LAFAYETTE, La., May 07, 2020 (GLOBE NEWSWIRE) — LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the quarter ended March 31, 2020. Unless otherwise noted, all results are compared with the first quarter ended March 31, 2019.First Quarter 2020 Financial ResultsNet service revenue increased 2.0% to $512.9 million.Net income attributable to LHC Group’s common stockholders increased 16.8% to $22.0 million. Earnings per diluted share attributable to LHC Group’s common stockholders increased 16.7% to $0.70.Adjusted net income attributable to LHC Group’s common stockholders was $23.4 million, or $0.75 adjusted earnings per diluted share, compared with $30.7 million, or $0.98 per diluted share, in the same period in 2019. Adjusted results for the first quarter of 2020 exclude a pre-tax amount of $1.5 million in acquisition and de novo related expenses associated with acquisitions completed in late 2019 and in the first quarter of 2020 and $0.5 million in closure related expenses associated with residual cost from closures in the fourth quarter of 2019 as well as the first quarter of 2020.EBITDA increased 12.0% to $33.3 million.Adjusted EBITDA was $38.1 million compared with $46.1 million in the same period in 2019.Organic growth in home health admissions was 7.1%.Organic growth in hospice admissions was 0.2%.A reconciliation of all non-GAAP financial results in this release appears on page 10.Operational and Strategic HighlightsAcross all operations of LHC Group, quality and patient satisfaction scores continue to exceed the national average and outpace industry peers.85% of LHC Group’s same store providers have CMS Quality Star ratings of four stars or greater when excluding 2019 acquisitions.Home health organic admission growth was 7.1% in the first quarter of 2020 as compared to the same period in 2019. For the pre-COVID period of January 1, 2020 to March 14, 2020, LHC Group experienced home health organic admission growth of 10%.On January 1, 2020, LHC Group completed the acquisition of eight home health and hospice providers in three states, all of which were hospital joint ventures. These acquisitions represent approximately $23.8 million in annualized revenue.Commenting on the results, Keith G. Myers, LHC Group’s Chairman and Chief Executive Officer, said, “We experienced two distinct periods within the first quarter and the following weeks. The first – January 1 to March 14 – was highlighted by revenues, earnings and organic growth above our forecasts for the quarter, strong execution under our PDGM care model and an expanding pipeline of new acquisition opportunities. The second period – March 15 to March 31 – was marked by a global health pandemic. Our focus shifted to ensuring our employees had adequate supplies of personal protective equipment for their safety and in-turn to fulfill our mission to safely care for the patients, families and communities we are privileged to serve; and our efforts to support our joint venture partners and referral sources who needed to discharge or transfer as many patients as possible to an in-home setting. We have taken several proactive steps to be part of the solution to this national pandemic for our employees, patients, communities, hospital partners, referral sources, payors, and governmental partners at the local, state and federal levels. During both periods, our demonstration of LHC Group’s core purpose — ‘It’s all about helping people’ — has proven to be the true difference between success and failure. I’m proud of the teamwork, preparedness, adaptability and fearless nature of service our employees have shown throughout this pandemic.” COVID-19 Update
Beginning in mid-March, the impact of the COVID-19 pandemic had an impact on our operations and financial results for the first quarter of 2020 with an expected continued impact in the second quarter. We incurred $2.9 million, or $0.07 per diluted share, in additional COVID-19 costs related to personal protective equipment (PPE) supplies and wages. We also benefitted from a tax benefit of $2.2 million, or $0.07 per diluted share, related to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which lifts certain tax deduction limitations and eliminates 80% of taxable income limitations for Net Operating Losses (“NOL”), which we are now able to fully utilize NOLs associated with Almost Family prior to the merger.We experienced lower patient volumes from our referral sources related to various COVID-19 policies implemented by local, state and federal public health and governmental authorities, a reduction in home visits, and a reduction in elective procedures. These reductions in patient volumes continued through mid-April but have begun to stabilize as we are beginning to see improvement in all of these areas.We believe the impact that COVID-19 will have on future operations and financial results will depend upon many factors, most of which are beyond our control or ability to predict. Due to the lack of visibility created by the ongoing impact and disruption from COVID-19, we have withdrawn our previously issued guidance for the year ending December 31, 2020.To create the safest environment possible for our employees, patients and communities we serve, in March we initiated employee pre-screening and protection protocols in accordance with Centers for Disease Control recommendations for all 32,000 employees that complemented our pre-existing infectious disease protocols for providing care in the home setting. LHC Group also introduced a number of programs to support our employees, including a special COVID-19 pandemic grant program as part of our 501(c)(3) LHC Group Purpose Fund that supports employees experiencing financial hardships, retirement plan amendments, special cash-in opportunities for accumulated paid time off, and expanded offerings in our employee assistance program while also implementing a wage supplement program designed to restore certain lost wages for frontline direct patient care-giving employees that qualify.LHC Group has also implemented a number of cost containment initiatives, including eliminating non-essential travel and expenses along with employee flexing, furloughs, and other measures. We continue to have strong access to capital with over $385.4 million of available liquidity from cash and our revolving credit facility.On March 30, 2020, we applied for advanced payments under the Medicare Accelerated and Advance Payment Program as provided for by the CARES Act. During April, we received funds totaling $307.6 million under this program. The accelerated Medicare payments are interest free and the program currently requires that the Centers for Medicare and Medicaid Services (“CMS”) recoup the accelerated payments beginning 120 days after receipt by the provider, by withholding future Medicare fee-for service payments for claims until such time as the full accelerated payment has been recouped. The program currently requires Medicare Part A providers to repay the funds within 210 days of receipt.On April 10, 2020, we received funds totaling $87.5 million related to the Provider Relief Fund as provided for by the CARES Act. There was no impact on our financial statements for the quarter ended March 31, 2020 and we continue to evaluate how best to account for these funds in our future financial results.Pre-COVID-19 and Post COVID-19 Trends
Please refer to the supplemental information that can be found under Quarterly Results on the Company’s Investor Relations page to access more detailed statistics on pre-COVID-19 and post-COVID-19 trends.Outlook
Joshua L. Proffitt, LHC Group’s Chief Financial Officer, added, “The accelerating organic growth and results we generated in the first 11 weeks of the first quarter combined with our new care model and associated operational strategies under PDGM exceeded our previous expectations. We had a brief but good look at the future of LHC Group – and we really like what we see. With a ramp up of patient volumes anticipated in the second half of the year as elective surgeries begin again and as we are able to fully execute under the PDGM model, we believe we are well positioned for a much higher velocity entering 2021. Working closely with our joint venture partners in hospitals and health systems throughout the country during this pandemic has allowed us to demonstrate our value proposition in real time. With those partnerships proving out every day and the historic consolidation we are anticipating within the in-home healthcare industry only temporarily forestalled due to COVID-19, we believe all of the factors are in place to drive an even more compelling consolidation opportunity than predicted a few months ago.”Conference Call
LHC Group will host a conference call on Friday, May 8, 2020, at 10:00 a.m. Eastern time to discuss its first quarter 2020 results. The toll-free number to call for this interactive teleconference is (866) 393‑1608 (international callers: (973) 890-8327). A telephonic replay of the conference call will be available through midnight on May 15, 2020, by dialing (855) 859‑2056 (international callers: (404) 537-3406) and entering confirmation number 5694184.The Company has posted supplemental financial information on the first quarter results that it will reference during the conference call. The supplemental information can be found under Quarterly Results on the Company’s Investor Relations page. A live webcast 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 one hour following the conclusion of the live broadcast.About LHC Group, Inc.
LHC Group, Inc. is a national provider of in-home healthcare services and innovations, providing high-quality and affordable healthcare services to patients in the privacy and comfort of the home or place of residence. LHC Group’s services cover a wide range of healthcare needs for patients and families dealing with illness, injury, or chronic conditions. The company’s 32,000 employees deliver home health, hospice, home and community based services, and facility-based care in 35 states and the District of Columbia – reaching 60 percent of the U.S. population aged 65 and older. LHC Group is the preferred in-home healthcare partner for 350 leading hospitals around the country.Forward-looking Statements
This press release contains “forward-looking statements” (as defined in the Securities Litigation Reform Act of 1995) regarding, among other things, future events or the future financial performance of the Company, or anticipated benefits of the transaction. Words such as “anticipate,” “expect,” “project,” “intend,” “believe,” “will,” “estimates,” “may,” “could,” “should” and words and terms of similar substance used in connection with any discussion of future plans, actions or events identify forward-looking statements. Forward-looking statements contained in this press release include, but are not limited to: our 2020 revenue and earnings guidance, statements about the benefits of the acquisition, including anticipated earnings accretion, synergies and cost savings and the timing thereof; the Company’s plans, objectives, expectations, projections and intentions; and other statements relating to the transaction that are not historical facts. Forward-looking statements are based on information currently available to the Company and involve estimates, expectations and projections. Investors are cautioned that all such forward-looking statements are subject to risks and uncertainties, and important factors could cause actual events or results to differ materially from those indicated by such forward-looking statements. With respect to the acquisition, these risks, uncertainties and factors include, but are not limited to: the risk that the businesses will not be integrated successfully; the risk that the cost savings, synergies and growth from the transaction may not be fully realized or may take longer to realize than expected; the diversion of management time on integration-related issues; and the risk that costs associated with the integration of the businesses are higher than anticipated. With respect to the Company’s businesses, these risks, uncertainties and factors include, but are not limited to: changes in, or failure to comply with, existing government regulations that impact the Company’s businesses; legislative proposals for healthcare reform; the impact of changes in future interpretations of fraud, anti-kickback, or other laws; changes in Medicare and Medicaid reimbursement levels; changes in laws and regulations with respect to Accountable Care Organizations; changes in the marketplace and regulatory environment for Health Risk Assessments; decrease in demand for the Company’s services; the potential impact of the transaction on relationships with customers, joint venture and other partners, competitors, management and other employees, including the loss of significant contracts or reduction in revenues associated with major payor sources; ability of customers to pay for services; risks related to any current or future litigation proceedings; potential audits and investigations by government and regulatory agencies, including the impact of any negative publicity or litigation; the ability to attract new customers and retain existing customers in the manner anticipated; the ability to hire and retain key personnel; increased competition from other entities offering similar services as offered by the Company; reliance on and integration of information technology systems; ability to protect intellectual property rights; impact of security breaches, cyber-attacks or fraudulent activity on the Company’s reputation; the risks associated with assumptions the parties make in connection with the parties’ critical accounting estimates and legal proceedings; the risks associated with the Company’s expansion strategy, the successful integration of recent acquisitions, and if necessary, the ability to relocate or restructure current facilities; and the potential impact of an economic downturn or effects of tax assessments or tax positions taken, risks related to goodwill and other intangible asset impairment, tax adjustments, anticipated tax rates, benefit or retirement plan costs, or other regulatory compliance costs.Many of these risks, uncertainties and assumptions are beyond the Company’s ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the information currently available to the Company on the date they are made, and the Company does not undertake any obligation to update publicly or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release. The Company does not give any assurance (1) that the Company will achieve its guidance or expectations, or (2) concerning any result or the timing thereof. All subsequent written and oral forward-looking statements concerning the transaction or other matters and attributable to the Company or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.LHC GROUP, INC. AND SUBSIDIARIES
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(Unaudited)(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.
(2) The number of locations for HCBS has been updated to not only include the physical standalone locations but also the locations that are part of a home health provider.RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO LHC GROUP, INC.
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(Unaudited) Expenses and other costs associated with recently announced or completed acquisitions and de novos. ($1.5 million pre-tax in the three months ended March 31, 2020).Expenses associated with the closure or consolidation of 4 locations in the first quarter of 2020 along with residual costs and expenses in connection with the closures in the fourth quarter of 2019. ($0.5 million pre-tax in the three months ended March 31, 2020).COVID-19 related expenses for purchases of personal protective equipment (PPE), supplies and wage adjustments ($2.9 million pre-tax in the three months ended March 31, 2020).Tax benefit related to new legislation in the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which lifts certain tax deduction limitations and eliminates 80% of taxable income limitations for Net Operating Losses (“NOL”), which we are now able to fully utilize NOLs associated with Almost Family prior to the merger.During the first quarter of 2019, the Company recorded $6.0 million of moratoria fair value impairment as a result of the Centers for Medicare and Medicaid Services (“CMS”) action to remove all federal moratoria with regard to Medicare provider enrollment. In assigning fair value acquired in acquisitions as required by ASC 805, Business Combinations, the Company had assigned fair value to Certificates of need or license moratoria, as applicable, in certain states. RECONCILIATION OF EBITDA AND ADJUSTED EBITDA
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