3,415 3,415
Revolving credit facility 25,000 19,500
Note payable 567
Total liabilities 119,968 103,254
Noncontrolling interest- redeemable 11,826 11,426
Stockholders' equity:    
Common stock – $0.01 par value: 40,000,000 shares authorized; 21,763,097 and 21,578,772 shares issued in 2013 and 2012, respectively 217 216
Treasury stock – 4,688,693 and 4,653,039 shares at cost, respectively (34,601) (33,846)
Additional paid-in capital 101,865 100,619
Retained earnings 213,268 201,192
Total LHC Group Inc. stockholders' equity 280,749 268,181
Noncontrolling interest- non-redeemable 2,845 4,033
Total equity 283,594 272,214
Total liabilities and stockholders' equity $415,388 $386,894
 
LHC GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except share and per share data)
(unaudited)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
  2013 2012 2013 2012
Net service revenue $166,302 $158,055 $328,255 $316,816
Cost of service revenue 97,009 92,218 190,257 182,077
Gross margin 69,293 65,837 137,998 134,739
Provision for bad debts 3,208 2,647 7,125 5,408
General and administrative expenses 54,157 50,967 105,780 101,849
Operating income 11,928 12,223 25,093 27,482
Interest expense (700) (208) (1,125) (567)
Non-operating income (loss) 65 (51) 130 14
Income before income taxes and noncontrolling interest 11,293 11,964 24,098 26,929
Income tax expense 3,918 4,092 8,454 9,318
Net income 7,375 7,872 15,644 17,611
Less net income attributable to noncontrolling interest 1,585 1,909 3,568 3,907
Net income attributable to LHC Group, Inc.'s common stockholders $5,790 $5,963 $12,076 $13,704
         
Earnings per share – basic:        
Net income attributable to LHC Group, Inc.'s common stockholders $0.34 $0.32 $0.71 $0.75
         
Earnings per share – diluted:        
Net income attributable to LHC Group, Inc.'s common stockholders $0.34 $0.32 $0.71 $0.74
         
Weighted average shares outstanding:      
Basic 17,055,619 18,385,783 17,011,306 18,357,362
Diluted 17,127,017 18,423,258 17,088,463 18,396,453
 
LHC GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
     
  Six Months Ended
  June 30,
  2013 2012
Operating activities    
Net income $15,644 $17,611
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization expense 3,830 3,836
Provision for bad debts 7,125 5,408
Stock based compensation expense 1,895 2,387
Deferred income taxes 1,270 1,803
Loss on sale of assets 15 113
Changes in operating assets and liabilities, net of acquisitions:    
Receivables (10,837) (4,875)
Prepaid expenses and other assets (1,519) 2,090
Prepaid income taxes 3,479 10,802
Accounts payable and accrued expenses 7,600 416
Net amounts due to/from governmental entities (432) 132
Net cash provided by operating activities 28,070 39,723
     
Investing activities    
Purchases of property, building, and equipment (3,569) (3,314)
Proceeds from sale of assets 23
Cash paid for acquisitions, primarily goodwill and intangible assets and advanced payment on acquisitions (26,920) (1,700)
Net cash used in investing activities (30,489) (4,991)
     
Financing activities    
Proceeds from line of credit 55,000 66,446
Payments on line of credit (49,500) (92,957)
Proceeds from Employee stock purchase plan 392 407
Proceeds from debt issuance 567
Noncontrolling interest distributions (4,352) (4,452)
Excess tax benefits from vesting of restricted stock 11
Redemption of treasury shares (755)
Purchase of additional controlling interest (1,618) (126)
Payments on repurchase of common stock (4,001)
Sale of noncontrolling interest 80
Net cash provided by (used in) financing activities (255) (34,603)
Change in cash (2,674) 129
Cash at beginning of period 9,720 256
Cash at end of period $7,046 $385
     
Supplemental disclosures of cash flow information    
Interest paid $1,125 $567
Income taxes paid $14,376 $8,203
 
LHC GROUP INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(amounts in thousands)
(unaudited)
             
  Three Months Ended Six Months Ended
  June 30, 2013 June 30, 2013
  Home-Based Facility-Based   Home-Based Facility-Based  
  Services Services Total Services Services Total
Net service revenue $146,544 $19,758 $166,302 $288,531 $39,724 $328,255
Cost of service revenue 86,252 10,757 97,009 167,842 22,415 190,257
Provision for bad debts 2,868 340 3,208 6,145 980 7,125
General and administrative expenses 48,767 5,390 54,157 94,939 10,841 105,780
Operating income 8,657 3,271 11,928 19,605 5,488 25,093
Interest expense (630) (70) (700) (1,017) (108) (1,125)
Non-operating income 38 27 65 79 51 130
Income before income taxes and noncontrolling interest 8,065 3,228 11,293 18,667 5,431 24,098
Income tax expense 3,553 365 3,918 7,640 814 8,454
Net income 4,512 2,863 7,375 11,027 4,617 15,644
Less net income attributable to noncontrolling interest 1,216 369 1,585 2,815 753 3,568
Net income attributable to LHC Group Inc.'s common stockholders $3,296 $2,494 $5,790 $8,212 $3,864 $12,076
Total assets $378,687 $36,701 $415,388 $378,687 $36,701 $415,388
             
  Three Months Ended Six Months Ended
  June 30, 2012 June 30, 2012
  Home-Based Facility-Based   Home-Based Facility-Based  
  Services Services Total Services Services Total
Net service revenue $139,996 $18,059 $158,055 $279,591 $37,225 $316,816
Cost of service revenue 80,707 11,511 92,218 159,768 22,309 182,077
Provision for bad debts 2,334 313 2,647 4,957 451 5,408
General and administrative expenses 45,566 5,401 50,967 90,792 11,057 101,849
Operating income 11,389 834 12,223 24,074 3,408 27,482
Interest expense (187) (21) (208) (510) (57) (567)
Non-operating income (loss) (50) (1) (51) 3 11 14
Income before income taxes and noncontrolling interest 11,152 812 11,964 23,567 3,362 26,929
Income tax expense 3,697 395 4,092 8,428 890 9,318
Net income 7,455 417 7,872 15,139 2,472 17,611
Less net income attributable to noncontrolling interest 1,826 83 1,909 3,518 389 3,907
Net income attributable to LHC Group Inc.'s common stockholders $5,629 $334 $5,963 $11,621 $2,083 $13,704
Total assets $348,788 $34,568 $383,356 $348,788 $34,568 $383,356
 
LHC GROUP INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(unaudited)
         
  Three Months Ended Six Months Ended
  June 30, June 30,
  2013 2012 2013 2012
Key Data:        
Home-Based Services:        
Home Health        
Locations 251 244 251 244
Acquired 0 0 19 0
De novo 0 0 0 1
Total new admissions 30,796 26,498 61,010 54,194
Medicare new admissions 20,766 17,837 41,293 36,883
Average daily census 34,923 32,988 35,250 32,723
Average Medicare daily census 26,375 24,858 26,619 24,720
Medicare completed and billed episodes 44,579 42,480 87,387 83,767
Average Medicare case mix for completed and billed Medicare episodes 1.27 1.26 1.26 1.26
Average reimbursement per completed and billed Medicare episodes $2,302 $2,352 $2,299 $2,350
Total visits 914,690 896,322 1,774,188 1,794,699
Total Medicare visits 684,387 653,053 1,338,183 1,311,619
Average visits per completed and billed Medicare episodes 15.4 15.4 15.3 15.7
Organic growth: (1)        
Net revenue -3.5% -2.5% -3.2% -2.4%
Net Medicare revenue -1.0% -6.4% -1.6% -5.7%
Total new admissions 4.4% 6.3% 4.0% 6.0%
Medicare new admissions 4.7% 2.1% 3.9% 2.3%
Average daily census -0.3% -2.8% 1.0% -4.1%
Average Medicare daily census 0.0% -5.1% 0.9% -6.1%
Medicare completed and billed episodes 0.4% -4.6% 0.5% -3.3%
         
Hospice        
Locations 34 32 34 32
Acquired 1 0 2 0
Admissions 1,209 1,072 2,589 2,181
Average daily census 1,146 995 1,109 964
Patient days 104,303 90,564 200,688 175,528
Average revenue per patient day $135 $138 $137 $138
         
Facility-Based Services:        
Long-term Acute Care        
Locations 9 9 9 9
Patient days 15,283 15,822 31,401 32,013
Average revenue per patient day $1,203 $1,102 $1,198 $1,129
         
(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

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