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LHC Group Announces Third Quarter 2008 Results
Company Increases Guidance for Full-Year 2008 - Wednesday, October 29, 2008
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LAFAYETTE, La.--(BUSINESS WIRE)--Oct. 29, 2008--LHC Group, Inc. (NASDAQ: LHCG):
Third Quarter Highlights:
-- Net service revenue of $98.2 million;
-- Net income of $8.0 million; and
-- Diluted earnings per share of $0.45.
LHC Group, Inc. (NASDAQ: LHCG), one of the largest providers of home nursing services in the United States, announced today its financial results for the third quarter and nine months ended September 30, 2008.
The Company also announced that it will be hosting its 2nd annual Investor/Analyst Day to be held at the NASDAQ MarketSite in New York City on November 5, 2008, from 10:30 a.m. to 2:00 p.m. Eastern time. The presentation will include discussions by key-note speakers on corporate strategy, market factors and financial metrics followed by question and answer sessions.
Financial Results for the Third Quarter
- Net service revenue for the third quarter of 2008, increased
26.7% to $98.2 million compared with $77.5 million in 2007.
- Net income for the third quarter of 2008 totaled $8.0 million,
or $0.45 per diluted share, compared with net income of $6.0
million, or $0.34 per diluted share, for the third quarter of
2007.
- Internal growth (which is the combination of organic growth
and internal growth on acquisitions) on Home-Based net service
revenue and Medicare net service revenue for the third quarter
of 2008 was 16.8% and 21.1%, respectively.
- Internal growth on Home-Based average weekly census and
Medicare average weekly census for the third quarter of 2008
was 13.1% and 21.5%, respectively.
- Days sales outstanding, or DSO, for the three months ended
September 30, 2008, was 52 days as compared with 69 days for
the same three-month period in 2007.
- DSO, when adjusted for unbilled accounts receivables from
acquisitions on hold pending change of ownership processing by
fiscal intermediaries, decreased to 49 days as compared with
64 days for the comparable period in 2007.
Financial Results for the Nine Months
In commenting on the results, Keith G. Myers, chief executive officer of LHC Group, said, "We are pleased to report another very strong quarter for the LHC Group family. By every measure, our third quarter results are the best in the history of our company. Our continued ability to deliver a strong return on equity was recently recognized once again when we were named #8 on the Forbes list of "America's 200 Best Small Companies." This is the second year in a row that LHC Group has made the top 10. Although we are proud of the operating results this quarter and this most recent recognition from Forbes, we are most proud of the quality of care being delivered by our dedicated caregivers to the many patients, families and communities we serve each and every day."
Guidance
The Company also announced that it is increasing its guidance for full-year 2008 to revenues of $360 million to $380 million (previously $350 million to $370 million) and fully diluted earnings per share of $1.50 to $1.60 (previously $1.35 to $1.45). The guidance does not take into account any future acquisitions or de novo locations.
Conference Call
The live broadcast of LHC Group's conference call will begin at 11:00 a.m. Eastern time on Thursday, October 30, 2008. Speakers on the call will include Keith Myers, chief executive officer; John Indest, president and chief operating officer, and Pete Roman, senior vice president and chief financial officer. A link to the webcast can be found under the investor relations section of the Company's website, www.lhcgroup.com, or at www.earnings.com. A replay of the webcast will also be archived on LHC Group's website. A telephone replay will be available for one week by dialing (888) 286-8010 (US) or (617) 801-6888 (international) and entering the pass code 55054019.
About LHC Group, Inc.
LHC Group, Inc. is one of the largest providers of home nursing services in the United States providing quality cost effective healthcare services to patients within the comfort and privacy of their home or place of residence.
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by words such as "believe," "expect," "anticipate," "intend," "estimate" or similar expressions. These forward-looking statements include, among other things, statements regarding our financial performance for 2008 and the impact that recent changes in reimbursement and our operations will have on our future results. Forward-looking statements involve a number of risks and uncertainties and there can be no assurance that any forward-looking statements will prove to be accurate. Important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include: changes in reimbursement, changes in government regulations, changes in our relationships with referral sources, increased competition for our services, increased competition for joint venture and acquisition candidates and changes in the interpretation of government regulations. LHC Group undertakes no obligation to update or revise any forward-looking statements. Further information regarding risks, uncertainties and other factors that could adversely affect LHC Group or cause actual results to differ materially from those anticipated in forward-looking statements are included in LHC Group's Form 10K for the year ended December 31, 2007, filed with the Securities and Exchange Commission.
LHC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
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(unaudited) |
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ASSETS |
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Current assets: |
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Cash |
$ 11,674 |
$ 1,155 |
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Receivables: |
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Patient accounts receivable, less allowance for uncollectible accounts of $10,819 and $8,953, respectively |
55,878 |
70,033 |
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Other receivables |
4,488 |
2,425 |
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Amounts due from governmental entities |
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Total receivables, net |
61,587 |
73,917 |
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Deferred income taxes |
4,155 |
2,946 |
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Prepaid expenses and other current assets |
4,312 |
4,423 |
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Assets held for sale |
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Total current assets |
82,164 |
82,997 |
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Property, building and equipment, net |
14,623 |
12,523 |
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Goodwill |
95,156 |
62,227 |
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Intangible assets, net |
18,784 |
14,055 |
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Advance payments on acquisitions |
2,800 |
– |
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Other assets |
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Total assets |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable and other accrued liabilities |
$ 8,648 |
$ 6,103 |
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Salaries, wages and benefits payable |
17,491 |
11,303 |
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Amounts due to governmental entities |
6,023 |
3,162 |
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Income taxes payable |
4,526 |
863 |
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Current portion of capital lease obligations |
77 |
88 |
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Current portion of long-term debt |
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Total current liabilities |
37,296 |
21,952 |
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Deferred income taxes, less current portion |
4,949 |
3,243 |
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Capital lease obligations |
– |
63 |
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Long-term debt, less current portion |
4,579 |
2,847 |
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Minority interests subject to exchange contracts and/or put options |
85 |
121 |
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Other minority interests |
3,914 |
3,388 |
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Stockholders’ equity: |
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Common stock — $0.01 par value: 40,000,000 shares authorized; 20,836,612 and 20,725,713 shares issued and 17,882,824 and 17,775,284 shares outstanding, respectively |
179 |
177 |
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Treasury stock – 2,953,788 and 2,950,429 shares at cost, respectively |
(2,939) |
(2,866) |
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Additional paid-in capital |
84,684 |
81,983 |
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Retained earnings |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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LHC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except share and per share data)
(unaudited)
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Three Months Ended
September 30, |
Nine Months Ended
September 30, |
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Net service revenue |
$ 98,166 |
$ 77,495 |
$ 271,755 |
$ 216,786 |
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Cost of service revenue |
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Gross margin |
50,189 |
37,516 |
136,323 |
106,110 |
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Provision for bad debts |
3,158 |
2,230 |
10,467 |
6,109 |
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General and administrative expenses |
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Operating income |
16,344 |
10,768 |
39,573 |
31,552 |
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Interest expense |
(128) |
(96) |
(356) |
(273) |
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Non-operating income |
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Income from continuing operations before income taxes and minority interest allocations |
16,290 |
11,030 |
40,099 |
32,234 |
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Income tax expense |
5,243 |
3,377 |
12,513 |
10,246 |
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Minority interest |
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Income from continuing operations |
8,035 |
6,240 |
19,876 |
17,661 |
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Loss from discontinued operations
(net of income tax benefit of $2, $157, $110 and $539, respectively) |
(3) |
(246) |
(171) |
(843) |
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Gain on sale of discontinued operations
(net of income taxes of $20 in the three and nine months ended September 30, 2007) |
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Net income |
8,032 |
6,025 |
19,705 |
16,849 |
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Redeemable minority interests |
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Net income available to common stockholders |
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Earnings per share — basic and diluted: |
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Income from continuing operations |
$ 0.45 |
$ 0.35 |
$ 1.11 |
$ 0.99 |
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Loss from discontinued operations, net |
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Net income |
0.45 |
0.34 |
1.10 |
0.94 |
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Redeemable minority interests |
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Net income available to common shareholders |
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Weighted average shares outstanding: |
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Basic |
17,881,228 |
17,766,612 |
17,843,869 |
17,756,537 |
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Diluted |
18,001,397 |
17,794,072 |
17,978,038 |
17,823,237 |
LHC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
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Nine Months Ended
September 30, |
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Operating activities |
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Net income |
$ 19,705 |
$ 16,849 |
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Adjustments to reconcile net income to net cash
provided by operating activities: |
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Depreciation and amortization expense |
2,730 |
2,201 |
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Provision for bad debts |
10,820 |
7,291 |
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Stock-based compensation expense |
1,380 |
758 |
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Minority interest in earnings of subsidiaries |
7,395 |
3,932 |
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Deferred income taxes |
497 |
(678) |
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Gain on sale of assets |
(343) |
– |
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Changes in operating assets and liabilities, net of acquisitions: |
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Receivables |
1,199 |
(17,390) |
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Prepaid income taxes |
788 |
(519) |
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Prepaid expenses and other assets |
– |
(318) |
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Accounts payable and accrued expenses |
12,094 |
2,890 |
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Net amounts due governmental entities |
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Net cash provided by operating activities |
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Investing activities |
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Purchases of property, building, and equipment |
(7,351) |
(2,634) |
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Proceeds from sale of assets |
3,094 |
– |
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Cash paid for acquisitions, primarily goodwill and intangible assets |
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Net cash used in investing activities |
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Financing activities |
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Proceeds from line of credit |
32,851 |
– |
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Payments on line of credit |
(32,851) |
– |
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Proceeds from debt issuance |
5,050 |
– |
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Principal payments on debt |
(3,220) |
(159) |
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Payments on capital leases |
(74) |
(175) |
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Excess tax benefits from vesting of restricted stock |
34 |
89 |
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Proceeds from employee stock purchase plan |
385 |
303 |
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Minority interest distributions, net |
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Net cash provided by (used in) financing activities |
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Change in cash |
10,519 |
(14,018) |
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Cash at beginning of period |
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Cash at end of period |
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Supplemental disclosures of cash flow information |
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Interest paid |
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Income taxes paid |
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LHC GROUP, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(in thousands)
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Three Months Ended
September 30, 2008 |
Nine Months Ended
September 30, 2008 |
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Net service revenue |
$ 84,514 |
$ 13,652 |
$ 98,166 |
$ 229,296 |
$ 42,459 |
$ 271,755 |
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Cost of service revenue |
39,916 |
8,061 |
47,977 |
110,738 |
24,694 |
135,432 |
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Provision for bad debts |
2,759 |
399 |
3,158 |
9,090 |
1,377 |
10,467 |
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General and administrative expenses |
27,696 |
2,991 |
30,687 |
75,915 |
10,368 |
86,283 |
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Operating income |
14,143 |
2,201 |
16,344 |
33,553 |
6,020 |
39,573 |
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Interest expense |
(113) |
(15) |
(128) |
(276) |
(80) |
(356) |
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Non-operating income |
58 |
16 |
74 |
703 |
179 |
882 |
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Income from continuing operations before income taxes and minority interest |
14,088 |
2,202 |
16,290 |
33,980 |
6,119 |
40,099 |
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Minority interest |
2,754 |
258 |
3,012 |
6,471 |
1,239 |
7,710 |
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Income from continuing operations before income taxes |
11,334 |
1,944 |
13,278 |
27,509 |
4,880 |
32,389 |
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Total assets |
$ 194,672 |
$ 21,893 |
$ 216,565 |
$ 194,672 |
$ 21,893 |
$ 216,565 |
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Three Months Ended
September 30, 2007 |
Nine Months Ended
September 30, 2007 |
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Net service revenue |
$ 63,217 |
$ 14,278 |
$ 77,495 |
$ 176,275 |
$ 40,511 |
$ 216,786 |
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Cost of service revenue |
31,135 |
8,844 |
39,979 |
84,874 |
25,802 |
110,676 |
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Provision for bad debts |
1,390 |
840 |
2,230 |
4,036 |
2,073 |
6,109 |
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General and administrative expenses |
20,717 |
3,801 |
24,518 |
56,703 |
11,746 |
68,449 |
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Operating income |
9,975 |
793 |
10,768 |
30,662 |
890 |
31,552 |
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Interest expense |
(64) |
(32) |
(96) |
(180) |
(93) |
(273) |
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Non-operating income |
246 |
112 |
358 |
661 |
294 |
955 |
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Income from continuing operations before income taxes and minority interest |
10,157 |
873 |
11,030 |
31,143 |
1,091 |
32,234 |
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Minority interest |
1,264 |
149 |
1,413 |
3,673 |
654 |
4,327 |
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Income from continuing operations before income taxes |
8,893 |
724 |
9,617 |
27,470 |
437 |
27,907 |
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Total assets |
$ 148,909 |
$ 28,771 |
$ 177,680 |
$ 148,909 |
$ 28,771 |
$ 177,680 | |
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