LHC Group Announces Second Quarter 2014 Results

LHC Group Announces Second Quarter 2014 Results

Raises Lower End of Full-Year 2014 Guidance for Fully Diluted Earnings Per
Share to a New Range of $1.25 to $1.35 from $1.15 to $1.35 Previously

LAFAYETTE, La., Aug. 6, 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 and six months ended June 30, 2014.

Financial Results for the Second Quarter

  *Net service revenue for the second quarter of 2014 was $188.9 million,
    compared with $166.3 million for the same period in 2013.
  *Net income attributable to LHC Group for the second quarter of 2014 was
    $6.1 million, compared with $5.8 million for the same period in 2013.
  *Diluted earnings per share was $0.35 for the second quarter of 2014,
    compared with $0.34 for the same period in 2013.

Commenting on the results, Keith G. Myers, LHC Group's chairman and CEO, said,
"We are very pleased with our financial performance during the second quarter
of 2014 and with our continued ability to execute our long-term growth
strategy. Over the last 18 months, we have executed 10 transactions, including
the recently announced definitive asset purchase agreement with Life Care Home
Health, Inc. that is anticipated to close on September 1. These transactions,
with a total purchase price of $101.5 million in cash, consisted of 81
locations in 21 states and represented $151.1 million in aggregate trailing
twelve month revenues at the time of acquisition. As we look ahead to the
remainder of 2014 and beyond, we are well positioned to continue increasing
shareholder value by focusing on growing revenue and improving efficiencies in
our existing locations, while capitalizing on opportunities to expand our
geographical footprint in home health, hospice and community-based services. I
would like to congratulate and thank our entire team for their unwavering
commitment to excellence and for consistently delivering the highest quality
of care to the growing number of patients, families and communities we serve."

Financial Results for the Six Months

  *Net service revenue for the six months ended June 30, 2014, was $352.5
    million, compared with $328.3 million for the same period in 2013.
  *Net income attributable to LHC Group for the six months ended June 30,
    2014, was $10.1 million, compared with $12.1 million for the same period
    in 2013.
  *Diluted earnings per share was $0.59 for the six months ended June 30,
    2014, compared with $0.71 for the same period in 2013.

Guidance

The Company is raising its full-year 2014 guidance for net service revenue,
which was issued on March 5, 2014, in the range of $700 million to $720
million, to a range of $720 million to $730 million. The Company is also
raising the lower end of its range for fully diluted earnings per share from
$1.15 to $1.35 to a range of $1.25 to $1.35. This guidance includes the
negative impact from the Medicare Home Health Prospective Payment System 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. This guidance does not take into account the
impact from LHC Group's recently announced pending acquisition of the assets
of Life Care Home Health, Inc., 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, August 7, 2014, at 11 a.m.
Eastern time to discuss its second 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, August 14, 2014, by
dialing (855)859‑2056 (international callers should call (404) 537-3406) and
entering confirmation number 66312151. 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)
                                                                    
                                                            June 30, Dec. 31,
                                                            2014     2013
                                                                    
ASSETS                                                               
Current assets:                                                      
Cash                                                         $12,027  $14,014
Receivables:                                                         
Patient accounts receivable, less allowance for              98,932   88,964
uncollectible accountsof $16,176 and $14,334, respectively
Other receivables                                            2,361    608
Amounts due from governmental entities                       990      1,234
Total receivables, net                                       102,283  90,806
Deferred income taxes                                        9,817    9,251
Prepaid income taxes                                         3,497    4,069
Prepaid expenses                                             8,657    6,966
Other current assets                                         4,137    4,449
Receivable due from insurance carrier                        7,850    –
Total current assets                                         148,268  129,555
Property, building and equipment, net of accumulated         32,929   31,052
depreciation of $44,258 and $40,935, respectively
Goodwill                                                     229,462  194,893
Intangible assets, net of accumulated amortization of $5,461 83,973   62,184
and $4,518, respectively
Other assets                                                 2,993    4,542
Total assets                                                 $497,625 $422,226
LIABILITIES AND STOCKHOLDERS' EQUITY                                 
Current liabilities:                                                 
Accounts payable and other accrued liabilities               $18,718  $17,217
Salaries, wages and benefits payable                         37,648   31,927
Self-insurance reserve                                       6,610    5,862
Current portion of long-term debt                            225      249
Amounts due to governmental entities                         3,746    4,391
Legal settlement payable                                     7,850    –
Total current liabilities                                    74,797   59,646
Deferred income taxes                                        30,470   29,060
Income tax payable                                           3,415    3,415
Revolving credit facility                                    69,000   22,000
Long-term debt, less current portion                         896      963
Total liabilities                                            178,578  115,084
Noncontrolling interest- redeemable                          11,263   11,258
Stockholders' equity:                                                
Common stock – $0.01 par value: 40,000,000 shares
authorized; 21,983,432 and 21,801,634 shares issued in 2014  219      218
and 2013, respectively
Treasury stock – 4,730,511 and 4,693,647 shares at cost,     (35,565) (34,715)
respectively
Additional paid-in capital                                   106,549  103,972
Retained earnings                                            233,663  223,534
Total LHC Group, Inc. stockholders' equity                  304,866  293,009
Noncontrolling interest- non-redeemable                      2,918    2,875
Total equity                                                307,784  295,884
Total liabilities and stockholders' equity                  $497,625 $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    Six Months Ended
                                  June 30,              June 30,
                                  2014       2013       2014       2013
Net service revenue                $188,867   $166,302   $352,548   $328,255
Cost of service revenue            111,527    97,009     208,861    190,257
Gross margin                       77,340     69,293     143,687    137,998
Provision for bad debts            4,363      3,208      7,725      7,125
General and administrative         59,614     54,157     114,226    105,780
expenses
Operating income                   13,363     11,928     21,736     25,093
Interest expense                  (830)      (700)      (1,218)    (1,125)
Non-operating income (loss)        (109)      65         (76)       130
Income before income taxes and     12,424     11,293     20,442     24,098
noncontrolling interest
Income tax expense                 4,352      3,918      7,275      8,454
Net income                         8,072      7,375      13,167     15,644
Less net income attributable       2,011      1,585      3,038      3,568
tononcontrolling interests
Net income attributable to LHC     $6,061     $5,790     $10,129    $12,076
Group, Inc.'s common stockholders
                                                                
Earnings per share – basic and                                   
diluted:
Net income attributable to LHC     $0.35      $0.34      $0.59      $0.71
Group, Inc.'s common stockholders
                                                                
Weighted average shares                                          
outstanding:
Basic                              17,233,264 17,055,619 17,190,070 17,011,306
Diluted                            17,277,224 17,127,017 17,268,556 17,088,463



LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
                                                                    
                                                            Six Months Ended
                                                            June 30,
                                                            2014     2013
Operating activities                                                 
Net income                                                   $13,167  $15,644
Adjustments to reconcile net income to net cash provided by  
operating activities:
Depreciation and amortization expense                        4,413    3,830
Provision for bad debts                                      7,725    7,125
Stock based compensation expense                             2,069    1,895
Deferred income taxes                                        844      1,270
Gain on sale of assets                                       144      15
Changes in operating assets and liabilities, net of acquisitions:     
Receivables                                                  (8,625)  (10,837)
Prepaid expenses and other assets                            (301)    (1,519)
Prepaid income taxes                                         512      3,479
Accounts payable and accrued expenses                        4,249    7,600
Net amounts due to/from governmental entities                (401)    (432)
Net cash provided by operating activities                   23,796   28,070
                                                                    
Investing activities                                                 
Purchases of property, building and equipment                (3,419)  (3,569)
Cash paid for acquisitions, primarily goodwill and           (65,103) (26,920)
intangible assets
Net cash used in investing activities                       (68,522) (30,489)
                                                                    
Financing activities                                                 
Proceeds from line of credit                                 68,000   55,000
Payments on line of credit                                   (21,000) (49,500)
Proceeds from employee stock purchase plan                   391      392
Proceeds from debt issuance                                  –        567
Payments on debt                                             (91)     –
Noncontrolling interest distributions                        (3,122)  (4,352)
Payment of deferred financing fees                           (799)    –
Excess tax benefits from vesting of restricted stock         112      11
Redemption of treasury shares                                (850)    (755)
Purchase of additional noncontrolling interest               (95)     (1,618)
Sale of noncontrolling interest                              193      –
Net cash provided by (used in) financing activities          42,739   (255)
Change in cash                                               (1,987)  (2,674)
Cash at beginning of period                                  14,014   9,720
Cash at end of period                                        $12,027  $7,046
                                                                    
Supplemental disclosures of cash flow information                    
Interest paid                                                $1,177   $1,125
Income taxes paid                                            $6,064   $14,376


LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Amounts in thousands)
(Unaudited)
                                                                  
                                   Three Months Ended June 30, 2014
                                   Home--            Facility--     
                                   Based    Hospice-- Based          
                                   Services Services  Services       Total
Net service revenue                 $154,260 $17,068   $17,539        $188,867
Cost of service revenue             90,223   10,151    11,153         111,527
Provision for bad debts             4,068    93        202            4,363
General and administrative expenses 49,612   4,791     5,211          59,614
Operating income                    10,357   2,033     973            13,363
Interest expense                    (664)    (83)      (83)           (830)
Non-operating income (loss)         (114)    2         3              (109)
Income before income taxes and      9,579    1,952     893            12,424
noncontrolling interest
Income tax expense                  3,436    530       386            4,352
Net income                          6,143    1,422     507            8,072
Less net income attributable        1,537    335       139            2,011
tononcontrolling interests
Net income attributable to LHC      $4,606   $1,087    $368           $6,061
Group, Inc.'s common stockholders
Total assets                        $425,254 $35,530   $36,841        $497,625
                                                                  
                                   Three Months Ended June 30, 2013
                                   Home--                          
                                   Based    Hospice-- Facility-Based 
                                   Services Services  Services       Total
Net service revenue                 $132,638 $13,906   $19,758        $166,302
Cost of service revenue             77,624   8,628     10,757         97,009
Provision for bad debts             2,657    211       340            3,208
General and administrative expenses 44,624   4,143     5,390          54,157
Operating income                    7,733    924       3,271          11,928
Interest expense                    (567)    (63)      (70)           (700)
Non-operating income                35       3         27             65
Income before income taxes and      7,201    864       3,228          11,293
noncontrolling interest
Income tax expense                  3,140    413       365            3,918
Net income                          4,061    451       2,863          7,375
Less net income attributable to     973      243       369            1,585
noncontrolling interests
Net income attributable to LHC      $3,088   $208      $2,494         $5,790
Group, Inc.'s common stockholders
Total assets                        $351,657 $27,030   $36,701        $415,388


LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION (Continued)
(Amounts in thousands)
(Unaudited)
                                                                  
                                       Six Months Ended June 30, 2014
                                       Home--            Facility-- 
                                       Based    Hospice-- Based      
                                       Services Services  Services   Total
Net service revenue                     $282,940 $32,290   $37,318    $352,548
Cost of service revenue                 166,667  19,048    23,146     208,861
Provision for bad debts                 6,722    198       805        7,725
General and administrative expenses     94,156   9,238     10,832     114,226
Operating income                        15,395   3,806     2,535      21,736
Interest expense                        (974)    (122)     (122)      (1,218)
Non-operating income (loss)             (87)     5         6          (76)
Income before income taxes and          14,334   3,689     2,419      20,442
noncontrolling interest
Income tax expense                      5,729    876       670        7,275
Net income                              8,605    2,813     1,749      13,167
Less net income attributable to         2,144    536       358        3,038
noncontrolling interests
Net income attributable to LHC Group,   $6,461   $2,277    $1,391     $10,129
Inc.'s common stockholders
Total assets                            $425,254 $35,530   $36,841    $497,625
                                                                  
                                       Six Months Ended June 30, 2013
                                       Home--            Facility-- 
                                       Based    Hospice-- Based      
                                       Services Services  Services   Total
Net service revenue                     $261,714 $26,817   $39,724    $328,255
Cost of service revenue                 151,159  16,683    22,415     190,257
Provision for bad debts                 5,676    469       980        7,125
General and administrative expenses     87,046   7,893     10,841     105,780
Operating income                        17,833   1,772     5,488      25,093
Interest expense                        (920)    (97)      (108)      (1,125)
Non-operating income                    61       18        51         130
Income before income taxes and          16,974   1,693     5,431      24,098
noncontrolling interest
Income tax expense                      6,965    675       814        8,454
Net income                              10,009   1,018     4,617      15,644
Less net income attributable to         2,340    475       753        3,568
noncontrolling interests
Net income attributable to LHC Group,   $7,669   $543      $3,864     $12,076
Inc.'s common stockholders
Total assets                            $351,657 $27,030   $36,701    $415,388


LHC GROUP, INC. AND SUBSIDIARIES
SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA
(Unaudited)
                                                           
                         Three Months Ended      Six Months Ended
                         June 30,                 June 30,                
                         2014         2013        2014        2013
Key Data:                                                   
Home-Based Services:                                        
Home Health                                                 
Locations                 277          251         277         251
Acquired                 24           0           26          19
De novo                   0            0           0           0
Total new admissions      33,869       30,868      64,754      61,229
Medicare new admissions   22,986       20,769      44,121      41,350
Average daily census      36,528       34,695      34,783      34,935
Average Medicare daily    27,129       26,232      26,056      26,418
census
Medicare completed and    47,142       45,191      89,577      87,999
billed episodes
Average Medicare case mix
for completed and billed  0.99         1.27        0.98        1.26
Medicare episodes^(1)
Average reimbursement per
completed and billed      $2,392       $2,309      $2,374      $2,327
Medicare episodes
Total visits              992,637      914,690     1,900,083   1,774,188
Total Medicare visits     740,809      684,387     1,422,332   1,338,183
Average visits per
completed and billed      15.7         15.1        15.9        15.2
Medicare episodes
Organic growth:^(2)                                         
Net revenue               2.1%         -3.5%       -1.4%       -3.2%
Net Medicare revenue      0.3%         -1.0%       -2.5%       -1.6%
Total new admissions      -0.1%        4.4%        -2.3%       4.0%
Medicare new admissions  2.1%         4.7%        -1.0%       3.9%
Average daily census      -3.8%        -0.3%       -10.0%      1.0%
Average Medicare daily    -3.8%        0.0%        -10.3%      0.9%
census
Medicare completed and    -3.2%        0.4%        -4.1%       0.5%
billed episodes
                                                           
Community-Based Services:                                   
Locations                 13           4           13          4
Acquired                 5            0           6           0
De novo                   0            0           1           0
Average daily census      851          433         697         417
Billable hours            277,215      38,131      317,932     76,526
Revenue per billable hour $30          $21         $29         $20
                                                           
Hospice-Based Services:                                     
Locations                 37           34          37          34
Acquired                 4            1           5           2
Admissions                1,426        1,209       2,658       2,484
Average daily census      1,371        1,146       1,298       1,109
Patient days              124,744      104,303     234,787     200,688
Average revenue per       $137         $133        $138        $134
patient day
                                                           
Facility-Based Services:                                    
Long-term Acute Care                                       
Locations                8            9           8           9
Patient days              14,939       15,283      31,401      31,401
Average revenue per       $1,124       $1,203      $1,140      $1,198
patient day
                                                           
^(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

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