LAFAYETTE, La., May 04, 2016 (GLOBE NEWSWIRE) -- LHC Group, Inc. (NASDAQ:LHCG) today announced its financial results for the three months ended March 31, 2016.
Financial Results for the First Quarter
- Net service revenue increased 15.3% to $222.6 million for the first quarter of 2016 compared with $193.1 million for the first quarter of 2015.
- Net income attributable to LHC Group for the first quarter of 2016 grew 12.9% to $7.7 million compared with $6.8 million for the same period in 2015.
- Net income attributable to LHC Group per diluted share increased 12.8% to $0.44 for the first quarter of 2016 from $0.39 for the first quarter last year.
- Total comparable-quarter growth in admissions for all service lines was 10.7%.
- Total comparable-quarter organic growth in home health admissions was 7.2%.
“We are pleased with our financial results for the first quarter of 2016, which included the impact of previously discussed Medicare reimbursement changes that we estimate reduced revenue by $1.5 million for the quarter and earnings per diluted share by $0.05,” remarked Keith G. Myers, LHC Group’s chairman and CEO. “We attribute the 15.3% increase in net service revenue primarily to a relatively balanced contribution from organic revenue growth and acquisitions.”
Organic revenue for home health services increased 8.1% for the quarter from the first quarter of 2015. This growth was primarily driven by a 7.2% increase in total new admissions for the quarter, as well as improved reimbursement reflecting increased acuity in the Company’s case mix. Net service revenue also benefited from a full quarter of operations for the seven acquisitions completed in 2015. For the first quarter of 2016, LHC Group acquired two home health locations and opened a de novo location. The Company also acquired six hospice locations, four of which were acquired in the purchase of Heartlite Hospice in March 2016.
With revenue growth generating additional operating leverage, combined with continuous cost control efforts, LHC Group achieved a 90 basis-point improvement in general and administrative expenses as a percent of revenue to 29.8% for the first quarter of 2016 compared with the first quarter last year. For the quarter, this improvement was more than offset by a 160 basis-point reduction in gross margin, primarily due to higher expenses related to acquisition integration and to the increased costs of providing care for a higher-acuity case mix.
Mr. Myers added, “Looking forward, we expect increased admission volume and patient acuity to have a further positive net impact on our organic growth rate, as payors and health systems shift patients in need of non-acute care from more intensive and expensive clinical settings. Consistent with this expectation, we were pleased to announce our 66th joint venture with hospitals and health systems in early April. Our new joint venture is with Northern Arizona Healthcare (NAH), the largest healthcare organization in a region encompassing more than 700,000 people. NAH has more than 3,000 doctors and staff providing comprehensive healthcare services through a variety of venues anchored by two major medical centers in Flagstaff and Verde Valley. Through the joint venture, we are operating, and have become the majority owner of, NAH’s two home health agencies and one hospice agency. In addition to providing us our first partnership in Arizona and the Southwest, this latest joint venture further validates our ongoing work to be a leading partner of choice for health systems and payors as they seek to improve their patients’ non-acute care.
“We also expect to continue executing on our robust corporate development pipeline, which produced five transactions in the first quarter – two acquisitions and three joint ventures – that include service lines producing an aggregate of $15.4 million in trailing 12 months revenue. With LHC Group’s trailing 12 months cash flow from operations of over $50 million at March 31, 2016, and current availability under our credit agreement of $123.2 million, we remain confident of funding our growth plans for 2016.”
Mr. Myers concluded, “We recognize and thank our team for their hard and selfless work to provide high quality care to our patients. Their commitment and the results they produce fundamentally support our continued belief that LHG Group is well positioned to leverage attractive market dynamics through our proven organic growth and acquisition strategies. We are confident that strong execution of these strategies will drive further long-term profitable growth and increased shareholder value.”
FY 2016 Guidance
LHC Group today affirmed its fiscal year 2016 guidance for net service revenue to be in an expected range of $870 million to $890 million, and fully diluted earnings per share to be in an expected range of $1.90 to $2.00. This guidance includes:
(1) the negative impact from the Medicare Home Health Prospective Payment System for 2016, which is expected to have an approximate 2% impact, or $9.5 million reduction to Medicare Home Health revenue and $0.32 reduction in fully diluted earnings per share for 2016; and
(2) the negative impact from the Medicare Long-Term Care Hospital (LTCH) Prospective Payment System (PPS), which establishes two different types of LTCH PPS payment rates depending on whether the patient meets certain clinical criteria: the LTCH PPS standard Federal payment rate and a new LTCH PPS site neutral payment rate comparable to the IPPS payment rates. The effect from the LTCH PPS is a 4.9% impact, or an expected $3.6 million reduction to Medicare LTCH revenue or $0.06 net reduction in fully diluted earnings per share for 2016 after implementation strategies.
The Company’s financial guidance does not take into account the impact of other future reimbursement changes, if any, future acquisitions, if made, de novo locations, if opened, or future legal expenses, if necessary.
Conference Call
LHC Group will host a conference call on Thursday, May 5, 2016, at 11:00 a.m. Eastern time to discuss its first quarter 2016 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 12, 2016, by dialing (855) 859‑2056 (international callers should call (404) 537-3406) and entering confirmation number 83060861. A live broadcast of LHC Group’s conference call will be available under the Investor Relations section of the Company’s website, www.LHCgroup.com. A one-year online replay will be available approximately an hour following the conclusion of the live broadcast.
About LHC Group, Inc.
LHC Group, Inc. is a national provider of non-acute healthcare services, providing quality, cost-effective healthcare to patients primarily within the comfort and privacy of their home or place of residence. LHC Group provides a comprehensive array of healthcare services through home health, hospice, community‑based services agencies and long-term acute care hospitals (LTACHs). At March 31, 2016, LHC Group operated 284 home health services locations, 61 hospice locations, 11 community-based service locations and six LTACHs with eight locations.
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements about the Company’s future financial performance and the strength of the Company’s operations. Such forward-looking statements may be identified by words such as “continue,” “expect,” and similar expressions. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements, including changes in reimbursement, changes in government regulations, changes in LHC Group’s relationships with referral sources, increased competition for LHC Group’s services, increased competition for joint venture and acquisition candidates, changes in the interpretation of government regulations and other risks set forth in Item 1A. Risk Factors in LHC Group’s Annual Report on Form 10-K for the year ended December 31, 2015, 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, 2016 | Dec. 31, 2015 | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash | $ | 5,593 | $ | 6,139 | ||
| Receivables: | ||||||
| Patient accounts receivable, less allowance for uncollectible accounts of $28,617 and $26,712, respectively | 117,761 | 110,350 | ||||
| Other receivables | 2,507 | 2,093 | ||||
| Amounts due from governmental entities | 964 | 1,081 | ||||
| Total receivables, net | 121,232 | 113,524 | ||||
| Prepaid income taxes | 1,575 | 1,949 | ||||
| Prepaid expenses | 10,519 | 10,833 | ||||
| Other current assets | 6,265 | 5,835 | ||||
| Receivable due from insurance carrier | – | 550 | ||||
| Total current assets | 145,184 | 138,830 | ||||
| Property, building and equipment, net of accumulated depreciation of $41,017 and $38,907, respectively | 38,191 | 38,096 | ||||
| Goodwill | 296,240 | 290,694 | ||||
| Intangible assets, net of accumulated amortization of $9,097 and $8,496, respectively | 100,863 | 96,405 | ||||
| Other assets | 2,375 | 2,029 | ||||
| Total assets | $ | 582,853 | $ | 566,054 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable and other accrued liabilities | $ | 24,912 | $ | 24,586 | ||
| Salaries, wages and benefits payable | 39,506 | 28,098 | ||||
| Self-insurance reserve | 11,109 | 9,636 | ||||
| Current portion of long-term debt | 243 | 241 | ||||
| Amounts due to governmental entities | 4,729 | 7,055 | ||||
| Legal settlement payable | – | 550 | ||||
| Total current liabilities | 80,499 | 70,166 | ||||
| Deferred income taxes | 23,605 | 23,729 | ||||
| Income tax payable | 3,415 | 3,415 | ||||
| Revolving credit facility | 96,000 | 98,000 | ||||
| Long-term debt, less current portion | 485 | 543 | ||||
| Total liabilities | 204,004 | 195,853 | ||||
| Noncontrolling interest – redeemable | 12,463 | 12,408 | ||||
| Stockholders’ equity: | ||||||
| Common stock – $0.01 par value: 40,000,000 shares authorized; 22,370,384 and 22,224,423 shares issued in 2016 and 2015, respectively | 224 | 222 | ||||
| Treasury stock – 4,814,522 and 4,776,560 shares at cost, respectively | (38,560 | ) | (37,139 | ) | ||
| Additional paid-in capital | 115,654 | 113,793 | ||||
| Retained earnings | 285,392 | 277,706 | ||||
| Total LHC Group, Inc. stockholders’ equity | 362,710 | 354,582 | ||||
| Noncontrolling interest – non-redeemable | 3,676 | 3,211 | ||||
| Total stockholders’ equity | 366,386 | 357,793 | ||||
| Total liabilities and stockholders’ equity | $ | 582,853 | $ | 566,054 | ||
| 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, | ||||||
| 2016 | 2015 | |||||
| Net service revenue | $ | 222,552 | $ | 193,079 | ||
| Cost of service revenue | 135,601 | 114,426 | ||||
| Gross margin | 86,951 | 78,653 | ||||
| Provision for bad debts | 4,601 | 5,259 | ||||
| General and administrative expenses | 66,240 | 59,298 | ||||
| Operating income | 16,110 | 14,096 | ||||
| Interest expense | (885 | ) | (545 | ) | ||
| Income before income taxes and noncontrolling interest | 15,225 | 13,551 | ||||
| Income tax expense | 5,342 | 4,729 | ||||
| Net income | 9,883 | 8,822 | ||||
| Less net income attributable to noncontrolling interests | 2,197 | 2,017 | ||||
| Net income attributable to LHC Group, Inc.’s common stockholders | $ | 7,686 | $ | 6,805 | ||
| Earnings per share – basic and diluted: | ||||||
| Net income attributable to LHC Group, Inc.’s common stockholders | $ | 0.44 | $ | 0.39 | ||
| Weighted average shares outstanding: | ||||||
| Basic | 17,485,766 | 17,322,791 | ||||
| Diluted | 17,633,549 | 17,489,483 | ||||
| LHC GROUP, INC. AND SUBSIDIARIES | ||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (Amounts in thousands) | ||||||
| (Unaudited) | ||||||
| Three Months Ended March 31, | ||||||
| 2016 | 2015 | |||||
| Operating activities | ||||||
| Net income | $ | 9,883 | $ | 8,822 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization expense | 2,948 | 2,716 | ||||
| Provision for bad debts | 4,601 | 5,259 | ||||
| Stock-based compensation expense | 982 | 991 | ||||
| Deferred income taxes | (124 | ) | (183 | ) | ||
| Impairment of intangibles and other | – | 79 | ||||
| Loss on disposal of assets | 204 | 284 | ||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||
| Receivables | (12,446 | ) | (7,026 | ) | ||
| Prepaid expenses and other assets | (162 | ) | (2,549 | ) | ||
| Prepaid income taxes | 374 | 2,478 | ||||
| Accounts payable and accrued expenses | 13,110 | 10,624 | ||||
| Net amounts due to/from governmental entities | (2,209 | ) | 1,109 | |||
| Net cash provided by operating activities | 17,161 | 22,604 | ||||
| Investing activities | ||||||
| Purchases of property, building and equipment | (2,622 | ) | (2,958 | ) | ||
| Cash paid for acquisitions, primarily goodwill and intangible assets | (10,577 | ) | (567 | ) | ||
| Other | 273 | – | ||||
| Net cash used in investing activities | (12,926 | ) | (3,525 | ) | ||
| Financing activities | ||||||
| Proceeds from line of credit | 4,000 | - | ||||
| Payments on line of credit | (6,000 | ) | (13,000 | ) | ||
| Proceeds from employee stock purchase plan | 230 | 210 | ||||
| Payments on debt | (56 | ) | (57 | ) | ||
| Noncontrolling interest distributions | (2,185 | ) | (2,242 | ) | ||
| Excess tax benefits from vesting of stock awards | 651 | 642 | ||||
| Withholding taxes paid on stock-based compensation | (1,421 | ) | (1,122 | ) | ||
| Net cash used in financing activities | (4,781 | ) | (15,569 | ) | ||
| Change in cash | (546 | ) | 3,510 | |||
| Cash at beginning of period | 6,139 | 531 | ||||
| Cash at end of period | $ | 5,593 | $ | 4,041 | ||
| Supplemental disclosures of cash flow information | ||||||
| Interest paid | $ | 749 | $ | 447 | ||
| Income taxes paid | $ | 4,466 | $ | 1,787 | ||
| LHC GROUP, INC. AND SUBSIDIARIES | |||||||||||||||
| SEGMENT INFORMATION | |||||||||||||||
| (Amounts in thousands) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended March 31, 2016 | |||||||||||||||
| Home Health Services | Hospice Services | Community- Based Services | Facility- Based Services | Total | |||||||||||
| Net service revenue | $ | 161,387 | $ | 30,824 | $ | 10,443 | $ | 19,898 | $ | 222,552 | |||||
| Cost of service revenue | 96,712 | 19,627 | 7,727 | 11,535 | 135,601 | ||||||||||
| Provision for bad debts | 3,455 | 775 | 82 | 289 | 4,601 | ||||||||||
| General and administrative expenses | 49,558 | 8,990 | 2,079 | 5,613 | 66,240 | ||||||||||
| Operating income | 11,662 | 1,432 | 555 | 2,461 | 16,110 | ||||||||||
| Interest expense | (678 | ) | (91 | ) | (41 | ) | (75 | ) | (885 | ) | |||||
| Income before income taxes and noncontrolling interest | 10,984 | 1,341 | 514 | 2,386 | 15,225 | ||||||||||
| Income tax expense | 3,850 | 420 | 228 | 844 | 5,342 | ||||||||||
| Net income | 7,134 | 921 | 286 | 1,542 | 9,883 | ||||||||||
| Less net income attributable to noncontrolling interests | 1,594 | 317 | (43 | ) | 329 | 2,197 | |||||||||
| Net income attributable to LHC Group, Inc.’s common stockholders | $ | 5,540 | $ | 604 | $ | 329 | $ | 1,213 | $ | 7,686 | |||||
| Total assets | $ | 400,924 | $ | 111,308 | $ | 33,133 | $ | 37,488 | $ | 582,853 | |||||
| Three Months Ended March 31, 2015 | |||||||||||||||
| Home Health Services | Hospice Services | Community- Based Services | Facility- Based Services | Total | |||||||||||
| Net service revenue | $ | 146,592 | $ | 16,851 | $ | 9,773 | $ | 19,863 | $ | 193,079 | |||||
| Cost of service revenue | 85,546 | 10,099 | 6,900 | 11,881 | 114,426 | ||||||||||
| Provision for bad debts | 4,476 | 347 | 180 | 256 | 5,259 | ||||||||||
| General and administrative expenses | 46,454 | 4,888 | 2,217 | 5,739 | 59,298 | ||||||||||
| Operating income | 10,116 | 1,517 | 476 | 1,987 | 14,096 | ||||||||||
| Interest expense | (430 | ) | (60 | ) | (6 | ) | (49 | ) | (545 | ) | |||||
| Income before income taxes and noncontrolling interest | 9,686 | 1,457 | 470 | 1,938 | 13,551 | ||||||||||
| Income tax expense | 3,657 | 620 | 45 | 407 | 4,729 | ||||||||||
| Net income | 6,029 | 837 | 425 | 1,531 | 8,822 | ||||||||||
| Less net income attributable to noncontrolling interests | 1,521 | 246 | (20 | ) | 270 | 2,017 | |||||||||
| Net income attributable to LHC Group, Inc.’s common stockholders | $ | 4,508 | $ | 591 | $ | 445 | $ | 1,261 | $ | 6,805 | |||||
| Total assets | $ | 385,653 | $ | 34,019 | $ | 32,971 | $ | 38,321 | $ | 490,964 | |||||
| LHC GROUP, INC. AND SUBSIDIARIES | ||||||
| SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA | ||||||
| (Unaudited) | ||||||
| Three Months Ended March 31, | ||||||
| 2016 | 2015 | |||||
| Key Data: | ||||||
| Home-Health Services: | ||||||
| Home Health | ||||||
| Locations | 284 | 272 | ||||
| Acquired | 2 | 1 | ||||
| De novo | 1 | 2 | ||||
| Divested/Consolidated | 2 | 3 | ||||
| Total new admissions | 39,124 | 35,965 | ||||
| Medicare new admissions | 26,136 | 24,875 | ||||
| Average daily census | 38,218 | 36,450 | ||||
| Average Medicare daily census | 28,246 | 27,235 | ||||
| Medicare completed and billed episodes | 48,486 | 46,684 | ||||
| Average Medicare case mix for completed and billed Medicare episodes | 1.03 | 0.97 | ||||
| Average reimbursement per completed and billed Medicare episodes | $ | 2,551 | $ | 2,463 | ||
| Total visits | 1,126,834 | 990,135 | ||||
| Total Medicare visits | 829,267 | 741,850 | ||||
| Average visits per completed and billed Medicare episodes | 17.1 | 15.9 | ||||
| Organic growth:(1) | ||||||
| Net revenue | 8.1 | % | 4.5 | % | ||
| Net Medicare revenue | 5.3 | % | 2.9 | % | ||
| Total new admissions | 7.2 | % | 6.2 | % | ||
| Medicare new admissions | 3.3 | % | 6.5 | % | ||
| Average daily census | 2.8 | % | 0.8 | % | ||
| Average Medicare daily census | 1.4 | % | (0.5 | )% | ||
| Medicare completed and billed episodes | 1.9 | % | 0.3 | % | ||
| Community-Based Services: | ||||||
| Locations | 11 | 14 | ||||
| Acquired | 0 | 1 | ||||
| De novo | 0 | 0 | ||||
| Divested/Consolidated | 2 | 0 | ||||
| Average daily census | 1,372 | 1,262 | ||||
| Billable hours | 304,487 | 294,016 | ||||
| Revenue per billable hour | $ | 34.30 | $ | 33.24 | ||
| Hospice-Based Services: | ||||||
| Locations | 61 | 38 | ||||
| Acquired | 6 | 0 | ||||
| De novo | 0 | 0 | ||||
| Divested/Consolidated | 1 | 0 | ||||
| Admissions | 2,463 | 1,481 | ||||
| Average daily census | 2,425 | 1,357 | ||||
| Patient days | 220,694 | 122,179 | ||||
| Average revenue per patient day | $ | 140 | $ | 138 | ||
| Facility-Based Services: | ||||||
| Long-term Acute Care | ||||||
| Locations | 8 | 8 | ||||
| Patient days | 15,537 | 16,162 | ||||
| Average revenue per patient day | $ | 1,211 | $ | 1,187 | ||
| (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. | ||||||