LHC Group Announces Third Quarter 2013 Results

LAFAYETTE, La., Nov. 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 nine months ended September 30, 2013.

Financial Results for the Third Quarter
  • Net service revenue for the third quarter of 2013 was $164.7 million, compared with $158.9 million for the same period in 2012.
  • Net income attributable to LHC Group for the third quarter of 2013 was $5.3 million, compared with $6.3 million for the same period in 2012.
  • Diluted earnings per share was $0.31 for the third quarter of 2013, compared with $0.36 for the same period in 2012.

In commenting on the results, Keith G. Myers, LHC Group's chairman and CEO, said, "As usual, through the first nine months of 2013, our dedicated employees have once again exceeded expectations. Our ability to consistently deliver high-quality care to the growing number of patients, families and communities we serve is a testament to the collective talent, work ethic and experience of the growing number of healthcare professionals who make up our LHC Group family. Going forward, we expect the release of the final home health reimbursement rule and rebasing to provide greater clarity surrounding the long-term reimbursement environment. As a result, we believe a period of significant consolidation in the industry will occur over the next several years, and we are prepared to absorb this growth organically through a more diversified and comprehensive post-acute strategy in existing markets and through acquisitions and joint ventures in new markets. We have made significant investments in people and infrastructure over the past several years, and we are well positioned to efficiently and effectively deliver the superior care and service expected by those we serve. We look to the future with optimism and are prepared for the challenges and opportunities ahead."

Financial Results for the Nine Months

  • Net service revenue for the nine months ended September 30, 2013, was $493.0 million, compared with $475.7 million for the same period in 2012.
  • Net income attributable to LHC Group for the nine months ended September 30, 2013, was $17.4 million, compared with $20.0 million for the same period in 2012.
  • Diluted earnings per share was $1.02 for the nine months ended September 30, 2013, compared with $1.10 for the same period in 2012. 

Guidance

The Company is reaffirming its full year 2013 guidance issued on August 7, 2013, for net service revenue of $660 million to $670 million and fully diluted earnings per share in the range of $1.25 to $1.35. 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, November 7, 2013, at 11 a.m. Eastern time to discuss its third 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, November 14, 2013, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 69132646. 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 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(Amounts in thousands, except share data) 
(Unaudited) 
     
  Sept. 30, 2013 Dec. 31, 2012
ASSETS
Current assets:    
Cash $443 $9,720
Receivables:    
Patient accounts receivable, less allowance for uncollectible accounts of $13,995 and $11,863, respectively 92,423 83,951
Other receivables 746 589
Amounts due from governmental entities 1,223 1,596
Total receivables, net 94,392 86,136
Deferred income taxes 11,098 7,671
Prepaid income taxes 3,125 7,436
Prepaid expenses 6,175 6,818
Other current assets 4,774 2,949
Total current assets 120,007 120,730
Property, building and equipment, net of accumulated depreciation of $39,320 and $34,331, respectively 30,561 29,531
Goodwill 194,893 169,150
Intangible assets, net of accumulated amortization of $3,357 and $2,985, respectively 63,199 62,042
Other assets 5,373 5,441
Total assets $414,033 $386,894
     
     
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:    
Accounts payable and other accrued liabilities $19,254 $14,897
Salaries, wages and benefits payable 25,134 29,890
Self insurance reserve 6,868 5,444
Amounts due to governmental entities 3,975 4,979
Total current liabilities 55,231 55,210
Deferred income taxes 29,036 25,129
Income tax payable 3,415 3,415
Revolving credit facility 24,000 19,500
Note payable 1,138
Total liabilities 112,820 103,254
Noncontrolling interest- redeemable 11,467 11,426
Stockholders' equity:    
Common stock – $0.01 par value: 40,000,000 shares authorized; 21,783,323 and 21,578,772 shares issued in 2013 and 2012, respectively 218 216
Treasury stock – 4,690,392 and 4,653,039 shares at cost, respectively (34,640) (33,846)
Additional paid-in capital 102,761 100,619
Retained earnings 218,565 201,192
Total LHC Group, Inc. stockholders' equity 286,904 268,181
Noncontrolling interest- non-redeemable 2,842 4,033
Total equity 289,746 272,214
Total liabilities and stockholders' equity $414,033 $386,894
         
         
LHC GROUP, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
(Amounts in thousands, except share and per share data) 
(Unaudited) 
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2013 2012 2013 2012
Net service revenue $164,748 $158,926 $493,003 $475,742
Cost of service revenue 97,966 91,234 288,223 273,311
Gross margin 66,782 67,692 204,780 202,431
Provision for bad debts 2,708 2,987 9,833 8,395
General and administrative expenses 53,047 52,464 158,827 154,313
Other intangibles impairment charge 650 650
Operating income 11,027 11,591 36,120 39,073
Interest expense  (430) (405) (1,555) (972)
Non-operating income 54 94 184 108
Income before income taxes and noncontrolling interest 10,651 11,280 34,749 38,209
Income tax expense 3,782 3,388 12,236 12,706
Net income 6,869 7,892 22,513 25,503
Less net income attributable to noncontrolling interest 1,572 1,556 5,140 5,463
Net income attributable to LHC Group, Inc.'s common stockholders $5,297 $6,336 $17,373 $20,040
         
Earnings per share – basic:        
Net income attributable to LHC Group, Inc.'s common stockholders $0.31 $0.36 $1.02 $1.11
         
Earnings per share – diluted:        
Net income attributable to LHC Group, Inc.'s common stockholders $0.31 $0.36 $1.02 $1.10
         
Weighted average shares outstanding:        
Basic 17,083,201 17,656,842 17,035,541 18,121,217
Diluted 17,182,013 17,726,819 17,109,675 18,160,489
     
     
LHC GROUP, INC. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Amounts in thousands) 
(Unaudited) 
     
  Nine Months Ended September 30,
  2013 2012
Operating activities    
Net income $22,513 $25,503
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization expense 5,958 5,801
Provision for bad debts 9,833 8,395
Stock based compensation expense 2,879 3,398
Deferred income taxes 480 1,552
Loss on sale of assets 17 100
Other intangibles impairment change 650
Changes in operating assets and liabilities, net of acquisitions:    
Receivables (18,462) (7,084)
Prepaid expenses and other assets (1,114) 2,247
Prepaid income taxes 4,262 13,960
Accounts payable and accrued expenses 645 (6,597)
Net amounts due to/from governmental entities (631) 135
Net cash provided by operating activities  26,380 48,060
     
Investing activities    
Purchases of property, building, and equipment (5,997) (6,508)
Proceeds from sale of assets 25
Cash paid for acquisitions, primarily goodwill and intangible assets  (26,920) (6,764)
Net cash used in investing activities  (32,917) (13,247)
     
Financing activities    
Proceeds from line of credit 64,500 173,562
Payments on line of credit (60,000) (183,297)
Proceeds from employee stock purchase plan 570 587
Proceeds from debt issuance 1,138
Noncontrolling interest distributions (6,286) (6,582)
Excess tax benefits from vesting of restricted stock 11
Redemption of treasury shares (794)
Purchase of additional controlling interest (1,879) (126)
Payments on repurchase of common stock (19,017)
Sale of noncontrolling interest 80
Net cash used in financing activities (2,740) (34,793)
Change in cash (9,277) 20
Cash at beginning of period 9,720 256
Cash at end of period $443 $276
     
Supplemental disclosures of cash flow information    
Interest paid $1,523 $972
Income taxes paid $18,123 $8,644
             
             
LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
             
  Three Months Ended September 30, 2013 Nine Months Ended September 30, 2013
  Home- Based Services Facility- Based Services Total Home- Based Services Facility- Based Services Total
Net service revenue $146,910 $17,838 $164,748 $435,441 $57,562 $493,003
Cost of service revenue 87,082 10,884 97,966 254,924 33,299 288,223
Provision for bad debts 2,651 57 2,708 8,796 1,037 9,833
General and administrative expenses 47,969 5,078 53,047 142,908 15,919 158,827
Operating income 9,208 1,819 11,027 28,813 7,307 36,120
Interest expense (387) (43) (430) (1,404) (151) (1,555)
Non-operating income 36 18 54 115 69 184
Income before income taxes and noncontrolling interest 8,857 1,794 10,651 27,524 7,225 34,749
Income tax expense 3,422 360 3,782 11,062 1,174 12,236
Net income 5,435 1,434 6,869 16,462 6,051 22,513
Less net income attributable to noncontrolling interest 1,279 293 1,572 4,094 1,046 5,140
Net income attributable to LHC Group, Inc.'s common stockholders $4,156 $1,141 $5,297 $12,368 $5,005 $17,373
             
Total assets $379,340 $34,693 $414,033 $379,340 $34,693 $414,033
             
  Three Months Ended September 30, 2012 Nine Months Ended September 30, 2012
  Home- Based Services Facility- Based Services Total Home- Based Services Facility- Based Services Total
Net service revenue $140,256 $18,670 $158,926 $419,847 $55,895 $475,742
Cost of service revenue 80,579 10,655 91,234 240,347 32,964 273,311
Provision for bad debts 2,669 318 2,987 7,626 769 8,395
General and administrative expenses 47,110 5,354 52,464 137,902 16,411 154,313
Other intangibles impairment charge 250 400 650 250 400 650
Operating income 9,648 1,943 11,591 33,722 5,351 39,073
Interest expense (364) (41) (405) (874) (98) (972)
Non-operating income 74 20 94 77 31 108
Income before income taxes and noncontrolling interest 9,358 1,922 11,280 32,925 5,284 38,209
Income tax expense 3,213 175 3,388 11,641 1,065 12,706
Net income 6,145 1,747 7,892 21,284 4,219 25,503
Less net income attributable to noncontrolling interest 1,308 248 1,556 4,826 637 5,463
Net income attributable to LHC Group, Inc.'s common stockholders $4,837 $1,499 $6,336 $16,458 $3,582 $20,040
             
Total assets $352,941 $34,557 $387,498 $352,941 $34,557 $387,498
         
         
LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)
         
  Three Months Ended September 30, Nine Months Ended September 30,
  2013 2012 2013 2012
Key Data:        
Home-Based Services:        
Home Health        
Locations 255 238 255 238
Acquired  4 2 23 2
De novo 0 1 0 1
Total new admissions 30,221 27,301 92,260 81,495
Medicare new admissions 21,078 18,415 63,311 55,298
Average daily census 33,527 32,605 34,506 32,764
Average Medicare daily census 25,505 24,279 26,109 24,618
Medicare completed and billed episodes 45,804 41,699 133,803 125,466
Average Medicare case mix for completed and billed Medicare episodes 1.28 1.25 1.27 1.25
Average reimbursement per completed and billed Medicare episodes $2,339 $2,337 $2,315 $2,337
Total visits 908,718 883,257 2,682,906 2,677,956
Total Medicare visits 686,295 637,310 2,024,478 1,948,929
Average visits per completed and billed Medicare episodes 15.0 15.3 15.1 15.5
Organic growth: (1)        
Net revenue -2.4% 1.7% -2.9% -1.1%
Net Medicare revenue 1.5% -1.9% -0.6% -4.5%
Total new admissions 1.0% 3.0% 3.0% 5.0%
Medicare new admissions  3.7% -1.8% 3.7% 0.9%
Average daily census -2.4% 3.2% -1.0% -1.4%
Average Medicare daily census -0.7% 0.3% -0.2% -4.1%
Medicare completed and billed episodes 3.8% 0.7% 1.2% -2.0%
         
Hospice        
Locations 34 32 34 32
Acquired  0 0 2 0
Admissions 1,252 1,117 3,736 3,298
Average daily census 1,144 1,021 1,121 984
Patient days 105,274 93,972 305,962 269,500
Average revenue per patient day $135 $138 $136 $138
         
Facility-Based Services:        
Long-term Acute Care         
Locations  9 9 9 9
Patient days 15,321 15,335 46,722 47,348
Average revenue per patient day $1,118 $1,172 $1,172 $1,143
         
(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

LHC Group Logo