LHC Group, Inc - FORM 8-K - EX-99 - PRESS RELEASE - August 6, 2012

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EXHIBIT 99.1

LHC Group Announces Second Quarter 2012 Results

Highlights:

  • Net service revenue was $158.1 million for the second quarter of 2012;
  • Adjusted net income attributable to LHC Group per diluted share was $0.35 for the second quarter of 2012; and
  • Organic growth in new home health admissions was 6.3% for the second quarter of 2012 and 6.0% for the six months ended June 30, 2012.

LAFAYETTE, La., Aug. 6, 2012 (GLOBE NEWSWIRE) -- LHC Group Inc. (Nasdaq:LHCG), a national provider of post-acute care services, today announced its financial results for the three and six months ended June 30, 2012.

Financial Results for the Second Quarter

  • Net service revenue for the second quarter of 2012 was $158.1 million, compared with $161.0 million for the same period in 2011.
  • Net income attributable to LHC Group for the second quarter of 2012 was $6.0 million, compared with $9.8 million for the same period in 2011. The 2012 amount includes $471,000, after tax, of expense associated with the strategic alternatives process completed in June 2012 and legal or other expenses associated with the company's previously announced investigations.
  • Diluted earnings per share was $0.32 for the second quarter of 2012, including $0.03 per diluted share, after tax, of expense associated with the strategic alternatives process and legal or other expenses associated with the company's previously announced investigations, compared with $0.53 for the same period in 2011.

"I congratulate and thank our team members, who consistently deliver high-quality care to the growing number of patients, families and communities we serve," said Keith G. Myers, LHC Group's chairman and CEO. "We are pleased with our solid performance through the first two quarters, which are in line with forecast and guidance. Our 6.3 percent increase in organic growth in home health admissions in the second quarter, building on a 5.6 percent increase in organic growth in home health admissions in the first quarter, is a clear indicator that more hospitals, physicians and patients around the country are choosing LHC Group for post-acute care. Additionally, our 13 percent decrease in corporate overhead costs demonstrates that our efficiency initiatives are yielding results. Our company's proven ability to grow admissions while simultaneously becoming more efficient in our operations is the key to long-term success in today's healthcare environment."

LHC Group continues to strengthen its position as the leading post-acute partner for hospitals and health systems nationwide. On July 1, the company announced a joint venture partnership with Texas Health Resources and Methodist Health System, two of the leading healthcare providers in North Texas.

"Our unique joint venture strategy positions our company, as well as our existing and future hospital partners, to be at the forefront of change as our country moves toward a more integrated healthcare delivery system," Myers said.

Financial Results for the Six Months

  • Net service revenue for the six months ended June 30, 2012, was $316.8 million compared with $322.8 million for the same period in 2011.
  • Net income attributable to LHC Group for the six months ended June 30, 2012, was $13.7 million, including $884,000, after tax, of expense associated with the previously mentioned strategic alternatives process and legal or other expenses associated with the company's previously announced investigations, compared with $17.5 million for the same period in 2011.
  • Diluted earnings per share was $0.74 for the six months ended June 30, 2012, including $0.05 per diluted share, after tax, of expense associated with the strategic alternatives process and legal or other expenses associated with the company's previously announced investigations, compared with $0.95 for the same period in 2011.

Guidance

The company is reaffirming its full year 2012 guidance issued Jan. 4, 2012, for net service revenue of $640 million to $660 million and fully diluted earnings per share in the range of $1.45 to $1.65. This guidance does not take into account the impact of any future acquisitions or share repurchases, if made, de novo locations, if opened, future reimbursement changes, if any, or future legal or other expenses associated with the company's ongoing investigations.

Conference Call

LHC Group will host a conference call Tuesday, Aug. 7, 2012, at 11 a.m. Eastern time to discuss its second quarter 2012 results. The toll-free number to call for this interactive teleconference is (866) 393-1608 (international callers should call 973-890-8327). A telephonic replay of the conference call will be available through midnight on Tuesday, Aug. 14, 2012, by dialing (855) 859-2056 (international callers should call 404-537-3406) and entering confirmation number 93666677. 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. A one-year online replay will be available approximately an hour after the conclusion of the live broadcast.

About LHC Group Inc.

LHC Group Inc. is a national provider of post-acute care, providing quality, cost-effective health care to patients within the comfort and privacy of their home or place of residence. LHC Group provides a comprehensive array of post-acute healthcare services through home health, hospice and private duty locations in its home-based division and long-term acute care hospitals in its facility-based division.

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, 2011, 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
(amounts in thousands, except share data)
(unaudited)
     
  June 30,
2012		 Dec. 31,
2011
     
ASSETS    
Current assets:    
Cash $ 385 $ 256
Receivables:    
Patient accounts receivable, less allowance for uncollectible accounts of $10,909 and $10,692, respectively 90,506 91,183
Other receivables 1,218 1,636
Amounts due from governmental entities 190 315
Total receivables, net 91,914 93,134
Deferred income taxes 7,506 7,269
Prepaid income taxes 15,551 26,667
Prepaid expenses 6,550 6,576
Other current assets 2,905 4,363
Total current assets 124,811 138,265
Property, building and equipment, net of accumulated depreciation of $30,895 and $28,073, respectively 27,909 28,182
Goodwill 164,731 164,731
Intangible assets, net of accumulated amortization of $2,712 and $2,325, respectively 60,702 59,389
Other assets 5,203 5,809
Total assets $ 383,356 $ 396,376
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable and other accrued liabilities $ 20,569 $ 23,119
Salaries, wages and benefits payable 29,261 25,571
Self insurance payable 4,888 5,612
Amounts due to governmental entities 3,241 3,234
Total current liabilities 57,959 57,536
Deferred income taxes 24,563 22,523
Income tax payable 3,415 3,415
Revolving credit facility 8,309 34,820
Total liabilities 94,246 118,294
Noncontrolling interest- redeemable 11,033 11,348
Stockholders' equity:    
Common stock – $0.01 par value: 40,000,000 shares authorized; 21,534,814 and 21,374,264 shares issued and 18,191,813 and 18,298,659 shares outstanding, respectively 184 183
Treasury stock – 3,343,001 and 3,075,605 shares at cost, respectively (10,779) (6,216)
Additional paid-in capital 98,483 95,964
Retained earnings 187,456 173,752
Total LHC Group Inc. stockholders' equity 275,344 263,683
Noncontrolling interest- non-redeemable 2,733 3,051
Total equity 278,077 266,734
Total liabilities and stockholders' equity $ 383,356 $ 396,376
 
LHC GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 (amounts in thousands, except share and per share data)
(unaudited)
         
  Three Months Ended
June 30,		 Six Months Ended 
June 30,
  2012 2011 2012 2011
Net service revenue $ 158,055 $ 161,015 $ 316,816 $ 322,798
Cost of service revenue 92,218 86,216 182,077 175,172
Gross margin 65,837 74,799 134,739 147,626
Provision for bad debts 2,647 3,143 5,408 5,704
General and administrative expenses 50,967 52,154 101,849 107,195
Operating income 12,223 19,502 27,482 34,727
Interest expense  (208) (195) (567) (290)
Non-operating income  (51) 4 14 177
Income before income taxes and noncontrolling interest 11,964 19,311 26,929 34,614
Income tax expense 4,092 6,549 9,318 11,710
Net income 7,872 12,762 17,611 22,904
Less net income attributable to noncontrolling interest 1,909 2,974 3,907 5,422
Net income attributable to LHC Group, Inc.'s common stockholders $ 5,963 $ 9,788 $ 13,704 $ 17,482
         
Earnings per share – basic:        
Net income attributable to LHC Group, Inc.'s common stockholders $ 0.32 $ 0.54 $ 0.75 $ 0.96
         
Earnings per share – diluted:        
Net income attributable to LHC Group, Inc.'s common stockholders $ 0.32 $ 0.53 $ 0.74 $ 0.95
         
Weighted average shares outstanding:        
Basic 18,385,783 18,278,479 18,357,362 18,247,238
Diluted 18,423,258 18,346,441 18,396,453 18,338,605
 
LHC GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
     
  Six Months Ended
June 30,
  2012 2011
Operating activities    
Net income $ 17,611 $ 22,904
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization expense 3,836 3,939
Provision for bad debts 5,408 5,704
Stock-based compensation expense 2,387 1,960
Deferred income taxes 1,803 3,375
Loss on sale of assets 113 –
Changes in operating assets and liabilities, net of acquisitions:    
Receivables (4,875) (4,254)
Prepaid expenses, other assets 2,090 5,984
Prepaid income taxes 10,802 (3,899)
Accounts payable and accrued expenses 416 (1,950)
Net amounts due to/from governmental entities 132 –
Net cash provided by operating activities  39,723 33,763
     
Investing activities    
Purchases of property, building, and equipment (3,314) (5,761)
Proceeds from sale of assets 23 –
Cash paid for acquisitions, primarily goodwill and intangible assets and advance payment on acquisitions  (1,700) (11,770)
Net cash used in investing activities  (4,991) (17,531)
     
Financing activities    
Proceeds from line of credit 66,446 49,187
Payments on line of credit (92,957) (49,187)
Payments on capital leases – (14)
Excess tax benefits from vesting of restricted stock – 318
Proceeds from employee stock purchase plan 407 426
Payments on repurchase of common stock (4,001) (577)
Noncontrolling interest distributions (4,452) (6,645)
Purchase of additional controlling interest (126) (816)
Sale of noncontrolling interest 80 –
Net cash used in financing activities (34,603) (7,308)
Change in cash 129 8,924
Cash at beginning of period 256 288
Cash at end of period $ 385 $ 9,212
     
Supplemental disclosures of cash flow information    
Interest paid $ 567 $ 290
Income taxes paid $ 8,203 $ 11,956
 
 
LHC GROUP INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(amounts in thousands)
(unaudited)
             
  Three Months Ended 
June 30, 2012		 Six Months Ended
June 30, 2012
  Home-
Based
Services		 Facility-
Based
Services		  Total Home-
Based
Services		 Facility-
Based
Services		  Total
Net service revenue $ 139,996 $ 18,059 $ 158,055 $ 279,591 $ 37,225 $ 316,816
Cost of service revenue 80,707 11,511 92,218 159,768 22,309 182,077
Provision for bad debts 2,334 313 2,647 4,957 451 5,408
General and administrative expenses 45,566 5,401 50,967 90,792 11,057 101,849
Operating income 11,389 834 12,223 24,074 3,408 27,482
Interest expense (187) (21) (208) (510) (57) (567)
Non-operating income (loss) (50) (1) (51) 3 11 14
Income before income taxes and noncontrolling interest 11,152 812 11,964 23,567 3,362 26,929
Income tax expense 3,697 395 4,092 8,428 890 9,318
Net income 7,455 417 7,872 15,139 2,472 17,611
Noncontrolling interest 1,826 83 1,909 3,518 389 3,907
Net income attributable to LHC Group Inc. $ 5,629 $ 334 $ 5,963 $ 11,621 $ 2,083 $ 13,704
Total assets $ 348,788 $ 34,568 $ 383,356 $ 348,788 $ 34,568 $ 383,356
             
  Three Months Ended
June 30, 2011		 Six Months Ended
June 30, 2011
  Home-
Based
Services		 Facility-
Based
Services		  Total Home-
Based
Services		 Facility-
Based
Services		  Total
Net service revenue $ 141,984 $ 19,031 $ 161,015 $ 283,785 $ 39,013 $ 322,798
Cost of service revenue 74,733 11,483 86,216 151,823 23,349 175,172
Provision for bad debts 2,998 145 3,143 5,406 298 5,704
General and administrative expenses 47,456 4,698 52,154 97,520 9,675 107,195
Operating income 16,797 2,705 19,502 29,036 5,691 34,747
Interest expense (175) (20) (195) (261) (29) (290)
Non-operating income (loss) (9) 13 4 142 35 177
Income before income taxes and noncontrolling interest 16,613 2,698 19,311 28,917 5,697 34,614
Income tax expense 5,917 632 6,549 10,594 1,116 11,710
Net income 10,696 2,066 12,762 18,323 4,581 22,904
Noncontrolling interest 2,687 287 2,974 4,782 640 5,422
Net income attributable to LHC Group Inc. $ 8,009 $ 1,779 $ 9,788 $ 13,541 $ 3,941 $ 17,482
Total assets $ 342,608 $ 35,118 $ 377,726 $ 342,608 $ 35,118 $ 377,726
 
LHC GROUP INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(unaudited)
         
  Three Months Ended
June 30,		 Six Months Ended
June 30,
  2012 2011 2012 2011
Key Data:        
Home-Based Services:        
Home Health        
Locations 244 260 244 260
Acquired  0 2 0 5
De novo 0 0 1 7
Total new admissions 26,498 24,935 54,194 51,129
Medicare new admissions 17,837 17,423 36,883 36,012
Average daily census 32,988 33,937 32,723 34,120
Average Medicare daily census 24,858 26,192 24,720 26,320
Medicare completed and billed episodes 42,480 44,541 83,767 86,607
Average Medicare case mix for completed and billed Medicare episodes 1.26 1.24 1.26 1.25
Average reimbursement per completed and billed Medicare episodes $ 2,362 $ 2,340 $ 2,350 $ 2,358
Total visits 896,322 883,888 1,794,699 1,763,823
Total Medicare visits 653,053 667,088 1,311,619 1,333,273
Average visits per completed and billed Medicare episodes 15.4 15.0 15.7 15.4
Organic growth (1):        
Net revenue -2.5% -1.8% -2.4% 1.7%
Net Medicare revenue -6.4% -4.4% -5.7% -1.2%
Total new admissions 6.3% 4.8% 6.0% 9.4%
Medicare new admissions  2.1% 1.2% 2.3% 5.4%
Average daily census -2.8% 4.7% -4.1% 6.4%
Average Medicare daily census -5.1% 1.6% -6.1% 3.0%
Medicare completed and billed episodes -4.6% 6.2% -3.3% 6.0%
         
Hospice        
Locations 32 32 32 32
Acquired  0 3 0 8
Admissions 1,072 1,045 2,181 1,964
Average Daily Census 995 930 964 882
Patient Days 90,564 84,669 175,528 159,670
Average revenue per patient day $ 138 $ 133 $ 138 $ 136
         
Facility-Based Services:        
Long-term Acute Care         
Locations  9 9 9 9
Patient days 15,822 15,268 32,013 30,601
Patient acuity mix  0.98 1.05 1.00 1.03
Average revenue per patient day $ 1,102 $ 1,171 $ 1,129 $ 1,190
         
(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.        
 
LHC GROUP INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME
(unaudited)
     
During the three months and six months ended June 30, 2012, the Company spent $471,000 and $884,000, respectively, after tax, on costs associated with the previously announced strategic alternatives process and legal or other expenses associated with the company's previously announced investigations. In order to reflect the operational performance of the Company during the quarter excluding these costs, company representatives may be asked to provide adjusted net income for the quarter excluding such costs. In the event the Company provides such information, the adjusted net income presented would be a non-GAAP financial measure determined as follows: net income excluding costs related to our previously announced strategic alternatives process and legal or other expenses associated with the company's previously announced investigations. The Company believes adjusted net income would provide investors with helpful information with respect to the performance of the Company's ongoing operations, and management is using adjusted net income to evaluate its ongoing operations and for internal planning and forecasting purposes. Adjusted net income is not a measure of liquidity. See the tables below, which reconcile net income to adjusted net income and GAAP earnings per share to adjusted earnings per share.
     
  For The
Three
Months
Ended
June 30,
2012		 For The
Six
Months
Ended
June 30,
2012
     
Adjusted net income attributable to LHC Group:    
Net income attributable to LHC Group Inc. $ 5,963 $ 13,704
Add: Costs related to strategic alternatives process and legal or other expenses associated with the company's previously announced investigations, net of tax 471 884
Adjusted net income attributable to LHC Group Inc. $ 6,434 $ 14,588
     
Adjusted net income attributable to LHC Group per diluted share:  
Net income attributable to LHC Group Inc. $ 0.32 $ 0.74
Add: Costs related to strategic alternatives process and legal or other expenses associated with the company's previously announced investigations, net of tax 0.03 0.05
Adjusted net income attributable to LHC Group Inc. $ 0.35 $ 0.79 
CONTACT: Eric Elliott
         Investor Relations
         (337) 233-1307
         eric.elliott@lhcgroup.com

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