LHC Group Announces First Quarter 2014 Results

LHC Group Announces First Quarter 2014 Results  Affirms Established 2014 Financial Guidance  LAFAYETTE, La., May 7, 2014 (GLOBE NEWSWIRE) -- LHC Group, Inc. (Nasdaq:LHCG), a national provider of home health, hospice and comprehensive post-acute healthcare services, today announced its financial results for the three months ended March 31, 2014.  Financial Results for the First Quarter    *Net service revenue for the first quarter of 2014 was $163.7 million,     compared with $162.0 million for the same period in 2013.   *Net income attributable to LHC Group for the first quarter of 2014 was     $4.1 million, compared with $6.3 million for the same period in 2013.   *Diluted earnings per share was $0.24 for the first quarter of 2014, which     includes a negative $0.05 impact from weather related closures, as     compared with $0.37 for the same period in 2013.  In commenting on the results, Keith G. Myers, LHC Group's chairman and CEO, said, "We had a challenging start to 2014, as severe winter weather impacted over 48% of our agencies and accounted for a decline in same-store volume for the first quarter. However, our team did an outstanding job under the circumstances, and we ended the first quarter with strong momentum, which has continued into the second quarter. We are making significant progress on integrating our previously announced acquisition of Deaconess HomeCare and Elk Valley Health Services and are excited about additional opportunities in our pipeline. As we look ahead to the remainder of 2014 and beyond, we are well prepared and well positioned to continue improving our operating results by controlling cost and capitalizing on the opportunities we see ahead for both internal and external volume growth."  FY 2014 Guidance  The Company is reaffirming its full year 2014 guidance issued on March 5, 2014, for net service revenue in the range of $700 million to $720 million and fully diluted earnings per share in the range of $1.15 to $1.35. This guidance includes the negative impact from the Medicare Home Health Prospective Payment System for 2014 (estimated to be an approximate $0.17 reduction in fully diluted earnings per share for 2014) and the positive impact of the recently closed acquisition of the home health, hospice and community-based services operations of Deaconess HomeCare and Elk Valley Health Services (estimated to be accretive to fully diluted earnings per share for 2014 of between approximately $0.05 and $0.10). This guidance, however, does not take into account the impact of other future reimbursement changes, if any, future acquisitions or share repurchases, if made, de novo locations, if opened, or future legal expenses, if necessary.  Conference Call  LHC Group will host a conference call Thursday, May 8, 2014, at 11 a.m. Eastern time to discuss its first quarter 2014 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, May 15, 2014, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 25729418. 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 healthcare services, providing quality, cost-effective healthcare to patients 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 and community‑based services agencies in its home-based and hospice-based divisions 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, 2013, 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)                                                                                                                               March 31, Dec. 31,                                                            2014      2013 ASSETS Current assets:                                                      Cash                                                       $3,395   $14,014 Receivables:                                                         Patient accounts receivable, less allowance for uncollectible accounts of $14,819 and $14,334,            84,470    88,964 respectively Other receivables                                          730       608 Amounts due from governmental entities                     1,166     1,234 Total receivables, net                                     86,366    90,806 Deferred income taxes                                      9,655     9,251 Prepaid income taxes                                       3,821     4,069 Prepaid expenses                                           7,361     6,966 Other current assets                                       4,186     4,449 Total current assets                                       114,784   129,555 Property, building and equipment, net of accumulated       31,273    31,052 depreciation of $42,475 and $40,935, respectively Goodwill                                                   196,358   194,893 Intangible assets, net of accumulated amortization of      62,047    62,184 $4,985 and $4,518, respectively Other assets                                               63,638    4,542 Total assets                                               $468,100 $422,226                                                                     LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:                                                 Accounts payable and other accrued liabilities             $17,587  $17,217 Salaries, wages and benefits payable                       24,521    31,927 Self-insurance reserve                                     6,502     5,862 Current portion of long-term debt                          222       249 Amounts due to governmental entities                       3,664     4,391 Total current liabilities                                  52,496    59,646 Deferred income taxes                                      29,859    29,060 Income tax payable                                         3,415     3,415 Revolving credit facility                                  70,000    22,000 Long-term debt, less current portion                       953       963 Total liabilities                                          156,723   115,084 Noncontrolling interest- redeemable                        10,797    11,258 Stockholders' equity:                                                Common stock – $0.01 par value: 40,000,000 shares authorized; 21,949,411 and 21,801,634 shares issued in     219       218 2014 and 2013, respectively Treasury stock – 4,724,491 and 4,693,647 shares at cost,   (35,442)  (34,715) respectively Additional paid-in capital                                 105,476   103,972 Retained earnings                                          227,602   223,534 Total LHC Group, Inc. stockholders' equity                 297,855   293,009 Noncontrolling interest- non-redeemable                    2,725     2,875 Total equity                                               300,580   295,884 Total liabilities and stockholders' equity                 $468,100 $422,226                                            LHC GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except share and per share data) (Unaudited)                                                                                                                  Three Months Ended                                                          March 31,                                                         2014       2013 Net service revenue                                      $163,681  $161,953 Cost of service revenue                                  97,334     93,248 Gross margin                                             66,347     68,705 Provision for bad debts                                  3,362      3,917 General and administrative expenses                      54,612     51,623 Operating income                                         8,373      13,165 Interest expense                                        (388)      (425) Non-operating income                                     33         65 Income before income taxes and noncontrolling interest   8,018      12,805 Income tax expense                                       2,923      4,536 Net Income                                               5,095      8,269 Less net income attributable to noncontrolling interests 1,027      1,983 Net income attributable to LHC Group, Inc.'s common      $4,068    $6,286 stockholders                                                                    Earnings per share – basic and diluted:                             Net income attributable to LHC Group, Inc.'s common      $0.24     $0.37 stockholders                                                                    Weighted average shares outstanding:                                Basic                                                    17,148,043 16,966,525 Diluted                                                  17,268,716 17,073,543                                            LHC GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited)                                                                                                                        Three Months Ended                                                             March 31,                                                            2014      2013 Operating activities                                                  Net income                                                  $5,095   $8,269 Adjustments to reconcile net income to net cash provided by           operating activities: Depreciation and amortization expense                       2,125     1,830 Provision for bad debts                                     3,362     3,917 Stock based compensation expense                            1,048     888 Deferred income taxes                                       395       846 Loss on sale of assets                                      –         14 Changes in operating assets and liabilities, net of                   acquisitions: Receivables                                                 956       (1,237) Prepaid expenses and other assets                           (39)      (664) Prepaid income taxes                                        248       3,703 Accounts payable and accrued expenses                       (6,428)   (3,178) Net amounts due to/from governmental entities               (659)     (319) Net cash provided by operating activities                   6,103     14,069                                                                      Investing activities                                                  Cash paid for acquisitions, primarily goodwill and          (61,159)  (19,655) intangible assets and advance payments on acquisitions Purchases of property, building and equipment               (1,520)   (1,151) Net cash used in investing activities                       (62,679)  (20,806)                                                                      Financing activities                                                  Proceeds from line of credit                                60,000    41,500 Payments on line of credit                                  (12,000)  (38,004) Proceeds from employee stock purchase plan                  184       179 Proceeds from debt issuance                                 –         201 Payments on debt issuance                                   (37)      – Noncontrolling interest distributions                       (1,768)   (2,509) Excess tax benefits from vesting of restricted stock        112       11 Redemption of treasury shares                               (727)     (607) Purchase of noncontrolling interest                         –         (350) Sale of noncontrolling interest                             193       – Net cash provided by financing activities                   45,957    421 Change in cash                                              (10,619)  (6,316) Cash at beginning of period                                 14,014    9,720 Cash at end of period                                       $3,395   $3,404                                                                      Supplemental disclosures of cash flow information                     Interest paid                                               $370     $425 Income taxes paid                                           $2,413   $10,337                                            LHC GROUP, INC. AND SUBSIDIARIES SEGMENT INFORMATION (Amounts in thousands) (Unaudited)                                                          Three Months Ended                              March 31, 2014                             Home-Based Hospice-Based Facility-Based Total                              Services   Services      Services Net service revenue          $128,680  $15,222      $19,779       $163,681 Cost of service revenue      76,444     8,897         11,993         97,334 Provision for bad debts      2,654      105           603            3,362 General and administrative   44,544     4,447         5,621          54,612 expenses Operating income             5,038      1,773         1,562          8,373 Interest expense             (310)      (39)          (39)           (388) Non-operating income         27         3             3              33 Income before income taxes   4,755      1,737         1,526          8,018 and noncontrolling interest Income tax expense           2,293      346           284            2,923 Net income                   2,462      1,391         1,242          5,095 Less net income attributable 607        201           219            1,027 to noncontrolling interest Net income attributable to LHC Group, Inc.'s common     $1,855    $1,190       $1,023        $4,068 stockholders                                                                   Total assets                 $402,455  $28,919      $36,726       $468,100                                                                      Three Months Ended                              March 31, 2013                             Home-Based Hospice-Based Facility-Based Total                              Services   Services      Services Net service revenue          $129,076  $12,911      $19,966       $ 161,953 Cost of service revenue      73,535     8,055         11,658         93,248 Provision for bad debts      3,019      258           640            3,917 General and administrative   42,422     3,750         5,451          51,623 expenses Operating income             10,100     848           2,217          13,165 Interest expense             (353)      (34)          (38)           (425) Non-operating income         26         15            24             65 Income before income taxes   9,773      829           2,203          12,805 and noncontrolling interest Income tax expense           3,825      262           449            4,536 Net income                   5,948      567           1,754          8,269 Less net income attributable 1,367      232           384            1,983 to noncontrolling interest Net income attributable to LHC Group, Inc.'s common     $4,581    $335         $1,370        $6,286 stockholders                                                                   Total assets                 $335,541  $22,600      $36,766       $394,907     LHC GROUP, INC. AND SUBSIDIARIES SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA (Unaudited)                                                                                Three Months Ended March 31,                                        2014                2013 Key Data:                                                   Home-Based Services:                                        Home Health                                                 Locations                               267                 251 Acquired                                2                   19 De novo                                 1                   0 Total new admissions                    30,885              30,361 Medicare new admissions                 21,135              20,581 Average daily census                    33,023              35,175 Average Medicare daily census           24,965              26,603 Medicare completed and billed episodes  42,435              42,808 Average Medicare case mix for completed 0.98                1.26 and billed Medicare episodes^(1) Average reimbursement per completed and $2,355             $2,297 billed Medicare episodes Total visits                            907,446             859,498 Total Medicare visits                   681,523             653,796 Average visits per completed and billed 16.1                15.3 Medicare episodes Organic growth:^(2)                                         Net revenue                             -5.1%               -2.9% Net Medicare revenue                    -5.4%               -2.1% Total new admissions                    -4.6%               4.0% Medicare new admissions                -4.2%               3.3% Average daily census                    -11.4%              0.5% Average Medicare daily census           -11.7%              0.1% Medicare completed and billed episodes  -5.2%               0.6%                                                            Hospice-Based Services:                                     Locations                               33                  33 Acquired                                1                   1 Admissions                              1,232               1,275 Average daily census                    1,223               1,071 Patient days                            110,043             96,385 Average revenue per patient day         $138               $134                                                            Facility-Based Services:                                    Long-term Acute Care                                        Locations                               8                   9 Patient days                            16,462              16,118 Average revenue per patient day         $1,154             $1,194                                                            ^(1) The Centers for Medicare and Medicaid Services (CMS) updated the Medicare Home Health Prospective Payment System effective January 1, 2014, which reduced the average case-mix weight for 2014 from 1.3464 to 1.0000.To offset the effect of resetting the case mix average to 1.000, CMS upwardly adjusted the national, standardized 60-day episode payment rate by the same factor that it used to decrease the weights from $2,137.73 in 2013 to $2,869.27 in 2014. ^(2) 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          Investor Relations          (337) 233-1307          eric.elliott@lhcgroup.com  LHC Group Logo  
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