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): November 6, 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 November 6, 2017, the Company issued a press release announcing its financial results for the third quarter and nine months ended September 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 November 6, 2017, announcing the Company’s financial results for the third quarter and nine months ended September 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: November 6, 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 November 6, 2017, announcing the Company’s financial results for the third quarter and nine months ended September 30, 2017.

EdgarFiling

EXHIBIT 99.1

LHC Group Reports Increase of 13.0% in Third Quarter Earnings Per Diluted Share, 18.5% in Adjusted Earnings Per Diluted Share

Revenue Grows 18.2%

Increases 2017 Guidance

LAFAYETTE, La., Nov. 06, 2017 (GLOBE NEWSWIRE) -- LHC Group, Inc. (NASDAQ:LHCG) announced its financial results for the three months and nine months ended September 30, 2017.

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

Operational Highlights

Commenting on the announcement, Keith G. Myers, LHC Group’s chairman and CEO, said, “The strength of our business model and the company-wide commitment to delivering high quality and patient satisfaction were evident once again in the strong organic growth in home health admissions as well as the growth generated from our joint ventures with the country’s leading hospitals and health systems. We have work ahead of us to deliver on the performance we expect from new leadership we brought to our hospice business and to execute on an active pipeline of de novo, acquisition and joint venture opportunities, but we are confident in our 2017 growth expectations and continuing a strong pace for 2018.”

Mr. Myers concluded, “The convergence of value-based healthcare and hospital systems’ needs to improve outcomes and value in home health and hospice place a premium on quality and the ability to address the entire post-acute continuum. These dynamics continue to play to the strengths, experience and culture within our organization as demonstrated by the success of our recent partnerships with CHRISTUS, LifePoint Health and Baptist Memorial.”

CHRISTUS Health Joint Venture
On September 1, 2017, the Company and CHRISTUS Health finalized their previously announced joint venture partnership to enhance home health, hospice, community-based and long-term acute-care services in Louisiana, Texas, Arkansas and Georgia. LHC Group acquired 21 service locations, all of which will continue to operate under their existing names. The joint venture is expected to generate approximately $80 million in annualized revenue and is expected to begin contributing to earnings in 2018.

LifePoint Health Joint Venture
On September 1, 2017, LHC Group completed the third and final phase of its joint venture with LifePoint Health by converting nine remaining locations the Company had managed since January 1, 2017, to owned locations. The joint venture now owns 28 home health and 13 hospice locations and is actively pursuing de novo and acquisition opportunities in both new and existing markets served by LifePoint Health. The 28 home health and 13 hospice locations, which consist of $72 million in annual revenue, were acquired in three phases during 2017. The full effect of the acquired revenue will be realized in 2018.

CMS Final Fiscal Year 2018 Medicare Home Health Prospective Payment System (HH PPS) Rate Update
On November 1, 2017, CMS issued its final rule updating HH PPS, which results in a 0.4% decrease in payment to home health agencies in calendar year 2018, which is consistent with a proposed rule introduced in July 2017. For calendar 2019, CMS decided not to finalize its rule on the Home Health Groupings Model (HHGM) and will take additional time to further engage with stakeholders to move towards a system that shifts the focus from volume of services to a more value based patient-centered model.

Fiscal Year 2017 Guidance
LHC Group raised its issued fiscal year 2017 guidance for net service revenue to be in an expected range of $1.05 billion to $1.06 billion, from the previous range of $1.03 billion to $1.045 billion, and GAAP earnings per diluted share to be in an expected range of $2.35 to $2.40, from the previous range of $2.30 to $2.40.

The Company’s fiscal year 2017 financial guidance includes the expenses of approximately $0.03 per fully diluted share for the third quarter of 2017 related to the CHRISTUS joint venture transaction and one agency closure in Oklahoma. The guidance ranges do not take into account 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 later today at 11:00 a.m. Eastern time to discuss its third 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 November 13, 2017, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 96827521.

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 324 home health services locations, 92 hospice locations, 12 community-based service locations and 15 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)

 Sept. 30, 2017Dec. 31,
2016
 (Unaudited) 
ASSETS
Current assets:  
Cash$  16,922 $  3,264 
Receivables:  
Patient accounts receivable, less allowance for uncollectible accounts of $26,089 and $29,036, respectively 145,508  124,803 
Other receivables 4,705  5,115 
Amounts due from governmental entities 830  942 
  Total receivables, net 151,043  130,860 
Prepaid income taxes 4,879   
Prepaid expenses 11,437  9,821 
Other current assets 7,331  5,796 
Total current assets 191,612  149,741 
Property, building and equipment, net of accumulated depreciation of $41,876 and $35,226, respectively 47,562  43,251 
Goodwill 392,689  307,317 
Intangible assets, net of accumulated amortization of $12,607 and $10,968, respectively 130,779  102,006 
Other assets 2,411  11,756 
Total assets$  765,053 $  614,071 
   
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:  
Accounts payable and other accrued liabilities$  40,355 $  26,805 
Salaries, wages, and benefits payable 53,289  34,265 
Self-insurance reserve 9,524  10,691 
Current portion of long-term debt 261  252 
Amounts due to governmental entities 4,564  4,955 
Income tax payable   3,499 
  Total current liabilities 107,993  80,467 
Deferred income taxes 38,186  31,941 
Revolving credit facility 119,000  87,000 
Long-term debt, less current portion 93  544 
  Total liabilities 265,272  199,952 
Noncontrolling interest – redeemable 13,206  12,567 
Stockholders’ equity:  
LHC Group, Inc. stockholders’ equity:  
Common stock – $0.01 par value; 40,000,000 shares authorized; 22,635,322 and 22,429,041 shares issued in 2017 and 2016, respectively 226  224 
Treasury stock –  4,890,181 and 4,828,679 shares at cost, respectively (42,226) (39,135)
Additional paid-in capital 125,208  119,748 
Retained earnings 345,967  314,289 
  Total LHC Group, Inc. stockholders’ equity 429,175  395,126 
Noncontrolling interest – non-redeemable 57,400  6,426 
  Total equity 486,575  401,552 
     Total liabilities and equity$  765,053 $  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
September 30,
Nine Months Ended
September 30,
  2017  2016  2017  2016 
Net service revenue$  272,872 $  230,797 $  779,700 $  679,380 
Cost of service revenue 172,856  140,832  488,384  413,561 
Gross margin 100,016  89,965  291,316  265,819 
Provision for bad debts 3,194  3,275  8,238  11,658 
General and administrative expenses 75,669  66,999  221,077  201,296 
(Gain) Loss on disposal of assets (177) 142  (23) 1,389 
Operating income 21,330  19,549  62,024  51,476 
Interest expense (995) (816) (2,615) (2,167)
Income before income taxes and
  noncontrolling interest
 20,335  18,733  59,409  49,309 
Income tax expense 7,445  6,562  20,410  15,500 
Net income 12,890  12,171  38,999  33,809 
Less net income attributable to
  noncontrolling interests
 1,984  2,555  7,321  7,043 
Net income attributable to LHC Group, Inc.’s common stockholders$  10,906 $  9,616 $  31,678 $  26,766 
     
Earnings per share attributable to LHC Group, Inc.’s common stockholders:    
Basic$  0.61 $  0.55 $  1.79 $  1.53 
Diluted$  0.61 $  0.54 $  1.77 $  1.52 
     
Weighted average shares outstanding:    
Basic 17,740,818  17,588,163  17,704,561  17,546,773 
Diluted 18,010,522  17,719,473  17,931,700  17,664,284 

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

 Nine Months Ended
September 30,
 2017  2016 
Operating activities:  
Net income$  38,999 $  33,809 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization expense 9,680  9,024 
Provision for bad debts 8,238  11,658 
Stock-based compensation expense 4,522  3,518 
Deferred income taxes 6,245  6,062 
Loss on disposal of assets (23) 1,389 
Impairment of intangibles and other 81   
Changes in operating assets and liabilities, net of acquisitions:  
Receivables (19,569) (21,175)
Prepaid expenses and other assets (3,859) 450 
Prepaid income taxes (4,879) (2,482)
Accounts payable and accrued expenses 26,038  17,633 
Income taxes payable (3,499)  
Net amounts due to/from governmental entities (279) (2,043)
Net cash provided by operating activities 61,695  57,843 
   
Investing activities:  
Purchases of property, building and equipment (7,944) (14,576)
Cash paid for acquisitions, primarily goodwill and intangible assets (61,247) (20,332)
Other   273 
Net cash used in investing activities (69,191) (34,635)
   
Financing activities:  
Proceeds from line of credit 63,000  38,000 
Payments on line of credit (31,000) (44,000)
Proceeds from employee stock purchase plan 776  663 
Payments on debt (192) (156)
Noncontrolling interest distributions (8,406) (6,859)
Excess tax benefits from vesting of stock awards   1,293 
Withholding taxes paid on stock-based compensation (3,091) (1,931)
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 21,154  (12,829)
Change in cash 13,658  10,379 
Cash at beginning of period 3,264  6,139 
Cash at end of period$  16,922 $  16,518 
   
Supplemental disclosures of cash flow information:  
Interest paid$  2,694 $  2,329 
Income taxes paid$  22,376 $  11,390 

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

 Three Months Ended September 30, 2017
 Home
Health
Services
Hospice
Services
Community-
Based
Services
Facility-
Based
Services
Total
Net service revenue$  198,978 $  41,291 $  12,146 $  20,457 $  272,872 
Cost of service revenue 123,204  27,441  8,971  13,240  172,856 
Provision for bad debts 2,661  234  30  269  3,194 
General and administrative expenses 55,980  11,263  2,387  6,039  75,669 
(Gain) loss on disposal of assets 20  13  (210) (177)
Operating income 17,113  2,340  758  1,119  21,330 
Interest expense (746) (149) (50) (50) (995)
Income before income taxes and noncontrolling interest 16,367  2,191  708  1,069  20,335 
Income tax expense 5,703  931  338  473  7,445 
Net income 10,664  1,260  370  596  12,890 
Less net income attributable to noncontrolling interests 1,759  273  (21) (27) 1,984 
Net income attributable to
  LHC Group, Inc.’s
  common stockholders
$  8,905 $  987 $  391 $  623 $  10,906 
Total assets$  515,562 $  156,296 $  44,621 $  48,574 $  765,053 


 Three Months Ended September 30, 2016
 Home
Health
Services
Hospice
Services
Community-
Based
Services
Facility-
Based
Services
Total
Net service revenue$  167,529 $  35,322 $  11,793 $  16,153 $  230,797 
Cost of service revenue 100,057  21,243  9,100  10,432  140,832 
Provision for bad debts 2,049  797  190  239  3,275 
General and administrative expenses 50,293  9,491  2,263  4,952  66,999 
Loss on disposal of assets 20  5    117  142 
Operating income 15,110  3,786  240  413  19,549 
Interest expense (612) (90) (41) (73) (816)
Income before income taxes and noncontrolling interest 14,498  3,696  199  340  18,733 
Income tax expense 5,133  1,275  83  71  6,562 
Net income 9,365  2,421  116  269  12,171 
Less net income attributable to noncontrolling interests 1,853  553    149  2,555 
Net income attributable to
  LHC Group, Inc.’s
  common stockholders
$  7,512 $  1,868 $  116 $  120 $  9,616 
Total assets$  425,923 $  119,906 $  33,549 $  34,075 $  613,453 


LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION (Continued)
(Amounts in thousands)
(Unaudited)

 Nine Months Ended September 30, 2017
 Home
Health
Services
Hospice
Services
Community-
Based
Services
Facility-
Based
Services
Total
Net service revenue$  575,180 $  116,249 $  33,807 $  54,464 $  779,700 
Cost of service revenue 352,896  75,187  24,905  35,396  488,384 
Provision for bad debts 5,796  1,393  404  645  8,238 
General and administrative expenses 165,153  32,404  6,957  16,563  221,077 
(Gain) loss on disposal of assets 39  21    (83) (23)
Operating income 51,296  7,244  1,541  1,943  62,024 
Interest expense (1,961) (393) (130) (131) (2,615)
Income before income taxes and noncontrolling interest 49,335  6,851  1,411  1,812  59,409 
Income tax expense 16,712  2,439  602  657  20,410 
Net income 32,623  4,412  809  1,155  38,999 
Less net income (loss) attributable to noncontrolling interests 6,053  1,038  (7) 237  7,321 
Net income attributable to
  LHC Group, Inc.’s
  common stockholders
$  26,570 $  3,374 $  816 $  918 $  31,678 


 Nine Months Ended September 30, 2016
 Home
Health
Services
Hospice
Services
Community-
Based
Services
Facility-
Based
Services
Total
Net service revenue$  492,090 $  100,051 $  32,823 $  54,416 $  679,380 
Cost of service revenue 294,359  61,836  24,656  32,710  413,561 
Provision for bad debts 8,122  2,364  488  684  11,658 
General and administrative expenses 150,948  27,787  6,557  16,004  201,296 
Loss on disposal of assets 811  329  46  203  1,389 
Operating income 37,850  7,735  1,076  4,815  51,476 
Interest expense (1,640) (232) (106) (189) (2,167)
Income before income taxes and noncontrolling interest 36,210  7,503  970  4,626  49,309 
Income tax expense 11,026  2,484  413  1,577  15,500 
Net income 25,184  5,019  557  3,049  33,809 
Less net income (loss) attributable to noncontrolling interests 5,002  1,368  (57) 730  7,043 
Net income attributable to
  LHC Group, Inc.’s
  common stockholders
$  20,182 $  3,651 $  614 $  2,319 $  26,766 

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

 Three Months Ended
September 30,
Nine Months Ended
September 30,
  2017  2016  2017  2016 
Key Data:    
Home-Health Services:    
Home Health    
Locations 320  289  320  289 
Acquired 8  6  40  11 
De novo 0  1  0  3 
Divested/Consolidated 2  2  5  7 
Total new admissions 47,841  40,657  142,841  118,730 
Medicare new admissions 29,964  26,810  89,789  78,763 
Average daily census 43,450  38,511  42,862  38,320 
Average Medicare daily census 29,691  27,983  29,527  28,069 
Medicare completed and billed episodes 54,003  49,230  159,145  148,195 
Average Medicare case mix for completed and billed Medicare episodes 1.10  1.07  1.09  1.05 
Average reimbursement per completed and billed Medicare episodes$  2,832 $  2,724 $  2,790 $  2,670 
Total visits 1,480,593  1,160,924  4,207,499  3,437,653 
Total Medicare visits 1,012,098  856,177  2,912,689  2,526,405 
Average visits per completed and billed Medicare episodes 18.7  17.4  18.3  17.0 
Organic growth:(1)    
Net revenue 10.3% 5.4% 10.3% 6.1%
Net Medicare revenue 4.9% 4.0% 5.6% 4.8%
Total new admissions 6.2% 10.5% 9.7% 8.8%
Medicare new admissions  1.7% 8.1% 5.5% 6.0%
Average daily census 3.7% 1.7% 4.0% 2.3%
Average Medicare daily census -1.2% -0.1% -0.7% 0.8%
Medicare completed and billed episodes 2.0% 0.3% 1.2% 2.1%
     
Community-Based Services:    
Locations 12  11  12  11 
Acquired 1  1  1  1 
De novo 0  0  0  0 
Divested/Consolidated 0  1  0  3 
Average daily census 1,933  1,672  1,745  1,631 
Billable hours 369,700  354,998  1,056,222  990,129 
Revenue per billable hour$  32.85 $  33.22 $  32.01 $  33.15 
     
Hospice-Based Services:    
Locations 92  64  92  64 
Acquired 6  2  27  9 
De novo 0  0  0  0 
Divested/Consolidated 1  1  1  2 
Admissions 3,438  2,554  9,717  7,540 
Average daily census 3,108  2,736  2,988  2,593 
Patient days 285,971  251,753  815,755  710,415 
Average revenue per patient day$  144 $  140 $  143 $  141 
     
Facility-Based Services:    
Long-term Acute Care     
Locations 15  8  15  8 
Acquired 6  0  6  0 
Patient days 14,599  13,499  41,406  42,965 
Average revenue per patient day$  1,252 $  1,113 $  1,132 $  1,189 

(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.

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

 Three Months Ended
September 30,
  2017 2016
Net income attributable to LHC Group, Inc.’s common stockholders$  10,906$  9,616
Add (net of tax):  
Disposal costs on closure of underperforming location 129
Costs associated with CHRISTUS Health Joint Venture 483
Adjusted net income attributable to LHC Group, Inc.’s common stockholders$  11,518$  9,616

RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO LHC GROUP, INC.
PER DILUTED SHARE

 (Unaudited)

 Three Months Ended
September 30,
  2017 2016
Net income attributable to LHC Group, Inc.’s common stockholders
  per diluted share
$  0.61$  0.54
   
Add:  
Disposal costs on closure of underperforming location 0.01
Costs associated with CHRISTUS Health Joint Venture 0.02
Adjusted net income attributable to LHC Group, Inc.’s common stockholders per diluted share$  0.64$  0.54

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