LHC (LHCG) 8-K LHC Group Reports Fourth Quarter Financial Results

Exhibit 99.1

LHC Group Reports Fourth Quarter Financial Results

Issues Initial 2018 Guidance

LAFAYETTE, La.--(BUSINESS WIRE)--February 28, 2018--LHC Group, Inc. (NASDAQ: LHCG) announced its financial results for the three months and twelve months ended December 31, 2017.

Financial Results for the Fourth Quarter of 2017

• Net service revenue increased 24.2% to $292.4 million compared with $235.4 million in the fourth quarter of 2016.
• Net income attributable to LHC Group’s common stockholders was $18.4 million, up 87.8% from $9.8 million in the fourth quarter of 2016, while earnings per diluted share attributable to LHC Group’s common stockholders increased 85.5% to $1.02 per diluted share from $0.55 in the fourth quarter of 2016.
• Results for the fourth quarter of 2017 include an increase of $0.75 per diluted share for the non-cash decrease in the provision for income taxes from the impact of the Tax Cuts and Jobs Act of 2017 on net deferred tax liabilities, which is partially offset by increases in Almost Family merger and other costs of approximately $0.35 per diluted share⁽¹⁾.
• Adjusted net income attributable to LHC Group’s common stockholders was $11.2 million, or $0.62 per diluted share, compared with $10.3 million, or $0.58 per diluted share, in the fourth quarter of 2016, for an increase of 6.9%.
• Total organic growth in home health admissions was 5.3%.
• Total organic revenue growth in home health was 7.8%.

Financial Results for Fiscal 2017

• Net service revenue increased 17.2% to $1.07 billion compared with $914.8 million in the prior-year period.
• Net income attributable to LHC Group’s common stockholders was $50.1 million, up 37.0% from $36.6 million in the prior-year period, while earnings per diluted share attributable to LHC Group’s common stockholders increased 34.8% to $2.79 per diluted share from $2.07 in the prior-year period.
• Adjusted net income attributable to LHC Group’s common stockholders was $43.5 million, or $2.42 per diluted share⁽¹⁾, compared with $37.0 million, or $2.10 per diluted share⁽¹⁾, in the prior-year period, for an increase of 17.6%.
• Total organic growth in home health admissions was 10.7%.
• Total organic revenue growth in home health was 10.0%.

⁽¹⁾ See “Reconciliation of Non-GAAP Measures – Adjusted net income attributable to LHC Group” to GAAP results on page 10.

Operational Highlights

• LHC Group quality and patient satisfaction results continue to exceed the national average with 98% of its same store locations having CMS Quality Star ratings of four stars or greater.
• LHC Group acquired 71 home health, hospice or community-based locations and six long-term acute care hospital operations during the twelve months ended December 31, 2017, which produced a record year of $114.4 million in annual revenue prior to acquisition.
• LHC Group agreed to merge with Almost Family, Inc., which would create one of the largest providers of in-home healthcare in the country. The all-stock merger is expected to accelerate revenue growth by providing additional channels of organic growth and creating a significant pipeline of joint ventures, extensions of existing relationships and acquisitions. A total of $25 million in annualized pre-tax cost synergies have been identified.

Commenting on the results, Keith G. Myers, LHC Group’s chairman and CEO, said, “The growth we generated in the fourth quarter was consistent with our experience throughout 2017 and helped us exceed our full year revenue and earnings goals. As always, this performance is driven by an overriding focus on clinical excellence that delivers quality and patient satisfaction that, according to the CMS Star ratings, continues to lead the home health industry. This was a record-setting year for us with acquisitions and joint ventures, and our ability to improve outcomes remains a critical element in providing value to our partners as we work alongside them to create customized solutions.”

Mr. Myers concluded, “We have established a growth plan for 2018 based on strong organic growth and continuation of our partnerships with leading hospitals and health systems. Our expectations for continuing the positive impact within the communities we serve are as high as they have ever been. With much of the regulatory uncertainties in our industry now resolved through recent pronouncements and legislation, we are confident the environment is conducive to executing on new growth opportunities and delivering on the benefits of a record-setting year for acquired revenue.”

Almost Family Merger Transaction

On November 15, 2017, LHC Group and Almost Family entered into an agreement providing for a ‘merger of equals’ business combination. Following approval by both companies’ shareholders, the merger will be an all-stock transaction with an exchange ratio of 0.9150 of LHC Group shares to be exchanged for each outstanding share of Almost Family stock. The combined company will have an expanded geographic service territory of 36 states covering over 60% of the U.S. population aged 65 and over, 781 locations and 76 joint venture partnerships with health systems that include 336 hospitals. The combined company will operate under the LHC Group name with common shares traded on the NASDAQ under ticker symbol LHCG. On February 22, 2018, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to this transaction had expired, satisfying one of the important conditions to closing. The transaction is expected to close at the end of the first quarter following both companies’ March 29, 2018, special shareholder meetings to approve the proposed transaction.

Commenting on the expected merger, Mr. Myers added, “I am pleased with the pace and success of our integration planning work over the last few months as we have prepared for the combination of our two companies. We are confident in our track record of integrating acquisitions and joint ventures successfully, and we began focusing on the important aspects of this integration many months ago. Our integration planning activities began during our comprehensive due diligence efforts conducted prior to signing the merger agreement in November with the assistance of our third party advisor partners at Alston & Bird, FTI Consulting and Ernst & Young. In addition, in November we also engaged the Berkeley Research Group (“BRG”) to lead the integration process. BRG will remain engaged for at least a year after the closing to assist in the execution of the actual integration. Since November, BRG has established an integration management office at each of our home office locations in Lafayette and in Louisville. Through those rigorous and dedicated efforts, we’ve been working diligently through 23 separate integration planning workstreams, each with teams comprised of members from LHC Group, Almost Family and BRG, to plan for the integration of systems, processes and personnel.

“With a shared vision for delivering patient-centered care in the home and complementary strengths and cultures, we will be well positioned to lead the evolution of the in-home healthcare industry to value-based reimbursement and highly coordinated care. We look forward to outlining our combined growth expectations later this year.”

Fiscal Year 2018 Guidance

Fiscal year 2018 net service revenue is expected to be in a range of $1.22 billion to $1.25 billion, and adjusted earnings per diluted share is expected to be in a range of $3.00 to $3.20. This guidance excludes the impact from a completed merger with Almost Family and assumes the following:

(1) an effective tax rate of 29% to 30%, which reflects the positive impact from passage of the Tax Cuts and Jobs Act of 2017; and
(2) the negative impact from the Medicare Home Health Prospective Payment System (PPS) for 2018, which is expected to have an approximate -1% impact, or $6 million reduction to Medicare Home Health revenue and $0.20 reduction in fully diluted earnings per share for 2018.

The Company’s guidance ranges do not take into account the impact of future reimbursement changes, if any, future acquisitions, if made, de novo locations, if opened, or future legal expenses, if necessary. Due to the difficulty in estimating the costs of the expected merger with Almost Family and its impact on GAAP earnings, the Company is only providing guidance to adjusted earnings for 2018. The Company’s guidance range on net service revenue does not take into account the Company’s adoption of ASU 2014-09 in 2018 regarding revenue recognition, which will result in a reduction to net service revenue by bad debt expense, but will not affect earnings per share.

Conference Call

LHC Group will host a conference call on Thursday, March 1, 2018, at 11:00 a.m. Eastern time to discuss its fourth quarter 2017 results. 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 March 8, 2018, by dialing (855) 859-2056 (international callers should call (404) 537-3406) and entering confirmation number 2883586.

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 non-acute healthcare services, providing quality, cost-effective healthcare to patients primarily within the comfort and privacy of their home or place of residence. LHC Group provides a comprehensive array of healthcare services through home health, hospice, community-based services agencies and facility-based services. LHC Group operates 320 home health services locations, 92 hospice locations, 12 community-based service locations and 15 long-term acute care hospitals (LTACHs).

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, 2016, 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 CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data)
	Dec. 31, 2017			Dec. 31, 2016
ASSETS
Current assets:
Cash	$	2,849		$	3,264
Receivables:
Patient accounts receivable, less allowance for uncollectible accounts of $23,556 and $29,036, respectively		161,898			124,803
Other receivables		3,163			5,115
Amounts due from governmental entities		830			942
Total receivables, net		165,891			130,860
Prepaid income taxes		7,006		─
Prepaid expenses		13,042			9,821
Other current assets		12,177			5,796
Total current assets		200,965			149,741
Property, building and equipment, net of accumulated depreciation of $43,565 and $35,226, respectively		46,453			43,251
Goodwill		392,601			307,317
Intangible assets, net of accumulated amortization of $13,041 and $10,968, respectively		134,610			102,006
Other assets		19,073			11,756
Total assets	$	793,702		$	614,071
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities	$	39,750		$	26,805
Salaries, wages, and benefits payable		44,747			34,265
Self-insurance reserve		12,450			10,691
Current portion of long-term debt		286			252
Amounts due to governmental entities		5,019			4,955
Income tax payable	—				3,499
Total current liabilities		102,252			80,467
Deferred income taxes		27,466			31,941
Revolving credit facility		144,000			87,000
Long-term debt, less current portion	—				544
Total liabilities		273,718			199,952
Noncontrolling interest – redeemable		13,393			12,567
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; 40,000,000 shares authorized; 22,640,046 and 22,429,041 shares issued in 2017 and 2016, respectively		226			224
Treasury stock – 4,890,504 and 4,828,679 shares at cost, respectively		(42,249	)		(39,135	)
Additional paid-in capital		126,490			119,748
Retained earnings		364,401			314,289
Total LHC Group, Inc. stockholders’ equity		448,868			395,126
Noncontrolling interest – non-redeemable		57,723			6,426
Total equity		506,591			401,552
Total liabilities and equity	$	793,702		$	614,071

LHC GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except share and per share data)
	Three Months Ended December 31,						Year Ended December 31,
		2017			2016			2017			2016
Net service revenue	$	292,386		$	235,443		$	1,072,086		$	914,823
Cost of service revenue		187,426			144,089			675,810			557,650
Gross margin		104,960			91,354			396,276			357,173
Provision for bad debts		1,246			3,131			9,484			14,790
General and administrative expenses		89,108			69,050			310,539			270,622
Impairment of intangibles and other		1,430			–			1,511			–
(Gain) Loss on disposal of assets		83			(190	)		60			1,199
Operating income		13,093			19,363			74,682			70,562
Interest expense		(1,260	)		(768	)		(3,876	)		(2,936	)
Non-operating income		90			213			524			492
Income before income taxes and noncontrolling interest		11,923			18,808			71,330			68,118
Income tax expense		(9,466	)		6,676			10,944			22,176
Net income		21,389			12,132			60,386			45,942
Less net income attributable to noncontrolling interests		2,954			2,315			10,274			9,359
Net income attributable to LHC Group, Inc.’s common stockholders	$	18,435		$	9,817		$	50,112		$	36,583
Earnings per share attributable to LHC Group, Inc.’s common stockholders:
Basic	$	1.04		$	0.56		$	2.83		$	2.08
Diluted	$	1.02		$	0.55		$	2.79		$	2.07
Weighted average shares outstanding:
Basic		17,749,872			17,597,190			17,715,992			17,559,477
Diluted		18,043,297			17,764,066			17,961,018			17,682,820

LHC GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)
	Year Ended December 31,
		2017			2016
Operating activities:
Net income	$	60,386		$	45,942
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		13,422			12,160
Provision for bad debts		9,484			14,790
Stock-based compensation expense		5,964			4,872
Deferred income taxes		(4,475	)		7,402
Loss on disposal of assets		60			1,199
Impairment of intangibles and other		1,511		─
Changes in operating assets and liabilities, net of acquisitions:
Receivables		(36,390	)		(28,873	)
Prepaid expenses and other assets		(26,973	)		1,034
Prepaid income taxes		(7,006	)		1,641
Accounts payable and accrued expenses		19,666			9,182
Income taxes payable		(3,499	)		84
Net amounts due to/from governmental entities		176			(1,961	)
Net cash provided by operating activities		32,326			67,472
Investing activities:
Purchases of property, building and equipment		(10,176	)		(16,009	)
Cash paid for acquisitions, primarily goodwill and intangible assets		(64,598	)		(23,156	)
Advanced payments on acquisitions	─				(11,488	)
Other	─				273
Net cash used in investing activities		(74,774	)		(50,380	)
Financing activities:
Proceeds from line of credit		96,000			38,000
Payments on line of credit		(39,000	)		(49,000	)
Proceeds from employee stock purchase plan		1,026			912
Payments on debt		(260	)		(238	)
Noncontrolling interest distributions		(11,382	)		(9,413	)
Excess tax benefits from vesting of stock awards	─				1,303
Withholding taxes paid on stock-based compensation		(3,114	)		(1.996	)
Purchase of additional controlling interest		(1,488	)	─
Sale of noncontrolling interest		251			356
Proceeds from exercise of stock options	─				109
Net cash provided by (used in) financing activities		42,033			(19,967	)
Change in cash		(415	)		(2,875	)
Cash at beginning of period		3,264			6,139
Cash at end of period	$	2,849		$	3,264
Supplemental disclosures of cash flow information:
Interest paid	$	3,853		$	3,123
Income taxes paid	$	25,199		$	11,533

LHC GROUP, INC. AND SUBSIDIARIES SEGMENT INFORMATION (Amounts in thousands) (Unaudited)
	Three Months Ended December 31, 2017
	Home Health Services			Hospice Services			Community- Based Services			Facility- Based Services			Total
Net service revenue	$	208,327		$	42,948		$	13,102		$	28,009		$	292,386
Cost of service revenue		129,283			28,782			10,339			19,022			187,426
Provision for bad debts		128			517			346			255			1,246
General and administrative expenses		63,854			13,061			2,984			9,209			89,108
Impairment of intangibles and other		1,430		─			─			─				1,430
(Gain) loss on disposal of assets		63			1		─				19			83
Operating income		13,569			587			(567	)		(496	)		13,093
Interest expense		(945	)		(189	)		(63	)		(63	)		(1,260	)
Non-operating income (loss)		20			20			1			49			90
Income before income taxes and noncontrolling interest		12,644			418			(629	)		(510	)		11,923
Income tax expense		(7,204	)		(1,382	)		(446	)		(434	)		(9,466	)
Net income		19,848			1,800			(183	)		(76	)		21,389
Less net income attributable to noncontrolling interests		3,049			210			(104	)		(201	)		2,954
Net income attributable to LHC Group, Inc.’s common stockholders	$	16,799		$	1,590		$	(79	)	$	125		$	18,435
Total assets	$	534,385		$	155,230		$	48,216		$	55,871		$	793,702
	Three Months Ended December 31, 2016
	Home Health Services			Hospice Services			Community- Based Services			Facility- Based Services			Total
Net service revenue	$	173,806		$	34,898		$	11,067		$	15,672		$	235,443
Cost of service revenue		104,091			21,523			7,947			10,528			144,089
Provision for bad debts		1,486			1,037			309			299			3,131
General and administrative expenses		52,255			9,393			2,217			5,185			69,050
Gain (loss) on disposal of assets		47			9			2			(248	)		(190	)
Operating income		15,927			2,936			592			(92	)		19,363
Interest expense		(576	)		(85	)		(38	)		(69	)		(768	)
Non-operating income (loss)		208			(1	)		1			5			213
Income from continuing operations before income taxes and noncontrolling interest		15,559			2,850			555			(156	)		18,808
Income tax expense		5,480			1,001			237			(42	)		6,676
Net income		10,079			1,849			318			(114	)		12,132
Less net income attributable to noncontrolling interests		1,875			499			(2	)		(57	)		2,315
Net income attributable to LHC Group, Inc.’s common stockholders	$	8,204		$	1,350		$	320		$	(57	)	$	9,817
Total assets	$	427,782		$	116,090		$	33,520		$	36,679		$	614,071

LHC GROUP, INC. AND SUBSIDIARIES SEGMENT INFORMATION (Continued) (Amounts in thousands)
	Year Ended December 31, 2017
	Home Health Services			Hospice Services			Community- Based Services			Facility- Based Services			Total
Net service revenue	$	783,507		$	159,197		$	46,909		$	82,473		$	1,072,086
Cost of service revenue		482,179			103,969			35,244			54,418			675,810
Provision for bad debts		5,924			1,910			750			900			9,484
General and administrative expenses		229,265			45,516			9,946			25,812			310,539
Impairment of intangibles and other		1,511		─			─			─				1,511
(Gain) loss on disposal of assets		101			22		─				(63	)		60
Operating income		64,527			7,780			969			1,406			74,682
Interest expense		(2,906	)		(582	)		(194	)		(194	)		(3,876	)
Non-operating income		360			71			3			90			524
Income before income taxes and noncontrolling interest		61,981			7,269			778			1,301			71,330
Income tax expense		9,509			1,057			156			222			10,944
Net income		52,472			6,212			622			1,079			60,386
Less net income (loss) attributable to noncontrolling interests		9,102			1,248			(111	)		35			10,274
Net income attributable to LHC Group, Inc.’s common stockholders	$	43,370		$	4,964		$	733		$	1,045		$	50,112
Total assets	$	534,385		$	155,230		$	48,216		$	55,871		$	793,702
	Year Ended December 31, 2016
	Home Health Services			Hospice Services			Community- Based Services			Facility- Based Services			Total
Net service revenue	$	665,896		$	134,948		$	43,891		$	70,088		$	914,823
Cost of service revenue		398,450			83,359			32,603			43,238			557,650
Provision for bad debts		9,609			3,401			797			983			14,790
General and administrative expenses		203,418			37,207			8,785			21,212			270,622
Loss on disposal of assets		857			338			49			(45	)		1,199
Operating income		53,562			10,643			1,657			4,700			70,562
Interest expense		(2,216	)		(317	)		(144	)		(259	)		(2,936	)
Non-operating income		422			25			14			31			492
Income before income taxes and noncontrolling interest		51,768			10,351			1,527			4,472			68,118
Income tax expense		16,505			3,485			651			1,535			22,176
Net income		35,263			6,866			876			2,937			45,942
Less net income (loss) attributable to noncontrolling interests		6,876			1,867			(58	)		674			9,359
Net income attributable to LHC Group, Inc.’s common stockholders	$	28,387		$	4,999		$	934		$	2,263		$	36,583
Total assets	$	427,782		$	116,090		$	33,520		$	36,679		$	614,071

LHC GROUP, INC. AND SUBSIDIARIES SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA (Unaudited)
	Three Months Ended December 31,						Year Ended December 31,
		2017			2016			2017			2016
Key Data:
Home-Health Services:
Home Health
Locations		315			281			315			281
Acquired		1			3			43			12
De novo		1			1			3			5
Divested/Consolidated		(9	)		(9	)		(12	)		(16	)
Total new admissions		49,668			41,184			192,116			159,914
Medicare new admissions		30,745			26,812			120,177			105,575
Average daily census		44,362			39,407			43,107			38,587
Average Medicare daily census		29,925			28,381			29,514			28,146
Medicare completed and billed episodes		54,493			51,040			213,255			199,235
Average Medicare case mix for completed and billed Medicare episodes		1.11			1.09			1.10			1.06
Average reimbursement per completed and billed Medicare episodes	$	2,867		$	2,751		$	2,817		$	2,690
Total visits		1,448,351			1,192,042			5,656,371			4,629,695
Total Medicare visits		987,586			869,759			3,899,678			3,396,164
Average visits per completed and billed Medicare episodes		18.1			17.0			18.3			17.0
Organic growth:(1)
Net revenue		7.8	%		7.3	%		10.0	%		6.4	%
Net Medicare revenue		1.8	%		5.3	%		4.7	%		4.7	%
Total new admissions		5.3	%		10.8	%		10.7	%		9.3	%
Medicare new admissions		1.6	%		8.5	%		5.4	%		6.6	%
Average daily census		1.0	%		3.5	%		4.2	%		2.3	%
Average Medicare daily census		-3.8	%		0.8	%		-1.3	%		0.4	%
Medicare completed and billed episodes		-2.7	%		2.5	%		1.1	%		2.2	%
Community-Based Services:
Locations		12			11			12			11
Acquired		1			–			1			1
De novo		–			–			–			–
Divested/Consolidated		–			–			–			(3	)
Average daily census		2,161			1,633			1,849			1,629
Billable hours		469,963			376,934			1,644,372			1,484,012
Revenue per billable hour	$	27.88		$	29.36		$	28.53		$	29.58
Hospice-Based Services:
Locations		91			65			91			65
Acquired		–			–			27			10
De novo		–			1			1			1
Divested/Consolidated		–			–			(2	)		(2	)
Admissions		3,655			2,448			13,369			9,988
Average daily census		3,180			2,699			3,036			2,620
Patient days		292,568			248,270			1,108,118			958,847
Average revenue per patient day	$	147		$	141		$	144		$	141
Facility-Based Services:
Long-term Acute Care
Locations		14			8			14			8
Acquired		–			–			6			–
Patient days		21,719			13,257			63,168			56,224
Average revenue per patient day	$	1,170		$	1,060		$	1,152		$	1,159
(1) 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.

LHC GROUP, INC. AND SUBSIDIARIES RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO LHC GROUP, INC. (Amounts in thousands) (Unaudited)
	Three Months Ended December 31,					Twelve Months Ended December 31,
	2017			2016		2017			2016
Net income attributable to LHC Group, Inc.’s common stockholders	$	18,435		$	9,817	$	50,112		$	36,583
Add (net of tax):
New tax rate(1)		(13,602	)	─			(13,602	)	─
AFAM merger/acquisition expenses(2)		3,816			451		4,299			451
Closures/relocations(3)		2,085		─			2,214		─
Home Health rule(4)		481		─			481		─
Adjusted net income attributable to LHC Group, Inc.’s common stockholders	$	11,215		$	10,268	$	43,504		$	37,034
RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO LHC GROUP, INC. PER DILUTED SHARE (Unaudited)
	Three Months Ended December 31,					Twelve Months Ended December 31,
	2017			2016		2017			2016
Net income attributable to LHC Group, Inc.’s common stockholders	$	1.02		$	0.55	$	2.79		$	2.07
Add (net of tax):
New tax rate(1)		(0.75	)	─			(0.76	)	─
AFAM merger/acquisition expenses(2)		0.21			0.03		0.24			0.03
Closures/relocations(3)		0.11		─			0.12		─
Home Health rule(4)		0.03		─			0.03		─
Adjusted net income attributable to LHC Group, Inc.’s common stockholders	$	0.62		$	0.58	$	2.42		$	2.10
(1) The passage of the Tax Cuts and Jobs Act of 2017 reduced the deferred tax liability by $13.6 million.
(2) Expenses associated with the pending merger between LHC Group and Almost Family and other prior acquisitions and joint ventures.
(3) Expenses associated with the closure, relocation or consolidation of nine home health agencies. This cost includes the $1.4 million impairment of intangibles charge.
(4) Impact on 2017 episodes, which ended on or after January 1, 2018, from the Medicare Home Health Prospective Payment System (PPS) for 2018, which was finalized on November 5, 2017.

We have included certain financial measures in this press release, including adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share, which are “non-GAAP financial measures” as defined under the rules and regulations promulgated by the SEC. We define adjusted net income attributable to LHC Group as net income attributable to LHC Group adjusted for the after-tax impact of the tax benefit related to tax reform, AFAM merger/acquisition costs, various adjustments, closures/relocations and the Home Health rule. We define adjusted net income attributable to LHC Group per diluted share as net income attributable to LHC Group adjusted for the after-tax impact of the tax benefit related to tax reform, AFAM merger/acquisition costs, various adjustments, closures/relocations and the Home Health rule divided by weighted average diluted shares outstanding.

Adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share are supplemental measures of our performance and are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). Adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share are not measures of our financial performance under GAAP and should not be considered as alternatives to net income attributable to LHC Group, net income attributable to LHC Group per diluted share or any other performance measures derived in accordance with GAAP. Our measurements of adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share may not be comparable to similarly titled measures of other companies. We have included information concerning adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share in this press release because we believe that such information is used by certain investors as measures of a company’s historical performance. We believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of issuers of equity securities, many of which present adjusted net income and adjusted net income per diluted share when reporting their results. Our presentation of adjusted net income attributable to LHC Group and adjusted net income attributable to LHC Group per diluted share should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.

CONTACT:
LHC Group, Inc.
Eric Elliott, 337-233-1307
Senior Vice President of Finance
eric.elliott@lhcgroup.com