Press Release

LHC Group Announces Third Quarter 2019 Financial Results

Company Release - 11/6/2019 4:20 PM ET

Increases 2019 EPS Guidance
Growth Expected to Accelerate in 2020

LAFAYETTE, La., Nov. 06, 2019 (GLOBE NEWSWIRE) -- LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the quarter ended September 30, 2019. Unless otherwise noted, all results are compared with the third quarter ended September 30, 2018.

Third Quarter of 2019 Financial Results – LHC Group Legacy Home Health and Hospice and Fully Converted Almost Family Locations Generating Strong Growth

  • Net service revenue increased 4.2% to $528.5 million.
  • Net income attributable to LHC Group’s common stockholders increased 41.6% to $30.1 million. Earnings per diluted share attributable to LHC Group’s common stockholders increased 41.2% to $0.96, which includes the effect of costs and expenses described within the adjusted results below.
  • Adjusted net income attributable to LHC Group’s common stockholders increased 33.9% to $39.5 million. Adjusted earnings per diluted share attributable to LHC Group’s common stockholders increased 32.6% to $1.26.
  • Adjusted EBITDA increased 22.2% to $59.6 million.
  • Adjusted results for the third quarter of 2019 exclude transaction and other transition related costs and expenses as well as charges and expenses related to certain closures and relocations in the aggregate amount of $9.4 million after tax, or $0.30 per diluted share.
  • Organic growth in home health admissions was 11.1% for the quarter and 8.6% year-to-date excluding Almost Family locations.
  • Organic growth in home health revenue was 7.9% for the quarter and 7.2% year-to-date excluding Almost Family locations.
  • Organic growth in hospice admissions was 2.1% for the quarter and 5.9% year-to-date excluding Almost Family locations.
  • Organic growth in hospice revenue was 6.0% for the quarter and 7.2% year-to-date excluding Almost Family locations.
  • Organic growth in hospice average daily census was 9.2% for the quarter and 8.9% year-to-date excluding Almost Family locations

A reconciliation of all non-GAAP financial results in this release appears on page 13.

Operational and Strategic Highlights

  • LHC Group quality and patient satisfaction scores continue to exceed the national average and outpace industry peers with 97% of its same store locations having CMS Quality Star ratings of four stars or greater when excluding Almost Family locations and other recent acquisitions. We continue to experience quarter over quarter improvement in each of our quality and patient satisfaction scores through our Almost Family locations and other recently acquired locations.
  • The 130 Almost Family locations that were fully converted to LHC Group’s version of Homecare Homebase prior to the third quarter demonstrated sequential organic growth in home health admissions of 1.2% in the third quarter as compared to the second quarter. We expect to complete the conversion of the remaining Almost Family locations to Homecare Homebase by the end of 2019.
  • To date in 2019, LHC Group has acquired or agreed to acquire 17 home health, 8 hospice, and two home and community based services locations in 10 states and the District of Columbia, the majority of which are hospital joint ventures. These acquisitions represent approximately $86.7 million in annualized revenue.

Commenting on the results, Keith G. Myers, LHC Group’s Chairman and Chief Executive Officer, said, “We have been able to deliver excellent results in 2019 with strong organic growth, margin improvement and momentum in our M&A strategy. Our growth is highlighted by increasing market share from legacy LHC locations and improving the performance at post-conversion Almost Family locations. We are well positioned to extend our growth posture in 2020 and beyond.”

M&A Strategy - Strong Current Pipeline of Joint Ventures and Acquisitions and Market Consolidation Expected to Accelerate in 2020
On August 1, 2019, LHC Group and Capital Regional Medical Center finalized their joint venture to purchase from SSM Health the assets of three home health and hospice locations in Jefferson City and Mexico, Missouri. LHC Group expects annualized revenue from this joint venture of approximately $3.5 million.

On August 1, 2019, LHC Group and Atmore Community Hospital finalized a JV partnership agreement to purchase and share ownership of a home health provider in Atmore, Alabama. The provider will continue operating under the name Atmore Community Home Care, serving patients and families in the community and the region with in-home healthcare. LHC Group expects annualized revenue from this joint venture of approximately $2.0 million.

On August 1, 2019, LHC Group purchased two home and community based services (HCBS) locations in West Union and Waverly, Ohio from Comfort Home Care. The agreement includes 100 percent of each location’s assets, which will be consolidated under LHC Group’s existing HCBS provider, HomeCare by Blackstone, in Columbus. LHC Group expects annualized revenue from this acquisition of approximately $2.0 million.

On August 1, 2019, LHC Group completed the previously announced acquisition of a home health and HCBS provider located in Baltimore from VNA of Maryland and Elite Home Care Services. LHC Group expects annualized revenue from this acquisition of approximately $35.0 million.

On September 1, 2019, LHC Group finalized a joint venture agreement with Norton Healthcare in Louisville, Kentucky to share ownership of Caregivers Health Network, a home health provider. Under terms of the agreement, Norton Healthcare purchased a minority interest in the agency, which has been renamed Norton Home Health.

On November 5, 2019, LHC Group and LifePoint Health agreed to further expand their existing joint venture partnership with the purchase of one home health provider with a location in Wilmington, Ohio and two hospice providers with a location in Sierra Vista, Arizona and Lewiston, Idaho. The agreement, which is subject to customary closing conditions, is expected to close by December 1, 2019. LHC Group expects annualized revenue from the expansion of this joint venture of approximately $3.6 million.

On November 5, 2019, LHC Group agreed to purchase a single freestanding home health provider – Life Wellness Home Health – in Las Vegas, Nevada. The agreement, which is subject to customary closing conditions, is expected to close by December 1, 2019. LHC Group expects annualized revenue from this joint venture of approximately $2.1 million.

Myers noted, “The common thread throughout all of the recent regulatory rulings and changes is that they shift care into the home and encourage payment models built on delivering value. The new models are now more dependent than ever on providers who can deliver the highest levels of clinical quality across the broadest range of services and within a value-based environment. LHC Group wins in all of these scenarios, and it will increase the value proposition we provide to leading hospital and health systems across the country. With over 30% of existing home health agencies projected to close as a result of PDGM and the elimination of the RAP according to many industry sources, we expect market consolidation through acquisitions and market share gains to help fuel our organic growth as well.”

Full Year 2019 EPS Guidance Raised and Full Year Revenue and EBITDA Guidance Affirmed - 24% Year-over-Year Adjusted Earnings Growth at the Midpoint Continues to be Fueled by Strong Organic Growth and Acquisition Accretion
The Company increased its guidance for full year adjusted earnings per diluted share to a range of $4.35 to $4.45 from a range of $4.25 to $4.35. The Company affirmed its full year 2019 guidance issued on May 8, 2019 for net service revenue in a range of $2.09 billion to $2.14 billion and Adjusted EBITDA, less non-controlling interest, in a range of $214 million to $220 million.

The Company’s guidance ranges do not take into account the impact of future reimbursement changes, if any, future acquisitions, if made, de novo locations, if opened, location closures, if any, or future legal expenses, if necessary. The adjusted earnings guidance for 2019 is presented on a non-GAAP basis, as it does not include the impact of transaction related costs, integration related expenses or other expenses related to the acquisition of Almost Family or other acquisitions. Given the difficulty in predicting the future amount and timing of these expenses, the Company cannot reasonably provide a full reconciliation of its fiscal year 2019 adjusted earnings per share guidance to GAAP earnings per share.

Joshua L. Proffitt, LHC Group’s Chief Financial Officer, added, “LHC Group’s distinct advantages in quality and patient satisfaction scores, national scale, organic growth, accelerating M&A pipeline, available liquidity and compelling value proposition for our partners provide near-term and long-term growth avenues that we have only begun to fully deploy. The strong organic growth we have achieved this year and the strengthening of the Almost Family business in the third quarter position us well for continued growth in 2020. In addition, the favorable rulings by CMS for PDGM and other expected regulatory changes that further enhance our leadership position and differentiated business model position us at the forefront of what we anticipate is a historic consolidation opportunity that can materially drive our growth in 2020 and beyond.”

Patient Driven Groupings Model (PDGM) Commentary
“Last week’s final PDGM ruling by CMS of a 4.36% behavioral adjustment was a significant improvement for the home health industry compared with the proposed rule issued in July 2019 with an 8.01% behavioral adjustment,” Myers added. “Despite this positive change, we remain concerned with the lack of transparency in CMS’s use of assumptions to establish payment policy and adjustments. We support payment reform that is evidence-based rather than on assumptions. We will continue to work closely with CMS to urge them to be more transparent in the calculation of payments to providers under the Medicare Home Health benefit”.

“I would like to thank the many sponsors in Congress for their overwhelming support with the regulatory and legislative changes under PDGM and their understanding of the need for the change in the adjustment to preserve access to home health services, particularly in rural areas. This change would not have happened without their help. I would also like to thank Seema Verma, the CMS Administrator, and her staff at CMS and HHS for their multiple meetings with us and their willingness to work collaboratively and listen to the industry’s concerns.”

“I’m extremely proud of how the LHC Group team approached the challenge of PDGM from a clinical perspective and created clinical pathways that ensure our high standards of clinical care and quality outcomes while increasing efficiency that minimizes the financial impact,” noted Myers. “Our clinical leadership team began working on PDGM preparedness in January and initiated pilots in mid-July that proved out the efficacy of our care models. Based on the success of these pilots, we are beginning the rollout of the care model. The benefits of this clinical approach will become more evident in 2020 as we execute our patient care models under the new rulings and demonstrate what it truly means to deliver value in the most appropriate and cost-efficient setting.”

Conference Call
LHC Group will host a conference call on Thursday, November 7, 2019, at 9:00 a.m. Eastern time to discuss its third quarter 2019 results. The toll-free number to call for this interactive teleconference is (866) 393‑1608 (international callers: (973) 890-8327). A telephonic replay of the conference call will be available through midnight on November 14, 2019, by dialing (855) 859‑2056 (international callers: (404) 537-3406) and entering confirmation number 4293488.

The Company has posted supplemental financial information on the third quarter results that it will reference during the conference call. The supplemental information can be found under Quarterly Results on the Company’s Investor Relations page. A live webcast 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 one hour following the conclusion of the live broadcast.

About LHC Group, Inc.
LHC Group, Inc. is a national provider of in-home healthcare services and innovations, providing quality, value-based healthcare to patients primarily within the comfort and privacy of their home or place of residence. LHC Group’s services cover a wide range of healthcare needs for patients and families dealing with illness, injury, or chronic conditions. The company’s 32,000 employees deliver home health, hospice, home and community based services, and facility-based care in 35 states and the District of Columbia – reaching 60 percent of the U.S. population aged 65 and older. LHC Group is the preferred in-home healthcare partner for 350 leading hospitals around the country. In 2019, the company was named to the inaugural Forbes list of “America’s Best-in-State Employers.”

Forward-looking Statements
This press release contains “forward-looking statements” (as defined in the Securities Litigation Reform Act of 1995) regarding, among other things, future events or the future financial performance of the Company, or anticipated benefits of the transaction. Words such as “anticipate,” “expect,” “project,” “intend,” “believe,” “will,” “estimates,” “may,” “could,” “should” and words and terms of similar substance used in connection with any discussion of future plans, actions or events identify forward-looking statements. Forward-looking statements contained in this press release include, but are not limited to: our 2019 revenue and earnings guidance, statements about the benefits of the acquisition, including anticipated earnings accretion, synergies and cost savings and the timing thereof; the Company’s plans, objectives, expectations, projections and intentions; and other statements relating to the transaction that are not historical facts. Forward-looking statements are based on information currently available to the Company and involve estimates, expectations and projections. Investors are cautioned that all such forward-looking statements are subject to risks and uncertainties, and important factors could cause actual events or results to differ materially from those indicated by such forward-looking statements. With respect to the acquisition, these risks, uncertainties and factors include, but are not limited to: the risk that the businesses will not be integrated successfully; the risk that the cost savings, synergies and growth from the transaction may not be fully realized or may take longer to realize than expected; the diversion of management time on integration-related issues; and the risk that costs associated with the integration of the businesses are higher than anticipated. With respect to the Company’s  businesses, these risks, uncertainties and factors include, but are not limited to: changes in, or failure to comply with, existing government regulations that impact the Company’s businesses; legislative proposals for healthcare reform; the impact of changes in future interpretations of fraud, anti-kickback, or other laws; changes in Medicare and Medicaid reimbursement levels; changes in laws and regulations with respect to Accountable Care Organizations; changes in the marketplace and regulatory environment for Health Risk Assessments; decrease in demand for the Company’s services; the potential impact of the transaction on relationships with customers, joint venture and other partners, competitors, management and other employees, including the loss of significant contracts or reduction in revenues associated with major payor sources; ability of customers to pay for services; risks related to any current or future litigation proceedings; potential audits and investigations by government and regulatory agencies, including the impact of any negative publicity or litigation; the ability to attract new customers and retain existing customers in the manner anticipated; the ability to hire and retain key personnel; increased competition from other entities offering similar services as offered by the  Company; reliance on and integration of information technology systems; ability to protect intellectual property rights; impact of security breaches, cyber-attacks or fraudulent activity on the Company’s reputation; the risks associated with assumptions the parties make in connection with the parties’ critical accounting estimates and legal proceedings; the risks associated with the Company’s expansion strategy, the successful integration of recent acquisitions, and if necessary, the ability to relocate or restructure current facilities; and the potential impact of an economic downturn or effects of tax assessments or tax positions taken, risks related to goodwill and other intangible asset impairment, tax adjustments, anticipated tax rates, benefit or retirement plan costs, or other regulatory compliance costs.

Many of these risks, uncertainties and assumptions are beyond the Company’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the information currently available to the Company on the date they are made, and the Company does not undertake any obligation to update publicly or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release. The Company does not give any assurance (1) that the Company will achieve its guidance or expectations, or (2) concerning any result or the timing thereof. All subsequent written and oral forward-looking statements concerning the transaction or other matters and attributable to the Company or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.


LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)

 September 30,
 2019
 December 31, 2018
ASSETS   
Current assets:   
Cash$29,302  $49,363 
Receivables:   
Patient accounts receivable288,114  252,592 
Other receivables11,205  6,658 
Amounts due from governmental entities963  830 
Total receivables300,282  260,080 
Prepaid income taxes1,316  11,788 
Prepaid expenses19,994  24,775 
Other current assets22,140  20,899 
Total current assets373,034  366,905 
Property, building and equipment, net of accumulated depreciation of $66,219 and $55,253, respectively84,288  79,563 
Goodwill1,216,227  1,161,717 
Intangible assets, net of accumulated amortization of $16,127 and $15,176, respectively304,517  297,379 
Assets held for sale2,500  2,850 
Operating lease right of use asset95,427   
Other assets21,871  20,301 
Total assets$2,097,864  $1,928,715 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable and other accrued liabilities$76,458  $77,135 
Salaries, wages, and benefits payable105,582  84,254 
Self-insurance reserves31,798  32,776 
Current operating lease liabilities29,362   
Current portion of long-term debt  7,773 
Amounts due to governmental entities1,249  4,174 
Total current liabilities244,449  206,112 
Deferred income taxes50,200  43,306 
Income taxes payable3,582  4,297 
Revolving credit facility232,000  235,000 
Long term notes payable  930 
Operating lease payable70,109   
  Total liabilities600,340  489,645 
Noncontrolling interest — redeemable15,594  14,596 
Stockholders’ equity:   
LHC Group, Inc. stockholders’ equity:   
Preferred stock – $0.01 par value; 5,000,000 shares authorized; none issued or outstanding   
Common stock — $0.01 par value; 60,000,000 shares authorized; 35,857,938 and 35,636,414 shares issued in 2019 and 2018, respectively359  356 
Treasury stock —  5,060,266 and 4,958,721 shares at cost, respectively(58,796) (49,374)
Additional paid-in capital945,575  937,968 
Retained earnings501,898  427,975 
Total LHC Group, Inc. stockholders’ equity1,389,036  1,316,925 
Noncontrolling interest — non-redeemable92,894  107,549 
Total equity1,481,930  1,424,474 
Total liabilities and equity$2,097,864  $1,928,715 


LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)

 Three Months Ended
September 30,
 Nine Months Ended
 September 30,
 2019 2018 2019 2018
Net service revenue$528,499  $507,043  $1,548,926  $1,300,121 
Cost of service revenue334,768  322,196  981,620  831,818 
Gross margin193,731  184,847  567,306  468,303 
General and administrative expenses146,829  149,572  440,634  390,817 
Other intangible impairment charge197  345  7,534  1,123 
Operating income46,705  34,930  119,138  76,363 
Interest expense(2,596) (3,264) (8,533) (7,916)
Income before income taxes and noncontrolling interest44,109  31,666  110,605  68,447 
Income tax expense9,508  6,685  22,665  14,832 
Net income34,601  24,981  87,940  53,615 
Less net income attributable to noncontrolling interests4,534  3,751  14,017  10,593 
Net income attributable to LHC Group, Inc.’s common stockholders$30,067  $21,230  $73,923  $43,022 
        
Earnings per share:       
Basic$0.97  $0.69  $2.39  $1.63 
Diluted$0.96  $0.68  $2.37  $1.61 
Weighted average shares outstanding:       
Basic30,971  30,750  30,919  26,393 
Diluted31,247  31,084  31,203  26,641 


LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

 Nine Months Ended
 September 30,
 2019 2018
Operating activities:   
Net income$87,940  $53,615 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization expense12,812  11,986 
Amortization of operating lease right of use asset22,952   
Stock-based compensation expense6,382  7,336 
Deferred income taxes8,102  2,915 
Loss (gain) on disposal of assets337  4 
  Impairment of intangibles and other7,534  1,123 
Changes in operating assets and liabilities, net of acquisitions:   
Receivables(42,928) (5,693)
Prepaid expenses and other assets2,018  (7,489)
Prepaid income taxes8,258  9,710 
Accounts payable and accrued expenses(4,668) 13,862 
Income taxes payable(715) (313)
Net amounts due to/from governmental entities(3,234) (722)
Net cash provided by operating activities104,790  86,334 
Investing activities:   
Purchases of property, building and equipment(15,401) (18,889)
Cash paid for acquisitions, net of cash acquired(54,120) 9,070 
Net cash used in investing activities(69,521) (9,819)
Financing activities:   
Proceeds from line of credit84,000  292,084 
Payments on line of credit(87,000) (300,884)
Proceeds from employee stock purchase plan1,540  1,015 
Payments on debt(7,650) (196)
  Payments on deferred financing fees  (1,881)
Noncontrolling interest distributions(18,944) (8,720)
Withholding taxes paid on stock-based compensation(9,422) (6,719)
Purchase of additional controlling interest(18,763) (412)
Exercise of options153   
Sale of noncontrolling interest756  3,322 
Net cash (used in) financing activities(55,330) (22,391)
Change in cash(20,061) 54,124 
Cash at beginning of period49,363  2,849 
Cash at end of period$29,302  $56,973 
Supplemental disclosures of cash flow information:   
Interest paid$8,549  $6,127 
Income taxes paid$8,015  $2,929 

Non-cash operating activity: The Company recorded $115.2 million in operating lease right of use assets in exchange for lease obligations.

Non-cash financing activity:  The Company accrued $1.5 million for capital expenditures primarily related to the home office expansion project during the nine months ended September 30, 2019.


LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)

 Three Months Ended September 30, 2019
 Home health services Hospice services Home and community-based services Facility-based services HCI Total
Net service revenue$375,599  $62,028  $53,411  $28,715  $8,746  $528,499 
Cost of service revenue237,414  35,819  39,694  18,508  3,333  334,768 
General and administrative expenses108,318  15,218  10,809  9,498  2,986  146,829 
Other intangible impairment charge197          197 
Operating income29,670  10,991  2,908  709  2,427  46,705 
Interest expense(1,758) (310) (272) (174) (82) (2,596)
Income before income taxes and noncontrolling interest27,912  10,681  2,636  535  2,345  44,109 
Income tax expense5,900  1,689  1,299  144  476  9,508 
Net income22,012  8,992  1,337  391  1,869  34,601 
Less net income (loss) attributable to
noncontrolling interests
3,577  1,213  (180) (67) (9) 4,534 
Net income attributable to LHC Group, Inc.'s common stockholder$18,435  $7,779  $1,517  $458  $1,878  $30,067 
Total assets$1,458,991  $235,865  $243,779  $88,905  $70,324  $2,097,864 


 Three Months Ended September 30, 2018
 Home health services Hospice services Home and community-based services Facility-based services HCI Total
Net service revenue$360,000  $52,962  $52,773  $27,891  $13,417  $507,043 
Cost of service revenue222,765  34,540  39,860  20,146  4,885  322,196 
General and administrative expenses105,112  14,685  12,922  9,823  7,030  149,572 
Other intangible impairment charge345          345 
Operating income (loss)31,778  3,737  (9) (2,078) 1,502  34,930 
Interest expense(2,284) (491) (163) (163) (163) (3,264)
Income (loss) before income taxes and noncontrolling interest29,494  3,246  (172) (2,241) 1,339  31,666 
Income tax expense (benefit)6,209  774  (74) (541) 317  6,685 
Net income (loss)23,285  2,472  (98) (1,700) 1,022  24,981 
Less net income (loss) attributable to noncontrolling interests3,425  386  (87) 27    3,751 
Net income (loss) attributable to LHC Group, Inc.'s common stockholders$19,860  $2,086  $(11) $(1,727) $1,022  $21,230 
Total assets$1,316,792  $203,921  $246,963  $61,089  $81,999  $1,910,764 

LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)

 Nine Months Ended September 30, 2019
 Home health services Hospice services Home and community-based services Facility-based services HCI Total
Net service revenue$1,113,887  $168,821  $157,610  $84,391  $24,217  $1,548,926 
Cost of service revenue694,082  103,853  119,054  53,812  10,819  981,620 
General and administrative expenses322,115  45,167  33,004  28,010  12,338  440,634 
Other intangible impairment charge7,263  271        7,534 
Operating income90,427  19,530  5,552  2,569  1,060  119,138 
Interest expense(5,919) (976) (857) (524) (257) (8,533)
Income before income taxes and noncontrolling interest84,508  18,554  4,695  2,045  803  110,605 
Income tax expense17,178  3,716  1,279  297  195  22,665 
Net income67,330  14,838  3,416  1,748  608  87,940 
Less net income (loss) attributable to
noncontrolling interests
11,305  2,712  (757) 779  (22) 14,017 
Net income attributable to LHC Group, Inc.'s common stockholder$56,025  $12,126  $4,173  $969  $630  $73,923 


 Nine Months Ended September 30, 2018
 Home health services Hospice services Home and community-based services Facility-based services HCI Total
Net service revenue$924,463  $146,142  $119,617  $86,345  $23,554  $1,300,121 
Cost of service revenue576,416  95,557  90,331  59,102  10,412  831,818 
General and administrative expenses277,075  43,090  28,664  29,571  12,417  390,817 
Other intangible impairment charge636      487    1,123 
Operating income70,336  7,495  622  (2,815) 725  76,363 
Interest expense(5,627) (1,181) (393) (395) (320) (7,916)
Income (loss) before income taxes and noncontrolling interest64,709  6,314  229  (3,210) 405  68,447 
Income tax expense (benefit)14,022  1,368  50  (695) 87  14,832 
Net income (loss)50,687  4,946  179  (2,515) 318  53,615 
Less net income (loss) attributable to noncontrolling interests9,472  1,215  (157) 129  (66) 10,593 
Net income (loss) attributable to LHC Group, Inc.'s common stockholders$41,215  $3,731  $336  $(2,644) $384  $43,022 


LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
Key Data: 2019 2018 2019 2018
         
Home Health Services:        
Locations 555  565  555  565 
Acquired 19  2  32  256 
De novo        
Divested/consolidated (3) (5) (16) (10)
Total new admissions 97,647  92,643  286,519  239,671 
Medicare new admissions 57,496  57,118  172,343  149,158 
Average daily census 76,905  75,479  76,573  76,080 
Average Medicare daily census 49,016  49,948  49,418  50,768 
Medicare completed and billed episodes 91,956  93,389  276,751  244,297 
Average Medicare case mix for completed and billed Medicare episodes 1.09  1.10  1.10  1.09 
Average reimbursement per completed and billed Medicare episodes $3,070  $2,929  $3,060  $2,890 
Total visits 2,619,073  2,471,979  7,702,229  6,472,307 
Total Medicare visits 1,695,148  1,662,610  5,048,298  4,375,408 
Average visits per completed and billed Medicare episodes 18.4  17.8  18.2  17.9 
Organic growth excluding Almost Family (1)(2)        
Net revenue 7.9% 9.3% 7.2% 9.1%
Net Medicare revenue 4.1% 4.6% 3.5% 4.8%
Total new admissions 11.1% 9.7% 8.6% 8.1%
Medicare new admissions 5.4% 4.6% 2.5% 4.8%
Average daily census 7.2% 2.9% 5.1% 2.9%
Average Medicare daily census 2.6% (0.9)% 0.0 % (0.8)%
Medicare completed and billed episodes 3.6% 0.7% 1.0% 1.0%
         
Hospice Services:        
Locations 109  104  109  104 
Acquired 5  1  10  16 
De novo        
Divested/Consolidated   (3) (5) (3)
Admissions 4,522  4,557  13,746  13,139 
Average daily census 4,187  3,763  4,002  3,525 
Patient days 385,164  346,153  1,093,039  962,839 
Average revenue per patient day $152.47  $155.40  $153.74  $154.03 
Organic growth excluding Almost Family: (1)(2)        
Total new admissions 2.1% 5.1% 5.9% 4.2%
         
Home and Community-Based Services:        
Locations (3) 105     105    
Average daily census 13,676  14,455  13,914  14,491 
Billable hours 2,276,984  2,295,450  6,841,598  5,002,064 
Revenue per billable hour $23.97  $23.30  $23.62  $24.30 
         
         
         
Facility-Based Services:        
Long-term Acute Care        
Locations 13  12  13  12 
Acquired 1    1   
Divested/Consolidated       (2)
Patient days 18,918  21,617  58,524  65,480 
Average revenue per patient day $1,377  $1,183  $1,310  $1,244 
Occupancy rate 66.3% 75.8% 69.2% 73.5%
  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.
  2. Almost Family locations remain counted as acquired locations due to continued system integrations, which are expected to be completed by the end of 2019.
     
  3. The number of locations for HCBS has been updated to not only include the physical standalone locations but also the locations that are part of a home health provider.


LHC GROUP, INC. AND SUBSIDIARIES
RECONCILIATION OF REVENUE AFTER ADOPTION OF ASU 2014-09
(Amounts in thousands)
(Unaudited)

  Three Months Ended
 September 30,
Nine Months Ended
 September 30,
  2019 2018 2019 2018
Revenue $532,026  $514,118  $1,568,084  $1,319,840 
Less:  Implicit price concession (1) 3,527  7,075  19,158  19,719 
Net service revenue $528,499  $507,043  $1,548,926  $1,300,121 

RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO LHC GROUP, INC.
(Amounts in thousands)
(Unaudited)

  Three Months Ended
 September 30,
Nine Months Ended
 September 30,
  2019 2018 2019 2018
Net income attributable to LHC Group, Inc.’s common stockholders $30,067  $21,230  $73,923  $43,022 
Add (net of tax):        
  AFAM and other acquisition expenses (2) 8,482  7,118  20,463  19,289 
  Closures/relocations/consolidations (3) 941  2,335  4,722  4,799 
  Excess tax benefit  (4)   (1,200)   (1,200)
  Income tax effect of adjustments to income       689 
  Provider moratorium impairment (5)     4,332   
Adjusted net income attributable to LHC Group, Inc.’s common stockholders $39,490  $29,483  $103,440  $66,599 

RECONCILIATION OF ADJUSTED NET INCOME
ATTRIBUTABLE TO LHC GROUP, INC. PER DILUTED SHARE
(Amounts in thousands)
(Unaudited)  

  Three Months Ended
 September 30,
Nine Months Ended
 September 30,
  2019 2018 2019 2018
Net income attributable to LHC Group, Inc.’s common stockholders $0.96  $0.68  $2.37  $1.61 
Add (net of tax):        
  AFAM and other acquisition expenses (2) 0.27  0.23  0.66  0.72 
  Closures/relocations/consolidations (3) 0.03  0.08  0.15  0.18 
  Excess tax benefit  (4)   (0.04)   (0.05)
  Income tax effect of adjustments to income       0.03 
  Provider moratorium impairment (5)     0.14   
Adjusted net income attributable to LHC Group, Inc.’s common stockholders $1.26  $0.95  $3.32  $2.49 
  1. Provision for bad debts are classified as implicit price concessions in determining the transaction price of the Company's net service revenue.
  2. Transition, integration and Homecare Homebase conversion expenses and other costs associated with the acquisition of Almost Family and other recently announced or completed acquisitions ($11.7 million pre-tax in the three months ended Sept 30, 2019 and $28.3 million in the nine months ended Sept 30, 2019).
  3. Expenses and impairments associated with the closure or consolidation of 3 locations in the third quarter of 2019 along with residual costs and expenses in connection with closures in prior periods ($1.3 million pre-tax in the three months ended Sept 30, 2019 and $6.5 million in the nine months ended Sept 30, 2019).
  4. Tax benefit due to the exercise of stock options related to the Almost Family acquisition.
  5. During the nine months ended September 30, 2019, the Company recorded $6.0 million of moratoria impairment as a result of the Centers for Medicare and Medicaid Services (“CMS”) action to remove all federal moratoria with regard to Medicare provider enrollment.

RECONCILIATION OF ADJUSTED EBITDA
(Amounts in thousands)

(Unaudited)

  Three Months Ended
 September 30,
Nine Months Ended
 September 30,
  2019 2018 2019 2018
Net income attributable to LHC Group, Inc.’s common stockholders $30,067  $21,230  $73,923  $43,022 
Add:        
  Income tax expense 9,508  6,685  22,665  14,832 
  Interest expense, net 2,596  3,264  8,533  7,916 
  Depreciation and amortization 4,412  4,438  12,812  11,986 
  Adjustment items (6) 13,033  13,165  40,841  33,879 
Adjusted EBITDA $59,616  $48,782  $158,774  $111,635 


(6) Adjustment items (pre-tax):        
  Almost Family merger and other acquisition expenses 11,731  9,914  28,305  27,114 
  Closures/relocation/consolidations 1,302  3,251  6,536  6,765 
  Provider moratorium impairment     6,000   
Total adjustments $13,033  $13,165  $40,841  $33,879 

Contact: 
Eric Elliott

Senior Vice President of Finance
(337) 233-1307
eric.elliott@lhcgroup.com



LHC Group

Source: LHC Group