LHC Group announces first quarter 2022 financial results

LAFAYETTE, La., May 4, 2022 /PRNewswire/ -- LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the quarter ended March 31, 2022.

First Quarter 2022 Financial Results

  • Net service revenue increased 8.9% to $571.5 million.
  • Adjusted net revenue was $575.5 million
  • Net income attributable to LHC Group's common stockholders was $19.5 million, or $0.64 per diluted share.
  • Adjusted net income attributable to LHC Group's common stockholders was $33.4 million, or $1.09 adjusted earnings per diluted share.
  • Adjusted EBITDA was $54.5 million.

    A reconciliation of all non-GAAP financial results in this release appears on pages 9-10.

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.
  • Home Health quality star ratings continue to improve from 4.12 in the January 2022 release to 4.20 in April 2022 release and to 4.25 in the CMS July 2022 preview.
  • Organic growth in total home health admissions increased 1.6% in the first quarter of 2022 compared with the same period in 2021.
  • Organic growth in hospice admissions increased 4.0% in the first quarter of 2022 compared with the same period in 2021.
  • On May 3, 2022, LHC Group announced that it has finalized a joint venture partnership for in-home services with Archbold Medical Center in Thomasville, Georgia.

The Company has posted supplemental financial information on the first quarter results, which can be found under Financial Results on the Company's Investor Relations page. In light of the pending acquisition of the Company by UnitedHealth Group Incorporated ("UNH"), LHC Group will not conduct a quarterly earnings call to discuss the first quarter results.

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 30,000 employees deliver home health, hospice, home and community based services, and facility-based care in 37 states and the District of Columbia – reaching 60 percent of the U.S. population aged 65 and older. Through Imperium Health, the company's ACO management and enablement company, LHC Group helps partners improve both savings and patient outcomes with a value-based approach. As the preferred joint venture partner for more than 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 the timing or anticipated benefits of pending acquisition of the Company by UnitedHealth Group Incorporated. 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 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. These risks, uncertainties and other factors include, but are not limited to, those discussed and described in our most recent Annual Report on Form 10-K, including those risks described in Part I, Item 1A. Risk Factors thereof, and in other reports filed subsequently by us with the Securities and Exchange Commission and, with respect to the pending acquisition of the Company by UnitedHealth Group Incorporated, include, but are not limited to, those discussed in the preliminary proxy statement filed by the Company with the SEC on April 29, 2021. All forward-looking statements included in this document are based on information available to us on the date hereof, and the Company assumes no obligation to update any such forward-looking statements to reflect future events or circumstances, except as required by law.

 

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

(Unaudited)



March 31,
2022


December 31,
2021

ASSETS




Current assets:




     Cash

$           7,680


$          9,809

     Receivables:




          Patient accounts receivable

376,968


348,820

          Other receivables

11,219


13,780

               Total receivables

388,187


362,600

     Prepaid taxes

13,195


     Prepaid income taxes

19,004


7,531

     Prepaid expenses

22,636


28,401

     Other current assets

34,538


24,801

               Total current assets

485,240


433,142

Property, building and equipment, net of accumulated depreciation of $101,643 and $98,394, respectively

156,673


153,959

Goodwill

1,747,504


1,748,426

Intangible assets, net of accumulated amortization of $20,772 and $19,152, respectively

397,973


400,002

Operating lease right of use asset

111,954


113,399

Other assets

44,196


46,693

               Total assets

$    2,943,540


$   2,895,621

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




     Accounts payable and other accrued liabilities

$       103,151


$        98,118

     Salaries, wages, and benefits payable

86,049


100,532

     Self-insurance reserves

41,331


33,784

     Contract liabilities - deferred revenue

43,922


106,489

     Current operating lease payable

37,633


37,630

     Amounts due to governmental entities

4,475


5,447

     Current liabilities - deferred employer payroll tax

26,790


26,790

               Total current liabilities

343,351


408,790

Deferred income taxes

76,749


70,026

Income taxes payable

7,537


7,320

Revolving credit facility

773,270


661,197

Long-term operating lease liabilities

77,287


78,688

               Total liabilities

1,278,194


1,226,021

Noncontrolling interest — redeemable

17,539


17,501

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; 36,687,528 and 36,549,524
          shares issued, and 30,558,774 and 30,634,414 shares outstanding, respectively

367


365

          Treasury stock —  6,128,754 and  5,915,110 shares at cost, respectively

(193,470)


(164,790)

          Additional paid-in capital

984,784


979,642

          Retained earnings

770,479


751,025

               Total LHC Group, Inc. stockholders' equity

1,562,160


1,566,242

Noncontrolling interest — non-redeemable

85,647


85,857

               Total stockholders' equity

1,647,807


1,652,099

               Total liabilities and stockholders' equity

$    2,943,540


$   2,895,621

 

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)



Three Months Ended  

 March 31,


2022


2021

Net service revenue

$       571,495


$       524,835

Cost of service revenue (excluding depreciation and amortization)

350,388


310,272

Gross margin

221,107


214,563

General and administrative expenses

184,359


163,249

Impairment of intangibles and other

1,229


177

Operating income

35,519


51,137

Interest expense

(4,171)


(263)

Income before income taxes and noncontrolling interest

31,348


50,874

Income tax expense

6,369


9,441

Net income

24,979


41,433

     Less net income attributable to noncontrolling interests

5,525


6,774

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

$         19,454


$         34,659





Earnings per share:




          Basic

$              0.64


$              1.11

          Diluted

$              0.64


$              1.10

Weighted average shares outstanding:




          Basic

30,478


31,165

          Diluted

30,603


31,432

 

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



Three Months Ended 

 March 31,


2022


2021

Operating activities:




     Net income

$       24,979


$       41,433

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




          Depreciation and amortization expense

5,617


4,999

          Amortization of operating lease right of use asset

10,128


8,918

          Stock-based compensation expense

4,376


3,513

          Deferred income taxes

6,723


7,717

          Loss on disposal of assets

155


31

          Impairment of intangibles and other

1,229


177

     Changes in operating assets and liabilities, net of acquisitions:




          Receivables

(25,538)


(28,805)

          Prepaid expenses

5,765


(3,980)

          Other assets

(7,192)


1,627

          Prepaid income taxes

(11,473)


          Prepaid taxes

(13,195)


          Accounts payable and accrued expenses

10,602


(2,894)

          Salaries, wages, and benefits payable

(6,936)


20,451

          Contract liabilities - deferred revenue

(62,567)


          Operating lease liabilities

(10,046)


(8,925)

          Income taxes payable

217


1,119

          Net amounts due to/from governmental entities

2,200


(575)

Net cash (used in) provided by operating activities

(64,956)


44,806

Investing activities:




     Purchases of property, building and equipment

(6,442)


(4,849)

     Proceeds from sale of property, building and equipment


45

     Proceeds from sale of an entity


200

     Minority interest investments

(100)


Net cash used in investing activities

(6,542)


(4,604)

Financing activities:




     Proceeds from line of credit

374,428


     Payments on line of credit

(262,355)


(20,000)

     Proceeds from employee stock purchase plan

698


649

     Payments on repurchasing common stock

(34,565)


     Noncontrolling interest distributions

(5,697)


(5,704)

     Withholding taxes paid on stock-based compensation

(3,140)


(9,541)

     Purchase of additional controlling interest


(142)

     Sale of noncontrolling interest


284

Net cash provided by (used in) financing activities

69,369


(34,454)

Change in cash

(2,129)


5,748

Cash at beginning of period

9,809


286,569

Cash at end of period

$         7,680


$     292,317





Non-Cash Financing Activity:




Supplemental disclosures of cash flow information:




Interest paid

$          3,519


$            495

Income taxes paid

$        10,944


$            621

Non-Cash Operating Activity:




Operating right of use assets in exchange for lease obligations

$          9,371


$       11,748

Reduction to right of use assets and liabilities

$            (688)


$              —

Non-Cash Investing Activity:




Net working capital adjustment

$           (102)


$              —

Accrued capital expenditures

$             372


$         1,973

 

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)



Three Months Ended March 31, 2022


Home health
services


Hospice
services


Home and
community-
based
services


Facility-
based
services


HCI


Total

Net service revenue

$     387,892


$   101,906


$    44,340


$     32,139


$      5,218


$     571,495

Cost of service revenue (excluding depreciation and amortization)

228,207


66,065


28,955


24,205


2,956


350,388

General and administrative expenses

126,807


31,345


11,418


11,428


3,361


184,359

Impairment of intangibles and other

449


726


54




1,229

Operating income (loss)

32,429


3,770


3,913


(3,494)


(1,099)


35,519

Interest expense

(2,970)


(498)


(413)


(208)


(82)


(4,171)

Income (loss) before income taxes and noncontrolling interest

29,459


3,272


3,500


(3,702)


(1,181)


31,348

Income tax expense (benefit)

4,769


596


2,258


(962)


(292)


6,369

Net income (loss)

24,690


2,676


1,242


(2,740)


(889)


24,979

Less net income (loss) attributable to noncontrolling interests

4,596


680


85


171


(7)


5,525

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

$       20,094


$       1,996


$      1,157


$      (2,911)


$        (882)


$       19,454

Total assets

$  1,756,250


$   803,004


$  240,195


$     80,831


$    63,260


$  2,943,540

 

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)



Three Months Ended March 31, 2021


Home health
services


Hospice
services


Home and
community-
based
services


Facility-
based
services


HCI


Total

Net service revenue

$     373,828


$     62,734


$     49,125


$     33,369


$       5,779


$    524,835

Cost of service revenue (excluding depreciation and amortization)

212,373


38,570


34,872


21,175


3,282


310,272

General and administrative expenses

119,397


18,127


11,529


11,257


2,939


163,249

Impairment of intangibles and other

177






177

Operating income (loss)

41,881


6,037


2,724


937


(442)


51,137

Interest expense

(182)


(36)


(24)


(14)


(7)


(263)

Income (loss) before income taxes and noncontrolling interest

41,699


6,001


2,700


923


(449)


50,874

Income tax expense (benefit)

7,890


1,067


518


57


(91)


9,441

Net income (loss)

33,809


4,934


2,182


866


(358)


41,433

Less net income (loss) attributable to noncontrolling interests

4,849


1,015


279


657


(26)


6,774

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

$       28,960


$       3,919


$       1,903


$          209


$         (332)


$      34,659

Total assets

$  1,785,486


$   308,009


$   262,538


$     97,692


$     69,129


$ 2,522,854

 

LHC GROUP, INC. AND SUBSIDIARIES

SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA

(Unaudited)



Three Months Ended

March 31,

Key Data:

2022


2021

Home Health Services:




Locations

546



531


Total new admissions

113,122



107,922


Episodic new admissions

68,154



67,392


Average daily census

85,347



83,938


Average episodic daily census

53,278



54,597


Completed episodes

100,527



101,736


Average reimbursement per completed episodes

$

2,934



$

2,856


Total visits

2,118,072



2,057,632


Total episodic visits

1,287,101



1,288,653


Average visits per episodes

12.8



12.7


Organic growth: (1)




Revenue

0.6

%


3.1

%

Episodic revenue

(1.8)

%


1.4

%

Total new admissions

1.6

%


(0.4)

%

Episodic new admissions

(2.4)

%


(4.3)

%

Average daily census

(0.8)

%


10.1

%

Average episodic daily census

(5.0)

%


3.5

%

Completed episodes

(3.2)

%


(0.7)

%





Hospice Services:




Locations

169



120


Admissions

8,376



5,451


Average daily census

7,065



4,411


Patient days

635,821



396,974


Average revenue per patient day

$

163.04



$

161.88


Organic growth: (1)




Total new admissions

4.0

%


7.5

%





Home and Community-Based Services:




Locations

135



129


Average daily census

12,079



13,711


Billable hours

1,673,692



1,901,281


Revenue per billable hour

$

27.15



$

26.04






Facility-Based Services:




Long-term Acute Care




Locations

12



12


Average revenue per patient day

$

1,449



$

1,518


Average Daily Census

228



235




(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.

 

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

(Amounts in thousands)

(Unaudited)




Three Months Ended
 March 31,



2022


2021


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


$

19,454



$

34,659



Add (net of tax):






   Acquisition, de novo and legal expenses (1)


3,019





   Closures/relocations/consolidations (2)


2,132



131



   COVID-19 impact:








      PPE, supplies and wages (3)




8,852



   ERP implementation (4)


1,692





   Cost improvement initiatives (5)


3,642





   Cost report and contract settlements (6)


3,498





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


$

33,437



$

43,642



 

RECONCILIATION OF ADJUSTED NET INCOME

ATTRIBUTABLE TO LHC GROUP, INC. PER DILUTED SHARE

(Unaudited)




Three Months Ended
 March 31,



2022


2021


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


$

0.64



$

1.10



Add (net of tax):






   Acquisition and de novo expenses (1)


0.10





   Closures/relocations/consolidations (2)


0.07



0.01



   COVID-19 impact:








      PPE, supplies and wages (3)




0.28



   ERP implementation (4)


0.05





   Cost improvement initiatives (5)


0.12





   Cost report and contract settlements (6)


0.11





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


$

1.09



$

1.39



 

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA

(Amounts in thousands)

(Unaudited)




Three Months Ended



2022


2021

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


$

19,454



$

34,659


Add:





   Income tax expense


6,369



9,441


   Interest expense, net


4,171



263


   Depreciation and amortization 


5,617



4,999


   Adjustment items (*)


18,904



12,167


Adjusted EBITDA


$

54,515



$

61,529








* Adjustment items (pre-tax):





   Acquisition, de novo and legal expenses (1)


4,081




   Closures/relocation/consolidations (2)


2,882



177


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




11,990


   ERP implementation (4)


2,287




   Cost improvement initiatives (5)


4,924




   Cost report and contract settlements (6)


4,730




Total adjustments


$

18,904



$

12,167




1.

Expenses and other costs associated with recently announced or completed acquisitions, de novos and the pending acquisition by UnitedHealth Group. ($4.1 million pre-tax in the three months ended March 31, 2022).

2.

Loss on the sale of an asset and other expenses associated with a closure or consolidation, including impairment ($2.9 million pre-tax in the three months ended March 31, 2022); expenses associated with the impairment on a closed home health location which occurred in the first quarter of 2021($0.2 million pre-tax in the three months ended March 31, 2021).

3.

COVID-19 related expenses for purchases of personal protective equipment (PPE), supplies and wage adjustments (No adjustments were made in the three months ended March 31, 2022; $12.0 million pre-tax in the three months ended March 31, 2021).

4.

Expenses and other costs associated with the implementation of an Enterprise Resource Planning software ($2.3 million pre-tax in the three months ended March 31, 2022).

5.

Expenses associated with cost improvement initiatives implemented in the first quarter of 2022, which consisted of contract terminations and general and administrative cost reductions ($4.9 million pre-tax in the three months ended March 31, 2022).

6.

Expenses associated with a 2004 cost report settlement along with other disputed contract settlements ($4.7 million pre-tax in the three months ended March 31, 2022).

 

Contact:

Eric Elliott


Senior Vice President of Finance


(337) 233-1307


eric.elliott@lhcgroup.com

 

SOURCE LHC Group, Inc.