updated 3/2/2011 5:47:57 PM ET 2011-03-02T22:47:57

Highlights:

  • Net service revenue was $168.1 million for the fourth quarter of 2010 and $635.0 million for full‑year 2010;
  • Diluted earnings per share was $0.63 for the fourth quarter of 2010 and $2.68 for full‑year 2010; and
  • Organic growth in net revenue was 11.4% for the fourth quarter of 2010 and organic growth in total new admissions was 11.5% for the fourth quarter of 2010.

LAFAYETTE, La., March 2, 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 months and year ended December 31, 2010.

Financial Results for the Fourth Quarter

  • Net service revenue for the fourth quarter of 2010 increased 18.8% to $168.1 million compared with $141.5 million for the same period in 2009. Net service revenue for the fourth quarter of 2010 reflects a decrease of approximately $1.8 million related to the reduction in fiscal year 2011 home health reimbursement rates of approximately 5% that affected episodes in November and December of 2010.
  • Net income attributable to LHC Group for the fourth quarter of 2010 decreased 9.6% to $11.4 million compared with $12.7 million for the same period in 2009. Net income attributable to LHC Group for the fourth quarter of 2010 includes costs associated with converting multiple home health and hospice information systems to two systems. These costs were approximately $1.6 million or $0.05 in diluted earnings per share in the fourth quarter.
  • Diluted earnings per share decreased 10.0% to $0.63 for the fourth quarter of 2010 compared with $0.70 for the same period in 2009.

Financial Results for the Year

  • Net service revenue for the year ended December 31, 2010, increased 19.4% to $635.0 million compared with $532.0 million for the same period in 2009.
  • Net income attributable to LHC Group for the year ended December 31, 2010, increased 11.2% to $48.8 million compared with $43.9 million for the same period in 2009.
  • Diluted earnings per share increased 10.3% to $2.68 for the year ended December 31, 2010, compared with $2.43 for the same period in 2009.

Guidance

The Company also announced its net revenue and fully diluted earnings per share guidance for fiscal-year 2011. Fiscal-year net service revenue is expected to be in the range of $660 million to $670 million and fully diluted earnings per share is expected to be in the range of $2.15 to $2.25.  This guidance does not take into account the impact of any future acquisitions or share repurchases, if made, or de novo locations, if opened, or future reimbursement changes, if any.

In commenting on the results, Keith G. Myers, Chief Executive Officer of LHC Group, said, "We are pleased with our operating results and the overall performance of our company and our team in 2010.  Despite the challenges of absorbing a 5.2% reduction in Medicare reimbursement for home health services, which affected episodes of care in the last two months of 2010, we ended the year with excellent organic volume growth in new admissions of 13.1% and organic revenue growth of 12.6%.  With regard to external growth, we acquired 30 locations through 14 separate transactions in 2010 and nine locations through five separate transactions in the first two months of 2011.  Most importantly, our team of dedicated caregivers in communities throughout the country continues to provide the highest quality of care to the patients, families and communities we serve day in and day out.  As we look ahead to the remainder of 2011 and beyond, we are well prepared and well positioned to continue increasing shareholder value by controlling cost and capitalizing on the opportunities we see ahead for both internal and external volume growth."

Conference Call

LHC Group will host a conference call on Thursday, March 3, 2011, at 11:00 a.m. Eastern time to discuss its 2010 results and 2011 guidance. 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, March 4, 2011, by dialing (800) 642-1687 (international callers should call 706-645-9291) and entering confirmation number 34672807. 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, 2009, 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)
   
     
  Dec. 31,

2010
Dec. 31,

2009
ASSETS
     
Current assets:    
Cash $ 288 $ 394
Receivables:    
Patient accounts receivable, less allowance for uncollectible accounts

 of $9,769 and $8,262, respectively
80,055 75,033
Other receivables 5,094 3,850
Amounts due from governmental entities 429 1,184
 Total receivables, net 85,578 80,067
Deferred income taxes 5,941 4,370
Prepaid income taxes 5,326 3,131
Prepaid expenses and other current assets 10,015 8,798
 Total current assets 107,148 96,760
Property, building and equipment, net of accumulated depreciation

 of $15,329 and $15,030, respectively
26,862 21,361
Goodwill 157,338 139,474
Intangible assets, net of accumulated amortization of $1,499 and $747, respectively 54,051 46,851
Advance payment on acquisitions 6,947 1,209
Other assets 4,959 1,960
 Total assets $ 357,305 $ 307,615
     
LIABILITIES AND STOCKHOLDERS' EQUITY
     
Current liabilities:    
Accounts payable and other accrued liabilities $ 21,017 $ 22,255
Salaries, wages and benefits payable 27,289 22,521
Amounts due to governmental entities 3,159 3,208
Current portion of long-term debt 387
 Total current liabilities 51,465 48,371
Deferred income taxes 16,817 12,475
Revolving credit facility 5,723
Long-term debt, less current portion 4,096
Other long-term obligations 1,567
 Total liabilities 68,282 72,232
Noncontrolling interest- redeemable 13,535 13,823
Stockholders' equity:    
Common stock – $0.01 par value: 40,000,000 shares authorized;

 21,180,286 and 20,967,418 shares issued and 18,172,022 and 17,990,685 shares outstanding, respectively
181 179
Treasury stock – 3,008,264 and 2,976,733 shares at cost, respectively (4,453) (3,513)
Additional paid-in capital 91,017 86,310
Retained earnings 186,996 138,196
 Total LHC Group, Inc. stockholders' equity 273,741 221,172
Noncontrolling interest- non-redeemable 1,747 388
Total equity 275,488 221,560
Total liabilities and equity $ 357,305 $ 307,615
LHC GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands, except share and per share data)

(unaudited)
   
  Three Months Ended

December 31,
Year Ended

December 31,
  2010 2009 2010 2009
Net service revenue $ 168,058 $ 141,492 $ 635,031 $ 531,980
Cost of service revenue 87,535 71,856 329,985 270,515
Gross margin 80,523 69,636 305,046 261,465
Provision for bad debts 2,307 585 7,607 4,724
General and administrative expenses 55,329 45,294 201,837 171,695
Operating income 22,887 23,757 95,602 85,046
Interest expense  (51) (24) (134) (142)
Loss on the sale of assets and entities  – (7) (22)
Non-operating income (loss) 93 64 812 (239)
Income from continuing operations before income taxes and noncontrolling interest 22,929 23,797 96,273 84,643
Income tax expense 7,606 7,989 31,727 26,743
Income from continuing operations 15,323 15,808 64,546 57,900
Loss from discontinued operations, net of income tax benefit of $7 and $55, respectively (11) (86)
Net income 15,323 15,797 64,546 57,814
Less net income attributable to noncontrolling interest 3,879 3,132 15,787 13,973
Net income attributable to LHC Group, Inc. 11,444 12,665 48,759 43,841
Redeemable noncontrolling interest 41 45
Net income attributable to LHC Group, Inc.'s common stockholders $ 11,444 $ 12,665 $ 48,800 $ 43,886
         
Earnings per share – basic:        
Income from continuing operations attributable to LHC Group, Inc. $ 0.63 $ 0.70 $ 2.69 $ 2.44
Loss from discontinued operations attributable to LHC Group, Inc.
Net income attributable to LHC Group, Inc. 0.63 0.70 2.69 2.44
Redeemable noncontrolling interest
Net income attributable to LHC Group, Inc.'s common stockholders $ 0.63 $ 0.70 $ 2.69 $ 2.44
         
Earnings per share – diluted:        
Income from continuing operations attributable to LHC Group, Inc. $ 0.63 $ 0.70 $ 2.68 $ 2.43
Loss from discontinued operations attributable to LHC Group, Inc.
Net income attributable to LHC Group, Inc. 0.63 0.70 2.68 2.43
Redeemable noncontrolling interest
Net income attributable to LHC Group, Inc.'s common stockholders $ 0.63 $ 0.70 $ 2.68 $ 2.43
         
Weighted average shares outstanding:        
Basic 18,166,586 17,985,169 18,119,183 17,960,376
Diluted 18,294,369 18,169,052 18,226,091 18,069,897
LHC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
  Year Ended

December 31,
  2010 2009
Operating activities    
Net income $ 64,546 $ 57,814
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization expense 7,496 4,831
Provision for bad debts 7,607 4,724
Stock-based compensation expense 3,742 2,393
Deferred income taxes 2,771 4,646
Loss on impairment of intangible assets 542
Changes in operating assets and liabilities, net of acquisitions:    
Receivables (16,195) (19,278)
Prepaid expenses and other assets (4,513) (4,747)
Accounts payable and accrued expenses 5,777 (168)
Net amounts due to/from governmental entities 706 (1,565)
Net cash provided by operating activities  71,937 49,192
     
Investing activities    
Purchases of property, building, and equipment (11,586) (8,236)
Cash paid for acquisitions, primarily goodwill and intangible assets and advance payment on acquisitions (31,747) (33,427)
Net cash used in investing activities  (43,333) (41,663)
     
Financing activities    
Proceeds from line of credit 9,023 69,206
Payments on line of credit (14,746) (63,483)
Principal payments on debt (4,483) (508)
Payment of deferred financing fees (498) (263)
Payments on capital leases (31) (80)
Payment of contingent consideration (1,726)
Excess tax benefits from vesting of restricted stock 476 121
Proceeds from exercise of stock options 74
Proceeds from employee stock purchase plan 781 618
Purchase of additional controlling interest (1,914) (2,286)
Noncontrolling interest distributions (15,666) (13,971)
Net cash used in financing activities (28,710) (10,646)
Change in cash (106) (3,117)
Cash at beginning of period 394 3,511
Cash at end of period $ 288 $ 394
     
Supplemental disclosures of cash flow information    
Interest paid $ 134 $ 142
Income taxes paid $ 30,605 $ 35,869
LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(amounts in thousands)

(unaudited)
   
  Three Months Ended

December 31, 2010
Year Ended

December 31, 2010
  Home-Based

Services
Facility-Based

Services
Total Home-Based

Services
Facility-Based

Services
Total
Net service revenue $ 147,552 $ 20,506 $ 168,058 $ 558,574 $ 76,457 $ 635,031
Cost of service revenue 74,910 12,625 87,535 284,477 45,508 329,985
Provision for bad debts 1,937 370 2,307 7,078 529 7,607
General and administrative expenses 49,797 5,532 55,329 182,750 19,087 201,837
Operating income 20,908 1,979 22,887 84,269 11,333 95,602
Interest expense (41) (10) (51) (116) (18) (134)
Non-operating income 83 10 93 746 59 805
Income from continuing operations before income taxes and noncontrolling interest 20,950 1,979 22,929 84,899 11,374 96,273
Income tax expense 6,841 765 7,606 28,613 3,114 31,727
Income from continuing operations 14,109 1,214 15,323 56,286 8,260 64,546
Noncontrolling interest 3,548 331 3,879 14,170 1,617 15,787
Net income attributable to

 LHC Group, Inc.
$ 10,561 $ 883 $ 11,444 $ 42,116 $ 6,643 $ 48,759
             
Total assets $ 319,447 $ 37,858 $ 357,305 $ 319,447 $ 37,858 $ 357,305
  Three Months Ended

December 31, 2009
Year Ended

December 31, 2009
  Home-Based

Services
Facility-Based

Services
Total Home-Based

Services
Facility-Based

Services
Total
Net service revenue $ 124,668 $ 16,824 $ 141,492 $ 469,470 $ 62,510 $ 531,980
Cost of service revenue 62,684 9,172 71,856 234,131 36,384 270,515
Provision for bad debts 54 531 585 4,199 525 4,724
General and administrative expenses 41,188 4,106 45,294 155,670 16,025 171,695
Operating income 20,742 3,015 23,757 75,470 9,576 85,046
Interest expense (22) (2) (24) (126) (16) (142)
Non-operating income (loss), including gain on sale of assets 66 (2) 64 (299) 38 (261)
Income from continuing operations before income taxes and noncontrolling interest 20,786 3,011 23,797 75,045 9,598 84,643
Income tax expense 7,246 743 7,989 24,082 2,661 26,743
Income from continuing operations 13,540 2,268 15,808 50,963 6,937 57,900
Loss from discontinued operations 11 11 86 86
Noncontrolling interest 2,707 425 3,132 12,527 1,446 13,973
Net income attributable to

 LHC Group, Inc.
$ 10,833 $ 1,832 $ 12,665 $ 38,436 $ 5,405 $ 43,841
             
Total assets $ 280,798 $ 26,817 $ 307,615 $ 280,798 $ 26,817 $ 307,615
     
LHC GROUP, INC. AND SUBSIDIARIES

SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA

(unaudited)
   
  Three Months Ended

December 31,
Year Ended

December 31,
  2010 2009 2010 2009
Key Data:        
Home-Based Services:        
Home Health locations 257 230 257 230
Hospice locations 26 21 26 21
Acquired (1) 3 4 26 16
De novo (1) 4 3 12 13
Home Health:        
Total new admissions (2) 24,612 20,293 92,764 76,286
Medicare new admissions (2) 17,200 14,879 66,826 55,863
Average weekly census 34,030 29,706 32,375 28,721
Average Medicare weekly census 26,336 23,512 25,541 22,994
Medicare completed and billed episodes 44,745 37,967 166,803 147,299
Average Medicare case mix for completed and billed Medicare episodes 1.27 1.26 1.27 1.26
Average reimbursement per completed and billed Medicare episodes $ 2,457 $ 2,423 $ 2,531 $ 2,432
Total visits 902,346 783,270 3,412,114 2,961,056
Total Medicare visits 683,605 604,473 2,632,269 2,317,996
Average visits per completed and billed Medicare episodes 15.3 15.9 15.8 15.7
Organic growth (3):        
Net revenue 11.4% 11.6% 12.6% 27.5%
Net Medicare revenue 10.2% 8.0% 11.4% 27.2%
Total new admissions 11.5% 7.1% 13.1% 14.5%
Medicare new admissions  8.0% 6.4% 13.5% 12.4%
Average weekly census 6.2% 4.3% 4.5% 15.5%
Average Medicare weekly census 5.4% 3.5% 4.6% 17.3%
Medicare completed and billed episodes 12.9% 10.7% 8.6% 25.2%
         
Facility-Based Services:        
Long-term Acute Care Hospital locations 9 8 9 8
Acquired (1) 0 0 1 0
Patient days 16,979 13,331 61,658 51,235
Patient acuity mix  1.02 0.99 1.02 1.00
         
(1) Inclusive of both home health and hospice agencies.        
(2) 2009 admission information revised to reflect patients who converted from traditional Medicare to a Medicare Advantage Plan during an episode of care.        
(3) 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

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