LHC Group announces third quarter 2021 financial results

LAFAYETTE, La., Nov. 3, 2021 /PRNewswire/ -- LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the quarter ended September 30, 2021.

Third Quarter 2021 Financial Results

• Net service revenue increased 6.6% to $565.5 million.
• Net income attributable to LHC Group's common stockholders was $27.7 million, or $0.88 per diluted share.
• Adjusted net income attributable to LHC Group's common stockholders was $45.7 million, or $1.45 adjusted earnings per diluted share.
• Adjusted EBITDA, less non-controlling interest, was $68.8 million.

 A reconciliation of all non-GAAP financial results in this release appears on pages 11-12.

Operational and Strategic Highlights

• Year-to-date, LHC Group has closed on the acquisition of approximately $300 million in annualized revenue. This M&A activity, which brought the Company's national footprint to 917 locations in 37 states and the District of Columbia, compares favorably to $37.8 million acquired in 2020 and $114.3 million acquired in 2019.
• The Company currently expects the $300 million of acquired annualized revenue in 2021 to generate an incremental EBITDA contribution in 2022 in a range of $20 million to $25 million.
• LHC Group increased its 2021 revenue guidance previously issued on October 18, 2021 to reflect the completion of the acquisition of home health, hospice, and therapy assets from the HCA Healthcare and Brookdale Healthcare Services Venture on November 1, 2021. The Company now expects net service revenue of $2.215 billion to $2.220 billion (compared with $2.200 billion to $2.205 billion previously). The Company affirmed its expectations for adjusted EBITDA, less non-controlling interest, of $265 million to $270 million, and adjusted earnings per diluted share of $5.75 to $5.85.
• Organic growth in home health admissions increased 3.6% in the third quarter of 2021 as compared to the third quarter of 2020.
• Non-Medicare episodic organic growth in home health admissions increased by 11.6% in the third quarter of 2021 compared with the same period in 2020.
• Organic growth in hospice admissions increased 0.1% in the third quarter of 2021 as compared to the third quarter of 2020 and increased sequentially by 3.3% in the third quarter of 2021 over the second quarter of 2021.
• LHC Group has experienced improving operating trends to date in the fourth quarter of 2021. All locations temporarily closed due to Hurricane Ida have reopened; the percentage of clinicians on quarantine has declined to 1.8% as of November 1, 2021; new COVID cases have quickly declined after spiking in the third quarter of 2021; and average daily Home Health census for October 2021 increased 1,164 to 85,422, up 1.4% compared with the third quarter of 2021.
• LHC Group continues to be an industry leader in quality and patient satisfaction. Recent data provided in September 2021 by Strategic Healthcare Programs (SHP) shows that the company's overall home health quality star rating improved to 4.43 as compared to 4.39 in June 2021 and to an overall home health quality star rating of 4.23 in the last published data from the Centers for Medicare and Medicaid Services (CMS) in October 2020.

Commenting on the results, Keith G. Myers, LHC Group's Chairman and Chief Executive Officer, said, "Despite the temporary headwinds we encountered in the third quarter, our improving operating trends to date in the fourth quarter, combined with a record level of M&A activity, have positioned us to deliver strong year-over-year growth for 2021 and beyond. There is a fundamental shift underway that is rapidly transforming and prioritizing the delivery of high-quality care in patients' homes or places of residence. Consumer preference, along with the rapidly increasing recognition that high quality services provided in a patient's home or place of residence can deliver equal or better outcomes at significantly lower costs than alternative inpatient post-acute settings, will continue to provide significant growth opportunities for our industry. We are confident that LHC Group, with our industry leading quality outcomes and patient satisfaction along with our strong financial position, will benefit from continued M&A activity and substantially increasing organic growth in patient admissions across our expanding footprint for many years to come."     

Revenues in the third quarter of 2021 totaled $565.5 million, compared to $530.7 million in the third quarter of 2020. Net income attributable to LHC Group, Inc. totaled $27.7 million, or $0.88 per diluted share, compared to $14.5 million, or $0.46 per diluted share, in the third quarter of 2020.

For the third quarter of 2021, adjusted net income attributable to LHC Group's common stockholders totaled $45.7 million, or $1.45 per diluted share, compared to $51.3 million, or $1.63 per diluted share, in the third quarter of 2020. For the third quarter of 2021, Adjusted EBITDA totaled $68.8 million, compared to $74.5 million in the third quarter of 2020. Adjusted net income attributable to LHC Group's common stockholders and Adjusted EBITDA are non-GAAP financial measures. A table providing reconciliation of these non-GAAP financial results is provided in this release on pages 11-12.

Full Year 2021 Guidance
The Company increased its 2021 revenue guidance previously issued on October 18, 2021 to reflect the completion of the acquisition of home health, hospice, and therapy assets from the HCA Healthcare and Brookdale Healthcare Services Venture on November 1, 2021. The Company now expects net service revenue of $2.215 billion to $2.220 billion (compared with $2.200 billion to $2.205 billion previously). The Company affirmed its expectations for adjusted EBITDA, less non-controlling interest, of $265 million to $270 million, and adjusted earnings per diluted share of $5.75 to $5.85. At the midpoint, the full year 2021 guidance implies a 7.5% increase in net service revenue, a 12.1% increase in adjusted EBITDA, and a 15.8% increase in adjusted EPS compared with 2020.

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 of approximately $45 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, November 4, 2021, at 9:00 a.m. Eastern time to discuss its third quarter 2021 results. The toll-free number to call for this interactive teleconference is (877) 407-9208 (international callers: (201) 493-6784). A telephonic replay of the conference call will be available through midnight on Thursday, November 11, 2021, by dialing (844) 512-2921 (international callers: (412) 317-6671) and entering confirmation number 13723484.

The Company has posted supplemental financial information on the third 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 37 states and the District of Columbia – reaching 60 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 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.