UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

Form 8-K
_____________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): August 2, 2017  

LHC GROUP, INC.
(Exact Name of Registrant as Specified in Charter)

Delaware001-3398971-0918189
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification Number)

 

901 Hugh Wallis Road South, Lafayette, LA 70508
(Address of Principal Executive Offices) (Zip Code)

(337) 233-1307
(Registrant's telephone number, including area code)

420 West Pinhook Rd., Suite A
Lafayette, LA 70503

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 [   ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 [   ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 [   ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 [   ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [   ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 
 

Item 2.02. Results of Operations and Financial Condition.

On August 2, 2017, the Company issued a press release announcing its financial results for the second quarter and six months ended June 30, 2017.  A copy of the press release is furnished with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

 

The information furnished pursuant to Item 2.02 and Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d)       Exhibits

The following exhibit is furnished with this Current Report on Form 8-K:

EXHIBIT NO. DESCRIPTION
   
99.1  Press Release, dated August 2, 2017, announcing the Company’s financial results for the second quarter and six months ended June 30, 2017.  


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 LHC GROUP, INC.
   
  
Date: August 3, 2017By: /s/ Joshua L. Proffitt        
  Joshua L. Proffitt
  Executive Vice President, Chief Financial Officer and Treasurer
  


INDEX TO EXHIBITS

 

EXHIBIT NO. DESCRIPTION
  
99.1  Press Release, dated August 2, 2017, announcing the Company’s financial results for the second quarter and six months ended June 30, 2017.  

EdgarFiling

EXHIBIT 99.1

LHC Group Second Quarter Earnings Per Diluted Share Increase 16.7% to $0.63 on 15.1% Growth in Revenue to $260.2 Million

Company Raises Fiscal Year 2017 Guidance for Fully Diluted Earnings Per Share to a Range of $2.30 to $2.40 and Net Service Revenue to a Range of $1.030 Billion to $1.045 Billion

LAFAYETTE, La., Aug. 02, 2017 (GLOBE NEWSWIRE) -- LHC Group, Inc. (NASDAQ:LHCG) today announced its financial results for the three months and six months ended June 30, 2017.

Financial Results for the Second Quarter of 2017 Compared with the Second Quarter of 2016

Commenting on the announcement, Keith G. Myers, LHC Group’s chairman and CEO, said, “LHG Group continued to produce strong financial growth during the second quarter, which is reflected in the 22.4% growth in total admissions for all service lines for the quarter.  A significant portion of this growth was again generated organically, much of which was driven by the 10.4% growth in organic home health admissions, which is our fourth consecutive quarter above 10%, complemented by 4.6% growth in organic hospice admissions. The steady, long-term trend of increasing acuity in our organic admissions continued in the second quarter of 2017, contributing to an increase in organic net home health revenues of 11.9% for the quarter.

“Our revenue growth is also attributable to the continued success of our acquisition strategy.  In the trailing 12 months ended June 30, 2017, we acquired 55 home health, hospice or community-based locations and began to manage 10 additional locations.  The joint venture we entered with LifePoint Health on January 1, 2017, accounts for 31 of the acquired locations and the 10 managed locations, which we are scheduled to convert from management to part of our joint venture in September. 

“Earlier this week, we announced the signing of a definitive agreement for another significant new joint venture with CHRISTUS Health, which we are working to complete by the end of the third quarter, subject to customary closing conditions.  This new agreement reflects the increasing interest we are seeing from hospitals and health systems in partnering with us for additional post-acute services beyond our core home health, hospice and community-based care services outside the hospital. Through this partnership with CHRISTUS Health, we will acquire and operate 21 service locations, including seven home health agencies, five hospice programs, two community-based home care services, one inpatient hospice unit, and six long-term acute-care hospitals (LTACH). When completed, we expect this joint venture – which will be our 75th hospital or health system joint venture – to generate approximately $80 million in annualized revenue and will not materially affect our 2017 diluted earnings per share. Including the CHRISTUS Health joint venture, we have announced agreements to acquire $106.8 million of annual revenue so far in 2017, which already surpasses any previous year.

“Looking forward, we expect the favorable market dynamics driving both our increased admissions and acquisition strategy to continue. The ongoing transition to value-based healthcare is highlighting our ability to provide high quality care for post-acute patients in less medically intensive and expensive venues. We are carefully studying the CMS’ proposed Home Health Groupings Model (HHGM). While it is too early to predict, with any precision or certainty, the effect of the proposed rule, if finalized, we note that certain aspects of the proposed model align with our current business model and strategic focus, namely how our joint venture strategy relates to HHGM’s positive view of admissions from institutional settings.

“We would like to also highlight our competitive differentiation as the leading high quality home health provider, based on the latest CMS Star ratings confirming that we have provided the highest quality and best patient satisfaction in the home health industry for the last five consecutive quarters, as well as our position as the only national home health provider that is 100% accredited by the Joint Commission. Our high-quality care, combined with our scale, financial strength and unmatched history in successful long-term joint ventures with hospitals and health systems, supports our core strategy of being the partner of choice for hospitals and health system joint ventures for post-acute healthcare regardless as to any changes in the federal reimbursement methodology.”

Mr. Myers concluded, “I and our Board of Directors are very proud of the long-term validation provided by the CMS Star ratings that our healthcare professionals, and the people who support them, are providing the highest quality care and achieving the best patient satisfaction in our industry. We congratulate all our colleagues throughout LHC Group for their excellent work and thank them for the skill, commitment and passion required to remain at the top in a competitive industry.  We never forget the direct correlation between the quality of our team and the quality of the care we provide, or how each sustains the growth potential of LHC Group.”

FY 2017 Guidance

LHC Group today raised its fiscal year 2017 guidance for net service revenue to be in an expected range of $1.030 billion to $1.045 billion, from the previous range of $1.02 billion to $1.04 billion, and fully diluted earnings per share to be in an expected range of $2.30 to $2.40, from the previous range of $2.23 to $2.33. 

The Company’s financial guidance does not take into account the recently announced definitive agreement with CHRISTUS Health, the impact of future reimbursement changes, if any, future acquisitions, if made, de novo locations, if opened, or future legal expenses, if necessary.

Conference Call

LHC Group will host a conference call on Thursday, August 3, 2017, at 11:00 a.m. Eastern time to discuss its second quarter 2017 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, August 10, 2017, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 40221056. 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 following the conclusion of the live broadcast.

About LHC Group, Inc.
LHC Group, Inc. is a national provider of non-acute healthcare services, providing quality, cost-effective healthcare to patients primarily 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, community‑based services agencies and facility-based services. LHC Group operates 315 home health services locations, 87 hospice locations, 11 community-based service locations and six long-term acute care hospitals (LTACHs) with eight locations.

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, 2016, 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)
   
 June 30,
2017
 Dec. 31,
2016
ASSETS
Current assets:       
Cash$6,968  $3,264 
Receivables:       
Patient accounts receivable, less allowance for uncollectible accounts of $26,020 and $29,036, respectively 130,948   124,803 
Other receivables 6,749   5,115 
Amounts due from governmental entities 830   942 
Total receivables, net 138,527   130,860 
Prepaid income taxes 3,296    
Prepaid expenses 10,888   9,821 
Other current assets 6,087   5,796 
Total current assets 165,766   149,741 
Property, building and equipment, net of accumulated depreciation of $39,111 and $35,226, respectively 43,885   43,251 
Goodwill 345,179   307,317 
Intangible assets, net of accumulated amortization of $12,143 and $10,968, respectively 114,966   102,006 
Other assets 2,870   11,756 
Total assets$672,666  $614,071 
        
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:       
Accounts payable and other accrued liabilities$38,513  $26,805 
Salaries, wages, and benefits payable 37,259   34,265 
Self-insurance reserve 13,627   10,691 
Current portion of long-term debt 258   252 
Amounts due to governmental entities 5,341   4,955 
Income tax payable    3,499 
Total current liabilities 94,998   80,467 
Deferred income taxes 34,463   31,941 
Revolving credit facility 84,000   87,000 
Long-term debt, less current portion 409   544 
Total liabilities 213,870   199,952 
Noncontrolling interest – redeemable 13,420   12,567 
Stockholders’ equity:       
LHC Group, Inc. stockholders’ equity:       
Common stock – $0.01 par value; 40,000,000 shares authorized; 22,617,280 and 22,429,041 shares issued in 2017 and 2016, respectively 226   224 
Treasury stock –  4,884,497 and 4,828,679 shares at cost, respectively (41,879)  (39,135)
Additional paid-in capital 123,456   119,748 
Retained earnings 335,060   314,289 
Total LHC Group, Inc. stockholders’ equity 416,863   395,126 
Noncontrolling interest – non-redeemable 28,513   6,426 
Total equity 445,376   401,552 
Total liabilities and equity$672,666  $614,071 
        


LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)
(Unaudited)
   
 Three Months Ended
June 30,
 Six Months Ended
June 30,
  2017   2016   2017   2016 
Net service revenue$260,210  $226,031  $506,828  $448,583 
Cost of service revenue 161,158   137,128   315,528   272,729 
Gross margin 99,052   88,903   191,300   175,854 
Provision for bad debts 2,675   3,782   5,044   8,383 
General and administrative expenses 73,550   68,261   145,409   134,297 
Loss on disposal of assets 2   1,043   154   1,247 
Operating income 22,825   15,817   40,693   31,927 
Interest expense (840)  (466)  (1,620)  (1,351)
Income before income taxes and noncontrolling interest 21,985   15,351   39,073   30,576 
Income tax expense 7,792   3,596   12,965   8,938 
Net income 14,193   11,755   26,108   21,638 
Less net income attributable to noncontrolling interests 2,889   2,291   5,337   4,488 
Net income attributable to LHC Group, Inc.’s common stockholders$11,304  $9,464  $20,771  $17,150 
                
Earnings per share attributable to LHC Group, Inc.’s common stockholders:               
Basic$0.64  $0.54  $1.17  $0.98 
Diluted$0.63  $0.54  $1.16  $0.97 
                
Weighted average shares outstanding:               
Basic 17,728,567   17,566,097   17,686,134   17,525,937 
Diluted 17,964,387   17,685,147   17,911,723   17,649,620 
                


LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
  
 Six Months Ended
June 30,
  2017   2016 
Operating activities:       
Net income$26,108  $21,638 
Adjustments to reconcile net income to net cash provided by operating activities:       
Depreciation and amortization expense 6,348   5,911 
Provision for bad debts 5,044   8,383 
Stock-based compensation expense 3,077   2,236 
Deferred income taxes 2,522   2,058 
Loss on disposal of assets 154   1,247 
Changes in operating assets and liabilities, net of acquisitions:       
Receivables (6,970)  (19,758)
Prepaid expenses and other assets (2,329)  (6,446)
Prepaid income taxes (3,296)  (4,364)
Accounts payable and accrued expenses 15,119   21,867 
Income taxes payable (3,499)   
Net amounts due to/from governmental entities 498   (1,900)
Net cash provided by operating activities 42,776   30,872 
        
Investing activities:       
Purchases of property, building and equipment (5,341)  (13,712)
Cash paid for acquisitions, primarily goodwill and intangible assets (22,704)  (11,515)
Advanced payments on acquisitions (523)   
Other    273 
Net cash used in investing activities (28,568)  (24,954)
        
Financing activities:       
Proceeds from line of credit 19,000   35,000 
Payments on line of credit (22,000)  (23,000)
Proceeds from employee stock purchase plan 469   445 
Payments on debt (129)  (115)
Noncontrolling interest distributions (5,167)  (4,338)
Excess tax benefits from vesting of stock awards    1,218 
Withholding taxes paid on stock-based compensation (2,744)  (1,703)
Purchase of additional controlling interest (184)   
Sale of noncontrolling interest 251   52 
Proceeds from exercise of stock options    109 
Net cash provided by (used in) financing activities (10,504)  7,668 
Change in cash 3,704   13,586 
Cash at beginning of period 3,264   6,139 
Cash at end of period$6,968  $19,725 
        
Supplemental disclosures of cash flow information:       
Interest paid$1,762  $1,489 
Income taxes paid$17,320  $10,635 
        


LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
  
 Three Months Ended June 30, 2017
 Home
Health
Services

 Hospice
Services

 Community-
Based
Services

 Facility-
Based
Services
 Total
Net service revenue$194,061  $38,513  $10,845  $16,791  $260,210 
Cost of service revenue 117,606   24,473   7,986   11,093   161,158 
Provision for bad debts 1,652   662   99   262   2,675 
General and administrative expenses 55,267   10,742   2,261   5,280   73,550 
Loss on disposal of assets 1   1         2 
Operating income 19,535   2,635   499   156   22,825 
Interest expense (630)  (126)  (42)  (42)  (840)
Income before income taxes and noncontrolling interest 18,905   2,509   457   114   21,985 
Income tax expense 6,757   849   180   6   7,792 
Net income 12,148   1,660   277   108   14,193 
Less net income attributable to noncontrolling interests 2,266   480   5   138   2,889 
Net income (loss) attributable to LHC Group, Inc.’s common stockholders$9,882  $1,180  $272  $(30) $11,304 
Total assets$466,308  $138,519  $33,292  $34,547  $672,666 
                    


 Three Months Ended June 30, 2016
 Home
Health
Services

 Hospice
Services

 Community-
Based
Services

 Facility-
Based
Services
 Total
Net service revenue$163,174  $33,905  $10,587  $18,365  $226,031 
Cost of service revenue 97,590   20,966   7,829   10,743   137,128 
Provision for bad debts 2,618   792   216   156   3,782 
General and administrative expenses 51,182   9,425   2,215   5,439   68,261 
Loss on disposal of assets 706   205   46   86   1,043 
Operating income 11,078   2,517   281   1,941   15,817 
Interest expense (350)  (51)  (23)  (42)  (466)
Income before income taxes and noncontrolling interest 10,728   2,466   258   1,899   15,351 
Income tax expense 2,043   789   102   662   3,596 
Net income 8,685   1,677   156   1,237   11,755 
Less net income (loss) attributable to noncontrolling interests 1,555   498   (14)  252   2,291 
Net income attributable to LHC Group, Inc.’s common stockholders$7,130  $1,179  $170  $985  $9,464 
Total assets$429,780  $118,353  $33,247  $38,265  $619,645 
                    


LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION (Continued)
(Amounts in thousands)
(Unaudited)
  
 Six Months Ended June 30, 2017
 Home
Health
Services

 Hospice
Services

 Community-
Based
Services

 Facility-
Based
Services
 Total
Net service revenue$376,202  $74,958  $21,661  $34,007  $506,828 
Cost of service revenue 229,692   47,746   15,934   22,156   315,528 
Provision for bad debts 3,135   1,159   374   376   5,044 
General and administrative expenses 109,171   21,141   4,572   10,525   145,409 
Loss on disposal of assets 19   8      127   154 
Operating income 34,185   4,904   781   823   40,693 
Interest expense (1,215)  (243)  (81)  (81)  (1,620)
Income before income taxes and noncontrolling interest 32,970   4,661   700   742   39,073 
Income tax expense 11,010   1,508   263   184   12,965 
Net income 21,960   3,153   437   558   26,108 
Less net income attributable to noncontrolling interests 4,294   766   13   264   5,337 
Net income attributable to LHC Group, Inc.’s common stockholders$17,666  $2,387  $424  $294  $20,771 
                    


 Six Months Ended June 30, 2016
 Home
Health
Services

 Hospice
Services

 Community-
Based
Services

 Facility-
Based
Services
 Total
Net service revenue$324,561  $64,729  $21,030  $38,263  $448,583 
Cost of service revenue 194,302   40,593   15,556   22,278   272,729 
Provision for bad debts 6,073   1,567   298   445   8,383 
General and administrative expenses 100,655   18,296   4,294   11,052   134,297 
Loss on disposal of assets 791   324   46   86   1,247 
Operating income 22,740   3,949   836   4,402   31,927 
Interest expense (1,028)  (142)  (65)  (116)  (1,351)
Income before income taxes and noncontrolling interest 21,712   3,807   771   4,286   30,576 
Income tax expense 5,893   1,209   330   1,506   8,938 
Net income 15,819   2,598   441   2,780   21,638 
Less net income (loss) attributable to noncontrolling interests 3,149   815   (57)  581   4,488 
Net income attributable to LHC Group, Inc.’s common stockholders$12,670  $1,783  $498  $2,199  $17,150 
                    


LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)
    
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2017 2016 2017 2016
Key Data:               
Home-Health Services:               
Home Health               
Locations 315   283   315   283 
Acquired 12   2   23   5 
De novo 0   0   0   1 
Divested/Consolidated 2   3   3   6 
Total new admissions 47,625   38,949   95,000   78,073 
Medicare new admissions 29,868   25,817   59,825   51,953 
Average daily census 43,396   38,357   42,615   38,262 
Average Medicare daily census 29,743   28,046   29,474   28,143 
Medicare completed and billed episodes 53,304   50,479   105,142   98,965 
Average Medicare case mix for completed and billed Medicare episodes 1.10   1.06   1.08   1.04 
Average reimbursement per completed and billed Medicare episodes$2,818  $2,673  $2,780  $2,634 
Total visits 1,399,195   1,149,895   2,726,906   2,276,729 
Total Medicare visits 969,673   840,961   1,900,591   1,670,228 
Average visits per completed and billed Medicare episodes     16.7       16.9 
Organic growth:(1)               
Net revenue 11.9%  4.6%  10.2%  6.4%
Net Medicare revenue 6.4%  4.2%  5.6%  4.8%
Total new admissions 10.4%  8.7%  11.0%  8.0%
Medicare new admissions 6.4%  6.4%  7.0%  4.9%
Average daily census 4.9%  2.2%  4.3%  2.5%
Average Medicare daily census -0.1%  0.7%  -0.7%  1.2%
Medicare completed and billed episodes -0.8%  3.7%  0.4%  2.9%
                
Community-Based Services:               
Locations 11   11   11   11 
Acquired 0   0   0   0 
De novo 0   0   0   0 
Divested/Consolidated 0   0   0   2 
Average daily census 1,746   1,619   1,688   1,613 
Billable hours 342,337   330,350   686,522   634,837 
Revenue per billable hour$31.68  $32.02  $31.55  $33.11 
                
Hospice-Based Services:               
Locations 87   62   87   62 
Acquired 13   1   21   7 
De novo 0   0   0   0 
Divested/Consolidated 0   0   0   1 
Admissions 3,227   2,523   6,279   4,986 
Average daily census 3,031   2,615   2,927   2,520 
Patient days 275,866   237,968   529,784   458,662 
Average revenue per patient day$140  $142  $141  $141 
                
Facility-Based Services:               
Long-term Acute Care                
Locations 8   8   8   8 
Patient days 13,075   13,929   26,807   29,466 
Average revenue per patient day$1,083  $1,239  $1085  $1,224 
                

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