LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the three months and twelve months ended December 31, 2017.
Financial Results for the Fourth Quarter of 2017
- Net service revenue increased 24.2% to $292.4 million compared with $235.4 million in the fourth quarter of 2016.
- Net income attributable to LHC Group’s common stockholders was $18.4 million, up 87.8% from $9.8 million in the fourth quarter of 2016, while earnings per diluted share attributable to LHC Group’s common stockholders increased 85.5% to $1.02 per diluted share from $0.55 in the fourth quarter of 2016.
- Results for the fourth quarter of 2017 include an increase of $0.75 per diluted share for the non-cash decrease in the provision for income taxes from the impact of the Tax Cuts and Jobs Act of 2017 on net deferred tax liabilities, which is partially offset by increases in Almost Family merger and other costs of approximately $0.35 per diluted share(1).
- Adjusted net income attributable to LHC Group’s common stockholders was $11.2 million, or $0.62 per diluted share, compared with $10.3 million, or $0.58 per diluted share, in the fourth quarter of 2016, for an increase of 6.9%.
- Total organic growth in home health admissions was 5.3%.
- Total organic revenue growth in home health was 7.8%.
Financial Results for Fiscal 2017
- Net service revenue increased 17.2% to $1.07 billion compared with $914.8 million in the prior-year period.
- Net income attributable to LHC Group’s common stockholders was $50.1 million, up 37.0% from $36.6 million in the prior-year period, while earnings per diluted share attributable to LHC Group’s common stockholders increased 34.8% to $2.79 per diluted share from $2.07 in the prior-year period.
- Adjusted net income attributable to LHC Group’s common stockholders was $43.5 million, or $2.42 per diluted share(1), compared with $37.0 million, or $2.10 per diluted share(1), in the prior-year period, for an increase of 17.6%.
- Total organic growth in home health admissions was 10.7%.
- Total organic revenue growth in home health was 10.0%.
(1) See “Reconciliation of Non-GAAP Measures – Adjusted net income attributable to LHC Group” to GAAP results on page 10.
Operational Highlights
- LHC Group quality and patient satisfaction results continue to exceed the national average with 98% of its same store locations having CMS Quality Star ratings of four stars or greater.
- LHC Group acquired 71 home health, hospice or community-based locations and six long-term acute care hospital operations during the twelve months ended December 31, 2017, which produced a record year of $114.4 million in annual revenue prior to acquisition.
- LHC Group agreed to merge with Almost Family, Inc., which would create one of the largest providers of in-home healthcare in the country. The all-stock merger is expected to accelerate revenue growth by providing additional channels of organic growth and creating a significant pipeline of joint ventures, extensions of existing relationships and acquisitions. A total of $25 million in annualized pre-tax cost synergies have been identified.
Commenting on the results, Keith G. Myers, LHC Group’s chairman and CEO, said, “The growth we generated in the fourth quarter was consistent with our experience throughout 2017 and helped us exceed our full year revenue and earnings goals. As always, this performance is driven by an overriding focus on clinical excellence that delivers quality and patient satisfaction that, according to the CMS Star ratings, continues to lead the home health industry. This was a record-setting year for us with acquisitions and joint ventures, and our ability to improve outcomes remains a critical element in providing value to our partners as we work alongside them to create customized solutions.”
Mr. Myers concluded, “We have established a growth plan for 2018 based on strong organic growth and continuation of our partnerships with leading hospitals and health systems. Our expectations for continuing the positive impact within the communities we serve are as high as they have ever been. With much of the regulatory uncertainties in our industry now resolved through recent pronouncements and legislation, we are confident the environment is conducive to executing on new growth opportunities and delivering on the benefits of a record-setting year for acquired revenue.”
Almost Family Merger Transaction
On November 15, 2017, LHC Group and Almost Family entered into an agreement providing for a ‘merger of equals’ business combination. Following approval by both companies’ shareholders, the merger will be an all-stock transaction with an exchange ratio of 0.9150 of LHC Group shares to be exchanged for each outstanding share of Almost Family stock. The combined company will have an expanded geographic service territory of 36 states covering over 60% of the U.S. population aged 65 and over, 781 locations and 76 joint venture partnerships with health systems that include 336 hospitals. The combined company will operate under the LHC Group name with common shares traded on the NASDAQ under ticker symbol LHCG. On February 22, 2018, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to this transaction had expired, satisfying one of the important conditions to closing. The transaction is expected to close at the end of the first quarter following both companies’ March 29, 2018, special shareholder meetings to approve the proposed transaction.
Commenting on the expected merger, Mr. Myers added, “I am pleased with the pace and success of our integration planning work over the last few months as we have prepared for the combination of our two companies. We are confident in our track record of integrating acquisitions and joint ventures successfully, and we began focusing on the important aspects of this integration many months ago. Our integration planning activities began during our comprehensive due diligence efforts conducted prior to signing the merger agreement in November with the assistance of our third party advisor partners at Alston & Bird, FTI Consulting and Ernst & Young. In addition, in November we also engaged the Berkeley Research Group (“BRG”) to lead the integration process. BRG will remain engaged for at least a year after the closing to assist in the execution of the actual integration. Since November, BRG has established an integration management office at each of our home office locations in Lafayette and in Louisville. Through those rigorous and dedicated efforts, we’ve been working diligently through 23 separate integration planning workstreams, each with teams comprised of members from LHC Group, Almost Family and BRG, to plan for the integration of systems, processes and personnel.
“With a shared vision for delivering patient-centered care in the home and complementary strengths and cultures, we will be well positioned to lead the evolution of the in-home healthcare industry to value-based reimbursement and highly coordinated care. We look forward to outlining our combined growth expectations later this year.”
Fiscal Year 2018 Guidance
Fiscal year 2018 net service revenue is expected to be in a range of $1.22 billion to $1.25 billion, and adjusted earnings per diluted share is expected to be in a range of $3.00 to $3.20. This guidance excludes the impact from a completed merger with Almost Family and assumes the following:
(1) an effective tax rate of 29% to 30%, which reflects the positive
impact from passage of the Tax Cuts and Jobs Act of 2017; and
(2)
the negative impact from the Medicare Home Health Prospective Payment
System (PPS) for 2018, which is expected to have an approximate -1%
impact, or $6 million reduction to Medicare Home Health revenue and
$0.20 reduction in fully diluted earnings per share for 2018.
The Company’s guidance ranges do not take into account the impact of future reimbursement changes, if any, future acquisitions, if made, de novo locations, if opened, or future legal expenses, if necessary. Due to the difficulty in estimating the costs of the expected merger with Almost Family and its impact on GAAP earnings, the Company is only providing guidance to adjusted earnings for 2018. The Company’s guidance range on net service revenue does not take into account the Company’s adoption of ASU 2014-09 in 2018 regarding revenue recognition, which will result in a reduction to net service revenue by bad debt expense, but will not affect earnings per share.
Conference Call
LHC Group will host a conference call on Thursday, March 1, 2018, at 11:00 a.m. Eastern time to discuss its fourth quarter 2017 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 March 8, 2018, by dialing (855) 859-2056 (international callers should call (404) 537-3406) and entering confirmation number 2883586.
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 facility-based services. LHC Group operates 320 home health services locations, 92 hospice locations, 12 community-based service locations and 15 long-term acute care hospitals (LTACHs).
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, 2016, 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 | |||||||||||
| Dec. 31, 2017 | Dec. 31, 2016 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash | $ | 2,849 | $ | 3,264 | |||||||
| Receivables: | |||||||||||
| Patient accounts receivable, less allowance for uncollectible accounts of $23,556 and $29,036, respectively | 161,898 | 124,803 | |||||||||
| Other receivables | 3,163 | 5,115 | |||||||||
| Amounts due from governmental entities | 830 | 942 | |||||||||
| Total receivables, net | 165,891 | 130,860 | |||||||||
| Prepaid income taxes | 7,006 | ─ | |||||||||
| Prepaid expenses | 13,042 | 9,821 | |||||||||
| Other current assets | 12,177 | 5,796 | |||||||||
| Total current assets | 200,965 | 149,741 | |||||||||
| Property, building and equipment, net of accumulated depreciation of $43,565 and $35,226, respectively | 46,453 | 43,251 | |||||||||
| Goodwill | 392,601 | 307,317 | |||||||||
| Intangible assets, net of accumulated amortization of $13,041 and $10,968, respectively | 134,610 | 102,006 | |||||||||
| Other assets | 19,073 | 11,756 | |||||||||
| Total assets | $ | 793,702 | $ | 614,071 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and other accrued liabilities | $ | 39,750 | $ | 26,805 | |||||||
| Salaries, wages, and benefits payable | 44,747 | 34,265 | |||||||||
| Self-insurance reserve | 12,450 | 10,691 | |||||||||
| Current portion of long-term debt | 286 | 252 | |||||||||
| Amounts due to governmental entities | 5,019 | 4,955 | |||||||||
| Income tax payable | — | 3,499 | |||||||||
| Total current liabilities | 102,252 | 80,467 | |||||||||
| Deferred income taxes | 27,466 | 31,941 | |||||||||
| Revolving credit facility | 144,000 | 87,000 | |||||||||
| Long-term debt, less current portion | — | 544 | |||||||||
| Total liabilities | 273,718 | 199,952 | |||||||||
| Noncontrolling interest – redeemable | 13,393 | 12,567 | |||||||||
| Stockholders’ equity: | |||||||||||
| LHC Group, Inc. stockholders’ equity: | |||||||||||
| Preferred stock – $0.01 par value: 5,000,000 shares authorized; none issued or outstanding | — | — | |||||||||
| Common stock – $0.01 par value; 40,000,000 shares authorized; 22,640,046 and 22,429,041 shares issued in 2017 and 2016, respectively | 226 | 224 | |||||||||
| Treasury stock – 4,890,504 and 4,828,679 shares at cost, respectively | (42,249 | ) | (39,135 | ) | |||||||
| Additional paid-in capital | 126,490 | 119,748 | |||||||||
| Retained earnings | 364,401 | 314,289 | |||||||||
| Total LHC Group, Inc. stockholders’ equity | 448,868 | 395,126 | |||||||||
| Noncontrolling interest – non-redeemable | 57,723 | 6,426 | |||||||||
| Total equity | 506,591 | 401,552 | |||||||||
| Total liabilities and equity | $ | 793,702 | $ | 614,071 | |||||||
LHC GROUP, INC. AND SUBSIDIARIES | |||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
| Net service revenue | $ | 292,386 | $ | 235,443 | $ | 1,072,086 | $ | 914,823 | |||||||||||||
| Cost of service revenue | 187,426 | 144,089 | 675,810 | 557,650 | |||||||||||||||||
| Gross margin | 104,960 | 91,354 | 396,276 | 357,173 | |||||||||||||||||
| Provision for bad debts | 1,246 | 3,131 | 9,484 | 14,790 | |||||||||||||||||
| General and administrative expenses | 89,108 | 69,050 | 310,539 | 270,622 | |||||||||||||||||
| Impairment of intangibles and other | 1,430 | – | 1,511 | – | |||||||||||||||||
| (Gain) Loss on disposal of assets | 83 | (190 | ) | 60 | 1,199 | ||||||||||||||||
| Operating income | 13,093 | 19,363 | 74,682 | 70,562 | |||||||||||||||||
| Interest expense | (1,260 | ) | (768 | ) | (3,876 | ) | (2,936 | ) | |||||||||||||
| Non-operating income | 90 | 213 | 524 | 492 | |||||||||||||||||
|
Income before income taxes and
noncontrolling interest | 11,923 | 18,808 | 71,330 | 68,118 | |||||||||||||||||
| Income tax expense | (9,466 | ) | 6,676 | 10,944 | 22,176 | ||||||||||||||||
| Net income | 21,389 | 12,132 | 60,386 | 45,942 | |||||||||||||||||
|
Less net income attributable to
noncontrolling interests | 2,954 | 2,315 | 10,274 | 9,359 | |||||||||||||||||
| Net income attributable to LHC Group, Inc.’s common stockholders | $ | 18,435 | $ | 9,817 | $ | 50,112 | $ | 36,583 | |||||||||||||
| Earnings per share attributable to LHC Group, Inc.’s common stockholders: | |||||||||||||||||||||
| Basic | $ | 1.04 | $ | 0.56 | $ | 2.83 | $ | 2.08 | |||||||||||||
| Diluted | $ | 1.02 | $ | 0.55 | $ | 2.79 | $ | 2.07 | |||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||
| Basic | 17,749,872 | 17,597,190 | 17,715,992 | 17,559,477 | |||||||||||||||||
| Diluted | 18,043,297 | 17,764,066 | 17,961,018 | 17,682,820 | |||||||||||||||||
LHC GROUP, INC. AND SUBSIDIARIES | |||||||||||
| Year Ended December 31, | |||||||||||
| 2017 | 2016 | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | 60,386 | $ | 45,942 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization expense | 13,422 | 12,160 | |||||||||
| Provision for bad debts | 9,484 | 14,790 | |||||||||
| Stock-based compensation expense | 5,964 | 4,872 | |||||||||
| Deferred income taxes | (4,475 | ) | 7,402 | ||||||||
| Loss on disposal of assets | 60 | 1,199 | |||||||||
| Impairment of intangibles and other | 1,511 | ─ | |||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
| Receivables | (36,390 | ) | (28,873 | ) | |||||||
| Prepaid expenses and other assets | (26,973 | ) | 1,034 | ||||||||
| Prepaid income taxes | (7,006 | ) | 1,641 | ||||||||
| Accounts payable and accrued expenses | 19,666 | 9,182 | |||||||||
| Income taxes payable | (3,499 | ) | 84 | ||||||||
| Net amounts due to/from governmental entities | 176 | (1,961 | ) | ||||||||
| Net cash provided by operating activities | 32,326 | 67,472 | |||||||||
| Investing activities: | |||||||||||
| Purchases of property, building and equipment | (10,176 | ) | (16,009 | ) | |||||||
| Cash paid for acquisitions, primarily goodwill and intangible assets | (64,598 | ) | (23,156 | ) | |||||||
| Advanced payments on acquisitions | ─ | (11,488 | ) | ||||||||
| Other | ─ | 273 | |||||||||
| Net cash used in investing activities | (74,774 | ) | (50,380 | ) | |||||||
| Financing activities: | |||||||||||
| Proceeds from line of credit | 96,000 | 38,000 | |||||||||
| Payments on line of credit | (39,000 | ) | (49,000 | ) | |||||||
| Proceeds from employee stock purchase plan | 1,026 | 912 | |||||||||
| Payments on debt | (260 | ) | (238 | ) | |||||||
| Noncontrolling interest distributions | (11,382 | ) | (9,413 | ) | |||||||
| Excess tax benefits from vesting of stock awards | ─ | 1,303 | |||||||||
| Withholding taxes paid on stock-based compensation | (3,114 | ) | (1.996 | ) | |||||||
| Purchase of additional controlling interest | (1,488 | ) | ─ | ||||||||
| Sale of noncontrolling interest | 251 | 356 | |||||||||
| Proceeds from exercise of stock options | ─ | 109 | |||||||||
| Net cash provided by (used in) financing activities | 42,033 | (19,967 | ) | ||||||||
| Change in cash | (415 | ) | (2,875 | ) | |||||||
| Cash at beginning of period | 3,264 | 6,139 | |||||||||
| Cash at end of period | $ | 2,849 | $ | 3,264 | |||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Interest paid | $ | 3,853 | $ | 3,123 | |||||||
| Income taxes paid | $ | 25,199 | $ | 11,533 | |||||||
LHC GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| Three Months Ended December 31, 2017 | ||||||||||||||||||||||||||
Home Health Services | Hospice Services | Community- Based Services | Facility- Based Services | Total | ||||||||||||||||||||||
| Net service revenue | $ | 208,327 | $ | 42,948 | $ | 13,102 | $ | 28,009 | $ | 292,386 | ||||||||||||||||
| Cost of service revenue | 129,283 | 28,782 | 10,339 | 19,022 | 187,426 | |||||||||||||||||||||
| Provision for bad debts | 128 | 517 | 346 | 255 | 1,246 | |||||||||||||||||||||
| General and administrative expenses | 63,854 | 13,061 | 2,984 | 9,209 | 89,108 | |||||||||||||||||||||
| Impairment of intangibles and other | 1,430 | ─ | ─ | ─ | 1,430 | |||||||||||||||||||||
| (Gain) loss on disposal of assets | 63 | 1 | ─ | 19 | 83 | |||||||||||||||||||||
| Operating income | 13,569 | 587 | (567 | ) | (496 | ) | 13,093 | |||||||||||||||||||
| Interest expense | (945 | ) | (189 | ) | (63 | ) | (63 | ) | (1,260 | ) | ||||||||||||||||
| Non-operating income (loss) | 20 | 20 | 1 | 49 | 90 | |||||||||||||||||||||
| Income before income taxes and noncontrolling interest | 12,644 | 418 | (629 | ) | (510 | ) | 11,923 | |||||||||||||||||||
| Income tax expense | (7,204 | ) | (1,382 | ) | (446 | ) | (434 | ) | (9,466 | ) | ||||||||||||||||
| Net income | 19,848 | 1,800 | (183 | ) | (76 | ) | 21,389 | |||||||||||||||||||
| Less net income attributable to noncontrolling interests | 3,049 | 210 | (104 | ) | (201 | ) | 2,954 | |||||||||||||||||||
|
Net income attributable to
LHC Group, Inc.’s common stockholders | $ | 16,799 | $ | 1,590 | $ | (79 | ) | $ | 125 | $ | 18,435 | |||||||||||||||
| Total assets | $ | 534,385 | $ | 155,230 | $ | 48,216 | $ | 55,871 | $ | 793,702 | ||||||||||||||||
| Three Months Ended December 31, 2016 | ||||||||||||||||||||||||||
Home Health Services | Hospice Services | Community- Based Services | Facility- Based Services | Total | ||||||||||||||||||||||
| Net service revenue | $ | 173,806 | $ | 34,898 | $ | 11,067 | $ | 15,672 | $ | 235,443 | ||||||||||||||||
| Cost of service revenue | 104,091 | 21,523 | 7,947 | 10,528 | 144,089 | |||||||||||||||||||||
| Provision for bad debts | 1,486 | 1,037 | 309 | 299 | 3,131 | |||||||||||||||||||||
| General and administrative expenses | 52,255 | 9,393 | 2,217 | 5,185 | 69,050 | |||||||||||||||||||||
| Gain (loss) on disposal of assets | 47 | 9 | 2 | (248 | ) | (190 | ) | |||||||||||||||||||
| Operating income | 15,927 | 2,936 | 592 | (92 | ) | 19,363 | ||||||||||||||||||||
| Interest expense | (576 | ) | (85 | ) | (38 | ) | (69 | ) | (768 | ) | ||||||||||||||||
| Non-operating income (loss) | 208 | (1 | ) | 1 | 5 | 213 | ||||||||||||||||||||
| Income from continuing operations before income taxes and noncontrolling interest | 15,559 | 2,850 | 555 | (156 | ) | 18,808 | ||||||||||||||||||||
| Income tax expense | 5,480 | 1,001 | 237 | (42 | ) | 6,676 | ||||||||||||||||||||
| Net income | 10,079 | 1,849 | 318 | (114 | ) | 12,132 | ||||||||||||||||||||
| Less net income attributable to noncontrolling interests | 1,875 | 499 | (2 | ) | (57 | ) | 2,315 | |||||||||||||||||||
|
Net income attributable to
LHC Group, Inc.’s common stockholders | $ | 8,204 | $ | 1,350 | $ | 320 | $ | (57 | ) | $ | 9,817 | |||||||||||||||
| Total assets | $ | 427,782 | $ | 116,090 | $ | 33,520 | $ | 36,679 | $ | 614,071 | ||||||||||||||||
LHC GROUP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| Year Ended December 31, 2017 | ||||||||||||||||||||||||||
Home Health Services | Hospice Services | Community- Based Services | Facility- Based Services | Total | ||||||||||||||||||||||
| Net service revenue | $ | 783,507 | $ | 159,197 | $ | 46,909 | $ | 82,473 | $ | 1,072,086 | ||||||||||||||||
| Cost of service revenue | 482,179 | 103,969 | 35,244 | 54,418 | 675,810 | |||||||||||||||||||||
| Provision for bad debts | 5,924 | 1,910 | 750 | 900 | 9,484 | |||||||||||||||||||||
| General and administrative expenses | 229,265 | 45,516 | 9,946 | 25,812 | 310,539 | |||||||||||||||||||||
| Impairment of intangibles and other | 1,511 | ─ | ─ | ─ | 1,511 | |||||||||||||||||||||
| (Gain) loss on disposal of assets | 101 | 22 | ─ | (63 | ) | 60 | ||||||||||||||||||||
| Operating income | 64,527 | 7,780 | 969 | 1,406 | 74,682 | |||||||||||||||||||||
| Interest expense | (2,906 | ) | (582 | ) | (194 | ) | (194 | ) | (3,876 | ) | ||||||||||||||||
| Non-operating income | 360 | 71 | 3 | 90 | 524 | |||||||||||||||||||||
| Income before income taxes and noncontrolling interest | 61,981 | 7,269 | 778 | 1,301 | 71,330 | |||||||||||||||||||||
| Income tax expense | 9,509 | 1,057 | 156 | 222 | 10,944 | |||||||||||||||||||||
| Net income | 52,472 | 6,212 | 622 | 1,079 | 60,386 | |||||||||||||||||||||
| Less net income (loss) attributable to noncontrolling interests | 9,102 | 1,248 | (111 | ) | 35 | 10,274 | ||||||||||||||||||||
|
Net income attributable to
LHC Group, Inc.’s common stockholders | $ | 43,370 | $ | 4,964 | $ | 733 | $ | 1,045 | $ | 50,112 | ||||||||||||||||
| Total assets | $ | 534,385 | $ | 155,230 | $ | 48,216 | $ | 55,871 | $ | 793,702 | ||||||||||||||||
| Year Ended December 31, 2016 | ||||||||||||||||||||||||||
Home Health Services | Hospice Services | Community- Based Services | Facility- Based Services | Total | ||||||||||||||||||||||
| Net service revenue | $ | 665,896 | $ | 134,948 | $ | 43,891 | $ | 70,088 | $ | 914,823 | ||||||||||||||||
| Cost of service revenue | 398,450 | 83,359 | 32,603 | 43,238 | 557,650 | |||||||||||||||||||||
| Provision for bad debts | 9,609 | 3,401 | 797 | 983 | 14,790 | |||||||||||||||||||||
| General and administrative expenses | 203,418 | 37,207 | 8,785 | 21,212 | 270,622 | |||||||||||||||||||||
| Loss on disposal of assets | 857 | 338 | 49 | (45 | ) | 1,199 | ||||||||||||||||||||
| Operating income | 53,562 | 10,643 | 1,657 | 4,700 | 70,562 | |||||||||||||||||||||
| Interest expense | (2,216 | ) | (317 | ) | (144 | ) | (259 | ) | (2,936 | ) | ||||||||||||||||
| Non-operating income | 422 | 25 | 14 | 31 | 492 | |||||||||||||||||||||
| Income before income taxes and noncontrolling interest | 51,768 | 10,351 | 1,527 | 4,472 | 68,118 | |||||||||||||||||||||
| Income tax expense | 16,505 | 3,485 | 651 | 1,535 | 22,176 | |||||||||||||||||||||
| Net income | 35,263 | 6,866 | 876 | 2,937 | 45,942 | |||||||||||||||||||||
| Less net income (loss) attributable to noncontrolling interests | 6,876 | 1,867 | (58 | ) | 674 | 9,359 | ||||||||||||||||||||
|
Net income attributable to
LHC Group, Inc.’s common stockholders | $ | 28,387 | $ | 4,999 | $ | 934 | $ | 2,263 | $ | 36,583 | ||||||||||||||||
| Total assets | $ | 427,782 | $ | 116,090 | $ | 33,520 | $ | 36,679 | $ | 614,071 | ||||||||||||||||
LHC GROUP, INC. AND SUBSIDIARIES | |||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
| Key Data: | |||||||||||||||||||||
| Home-Health Services: | |||||||||||||||||||||
Home Health | |||||||||||||||||||||
| Locations | 315 | 281 | 315 | 281 | |||||||||||||||||
| Acquired | 1 | 3 | 43 | 12 | |||||||||||||||||
| De novo | 1 | 1 | 3 | 5 | |||||||||||||||||
| Divested/Consolidated | (9 | ) | (9 | ) | (12 | ) | (16 | ) | |||||||||||||
| Total new admissions | 49,668 | 41,184 | 192,116 | 159,914 | |||||||||||||||||
| Medicare new admissions | 30,745 | 26,812 | 120,177 | 105,575 | |||||||||||||||||
| Average daily census | 44,362 | 39,407 | 43,107 | 38,587 | |||||||||||||||||
| Average Medicare daily census | 29,925 | 28,381 | 29,514 | 28,146 | |||||||||||||||||
| Medicare completed and billed episodes | 54,493 | 51,040 | 213,255 | 199,235 | |||||||||||||||||
| Average Medicare case mix for completed and billed Medicare episodes | 1.11 | 1.09 | 1.10 | 1.06 | |||||||||||||||||
| Average reimbursement per completed and billed Medicare episodes | $ | 2,867 | $ | 2,751 | $ | 2,817 | $ | 2,690 | |||||||||||||
| Total visits | 1,448,351 | 1,192,042 | 5,656,371 | 4,629,695 | |||||||||||||||||
| Total Medicare visits | 987,586 | 869,759 | 3,899,678 | 3,396,164 | |||||||||||||||||
| Average visits per completed and billed Medicare episodes | 18.1 | 17.0 | 18.3 | 17.0 | |||||||||||||||||
| Organic growth:(1) | |||||||||||||||||||||
| Net revenue | 7.8 | % | 7.3 | % | 10.0 | % | 6.4 | % | |||||||||||||
| Net Medicare revenue | 1.8 | % | 5.3 | % | 4.7 | % | 4.7 | % | |||||||||||||
| Total new admissions | 5.3 | % | 10.8 | % | 10.7 | % | 9.3 | % | |||||||||||||
| Medicare new admissions | 1.6 | % | 8.5 | % | 5.4 | % | 6.6 | % | |||||||||||||
| Average daily census | 1.0 | % | 3.5 | % | 4.2 | % | 2.3 | % | |||||||||||||
| Average Medicare daily census | -3.8 | % | 0.8 | % | -1.3 | % | 0.4 | % | |||||||||||||
| Medicare completed and billed episodes | -2.7 | % | 2.5 | % | 1.1 | % | 2.2 | % | |||||||||||||
| Community-Based Services: | |||||||||||||||||||||
| Locations | 12 | 11 | 12 | 11 | |||||||||||||||||
| Acquired | 1 | – | 1 | 1 | |||||||||||||||||
| De novo | – | – | – | – | |||||||||||||||||
| Divested/Consolidated | – | – | – | (3 | ) | ||||||||||||||||
| Average daily census | 2,161 | 1,633 | 1,849 | 1,629 | |||||||||||||||||
| Billable hours | 469,963 | 376,934 | 1,644,372 | 1,484,012 | |||||||||||||||||
| Revenue per billable hour | $ | 27.88 | $ | 29.36 | $ | 28.53 | $ | 29.58 | |||||||||||||
| Hospice-Based Services: | |||||||||||||||||||||
| Locations | 91 | 65 | 91 | 65 | |||||||||||||||||
| Acquired | – | – | 27 | 10 | |||||||||||||||||
| De novo | – | 1 | 1 | 1 | |||||||||||||||||
| Divested/Consolidated | – | – | (2 | ) | (2 | ) | |||||||||||||||
| Admissions | 3,655 | 2,448 | 13,369 | 9,988 | |||||||||||||||||
| Average daily census | 3,180 | 2,699 | 3,036 | 2,620 | |||||||||||||||||
| Patient days | 292,568 | 248,270 | 1,108,118 | 958,847 | |||||||||||||||||
| Average revenue per patient day | $ | 147 | $ | 141 | $ | 144 | $ | 141 | |||||||||||||
| Facility-Based Services: | |||||||||||||||||||||
Long-term Acute Care | |||||||||||||||||||||
| Locations | 14 | 8 | 14 | 8 | |||||||||||||||||
| Acquired | – | – | 6 | – | |||||||||||||||||
| Patient days | 21,719 | 13,257 | 63,168 | 56,224 | |||||||||||||||||
| Average revenue per patient day | $ | 1,170 | $ | 1,060 | $ | 1,152 | $ | 1,159 | |||||||||||||
(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 | |||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net income attributable to LHC Group, Inc.’s common stockholders | $ | 18,435 | $ | 9,817 | $ | 50,112 | $ | 36,583 | |||||||
| Add (net of tax): | |||||||||||||||
| New tax rate(1) | (13,602 | ) | ─ | (13,602 | ) | ─ | |||||||||
| AFAM merger/acquisition expenses(2) | 3,816 | 451 | 4,299 | 451 | |||||||||||
| Closures/relocations(3) | 2,085 | ─ | 2,214 | ─ | |||||||||||
| Home Health rule(4) | 481 | ─ | 481 | ─ | |||||||||||
Adjusted net income attributable to LHC Group, Inc.’s common stockholders | $ | 11,215 | $ | 10,268 | $ | 43,504 | $ | 37,034 | |||||||
RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO LHC
GROUP, INC. | |||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net income attributable to LHC Group, Inc.’s common stockholders | $ | 1.02 | $ | 0.55 | $ | 2.79 | $ | 2.07 | |||||||
| Add (net of tax): | |||||||||||||||
| New tax rate(1) | (0.75 | ) | ─ | (0.76 | ) | ─ | |||||||||
| AFAM merger/acquisition expenses(2) | 0.21 | 0.03 | 0.24 | 0.03 | |||||||||||
| Closures/relocations(3) | 0.11 | ─ | 0.12 | ─ | |||||||||||
| Home Health rule(4) | 0.03 | ─ | 0.03 | ─ | |||||||||||
Adjusted net income attributable to LHC Group, Inc.’s common stockholders | $ | 0.62 | $ | 0.58 | $ | 2.42 | $ | 2.10 | |||||||
(1) The passage of the Tax Cuts and Jobs Act of 2017 reduced the deferred tax liability by $13.6 million. | |||||||||||||||
(2) Expenses associated with the pending merger between LHC Group and Almost Family and other prior acquisitions and joint ventures. | |||||||||||||||
(3) Expenses associated with the closure, relocation or consolidation of nine home health agencies. This cost includes the $1.4 million impairment of intangibles charge. | |||||||||||||||
(4) Impact on 2017 episodes, which ended on or after January 1, 2018, from the Medicare Home Health Prospective Payment System (PPS) for 2018, which was finalized on November 5, 2017. | |||||||||||||||
We have included certain financial measures in this press release, including adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share, which are “non-GAAP financial measures” as defined under the rules and regulations promulgated by the SEC. We define adjusted net income attributable to LHC Group as net income attributable to LHC Group adjusted for the after-tax impact of the tax benefit related to tax reform, AFAM merger/acquisition costs, various adjustments, closures/relocations and the Home Health rule. We define adjusted net income attributable to LHC Group per diluted share as net income attributable to LHC Group adjusted for the after-tax impact of the tax benefit related to tax reform, AFAM merger/acquisition costs, various adjustments, closures/relocations and the Home Health rule divided by weighted average diluted shares outstanding.
Adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share are supplemental measures of our performance and are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). Adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share are not measures of our financial performance under GAAP and should not be considered as alternatives to net income attributable to LHC Group, net income attributable to LHC Group per diluted share or any other performance measures derived in accordance with GAAP. Our measurements of adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share may not be comparable to similarly titled measures of other companies. We have included information concerning adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share in this press release because we believe that such information is used by certain investors as measures of a company’s historical performance. We believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of issuers of equity securities, many of which present adjusted net income and adjusted net income per diluted share when reporting their results. Our presentation of adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180228006584/en/
Contacts:
Eric Elliott, 337-233-1307
Senior
Vice President of Finance
eric.elliott@lhcgroup.com
