LHC Group Announces Third Quarter 2012 Results
LHC Group Announces Third Quarter 2012 Results
Highlights:
* Net service revenue was $158.9 million for the third quarter of 2012;
* Net income attributable to LHC Group per diluted share was $0.36 for the
third quarter of 2012; and
* Organic growth in new home health admissions was 3.0% for the third
quarter of 2012 and 5.0% for the nine months ended September 30, 2012.
LAFAYETTE, La., Nov. 7, 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 nine months ended September 30, 2012.
Financial Results for the Third Quarter
* Net service revenue for the third quarter of 2012 was $158.9 million,
compared with $153.4 million for the same period in 2011.
* Net income attributable to LHC Group for the third quarter of 2012 was
$6.3 million, compared with a net loss attributable to LHC Group for the
third quarter of 2011 of $38.0 million, which included a $45.0 million
after tax charge related to the company's settlement with the Department
of Justice. The 2012 amount includes:
-- $505,000 benefit from a lower tax rate due to Work Opportunity Tax
Credits ($0.03 per share), and
-- $390,000 after tax expense associated with an intangibles impairment
charge ($0.02 per share).
* Estimated revenue loss of $571,000 ($321,000 after tax) in the third
quarter of 2012 due to Hurricane Isaac.
* Diluted earnings per share was $0.36 for the third quarter of 2012,
including approximately $0.01 benefit from the share repurchases during
2012.
Keith G. Myers, LHC Group's chairman and CEO, said the company continues to
demonstrate its proven ability to operate efficiently and effectively, posting
solid operating results despite the significant impact of Hurricane Isaac and
ongoing uncertainties in the regulatory environment.
"Like residents all along the Gulf Coast, LHC Group grappled with many
short-term challenges from Hurricane Isaac," Myers said. "This slow-moving
storm affected 85 of our locations for an extended period. However, we are
proud of the dedication exhibited by our clinicians, who helped make sure
every patient was safe before, during and after the storm.
"Our LHC Group team continues to show resiliency in the face of challenge and
adversity. Once again, we have clearly demonstrated our ability to operate
efficiently, delivering high-quality care in a cost-effective manner, even
under the most difficult of circumstances. Our industry-leading model of
post-acute care partnerships with hospitals and health systems positions us
well for the future, and we are well poised to continue delivering value to
our patients, our partners and all stakeholders."
Myers said the company's commitment to excellence recently propelled nearly 60
percent of LHC Group's home health agencies to HomeCare Elite status for 2012.
Compiled annually by OCS HomeCare and DecisionHealth, HomeCare Elite
recognizes the top 25 percent of home health agencies in the country based on
quality of care, quality improvement, patient experience, process measure
implementation and financial performance.
Financial Results for the Nine Months
* Net service revenue for the nine months ended September 30, 2012, was
$475.7 million, compared with $476.2 million for the same period in 2011.
* Net income attributable to LHC Group for the nine months ended September
30, 2012, was $20.0 million, compared with a net loss attributable to LHC
Group for the nine months ended September 30, 2011, of $20.5 million,
which included a $45.0 million after tax charge related to the company's
settlement with the Department of Justice. The 2012 amount includes:
-- $1.2 million after tax expense associated with the strategic
alternatives process and legal or other expenses associated with the
company's previously announced investigations ($0.06 per share),
-- $505,000 benefit from a lower tax rate due to Work Opportunity Tax
Credits ($0.03 per share),
-- $390,000 after tax expense associated with an intangibles impairment
charge ($0.02 per share), and
-- $109,000 after tax loss from locations acquired in the period ($0.01).
* Estimated revenue loss of $571,000 ($321,000 after tax) for the nine
months ended September 30, 2012, due to Hurricane Isaac.
* Diluted earnings per share was $1.10 for the nine months ended September
30, 2012, compared with a loss per share of $1.12 for the same period in
2011. The 2012 amount includes $0.01 per share benefit from the share
repurchases during the period.
Guidance
The company is adjusting its full year 2012 guidance issued January 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 to net service revenue of
$635 million to $645 million and fully diluted earnings per share in the range
of $1.45 to $1.55, which includes the effect of share repurchases and
acquisitions made through September 30, 2012. 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, and
excludes legal or other expenses associated with the company's ongoing
investigations.
Conference Call
LHC Group will host a conference call Thursday, November 8, 2012, at 11 a.m.
Eastern time to discuss its third 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 Thursday, November 15, 2012, by dialing
(855) 859‑2056 (international callers should call 404-537-3406) and entering
confirmation number 37823587. 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)
Sept. 30, Dec. 31,
2012 2011
ASSETS
Current assets:
Cash $276 $256
Receivables:
Patient accounts receivable, less allowance for
uncollectible accounts of $11,218 and $10,692, 89,945 91,183
respectively
Other receivables 961 1,636
Amounts due from governmental entities 187 315
Total receivables, net 91,093 93,134
Deferred income taxes 8,630 7,269
Prepaid income taxes 12,365 26,667
Prepaid expenses 5,780 6,576
Other current assets 3,274 4,363
Total current assets 121,418 138,265
Property, building and equipment, net of accumulated 29,374 28,182
depreciation of $32,610 and $28,073, respectively
Goodwill 168,984 164,731
Intangible assets, net of accumulated amortization of 62,275 59,389
$2,848 and $2,325, respectively
Other assets 5,447 5,809
Total assets $387,498 $396,376
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued liabilities $17,780 $23,119
Salaries, wages and benefits payable 24,971 25,571
Self insurance payable 4,954 5,612
Amounts due to governmental entities 3,241 3,234
Total current liabilities 50,946 57,536
Deferred income taxes 25,436 22,523
Income tax payable 3,415 3,415
Revolving credit facility 25,085 34,820
Total liabilities 104,882 118,294
Noncontrolling interest- redeemable 10,781 11,348
Stockholders' equity:
Common stock – $0.01 par value: 40,000,000 shares 216 183
authorized;
21,554,171 and 21,374,264 shares issued and 17,352,151 and
18,298,659 shares outstanding, respectively
Treasury stock – 4,202,020 and 3,075,605 shares at (25,835) (6,216)
cost, respectively
Additional paid-in capital 99,615 95,964
Retained earnings 193,792 173,752
Total LHC Group Inc. stockholders' equity 267,788 263,683
Noncontrolling interest- non-redeemable 4,047 3,051
Total equity 271,835 266,734
Total liabilities and stockholders' equity $387,498 $396,376
LHC GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except share and per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Net service revenue $158,926 $153,398 $475,742 $476,196
Cost of service revenue 91,234 87,815 273,311 262,987
Gross margin 67,692 65,583 202,431 213,209
Provision for bad debts 2,987 3,199 8,395 8,903
General and administrative 52,464 52,656 154,313 159,851
expenses
Other intangibles impairment 650 – 650 –
charge
Settlement with government – 65,000 – 65,000
agencies
Operating income (loss) 11,591 (55,272) 39,073 (20,545)
Interest expense (405) (217) (972) (507)
Non-operating income 94 1,396 108 1,573
Income (loss) before income
taxes and noncontrolling 11,280 (54,093) 38,209 (19,479)
interest
Income tax expense (benefit) 3,388 (18,130) 12,706 (6,420)
Net income (loss) 7,892 (35,963) 25,503 (13,059)
Less net income attributable to 1,556 1,997 5,463 7,419
noncontrolling interest
Net income (loss) attributable
to LHC Group, Inc.'s common $6,336 $ (37,960) $20,040 $ (20,478)
stockholders
Earnings per share – basic:
Net income (loss) attributable
to LHC Group, Inc.'s common $0.36 $ (2.08) $1.11 $ (1.12)
stockholders
Earnings per share – diluted:
Net income (loss) attributable
to LHC Group, Inc.'s common $0.36 $ (2.08) $1.10 $ (1.12)
stockholders
Weighted average shares
outstanding:
Basic 17,656,842 18,263,237 18,121,217 18,251,648
Diluted 17,726,819 18,263,237 18,160,489 18,251,648
LHC GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
Nine Months Ended
September 30,
2012 2011
Operating activities
Net income (loss) $25,503 $ (13,059)
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation and amortization expense 5,801 5,719
Provision for bad debts 8,395 8,903
Stock-based compensation expense 3,398 3,041
Deferred income taxes 1,552 2,834
Loss on sale of assets 100 –
Other intangibles impairment change 650 –
Changes in operating assets and liabilities, net of acquisitions:
Receivables (7,084) (5,871)
Prepaid expenses, other assets 2,247 6,762
Prepaid income taxes 13,960 (21,569)
Accounts payable and accrued expenses (6,597) (2,627)
Net amounts due to/from governmental entities 135 217
Net cash (used in) provided by operating activities 48,060 (15,650)
Investing activities
Purchases of property, building, and equipment (6,508) (6,058)
Proceeds from sale of assets 25 –
Cash paid for acquisitions, primarily goodwill and (6,764) (11,745)
intangible assets and advance payment on acquisitions
Net cash (used in) investing activities (13,247) (17,803)
Financing activities
Proceeds from line of credit 173,562 103,187
Payments on line of credit (183,297) (49,187)
Payments on capital leases – (14)
Excess tax benefits from vesting of restricted stock – 319
Proceeds from employee stock purchase plan 587 648
Payments on repurchase of common stock (19,017) (577)
Noncontrolling interest distributions (6,582) (9,537)
Purchase of additional controlling interest (126) (816)
Sale of noncontrolling interest 80 276
Net cash (used in) provided by financing activities (34,793) 44,299
Change in cash 20 10,846
Cash at beginning of period 256 288
Cash at end of period $276 $11,134
Supplemental disclosures of cash flow information
Interest paid $972 $507
Income taxes paid $8,644 $12,335
LHC GROUP INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(amounts in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, 2012 September 30, 2012
Home- Facility- Home- Facility-
Based Based Total Based Based Total
Services Services Services Services
Net service $140,256 $18,670 $158,926 $419,847 $55,895 $475,742
revenue
Cost of
service 80,579 10,655 91,234 240,347 32,964 273,311
revenue
Provision for 2,669 318 2,987 7,626 769 8,395
bad debts
General and
administrative 47,110 5,354 52,464 137,902 16,411 154,313
expenses
Other
intangibles 650 – 650 650 – 650
impairment
charge
Operating 9,248 2,343 11,591 33,322 5,751 39,073
income
Interest (364) (41) (405) (874) (98) (972)
expense
Non-operating 74 20 94 77 31 108
income
Income before
income taxes
and 8,958 2,322 11,280 32,525 5,684 38,209
noncontrolling
interest
Income tax 3,050 338 3,388 11,478 1,228 12,706
expense
Net income 5,908 1,984 7,892 21,047 4,456 25,503
Noncontrolling 1,308 248 1,556 4,826 637 5,463
interest
Net income
attributable $4,600 $1,736 $6,336 $16,221 $3,819 $20,040
to LHC Group
Inc.
Total assets $352,541 $34,957 $387,498 $352,541 $34,957 $387,498
Three Months Ended Nine Months Ended
September 30, 2011 September 30, 2011
Home- Facility- Home- Facility-
Based Based Total Based Based Total
Services Services Services Services
Net service $134,950 $18,448 $153,398 $418,735 $57,461 $476,196
revenue
Cost of
service 77,331 10,484 87,815 229,153 33,834 262,987
revenue
Provision for 3,097 102 3,199 8,503 400 8,903
bad debts
General and
administrative 47,522 5,134 52,656 145,043 14,808 159,851
expenses
Settlement
with 65,000 – 65,000 65,000 – 65,000
government
agencies
Operating (58,000) 2,728 (55,272) (28,964) 8,419 (20,545)
income (loss)
Interest (196) (21) (217) (457) (50) (507)
expense
Non-operating 1,374 22 1,396 1,516 57 1,573
income
Income (loss)
before income
taxes and (56,822) 2,729 (54,093) (27,905) 8,426 (19,479)
noncontrolling
interest
Income tax
expense (18,506) 376 (18,130) (7,912) 1,492 (6,420)
(benefit)
Net income (38,316) 2,353 (35,963) (19,993) 6,934 (13,059)
(loss)
Noncontrolling 1,622 375 1,997 6,404 1,015 7,419
interest
Net income
(loss)
attributable $ (39,938) $1,978 $ (37,960) $ (26,397) $5,919 $ (20,478)
to LHC Group
Inc.
Total assets $356,417 $41,476 $397,893 $356,417 $41,476 $397,893
LHC GROUP INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
Key Data:
Home-Based Services:
Home Health
Locations 238 258 238 258
Acquired 2 0 2 5
De novo 1 1 1 4
Total new admissions 27,301 25,787 81,495 76,916
Medicare new admissions 18,415 18,445 55,298 54,511
Average daily census 32,605 31,311 32,764 32,942
Average Medicare daily 24,279 24,076 24,618 25,539
census
Medicare completed and 41,699 41,191 125,466 127,798
billed episodes
Average Medicare case mix
for completed and billed 1.25 1.24 1.25 1.24
Medicare episodes
Average reimbursement per
completed and billed $2,337 $2,344 $2,337 $2,352
Medicare episodes
Total visits 883,257 862,220 2,677,956 2,626,043
Total Medicare visits 637,310 644,392 1,948,929 1,977,665
Average visits per completed 15.3 15.6 15.5 15.5
and billed Medicare episodes
Organic growth ^(1):
Net revenue 1.7% -11.2% -1.1% -1.9%
Net Medicare revenue -1.9% -13.4% -4.5% -4.6%
Total new admissions 3.0% 5.1% 5.0% 9.5%
Medicare new admissions -1.8% 4.5% 0.9% 6.5%
Average daily census 3.2% -8.2% -1.4% 1.6%
Average Medicare daily 0.3% -10.2% -4.1% -0.8%
census
Medicare completed and 0.7% -5.6% -2.0% 2.9%
billed episodes
Hospice
Locations 32 32 32 32
Acquired 0 0 0 8
Admissions 1,117 1,061 3,298 3,025
Average Daily Census 1,021 918 984 894
Patient Days 93,972 84,410 269,500 244,080
Average revenue per patient $138 $134 $138 $135
day
Facility-Based Services:
Long-term Acute Care
Locations 9 9 9 9
Patient days 15,335 15,385 47,348 45,986
Patient acuity mix 1.01 1.02 1 1.03
Average revenue per patient $1,172 $1,167 $1,143 $1,182
day
^(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 nine months ended September 30, 2012, the company
incurred costs or received benefits related to the previously announced
strategic alternative process, the previously announced investigations or that
related to circumstances that are not considered part of the company's normal
ongoing operating results by management. In order to reflect the operational
performance of the company during the quarter or nine month period excluding
these costs, company representatives may be asked to provide adjusted net
income for the quarter excluding such costs or benefits. In the event the
company provides such information, the adjusted net income presented would be
a non-GAAP financial measure. 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 For The
Three Nine
Months Months
Ended Ended
Sept. 30, Sept. 30,
2012 2012
Adjusted net income attributable to LHC Group:
Net income attributable to LHC Group Inc. $ 6,336 $ 20,040
Costs related to legal or other expenses associated with
the company's previously announced investigations, net of 90 1,164
tax
Other intangibles impairment charge, net of tax 390 390
Loss from acquisition, net of tax 109 109
Estimated revenue loss from Hurricane Isaac, net of tax 321 321
Tax credits offset by consulting fees, net of tax (505) (505)
Adjusted net income attributable to LHC Group Inc. $ 6,741 $ 21,519
Adjusted net income attributable to LHC Group per diluted
share:
Net income attributable to LHC Group Inc. $ 0.36 $ 1.10
Costs related to strategic alternatives process and legal
or other expenses associated with the company's previously 0.01 0.06
announced investigations, net of tax
Other intangibles impairment charge, net of tax 0.02 0.02
Loss from acquisition, net of tax 0.01 0.01
Estimated revenue loss from Hurricane Isaac, net of tax 0.02 0.02
Tax credits offset by consulting fees, net of tax (0.03) (0.03)
Effect of share repurchase (0.01) (0.01)
Adjusted net income attributable to LHC Group Inc. $ 0.38 $ 1.17
CONTACT: Eric Elliott
Investor Relations
(337) 233-1307
eric.elliott@lhcgroup.com
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