LHC Group announces fourth quarter 2019 financial results

Strong organic growth and M&A activity drive favorable outlook for 2020

LAFAYETTE, La., Feb. 26, 2020 (GLOBE NEWSWIRE) -- LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the quarter and year ended December 31, 2019. Unless otherwise noted, all results are compared with the fourth quarter and year ended December 31, 2018.

Fourth Quarter of 2019 Financial Results – Strong Organic Growth by LHC Group Legacy Home Health and Hospice and Continued Sequential Improvement at Almost Family Locations

  • Net service revenue increased 4.2% to $531.3 million.
  • Net income attributable to LHC Group’s common stockholders increased 5.8% to $21.8 million. Earnings per diluted share attributable to LHC Group’s common stockholders increased 6.1% to $0.70, 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 12.0% to $35.9 million. Adjusted earnings per diluted share attributable to LHC Group’s common stockholders increased 11.7% to $1.15.
  • Adjusted EBITDA increased 2.9% to $53.3 million.
  • Adjusted results for the fourth quarter of 2019 exclude transaction and other transition related costs and expenses as well as charges and expenses related to certain closures and relocations, PDGM preparedness, departure of our former President and Chief Operating Officer and certain dispute settlements in the aggregate amount of $14.1 million after tax, or $0.45 per diluted share.
  • Organic growth in home health admissions was 10.3%, excluding Almost Family locations.
  • Organic growth in home health revenue was 4.2%, excluding Almost Family locations.
  • Organic growth in hospice admissions was 4.6%, excluding Almost Family locations.
  • Organic growth in hospice revenue was 5.0%, excluding Almost Family locations.

Full Year 2019 Financial Results – Another solid year of organic growth, margin expansion and M&A growth setting the stage for a strong 2020

  • Net service revenue increased 14.9% to $2.08 billion.
  • Net income attributable to LHC Group’s common stockholders increased 50.5% to $95.7 million. Earnings per diluted share attributable to LHC Group’s common stockholders increased 34.1% to $3.07 per diluted share.
  • Adjusted net income attributable to LHC Group’s common stockholders increased 41.3% to $139.4 million. Adjusted net income attributable to LHC Group’s common stockholders per diluted share increased 25.9% to $4.47.
  • Adjusted EBITDA increased 30.9% to $212.1 million.
  • Organic growth in home health admissions was 9.1%, excluding Almost Family locations.
  • Organic growth in home health revenue was 6.5%, excluding Almost Family locations.
  • Organic growth in hospice admissions was 5.6%, excluding Almost Family locations.
  • Organic growth in hospice revenue was 6.5%, excluding Almost Family locations.

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

Operational and Strategic Highlights

  • Across all of the operations of LHC Group, quality and patient satisfaction scores continue to exceed the national average and outpace industry peers.
  • 97% of LHC Group’s same store locations have CMS Quality Star ratings of four stars or greater when excluding Almost Family locations and other recent acquisitions.
  • The conversion of all Almost Family locations to LHC Group’s version of Homecare Homebase was completed as scheduled during the fourth quarter.
  • Combined LHC Group and Almost Family home health same store admission growth was 5.5% in the fourth quarter of 2019 as compared to the same period in 2018, and is on pace for combined home health same store admission growth nearly double that rate in the first quarter of 2020.
  • During 2019 and to date in 2020, LHC Group acquired 27 home health, 11 hospice, three home and community based services locations and one LTAC hospital in 13 states and the District of Columbia, the majority of which are hospital joint ventures. These acquisitions represent approximately $114.3 million in annualized revenue.

Commenting on the results, Keith G. Myers, LHC Group’s Chairman and Chief Executive Officer, said, “We maintained a high level of discipline and preparedness throughout 2019 as we readied LHC Group and our 32,000 employees to thrive under PDGM with extensive design, development, piloting, testing and training. With Almost Family, we executed a similar approach and a healthy dose of strategic patience to ensure those locations were operationally sound, quality scores were improved and overall on a solid footing in order to drive more aggressive growth in 2020. While these preparation head winds were heavier in the fourth quarter, we are confident that we are well positioned for success in 2020. We saw the early results from this strategy with over 5% combined organic growth in the fourth quarter and a combined organic growth rate nearly double that amount to date in the first quarter of 2020.”      

M&A Strategy – Historic Consolidation Opportunity Expected in 2020 and Beyond Will Expand Current Pipeline of Joint Ventures and Acquisitions
On December 1, 2019, LHC Group and LifePoint Health finalized the expansion of 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. LHC Group expects annualized revenue from the expansion of this joint venture of approximately $3.6 million.

On December 1, 2019, LHC Group completed the acquisition of a single freestanding home health provider – Life Wellness Home Health – in Las Vegas, Nevada. LHC Group expects annualized revenue from this acquisition of approximately $2.1 million.

On January 1, 2020, LHC Group finalized joint venture purchase and expansion agreements with DFW Home Health (a separate legal entity jointly owned by LHC Group, Texas Health Resources and a subsidiary of Methodist Health System) in Arlington, Texas; with LifePoint Health in Bryant, Arkansas; and with Ochsner Health System in South Louisiana. LHC Group expects annualized revenue from these transactions of approximately $23.8 million.

Myers noted, “We are entering the most significant period of change and consolidation opportunity for the in-home healthcare industry in nearly two decades. Early disruptions from the implementation of PDGM and the elimination of the RAP payment are already evident among the smaller home health agencies, and we expect this highly fragmented market to consolidate among the top providers in 2020 and beyond. Having completed approximately $114 million in acquisitions and joint ventures during 2019 and to date in 2020, the size and quality of our current pipeline and the volume of inbound requests from potential partners indicates we have the potential to deliver on record M&A activity. At the same time, we expect to capture additional market share through organic growth and accelerate our plans for expanding our hospice and home and community-based services across our national footprint.”  

Full Year 2020 and First Quarter 2020 Guidance - Earnings Growth at the Midpoint Reflects Strong Organic Growth, Margin Improvement on Recent Acquisitions and the Timing of the New PDGM Care Model Rollout
Full year 2020 net service revenue is expected to be in a range of $2.13 billion to $2.18 billion, earnings per diluted share is expected to be in a range of $4.60 to $4.80, and EBITDA, less non-controlling interest, is expected to be in a range of $230 million to $240 million. This guidance assumes an estimated effective tax rate of approximately 27%, which includes the impact of an excess tax benefit in March 2020 related to the vesting of restricted stock awards.  

For the first quarter ending March 31, 2020, net service revenue is expected to be $500 million to $510 million, earnings per diluted share is expected to be in a range of $0.70 to $0.80, and EBITDA, less non-controlling interest, is expected to be in a range of $33 million to $40 million. This guidance assumes an estimated effective tax rate of approximately 21%, which reflects the impact of an excess tax benefit in March 2020 related to the vesting of restricted stock awards.

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.

Joshua L. Proffitt, LHC Group’s Chief Financial Officer, added, “LHC Group enters 2020 with a number of industry and company-specific tailwinds that complement our competitive differentiators and drive our organic and inorganic growth expectations. Our intense focus on a unique employee and patient-first culture as well as superior clinical quality was at the heart of our preparations for operating under a new model in PDGM, but also enabled us to better pursue the organic and M&A opportunities this new environment is already presenting. As our first quarter and full year guidance suggests, there will be a ramp up throughout the year associated with strong organic growth, margin improvements across the former Almost Family locations and other recent acquisitions and the timing of the new PDGM care model rollout. Our differentiated approach through our joint venture strategy, ACO management business, use of data analytics and payment and clinical innovation have likewise positioned us to deploy our unique assets to benefit from the continued transition to value-based care.”

Conference Call
LHC Group will host a conference call on Thursday, February 27, 2020, at 9:00 a.m. Eastern time to discuss its fourth 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 March 5, 2020, by dialing (855) 859‑2056 (international callers: (404) 537-3406) and entering confirmation number 6183077.

The Company has posted supplemental financial information on the fourth 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 high-quality and affordable healthcare services to patients in the privacy and comfort of the 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 2020 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
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)

    As of December 31,
    2019   2018
ASSETS        
Current assets:        
Cash   $ 31,672     $ 49,363  
Receivables:        
Patient accounts receivable   284,962     252,592  
Other receivables   10,832     6,658  
Amounts due from governmental entities       830  
Total receivables, net   295,794     260,080  
Prepaid income taxes   9,652     11,788  
Prepaid expenses   21,304     24,775  
Other current assets   21,852     20,899  
Total current assets   380,274     366,905  
Property, building and equipment, net of accumulated depreciation of $69,441 and $55,253, respectively   97,908     79,563  
Goodwill   1,219,972     1,161,717  
Intangible assets, net of accumulated amortization of $16,431 and $15,176, respectively   305,556     297,379  
Assets held for sale   2,500     2,850  
Operating lease right of use asset   95,452      
Other assets   38,633     20,301  
Total assets   $ 2,140,295     $ 1,928,715  
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable and other accrued liabilities   $ 83,572     $ 77,135  
Salaries, wages and benefits payable   85,631     84,254  
Self insurance reserves   31,188     32,776  
Current operating lease liabilities   28,701      
Current portion of long-term notes payable       7,773  
Amounts due to governmental entities   1,880     4,174  
Total current liabilities   230,972     206,112  
Deferred income taxes   60,498     43,306  
Income taxes payable   3,867     4,297  
Revolving credit facility   253,000     235,000  
Long-term notes payable       930  
Operating lease payable   69,556      
Total liabilities   617,893     489,645  
Noncontrolling interest-redeemable   15,151     14,596  
Commitments and contingencies        
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; 36,129,280 and 35,835,348 shares issued, and 30,992,390 and 30,805,919 shares outstanding, respectively   361     358  
Treasury stock – 5,136,890 and 5,029,429 shares at cost, respectively   (60,060 )   (49,373 )
Additional paid-in capital   949,321     937,965  
Retained earnings   523,701     427,975  
Total LHC Group, Inc. stockholders’ equity   1,413,323     1,316,925  
Noncontrolling interest – non-redeemable   93,928     107,549  
Total stockholders’ equity   1,507,251     1,424,474  
Total liabilities and stockholders’ equity   $ 2,140,295     $ 1,928,715  
                 

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

  (Unaudited)
Three Months Ended
December 31, 
  Twelve Months Ended
 December 31,
  2019   2018   2019   2018
Net service revenue $ 531,315     $ 509,841     $ 2,080,241     $ 1,809,963  
Cost of service revenue 343,267     324,539     1,324,887     1,156,357  
Gross margin 188,048     185,302     755,354     653,606  
General and administrative expenses 155,372     145,609     596,006     537,916  
Other intangible impairment charge 200     3,562     7,734     4,689  
Operating income 32,476     36,131     151,614     111,001  
Interest expense (2,622 )   (3,255 )   (11,155 )   (9,679 )
Income before income taxes and noncontrolling interest 29,854     32,876     140,459     101,322  
Income tax expense 3,942     7,568     26,607     22,399  
Net income 25,912     25,308     113,852     78,923  
Less net income attributable to noncontrolling interests 4,109     4,756     18,126     15,349  
Net income attributable to LHC Group, Inc.’s common stockholders $ 21,803     $ 20,552     $ 95,726     $ 63,574  
               
Earnings per share:              
Basic $ 0.70     $ 0.67     $ 3.09     $ 2.31  
Diluted $ 0.70     $ 0.66     $ 3.07     $ 2.29  
Weighted average shares outstanding:              
Basic 30,978     30,778     30,933     27,498  
Diluted 31,270     31,142     31,210     27,773  
                       

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

    For the Year Ended December 31,
    2019   2018
Operating activities:        
         
Net income   $ 113,852     $ 78,923  
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization expense   18,254     16,362  
Amortization and impairment of operating lease right of use asset   33,368      
Stock-based compensation expense   9,646     9,358  
Deferred income taxes   18,400     19,453  
Loss on disposal of assets   802     319  
Impairment of goodwill and other   7,734     4,370  
Changes in operating assets and liabilities, net of acquisitions:        
Receivables   (38,907 )   (362 )
Prepaid expenses and other assets   607     (10,257 )
Prepaid income taxes   (78 )   (2,519 )
Accounts payable and accrued expenses   (3,082 )   (6,577 )
Operating lease payable   (28,062 )    
Income tax payable   (431 )   511  
Net amounts due to/from governmental entities   (1,641 )   (996 )
Net cash provided by operating activities   130,462     108,585  
Investing activities:        
Cash paid for acquisitions, net of cash acquired   (74,293 )   7,702  
Purchases of property, building and equipment   (33,609 )   (32,993 )
Net cash used in investing activities   (107,902 )   (25,291 )
Financing activities:        
Proceeds from line of credit   267,000     303,943  
Payments on line of credit   (249,000 )   (319,743 )
Proceeds from employee stock purchase plan   2,066     1,342  
Payments on debt   (7,650 )   (4,975 )
Payments on deferred financing fees       (1,884 )
Noncontrolling interest distributions   (24,082 )   (12,134 )
Purchase of additional controlling interest   (19,663 )   (412 )
Sale of noncontrolling interest   756     4,208  
Withholding taxes paid on stock-based compensation   (10,687 )   (7,125 )
Exercise of options   1,009      
Net cash (used in) provided by financing activities   (40,251 )   (36,780 )
Change in cash   (17,691 )   46,514  
Cash at beginning of period   49,363     2,849  
Cash at end of period   $ 31,672     $ 49,363  
Supplemental disclosures of cash flow information        
Interest paid   $ 11,015     $ 9,067  
Income taxes paid   $ 10,109     $ 5,703  
Non-Cash Operating activity:                  
Operating right of use assets in exchange for lease obligations     $ 129,290        
Non-Cash Investing activity:                  
Accrued capital expenditures       2,729       3,449  
Consideration transferred for a business combination             795,412  
Non-Cash Financing activity:                  
Purchase of additional controlling interest             7,705  


LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)

  Three Months Ended December 31, 2019
  Home health   Hospice   Home and
community-
based
  Facility-
based
  HCI   Total
Net service revenue $ 389,506     $ 58,101     $   50,845     $ 27,418     $ 5,445     $ 531,315  
Cost of service revenue 244,953     36,324       38,763     19,462     3,765     343,267  
Gross margin 144,553     21,777       12,082     7,956     1,680     188,048  
General and administrative expenses 115,161     16,023       11,021     10,348     2,819     155,372  
Impairment of intangibles and other 180     20                   200  
Operating income (loss) 29,212     5,734       1,061     (2,392 )   (1,139 )   32,476  
Interest expense (1,843 )   (293 )     (255 )   (154 )   (77 )   (2,622 )
Income (loss) before income taxes and noncontrolling interest 27,369     5,441       806     (2,546 )   (1,216 )   29,854  
Income tax expense (benefit) 3,969     637       115     (501 )   (278 )   3,942  
Net income (loss) 23,400     4,804       691     (2,045 )   (938 )   25,912  
Less net income (loss) attributable to noncontrolling interests 3,346     1,267       (149 )   (344 )   (11 )   4,109  
Net income (loss) attributable to LHC Group, Inc.’s common stockholders $ 20,054     $ 3,537     $ 840     $ (1,701 )   $ (927 )   $ 21,803  
Total assets $ 1,486,012     $ 244,105     $ 249,524     $ 91,337     $ 69,317     $ 2,140,295  
                                               


  Three Months Ended December 31, 2018
  Home health   Hospice   Home and
community-
based
  Facility-
based
  HCI   Total
Net service revenue $ 367,107     $ 52,976     $   52,885     $ 27,439     $ 9,434     $ 509,841  
Cost of service revenue 225,999     35,435       40,329     17,797     4,979     324,539  
Gross margin 141,108     17,541       12,556     9,642     4,455     185,302  
General and administrative expenses 100,358     17,798       11,407     9,903     6,143     145,609  
Impairment of intangibles and other 1,073     162       (10 )   200     2,137     3,562  
Operating income (loss) 39,677     (419 )     1,159     (461 )   (3,825 )   36,131  
Interest expense (2,427 )   (415 )     (82 )   (181 )   (150 )   (3,255 )
Income (loss) before income taxes and noncontrolling interest 37,250     (834 )     1,077     (642 )   (3,975 )   32,876  
Income tax expense (benefit) 8,688     (141 )     370     (439 )   (910 )   7,568  
Net income (loss) 28,562     (693 )     707     (203 )   (3,065 )   25,308  
Less net income (loss) attributable to noncontrolling interests 3,873     548       (119 )   461     (7 )   4,756  
Net income (loss) attributable to LHC Group, Inc.’s common stockholders $ 24,689     $ (1,241 )   $ 826     $ (664 )   $ (3,058 )   $ 20,552  
Total assets $ 1,336,537     $ 209,680     $ 236,523     $ 70,261     $ 75,714     $ 1,928,715  
                                               

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

    Year Ended December 31, 2019
    Home health   Hospice   Home and
community-
based
  Facility-
based
  HCI   Total
Net service revenue   $ 1,503,393     $ 226,922     $ 208,455     $ 111,809     $ 29,662     $ 2,080,241  
Cost of service revenue   939,035     140,177     157,817     73,274     14,584     1,324,887  
Gross margin   564,358     86,745     50,638     38,535     15,078     755,354  
General and administrative expenses   437,276     61,190     44,025     38,358     15,157     596,006  
Impairment of intangibles and other   7,443     291                 7,734  
Operating income (loss)   119,639     25,264     6,613     177     (79 )   151,614  
Interest expense   (7,762 )   (1,269 )   (1,112 )   (678 )   (334 )   (11,155 )
Income (loss) before income taxes and noncontrolling interests   111,877     23,995     5,501     (501 )   (413 )   140,459  
Income tax expense (benefit)   21,147     4,353     1,394     (204 )   (83 )   26,607  
Net income (loss)   90,730     19,642     4,107     (297 )   (330 )   113,852  
Less net income (loss) attributable to noncontrolling interests   14,651     3,979     (906 )   435     (33 )   18,126  
Net income (loss) attributable to LHC Group, Inc.’s common stockholders   $ 76,079     $ 15,663     $ 5,013     $ (732 )   $ (297 )   $ 95,726  
Total assets   $ 1,487,031     $ 244,265     $ 249,670     $ 91,424     $ 69,361     $ 2,141,751  
                                                 


    Year Ended December 31, 2018
    Home health   Hospice   Home and
community-
based
  Facility-
based
  HCI   Total
Net service revenue   $ 1,291,457     $ 199,118     $ 172,501     $ 113,784     $ 33,103     $ 1,809,963  
Cost of service revenue   802,006     130,991     130,660     76,899     15,801     1,156,357  
Gross margin   489,451     68,127     41,841     36,885     17,302     653,606  
General and administrative expenses   378,124     60,933     40,467     39,638     18,754     537,916  
Impairment of intangibles and other   1,816     186     (6 )   554     2,139     4,689  
Operating income (loss)   109,511     7,008     1,380     (3,307 )   (3,591 )   111,001  
Interest expense   (7,060 )   (1,529 )   (76 )   (545 )   (469 )   (9,679 )
Income (loss) before income taxes and noncontrolling interests   102,451     5,479     1,304     (3,852 )   (4,060 )   101,322  
Income tax expense (benefit)   22,711     1,227     420     (1,136 )   (823 )   22,399  
Net income (loss)   79,740     4,252     884     (2,716 )   (3,237 )   78,923  
Less net income (loss) attributable to noncontrolling interests   13,361     1,764     (275 )   589     (90 )   15,349  
Net income (loss) attributable to LHC Group, Inc.’s common stockholders   $ 66,379     $ 2,488     $ 1,159     $ (3,305 )   $ (3,147 )   $ 63,574  
Total assets   $ 1,336,988     $ 209,680     $ 236,072     $ 70,261     $ 75,714     $ 1,928,715  
                                                 


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

    Three Months Ended
December 31,
  Twelve Months Ended
December 31,
Key Data:   2019   2018   2019   2018
                 
Home Health Services:                
Locations   553       555     553     555    
Acquired   2       4     16     278    
De novo             4        
Divested/consolidated   (4 )     (18 )   (22 )   (38 )  
Total new admissions   102,940       92,168     389,459     331,839    
Medicare new admissions   59,664       56,919     232,007     206,077    
Average daily census   78,380       75,869     77,025     75,946    
Average Medicare daily census   49,108       49,858     49,341     50,491    
Medicare completed and billed episodes   96,065       93,950     372,816     338,247    
Average Medicare case mix for completed and billed Medicare episodes   1.08       1.11     1.09     1.10    
Average reimbursement per completed and billed Medicare episodes   $ 3,058       $ 2,991     $ 3,046     $ 2,934    
Total visits   2,581,022       2,485,083     10,283,251     8,957,390    
Total Medicare visits   1,640,023       1,659,256     6,688,321     6,034,664    
Average visits per completed and billed Medicare episodes   17.1       17.7     17.9     17.8    
Organic growth excluding Almost Family (1)(2)                
Net revenue   4.2   %   6.6 %   6.5 %   8.5   %
Net Medicare revenue   3.2   %   1.4 %   3.4 %   4.0   %
Total new admissions   10.3   %   7.8 %   9.1 %   8.2   %
Medicare new admissions   4.2   %   3.5 %   2.9 %   4.8   %
Average daily census   5.2   %   2.9 %   5.1 %   2.9   %
Average Medicare daily census   0.1   %   (1.1 )%   0.0  %   (0.9 ) %
Medicare completed and billed episodes   2.3   %   1.0 %   1.3 %   1.1   %
                 
Hospice Services:                
Locations   110       108     110     108    
Acquired   3       2     8     22    
De novo                 1    
Divested/Consolidated   (1 )     (3 )   (6 )   (6 )  
Admissions   4,768       4,558     18,515     17,697    
Average daily census   4,213       3,995     4,062     3,603    
Patient days   389,926       351,742     1,483,146     1,314,581    
Average revenue per patient day   $ 151.82       $ 152.56     $ 152.87     $ 153.64    
Organic growth excluding Almost Family: (1)(2)                
Total new admissions   4.6   %   9.2 %   5.6 %   7.2   %
                 
Home and Community-Based Services:                
Locations (3)   107       81     107     81    
Acquired   2       1     2     65    
De novo             24     4    
Divested/Consolidated                    
Average daily census   13,896       14,642     13,910     14,392    
Billable hours   2,111,816       2,257,127     8,907,461     7,259,191    
Revenue per billable hour   $ 24.96       $ 23.87     $ 24.06     $ 24.17    
                 
Facility-Based Services:                
Long-term Acute Care                
Locations   13       12     13     12    
Acquired   1           1        
Divested/Consolidated         (1 )       (2 )  
Patient days   20,313       18,409     78,837     83,889    
Average revenue per patient day   $ 1,287       $ 1,359     $ 1,304     $ 1,269    
Occupancy rate   64.7   %   64.5 %   67.0 %   74.1   %

(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 were 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
 December 31,
Twelve Months Ended
 December 31,
    2019   2018   2019   2018
Revenue   $ 533,824     $ 515,638     $ 2,101,908     $ 1,835,478  
Less:  Implicit price concession (1)   2,509     5,796     21,667     25,515  
Net service revenue   $ 531,315     $ 509,842     $ 2,080,241     $ 1,809,963  
                                 

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

    Three Months Ended
 December 31,
Twelve Months Ended
 December 31,
    2019   2018   2019   2018
Net income attributable to LHC Group, Inc.’s common stockholders   $ 21,803     $ 20,552     $ 95,726     $ 63,574  
Add (net of tax):                
AFAM and other acquisition expenses (2)   5,303     4,235     25,766     23,524  
Closures/relocations/consolidations (3)   1,108     7,271     5,830     12,070  
Operation realignment and PDGM implementation cost  (4)   5,032         5,302      
Dispute settlements (5)   2,671         2,671      
Provider moratorium impairment (6)           4,332      
Net tax benefit related to Almost Family acquisition               (511 )
Adjusted net income attributable to LHC Group, Inc.’s common stockholders   $ 35,917     $ 32,058     $ 139,357     $ 98,657  
                                 

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

    Three Months Ended
December 31,
Twelve Months Ended
 December 31,
    2019   2018   2019   2018
Net income attributable to LHC Group, Inc.’s common stockholders   $ 0.70     $ 0.66     $ 3.07     $ 2.29  
Add (net of tax):                
AFAM and other acquisition expenses (2)   0.17     0.14     0.83     0.85  
Closures/relocations/consolidations (3)   0.04     0.23     0.19     0.43  
Operation realignment and PDGM implementation cost  (4)   0.16         0.16      
Dispute settlements (5)   0.08         0.08      
Provider moratorium impairment (6)           0.14      
Net tax benefit related to Almost Family acquisition               (0.02 )
Adjusted net income attributable to LHC Group, Inc.’s common stockholders   $ 1.15     $ 1.03     $ 4.47     $ 3.55  
                                 
  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 ($7.3 million pre-tax in the three months ended December 31, 2019 and $35.6 million in the twelve months ended December 31, 2019).
  3. Expenses and impairments associated with the closure or consolidation of 5 locations in the fourth quarter of 2019 along with residual costs and expenses in connection with closures in prior periods ($1.5 million pre-tax in the three months ended December 31, 2019 and $8.1 million in the twelve months ended December 31, 2019).
  4. Expenses, severance payments and other benefits associated with the separation agreement from the resignation of our former Chief Operating Officer effective December 31, 2019, along with expenses and costs associated with a realignment of our home health divisions and PDGM preparedness, software implementation and training cost ($6.9 million pre-tax in the three months ended December 31, 2019 and in the twelve months ended December 31, 2019).
  5. In the fourth quarter of 2019, the Company settled disputed contractual payments ($3.7 million pre-tax in the three months ended December 31, 2019 and in the twelve months ended December 31, 2019).
  6. During the twelve months ended December 31, 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
December 31,
Twelve Months Ended
December 31,
    2019   2018   2019   2018
Net income attributable to LHC Group, Inc.’s common stockholders   $ 21,803     $ 20,552     $ 95,726     $ 63,574  
Add:                
Income tax expense   3,942     7,568     26,607     22,399  
Interest expense, net   2,622     3,255     11,156     9,679  
Depreciation and amortization   5,442     4,376     18,254     16,362  
Adjustment items (7)   19,522     16,092     60,363     49,972  
Adjusted EBITDA   $ 53,331     $ 51,843     $ 212,106     $ 161,986  
                                 


7. Adjustment items (pre-tax):                
Almost Family merger and other acquisition expenses   7,335     5,922     35,640     33,037  
Closures/relocation/consolidations   1,532     10,170     8,068     16,935  
Operation realignment and PDGM implementation cost   6,960         6,960      
Dispute settlements   3,695         3,695      
Provider moratorium impairment           6,000      
Total adjustments   $ 19,522     $ 16,092     $ 60,363     $ 49,972  
                                 

Contact:
Eric Elliott

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

LHC Group

Source: LHC Group