LHC Group Announces Second Quarter 2009 Results

Company Reaffirms Guidance for Full-Year 2009

LAFAYETTE, La.--(BUSINESS WIRE)-- LHC Group, Inc. (NASDAQ: LHCG):

Second Quarter Highlights:

    --  Net service revenue increases 47.1% to $132.6 million;
    --  Net income attributable to LHC Group increases 62.0% to $10.3 million;
        and
    --  Diluted earnings per share increases 62.9% to $0.57.

LHC Group, Inc. (NASDAQ: LHCG), one of the largest providers of home health services in the United States, announced today its financial results for the second quarter and six months ended June 30, 2009.

Financial Results for the Second Quarter

    --  Net service revenue for the second quarter of 2009 increased 47.1% to
        $132.6 million compared with $90.1 million for the same period in 2008.
    --  Home-based net service revenue for the second quarter of 2009 increased
        53.9% to $117.6 million compared with $76.4 million for the same period
        in 2008.
    --  Net income attributable to LHC Group for the second quarter of 2009
        totaled $10.3 million, or $0.57 per diluted share, compared with net
        income of $6.3 million, or $0.35 per diluted share, for the second
        quarter of 2008.
    --  Days sales outstanding, or DSO, for the three months ended June 30,
        2009, was 45 days as compared with 60 days for the same three-month
        period in 2008.

In commenting on the results, Keith G. Myers, Chief Executive Officer of LHC Group, said, "We are pleased to report another fundamentally strong quarter. All credit goes to the hard working, caring and dedicated employees of the LHC Group family. We remain focused on our long-term goals and objectives and are constantly reevaluating and reinventing ourselves by making the necessary investments in people and technology to become even more efficient and deliver even higher quality outcomes to every patient we serve. Our long-term commitment to delivering cost-effective, high-quality healthcare services to the patients, families and communities we serve is at the heart of everything we do and every decision we make."

Financial Results for the Six Months

    --  Net service revenue for the six months ended June 30, 2009, increased
        48.2% to $257.2 million compared with $173.6 million for the same period
        in 2008.
    --  Home-based net service revenue for the six months ended June 30, 2009,
        increased 56.8% to $227.0 million compared with $144.8 million for the
        same period in 2008.
    --  Net income attributable to LHC Group for the six months ended June 30,
        2009, totaled $21.3 million, or $1.19 per diluted share, compared with
        net income of $11.7 million, or $0.65 per diluted share, for the same
        period in 2008.

Guidance

The Company is reaffirming its guidance issued on May 6, 2009, of full-year net service revenue in the range of $500 million to $510 million and fully diluted earnings per share in the range of $2.15 to $2.25. This guidance does not take into account the impact of any future acquisitions, if made, or de novo locations, if opened.

Conference Call

LHC Group will conduct a conference call on Wednesday, August 5, 2009, beginning at 10:00 a.m. Eastern time. Speakers on the call will include key members of the LHC Group senior management team. The toll-free number to call for this interactive teleconference is (877) 681-3378 (international callers should call 719-325-4816). A telephonic replay of the conference call will be available through midnight on Wednesday, August 12, 2009, by dialing (888) 203-1112 (international callers should call 719-457-0820) and entering confirmation number 3146340.

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, or at www.opencompany.info. An online replay of the conference call will also be available on the Company's website for one year, beginning approximately an hour following the conclusion of the live broadcast.

About LHC Group, Inc.

LHC Group, Inc. (www.LHCGroup.com) is one of the largest providers of home health services in the United States providing quality cost effective healthcare services to patients within the comfort and privacy of their home or place of residence.

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, 2008, 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

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share data)

                                                     June 30,     Dec. 31,

                                                     2009         2008

                                                     (Unaudited)

ASSETS

Current assets:

Cash                                                 $ 1,223      $ 3,511

Receivables:

Patient accounts receivable, less allowance for
uncollectible accounts of $10,386 and $9,976,          65,753       61,524
respectively

Other receivables                                      3,657        2,317

Amounts due from governmental entities                 1,432        2,434

Total receivables, net                                 70,842       66,275

Deferred income taxes                                  5,360        4,959

Assets held for sale                                   450          -

Prepaid income taxes                                   3,522        -

Prepaid expenses and other current assets              6,608        6,464

Total current assets                                   88,005       81,209

Property, building and equipment, net                  18,338       16,348

Goodwill                                               124,141      112,572

Intangible assets, net                                 35,958       29,975

Other assets                                           3,155        3,296

Total assets                                         $ 269,597    $ 243,400

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable and other accrued liabilities       $ 20,499     $ 15,422

Salaries, wages and benefits payable                   19,815       16,400

Amounts due to governmental entities                   3,219        6,023

Income taxes payable                                   -            10,682

Current portion of long-term debt and capital lease    463          583
obligations

Total current liabilities                              43,996       49,110

Deferred income taxes                                  8,125        5,718

Long-term debt, less current portion                   4,314        4,483

Other long-term obligations                            77           145

Stockholders' equity:

LHC Group, Inc. stockholders' equity:

Common stock - $0.01 par value: 40,000,000 shares
authorized; 20,933,407 and 20,853,463 shares issued    179          179
and 17,961,857 and 17,895,832 shares outstanding,
respectively

Treasury stock - 2,971,550 and 2,957,631 shares at     (3,364  )    (3,072  )
cost, respectively

Additional paid-in capital                             86,982       85,404

Retained earnings                                      115,702      94,310

Total LHC Group, Inc. stockholders' equity             199,499      176,821

Noncontrolling interest                                13,586       7,123

Total equity                                           213,085      183,944

Total liabilities and stockholders' equity           $ 269,597    $ 243,400




LHC GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except share and per share data)

(unaudited)

                  Three Months Ended              Six Months Ended

                  June 30,                        June 30,

                    2009            2008            2009            2008

Net service       $ 132,593       $ 90,115        $ 257,215       $ 173,588
revenue

Cost of service     66,588          44,935          128,809         86,207
revenue

Gross margin        66,005          45,180          128,406         87,381

Provision for       1,807           3,623           2,990           7,309
bad debts

General and
administrative      43,520          29,347          82,417          56,844
expenses

Operating income    20,678          12,210          42,999          23,228

Interest expense    (39        )    (80        )    (98        )    (228       )

Non-operating       84              407             (376       )    808
(loss) income

Income from
continuing
operations
before income       20,723          12,537          42,525          23,808
taxes and
noncontrolling
interests

Income tax          6,415           3,907           13,153          7,270
expense

Income from
continuing          14,308          8,630           29,372          16,538
operations

Loss from
discontinued
operations (net
of income tax       80              37              80              167
benefit of $50,
$24, $50 and
$108,
respectively)

Net income          14,228          8,593           29,292          16,371

Less net income
attributable to     3,966           2,259           7,948           4,698
noncontrolling
interests

Net income
attributable to     10,262          6,334           21,344          11,673
LHC Group, Inc.

Redeemable
noncontrolling      20              (36        )    48              65
interest

Net income
available to LHC
Group, Inc.'s     $ 10,282        $ 6,298         $ 21,392        $ 11,738
common
stockholders

Earnings per
share - basic
and diluted:

Income from
continuing
operations        $ 0.57          $ 0.35          $ 1.19          $ 0.66
attributable to
LHC Group, Inc.

Loss from
discontinued
operations          -               -               -               (0.01      )
attributable to
LHC Group, Inc.

Net income
attributable to     0.57            0.35            1.19            0.65
LHC Group, Inc.

Redeemable
noncontrolling      -               -               -               0.01
interest

Net income
available to LHC
Group, Inc.'s     $ 0.57          $ 0.35          $ 1.19          $ 0.66
common
stockholders

Weighted average
shares
outstanding:

Basic               17,959,823      17,849,820      17,942,119      17,824,895

Diluted             18,030,373      17,883,964      17,992,331      17,875,527




LHC GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

                                                      Six Months Ended

                                                      June 30,

                                                      2009         2008

Operating activities

Net income                                            $ 29,292     $ 16,218

Adjustments to reconcile net income to net cash
provided by operating activities:

Depreciation and amortization expense                   2,286        1,757

Provision for bad debts                                 3,035        7,663

Stock-based compensation expense                        1,101        816

Deferred income taxes                                   1,256        829

Loss on impairment of intangible assets                 542          -

Gain on sale of assets                                  -            (339    )

Changes in operating assets and liabilities, net of
acquisitions:

Receivables                                             (8,605  )    1,240

Prepaid expenses, income taxes and other assets         (3,255  )    (728    )

Accounts payable and accrued expenses                   (2,847  )    4,282

Net amounts due to/from governmental entities           (1,802  )    210

Net cash provided by operating activities               21,003       31,948

Investing activities

Purchases of property, building, and equipment          (3,741  )    (6,467  )

Proceeds from sale of assets                            -            3,090

Cash paid for acquisitions, primarily goodwill and      (12,176 )    (32,855 )
intangible assets

Net cash used in investing activities                   (15,917 )    (36,232 )

Financing activities

Proceeds from line of credit                            18,134       30,057

Payments on line of credit                              (18,134 )    (21,976 )

Payment of deferred financing fees                      (260    )    -

Proceeds from debt issuance                             -            5,050

Principal payments on debt                              (240    )    (3,050  )

Payments on capital leases                              (65     )    (49     )

Excess tax benefits from vesting of restricted stock    95           33

Proceeds from employee stock purchase plan              275          253

Noncontrolling interest distributions                   (7,179  )    (4,309  )

Net cash (used in) provided by financing activities     (7,374  )    6,009

Change in cash                                          (2,288  )    1,725

Cash at beginning of period                             3,511        1,155

Cash at end of period                                 $ 1,223      $ 2,880

Supplemental disclosures of cash flow information

Interest paid                                         $ 98         $ 228

Income taxes paid                                     $ 26,040     $ 8,485





LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(dollars in thousands)

(unaudited)

                Three Months Ended                    Six Months Ended

                June 30, 2009                         June 30, 2009

                Home-        Facility-                Home-        Facility-
                Based        Based       Total        Based        Based       Total
                Services     Services                 Services     Services

Net service     $ 117,608    $ 14,985    $ 132,593    $ 226,956    $ 30,259    $ 257,215
revenue

Cost of
service           57,376       9,212       66,588       110,962      17,847      128,809
revenue

Provision for     1,807        -           1,807        2,836        154         2,990
bad debts

General and
administrative    39,954       3,566       43,520       74,866       7,551       82,417
expenses

Operating         18,471       2,207       20,678       38,292       4,707       42,999
income

Interest          (34     )    (5     )    (39     )    (86     )    (12    )    (98     )
expense

Non-operating     64           20          84           (410    )    34          (376    )
(loss) income

Income from
continuing
operations
before income     18,501       2,222       20,723       37,796       4,729       42,525
taxes and
noncontrolling
interest

Noncontrolling    3,603        363         3,966        7,101        847         7,948
interest

Income from
continuing
operations        14,898       1,859       16,757       30,695       3,882       34,577
before income
taxes

Total assets    $ 245,503    $ 24,094    $ 269,597    $ 245,503    $ 24,094    $ 269,597

                Three Months Ended                    Six Months Ended

                June 30, 2008                         June 30, 2008

                Home-        Facility-                Home-        Facility-
                Based        Based       Total        Based        Based       Total
                Services     Services                 Services     Services

Net service     $ 76,419     $ 13,696    $ 90,115     $ 144,782    $ 28,806    $ 173,588
revenue

Cost of
service           36,912       8,023       44,935       69,760       16,447      86,207
revenue

Provision for     3,085        538         3,623        6,331        978         7,309
bad debts

General and
administrative    25,589       3,758       29,347       49,281       7,563       56,844
expenses

Operating         10,833       1,377       12,210       19,410       3,818       23,228
income

Interest          (62     )    (18    )    (80     )    (163    )    (65    )    (228    )
expense

Non-operating     360          47          407          645          163         808
(loss) income

Income from
continuing
operations
before income     11,131       1,406       12,537       19,892       3,916       23,808
taxes and
noncontrolling
interest

Noncontrolling    1,978        281         2,259        3,717        981         4,698
interest

Income from
continuing
operations        9,153        1,125       10,278       16,175       2,935       19,110
before income
taxes

Total assets    $ 181,362    $ 22,781    $ 204,143    $ 181,362    $ 22,781    $ 204,143




    LHC GROUP, INC. AND SUBSIDIARIES

    SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA

    (unaudited)

                          Three Months Ended        Six Months Ended

                          June 30,                  June 30,

                          2009         2008         2009           2008

    Key Data:

    Home Health             220          167          220            167
    locations

    Hospice locations       21           10           21             10

    Acquired (1)            6            18           9              21

    De novo (1)             7            3            9              8

    Home Nursing:

    Total new admissions    19,779       13,688       37,883         27,055

    Medicare new            14,721       10,053       26,963         19,827
    admissions

    Average weekly          29,182       20,469       28,508         19,714
    census

    Average Medicare        23,592       16,544       22,978         15,710
    weekly census

    Medicare completed      41,413       29,304       78,370         55,097
    episodes

    Average Medicare
    case mix for            1.26         1.25         1.26           1.25
    completed Medicare
    episodes

    Average
    reimbursement per     $ 2,244      $ 2,091      $ 2,287        $ 2,098
    completed Medicare
    episodes

    Total visits            733,777      529,869      1,412,471      1,008,893

    Total Medicare          581,669      408,943      1,115,889      768,023
    visits

    Average visits per
    completed Medicare      14.0         14.0         14.2           13.9
    episodes

    Organic growth (2):

    Net revenue             24.5    %    11.0    %    27.7      %    9.0       %

    Net Medicare revenue    26.7    %    13.1    %    29.9      %    10.9      %

    Total new admissions    5.0     %    -0.4    %    5.8       %    -0.9      %

    Medicare new            8.6     %    2.5     %    2.7       %    5.5       %
    admissions

    Average weekly          18.4    %    2.4     %    20.4      %    0.3       %
    census

    Average Medicare        20.7    %    8.5     %    24.4      %    5.5       %
    weekly census

    Medicare completed      19.9    %    24.2    %    22.0      %    26.7      %
    episodes

    Facility-based
    Services:

    Long-term Acute Care    8            7            8              7
    Hospital locations

    Acquired (1)            1            -            1              -

    Patient days            12,880       11,298       24,861         23,332

    Patient acuity mix      0.9919       0.9759       0.9987         0.9803

(1) Inclusive of both home health and hospice agencies.

(2) 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.



LHCG-E


    Source: LHC Group, Inc.