LHC Group Announces Fourth Quarter And Full-Year 2012 Results

LAFAYETTE, La., March 6, 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 year ended December 31, 2012.

Financial Results for the Fourth Quarter
  • Net service revenue for the fourth quarter of 2012 was $161.8 million, compared with $157.7 million for the same period in 2011.
  • Net income attributable to LHC Group for the fourth quarter of 2012 was $7.4 million, compared with $7.2 million for the same period in 2011.
  • Diluted earnings per share was $0.43 for the fourth quarter of 2012, compared with $0.39 for the same period in 2011.
  • Organic growth in new home health admissions was 5.6% for the fourth quarter of 2012.

Financial Results for the Year
  • Net service revenue for the year ended December 31, 2012, was $637.6 million, compared with $633.9 million for the same period in 2011.
  • Net income attributable to LHC Group for the year ended December 31, 2012, was $27.4 million, compared with a net loss attributable to LHC Group for year ended December 31, 2011, of $13.2 million, which included a $45 million after-tax charge related to fees and legal expense associated with the third quarter 2011 settlement agreement with the government.
  • Diluted earnings per share was $1.53 for the year ended December 31, 2012, compared with a loss per share of $0.73, including the aforementioned third quarter 2011 settlement with the government, for the same period in 2011.
  • Organic growth in new home health admissions was 5.1% for the year ended December 31, 2012.

In commenting on the results, Keith G. Myers, Chief Executive Officer of LHC Group, said, "We are pleased with our operating results and the overall performance of our company and our team in 2012. We ended the year with solid momentum in both volume growth and cost containment, while going through a strategic alternative process during the first half of the year and converting to a new point-of-care software system. Most importantly, our team of dedicated caregivers in communities throughout the country continues to provide the highest quality of care, day in and day out, to the patients, families and communities we serve. As we look ahead to the remainder of 2013 and beyond, we are well prepared and well positioned to continue increasing shareholder value by focusing on efficiencies while capitalizing on the opportunities we see ahead for both internal and external volume growth."

FY 2013 Guidance

Fiscal year net service revenue is expected to be in the range of $660 million to $680 million, and fully diluted earnings per share are expected to be in the range of $1.10 to $1.30. This guidance includes the negative impact of sequestration, which is an approximate $8.5 million reduction in Medicare revenue and $0.30 reduction in fully diluted earnings per share for the nine month period of April 1 to December 31, 2013. This guidance assumes that sequestration will affect the reimbursement on Medicare patients whose service dates end on and after April 1. This guidance also includes the impact of the recently announced acquisition of the home health service line of Addus HomeCare Corp. 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, March 7, 2013, at 11 a.m. Eastern time to discuss its fourth quarter and year-end 2012 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, March 14, 2013, by dialing (855) 859‑2056 (international callers should call 404-537-3406) and entering confirmation number 89678158. 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 private duty locations 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, 2011, 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)
  Dec. 31, 2012 Dec. 31, 2011
ASSETS
Current assets:    
Cash $ 9,720 $ 256
Receivables:    
Patient accounts receivable, less allowance for uncollectible accounts  of $11,863  and $10,692, respectively 83,951 91,183
Other receivables 589 1,636
Amounts due from governmental entities 1,596 315
Total receivables, net 86,136 93,134
Deferred income taxes 7,671 7,269
Prepaid income taxes 7,436 26,667
Prepaid expenses 6,818 6,576
Other current assets 2,949 4,363
Total current assets 120,730 138,265
Property, building and equipment, net of accumulated depreciation of $34,331 and $28,073, respectively 29,531 28,182
Goodwill 169,150 164,731
Intangible assets, net of accumulated amortization of $2,985 and $2,325, respectively 62,042 59,389
Other assets 5,441 5,809
Total assets $ 386,894 $ 396,376
     
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:    
Accounts payable and other accrued liabilities $ 14,897 $ 23,119
Salaries, wages and benefits payable 29,890 25,571
Self insurance payable 5,444 5,612
Amounts due to governmental entities 4,979 3,234
Total current liabilities 55,210 57,536
Deferred income taxes 25,129 22,523
Income tax payable 3,415 3,415
Revolving credit facility 19,500 34,820
Total liabilities 103,254 118,294
Noncontrolling interest- redeemable 11,426 11,348
Stockholders' equity:    
Common stock – $0.01 par value: 40,000,000 shares authorized; 21,578,772 and 21,374,264 shares issued and 16,925,733 and 18,298,659 shares outstanding, respectively 216 183
Treasury stock – 4,653,039 and 3,075,605 shares at cost, respectively (33,846) (6,216)
Additional paid-in capital 100,619 95,964
Retained earnings 201,192 173,752
Total LHC Group Inc. stockholders' equity 268,181 263,683
Noncontrolling interest- non-redeemable 4,033 3,051
Total equity 272,214 266,734
Total liabilities and stockholders' equity $ 386,894 $ 396,376

 
LHC GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS  (amounts in thousands, except share and per share data) (unaudited)
  Three Months Ended December 31, Year Ended December 31,
  2012 2011 2012 2011
Net service revenue $ 161,827 $  157,676 $ 637,569 $ 633,872
Cost of service revenue 92,441 89,359 365,752 352,346
Gross margin 69,386 68,317 271,817 281,526
Provision for bad debts 3,480 3,417 11,875 12,320
General and administrative expenses 50,674 50,737 205,637 210,588
Settlement with government agencies 65,000
Operating income (loss) 15,232 14,163 54,305 (6,382)
Interest expense  (578) (511) (1,550) (1,018)
Gain (loss) on the sale of assets and entities (5) 54 (105) 59
Non-operating income 81 154 289 1,722
Income (loss) from continuing operations before income taxes and noncontrolling interest 14,730 13,860 52,939 (5,619)
Income tax expense (benefit) 4,805 4,452 17,511 (1,968)
Net income (loss) from continuing operations 9,925 9,408 35,428 (3,651)
Less net income attributable to noncontrolling interest 2,525 2,174 7,988 9,593
Net income (loss) attributable to LHC Group, Inc.'s common stockholders $ 7,400 $ 7,234 $ 27,440 $ (13,244)
         
Earnings per share – basic:        
Net income (loss) attributable to LHC Group, Inc.'s common stockholders $ 0.43 $ 0.40 $ 1.54 $ (0.73)
         
Earnings per share – diluted:        
Net income (loss) attributable to LHC Group, Inc.'s common stockholders $ 0.43 $ 0.39 $ 1.53 $ (0.73)
         
Weighted average shares outstanding:        
Basic 17,056,611 18,296,062 17,853,321 18,265,118
Diluted 17,155,909 18,353,505 17,899,195 18,265,118

 
LHC GROUP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (unaudited)
  Year Ended December 31,
  2012 2011
     
Operating activities    
Net income (loss) $ 35,428 $ (3,651)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Depreciation and amortization expense 7,806 7,521
Provision for bad debts 11,875 12,320
Stock based compensation expense 4,390 4,092
Deferred income taxes 2,204 4,378
Loss on sale of assets 105
Other intangibles impairment change 650
Changes in operating assets and liabilities, net of acquisitions:    
Receivables (4,497) (21,024)
Prepaid expenses, other assets 1,780 6,247
Prepaid income taxes 18,855 (17,926)
Accounts payable and accrued expenses (4,288) 4,478
Net amounts due to/from governmental entities 464 189
Net cash provided by (used in) operating activities 74,772 (3,376)
     
Investing activities    
Purchases of property, building, and equipment (8,415) (11,680)
Proceeds from sale of assets 33
Cash paid for acquisitions, primarily goodwill and intangible assets and advance payment on acquisitions (6,758) (7,945)
Net cash used in investing activities (15,140) (19,625)
     
Financing activities    
Proceeds from line of credit 188,561 142,995
Payments on line of credit (203,881) (108,175)
Payments on capital leases (14)
Excess tax benefits from vesting of restricted stock 320
Proceeds from issuance of common stock under Employee Stock Purchase Plan 783 860
Noncontrolling interest distributions (8,444) (11,857)
Purchase of additional controlling interest (309) (891)
Sale of noncontrolling interest 80 308
Repurchase of common stock (26,958) (577)
Net cash (used in) provided by financing activities (50,168) 22,969
Change in cash 9,464 (32)
Cash at beginning of period 256 288
Cash at end of period $ 9,720 $ 256
     
Supplemental disclosures of cash flow information    
Interest paid $ 1,550 $ 1,018
Income taxes paid $ 8,645 $ 11,363

 
LHC GROUP INC. AND SUBSIDIARIES SEGMENT INFORMATION (amounts in thousands) (unaudited)
  Three Months Ended December 31, 2012 Year Ended December 31, 2012
  Home-Based Services Facility-Based Services Total Home-Based Services Facility-Based Services Total
Net service revenue $ 143,894 $ 17,933 $ 161,827 $ 563,741 $ 73,828 $ 637,569
Cost of service revenue 81,842 10,599 92,441 322,189 43,563 365,752
Provision for bad debts 2,967 513 3,480 10,593 1,282 11,875
General and administrative expenses 45,573 5,101 50,674 184,125 21,512 205,637
Operating income 13,512 1,720 15,232 46,834 7,471 54,305
Interest expense (482) (96) (578) (1,356) (194) (1,550)
Non-operating income, including gain on sale of assets 56 20 76 133 51 184
Income before income taxes and noncontrolling interest 13,086 1,644 14,730 45,611 7,328 52,939
Income tax expense 3,979 826 4,805 15,457 2,054 17,511
Net income 9,107 818 9,925 30,154 5,274 35,428
Noncontrolling interest 2,138 387 2,525 6,964 1,024 7,988
Net income attributable to LHC Group Inc. $ 6,969 $ 431 $ 7,400 $ 23,190 $ 4,250 $ 27,440
Total assets $ 349,740 $ 37,154 $ 386,894 $ 349,740 $ 37,154 $ 386,894
     
  Three Months Ended December 31, 2011 Year Ended December 31, 2011
  Home-Based Services Facility-Based Services Total Home-Based Services Facility-Based Services Total
Net service revenue $ 139,167 $ 18,509 $ 157,676 $ 557,901 $ 75,971 $ 633,872
Cost of service revenue 78,591 10,768 89,359 307,744 44,602 352,346
Provision for bad debts 3,178 239 3,417 11,680 640 12,320
General and administrative expenses 45,222 5,515 50,737 190,264 20,324 210,588
Settlement with government agencies 65,000 65,000
Operating income (loss) 12,176 1,987 14,163 (16,787) 10,405 (6,382)
Interest expense (458) (53) (511) (914) (104) (1,018)
Non-operating income, including gain on sale of assets 129 79 208 1,645 136 1,781
Income (loss) before income taxes and noncontrolling interest 11,847 2,013 13,860 (16,056) 10,437 (5,619)
Income tax expense (benefit) 3,710 742 4,452 (4,201) 2,233 (1,968)
Net income (loss) 8,137 1,271 9,408 (11,855) 8,204 (3,651)
Noncontrolling interest 2,000 174 2,174 8,404 1,189 9,593
Net income (loss) attributable to LHC Group Inc. $ 6,137 $ 1,097 $ 7,234 $ (20,259) $ 7,015 $ (13,244)
Total assets $ 360,340 $ 36,036 $ 396,376 $ 360,340 $ 36,036 $ 396,376

 
LHC GROUP INC. AND SUBSIDIARIES SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA (unaudited)
  Three Months Ended December 31, Year Ended December 31,
  2012 2011 2012 2011
Key Data:        
Home-Based Services:        
Home Health        
Locations 232 247 232 247
Acquired 1 0 3 5
De novo 0 3 0 6
Total new admissions 27,443 25,410 108,938 102,326
Medicare new admissions 18,665 17,803 73,963 72,260
Average daily census 33,103 31,692 32,834 32,165
Average Medicare daily census 24,765 24,301 24,639 24,899
Medicare completed and billed episodes 41,563 41,391 167,029 169,189
Average Medicare case mix for completed and billed Medicare episodes 1.27 1.26 1.25 1.25
Average reimbursement per completed and billed Medicare episodes $ 2,374 $ 2,383 $ 2,336 $ 2,357
Total visits 902,275 845,709 3,580,231 3,471,752
Total Medicare visits 660,289 624,682 2,609,218 2,602,347
Average visits per completed and billed Medicare episodes 15.9 15.1 16.0 15.4
Organic growth (1):        
Net revenue 1.3% -7.9% -0.5% -2.5%
Net Medicare revenue -1.3% -8.6% -3.7% -4.3%
Total new admissions 5.6% 0.9% 5.1% 7.5%
Medicare new admissions  3.3% 1.0% 1.5% 5.4%
Average daily census 3.3% -8.6% 1.6% -2.3%
Average Medicare daily census 1.2% -9.5% -1.3% -4.1%
Medicare completed and billed episodes -0.5% -9.0% -1.6% -0.1%
         
Hospice        
Locations 32 32 32 32
Acquired 0 0 0 8
Admissions 1,126 972 4,424 3,997
Average Daily Census 1,037 905 1,000 897
Patient Days 95,374 83,233 364,874 327,313
Average revenue per patient day $ 139 $ 137 $ 138 $ 136
         
Facility-Based Services:        
Long-term Acute Care        
Locations 9 9 9 9
Patient days 15,552 15,953 62,900 61,939
Patient acuity mix  0.99 1.03 1.00 1.03
Average revenue per patient day $ 1,173 $ 1,129 $ 1,151 $ 1,168
 
(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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