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 September30, 2012.

Financial Results for the Third Quarter

  *Net service revenue for the third quarter of 2012 was $158.9 million,
    compared with $153.4million 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 $20.0million, 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 $660million and fully diluted
earnings per share in the range of $1.45 to $1.65 to net service revenue of
$635 million to $645million 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 number37823587. 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 accountsof $11,218and $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

LHC Group Logo
 
Press spacebar to pause and continue. Press esc to stop.