LHC Group (LHCG) Tops Q1 EPS by 9c, Revenues Miss; Raises FY19 EPS/Revenue/Adj. EBITDA Guidance

LHC Group (NASDAQ: LHCG) reported Q1 EPS of $0.98, $0.09 better than the analyst estimate of $0.89. Revenue for the quarter came in at $502 million versus the consensus estimate of $512.45 million.

• Net service revenue increased 72.7% to $502.6 million.
• Net income attributable to LHC Group’s common stockholders increased 277.5% to $18.9 million. Earnings per diluted share attributable to LHC Group’s common stockholders increased 114.3% to $0.60 which includes a 72.9% increase in weighted average diluted shares outstanding and the effect of costs and expenses described within the adjusted results below.
• Adjusted net income attributable to LHC Group’s common stockholders increased 171.5% to $30.7 million. Adjusted earnings per diluted share attributable to LHC Group’s common stockholders increased 55.6% to $0.98.
• Adjusted results for the first quarter of 2019 exclude transaction and other transition related costs, expenses related to certain closures and relocations and a license change related impairment in the aggregate amount of $11.8 million after tax, or $0.38 per diluted share.
• Total growth in home health admissions was 76.3%; organic growth was 5.7%.
• Total growth in home health revenue was 77.4%; organic growth was 7.0%.
• Total growth in hospice admissions was 13.1%; organic growth was 6.2%.A reconciliation of all non-GAAP financial results in this release appears on page 10.

Operational and Strategic Highlights

• LHC Group quality and patient satisfaction scores continue to exceed the national average with 99% of its same store locations having CMS Quality Star ratings of four stars or greater when excluding recent acquisitions.
• LHC Group realized a total of approximately $7.4 million in pre-tax synergies in the first quarter from its acquisition of Almost Family, which brings the cumulative amount to $21.6 million.
• During the first quarter and to date in the second quarter, LHC Group also acquired or agreed to acquire 18 home health, hospice or home and community based services locations, all of which, are hospital joint ventures. These acquisitions represent approximately $44.0 million in annualized revenue.
• Commenting on the results, Keith G. Myers, LHC Group’s Chairman and Chief Executive Officer, said, “We remain at the forefront of value-based initiatives to deliver better care, better outcomes and better value for patients and payors. As a clinically driven company, we have a long track record of tightly controlling non-patient expenses that enables us to reinvest in our people, technology and education. This commitment to reinvesting in those directly responsible for care has led to industry leading quality and patient satisfaction, long tenured and highly qualified clinicians and leaders and the lowest turnover in our history.

“We have outlined a number of growth opportunities for the next several years that build on our leadership position, expand our national in-home healthcare platform and enhance our relationships with hospitals and health systems as well as managed care providers. Early results in 2019 demonstrate strong progress on each one of our growth priorities and the increasing recognition that LHC Group is creating a model for the future in healthcare.”

GUIDANCE:

LHC Group sees FY2019 EPS of $4.25-$4.35, versus the consensus of $4.20. LHC Group sees FY2019 revenue of $2.09-2.14 billion, versus the consensus of $2.12 billion.

• The Company expects to achieve a total of $12 million to $17 million in pre-tax cost synergies in 2019 in connection with the Almost Family transaction, of which $7.4 million have been realized in the first quarter. The 2019 synergies would bring the total run-rate cost synergies by the second half of 2019 to a range of $25 million to $30 million;
• An estimated effective tax rate of 27.5% to 28.5%; and
• Weighted average diluted shares of approximately 31.3 million for the full year of 2019.

For earnings history and earnings-related data on LHC Group (LHCG) click here.

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