LHC Group announces second quarter 2022 financial results

LAFAYETTE, La., Aug. 3, 2022 /PRNewswire/ -- LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the quarter ended June 30, 2022.

Second Quarter 2022 Financial Results

  • Net service revenue increased 5.5% to $576.2 million.
  • Net income attributable to LHC Group's common stockholders was $10.6 million, or $0.35 per diluted share.
  • Adjusted net income attributable to LHC Group's common stockholders was $29.8 million, or $0.98 adjusted earnings per diluted share.
  • Adjusted EBITDA was $53.0 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 4.20 in the April 2022 release to 4.25 in the July 2022 release and Home Health quality patient satisfaction ratings continue to improve from 3.83 in the April 2022 release to 4.01 in the July 2022 release.
  • Organic growth in hospice admissions increased 5.5% in the second 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 second 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 second 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 29,000 employees deliver home health, hospice, home- and community-based services, and facility-based care in 37 states and the District of Columbia – reaching 68 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 proxy statement filed by the Company with the SEC on May 17, 2022. 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)


June 30,

2022


December 31,
2021

ASSETS




Current assets:




Cash

$         27,400


$          9,809

Receivables:




Patient accounts receivable

342,068


348,820

Other receivables

13,304


13,780

Amounts due from governmental entities

483


Total receivables

355,855


362,600

Prepaid income taxes

19,613


7,531

Prepaid expenses

20,556


28,401

Other current assets

36,166


24,801

Total current assets

459,590


433,142

Property, building and equipment, net of accumulated depreciation of $106,541 and $98,394, respectively

155,978


153,959

Goodwill

1,751,430


1,748,426

Intangible assets, net of accumulated amortization of $21,902 and $19,152, respectively

397,121


400,002

Operating lease right of use asset

109,925


113,399

Other assets

63,830


46,693

Total assets

$    2,937,874


$   2,895,621

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable and other accrued liabilities

$       124,222


$        98,118

Salaries, wages, and benefits payable

94,432


100,532

Self-insurance reserves

41,302


33,784

Contract liabilities - deferred revenue

8,222


106,489

Current operating lease payable

36,929


37,630

Amounts due to governmental entities

3,034


5,447

Current liabilities - deferred employer payroll tax

26,790


26,790

Total current liabilities

334,931


408,790

Deferred income taxes

80,691


70,026

Income taxes payable

7,754


7,320

Revolving credit facility

759,000


661,197

Long-term operating lease liabilities

75,971


78,688

                                   Total liabilities

1,258,347


1,226,021

Noncontrolling interest — redeemable

17,210


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; 36,703,550  and 36,549,524
shares issued, and 30,567,333 and 30,634,414 shares outstanding, respectively

367


365

Treasury stock —  6,136,217 and  5,915,110 shares at cost, respectively

(194,390)


(164,790)

Additional paid-in capital

990,247


979,642

Retained earnings

781,063


751,025

Total LHC Group, Inc. stockholders' equity

1,577,287


1,566,242

Noncontrolling interest — non-redeemable

85,030


85,857

Total stockholders' equity

1,662,317


1,652,099

Total liabilities and stockholders' equity

$    2,937,874


$   2,895,621

 

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)



Three Months Ended  

 June 30,


Six Months Ended 

 June 30,


2022


2021


2022


2021

Net service revenue

$       576,193


$       545,907


$    1,147,688


$    1,070,742

Cost of service revenue (excluding depreciation and amortization)

353,933


317,872


704,321


628,144

Gross margin

222,260


228,035


443,367


442,598

General and administrative expenses

196,390


167,061


380,749


330,310

Impairment of intangibles and other

842


760


2,071


937

Operating income

25,028


60,214


60,547


111,351

Interest expense

(6,407)


(143)


(10,578)


(406)

Income before income taxes and noncontrolling interest

18,621


60,071


49,969


110,945

Income tax expense

3,679


13,318


10,048


22,759

Net income

14,942


46,753


39,921


88,186

Less net income attributable to noncontrolling interests

4,358


9,110


9,883


15,884

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

$         10,584


$         37,643


$         30,038


$         72,302









Earnings per share:








Basic

$              0.35


$              1.21


$              0.98


$              2.32

Diluted

$              0.35


$              1.20


$              0.98


$              2.30

Weighted average shares outstanding:








Basic

30,543


31,225


30,508


31,188

Diluted

30,676


31,430


30,623


31,423

 

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



Six Months Ended June 30,



2022



2021

Operating activities:






Net income

$

39,921


$

88,186

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






Depreciation and amortization expense


11,723



9,541

Amortization of operating lease right of use asset


20,412



17,995

Stock-based compensation expense


9,319



7,506

Deferred income taxes


10,665



19,489

Loss on disposal of assets


221



19

    Impairment of intangibles and other


2,071



937

Changes in operating assets and liabilities, net of acquisitions:






Receivables


5,686



(25,649)

Prepaid expenses


7,845



(4,484)

Other assets


(13,403)



6,170

Prepaid income taxes


(12,083)



(13,739)

Accounts payable and accrued expenses


31,358



(9,148)

Salaries, wages, and benefits payable


1,338



(4,560)

Contract liabilities - deferred revenue


(98,267)



(65,026)

Operating lease liabilities


(20,286)



(17,962)

Income taxes payable


434



(21,042)

Net amounts due to/from governmental entities


758



(57)

Net cash used in operating activities


(2,288)



(11,824)

Investing activities:






Purchases of property, building and equipment


(11,138)



(15,619)

Proceeds from sale of property, building and equipment




150

Cash paid for acquisitions, net of cash acquired


(2,570)



(649)

Proceeds from sale of an entity




1,531

Minority interest investments


(15,100)



(10,100)

Net cash used in investing activities


(28,808)



(24,687)

Financing activities:






Proceeds from line of credit


597,250



Payments on line of credit


(499,447)



(20,000)

Government stimulus advance




(93,257)

Proceeds from employee stock purchase plan


1,233



1,222

   Payments on repurchasing common stock


(34,565)



Noncontrolling interest distributions


(11,541)



(13,332)

Withholding taxes paid on stock-based compensation


(3,867)



(10,754)

Purchase of additional controlling interest


(376)



(2,113)

Sale of noncontrolling interest




284

Net cash provided by (used in) financing activities


48,687



(137,950)

Change in cash


17,591



(174,461)

Cash at beginning of period


9,809



286,569

Cash at end of period

$

27,400


$

112,108







Non-Cash Financing Activity:






Supplemental disclosures of cash flow information:






Interest paid

$

9,321


$

1,322

Income taxes paid

$

11,191


$

38,103

Non-Cash Operating Activity:






Operating right of use assets in exchange for lease obligations

$

18,633


$

25,656

Reduction to right of use assets and liabilities

$

(1,695)



Non-Cash Investing Activity:






Net working capital adjustment

$

1,440



Accrued capital expenditures

$

74


$

1,108

 

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)



Three Months Ended June 30, 2022


Home health
services


Hospice
services


Home and
community-
based
services


Facility-
based
services


HCI


Total

Net service revenue

$     392,782


$   102,617


$    44,718


$     30,709


$      5,367


$     576,193

Cost of service revenue (excluding depreciation and amortization)

228,511


67,848


31,788


22,830


2,956


353,933

General and administrative expenses

134,623


33,423


12,444


12,211


3,689


196,390

Impairment of intangibles and other

481


361





842

Operating income (loss)

29,167


985


486


(4,332)


(1,278)


25,028

Interest expense

(4,488)


(949)


(564)


(281)


(125)


(6,407)

Income (loss) before income taxes and noncontrolling interest

24,679


36


(78)


(4,613)


(1,403)


18,621

Income tax expense (benefit)

6,565


(160)


(1,413)


(960)


(353)


3,679

Net income (loss)

18,114


196


1,335


(3,653)


(1,050)


14,942

Less net income (loss) attributable to non controlling interests

4,324


888


(34)


(817)


(3)


4,358

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

$       13,790


$         (692)


$      1,369


$      (2,836)


$     (1,047)


$       10,584

Total assets

$  1,746,161


$   807,100


$  240,481


$     80,617


$    63,515


$ 2,937,874

 

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)



Three Months Ended June 30, 2021


Home health
services


Hospice
services


Home and
community-
based
services


Facility-
based
services


HCI


Total

Net service revenue

$     396,534


$     63,804


$     48,407


$     31,030


$       6,132


$    545,907

Cost of service revenue (excluding depreciation and amortization)

219,925


39,647


34,683


20,460


3,157


317,872

General and administrative expenses

123,245


18,114


11,923


10,906


2,873


167,061

Impairment of intangibles and other

760






760

Operating income (loss)

52,604


6,043


1,801


(336)


102


60,214

Interest expense

(106)


(20)


(10)


(5)


(2)


(143)

Income (loss) before income taxes and noncontrolling interest

52,498


6,023


1,791


(341)


100


60,071

Income tax expense (benefit)

11,706


1,280


470


(152)


14


13,318

Net income (loss)

40,792


4,743


1,321


(189)


86


46,753

Less net income (loss) attributable to noncontrolling interests

7,500


1,208


85


322


(5)


9,110

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

$       33,292


$       3,535


$       1,236


$         (511)


$            91


$      37,643

Total assets

$  1,681,871


$   288,985


$   245,071


$     85,520


$     65,678


$ 2,367,125

 

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)



Six months ended June 30, 2022


Home health
services


Hospice
services


Home and
community-
based
services


Facility-
based
services


HCI


Total

Net service revenue

$      780,674


$   204,523


$     89,058


$     62,848


$     10,585


$ 1,147,688

Cost of service revenue (excluding depreciation and amortization)

456,718


133,913


60,743


47,035


5,912


704,321

General and administrative expenses

261,430


64,768


23,862


23,639


7,050


380,749

Impairment of intangibles and other

930


1,087


54




2,071

Operating income (loss)

61,596


4,755


4,399


(7,826)


(2,377)


60,547

Interest expense

(7,458)


(1,447)


(977)


(489)


(207)


(10,578)

Income (loss) before income taxes and noncontrolling interest

54,138


3,308


3,422


(8,315)


(2,584)


49,969

Income tax expense (benefit)

11,334


436


845


(1,922)


(645)


10,048

Net income (loss)

42,804


2,872


2,577


(6,393)


(1,939)


39,921

Less net income (loss) attributable to non controlling interests

8,920


1,568


51


(646)


(10)


9,883

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

$        33,884


$       1,304


$       2,526


$      (5,747)


$      (1,929)


$      30,038

 

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)



Six months ended June 30, 2021


Home health
services


Hospice
services


Home and
community-
based
services


Facility-
based
services


HCI


Total

Net service revenue

$      770,362


$   126,538


$     97,532


$     64,399


$     11,911


$ 1,070,742

Cost of service revenue (excluding depreciation and amortization)

432,298


78,217


69,555


41,635


6,439


628,144

General and administrative expenses

242,642


36,241


23,452


22,163


5,812


330,310

Impairment of intangibles and other

937






937

Operating income (loss)

94,485


12,080


4,525


601


(340)


111,351

Interest expense

(288)


(56)


(34)


(19)


(9)


(406)

Income (loss) before income taxes and noncontrolling interest

94,197


12,024


4,491


582


(349)


110,945

Income tax expense (benefit)

19,596


2,347


988


(95)


(77)


22,759

Net income (loss)

74,601


9,677


3,503


677


(272)


88,186

Less net income (loss) attributable to non controlling interests

12,349


2,223


364


979


(31)


15,884

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

$        62,252


$       7,454


$       3,139


$         (302)


$         (241)


$      72,302

 

LHC GROUP, INC. AND SUBSIDIARIES

SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA

(Unaudited)






Three Months Ended

June 30,


Six Months Ended

June 30,


Key Data:


2022


2021


2022


2021











Home Health Services:









Locations


543



531



543



531


Total new admissions


107,268



109,082



220,390



217,004


Episodic new admissions


66,419



68,738



134,573



136,130


Average daily census


84,320



85,554



84,833



84,745


Average episodic daily census


53,415



55,706



53,191



55,152


Completed episodes


104,053



105,393



204,580



207,129


Average reimbursement per completed episodes


$2,878



$2,882



$2,906



$2,869


Total visits


2,089,747



2,151,665



4,207,819



4,209,298


Total episodic visits


1,286,584



1,352,608



2,573,685



2,641,261


Average visits per episodes


12.4



12.8



12.6



12.8


Organic growth: (1)

















   Revenue


-3.4

%


16.4

%


-1.5

%


9.4

%

   Episodic revenue


-4.2

%


14.8

%


-3.0

%


8.0

%

   Total new admissions


-4.3

%


16.4

%


-1.4

%


7.3

%

   Episodic new admissions


-6.3

%


13.4

%


-4.4

%


4.6

%

   Average daily census


-3.5

%


10.3

%


-2.2

%


10.2

%

   Average episodic daily census


-6.4

%


5.7

%


-5.7

%


4.5

%

   Completed episodes


-3.7

%


11.0

%


-3.5

%


5.5

%










Hospice Services:









Locations


169



120



169



120


Admissions


7,370



4,967



15,746



10,418


Average daily census


7,123



4,454



7,093



4,433


Patient days


648,216



405,339



1,284,037



802,313


Average revenue per patient day


$

160.97



$

158.54



$

161.99



$

160.19


Organic growth: (1)













   Total new admissions


5.5

%


1.1

%


7.1

%


4.7

%










Home and Community-Based Services:









Locations


135



135



135



133


Average daily census


11,598



13,514



11,864



13,613


Billable hours


1,694,994



1,878,138



3,368,686



3,779,419


Revenue per billable hour


$

27.22



$

25.88



$

27.19



$

25.96


Facility-Based Services:









Long-term Acute Care









Locations


12



12



12



12


Average revenue per patient day


$

1,479



$

1,517



$

1,463



$

1,517


Patient days


17,550



20,199



38,063



41,359



























(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
 June 30,

Six Months Ended
 June 30,



2022


2021


2022


2021

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


$

10,584



$

37,643



$

30,038



$

72,302


Add (net of tax):









   Acquisition, de novo and legal expenses (1)


6,771



3,477



9,790



3,477


   Closures/relocations/consolidations (2)


3,010



1,048



5,142



1,179


   COVID-19 impact: 













      PPE, supplies and other expenses (3)




7,999





16,851


   ERP implementation (4)


2,446



728



4,138



728


   Cost improvement initiatives (5)


6,562





10,204




   Cost report and contract settlements (6)


465





3,963




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


$

29,838



$

50,895



$

63,275



$

94,537


 

RECONCILIATION OF ADJUSTED NET INCOME

ATTRIBUTABLE TO LHC GROUP, INC. PER DILUTED SHARE

(Unaudited)  




Three Months Ended
 June 30,

Six Months Ended
 June 30,



2022


2021


2022


2021

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


$

0.35



$

1.20



$

0.98



$

2.30


Add (net of tax):









   Acquisition, de novo and legal expenses (1)


0.22



0.11



0.32



0.11


   Closures/relocations/consolidations (2)


0.10



0.03



0.17



0.04


   COVID-19 impact:













      PPE, supplies and other expenses (3)




0.26





0.54


   ERP implementation (4)


0.08



0.02



0.14



0.02


   Cost improvement initiatives (5)


0.21





0.33




   Cost report and contract settlements (6)


0.02





0.13




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


$

0.98



$

1.62



$

2.07



$

3.01


 

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA

(Amounts in thousands)

(Unaudited)




Three Months Ended
June 30,

Six Months Ended
June 30,



2022


2021


2022


2021

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


$

10,584



$

37,643



$

30,038



$

72,302


Add:









   Income tax expense


3,679



13,318



10,048



22,759


   Interest expense, net


6,407



143



10,578



406


   Depreciation and amortization 


6,106



4,542



11,723



9,541


   Adjustment items (*)


26,233



17,942



45,137



30,109


Adjusted EBITDA


$

53,009



$

73,588



$

107,524



$

135,117


* Adjustment items (pre-tax):









   Acquisition, de novo and legal expenses (1)


9,226



4,708



13,307



4,708


   Closures/relocation/consolidations (2)


4,101



1,419



6,983



1,596


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




10,829





22,819


   ERP implementation (4)


3,332



986



5,619



986


   Cost improvement initiatives (5)


8,941





13,865




   Cost report and contract settlements (6)


633





5,363




Total adjustments


$

26,233



$

17,942



$

45,137



$

30,109



















 

  1. Expenses and other costs associated with recently announced or completed acquisitions, de novos and the pending acquisition by UnitedHealth Group. ($9.2 million pre-tax in the three months ended June 30, 2022 and $13.3 million pre-tax in the six months ended June 30, 2022; $4.7 million pre-tax in the three and six months ended June 30, 2021).
  2. Loss on the sale of an asset and other expenses associated with a closure or consolidation, including impairment ($4.1 million pre-tax in the three months ended June 30, 2022 and $7.0 million in the six months ended June 30, 2022; $1.4 million pre-tax in the three months ended June 30, 2021 and $1.6 million in the six months ended June 30, 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 and six months ended June 30, 2022; $10.8 million pre-tax in the three months ended June 30, 2021 and $22.8 million pre-tax in the six months ended June 30, 2021).
  4. Expenses and other costs associated with the implementation of an Enterprise Resource Planning software ($3.3 million pre-tax in the three months ended June 30, 2022 and $5.6 million pre-tax in the six months ended June 30, 2022; $1.0 million pre-tax in the three and six months ended June 30, 2021).
  5. Expenses associated with cost improvement initiatives implemented in the first and second quarters of 2022, which consisted of contract terminations and general and administrative cost reductions ($8.9 million pre-tax in the three months ended June 30, 2022 and $13.9 million pre-tax in the six months ended June 30, 2022).
  6. Expenses associated with a 2004 cost report settlement along with other disputed contract settlements ($0.6 million pre-tax in the three months ended June 30, 2022 and $5.4 million pre-tax in the six months ended June 30, 2022).

Contact:   

Eric Elliott


Senior Vice President of Finance


(337) 233-1307


eric.elliott@lhcgroup.com

SOURCE LHC Group, Inc.