LHC Group, Inc - FORM 8-K - EX-99.1 - PRESS RELEASE

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8-K - FORM 8-K - LHC Group, Inc	f8k_080217.htm

EXHIBIT 99.1

LHC Group Second Quarter Earnings Per Diluted Share Increase 16.7% to $0.63 on 15.1% Growth in Revenue to $260.2 Million

Company Raises Fiscal Year 2017 Guidance for Fully Diluted Earnings Per Share to a Range of $2.30 to $2.40 and Net Service Revenue to a Range of $1.030 Billion to $1.045 Billion

LAFAYETTE, La., Aug. 02, 2017 (GLOBE NEWSWIRE) -- LHC Group, Inc. (NASDAQ:LHCG) today announced its financial results for the three months and six months ended June 30, 2017.

Financial Results for the Second Quarter of 2017 Compared with the Second Quarter of 2016

Net service revenue increased 15.1% to $260.2 million for the second quarter of 2017 compared with $226.0 million for the second quarter of 2016.
Net income attributable to LHC Group’s common stockholders was $11.3 million, up 19.4% from $9.5 million for the second quarter of 2016, while earnings per diluted share attributable to LHC Group’s common stockholders increased 16.7% to $0.63 per diluted share from $0.54.
Total comparable-quarter growth in admissions for all service lines was 22.4%
Total comparable-quarter organic growth in home health admissions was 10.4%.
Total comparable-quarter organic growth in hospice admissions 4.6%.

Commenting on the announcement, Keith G. Myers, LHC Group’s chairman and CEO, said, “LHG Group continued to produce strong financial growth during the second quarter, which is reflected in the 22.4% growth in total admissions for all service lines for the quarter. A significant portion of this growth was again generated organically, much of which was driven by the 10.4% growth in organic home health admissions, which is our fourth consecutive quarter above 10%, complemented by 4.6% growth in organic hospice admissions. The steady, long-term trend of increasing acuity in our organic admissions continued in the second quarter of 2017, contributing to an increase in organic net home health revenues of 11.9% for the quarter.

“Our revenue growth is also attributable to the continued success of our acquisition strategy. In the trailing 12 months ended June 30, 2017, we acquired 55 home health, hospice or community-based locations and began to manage 10 additional locations. The joint venture we entered with LifePoint Health on January 1, 2017, accounts for 31 of the acquired locations and the 10 managed locations, which we are scheduled to convert from management to part of our joint venture in September.

“Earlier this week, we announced the signing of a definitive agreement for another significant new joint venture with CHRISTUS Health, which we are working to complete by the end of the third quarter, subject to customary closing conditions. This new agreement reflects the increasing interest we are seeing from hospitals and health systems in partnering with us for additional post-acute services beyond our core home health, hospice and community-based care services outside the hospital. Through this partnership with CHRISTUS Health, we will acquire and operate 21 service locations, including seven home health agencies, five hospice programs, two community-based home care services, one inpatient hospice unit, and six long-term acute-care hospitals (LTACH). When completed, we expect this joint venture – which will be our 75^th hospital or health system joint venture – to generate approximately $80 million in annualized revenue and will not materially affect our 2017 diluted earnings per share. Including the CHRISTUS Health joint venture, we have announced agreements to acquire $106.8 million of annual revenue so far in 2017, which already surpasses any previous year.

“Looking forward, we expect the favorable market dynamics driving both our increased admissions and acquisition strategy to continue. The ongoing transition to value-based healthcare is highlighting our ability to provide high quality care for post-acute patients in less medically intensive and expensive venues. We are carefully studying the CMS’ proposed Home Health Groupings Model (HHGM). While it is too early to predict, with any precision or certainty, the effect of the proposed rule, if finalized, we note that certain aspects of the proposed model align with our current business model and strategic focus, namely how our joint venture strategy relates to HHGM’s positive view of admissions from institutional settings.

“We would like to also highlight our competitive differentiation as the leading high quality home health provider, based on the latest CMS Star ratings confirming that we have provided the highest quality and best patient satisfaction in the home health industry for the last five consecutive quarters, as well as our position as the only national home health provider that is 100% accredited by the Joint Commission. Our high-quality care, combined with our scale, financial strength and unmatched history in successful long-term joint ventures with hospitals and health systems, supports our core strategy of being the partner of choice for hospitals and health system joint ventures for post-acute healthcare regardless as to any changes in the federal reimbursement methodology.”

Mr. Myers concluded, “I and our Board of Directors are very proud of the long-term validation provided by the CMS Star ratings that our healthcare professionals, and the people who support them, are providing the highest quality care and achieving the best patient satisfaction in our industry. We congratulate all our colleagues throughout LHC Group for their excellent work and thank them for the skill, commitment and passion required to remain at the top in a competitive industry. We never forget the direct correlation between the quality of our team and the quality of the care we provide, or how each sustains the growth potential of LHC Group.”

FY 2017 Guidance

LHC Group today raised its fiscal year 2017 guidance for net service revenue to be in an expected range of $1.030 billion to $1.045 billion, from the previous range of $1.02 billion to $1.04 billion, and fully diluted earnings per share to be in an expected range of $2.30 to $2.40, from the previous range of $2.23 to $2.33.

The Company’s financial guidance does not take into account the recently announced definitive agreement with CHRISTUS Health, the impact of future reimbursement changes, if any, future acquisitions, if made, de novo locations, if opened, or future legal expenses, if necessary.

Conference Call

LHC Group will host a conference call on Thursday, August 3, 2017, at 11:00 a.m. Eastern time to discuss its second quarter 2017 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 Thursday, August 10, 2017, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 40221056. 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 following the conclusion of the live broadcast.

About LHC Group, Inc.
LHC Group, Inc. is a national provider of non-acute healthcare services, providing quality, cost-effective healthcare to patients primarily within the comfort and privacy of their home or place of residence. LHC Group provides a comprehensive array of healthcare services through home health, hospice, community‑based services agencies and facility-based services. LHC Group operates 315 home health services locations, 87 hospice locations, 11 community-based service locations and six long-term acute care hospitals (LTACHs) with eight locations.

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, 2016, 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,
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
(Unaudited)

	June 30, 2017			Dec. 31, 2016
ASSETS
Current assets:
Cash	$	6,968		$	3,264
Receivables:
Patient accounts receivable, less allowance for uncollectible accounts of $26,020 and $29,036, respectively		130,948			124,803
Other receivables		6,749			5,115
Amounts due from governmental entities		830			942
Total receivables, net		138,527			130,860
Prepaid income taxes		3,296			─
Prepaid expenses		10,888			9,821
Other current assets		6,087			5,796
Total current assets		165,766			149,741
Property, building and equipment, net of accumulated depreciation of $39,111 and $35,226, respectively		43,885			43,251
Goodwill		345,179			307,317
Intangible assets, net of accumulated amortization of $12,143 and $10,968, respectively		114,966			102,006
Other assets		2,870			11,756
Total assets	$	672,666		$	614,071

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities	$	38,513		$	26,805
Salaries, wages, and benefits payable		37,259			34,265
Self-insurance reserve		13,627			10,691
Current portion of long-term debt		258			252
Amounts due to governmental entities		5,341			4,955
Income tax payable		─			3,499
Total current liabilities		94,998			80,467
Deferred income taxes		34,463			31,941
Revolving credit facility		84,000			87,000
Long-term debt, less current portion		409			544
Total liabilities		213,870			199,952
Noncontrolling interest – redeemable		13,420			12,567
Stockholders’ equity:
LHC Group, Inc. stockholders’ equity:
Common stock – $0.01 par value; 40,000,000 shares authorized; 22,617,280 and 22,429,041 shares issued in 2017 and 2016, respectively		226			224
Treasury stock – 4,884,497 and 4,828,679 shares at cost, respectively		(41,879	)		(39,135	)
Additional paid-in capital		123,456			119,748
Retained earnings		335,060			314,289
Total LHC Group, Inc. stockholders’ equity		416,863			395,126
Noncontrolling interest – non-redeemable		28,513			6,426
Total equity		445,376			401,552
Total liabilities and equity	$	672,666		$	614,071

LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share data)
(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016
Net service revenue	$	260,210		$	226,031		$	506,828		$	448,583
Cost of service revenue		161,158			137,128			315,528			272,729
Gross margin		99,052			88,903			191,300			175,854
Provision for bad debts		2,675			3,782			5,044			8,383
General and administrative expenses		73,550			68,261			145,409			134,297
Loss on disposal of assets		2			1,043			154			1,247
Operating income		22,825			15,817			40,693			31,927
Interest expense		(840	)		(466	)		(1,620	)		(1,351	)
Income before income taxes and noncontrolling interest		21,985			15,351			39,073			30,576
Income tax expense		7,792			3,596			12,965			8,938
Net income		14,193			11,755			26,108			21,638
Less net income attributable to noncontrolling interests		2,889			2,291			5,337			4,488
Net income attributable to LHC Group, Inc.’s common stockholders	$	11,304		$	9,464		$	20,771		$	17,150

Earnings per share attributable to LHC Group, Inc.’s common stockholders:
Basic	$	0.64		$	0.54		$	1.17		$	0.98
Diluted	$	0.63		$	0.54		$	1.16		$	0.97

Weighted average shares outstanding:
Basic		17,728,567			17,566,097			17,686,134			17,525,937
Diluted		17,964,387			17,685,147			17,911,723			17,649,620

LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

	Six Months Ended June 30,
		2017			2016
Operating activities:
Net income	$	26,108		$	21,638
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		6,348			5,911
Provision for bad debts		5,044			8,383
Stock-based compensation expense		3,077			2,236
Deferred income taxes		2,522			2,058
Loss on disposal of assets		154			1,247
Changes in operating assets and liabilities, net of acquisitions:
Receivables		(6,970	)		(19,758	)
Prepaid expenses and other assets		(2,329	)		(6,446	)
Prepaid income taxes		(3,296	)		(4,364	)
Accounts payable and accrued expenses		15,119			21,867
Income taxes payable		(3,499	)		─
Net amounts due to/from governmental entities		498			(1,900	)
Net cash provided by operating activities		42,776			30,872

Investing activities:
Purchases of property, building and equipment		(5,341	)		(13,712	)
Cash paid for acquisitions, primarily goodwill and intangible assets		(22,704	)		(11,515	)
Advanced payments on acquisitions		(523	)		─
Other		─			273
Net cash used in investing activities		(28,568	)		(24,954	)

Financing activities:
Proceeds from line of credit		19,000			35,000
Payments on line of credit		(22,000	)		(23,000	)
Proceeds from employee stock purchase plan		469			445
Payments on debt		(129	)		(115	)
Noncontrolling interest distributions		(5,167	)		(4,338	)
Excess tax benefits from vesting of stock awards		─			1,218
Withholding taxes paid on stock-based compensation		(2,744	)		(1,703	)
Purchase of additional controlling interest		(184	)		─
Sale of noncontrolling interest		251			52
Proceeds from exercise of stock options		─			109
Net cash provided by (used in) financing activities		(10,504	)		7,668
Change in cash		3,704			13,586
Cash at beginning of period		3,264			6,139
Cash at end of period	$	6,968		$	19,725

Supplemental disclosures of cash flow information:
Interest paid	$	1,762		$	1,489
Income taxes paid	$	17,320		$	10,635

LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)

	Three Months Ended June 30, 2017
	Home Health Services			Hospice Services			Community- Based Services			Facility- Based Services			Total
Net service revenue	$	194,061		$	38,513		$	10,845		$	16,791		$	260,210
Cost of service revenue		117,606			24,473			7,986			11,093			161,158
Provision for bad debts		1,652			662			99			262			2,675
General and administrative expenses		55,267			10,742			2,261			5,280			73,550
Loss on disposal of assets		1			1			─			─			2
Operating income		19,535			2,635			499			156			22,825
Interest expense		(630	)		(126	)		(42	)		(42	)		(840	)
Income before income taxes and noncontrolling interest		18,905			2,509			457			114			21,985
Income tax expense		6,757			849			180			6			7,792
Net income		12,148			1,660			277			108			14,193
Less net income attributable to noncontrolling interests		2,266			480			5			138			2,889
Net income (loss) attributable to LHC Group, Inc.’s common stockholders	$	9,882		$	1,180		$	272		$	(30	)	$	11,304
Total assets	$	466,308		$	138,519		$	33,292		$	34,547		$	672,666

	Three Months Ended June 30, 2016
	Home Health Services			Hospice Services			Community- Based Services			Facility- Based Services			Total
Net service revenue	$	163,174		$	33,905		$	10,587		$	18,365		$	226,031
Cost of service revenue		97,590			20,966			7,829			10,743			137,128
Provision for bad debts		2,618			792			216			156			3,782
General and administrative expenses		51,182			9,425			2,215			5,439			68,261
Loss on disposal of assets		706			205			46			86			1,043
Operating income		11,078			2,517			281			1,941			15,817
Interest expense		(350	)		(51	)		(23	)		(42	)		(466	)
Income before income taxes and noncontrolling interest		10,728			2,466			258			1,899			15,351
Income tax expense		2,043			789			102			662			3,596
Net income		8,685			1,677			156			1,237			11,755
Less net income (loss) attributable to noncontrolling interests		1,555			498			(14	)		252			2,291
Net income attributable to LHC Group, Inc.’s common stockholders	$	7,130		$	1,179		$	170		$	985		$	9,464
Total assets	$	429,780		$	118,353		$	33,247		$	38,265		$	619,645

LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION (Continued)
(Amounts in thousands)
(Unaudited)

	Six Months Ended June 30, 2017
	Home Health Services			Hospice Services			Community- Based Services			Facility- Based Services			Total
Net service revenue	$	376,202		$	74,958		$	21,661		$	34,007		$	506,828
Cost of service revenue		229,692			47,746			15,934			22,156			315,528
Provision for bad debts		3,135			1,159			374			376			5,044
General and administrative expenses		109,171			21,141			4,572			10,525			145,409
Loss on disposal of assets		19			8			—			127			154
Operating income		34,185			4,904			781			823			40,693
Interest expense		(1,215	)		(243	)		(81	)		(81	)		(1,620	)
Income before income taxes and noncontrolling interest		32,970			4,661			700			742			39,073
Income tax expense		11,010			1,508			263			184			12,965
Net income		21,960			3,153			437			558			26,108
Less net income attributable to noncontrolling interests		4,294			766			13			264			5,337
Net income attributable to LHC Group, Inc.’s common stockholders	$	17,666		$	2,387		$	424		$	294		$	20,771

	Six Months Ended June 30, 2016
	Home Health Services			Hospice Services			Community- Based Services			Facility- Based Services			Total
Net service revenue	$	324,561		$	64,729		$	21,030		$	38,263		$	448,583
Cost of service revenue		194,302			40,593			15,556			22,278			272,729
Provision for bad debts		6,073			1,567			298			445			8,383
General and administrative expenses		100,655			18,296			4,294			11,052			134,297
Loss on disposal of assets		791			324			46			86			1,247
Operating income		22,740			3,949			836			4,402			31,927
Interest expense		(1,028	)		(142	)		(65	)		(116	)		(1,351	)
Income before income taxes and noncontrolling interest		21,712			3,807			771			4,286			30,576
Income tax expense		5,893			1,209			330			1,506			8,938
Net income		15,819			2,598			441			2,780			21,638
Less net income (loss) attributable to noncontrolling interests		3,149			815			(57	)		581			4,488
Net income attributable to LHC Group, Inc.’s common stockholders	$	12,670		$	1,783		$	498		$	2,199		$	17,150

LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Key Data:
*Home-Health Services:*
Home Health
Locations		315			283			315			283
Acquired		12			2			23			5
De novo		0			0			0			1
Divested/Consolidated		2			3			3			6
Total new admissions		47,625			38,949			95,000			78,073
Medicare new admissions		29,868			25,817			59,825			51,953
Average daily census		43,396			38,357			42,615			38,262
Average Medicare daily census		29,743			28,046			29,474			28,143
Medicare completed and billed episodes		53,304			50,479			105,142			98,965
Average Medicare case mix for completed and billed Medicare episodes		1.10			1.06			1.08			1.04
Average reimbursement per completed and billed Medicare episodes	$	2,818		$	2,673		$	2,780		$	2,634
Total visits		1,399,195			1,149,895			2,726,906			2,276,729
Total Medicare visits		969,673			840,961			1,900,591			1,670,228
Average visits per completed and billed Medicare episodes					16.7						16.9
Organic growth:⁽¹⁾
Net revenue		11.9	%		4.6	%		10.2	%		6.4	%
Net Medicare revenue		6.4	%		4.2	%		5.6	%		4.8	%
Total new admissions		10.4	%		8.7	%		11.0	%		8.0	%
Medicare new admissions		6.4	%		6.4	%		7.0	%		4.9	%
Average daily census		4.9	%		2.2	%		4.3	%		2.5	%
Average Medicare daily census		-0.1	%		0.7	%		-0.7	%		1.2	%
Medicare completed and billed episodes		-0.8	%		3.7	%		0.4	%		2.9	%

*Community-Based Services:*
Locations		11			11			11			11
Acquired		0			0			0			0
De novo		0			0			0			0
Divested/Consolidated		0			0			0			2
Average daily census		1,746			1,619			1,688			1,613
Billable hours		342,337			330,350			686,522			634,837
Revenue per billable hour	$	31.68		$	32.02		$	31.55		$	33.11

*Hospice-Based Services:*
Locations		87			62			87			62
Acquired		13			1			21			7
De novo		0			0			0			0
Divested/Consolidated		0			0			0			1
Admissions		3,227			2,523			6,279			4,986
Average daily census		3,031			2,615			2,927			2,520
Patient days		275,866			237,968			529,784			458,662
Average revenue per patient day	$	140		$	142		$	141		$	141

*Facility-Based Services:*
Long-term Acute Care
Locations		8			8			8			8
Patient days		13,075			13,929			26,807			29,466
Average revenue per patient day	$	1,083		$	1,239		$	1085		$	1,224

⁽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.

Contact:

Eric Elliott
Senior Vice President of Finance
(337) 233-1307
eric.elliott@lhcgroup.com

LHC Group, Inc - FORM 8-K - EX-99.1 - PRESS RELEASE - August 3, 2017

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