LHC Group Announces Fourth Quarter And Full-Year 2013 Results

LAFAYETTE, La., March 5, 2014 (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, 2013.

Financial Results for the Fourth Quarter
  • Net service revenue for the fourth quarter of 2013 was $165.3 million, compared with $161.8 million for the same period in 2012.
  • Net income attributable to LHC Group for the fourth quarter of 2013 was $5.0 million, compared with $7.4 million for the same period in 2012.
  • Diluted earnings per share was $0.29 for the fourth quarter of 2013, compared with $0.43 for the same period in 2012.

Financial Results for the Year
  • Net service revenue for the year ended Dec. 31, 2013, was $658.3 million, compared with $637.6 million for the same period in 2012.
  • Net income attributable to LHC Group for the year ended Dec. 31, 2013, was $22.3 million, compared with $27.4 million for the same period in 2012.
  • Diluted earnings per share was $1.30 for the year ended Dec. 31, 2013, compared with $1.53 for the same period in 2012.

In commenting on the results, Keith G. Myers, LHC Group's chairman and CEO, said, "We are pleased with our operating results and the overall performance of our company and our team in 2013 and in the first two months of 2014. Our intense focus on reducing overhead costs, combined with the investments we've made in point-of-care technology over the past several years, is allowing us to improve operational efficiencies without sacrificing quality.

"As we celebrate our first 20 years and look forward to the next chapter in our company's story, our proven healthcare delivery model, combined with our unique hospital joint venture strategy, positions us well to take advantage of the unprecedented growth opportunities ahead and to be at the forefront of change as our country moves toward a more integrated healthcare delivery system.

"With regard to external growth, we recently announced a definitive stock purchase agreement with BioScrip®, Inc. to purchase two of its operating subsidiaries – doing business as Deaconess HomeCare and Elk Valley Health Services – with annual revenues of approximately $72.6 million. We look forward to more opportunities to join forces with other high-quality providers who share our values and commitment to excellence. Most importantly, our team of dedicated caregivers in communities throughout the country continues to provide the highest quality care to the patients, families and communities we serve day in and day out."

FY 2014 Guidance

Fiscal year net service revenue is expected to be in the range of $700 million to $720 million, and fully diluted earnings per share are expected to be in the range of $1.15 to $1.35. This guidance includes:

(1) the negative impact from the Medicare Home Health Prospective Payment System for 2014, which is an approximate $5 million reduction in Medicare revenue and $0.17 reduction in fully diluted earnings per share for 2014;

(2) the impact of the recently announced acquisition of the home health, hospice and community-based services operations of Deaconess HomeCare and Elk Valley Health Services, which is anticipated to be accretive to fully diluted earnings per share by between $0.05 and $0.10 for 2014; and

(3) an estimated $0.05 reduction in fully diluted earnings per share in the first quarter of 2014 due to the impact of inclement weather conditions in January and February, which caused agency closures.

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 6, 2014, at 11 a.m. Eastern time to discuss its fourth quarter and full-year 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, March 13, 2014, by dialing (855) 859-2056 (international callers should call (404) 537-3406) and entering confirmation number 33183871. 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)
     
  Dec. 31, Dec. 31,
  2013 2012
     
ASSETS    
Current assets:    
Cash $14,014 $9,720
Receivables:    
Patient accounts receivable, less allowance for uncollectible accounts of $14,334 and $11,863, respectively 88,964 83,951
Other receivables 608 589
Amounts due from governmental entities 1,234 1,596
Total receivables, net 90,806 86,136
Deferred income taxes 9,251 7,671
Prepaid income taxes 4,069 7,436
Prepaid expenses 6,966 6,818
Other current assets 4,449 2,949
Total current assets 129,555 120,730
Property, building and equipment, net of accumulated depreciation of $40,935 and $34,331, respectively 31,052 29,531
Goodwill 194,893 169,150
Intangible assets, net of accumulated amortization of $4,518 and $3,054, respectively 62,184 62,042
Other assets 4,542 5,441
Total assets $422,226 $386,894
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable and other accrued liabilities $17,217 $14,897
Salaries, wages and benefits payable 31,927 29,890
Self insurance reserve 5,862 5,444
Current portion of long-term debt 249
Amounts due to governmental entities 4,391 4,979
Total current liabilities 59,646 55,210
Deferred income taxes 29,060 25,129
Income tax payable 3,415 3,415
Revolving credit facility 22,000 19,500
Long-term debt, less current portion 963
Total liabilities 115,084 103,254
Noncontrolling interest- redeemable 11,258 11,426
Stockholders' equity:    
Common stock – $0.01 par value: 40,000,000 shares authorized; 21,801,634 and 21,578,772 shares issued in 2013 and 2012, respectively 218 216
Treasury stock – 4,693,647 and 4,653,039 shares at cost, respectively (34,715) (33,846)
Additional paid-in capital 103,972 100,619
Retained earnings 223,534 201,192
Total LHC Group, Inc. stockholders' equity 293,009 268,181
Noncontrolling interest- non-redeemable 2,875 4,033
 Total stockholders' equity 295,884 272,214
Total liabilities and stockholders' equity $422,226 $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 Year Ended 
  December 31, December 31,
  2013 2012 2013 2012
Net service revenue $165,280 $161,827 $658,283 $637,569
Cost of service revenue 95,241 92,441 383,464 365,752
Gross margin 70,039 69,386 274,819 271,817
Provision for bad debts 4,096 3,480 13,929 11,875
General and administrative expenses 55,306 50,674 214,133 205,637
Operating income 10,637 15,232 46,757 54,305
Interest expense  (440) (578) (1,995) (1,550)
Non-operating income 59 76 243 184
Income from continuing operations before income taxes and noncontrolling interest 10,256 14,730 45,005 52,939
Income tax expense 3,623 4,805 15,859 17,511
Income from continuing operations 6,633 9,925 29,146 35,428
Less net income attributable to noncontrolling interest 1,664 2,525 6,804 7,988
Net income attributable to LHC Group, Inc.'s common stockholders $4,969 $7,400 $22,342 $27,440
         
Earnings per share – basic:        
Net income attributable to LHC Group, Inc.'s common stockholders $0.29 $0.43 $1.31 $1.54
         
Earnings per share – diluted:        
Net income attributable to LHC Group, Inc.'s common stockholders $0.29 $0.43 $1.30 $1.53
         
Weighted average shares outstanding:        
Basic 17,096,360 17,056,611 17,049,794 17,853,321
Diluted 17,228,499 17,155,909 17,132,751 17,899,195
         
         
LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
     
  Year Ended
  December 31,
  2013 2012
Operating activities    
Net income $29,146 $35,428
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization expense 8,325 7,806
Provision for bad debts 13,929 11,875
Stock based compensation expense 3,886 4,390
Deferred income taxes 2,351 2,204
Loss on sale of assets 20 105
Other intangibles impairment change 500 650
Changes in operating assets and liabilities, net of acquisitions:    
Receivables (18,961) (4,497)
Prepaid expenses and other assets (749) 1,780
Prepaid income taxes 3,299 18,855
Accounts payable and accrued expenses 4,395 (4,288)
Net amounts due to/from governmental entities (226) 464
Net cash provided by operating activities  45,915 74,772
     
Investing activities    
Cash paid for acquisitions, primarily goodwill and intangible assets (26,920) (6,758)
Proceeds from sale of assets 33
Purchases of property, building and equipment  (8,343) (8,415)
Net cash used in investing activities  (35,263) (15,140)
     
Financing activities    
Proceeds from line of credit 73,000 188,561
Payments on line of credit (70,500) (203,881)
Proceeds from issuance of common stock under the employee stock purchase plan 786 783
Proceeds from debt issuance 1,212
Noncontrolling interest distributions (8,126) (8,444)
Excess tax benefits from vesting of restricted stock 18
Redemption of treasury shares to pay income tax (869)
Purchase of additional controlling interest (1,879) (309)
Payments on repurchase of common stock (26,958)
Sale of noncontrolling interest 80
Net cash used in financing activities (6,358) (50,168)
Change in cash 4,294 9,464
Cash at beginning of period 9,720 256
Cash at end of period $14,014 $9,720
     
Supplemental disclosures of cash flow information    
Interest paid $1,961 $1,550
Income taxes paid $21,606 $8,645
     
     
LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
             
  Three Months Ended  Year Ended
  December 31, 2013 December 31, 2013
  Home- Facility-   Home- Facility-  
  Based Based   Based Based  
  Services Services Total Services Services Total
Net service revenue $147,450 $17,830 $165,280 $582,891 $75,392 $658,283
Cost of service revenue 84,276 10,965 95,241 339,199 44,265 383,464
Provision for bad debts 4,047 49 4,096 12,843 1,086 13,929
General and administrative expenses 49,876 5,430 55,306 192,784 21,349 214,133
Operating income 9,251 1,386 10,637 38,065 8,692 46,757
Interest expense (396) (44) (440) (1,800) (195) (1,995)
Non-operating income 34 25 59 149 94 243
Income from continuing operations before income taxes and noncontrolling interest 8,889 1,367 10,256 36,414 8,591 45,005
Income tax expense 3,280 343 3,623 14,342 1,517 15,859
Income from continuing operations 5,609 1,024 6,633 22,072 7,074 29,146
Less net income attributable to noncontrolling interest 1,458 206 1,664 5,552 1,252 6,804
Net income attributable to LHC Group, Inc.'s common stockholders $4,151 $818 $4,969 $16,520 $5,822 $22,342
             
Total assets $385,915 $36,311 $422,226 $385,915 $36,311 $422,226
             
  Three Months Ended  Year Ended
  December 31, 2012 December 31, 2012
  Home- Facility-   Home- Facility-  
  Based Based   Based Based  
  Services Services Total Services 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 50,674 183,725 21,912 205,637
Operating income 13,512 1,720 15,232 47,234 7,071 54,305
Interest expense (482) (96) (578) (1,356) (194) (1,550)
Non-operating income 56 20 76 133 51 184
Income from continuing operations before income taxes and noncontrolling interest 13,086 1,644 14,730 46,011 6,928 52,939
Income tax expense 3,979 826 4,805 15,619 1,892 17,511
Income from continuing operations 9,107 818 9,925 30,392 5,036 35,428
Less net income attributable to noncontrolling interest 2,138 387 2,525 6,964 1,024 7,988
Net income attributable to LHC Group, Inc.'s common stockholders $6,969 $431 $7,400 $23,428 $4,012 $27,440
             
Total assets $350,140 $36,754 $386,894 $350,140 $36,754 $386,894
             
             
LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)
         
  Three Months Ended Year Ended 
   December 31, December 31,
  2013 2012 2013 2012
Key Data:        
Home-Based Services:        
Home Health        
Locations 255 232 255 232
Acquired  0 1 23 3
De novo 0 0 1 0
Total new admissions 29,557 27,490 121,745 109,026
Medicare new admissions 20,424 18,679 83,565 73,990
Average daily census 32,981 32,897 34,056 32,750
Average Medicare daily census 25,245 24,653 25,860 24,618
Medicare completed and billed episodes 43,193 41,563 176,996 167,029
Average Medicare case mix for completed and billed Medicare episodes 1.30 1.27 1.27 1.25
Average reimbursement per completed and billed Medicare episodes $2,415 $2,374 $2,340 $2,336
Total visits 896,385 902,275 3,579,291 3,580,231
Total Medicare visits 682,641 660,289 2,707,119 2,609,218
Average visits per completed and billed Medicare episodes 15.8 15.9 15.3 15.6
Organic growth: (1)        
Net revenue -5.6% 1.3% -2.9% -0.5%
Net Medicare revenue -3.0% -1.3% -0.7% -3.7%
Total new admissions -0.8% 5.5% 3.6% 5.2%
Medicare new admissions  -0.3% 3.2% 3.7% 1.5%
Average daily census -4.9% 2.2% -1.1% 1.5%
Average Medicare daily census -3.3% 0.3% -0.5% -1.5%
Medicare completed and billed episodes -0.6% -0.5% 4.8% -1.6%
         
Hospice        
Locations 34 32 34 32
Acquired  0 0 2 0
Admissions 1,180 1,126 4,916 4,424
Average daily census 1,208 1,037 1,143 1,000
Patient days 111,107 95,374 417,069 364,874
Average revenue per patient day $137 $139 $135 $138
         
Facility-Based Services:        
Long-term Acute Care         
Locations  9 9 9 9
Patient days 15,116 15,552 61,838 62,900
Average revenue per patient day $1,132 $1,173 $1,162 $1,151
(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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