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LHC Group Announces First Quarter 2014 Results

LAFAYETTE, La., May 7, 2014 (GLOBE NEWSWIRE) -- 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 ended March 31, 2014.

Financial Results for the First Quarter

  • Net service revenue for the first quarter of 2014 was $163.7 million, compared with $162.0 million for the same period in 2013.
  • Net income attributable to LHC Group for the first quarter of 2014 was $4.1 million, compared with $6.3 million for the same period in 2013.
  • Diluted earnings per share was $0.24 for the first quarter of 2014, which includes a negative $0.05 impact from weather related closures, as compared with $0.37 for the same period in 2013.

In commenting on the results, Keith G. Myers, LHC Group's chairman and CEO, said, "We had a challenging start to 2014, as severe winter weather impacted over 48% of our agencies and accounted for a decline in same-store volume for the first quarter. However, our team did an outstanding job under the circumstances, and we ended the first quarter with strong momentum, which has continued into the second quarter. We are making significant progress on integrating our previously announced acquisition of Deaconess HomeCare and Elk Valley Health Services and are excited about additional opportunities in our pipeline. As we look ahead to the remainder of 2014 and beyond, we are well prepared and well positioned to continue improving our operating results by controlling cost and capitalizing on the opportunities we see ahead for both internal and external volume growth."

FY 2014 Guidance

The Company is reaffirming its full year 2014 guidance issued on March 5, 2014, for net service revenue in the range of $700 million to $720 million and fully diluted earnings per share in the range of $1.15 to $1.35. This guidance includes the negative impact from the Medicare Home Health Prospective Payment System for 2014 (estimated to be an approximate $0.17 reduction in fully diluted earnings per share for 2014) and the positive impact of the recently closed acquisition of the home health, hospice and community-based services operations of Deaconess HomeCare and Elk Valley Health Services (estimated to be accretive to fully diluted earnings per share for 2014 of between approximately $0.05 and $0.10). 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, May 8, 2014, at 11 a.m. Eastern time to discuss its first 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, May 15, 2014, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 25729418. 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.

 
 
LHC GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data) (Unaudited)
     
  March 31, 2014 Dec. 31, 2013
ASSETS
Current assets:    
Cash $ 3,395 $ 14,014
Receivables:    
Patient accounts receivable, less allowance for uncollectible accounts  of $14,819 and $14,334, respectively 84,470 88,964
Other receivables 730 608
Amounts due from governmental entities 1,166 1,234
Total receivables, net 86,366 90,806
Deferred income taxes 9,655 9,251
Prepaid income taxes 3,821 4,069
Prepaid expenses 7,361 6,966
Other current assets 4,186 4,449
Total current assets 114,784 129,555
Property, building and equipment, net of accumulated depreciation of $42,475 and $40,935, respectively 31,273 31,052
Goodwill 196,358 194,893
Intangible assets, net of accumulated amortization of $4,985 and $4,518, respectively 62,047 62,184
Other assets 63,638 4,542
Total assets $ 468,100 $ 422,226
     
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:    
Accounts payable and other accrued liabilities $ 17,587 $ 17,217
Salaries, wages and benefits payable 24,521 31,927
Self-insurance reserve 6,502 5,862
Current portion of long-term debt 222 249
Amounts due to governmental entities 3,664 4,391
Total current liabilities 52,496 59,646
Deferred income taxes 29,859 29,060
Income tax payable 3,415 3,415
Revolving credit facility 70,000 22,000
Long-term debt, less current portion 953 963
Total liabilities 156,723 115,084
Noncontrolling interest- redeemable 10,797 11,258
Stockholders' equity:    
Common stock – $0.01 par value: 40,000,000 shares authorized; 21,949,411 and 21,801,634 shares issued in 2014 and 2013, respectively 219 218
Treasury stock – 4,724,491 and 4,693,647 shares at cost, respectively (35,442) (34,715)
Additional paid-in capital 105,476 103,972
Retained earnings 227,602 223,534
Total LHC Group, Inc. stockholders' equity 297,855 293,009
Noncontrolling interest- non-redeemable 2,725 2,875
Total equity 300,580 295,884
Total liabilities and stockholders' equity $ 468,100 $ 422,226

 

 
 
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,
  2014 2013
Net service revenue $ 163,681 $ 161,953
Cost of service revenue 97,334 93,248
Gross margin 66,347 68,705
Provision for bad debts 3,362 3,917
General and administrative expenses 54,612 51,623
Operating income 8,373 13,165
Interest expense  (388) (425)
Non-operating income 33 65
Income before income taxes and noncontrolling interest 8,018 12,805
Income tax expense 2,923 4,536
Net Income 5,095 8,269
Less net income attributable to noncontrolling interests 1,027 1,983
Net income attributable to LHC Group, Inc.'s common stockholders $ 4,068 $ 6,286
     
Earnings per share – basic and diluted:    
Net income attributable to LHC Group, Inc.'s common stockholders $ 0.24 $ 0.37
     
Weighted average shares outstanding:    
Basic 17,148,043 16,966,525
Diluted 17,268,716 17,073,543

 

 
 
LHC GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)
   
  Three Months Ended March 31,
  2014 2013
Operating activities    
Net income $ 5,095 $ 8,269
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization expense 2,125 1,830
Provision for bad debts 3,362 3,917
Stock based compensation expense 1,048 888
Deferred income taxes 395 846
Loss on sale of assets 14
Changes in operating assets and liabilities, net of acquisitions:    
Receivables 956 (1,237)
Prepaid expenses and other assets (39) (664)
Prepaid income taxes 248 3,703
Accounts payable and accrued expenses (6,428) (3,178)
Net amounts due to/from governmental entities (659) (319)
Net cash provided by operating activities 6,103 14,069
     
Investing activities    
Cash paid for acquisitions, primarily goodwill and intangible assets and advance payments on acquisitions (61,159) (19,655)
Purchases of property, building and equipment (1,520) (1,151)
Net cash used in investing activities (62,679) (20,806)
     
Financing activities    
Proceeds from line of credit 60,000 41,500
Payments on line of credit (12,000) (38,004)
Proceeds from employee stock purchase plan 184 179
Proceeds from debt issuance 201
Payments on debt issuance (37)
Noncontrolling interest distributions (1,768) (2,509)
Excess tax benefits from vesting of restricted stock 112 11
Redemption of treasury shares (727) (607)
Purchase of noncontrolling interest (350)
Sale of noncontrolling interest 193
Net cash provided by financing activities 45,957 421
Change in cash (10,619) (6,316)
Cash at beginning of period 14,014 9,720
Cash at end of period $ 3,395 $ 3,404
     
Supplemental disclosures of cash flow information    
Interest paid $ 370 $ 425
Income taxes paid $ 2,413 $ 10,337

 

 
 
LHC GROUP, INC. AND SUBSIDIARIES SEGMENT INFORMATION (Amounts in thousands) (Unaudited)
   
  Three Months Ended March 31, 2014
  Home-Based Services Hospice-Based Services Facility-Based Services Total
Net service revenue $ 128,680 $ 15,222 $ 19,779 $ 163,681
Cost of service revenue 76,444 8,897 11,993 97,334
Provision for bad debts 2,654 105 603 3,362
General and administrative expenses 44,544 4,447 5,621 54,612
Operating income 5,038 1,773 1,562 8,373
Interest expense (310) (39) (39) (388)
Non-operating income 27 3 3 33
Income before income taxes and noncontrolling interest 4,755 1,737 1,526 8,018
Income tax expense 2,293 346 284 2,923
Net income 2,462 1,391 1,242 5,095
Less net income attributable to noncontrolling interest 607 201 219 1,027
Net income attributable to LHC Group, Inc.'s common stockholders $ 1,855 $ 1,190 $ 1,023 $ 4,068
         
Total assets $ 402,455 $ 28,919 $ 36,726 $ 468,100

 

  Three Months Ended March 31, 2013
  Home-Based Services Hospice-Based Services Facility-Based Services Total
Net service revenue $ 129,076 $ 12,911 $ 19,966 $ 161,953
Cost of service revenue 73,535 8,055 11,658 93,248
Provision for bad debts 3,019 258 640 3,917
General and administrative expenses 42,422 3,750 5,451 51,623
Operating income 10,100 848 2,217 13,165
Interest expense (353) (34) (38) (425)
Non-operating income 26 15 24 65
Income before income taxes and noncontrolling interest 9,773 829 2,203 12,805
Income tax expense 3,825 262 449 4,536
Net income 5,948 567 1,754 8,269
Less net income attributable to noncontrolling interest 1,367 232 384 1,983
Net income attributable to LHC Group, Inc.'s common stockholders $ 4,581 $ 335 $ 1,370 $ 6,286
         
Total assets $ 335,541 $ 22,600 $ 36,766 $ 394,907
 
 
 
LHC GROUP, INC. AND SUBSIDIARIES SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA (Unaudited)
   
  Three Months Ended March 31,
  2014 2013
Key Data:    
Home-Based Services:    
Home Health    
Locations 267 251
Acquired 2 19
De novo 1 0
Total new admissions 30,885 30,361
Medicare new admissions 21,135 20,581
Average daily census 33,023 35,175
Average Medicare daily census 24,965 26,603
Medicare completed and billed episodes 42,435 42,808
Average Medicare case mix for completed and billed Medicare episodes (1) 0.98 1.26
Average reimbursement per completed and billed Medicare episodes $ 2,355 $ 2,297
Total visits 907,446 859,498
Total Medicare visits 681,523 653,796
Average visits per completed and billed Medicare episodes 16.1 15.3
Organic growth: (2)    
Net revenue -5.1% -2.9%
Net Medicare revenue -5.4% -2.1%
Total new admissions -4.6% 4.0%
Medicare new admissions  -4.2% 3.3%
Average daily census -11.4% 0.5%
Average Medicare daily census -11.7% 0.1%
Medicare completed and billed episodes -5.2% 0.6%
     
Hospice-Based Services:    
Locations 33 33
Acquired 1 1
Admissions 1,232 1,275
Average daily census 1,223 1,071
Patient days 110,043 96,385
Average revenue per patient day $ 138 $ 134
     
Facility-Based Services:    
Long-term Acute Care    
Locations 8 9
Patient days 16,462 16,118
Average revenue per patient day $ 1,154 $ 1,194
     
(1)  The Centers for Medicare and Medicaid Services (CMS) updated the Medicare Home Health Prospective Payment System effective January 1, 2014, which reduced the average case-mix weight for 2014 from 1.3464 to 1.0000. To offset the effect of resetting the case mix average to 1.000, CMS upwardly adjusted the national, standardized 60-day episode payment rate by the same factor that it used to decrease the weights from $2,137.73 in 2013 to $2,869.27 in 2014.
(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
         Investor Relations
         (337) 233-1307
         eric.elliott@lhcgroup.com

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