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LAFAYETTE, La., Nov. 2, 2022 /PRNewswire/ -- LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the quarter ended September 30, 2022.
Third Quarter 2022 Financial Results
A reconciliation of all non-GAAP financial results in this release appears on pages 8-9.
In light of the pending acquisition of the Company by UnitedHealth Group Incorporated ("UNH"), LHC Group will not conduct a quarterly earnings call to discuss the third quarter results.
About LHC Group, Inc.
LHC Group, Inc. is a national provider of in-home healthcare services and innovations for communities around the nation, offering quality, value-based healthcare to patients primarily within the comfort and privacy of their home or place of residence. The company's 29,000 employees deliver home health, hospice, home- and community-based services, and facility-based care in 37 states and the District of Columbia – reaching 68 percent of the U.S. population aged 65 and older. Through Imperium Health, the company's ACO management and enablement company, LHC Group helps partners improve both savings and patient outcomes with a value-based approach. As the preferred joint venture partner for more than 400 leading U.S. hospitals and health systems, LHC Group works in cooperation with providers to customize each partnership and reach more patients and families with an effective and efficient model of care.
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 the timing or anticipated benefits of pending acquisition of the Company by UnitedHealth Group Incorporated. 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 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. These risks, uncertainties and other factors include, but are not limited to, those discussed and described in our most recent Annual Report on Form 10-K, including those risks described in Part I, Item 1A. Risk Factors thereof, and in other reports filed subsequently by us with the Securities and Exchange Commission and, with respect to the pending acquisition of the Company by UnitedHealth Group Incorporated, include, but are not limited to, those discussed in the proxy statement filed by the Company with the SEC on May 17, 2022. All forward-looking statements included in this document are based on information available to us on the date hereof, and the Company assumes no obligation to update any such forward-looking statements to reflect future events or circumstances, except as required by law.
LHC GROUP, INC. AND SUBSIDIARIES | |||
September 30, | December 31, | ||
ASSETS | |||
Current assets: | |||
Cash | $ 10,522 | $ 9,809 | |
Receivables: | |||
Patient accounts receivable | 331,524 | 348,820 | |
Other receivables | 30,217 | 13,780 | |
Total receivables | 361,741 | 362,600 | |
Prepaid income taxes | 19,303 | 7,531 | |
Prepaid expenses | 23,128 | 28,401 | |
Other current assets | 25,687 | 24,801 | |
Total current assets | 440,381 | 433,142 | |
Property, building and equipment, net of accumulated depreciation of $110,600 and $98,394, respectively | 153,806 | 153,959 | |
Goodwill | 1,750,420 | 1,748,426 | |
Intangible assets, net of accumulated amortization of $22,865 and $19,152, respectively | 395,309 | 400,002 | |
Operating lease right of use asset | 108,975 | 113,399 | |
Other assets | 65,263 | 46,693 | |
Total assets | $ 2,914,154 | $ 2,895,621 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable and other accrued liabilities | $ 108,748 | $ 98,118 | |
Salaries, wages, and benefits payable | 84,412 | 100,532 | |
Self-insurance reserves | 38,734 | 33,784 | |
Contract liabilities - deferred revenue | 4,840 | 106,489 | |
Current operating lease payable | 36,998 | 37,630 | |
Amounts due to governmental entities | 2,499 | 5,447 | |
Current liabilities - deferred employer payroll tax | 26,790 | 26,790 | |
Total current liabilities | 303,021 | 408,790 | |
Deferred income taxes | 87,661 | 70,026 | |
Income taxes payable | 7,988 | 7,320 | |
Revolving credit facility | 738,000 | 661,197 | |
Long-term operating lease liabilities | 74,992 | 78,688 | |
Total liabilities | 1,211,662 | 1,226,021 | |
Noncontrolling interest — redeemable | 16,978 | 17,501 | |
Commitments and contingencies | |||
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; 60,000,000 shares authorized; 36,733,790 and 36,549,524 shares issued, and 30,587,735 and 30,634,414 shares outstanding, respectively | 367 | 365 | |
Treasury stock — 6,146,055 and 5,915,110 shares at cost, respectively | (195,447) | (164,790) | |
Additional paid-in capital | 997,115 | 979,642 | |
Retained earnings | 798,372 | 751,025 | |
Total LHC Group, Inc. stockholders' equity | 1,600,407 | 1,566,242 | |
Noncontrolling interest — non-redeemable | 85,107 | 85,857 | |
Total stockholders' equity | 1,685,514 | 1,652,099 | |
Total liabilities and stockholders' equity | $ 2,914,154 | $ 2,895,621 |
LHC GROUP, INC. AND SUBSIDIARIES | |||||||
Three months ended September 30, | Nine months ended September 30, | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Net service revenue | $ 576,913 | $ 565,451 | $ 1,724,601 | $ 1,636,193 | |||
Cost of service revenue (excluding depreciation and amortization) | 347,772 | 343,862 | 1,052,093 | 972,006 | |||
Gross margin | 229,141 | 221,589 | 672,508 | 664,187 | |||
General and administrative expenses | 189,051 | 176,444 | 569,800 | 506,754 | |||
Impairment of intangibles and other | 2,059 | — | 4,130 | 937 | |||
Operating income | 38,031 | 45,145 | 98,578 | 156,496 | |||
Interest expense | (9,053) | (1,135) | (19,631) | (1,541) | |||
Income before income taxes and noncontrolling interest | 28,978 | 44,010 | 78,947 | 154,955 | |||
Income tax expense | 6,966 | 10,150 | 17,014 | 32,909 | |||
Net income | 22,012 | 33,860 | 61,933 | 122,046 | |||
Less net income attributable to noncontrolling interests | 4,703 | 6,126 | 14,586 | 22,010 | |||
Net income attributable to LHC Group, Inc.'s common stockholders | $ 17,309 | $ 27,734 | $ 47,347 | $ 100,036 | |||
Earnings per share: | |||||||
Basic | $ 0.57 | $ 0.89 | $ 1.55 | $ 3.21 | |||
Diluted | $ 0.56 | $ 0.88 | $ 1.55 | $ 3.18 | |||
Weighted average shares outstanding: | |||||||
Basic | 30,565 | 31,238 | 30,527 | 31,205 | |||
Diluted | 30,706 | 31,434 | 30,639 | 31,422 |
LHC GROUP, INC. AND SUBSIDIARIES | |||
Nine months ended September 30, | |||
2022 | 2021 | ||
Operating activities: | |||
Net income | $ 61,933 | $ 122,046 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization expense | 17,483 | 14,899 | |
Amortization of operating lease right of use asset | 30,769 | 27,526 | |
Stock-based compensation expense | 15,290 | 11,717 | |
Deferred income taxes | 17,635 | 23,356 | |
Loss (gain) on disposal of assets | 484 | (1,190) | |
Impairment of intangibles and other | 4,130 | 937 | |
Changes in operating assets and liabilities, net of acquisitions: | |||
Receivables | (684) | (27,038) | |
Prepaid expenses | 5,273 | 397 | |
Other assets | (4,208) | (6,368) | |
Prepaid income taxes | (11,772) | (11,575) | |
Prepaid taxes | — | (12,509) | |
Accounts payable and accrued expenses | 16,282 | 6,626 | |
Salaries, wages, and benefits payable | (11,251) | (9,687) | |
Contract liabilities - deferred revenue | (101,649) | (141,629) | |
Operating lease liabilities | (30,568) | (27,472) | |
Income taxes payable | 668 | (20,819) | |
Net amounts due to/from governmental entities | 223 | (833) | |
Net cash provided by (used in) operating activities | 10,038 | (51,616) | |
Investing activities: | |||
Purchases of property, building and equipment | (14,074) | (23,548) | |
Proceeds from sale of property, building and equipment | — | 3,350 | |
Cash paid for acquisitions, net of cash acquired | (2,570) | (383,475) | |
Purchase of intangible assets | (100) | — | |
Proceeds from sale of an entity | — | 1,531 | |
Minority interest investments | (15,250) | (10,100) | |
Net cash used in investing activities | (31,994) | (412,242) | |
Financing activities: | |||
Proceeds from line of credit | 815,155 | 544,056 | |
Payments on line of credit | (738,352) | (209,056) | |
Government stimulus advance | — | (93,257) | |
Proceeds from employee stock purchase plan | 1,840 | 1,877 | |
Payments on deferred financing fees | — | (2,855) | |
Payments on repurchasing common stock | (34,565) | — | |
Noncontrolling interest distributions | (16,346) | (22,187) | |
Withholding taxes paid on stock-based compensation | (4,630) | (11,594) | |
Purchase of additional controlling interest | (433) | (2,113) | |
Sale of noncontrolling interest | — | 1,934 | |
Net cash provided by financing activities | 22,669 | 206,805 | |
Change in cash | 713 | (257,053) | |
Cash at beginning of period | 9,809 | 286,569 | |
Cash at end of period | $ 10,522 | $ 29,516 |
LHC GROUP, INC. AND SUBSIDIARIES | |||
Supplemental disclosures of cash flow information: | |||
Interest paid | $ 18,049 | $ 1,532 | |
Income taxes paid | $ 10,701 | $ 42,036 | |
Non-Cash Operating Activity: | |||
Operating right of use assets in exchange for lease obligations | $ 28,435 | $ 41,776 | |
Reduction to right of use assets and liabilities | $ 2,089 | $ 2,746 | |
Non-Cash Investing Activity: | |||
Net working capital adjustment | $ 1,440 | $ — | |
Accrued capital expenditures | $ 126 | $ 1,807 |
LHC GROUP, INC. AND SUBSIDIARIES | |||||||||||
Three months ended September 30, 2022 | |||||||||||
Home health | Hospice | Home and | Facility- | HCI | Total | ||||||
Net service revenue | $ 373,335 | $ 103,799 | $ 47,978 | $ 31,441 | $ 20,360 | $ 576,913 | |||||
Cost of service revenue (excluding depreciation and amortization) | 217,790 | 68,951 | 35,727 | 22,549 | 2,755 | 347,772 | |||||
General and administrative expenses | 126,052 | 32,384 | 11,893 | 12,098 | 6,624 | 189,051 | |||||
Impairment of intangibles and other | — | 1,590 | 469 | — | — | 2,059 | |||||
Operating income (loss) | 29,493 | 874 | (111) | (3,206) | 10,981 | 38,031 | |||||
Interest expense | (6,347) | (1,356) | (808) | (362) | (180) | (9,053) | |||||
Income (loss) before income taxes and noncontrolling interest | 23,146 | (482) | (919) | (3,568) | 10,801 | 28,978 | |||||
Income tax expense (benefit) | 5,723 | (439) | (165) | (927) | 2,774 | 6,966 | |||||
Net income (loss) | 17,423 | (43) | (754) | (2,641) | 8,027 | 22,012 | |||||
Less net income (loss) attributable to non controlling interests | 3,838 | 1,269 | (125) | (439) | 160 | 4,703 | |||||
Net income (loss) attributable to LHC Group, Inc.'s common stockholder | $ 13,585 | $ (1,312) | $ (629) | $ (2,202) | $ 7,867 | $ 17,309 | |||||
Total assets | $ 1,717,209 | $ 798,668 | $ 238,082 | $ 80,223 | $ 79,972 | $ 2,914,154 |
LHC GROUP, INC. AND SUBSIDIARIES | |||||||||||
Three months ended September 30, 2021 | |||||||||||
Home health | Hospice | Home and | Facility- | HCI | Total | ||||||
Net service revenue | $ 386,699 | $ 82,653 | $ 45,800 | $ 32,415 | $ 17,884 | $ 565,451 | |||||
Cost of service revenue (excluding depreciation and amortization) | 230,839 | 51,631 | 34,386 | 23,725 | 3,281 | 343,862 | |||||
General and administrative expenses | 126,695 | 22,548 | 11,764 | 11,050 | 4,387 | 176,444 | |||||
Operating income (loss) | 29,165 | 8,474 | (350) | (2,360) | 10,216 | 45,145 | |||||
Interest expense | (811) | (139) | (109) | (54) | (22) | (1,135) | |||||
Income (loss) before income taxes and noncontrolling interest | 28,354 | 8,335 | (459) | (2,414) | 10,194 | 44,010 | |||||
Income tax expense (benefit) | 6,407 | 1,874 | (99) | (554) | 2,522 | 10,150 | |||||
Net income (loss) | 21,947 | 6,461 | (360) | (1,860) | 7,672 | 33,860 | |||||
Less net income (loss) attributable to noncontrolling interests | 5,157 | 1,085 | 77 | (187) | (6) | 6,126 | |||||
Net income (loss) attributable to LHC Group, Inc.'s common stockholders | $ 16,790 | $ 5,376 | $ (437) | $ (1,673) | $ 7,678 | $ 27,734 | |||||
Total assets | $ 1,632,670 | $ 681,954 | $ 239,452 | $ 83,276 | $ 75,334 | $ 2,712,686 |
LHC GROUP, INC. AND SUBSIDIARIES | |||||||||||
Nine months ended September 30, 2022 | |||||||||||
Home health | Hospice | Home and | Facility- | HCI | Total | ||||||
Net service revenue | $ 1,154,009 | $ 308,322 | $ 137,036 | $ 94,289 | $ 30,945 | $ 1,724,601 | |||||
Cost of service revenue (excluding depreciation and amortization) | 674,508 | 202,864 | 96,470 | 69,584 | 8,667 | 1,052,093 | |||||
General and administrative expenses | 387,482 | 97,152 | 35,755 | 35,737 | 13,674 | 569,800 | |||||
Impairment of intangibles and other | 930 | 2,677 | 523 | — | — | 4,130 | |||||
Operating income (loss) | 91,089 | 5,629 | 4,288 | (11,032) | 8,604 | 98,578 | |||||
Interest expense | (13,805) | (2,803) | (1,785) | (851) | (387) | (19,631) | |||||
Income (loss) before income taxes and noncontrolling interest | 77,284 | 2,826 | 2,503 | (11,883) | 8,217 | 78,947 | |||||
Income tax expense (benefit) | 17,057 | (3) | 680 | (2,849) | 2,129 | 17,014 | |||||
Net income (loss) | 60,227 | 2,829 | 1,823 | (9,034) | 6,088 | 61,933 | |||||
Less net income (loss) attributable to non controlling interests | 12,758 | 2,837 | (74) | (1,085) | 150 | 14,586 | |||||
Net income (loss) attributable to LHC Group, Inc.'s common stockholder | $ 47,469 | $ (8) | $ 1,897 | $ (7,949) | $ 5,938 | $ 47,347 |
LHC GROUP, INC. AND SUBSIDIARIES | |||||||||||
Nine months ended September 30, 2021 | |||||||||||
Home health | Hospice | Home and | Facility- | HCI | Total | ||||||
Net service revenue | $ 1,157,061 | $ 209,191 | $ 143,332 | $ 96,814 | $ 29,795 | $ 1,636,193 | |||||
Cost of service revenue (excluding depreciation and amortization) | 663,137 | 129,848 | 103,941 | 65,360 | 9,720 | 972,006 | |||||
General and administrative expenses | 369,337 | 58,789 | 35,216 | 33,213 | 10,199 | 506,754 | |||||
Impairment of intangibles and other | 937 | — | — | — | — | 937 | |||||
Operating income (loss) | 123,650 | 20,554 | 4,175 | (1,759) | 9,876 | 156,496 | |||||
Interest expense | (1,099) | (195) | (143) | (73) | (31) | (1,541) | |||||
Income (loss) before income taxes and noncontrolling interest | 122,551 | 20,359 | 4,032 | (1,832) | 9,845 | 154,955 | |||||
Income tax expense (benefit) | 26,003 | 4,221 | 889 | (649) | 2,445 | 32,909 | |||||
Net income (loss) | 96,548 | 16,138 | 3,143 | (1,183) | 7,400 | 122,046 | |||||
Less net income (loss) attributable to non controlling interests | 17,506 | 3,308 | 441 | 792 | (37) | 22,010 | |||||
Net income (loss) attributable to LHC Group, Inc.'s common stockholder | $ 79,042 | $ 12,830 | $ 2,702 | $ (1,975) | $ 7,437 | $ 100,036 |
RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO LHC GROUP, INC. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income attributable to LHC Group, Inc.'s common stockholders | $ | 17,309 | $ | 27,734 | $ | 47,347 | $ | 100,036 | ||||||||
Add (net of tax): | ||||||||||||||||
Acquisition, de novo and legal expenses (1) | 4,244 | 6,875 | 14,034 | 10,352 | ||||||||||||
Closures/relocations/consolidations (2) | 3,970 | 369 | 9,112 | 1,548 | ||||||||||||
COVID-19 impact: | ||||||||||||||||
PPE, supplies and other expenses (3) | — | 10,290 | — | 27,141 | ||||||||||||
ERP implementation (4) | 1,360 | 498 | 5,498 | 1,226 | ||||||||||||
Cost improvement initiatives (5) | 3,621 | — | 13,825 | — | ||||||||||||
Cost report and contract settlements (6) | 2,063 | — | 6,026 | — | ||||||||||||
Hurricane Ida (7) | — | 844 | — | 844 | ||||||||||||
Gain on sale of asset (8) | — | (951) | — | (951) | ||||||||||||
Adjusted net income attributable to LHC Group, Inc.'s common stockholders | $ | 32,567 | $ | 45,659 | $ | 95,842 | $ | 140,196 |
RECONCILIATION OF ADJUSTED NET INCOME | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income attributable to LHC Group, Inc.'s common stockholders | $ | 0.56 | $ | 0.88 | $ | 1.55 | $ | 3.18 | ||||||||
Add (net of tax): | ||||||||||||||||
Acquisition, de novo and legal expenses (1) | 0.14 | 0.22 | 0.46 | 0.33 | ||||||||||||
Closures/relocations/consolidations (2) | 0.13 | 0.01 | 0.30 | 0.05 | ||||||||||||
COVID-19 impact: | ||||||||||||||||
PPE, supplies and other expenses (3) | — | 0.33 | — | 0.87 | ||||||||||||
ERP implementation (4) | 0.04 | 0.01 | 0.17 | 0.03 | ||||||||||||
Cost improvement initiatives (5) | 0.12 | — | 0.45 | — | ||||||||||||
Cost report and contract settlements (6) | 0.07 | — | 0.20 | — | ||||||||||||
Hurricane Ida (7) | — | 0.03 | — | 0.03 | ||||||||||||
Gain on sale of asset (8) | — | (0.03) | — | (0.03) | ||||||||||||
Adjusted net income attributable to LHC Group, Inc.'s common stockholders | $ | 1.06 | $ | 1.45 | $ | 3.13 | $ | 4.46 |
RECONCILIATION OF EBITDA AND ADJUSTED EBITDA | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Net income attributable to LHC Group, Inc.'s common stockholders | $ | 17,309 | $ | 27,734 | $ | 47,347 | $ | 100,036 | ||||||||
Add: | ||||||||||||||||
Income tax expense | 6,966 | 10,150 | 17,014 | 32,909 | ||||||||||||
Interest expense, net | 9,053 | 1,135 | 19,631 | 1,541 | ||||||||||||
Depreciation and amortization | 5,759 | 5,358 | 17,483 | 14,899 | ||||||||||||
Adjustment items (*) | 21,167 | 24,415 | 66,304 | 54,524 | ||||||||||||
Adjusted EBITDA | $ | 60,254 | $ | 68,792 | $ | 167,779 | $ | 203,909 | ||||||||
* Adjustment items (pre-tax): | ||||||||||||||||
Acquisition, de novo and legal expenses (1) | 5,888 | 9,364 | 19,195 | 14,072 | ||||||||||||
Closures/relocation/consolidations (2) | 5,508 | 502 | 12,491 | 2,098 | ||||||||||||
COVID-19 PPE, supplies and other expenses (3) | — | 14,016 | — | 36,835 | ||||||||||||
ERP implementation (4) | 1,886 | 679 | 7,505 | 1,665 | ||||||||||||
Cost improvement initiatives (5) | 5,023 | — | 18,888 | — | ||||||||||||
Cost report and contract settlements (6) | 2,862 | — | 8,225 | — | ||||||||||||
Hurricane Ida (7) | — | 1,150 | — | 1,150 | ||||||||||||
Gain on sale of asset (8) | — | (1,296) | — | (1,296) | ||||||||||||
Total adjustments | $ | 21,167 | $ | 24,415 | $ | 66,304 | $ | 54,524 | ||||||||
Contact: | Eric Elliott |
Senior Vice President of Finance | |
(337) 233-1307 | |
eric.elliott@lhcgroup.com |
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SOURCE LHC Group, Inc.