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| 8-K - FORM 8-K FILING DOCUMENT - LHC Group, Inc | document.htm |
EXHIBIT 99.1
LHC Group Announces Second Quarter 2011 Results
Highlights:
- Net service revenue was $161.0 million for the second quarter of 2011;
- Diluted earnings per share was $0.53 for the second quarter of 2011;
- Organic growth in total new home health admissions was 4.8% for the second quarter of 2011; and
- Company reaffirms FY 2011 EPS guidance, while lowering revenue guidance.
LAFAYETTE, La., Aug. 3, 2011 (GLOBE NEWSWIRE) -- LHC Group, Inc. (Nasdaq:LHCG), a national provider of home health and hospice services, announced today its financial results for the three and six months ended June 30, 2011.
Financial Results for the Second Quarter
- Net service revenue for the second quarter of 2011 increased to $161.0 million compared with $153.6 million for the same period in 2010.
- Days sales outstanding, or DSO, for the three months ended June 30, 2011, was 45 days.
- Net income attributable to LHC Group for the second quarter of 2011 decreased to $9.8 million compared with $12.4 million for the same period in 2010.
- Diluted earnings per share decreased to $0.53 for the second quarter of 2011 compared with $0.68 for the same period in 2010.
- Diluted earnings per share of $0.53 for the second quarter of 2011 includes approximately $0.03 per fully diluted share, after tax, in legal and consulting fees associated with our ongoing investigations. Excluding these fees, diluted earnings per share for second quarter 2011 would have been $0.56.
In commenting on the results, Keith G. Myers, Chief Executive Officer of LHC Group, said, "We are very pleased with our financial results in the second quarter, especially given the significant reimbursement and regulatory changes we have been working through. The combination of the 5.2% reimbursement cut for 2011 and the "face-to-face" requirement that went into effect in April of this year has understandably resulted in significant pressure on volume growth, revenue and internal resources. In the first quarter, we committed resources towards education in the field and to insure that our staff fully understood the requirements of the new face-to-face rule and had the proper training and tools to handle this significant change on relatively short notice. We also invested financial resources to get down to two revenue systems and significantly reduced the complexity of dealing with these new requirements. As a result, not only have we adapted to the new rule and are in compliance, but we still managed to turn in organic growth in home health admissions of 4.8%.
"This quarter, we emphasized cost containment and efficiency – a strategy that was validated by our success in reducing overhead costs while at the same time continuing to improve overall quality scores, patient satisfaction scores and acute care re-hospitalization rates. Our continued success acknowledges the long-term commitment to excellence that is ingrained in our culture and in every member of the LHC Group family. Our commitment to the patients, families and communities we serve is at the heart of everything we do."
Financial Results for the Six Months
- Net service revenue for the six months ended June 30, 2011, increased to $322.8 million compared with $298.8 million for the same period in 2010.
- Net income attributable to LHC Group for the six months ended June 30, 2011, decreased to $17.5 million compared with $24.0 million for the same period in 2010.
- Diluted earnings per share decreased to $0.95 for the six months ended June 30, 2011, compared with $1.32 for the same period in 2010.
Guidance
The Company is reaffirming its previously stated guidance issued on March 2, 2011, of fully diluted earnings per share in the range of $2.15 to $2.25, but lowering its annual net service revenue from the original range of $660 million to $670 million to a range of $640 million to $650 million. This guidance does not take into account the impact of any future acquisitions or share repurchases, if made, de novo locations, if opened, legal or other expenses associated with the Company's ongoing investigations or future reimbursement changes, if any. Specifically, this guidance does not take into account the proposed 2012 rule issued by the Centers for Medicare and Medicaid Services, which if adopted would apply to episodes for patients on service at December 31, 2011. We estimate the impact to the fourth quarter 2011 operating results would be to decrease revenue approximately $1.2 million and decrease fully diluted earnings per share $0.04 after tax.
Conference Call
LHC Group will host a conference call on Thursday, August 4, 2011, at 11:00 a.m. Eastern time to discuss its second quarter 2011 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 Friday, August 12, 2011, by dialing (800) 642-1687 (international callers should call 706-645-9291) and entering confirmation number 44149673. 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 home health and hospice 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 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, 2010, 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) | ||
|
June 30, 2011 |
Dec. 31, 2010 |
|
| ASSETS | ||
| Current assets: | ||
| Cash | $ 9,212 | $ 288 |
| Receivables: | ||
| Patient accounts receivable, less allowance for uncollectible accounts of $9,532 and $9,769, respectively | 80,422 | 80,055 |
| Other receivables | 2,203 | 5,094 |
| Amounts due from governmental entities | 315 | 429 |
| Total receivables, net | 82,940 | 85,578 |
| Deferred income taxes | 6,516 | 5,941 |
| Prepaid income taxes | 9,225 | 5,326 |
| Prepaid expenses | 6,416 | 6,573 |
| Other current assets | 3,961 | 3,442 |
| Total current assets | 118,270 | 107,148 |
| Property, building and equipment, net of accumulated depreciation of $18,651 and $15,329, respectively | 29,190 | 26,862 |
| Goodwill | 164,755 | 157,338 |
| Intangible assets, net of accumulated amortization of $1,933 and $1,499, respectively | 59,781 | 54,051 |
| Advance payment on acquisitions | – | 6,947 |
| Other assets | 5,730 | 4,959 |
| Total assets | $ 377,726 | $ 357,305 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable and other accrued liabilities | $ 17,266 | $ 21,017 |
| Salaries, wages and benefits payable | 29,254 | 27,289 |
| Amounts due to governmental entities | 3,203 | 3,159 |
| Total current liabilities | 49,723 | 51,465 |
| Deferred income taxes | 20,767 | 16,817 |
| Total liabilities | 70,490 | 68,282 |
| Noncontrolling interest- redeemable | 12,574 | 13,535 |
| Stockholders' equity: | ||
|
Common stock – $0.01 par value: 40,000,000 shares authorized; 21,329,969 and 21,180,286 shares issued and 18,261,010 and 18,172,022 shares outstanding, respectively |
183 | 181 |
| Treasury stock – 3,068,959 and 3,008,264 shares at cost, respectively | (6,104) | (4,453) |
| Additional paid-in capital | 93,085 | 91,017 |
| Retained earnings | 204,478 | 186,996 |
| Total LHC Group, Inc. stockholders' equity | 291,642 | 273,741 |
| Noncontrolling interest- non-redeemable | 3,020 | 1,747 |
| Total equity | 294,662 | 275,488 |
| Total liabilities and equity | $ 377,726 | $ 357,305 |
| LHC GROUP, INC. AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||
| (amounts in thousands, except share and per share data) | ||||
| (unaudited) | ||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
| 2011 | 2010 | 2011 | 2010 | |
| Net service revenue | $ 161,015 | $ 153,642 | $ 322,798 | $ 298,803 |
| Cost of service revenue | 86,216 | 78,737 | 175,172 | 152,725 |
| Gross margin | 74,799 | 74,905 | 147,626 | 146,078 |
| Provision for bad debts | 3,143 | 1,542 | 5,704 | 3,600 |
| General and administrative expenses | 52,154 | 49,686 | 107,195 | 95,453 |
| Operating income | 19,502 | 23,667 | 34,727 | 47,025 |
| Interest expense | (195) | (25) | (290) | (50) |
| Non-operating income | 4 | 593 | 177 | 622 |
| Income before income taxes and noncontrolling interest | 19,311 | 24,245 | 34,614 | 47,597 |
| Income tax expense | 6,549 | 7,979 | 11,710 | 15,488 |
| Net income | 12,762 | 16,266 | 22,904 | 32,109 |
| Less net income attributable to noncontrolling interest | 2,974 | 3,873 | 5,422 | 8,092 |
| Net income attributable to LHC Group, Inc. | 9,788 | 12,393 | 17,482 | 24,017 |
| Redeemable noncontrolling interest | – | – | – | 41 |
| Net income attributable to LHC Group, Inc.'s common stockholders | $ 9,788 | $ 12,393 | $ 17,482 | $ 24,058 |
| Earnings per share – basic: | ||||
| Income attributable to LHC Group, Inc. | $ 0.54 | $ 0.68 | $ 0.96 | $ 1.33 |
| Redeemable noncontrolling interest | – | – | – | – |
| Net income attributable to LHC Group, Inc.'s common stockholders | $ 0.54 | $ 0.68 | $ 0.96 | $ 1.33 |
| Earnings per share – diluted: | ||||
| Income attributable to LHC Group, Inc. | $ 0.53 | $ 0.68 | $ 0.95 | $ 1.32 |
| Redeemable noncontrolling interest | – | – | – | – |
| Net income attributable to LHC Group, Inc.'s common stockholders | $ 0.53 | $ 0.68 | $ 0.95 | $ 1.32 |
| Weighted average shares outstanding: | ||||
| Basic | 18,278,479 | 18,118,197 | 18,247,238 | 18,080,077 |
| Diluted | 18,346,441 | 18,236,380 | 18,338,605 | 18,200,066 |
| LHC GROUP, INC. AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (amounts in thousands) | ||
| (unaudited) | ||
|
Six Months Ended June 30, |
||
| 2011 | 2010 | |
| Operating activities | ||
| Net income | $ 22,904 | $ 32,108 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization expense | 3,939 | 3,377 |
| Provision for bad debts | 5,704 | 3,601 |
| Stock-based compensation expense | 1,960 | 1,859 |
| Deferred income taxes | 3,375 | 190 |
| Changes in operating assets and liabilities, net of acquisitions: | ||
| Receivables | (4,254) | (5,206) |
| Prepaid expenses and other assets | 5,984 | 2,650 |
| Prepaid income taxes | (3,899) | (1,398) |
| Accounts payable and accrued expenses | (1,950) | 4,265 |
| Net cash provided by operating activities | 33,763 | 41,446 |
| Investing activities | ||
| Purchases of property, building, and equipment | (5,761) | (5,713) |
| Cash paid for acquisitions, primarily goodwill and intangible assets and advance payment on acquisitions | (11,770) | (20,215) |
| Net cash used in investing activities | (17,531) | (25,928) |
| Financing activities | ||
| Proceeds from line of credit | 49,187 | 9,023 |
| Payments on line of credit | (49,187) | (14,745) |
| Principal payments on debt | – | (171) |
| Payments on capital leases | (14) | (14) |
| Excess tax benefits from vesting of restricted stock | 318 | 632 |
| Proceeds from employee stock purchase plan | 426 | 374 |
| Payments on repurchase of common stock | (577) | – |
| Purchase of additional controlling interest | (816) | (1,914) |
| Noncontrolling interest distributions | (6,645) | (7,823) |
| Net cash used in financing activities | (7,308) | (14,638) |
| Change in cash | 8,924 | 880 |
| Cash at beginning of period | 288 | 394 |
| Cash at end of period | $ 9,212 | $ 1,274 |
| Supplemental disclosures of cash flow information | ||
| Interest paid | $ 290 | $ 50 |
| Income taxes paid | $ 11,956 | $ 16,137 |
| LHC GROUP, INC. AND SUBSIDIARIES | ||||||
| SEGMENT INFORMATION | ||||||
| (amounts in thousands) | ||||||
| (unaudited) | ||||||
|
Three Months Ended June 30, 2011 |
Six Months Ended June 30, 2011 |
|||||
|
Home-Based Services |
Facility-Based Services |
Total |
Home-Based Services |
Facility-Based Services |
Total |
|
| Net service revenue | $ 141,984 | $ 19,031 | $ 161,015 | $ 283,785 | $ 39,013 | $ 322,798 |
| Cost of service revenue | 74,733 | 11,483 | 86,216 | 151,823 | 23,349 | 175,172 |
| Provision for bad debts | 2,998 | 145 | 3,143 | 5,406 | 298 | 5,704 |
| General and administrative expenses | 47,456 | 4,698 | 52,154 | 97,520 | 9,675 | 107,195 |
| Operating income | 16,797 | 2,705 | 19,502 | 29,036 | 5,691 | 34,747 |
| Interest expense | (175) | (20) | (195) | (261) | (29) | (290) |
| Non-operating income (loss) | (9) | 13 | 4 | 142 | 35 | 177 |
| Income before income taxes and noncontrolling interest | 16,613 | 2,698 | 19,311 | 28,917 | 5,697 | 34,614 |
| Income tax expense | 5,917 | 632 | 6,549 | 10,594 | 1,116 | 11,710 |
| Net Income | 10,696 | 2,066 | 12,762 | 18,323 | 4,581 | 22,904 |
| Noncontrolling interest | 2,687 | 287 | 2,974 | 4,782 | 640 | 5,422 |
| Net income attributable to LHC Group, Inc. | $ 8,009 | $ 1,779 | $ 9,788 | $ 13,541 | $ 3,941 | $ 17,482 |
| Total assets | $ 342,608 | $ 35,118 | $ 377,726 | $ 342,608 | $ 35,118 | $ 377,726 |
|
Three Months Ended June 30, 2010 |
Six Months Ended June 30, 2010 |
|||||
|
Home-Based Services |
Facility-Based Services |
Total |
Home-Based Services |
Facility-Based Services |
Total |
|
| Net service revenue | $ 135,738 | $ 17,904 | $ 153,642 | $ 263,694 | $ 35,109 | $ 298,803 |
| Cost of service revenue | 68,685 | 10,052 | 78,737 | 132,586 | 20,139 | 152,725 |
| Provision for bad debts | 1,337 | 205 | 1,542 | 3,291 | 309 | 3,600 |
| General and administrative expenses | 45,341 | 4,345 | 49,686 | 86,834 | 8,619 | 95,453 |
| Operating income | 20,375 | 3,302 | 23,677 | 40,983 | 6,042 | 47,025 |
| Interest expense | (23) | (2) | (25) | (45) | (5) | (50) |
| Non-operating income (loss) | 584 | 9 | 593 | 625 | (3) | 622 |
| Income before income taxes and noncontrolling interest | 20,936 | 3,309 | 24,245 | 41,563 | 6,034 | 47,597 |
| Income tax expense | 7,221 | 758 | 7,979 | 13,979 | 1,509 | 15,488 |
| Net Income | 13,715 | 2,551 | 16,266 | 27,584 | 4,525 | 32,109 |
| Noncontrolling interest | 3,417 | 456 | 3,873 | 7,184 | 908 | 8,092 |
| Net income attributable to LHC Group, Inc. | $ 10,298 | $ 2,095 | $ 12,393 | $ 20,400 | $ 3,617 | $ 24,017 |
| Total assets | $ 296,462 | $ 34,736 | $ 331,198 | $ 296,462 | $ 34,736 | $ 331,198 |
| LHC GROUP, INC. AND SUBSIDIARIES | ||||
| SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA | ||||
| (unaudited) | ||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
| 2011 | 2010 | 2011 | 2010 | |
| Key Data: | ||||
| Home-Based Services: | ||||
| Home Health | ||||
| Locations | 260 | 235 | 260 | 235 |
| Acquired | 2 | 1 | 5 | 4 |
| De novo | 0 | 3 | 7 | 5 |
| Total new admissions | 24,935 | 22,540 | 51,129 | 44,345 |
| Medicare new admissions | 17,423 | 16,374 | 36,012 | 32,526 |
| Average weekly census | 33,937 | 31,345 | 34,120 | 31,033 |
| Average Medicare weekly census | 26,192 | 24,951 | 26,320 | 24,795 |
| Medicare completed and billed episodes | 44,541 | 40,509 | 86,607 | 79,245 |
| Average Medicare case mix for completed and billed Medicare episodes | 1.24 | 1.28 | 1.25 | 1.27 |
| Average reimbursement per completed and billed Medicare episodes | $ 2,340 | $ 2,546 | $ 2,358 | $ 2,535 |
| Total visits | 883,888 | 834,350 | 1,763,823 | 1,620,807 |
| Total Medicare visits | 667,088 | 647,541 | 1,333,273 | 1,264,908 |
| Average visits per completed and billed Medicare episodes | 15.0 | 16.0 | 15.4 | 16.0 |
| Organic growth (1): | ||||
| Net revenue | -1.8% | 6.6% | 1.7% | 8.0% |
| Net Medicare revenue | -4.4% | 6.1% | -1.2% | 7.4% |
| Total new admissions | 4.8% | 3.0% | 9.4% | 6.1% |
| Medicare new admissions | 1.2% | 2.3% | 5.4% | 11.1% |
| Average weekly census | 4.7% | -0.5% | 6.4% | 1.0% |
| Average Medicare weekly census | 1.6% | -1.0% | 3.0% | 1.2% |
| Medicare completed and billed episodes | 6.2% | 1.7% | 6.0% | 4.1% |
| Hospice | ||||
| Locations | 32 | 21 | 32 | 21 |
| Acquired | 3 | 0 | 8 | 1 |
| Admissions | 1,045 | 693 | 1,964 | 1,358 |
| Average Daily Census | 930 | 596 | 882 | 578 |
| Patient Days | 84,669 | 54,201 | 159,670 | 104,672 |
| Average revenue per patient day | $ 133 | $ 133 | $ 136 | $ 135 |
| Facility-Based Services: | ||||
| Long-term Acute Care | ||||
| Locations | 9 | 9 | 9 | 9 |
| Patient days | 15,268 | 14,071 | 30,601 | 27,943 |
| Patient acuity mix | 1.05 | 1.06 | 1.03 | 1.02 |
| Average revenue per patient day | $ 1,171 | $ 1,171 | $ 1,190 | $ 1,157 |
|
(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. |
||||
CONTACT: Eric Elliott
Vice President of Investor Relations
(337) 233-1307
eric.elliott@lhcgroup.com