LHC Group announces first quarter 2021 financial results

LAFAYETTE, La., May 5, 2021 /PRNewswire/ -- LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the quarter ended March 31, 2021. Unless otherwise noted, all results are compared with the first quarter ended March 31, 2020.

First Quarter 2021 Financial Results

• Net service revenue increased 2.3% to $524.8 million.
• Net income attributable to LHC Group's common stockholders increased 57.4% to $34.7 million. Earnings per diluted share attributable to LHC Group's common stockholders increased 57.1% to $1.10.
• Adjusted net income attributable to LHC Group's common stockholders increased 86.7% to $43.6 million, or $1.39 adjusted earnings per diluted share. Adjusted results for the first quarter of 2021 exclude a pre-tax amount of $12.0 million in COVID-19 related costs and expenses for purchases of personal protective equipment (PPE), supplies, employee related costs and expenses and other categories of costs and expenses incurred in response to the pandemic and $0.2 million for an impairment of a closed home health location.
• EBITDA increased 48.3% to $49.4 million.
• Adjusted EBITDA increased 61.3% to $61.5 million.
• Organic growth in home health admissions decreased 0.4% in the first quarter of 2021 as compared to the first quarter of 2020 and increased sequentially by 5.9% in the first quarter of 2021 over the fourth quarter of 2020.
• Organic growth in hospice admissions increased 7.6% in the first quarter of 2021 as compared to the first quarter of 2020 and increased sequentially by 1.3% in the first quarter of 2021 over the fourth quarter of 2020.
  
  A reconciliation of all non-GAAP financial results in this release appears on pages 10-11.

Operational and Strategic Highlights

• LHC Group's quality and patient satisfaction scores continue to exceed the national average as the Company remains a leader among industry peers.
• LHC Group's acquisition pipeline is currently over $502 million with over $300 million of the targets in exclusive discussions. This gives the Company a high level of confidence in reaching or exceeding its target of $150 million to $200 million in acquired revenue in 2021.
• Non-Medicare episodic organic growth in home health admissions increased by 22.6% in the first quarter of 2021 compared with the same period in 2020 and increased by 25.1% sequentially over the fourth quarter of 2020.
• LHC Group's goal of becoming an invaluable asset and citizen of each community it is privileged to serve was reinforced by the 2021 Environmental, Social & Governance (ESG) Report published in April 2021 and available on the Company's ESG page.

Commenting on the results, Keith G. Myers, LHC Group's Chairman and Chief Executive Officer, said, "This is a year of great opportunity for LHC Group. We have begun the year on a strong clinical, operational and financial footing, and we have brought to light the broad impact we are undertaking to provide the thousands of communities we serve with our enhanced ESG reporting. With our operational and clinical strategies stress tested throughout PDGM and the COVID-19 public health emergency, we are positioned to earn more market share with leading quality scores, increased physician referrals and a proven history of delivering value for our partners and improved outcomes for patients. Our M&A pipeline remains very robust with our activity expected to accelerate throughout the year with new opportunities in a number of our service lines as well as new and expanded joint ventures. We are also benefiting from an improved legislative and regulatory outlook as legislative initiatives from Congress, innovation from CMS and stated budget and stimulus priorities of the Biden Administration are all emphasizing the need for at home care." 

COVID-19 Update
The COVID-19 pandemic had an impact on our operations and financial results for the first quarter of 2021 with a continued impact expected throughout 2021, although to a lesser extent than what we have experienced to date. During the first quarter, we incurred $12.0 million ($8.9 million net of tax), or $0.28 per diluted share, in additional COVID-19 costs and expenses related to PPE, supplies, employee related costs and expenses, including, without limitation, bonuses, increased wages, and wage supplements for front line caregivers, and other categories of costs and expenses incurred in response to the pandemic.

LHC Group has also implemented a number of cost containment initiatives, including eliminating non-essential travel and expenses and other measures. We continue to have strong access to capital with approximately $555.7 million of available liquidity from cash and our revolving credit facility net of the $411.2 million liability associated with the Medicare Accelerated and Advance Payments and Provider Relief Funds.

Since April 2020, we received funds totaling $318.0 million under the Medicare Accelerated and Advance Payment Program as provided for by the CARES Act. 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 12 months after receipt by the provider, by withholding 25% of future Medicare fee-for service payments for claims for 11 months and then withholding 50% of future Medicare fee-for service payments for claims for an additional six months. An interest rate of 4% will be assessed on any outstanding balances after 29 months from the date of the initial advance but we intend to repay the full amount before any interest will accrue. CMS began recouping these funds on April 13, 2021.

As of March 31, 2021, we have received funds totaling $93.3 million related to the Provider Relief Fund as provided for by the CARES Act. The full amount received was recorded as a short-term liability in government stimulus advance in our condensed consolidated balance sheet, but no funds were recognized in our condensed consolidated statements of income for the three months ended March 31, 2021 or for the twelve months ended December 31, 2020. It is our intent to return the funds to the government.

Operational 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. 

Full Year 2021 Guidance
The Company raised its guidance for 2021 to account for the extension of the Public Health Emergency to July 20, 2021 and the suspension of Medicare sequestration to December 31, 2021. Full year 2021 net service revenue is now expected to be in a range of $2.215 billion to $2.265 billion (compared with $2.200 billion to $2.260 billion previously) adjusted earnings per diluted share is expected to be in a range of $6.20 to $6.40 (compared with $5.65 to $5.90 previously), and EBITDA, less non-controlling interest, is expected to be in a range of $290 million to $300 million (compared with $268 million to $280 million previously).

Joshua L. Proffitt, LHC Group's President, added, "The first quarter results continue to reflect the sequential acceleration in our business with revenue within our projected range and adjusted earnings and adjusted EBITDA ahead of our expectations. This performance and the positive sequential trends we have experienced provide us with even greater confidence in our outlook and in the number of new growth opportunities we can pursue. We are intently focused on driving organic growth, enhancing our position as the partner of choice for hospitals and health systems, delivering leading quality and patient satisfaction, deploying resources to new hospice opportunities and capitalizing on the consolidation opportunity in home health."

The Company's guidance ranges reflect a number of assumptions that are subject to change based on uncertainties related to the impact of the COVID-19 pandemic. The Company's guidance ranges do not take into account the impact of future COVID-19 related costs and expenses. The Company is estimating COVID-19 related costs and expenses in the range of $20 million to $25 million in the full year of 2021. The Company's guidance ranges also do not take into account reimbursement changes, if any, future acquisitions, if made, de novo locations, if opened, location closures, if any, or future legal expenses, if necessary. Please refer to the supplemental information that can be found under Financial Results on the Company's Investor Relations page to access more detailed guidance assumptions. 

Conference Call
LHC Group will host a conference call on Thursday, May 6, 2021, at 9:00 a.m. Eastern time to discuss its first quarter 2021 results. The toll-free number to call for this interactive teleconference is (877) 870-4263 (international callers: (412) 317-0790). A telephonic replay of the conference call will be available through midnight on Thursday, May 13, 2021, by dialing (877) 344-7529 (international callers: (412) 317-0088) and entering confirmation number 10154018.

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 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 30,000 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. As the preferred joint venture partner for approximately 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 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 2021 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.

Contact:   
Eric Elliott
Senior Vice President of Finance
(337) 233-1307
[email protected]

SOURCE LHC Group, Inc.