LHC Group announces third quarter 2020 financial results

Raises 2020 guidance

LAFAYETTE, La., Nov. 4, 2020 /PRNewswire/ -- LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the quarter ended September 30, 2020. Unless otherwise noted, all results are compared with the third quarter ended September 30, 2019.

Third Quarter 2020 Financial Results

  • Net service revenue increased 0.4% to $530.7 million.
  • Based on improved current and projected future results, LHC Group intends to return the entire $93.3 million in funds it has received from the Provider Relief Fund (PRF) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
  • Net income attributable to LHC Group's common stockholders decreased to $14.5 million, or $0.46 per diluted share, due to the reversal of $44.4 million, or $0.87 per diluted share, net of non-controlling interest, of government stimulus income recorded in the second quarter of 2020 related to the general distribution funds from the PRF and $7.7 million, or $0.24 per diluted share, due to COVID-19 related costs and expenses for purchases of personal protective equipment (PPE), supplies, employee related costs and expenses and other categories of costs and expenses incurred in response to the pandemic.
  • Adjusted net income attributable to LHC Group's common stockholders increased 29.8% to $51.3 million, or $1.63 adjusted earnings per diluted share, compared with $39.5 million, or $1.26 per diluted share, in the same period in 2019. Adjusted results for the third quarter of 2020 exclude a pre-tax amount of $2.5 million in acquisition and de novo related expenses, $10.5 million in COVID-19 related costs and expenses noted above, and the reversal of government stimulus income noted above.
  • Adjusted EBITDA increased 25.0% to $74.5 million compared with $59.6 million in the same period in 2019.

A reconciliation of all non-GAAP financial results in this release appears on pages 12-13.

Operational and Strategic Highlights

  • LHC Group's quality and patient satisfaction scores continue to exceed the national average as the Company remains a leader among industry peers.
  • Organic growth in home health admissions increased 4.7% in the third quarter of 2020 compared with the same period in 2019. Home health organic admissions increased sequentially by 13.1% over the second quarter of 2020.
  • Organic growth in hospice admissions increased 12.8% in the third quarter of 2020 compared with the same period in 2019. Hospice organic admissions increased sequentially by 8.3% over the second quarter of 2020.
  • On August 1, 2020, LHC Group finalized a joint venture with Orlando Health to enhance home health and home and community based services (HCBS) in the state of Florida. The joint venture includes six total locations and LHC Group expects incremental annualized revenue from this joint venture of approximately $3.5 million.
  • On October 1, 2020, LHC Group finalized a joint venture with University Health Care System to enhance home health and hospice services in Georgia and South Carolina. The joint venture includes ten total locations and LHC Group expects incremental annualized revenue from this joint venture of approximately $8.3 million.
  • On October 1, 2020, LHC Group finalized a joint venture with Northeast Georgia Health System to share ownership of SunCrest Home Health in Gainesville, Georgia. LHC Group also closed on the purchase of Santa Rita Hospice in Aurora, Colorado, where it will operate under the At Home Hospice name in a shared space with LHC Group's home health provider in Aurora.
  • On November 1, 2020 LHC Group finalized an expansion of its joint venture with CHRISTUS Health with the addition of a hospice provider in San Marcos, Texas. LHC Group expects incremental annualized revenue from this joint venture of approximately $2.1 million.

Commenting on the results, Keith G. Myers, LHC Group's Chairman and Chief Executive Officer, said, "The new normal in healthcare is placing a greater emphasis on care in the home and creating a demand for what we do best, which is treating patients and their families in the safety and comfort of their home and in the most cost-effective setting. The regulatory environment is rapidly moving to better support in-home care, and payors and joint venture partners are increasingly seeing the real-time benefit of working closely with us as well. Focusing on the most important things even in the midst of a public health emergency – the safety of our employees and delivering the highest quality and patient satisfaction to those we are privileged to serve – is naturally driving our strong growth. We expect this growth to continue through the balance of 2020 and position us for the market consolidation we have been anticipating in 2021 and beyond."

COVID-19 Update
The COVID-19 pandemic had an impact on our operations and financial results for the third quarter of 2020 with a continued impact expected in the fourth quarter of 2020, although to a lesser extent than what we have experienced to date. During the quarter, we incurred $10.5 million ($7.7 million net of tax), or $0.25 per diluted share, in additional COVID-19 costs and expenses related to PPE, supplies, employee related costs and expenses, including, without limitation, bonuses, increased wages, and wage supplements for front line caregivers, and other categories of costs and expenses incurred in response to the pandemic.

We continue to invest in creating the safest environment possible for our employees, patients and communities we serve. The robust employee pre-screening, patient and employee protection protocols and other infection control procedures we implemented in March in accordance with Centers for Disease Control recommendations for all 32,000 employees remain in place, and we have also secured adequate par levels of PPE to ensure we are able to continue providing care in the home setting. In addition, we have implemented a number of programs to support our employees, including a special COVID-19 pandemic grant program as part of our 501(c)(3) LHC Group Purpose Fund that supports employees experiencing financial hardships, retirement plan amendments, special cash-in opportunities for accumulated paid time off, expanded offerings in our employee assistance program, a wage supplement program designed to restore certain lost wages for frontline direct patient care-giving employees that qualified, and a PTO replenishment program designed to restore certain hours of paid time off for front line direct patient care-giving employees that qualified and for any employees who previously donated their PTO hours to these front line direct patient caregivers.

LHC Group has also implemented a number of cost containment initiatives, including eliminating non-essential travel and expenses and other measures. We continue to have strong access to capital with over $598.3 million of available liquidity from cash and our revolving credit facility net of the $317.9 million liability associated with the Medicare Accelerated and Advance Payments.

Since April 2020, we received funds totaling $317.9 million under the Medicare Accelerated and Advance Payment Program as provided for by the CARES Act. The accelerated Medicare payments are interest free and the program currently requires that the Centers for Medicare and Medicaid Services (CMS) recoup the accelerated payments beginning 12 months after receipt by the provider, by withholding 25% of future Medicare fee-for service payments for claims for 11 months and then withholding 50% of future Medicare fee-for service payments for claims for an additional six months. An interest rate of 4% will be assessed on any outstanding balances after 29 months from the date of the initial advance but we intend to repay the full amount before any interest will accrue. Cash flows from operations for the nine months ended 2020 included $317.9 million of accelerated Medicare payments, all of which remains deferred on the balance sheet at September 30, 2020.

As of September 30, 2020, we have received funds totaling $93.3 million related to the Provider Relief Fund as provided for by the CARES Act. During the three months ended June 30, 2020, we recognized $44.4 million ($27.2 million net of non-controlling interest and tax), or $0.87 per diluted share, in government stimulus income in our condensed consolidated statements of income related to general distribution funds received from the Provider Relief Fund. During the three months ended September 30, 2020, we reversed $44.4 million such that we recognized no funds for the nine months ended September 30, 2020. The full amount received, $93.3 million, was recorded as a short-term liability in government stimulus advance in our condensed consolidated balance sheet. It is our intent to return the funds to the government.

COVID-19 Trends
Please refer to the supplemental information that can be found under Financial Results on the Company's Investor Relations page to access more detailed statistics on pre-COVID-19 and post-COVID-19 trends. 

Full Year 2020 Guidance
The Company is increasing its full year 2020 guidance, which it withdrew on May 7, 2020 and subsequently reinstated on August 5, 2020. Full year 2020 net service revenue is expected to be in a range of $2.06 billion to $2.07 billion, adjusted earnings per diluted share is expected to be in a range of $4.90 to $5.00, and Adjusted EBITDA, less non-controlling interest, is expected to be in a range of $232 million to $237 million.


Original FY 2020 Guidance
issued on Feb. 27, 2020

Reinstated FY 2020 Guidance
issued on August 5, 2020

Raised FY 2020 Guidance

Net service revenue

$2.13 billion to $2.18 billion

$2.0 billion to $2.05 billion

$2.06 billion to $2.07 billion

Adjusted EPS

$4.60 to $4.80

$4.60 to $4.80

$4.90 to $5.00

Adjusted EBITDA

$230 million to $240 million

$220 million to $230 million

$232 million to $237 million

The Company's guidance ranges reflect a number of assumptions that are subject to change based on uncertainties related to the impact of the COVID-19 pandemic. The Company's guidance ranges do not take into account the impact of future COVID-19 related costs and  expenses, 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 President, added, "The sequential month by month improvement we have experienced in our organic growth in home health and hospice since April has outpaced our expectations, and the increased visibility in the strength in all of our service lines led us to raise both the top and bottom end of our guidance ranges for the full year. The implied sequential and year-over-year growth in the fourth quarter positions us well for another strong year in 2021. The headwinds caused by the pandemic and some of the initial support smaller agencies received from government stimulus temporarily forestalled the historic market consolidation we had been expecting this year, but we have instead captured that growth organically with increased referrals and market share gains. Recently, we have seen these headwinds abate, resulting in accelerated joint ventures and acquisitions and a very active and robust M&A pipeline in both home health and hospice opportunities." 

Conference Call
LHC Group will host a conference call on Thursday, November 5, 2020, at 10:00 a.m. Eastern time to discuss its third quarter 2020 results. The toll-free number to call for this interactive teleconference is (877) 870-4263 (international callers: (412) 317-6011). A telephonic replay of the conference call will be available through midnight on Thursday, November 12, 2020, by dialing (877) 344-7529 (international callers: (412) 317-0088) and entering confirmation number 10148535.

The Company has posted supplemental financial information on the second quarter results that it will reference during the conference call. The supplemental information can be found under Financial 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 for communities around the nation, offering quality, value-based healthcare to patients primarily within the comfort and privacy of their home or place of residence. 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. As the preferred joint venture partner for almost 400 leading U.S. hospitals and health systems, LHC Group works in cooperation with providers to customize each partnership and reach more patients and families with an effective and efficient model of care.

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

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

(Unaudited)



September 30,
2020


December 31,
2019

ASSETS




Current assets:




Cash

$

253,764



$

31,672


Receivables:




Patient accounts receivable

313,325



284,962


Other receivables

19,858



10,832


Total receivables

333,183



295,794


Prepaid income taxes

19,687



9,652


Prepaid expenses

22,791



21,304


Other current assets

26,231



21,852


Total current assets

655,656



380,274


Property, building and equipment, net of accumulated depreciation of $78,623 and $69,441, respectively

132,130



97,908


Goodwill

1,235,123



1,219,972


Intangible assets, net of accumulated amortization of $17,372 and $16,431, respectively

310,967



305,556


Assets held for sale

1,900



2,500


Operating lease right of use asset

99,066



95,452


Other assets

21,494



38,633


Total assets

$

2,456,336



$

2,140,295


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable and other accrued liabilities

$

73,508



$

83,572


Salaries, wages, and benefits payable

111,108



85,631


Self-insurance reserves

31,856



31,188


Government stimulus advance

93,257




Contract liabilities – deferred revenue

317,938




Current operating lease liabilities

32,018



28,701


Amounts due to governmental entities

2,435



1,880


Total current liabilities

662,120



230,972


Deferred income taxes

75,536



60,498


Income taxes payable

6,588



3,867


Revolving credit facility

20,000



253,000


Other long term liabilities

33,632




Operating lease payable

69,977



69,556


                                   Total liabilities

867,853



617,893


Noncontrolling interest – redeemable

16,897



15,151


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; 36,351,416 and 36,129,280 shares issued, and 31,136,522 and 30,992,390 shares outstanding, respectively

364



361


Treasury stock – 5,214,894 and 5,136,890 shares at cost, respectively

(68,845)



(60,060)


Additional paid-in capital

958,212



949,321


Retained earnings

604,917



523,701


Total LHC Group, Inc. stockholders' equity

1,494,648



1,413,323


Noncontrolling interest – non-redeemable

76,938



93,928


Total stockholders' equity

1,571,586



1,507,251


Total liabilities and stockholders' equity

$

2,456,336



$

2,140,295


 

 

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)



Three Months Ended
September 30,


Nine Months Ended 
 September 30,


2020


2019


2020


2019

Net service revenue

$

530,684



$

528,499



$

1,530,875



$

1,548,926


Cost of service revenue (excluding depreciation and amortization)

305,246



334,768



933,160



981,620


Gross margin

225,438



193,731



597,715



567,306


General and administrative expenses

161,463



146,829



469,903



440,634


Impairment of intangibles and other

22



197



622



7,534


Government stimulus (income) expense (1)

44,435








Operating income

19,518



46,705



127,190



119,138


Interest expense

(431)



(2,596)



(4,040)



(8,533)


Income before income taxes and noncontrolling interest

19,087



44,109



123,150



110,605


Income tax expense

4,595



9,508



23,181



22,665


Net income

14,492



34,601



99,969



87,940


Less net income (loss) attributable to noncontrolling interests

(8)



4,534



18,753



14,017


Net income attributable to LHC Group, Inc.'s common stockholders

$

14,500



$

30,067



$

81,216



$

73,923










Earnings per share:








Basic

$

0.47



$

0.97



$

2.61



$

2.39


Diluted

$

0.46



$

0.96



$

2.59



$

2.37


Weighted average shares outstanding:








Basic

31,121



30,971



31,080



30,919


Diluted

31,411



31,247



31,334



31,203





(1)     Refer to footnote 5 on page 13.

 

 

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands) (Unaudited)



Nine Months Ended 
 September 30,


2020


2019

Operating activities:




Net income

$

99,969



$

87,940


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




Depreciation and amortization expense

15,601



12,812


Amortization of operating lease right of use asset

25,799



22,952


Stock-based compensation expense

11,133



6,382


Deferred income taxes

15,038



8,102


Loss on disposal of assets

291



337


    Impairment of intangibles and other

622



7,534


Changes in operating assets and liabilities, net of acquisitions:




Receivables

(36,194)



(42,928)


Prepaid expenses

(1,487)



4,828


Other assets

(3,183)



(2,810)


Prepaid income taxes

(10,035)



8,258


Accounts payable and accrued expenses

(17,085)



(4,241)


Salaries, wages, and benefits payable

25,913



18,001


Contract liabilities - deferred revenue

317,938




Other long term liabilities

33,632




Operating lease liabilities

(25,485)



(18,428)


Income taxes payable

2,721



(715)


Net amounts due to/from governmental entities

555



(3,234)


Net cash provided by operating activities

455,743



104,790


Investing activities:




Purchases of property, building and equipment

(51,241)



(15,401)


Proceeds from sale of property, building and equipment

7,142




Cash received (paid) for acquisitions

2,326



(54,120)


Net cash used in investing activities

(41,773)



(69,521)


Financing activities:




Proceeds from line of credit

276,229



84,000


Payments on line of credit

(509,229)



(87,000)


Government stimulus advance

93,257




Proceeds from employee stock purchase plan

1,679



1,540


Payments on debt



(7,650)


Noncontrolling interest distributions

(22,505)



(18,944)


Withholding taxes paid on stock-based compensation

(9,854)



(9,422)


Purchase of additional controlling interest

(23,575)



(18,763)


Exercise of vested awards and stock options



153


Sale of noncontrolling interest

2,120



756


Net cash used in financing activities

(191,878)



(55,330)


Change in cash

222,092



(20,061)


Cash at beginning of period

31,672



49,363


Cash at end of period

$

253,764



$

29,302


Supplemental disclosures of cash flow information:




Interest paid

$

4,556



$

8,549


Income taxes paid

$

15,583



$

8,015


Non-Cash Operating Activity:




Operating right of use assets in exchange for lease obligations

$

25,633



$

115,161


Non-Cash Investing Activity:




Accrued capital expenditures

$

5,851



$

1,514



 

 

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)



Three Months Ended September 30, 2020


Home health services


Hospice
services


Home and community-based services


Facility-
based
services


HCI


Total

Net service revenue

$

373,450



$

59,801



$

48,387



$

33,344



$

15,702



$

530,684


Cost of service revenue (excluding depreciation and
amortization)

205,523



37,180



36,664



22,213



3,666



305,246


General and administrative expenses

118,792



16,668



10,937



11,439



3,627



161,463


Impairment of intangibles and other

22











22


Government stimulus (income) expense (1)

35,019



4,731



2,865



1,656



164



44,435


Operating income (loss)

14,094



1,222



(2,079)



(1,964)



8,245



19,518


Interest expense

(310)



(51)



(37)



(22)



(11)



(431)


Income (loss) before income taxes and noncontrolling interest

13,784



1,171



(2,116)



(1,986)



8,234



19,087


Income tax expense (benefit)

3,403



247



(440)



(435)



1,820



4,595


Net income (loss)

10,381



924



(1,676)



(1,551)



6,414



14,492


Less net income (loss) attributable to noncontrolling interests

(157)



321



(153)



(12)



(7)



(8)


Net income (loss) attributable to LHC Group, Inc.'s common stockholder

$

10,538



$

603



$

(1,523)



$

(1,539)



$

6,421



$

14,500


Total assets

$

1,721,278



$

277,358



$

263,414



$

108,118



$

86,168



$

2,456,336


(1)     Refer to footnote 5 on page 13.

 

 

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)



Three Months Ended September 30, 2019


Home health services


Hospice
services


Home and community-based services


Facility-
based
services


HCI


Total

Net service revenue

$

375,599



$

62,028



$

53,411



$

28,715



$

8,746



$

528,499


Cost of service revenue (excluding depreciation
and amortization)

237,414



35,819



39,694



18,508



3,333



334,768


General and administrative expenses

108,318



15,218



10,809



9,498



2,986



146,829


Impairment of intangibles and other

197











197


Operating income

29,670



10,991



2,908



709



2,427



46,705


Interest expense

(1,758)



(310)



(272)



(174)



(82)



(2,596)


Income before income taxes and noncontrolling interest

27,912



10,681



2,636



535



2,345



44,109


Income tax expense

5,900



1,689



1,299



144



476



9,508


Net income

22,012



8,992



1,337



391



1,869



34,601


Less net income (loss) attributable to noncontrolling interests

3,577



1,213



(180)



(67)



(9)



4,534


Net income attributable to LHC Group, Inc.'s common stockholders

$

18,435



$

7,779



$

1,517



$

458



$

1,878



$

30,067


Total assets

$

1,458,991



$

235,865



$

243,779



$

88,905



$

70,324



$

2,097,864



 

 

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)



Nine Months Ended September 30, 2020


Home health services


Hospice
services


Home and community-based services


Facility-
based
services


HCI


Total

Net service revenue

$

1,081,143



$

181,387



$

144,526



$

96,664



$

27,155



$

1,530,875


Cost of service revenue (excluding depreciation and
amortization)

631,109



112,485



113,864



64,340



11,362



933,160


General and administrative expenses

345,024



49,560



33,520



31,984



9,815



469,903


Impairment of intangibles and other

22



600









622


Government stimulus income












Operating income (loss)

104,988



18,742



(2,858)



340



5,978



127,190


Interest expense

(2,804)



(451)



(382)



(288)



(115)



(4,040)


Income (loss) before income taxes and noncontrolling interest

102,184



18,291



(3,240)



52



5,863



123,150


Income tax expense (benefit)

19,499



3,294



(658)



(261)



1,307



23,181


Net income (loss)

82,685



14,997



(2,582)



313



4,556



99,969


Less net income (loss) attributable to noncontrolling interests

14,371



3,452



(275)



1,228



(23)



18,753


Net income (loss) attributable to LHC Group, Inc.'s common stockholder

$

68,314



$

11,545



$

(2,307)



$

(915)



$

4,579



$

81,216


 

 

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)



Nine Months Ended September 30, 2019


Home health services


Hospice
services


Home and community-based services


Facility-
based
services


HCI


Total

Net service revenue

$

1,113,887



$

168,821



$

157,610



$

84,391



$

24,217



$

1,548,926


Cost of service revenue (excluding depreciation
and amortization)

694,082



103,853



119,054



53,812



10,819



981,620


General and administrative expenses

322,115



45,167



33,004



28,010



12,338



440,634


Impairment of intangibles and other

7,263



271









7,534


Operating income

90,427



19,530



5,552



2,569



1,060



119,138


Interest expense

(5,919)



(976)



(857)



(524)



(257)



(8,533)


Income before income taxes and noncontrolling interest

84,508



18,554



4,695



2,045



803



110,605


Income tax expense

17,178



3,716



1,279



297



195



22,665


Net income

67,330



14,838



3,416



1,748



608



87,940


Less net income (loss) attributable to noncontrolling interests

11,305



2,712



(757)



779



(22)



14,017


Net income attributable to LHC Group, Inc.'s common stockholders

$

56,025



$

12,126



$

4,173



$

969



$

630



$

73,923


 

 

LHC GROUP, INC. AND SUBSIDIARIES

SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA

(Unaudited)




Three Months Ended

September 30,


Nine Months Ended

September 30,

Key Data:


2020


2019


2020


2019










Home Health Services:









Locations


549



555



549



555


Acquired


2



19



8



32


De novo









Divested/consolidated


(6)



(3)



(14)



(16)


Total new admissions


104,304



97,647



305,968



286,519


Medicare new admissions


55,907



57,496



166,332



172,343


Average daily census


82,254



76,905



78,920



76,573


Average Medicare daily census


47,120



49,016



46,008



49,418


Medicare completed and billed episodes


88,970



91,956



260,415



276,751


Average Medicare case mix for completed and billed Medicare episodes


1.01



1.09



1.02



1.10


Average reimbursement per completed and billed Medicare episodes


$

2,824



$

2,863



$

2,798



$

2,852


Total visits


2,081,418



2,619,073



6,181,133



7,702,229


Total Medicare visits


1,149,577



1,695,148



3,474,314



5,048,298


Average visits per completed and billed Medicare episodes


12.9



18.4



13.3



18.2


Organic growth: (1)









Net revenue


(4.1)

%


7.9

%


(6.5)

%


7.2

%

Net Medicare revenue


(8.9)

%


4.1

%


(11.3)

%


3.5

%

Total new admissions


4.7

%


11.1

%


2.4

%


8.6

%

Medicare new admissions


(4.4)

%


5.4

%


(7.0)

%


2.5

%

Average daily census


4.9

%


7.2

%


0.4

%


5.1

%

Average Medicare daily census


(5.7)

%


2.6

%


(9.2)

%


0.0

%

Medicare completed and billed episodes


(3.5)

%


3.6

%


(8.1)

%


1.0

%










Hospice Services:









Locations


111



109



111



109


Acquired




5



4



10


De novo









Divested/consolidated


(1)





(2)



(5)


Admissions


5,077



4,522



15,006



13,746


Average daily census


4,393



4,187



4,338



4,002


Patient days


404,214



385,164



1,192,866



1,093,039


Average revenue per patient day


$

155.14



$

152.47



$

154.39



$

153.74


Organic growth: (1)









Total new admissions


12.8

%


2.1

%


4.8

%


5.9

%










Home and Community-Based Services:









Locations (2)


122



105



122



105


Acquired






4




De novo


13





19




Divested/consolidated


(2)





(2)




Average daily census


14,455



13,676



14,391



14,491


Billable hours


1,942,706



2,276,984



5,865,309



5,002,064


Revenue per billable hour


$

26.31



$

23.97



$

25.87



$

24.30











Facility-Based Services:









Long-term Acute Care









Locations


12



13



12



13


Acquired




1





1


Divested/consolidated


(1)





(1)




Patient days


24,275



18,918



68,094



58,524


Average revenue per patient day


$

1,346



$

1,377



$

1,362



$

1,310


Average Daily Census


264



206



249



214




(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)

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.


 

 

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

(Amounts in thousands)

(Unaudited)




Three Months
Ended
 September 30,

Nine Months Ended
 September 30,



2020


2019


2020


2019

Net income attributable to LHC Group, Inc.'s common
stockholders


$

14,500



$

30,067



$

81,216



$

73,923


Add (net of tax):









   Acquisition and de novo expenses (1)


1,829



8,482



3,345



20,463


   Closures/relocations/consolidations (2)




941



866



4,722


   COVID-19 impact: 













      PPE, supplies and other expenses (3)


7,689





29,967




      CARES Act tax benefit (4)






(2,210)




   Provider Relief Fund (PRF) (5)


32,882








   NCI associated with PRF (6)


(5,643)








   Provider moratorium impairment (7)








4,332


Adjusted net income attributable to LHC Group, Inc.'s
common stockholders


$

51,257



$

39,490



$

113,184



$

103,440


 

  

RECONCILIATION OF ADJUSTED NET INCOME

ATTRIBUTABLE TO LHC GROUP, INC. PER DILUTED SHARE

(Amounts in thousands)

(Unaudited)




Three Months
Ended
 September 30,

Nine Months Ended
 September 30,



2020


2019


2020


2019

Net income attributable to LHC Group, Inc.'s common stockholders


$

0.46



$

0.96



$

2.59



$

2.37


Add (net of tax):









   Acquisition and de novo expenses (1)


0.05



0.27



0.11



0.66


   Closures/relocations/consolidations (2)




0.03



0.03



0.15


   COVID-19 impact:













      PPE, supplies and other expenses (3)


0.25





0.95




      CARES Act tax benefit (4)






(0.07)




   Provider Relief Fund (PRF) (5)


1.05








   NCI associated with PRF (6)


(0.18)








   Provider moratorium impairment (7)








0.14


Adjusted net income attributable to LHC Group, Inc.'s
common stockholders


$

1.63



$

1.26



$

3.61



$

3.32


 

 

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA

(Amounts in thousands)

(Unaudited)




Three Months Ended
September 30,

Nine Months Ended
September 30,



2020


2019


2020


2019

Net income attributable to LHC Group, Inc.'s common stockholders


$

14,500



$

30,067



$

81,216



$

73,923


Add:









   Income tax expense


4,595



9,508



23,181



22,665


   Interest expense, net


431



2,596



4,040



8,533


   Depreciation and amortization 


5,217



4,412



15,601



12,812


   Adjustment items (1) 


49,775



13,033



46,339



40,841


Adjusted EBITDA


$

74,518



$

59,616



$

170,377



$

158,774











1. Adjustment items (pre-tax):









   Acquisition and de novo expenses (1)


2,492



11,731



4,556



28,305


   Closures/relocation/consolidations (2)




1,302



1,174



6,536


   COVID-19 PPE, supplies and other expenses (3)


10,474





40,609




   Provider Relief Fund (PRF) (5)


44,435








   NCI associated with PRF (6)


(7,626)








   Provider moratorium impairment (7)








6,000


Total adjustments


$

49,775



$

13,033



$

46,339



$

40,841



















 

 

1.

Expenses and other costs associated with recently announced or completed acquisitions and de novos. ($2.5 million pre-tax in the three months ended September 30, 2020 and $4.6 million pre-tax in the nine months ended September 30, 2020).

2.

Loss on the sale of an asset and other expenses associated with a closure or consolidation (none in the three months ended September 30, 2020 and $1.2 million pre-tax in the nine months ended September 30, 2020).

3.

COVID-19 related expenses for purchases of personal protective equipment ("PPE"), supplies and employee benefit expenses including, without limitation, bonuses and increased wages, wage supplements and PTO replenishments for front line caregivers. ($10.5 million pre-tax in the three months ended September 30, 2020 and $40.6 million pre-tax in the nine months ended September 30, 2020).

4.

Tax benefit related to new legislation in the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") which lifts certain tax deduction limitations and eliminates 80% of taxable income limitations for Net Operating Losses ("NOL"), which we are now able to fully utilize NOLs associated with Almost Family prior to the merger.

5.

Based on improved current and projected future results, the Company intends to return the entire $93.3 million in funds it has received from the Provider Relief Fund ("PRF") under the CARES Act and for the consolidated results for the third quarter of 2020 has reversed the $44.4 million in government stimulus income recognized during the second of 2020 related to general distribution funds received from the PRF ($44.4 million pre-tax).  

6.

Non-controlling interest distributed to our Joint Venture partners in association with the Government stimulus income recognized during the second quarter of 2020 ($7.6 million pre-tax) was reversed in the three months ended September 30, 2020 as noted above.

7.

During the first quarter of 2019, the Company recorded $6.0 million of moratoria fair value 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. In assigning fair value acquired in acquisitions as required by ASC 805, Business Combinations, the Company had assigned fair value to Certificates of need or license moratoria, as applicable, in certain states.

 

 

Contact:

Eric Elliott


Senior Vice President of Finance


(337) 233-1307


eric.elliott@lhcgroup.com 

 

SOURCE LHC Group, Inc.