Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 04, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | LHCG | |
Entity Registrant Name | LHC Group, Inc | |
Entity Central Index Key | 1,303,313 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 17,959,562 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 18,270 | $ 531 |
Receivables: | ||
Patient account receivable, less allowance for uncollectible accounts of $23,900 and $18,582, respectively | 100,124 | 97,498 |
Other receivables | 1,419 | 1,334 |
Amounts due from governmental entities | 979 | 1,164 |
Total receivables, net | 102,522 | 99,996 |
Deferred income taxes | 13,890 | 11,381 |
Prepaid income taxes | 2,225 | 3,093 |
Prepaid expenses | 10,799 | 8,724 |
Other current assets | 5,430 | 3,777 |
Receivable due from insurance carrier | 0 | 7,850 |
Total current assets | 153,136 | 135,352 |
Property, building and equipment, net of accumulated depreciation of $47,873 and $44,683, respectively | 34,765 | 34,787 |
Goodwill | 240,214 | 240,019 |
Intangible assets, net of accumulated amortization of $7,538 and $6,560, respectively | 79,027 | 79,685 |
Other assets | 1,903 | 1,896 |
Total assets | 509,045 | 491,739 |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 23,444 | 19,278 |
Salaries, wages, and benefits payable | 40,489 | 22,466 |
Self-insurance reserve | 8,716 | 6,559 |
Current portion of long-term debt | 235 | 230 |
Amounts due to governmental entities | 3,559 | 4,459 |
Legal settlement payable | 0 | 7,850 |
Total current liabilities | 76,443 | 60,842 |
Deferred income taxes | 37,109 | 33,592 |
Income tax payable | 3,415 | 3,415 |
Revolving credit facility | 40,000 | 60,000 |
Long-term debt, less current portion | 660 | 778 |
Total liabilities | 157,627 | 158,627 |
Noncontrolling interest — redeemable | 11,981 | 11,517 |
LHC Group, Inc. stockholders’ equity: | ||
Common Stock -- $0.01 par value; 40,000,000 shares authorized; 22,207,136 and 22,015,211 shares issued in 2015 and 2014, respectively | 222 | 220 |
Treasury stock -- 4,773,160 and 4,734,363 shares at cost, respectively | 36,989 | 35,660 |
Additional paid-in capital | 111,849 | 108,708 |
Retained earnings | 261,126 | 245,371 |
Total LHC Group, Inc. stockholders’ equity | 336,208 | 318,639 |
Noncontrolling interest — non-redeemable | 3,229 | 2,956 |
Total equity | 339,437 | 321,595 |
Total liabilities and equity | $ 509,045 | $ 491,739 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Patient accounts receivable, allowance for uncollectible accounts | $ 23,900 | $ 18,582 |
Property, building and equipment, accumulated depreciation | 47,873 | 44,683 |
Intangible assets, accumulated amortization | $ 7,538 | $ 6,560 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized | 40,000,000 | 40,000,000 |
Common stock, issued | 22,207,136 | 22,015,211 |
Treasury stock at cost, shares | 4,773,160 | 4,734,363 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Net service revenue | $ 200,172 | $ 188,867 | $ 393,251 | $ 352,548 |
Cost of service revenue | 116,639 | 111,527 | 231,065 | 208,861 |
Gross margin | 83,533 | 77,340 | 162,186 | 143,687 |
Provision for bad debts | 4,805 | 4,363 | 10,064 | 7,725 |
General and administrative expenses | 60,370 | 59,723 | 119,668 | 114,302 |
Operating income | 18,358 | 13,254 | 32,454 | 21,660 |
Interest expense | (554) | (830) | (1,099) | (1,218) |
Income before income taxes and noncontrolling interest | 17,804 | 12,424 | 31,355 | 20,442 |
Income tax expense | 6,220 | 4,352 | 10,949 | 7,275 |
Net income | 11,584 | 8,072 | 20,406 | 13,167 |
Less net income attributable to noncontrolling interests | 2,634 | 2,011 | 4,651 | 3,038 |
Net income attributable to LHC Group, Inc.’s common stockholders | $ 8,950 | $ 6,061 | $ 15,755 | $ 10,129 |
Earnings per share — basic: | ||||
Net income attributable to LHC Group, Inc.'s common stockholders | $ 0.51 | $ 0.35 | $ 0.91 | $ 0.59 |
Earnings per share — diluted: | ||||
Net income attributable to LHC Group, Inc.'s common stockholders | $ 0.51 | $ 0.35 | $ 0.90 | $ 0.59 |
Weighted average shares outstanding: | ||||
Basic | 17,410,971 | 17,233,264 | 17,366,141 | 17,190,070 |
Diluted | 17,529,100 | 17,277,224 | 17,528,101 | 17,268,556 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Noncontrolling Interest Non Redeemable | |
Beginning balance, Amount at Dec. 31, 2014 | $ 321,595 | $ 220 | $ (35,660) | $ 108,708 | $ 245,371 | $ 2,956 | |
Beginning balance, Shares at Dec. 31, 2014 | 22,015,211 | ||||||
Beginning balance, Treasury Shares at Dec. 31, 2014 | (4,734,363) | (4,734,363) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | $ 16,621 | [1] | 15,755 | 866 | |||
Noncontrolling interest | 155 | 155 | |||||
Purchase of noncontrolling interest | (275) | (275) | |||||
Noncontrolling interest distributions | $ (748) | (748) | |||||
Stock options exercised, Shares | 9,500 | ||||||
Stock options exercised | $ 145 | 145 | |||||
Nonvested stock compensation | 2,073 | 2,073 | |||||
Issuance of vested stock | 169,655 | ||||||
Treasury shares redeemed to pay income tax | $ (1,329) | $ (1,329) | |||||
Treasury shares redeemed to pay income tax, Shares | (38,797) | (38,797) | |||||
Excess tax benefits — vesting nonvested stock | $ 811 | 811 | |||||
Issuance of common stock under Employee Stock Purchase Plan | 389 | $ 2 | 387 | ||||
Issuance of common stock under Employee Stock Purchase Plan, Shares | 12,770 | ||||||
Ending balance, Amount at Jun. 30, 2015 | $ 339,437 | $ 222 | $ (36,989) | $ 111,849 | $ 261,126 | $ 3,229 | |
Ending balance, Shares at Jun. 30, 2015 | 22,207,136 | ||||||
Ending balance, Treasury Shares at Jun. 30, 2015 | (4,773,160) | (4,773,160) | |||||
[1] | Net income excludes net income attributable to noncontrolling interest-redeemable of $3.8 million during the six months ending June 30, 2015. Noncontrolling interest-redeemable is reflected outside of permanent equity on the condensed consolidated balance sheets. See Note 9 of the Notes to Condensed Consolidated Financial Statements. |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) (Parenthetical) $ in Millions | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Net income attributable to noncontrolling interest-redeemable | $ 3.8 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Operating activities: | ||
Net income | $ 20,406 | $ 13,167 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 5,801 | 4,413 |
Provision for bad debts | 10,064 | 7,725 |
Stock-based compensation expense | 2,073 | 2,069 |
Deferred income taxes | 1,008 | 844 |
Impairment of intangibles | 248 | 0 |
Loss on sale of assets | 404 | 144 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Receivables | (12,812) | (8,625) |
Prepaid expenses and other assets | (3,735) | (301) |
Prepaid income taxes | 868 | 512 |
Accounts payable and accrued expenses | 24,341 | 4,249 |
Net amounts due to/from governmental entities | (715) | (401) |
Net cash provided by operating activities | 47,951 | 23,796 |
Investing activities: | ||
Purchases of property, building and equipment | (5,205) | (3,419) |
Cash paid for acquisitions, primarily goodwill and intangible assets | (566) | (65,103) |
Net cash (used in) investing activities | (5,771) | (68,522) |
Financing activities: | ||
Proceeds from line of credit | 2,000 | 68,000 |
Payments on line of credit | (22,000) | (21,000) |
Proceeds from employee stock purchase plan | 389 | 391 |
Payments on debt | (113) | (91) |
Noncontrolling interest distributions | (4,069) | (3,122) |
Payment of deferred financing fees | 0 | (799) |
Excess tax benefits from vesting of stock awards | 811 | 112 |
Redemption of treasury shares | (1,329) | (850) |
Purchase of additional controlling interest | (275) | (95) |
Proceeds from exercise of stock options | 145 | 0 |
Sale of noncontrolling interest | 0 | 193 |
Net cash provided by (used in) financing activities | (24,441) | 42,739 |
Change in cash | 17,739 | (1,987) |
Cash at beginning of period | 531 | 14,014 |
Cash at end of period | 18,270 | 12,027 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 765 | 1,177 |
Income taxes paid | $ 8,208 | $ 6,064 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization LHC Group, Inc. (the “Company”) is a health care provider specializing in the post-acute continuum of care primarily for Medicare beneficiaries. The Company provides home health services, hospice services, community-based services, and facility-based services, the latter primarily through long-term acute care hospitals (“LTACHs”). As of June 30, 2015 , the Company, through its wholly-owned and majority-owned subsidiaries, equity joint ventures and controlled affiliates, operated 337 service providers in 28 states within the continental United States. Unaudited Interim Financial Information The condensed consolidated balance sheets as of June 30, 2015 and December 31, 2014, and the related condensed consolidated statements of income for the three and six months ended June 30, 2015 and 2014, condensed consolidated statement of changes in equity for the six months ended June 30, 2015 , condensed consolidated statements of cash flows for the six months ended June 30, 2015 and 2014 and related notes (collectively, these financial statements and the related notes are referred to herein as the “interim financial information”) have been prepared by the Company. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been included. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from the interim financial information presented. This report should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission (the “SEC”) on March 11, 2015, which includes information and disclosures not included herein. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenue and expenses during the reporting period. Actual results could differ from those estimates. Critical Accounting Policies The Company’s most critical accounting policies relate to the principles of consolidation, revenue recognition and accounts receivable and allowances for uncollectible accounts. Principles of Consolidation The interim financial information includes all subsidiaries and entities controlled by the Company. Control is defined by the Company as ownership of a majority of the voting interest of an entity. The interim financial information includes entities in which the Company receives a majority of the entities’ expected residual returns and absorbs a majority of the entities’ expected losses. Third party equity interests in the consolidated joint ventures are reflected as noncontrolling interests in the Company’s interim financial information. The following table summarizes the percentage of net service revenue earned by type of ownership or relationship the Company had with the operating entity: Three Months Ended Six Months Ended 2015 2014 2015 2014 Wholly-owned subsidiaries 54.5 % 54.5 % 54.2 % 52.0 % Equity joint ventures 43.6 42.9 43.7 45.3 License leasing arrangements 1.0 1.8 1.2 1.9 Management services 0.9 0.8 0.9 0.8 100.0 % 100.0 % 100.0 % 100.0 % All significant intercompany accounts and transactions have been eliminated in the Company’s accompanying interim financial information. Business combinations accounted for under the acquisition method have been included in the interim financial information from the respective dates of acquisition. The following describes the Company’s consolidation policy with respect to its various ventures excluding wholly-owned subsidiaries: Equity Joint Ventures The members of the Company’s equity joint ventures participate in profits and losses in proportion to their equity interests. The Company consolidates these entities as the Company has voting control over the entities. License Leasing Arrangements The Company, through wholly-owned subsidiaries, leases home health licenses necessary to operate certain of its home nursing and hospice agencies. The Company owns 100% of the equity of these entities and consolidates them based on such ownership. Management Services The Company has various management services agreements under which the Company manages certain operations of agencies and facilities. The Company does not consolidate these agencies or facilities because the Company does not have an ownership interest in, and does not have an obligation to absorb losses of, the entities that own the agencies and facilities or the right to receive the benefits from those entities. Revenue Recognition The Company reports net service revenue at the estimated net realizable amount due from Medicare, Medicaid and other commercial or managed care insurance programs for services rendered. The Company assesses the patient's ability to pay for their healthcare services at the time of patient admission based on the Company's verification of the patient's insurance coverage under the Medicare, Medicaid, and other commercial or managed care insurance program. All such payors contribute to the net service revenue of the Company’s home health services, hospice services, community-based services, and facility-based services. The following table sets forth the percentage of net service revenue earned by category of payor for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended 2015 2014 2015 2014 Payor: Medicare 74.0 % 75.3 % 74.3 % 76.9 % Medicaid 1.5 1.4 1.5 1.3 Other 24.5 23.3 24.2 21.8 100.0 % 100.0 % 100.0 % 100.0 % The following table sets forth the percentage of net service revenue contributed from each reporting segment for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended 2015 2014 2015 2014 Home health services 76.6 % 77.2 % 76.3 % 77.7 % Hospice services 9.3 9.0 9.0 9.1 Community-based services 5.1 4.5 5.1 2.6 Facility-based services 9.0 9.3 9.6 10.6 100.0 % 100.0 % 100.0 % 100.0 % Medicare Home Health The Company’s home nursing Medicare patients are classified into one of 153 home health resource groups prior to receiving services. Based on the patient’s home health resource group, the Company is entitled to receive a standard prospective Medicare payment for delivering care over a 60 -day period referred to as an episode. The Company recognizes revenue based on the number of days elapsed during an episode of care within the reporting period. Final payments from Medicare may reflect one of four retroactive adjustments to ensure the adequacy and effectiveness of the total reimbursement: (a) an outlier payment if the patient’s care was unusually costly; (b) a low utilization adjustment if the number of visits was fewer than five ; (c) a partial payment if the patient transferred to another provider before completing the episode; or (d) a payment adjustment based upon the level of therapy services required. In calculating net service revenue, management estimates the impact of these payment adjustments based on historical experience and records this estimate as the services are rendered using the expected level of services that will be provided. Hospice Services The Company is paid by Medicare under a per diem payment system. The Company receives one of four predetermined daily or hourly rates based upon the level of care the Company furnished. The Company records net service revenue from hospice services based on the daily or hourly rate and recognizes revenue as hospice services are provided. Hospice payments are subject to an inpatient cap and an overall Medicare payment cap. The inpatient cap relates to individual programs receiving more than 20% of its total Medicare reimbursement from inpatient care services and the overall Medicare payment cap relates to individual providers receiving reimbursements in excess of a “cap amount,” calculated by multiplying the number of beneficiaries during the period by a statutory amount that is indexed for inflation. The determination for each cap is made annually based on the 12 -month period ending on October 31 of each year. The Company monitors its limits on a provider-by-provider basis and records an estimate of its liability for reimbursements received in excess of the cap amount. Beginning with the cap year October 1, 2014, CMS implemented a new process requiring hospice providers to self-report their cap liabilities and remit applicable payment by March 31, 2016. Facility-Based Services The Company is reimbursed by Medicare for services provided under the LTACH prospective payment system. Each patient is assigned a long-term care diagnosis-related group. The Company is paid a predetermined fixed amount intended to reflect the average cost of treating a Medicare patient classified in that particular long-term care diagnosis-related group. For selected patients, the amount may be further adjusted based on length of stay and facility-specific costs, as well as in instances where a patient is discharged and subsequently re-admitted, among other factors. The Company calculates the adjustment based on a historical average of these types of adjustments for claims paid. Similar to other Medicare prospective payment systems, the rate is also adjusted for geographic wage differences. Revenue is recognized for the Company’s LTACHs as services are provided. Medicaid, Managed Care and Other Payors The Company’s Medicaid reimbursement is based on a predetermined fee schedule applied to each service provided. Therefore, revenue is recognized for Medicaid services as services are provided based on this fee schedule. The Company’s managed care and other payors reimburse the Company based upon a predetermined fee schedule or an episodic basis, depending on the terms of the applicable contract. Accordingly, the Company recognizes revenue from managed care and other payors in the same manner as the Company recognizes revenue from Medicare or Medicaid. Accounts Receivable and Allowances for Uncollectible Accounts The Company reports accounts receivable net of estimated allowances for uncollectible accounts and adjustments. Accounts receivable are uncollateralized and primarily consist of amounts due from Medicare, other third-party payors and patients. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value. The credit risk for other concentrations of receivables is limited due to the significance of Medicare as the primary payor. The Company believes the credit risk associated with its Medicare accounts, which have historically exceeded 55% of its patient accounts receivable, is limited due to (i) the historical collection rate from Medicare and (ii) the fact that Medicare is a U.S. government payor. The Company does not believe that there are any other concentrations of receivables from any particular payor that would subject it to any significant credit risk in the collection of accounts receivable. The provision for bad debts is based upon the Company’s assessment of historical and expected net collections, business and economic conditions and trends in government reimbursement. Uncollectible accounts are written off when the Company has determined the account will not be collected. A portion of the estimated Medicare prospective payment system reimbursement from each submitted home nursing episode is received in the form of a request for anticipated payment (“RAP”). The Company submits a RAP for 60% of the estimated reimbursement for the initial episode at the start of care. The full amount of the episode is billed after the episode has been completed. The RAP received for that particular episode is deducted from the final payment. If a final bill is not submitted within the greater of 120 days from the start of the episode, or 60 days from the date the RAP was paid, any RAP received for that episode will be recouped by Medicare from any other Medicare claims in process for that particular provider. The RAP and final claim must then be resubmitted. For subsequent episodes of care contiguous with the first episode for a particular patient, the Company submits a RAP for 50% instead of 60% of the estimated reimbursement. The Company’s services to the Medicare population are paid at prospectively set amounts that can be determined at the time services are rendered. The Company’s Medicaid reimbursement is based on a predetermined fee schedule applied to each individual service it provides. The Company’s managed care contracts and contracts with other payors provide for payments based upon a predetermined fee schedule or an episodic basis, depending on the terms of the applicable contract. Because of its payor mix, the Company is able to calculate its actual amount due at the patient level and adjust the gross charges down to the actual amount at the time of billing. This negates the need to record an estimated contractual allowance when reporting net service revenue for each reporting period. Other Significant Accounting Policies Earnings per Share Basic per share information is computed by dividing the relevant amounts from the condensed consolidated statements of income by the weighted-average number of shares outstanding during the period, under the treasury stock method. Diluted per share information is also computed using the treasury stock method, by dividing the relevant amounts from the condensed consolidated statements of income by the weighted-average number of shares outstanding plus potentially dilutive shares. The following table sets forth shares used in the computation of basic and diluted per share information: Three Months Ended Six Months Ended 2015 2014 2015 2014 Weighted average number of shares outstanding for basic per share calculation 17,410,971 17,233,264 17,366,141 17,190,070 Effect of dilutive potential shares: Options 3,717 3,750 2,741 4,031 Nonvested stock 114,412 40,210 159,219 74,455 Adjusted weighted average shares for diluted per share calculation 17,529,100 17,277,224 17,528,101 17,268,556 Anti-dilutive shares — 187,179 190,385 210,570 Recently Issued Accounting Pronouncements On May 28, 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers, ("ASU 2014-9") which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-9 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2018. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-9 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
Acquisitions and Disposals
Acquisitions and Disposals | 6 Months Ended |
Jun. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisitions and Disposals | Acquisitions and Disposals The Company acquired the majority-ownership of one home health agency and one community-based services agency during the six months ended June 30, 2015 . The total aggregate purchase price for the Company’s acquisition was $0.6 million , which was paid in cash. The purchase price was determined based on the Company’s analysis of comparable acquisitions and the target market’s potential future cash flows. Acquired intangible assets consist of a Medicare license, Medicaid license, and trade name. The fair value of the acquired intangible assets was $0.4 million . The Company's home health services segment and community-based services segment each recognized goodwill of $0.2 million . Goodwill generated from the acquisition was recognized based on the expected contribution of the acquisition to the overall corporate strategy. The Company expects its portion of goodwill to be fully tax deductible. The acquisition was accounted for under the acquisition method of accounting, and, accordingly, the accompanying interim financial information includes the results of operations of the acquired entity from the date of acquisition. |
Goodwill and Intangibles
Goodwill and Intangibles | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangibles | Goodwill and Intangibles The changes in recorded goodwill by reporting unit for the six months ended June 30, 2015 were as follows (amounts in thousands): Home health reporting unit Hospice Community-based reporting unit Facility-based reporting unit Total Balance as of December 31, 2014 $ 196,296 $ 14,793 $ 17,339 $ 11,591 $ 240,019 Goodwill from acquisitions 138 — 204 — 342 Goodwill related to noncontrolling interests 14 — 22 — 36 Goodwill related to disposal (156 ) — (27 ) — (183 ) Balance as of June 30, 2015 $ 196,292 $ 14,793 $ 17,538 $ 11,591 $ 240,214 Intangible assets consisted of the following as of June 30, 2015 and December 31, 2014 (amounts in thousands): June 30, 2015 Estimated useful life Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived assets : Trade names Indefinite $ 54,855 $ — $ 54,855 Certificates of need/licenses Indefinite 19,259 — 19,259 Indefinite-lived balance at end of period $ 74,114 $ — $ 74,114 Definite-lived assets: Trade names 2 months — 5 years $ 8,227 $ (3,633 ) $ 4,594 Non-compete agreements 1 month — 3 years 4,224 (3,905 ) 319 Definite-lived balance at end of period $ 12,451 $ (7,538 ) $ 4,913 Balance as of June 30, 2015 $ 86,565 $ (7,538 ) $ 79,027 December 31, 2014 Estimated useful life Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived assets : Trade names Indefinite $ 54,732 $ — $ 54,732 Certificates of need/licenses Indefinite 19,058 — 19,058 Indefinite-lived balance at end of period $ 73,790 $ — $ 73,790 Definite-lived assets: Trade names 2 months — 5 years $ 8,230 $ (2,797 ) $ 5,433 Non-compete agreements 3 months — 3 years 4,225 (3,763 ) 462 Definite-lived balance at end of period $ 12,455 $ (6,560 ) $ 5,895 Balance as of December 31, 2014 $ 86,245 $ (6,560 ) $ 79,685 Intangible assets of $65.7 million , net of accumulated amortization, were related to the home health services segment, $5.0 million were related to the hospice segment, $7.3 million were related to the community-based services segment and $1.0 million were related to the facility-based services segment as of June 30, 2015 . |
Debt
Debt | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt Credit Facility On June 18, 2014, the Company entered into a Credit Agreement (the “Credit Agreement”) with Capital One, National Association, which provides a senior, secured revolving line of credit commitment with a maximum principal borrowing limit of $225.0 million and a letter of credit sub-limit equal to $15.0 million . The Credit Agreement replaces the Third Amended and Restated Credit Agreement with Capital One, National Association, dated August 31, 2012. The expiration date of the Credit Agreement is June 18, 2019 . Revolving loans under the Credit Agreement bear interest at either a (1) Base Rate, which is defined as a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate in effect on such day plus 0.5% (b) the Prime Rate in effect on such day and (c) the Eurodollar Rate for a one month interest period on such day plus 1.0% , plus a margin ranging from 0.75% to 1.5% per annum or (2) Eurodollar rate plus a margin ranging from 1.75% to 2.5% per annum. Swing line loans bear interest at the Base Rate. The Company is limited to 15 Eurodollar borrowings outstanding at the same time. The Company is required to pay a commitment fee for the unused commitments at rates ranging from 0.225% to 0.375% per annum depending upon the Company’s consolidated Leverage Ratio, as defined in the Credit Agreement. The Base Rate at June 30, 2015 was 4.00% and the Eurodollar rate was 1.94% . As of June 30, 2015, the interest rate on outstanding borrowings was 1.94% . As of June 30, 2015 and December 31, 2014, respectively, the Company had $40.0 million and $60.0 million drawn and letters of credit totaling $7.1 million outstanding under its credit facilities with Capital One, National Association. As of June 30, 2015 , the Company had $177.9 million available for borrowing under the Credit Agreement with Capital One, National Association. . |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes As of June 30, 2015 , an unrecognized tax benefit of $3.4 million was recorded in income tax payable, which, if recognized, would decrease the Company’s effective tax rate. All of the Company’s unrecognized tax benefit is due to the settlement with the United States of America, which was announced September 30, 2011. On July 30, 2014, the Internal Revenue Service (“IRS”) issued a notice of proposed adjustment asserting that a portion of the original tax deduction claimed by the Company associated with the settlement with the United States of America should be disallowed. The Company is currently appealing this proposed adjustment with IRS Appeals. The Company intends to vigorously defend its original position of the deductibility of the full settlement amount on its 2011 tax return. |
Stockholder's Equity
Stockholder's Equity | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Stockholder's Equity | Stockholder’s Equity Equity Based Awards The 2010 Long Term Incentive Plan (the “2010 Incentive Plan”) is administered by the Compensation Committee of the Company’s Board of Directors. A total of 1,500,000 shares of the Company’s common stock are reserved and 499,037 shares are currently available for issuance pursuant to awards granted under the 2010 Incentive Plan. A variety of discretionary awards for employees, officers, directors and consultants are authorized under the 2010 Incentive Plan, including incentive or non-qualified statutory stock options and nonvested stock. All awards must be evidenced by a written award certificate which will include the provisions specified by the Compensation Committee of the Board of Directors. The Compensation Committee determines the exercise price for non-statutory stock options. The exercise price for any option cannot be less than the fair market value of the Company’s common stock as of the date of grant. Share Based Compensation Nonvested Stock During the six months ended June 30, 2015 , the Company’s independent directors were granted 16,200 nonvested shares of common stock under the 2005 Director Compensation Plan. The shares were drawn from the 1,500,000 shares of common stock reserved and available for issuance under the 2010 Incentive Plan. The shares vest 100% on the one year anniversary date. During the six months ended June 30, 2015 , employees were granted 174,865 nonvested shares of common stock pursuant to the 2010 Incentive Plan. The shares vest over a five year period, conditioned on continued employment. The fair value of nonvested shares of common stock is determined based on the closing trading price of the Company’s common stock on the grant date. The weighted average grant date fair value of nonvested shares of common stock granted during the six months ended June 30, 2015 was $33.80 . The following table represents the nonvested stock activity for the six months ended June 30, 2015 : Number of Shares Weighted average grant date fair value Nonvested shares outstanding as of December 31, 2014 524,287 $ 22.56 Granted 191,065 $ 33.80 Vested (166,529 ) $ 23.32 Forfeited (15,880 ) $ 22.44 Nonvested shares outstanding as of June 30, 2015 532,943 $ 26.35 During the six months ended June 30, 2015 , an independent director of the Company received a share based award, which will be settled in cash at March 1, 2016. The amount of such cash payment will equal the fair market value of 1,800 shares on the settlement date. As of June 30, 2015 , there was $11.3 million of total unrecognized compensation cost related to nonvested shares of common stock granted. That cost is expected to be recognized over the weighted average period of 3.25 years . The total fair value of shares of common stock vested during the six months ended June 30, 2015 and 2014 was $3.9 million and $3.6 million , respectively. The Company records compensation expense related to nonvested stock awards at the grant date for shares of common stock that are awarded fully vested, and over the vesting term on a straight line basis for shares of common stock that vest over time. The Company recorded $2.1 million of compensation expense related to nonvested stock grants in the six months ended June 30, 2015 and 2014, respectively. Employee Stock Purchase Plan In 2006, the Company adopted the Employee Stock Purchase Plan whereby eligible employees may purchase the Company’s common stock at 95% of the market price on the last day of the calendar quarter. There were 250,000 shares of common stock initially reserved for the plan. In 2013, the Company adopted the Amended and Restated Employee Stock Purchase Plan, which reserved an additional 250,000 shares of common stock to the plan. The table below details the shares of common stock issued during 2015: Number of Shares Per share price Shares available as of December 31, 2014 236,483 Shares issued during three months ended March 31, 2015 7,068 $ 29.62 Shares issued during three months ended June 30, 2015 5,702 $ 31.38 Shares available as of June 30, 2015 223,713 Stock Options During the six months ended June 30, 2015 , 9,500 options were exercised at a weighted average exercise price of $15.21 . No options were granted or forfeited. As of June 30, 2015, 5,500 options are outstanding with an exercise price of $19.75 . These options expire on June 14, 2016. Treasury Stock In conjunction with the vesting of the nonvested shares of common stock, recipients incur personal income tax obligations. The Company allows the recipients to turn in shares of common stock to satisfy minimum tax obligations. During the six months ended June 30, 2015 , the Company redeemed 38,797 shares of common stock valued at $1.3 million , related to these tax obligations. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contingencies The Company is involved in various legal proceedings arising in the ordinary course of business. Although the results of litigation cannot be predicted with certainty, management believes the outcome of pending litigation will not have a material adverse effect, after considering the effect of the Company’s insurance coverage, on the Company’s interim financial information. On June 13, 2012, a putative shareholder securities class action was filed against the Company and its Chairman and Chief Executive Officer in the United States District Court for the Western District of Louisiana, styled City of Omaha Police & Fire Retirement System v. LHC Group, Inc., et al. , Case No. 6:12-cv-1609-JTT-CMH. The action was filed on behalf of LHC shareholders who purchased shares of the Company’s common stock between July 30, 2008 and October 26, 2011. Plaintiff generally alleges that the defendants caused false and misleading statements to be issued in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (“the Exchange Act”) and Rule 10b-5 promulgated thereunder and that the Company’s Chairman and Chief Executive Officer is a control person under Section 20(a) of the Exchange Act. On November 2, 2012, Lead Plaintiff City of Omaha Police & Fire Retirement System filed an Amended Complaint for Violations of the Federal Securities Laws (“the Amended Complaint”) on behalf of the same putative class of LHC shareholders as the original Complaint. In addition to claims under Sections 10(b) and 20(a) of the Exchange Act, the Amended Complaint added a claim against the Chairman and Chief Executive Officer for violation of Section 20A of the Exchange Act. The Company believes these claims are without merit. On December 17, 2012, the Company and the Chairman and Chief Executive Officer filed a motion to dismiss the Amended Complaint, which was denied by Order dated March 15, 2013. On June 16, 2014, following mediation, the parties entered into a Stipulation of Settlement. On August 5, 2014, the District Court entered an Order Preliminarily Approving Settlement and Providing for Notice. The District Court held a final fairness hearing on December 11, 2014 and issued two Report and Recommendations on February 11, 2015 approving the settlement plan of allocation and Lead Plaintiff's fees and expenses. On March 3, 2015, the District Court entered its Judgments adopting the Report and Recommendation previously issued and dismissing the action with prejudice. The time for appeal has passed and no appeals were filed. This matter is now concluded. The Company's insurance carrier has funded the entire $7.9 million settlement amount. On October 18, 2013, a derivative complaint was filed by a purported Company shareholder against certain of the Company’s current and former executive officers, employees and members of its Board of Directors in the United States District Court for the Western District of Louisiana, styled Plummer v. Myers, et al. , Case No. 6:13-cv-2899-JTT-CMH. The action was brought derivatively on behalf of the Company, which is also named as a nominal defendant. Plaintiff generally alleges that the individual defendants breached their fiduciary duties owed to the Company. The complaint also alleges claims for insider selling and unjust enrichment against the Company’s Chairman and Chief Executive Officer and the Company’s former President and Chief Operating Officer. On December 30, 2013, a related derivative complaint was filed by a purported Company shareholder against certain of the Company’s current and former executive officers, employees and members of its Board of Directors in the United States District Court of the Western District of Louisiana, styled McCormack v. Myers, et al. , Case No. 6:13-cv-3301-JTT-CMH. The action was brought derivatively on the Company’s behalf and the Company was also named as a nominal defendant. Plaintiff generally alleges that the individual defendants breached their fiduciary duties owed to the Company and wasted corporate assets. Plaintiff also alleges that the Company’s Chairman and Chief Executive Officer caused false and misleading statements to be issued in violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder and that the Company’s Directors are control persons under Section 20(a) of the Exchange Act. The complaint also alleges claims for insider selling, misappropriation of information and unjust enrichment against the Company’s Chairman and Chief Executive Officer and the Company’s former President and Chief Operating Officer. On March 25, 2014, the McCormack derivative action was consolidated with the Plummer derivative action described above. The parties are presently discussing future case scheduling. The Company believes these claims are without merit and intends to defend this consolidated lawsuit vigorously. The Company cannot predict the outcome or effect of this consolidated lawsuit, if any, on the Company’s financial condition and results of operations. Except as discussed above, the Company is not aware of any pending or threatened investigations involving allegations of potential wrongdoing. Any negative findings in the above described lawsuits could result in substantial financial penalties or awards against the Company. At this time, the Company cannot predict the ultimate outcome of these matters or the potential range of damages, if any. Joint Venture Buy/Sell Provisions Most of the Company’s joint ventures include a buy/sell option that grants to the Company and its joint venture partners the right to require the other joint venture party to either purchase all of the exercising member’s membership interests or sell to the exercising member all of the non-exercising member’s membership interest, at the non-exercising member’s option, within 30 days of the receipt of notice of the exercise of the buy/sell option. In some instances, the purchase price is based on a multiple of the historical or future earnings before income taxes and depreciation and amortization of the equity joint venture at the time the buy/sell option is exercised. In other instances, the buy/sell purchase price will be negotiated by the partners and subject to a fair market valuation process. The Company has not received notice from any joint venture partners of their intent to exercise the terms of the buy/sell agreement nor has the Company notified any joint venture partners of its intent to exercise the terms of the buy/sell agreement. Compliance The laws and regulations governing the Company’s operations, along with the terms of participation in various government programs, regulate how the Company does business, the services offered and its interactions with patients and the public. These laws and regulations, and their interpretations, are subject to frequent change. Changes in existing laws or regulations, or their interpretations, or the enactment of new laws or regulations could materially and adversely affect the Company’s operations and financial condition. The Company is subject to various routine and non-routine governmental reviews, audits and investigations. In recent years, federal and state civil and criminal enforcement agencies have heightened and coordinated their oversight efforts related to the health care industry, including referral practices, cost reporting, billing practices, joint ventures and other financial relationships among health care providers. Violation of the laws governing the Company’s operations, or changes in the interpretation of those laws, could result in the imposition of fines, civil or criminal penalties, and/or termination of the Company’s rights to participate in federal and state-sponsored programs and suspension or revocation of the Company’s licenses. The Company believes that it is in material compliance with all applicable laws and regulations. |
Noncontrolling interest
Noncontrolling interest | 6 Months Ended |
Jun. 30, 2015 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling interest | Noncontrolling Interest Noncontrolling Interest-Redeemable A majority of the Company’s equity joint venture agreements include a provision that requires the Company to purchase the noncontrolling partner’s interest upon the occurrence of certain triggering events, such as death or bankruptcy of the partner or the partner’s exclusion from the Medicare or Medicaid programs. These triggering events and the related repurchase provisions are specific to each individual equity joint venture; if the repurchase provision is triggered in any one equity joint venture, the remaining equity joint ventures would not be impacted. Upon the occurrence of a triggering event, the Company would be required to purchase the noncontrolling partner’s interest at either the fair value or the book value at the time of purchase, as stated in the applicable joint venture agreement. Historically, no triggering event has occurred, and the Company believes the likelihood of a triggering event occurring is remote. The Company has never been required to purchase the noncontrolling interest of any of its equity joint venture partners. According to authoritative guidance, redeemable noncontrolling interests must be reported outside of permanent equity on the consolidated balance sheet in instances where there is a repurchase provision with a triggering event that is outside the control of the Company. The following table summarizes the activity of noncontrolling interest-redeemable for the six months ended June 30, 2015 (amounts in thousands): Balance as of December 31, 2014 $ 11,517 Net income attributable to noncontrolling interest-redeemable 3,785 Noncontrolling interest-redeemable distributions (3,321 ) Balance as of June 30, 2015 $ 11,981 |
Allowance for Uncollectible Acc
Allowance for Uncollectible Accounts | 6 Months Ended |
Jun. 30, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
Allowance for Uncollectible Accounts | Allowance for Uncollectible Accounts The following table summarizes the activity in the allowance for uncollectible accounts for the six months ended June 30, 2015 (amounts in thousands): Balance as of December 31, 2014 $ 18,582 Additions 10,064 Deductions (4,746 ) Balance as of June 30, 2015 $ 23,900 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company’s cash, receivables, accounts payable and accrued liabilities approximate their fair values because of their short maturity. The estimated fair value of intangible assets acquired was calculated using level 3 inputs based on the present value of anticipated future benefits. For the six months ended June 30, 2015 , the carrying value of the Company’s long-term debt approximates fair value as the interest rates approximates current rates. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information During the first quarter of 2015, the Company had a change in the composition of segments due to the community-based services meeting the criteria of qualitative thresholds established by ASC 280, Segment Reporting . Prior-period segment data has been restated to reflect the newly reportable segment in which community-based services were previously included in home-based services. The Company’s reportable segments consist of home health services, hospice services, community-based services, and facility-based services. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The following tables summarize the Company’s segment information for the three and six months ended June 30, 2015 and 2014 (amounts in thousands): Three Months Ended June 30, 2015 Home health services Hospice services Community-based services Facility- based services Total Net service revenue $ 153,272 $ 18,632 $ 10,312 $ 17,956 $ 200,172 Cost of service revenue 87,045 10,844 7,456 11,294 116,639 Provision for bad debts 3,645 299 691 170 4,805 General and administrative expenses 47,576 5,111 2,068 5,615 60,370 Operating income 15,006 2,378 97 877 18,358 Interest expense (438 ) (61 ) (6 ) (49 ) (554 ) Income before income taxes and noncontrolling interest 14,568 2,317 91 828 17,804 Income tax expense (1) 4,740 723 215 542 6,220 Net income (loss) 9,828 1,594 (124 ) 286 11,584 Less net income attributable to noncontrolling interests 2,251 253 (52 ) 182 2,634 Net income (loss) attributable to LHC Group, Inc.’s common stockholders $ 7,577 $ 1,341 $ (72 ) $ 104 $ 8,950 Total assets $ 400,906 $ 36,178 $ 33,131 $ 38,830 $ 509,045 (1) During the three months ended, June 30, 2015, the Company's internal allocation methodology for recording income tax expense was changed to record each segment's respective tax expense on pretax net income at the Company's effective tax rate of 41.0%; the change was done on a year-to-date basis. Prior to this quarter, income tax expense was allocated to each segment based on their respective percentage of equity. There is no impact on the Company's consolidated income tax expense. Three Months Ended June 30, 2014 Home health services Hospice services Community-based services Facility- based services Total Net service revenue $ 145,861 $ 17,068 $ 8,399 $ 17,539 $ 188,867 Cost of service revenue 84,278 10,151 5,945 11,153 111,527 Provision for bad debts 3,701 93 367 202 4,363 General and administrative expenses 47,661 4,789 2,065 5,208 59,723 Operating income 10,221 2,035 22 976 13,254 Interest expense (657 ) (83 ) (7 ) (83 ) (830 ) Income before income taxes and noncontrolling interest 9,564 1,952 15 893 12,424 Income tax expense 3,405 530 31 386 4,352 Net income (loss) 6,159 1,422 (16 ) 507 8,072 Less net income attributable to noncontrolling interests 1,541 335 (4 ) 139 2,011 Net income (loss) attributable to LHC Group, Inc.’s common stockholders $ 4,618 $ 1,087 $ (12 ) $ 368 $ 6,061 Total assets $ 390,542 $ 35,530 $ 34,712 $ 36,841 $ 497,625 Six Months Ended June 30, 2015 Home health services Hospice services Community-based services Facility- based services Total Net service revenue $ 299,864 $ 35,483 $ 20,085 $ 37,819 $ 393,251 Cost of service revenue 172,591 20,943 14,356 23,175 231,065 Provision for bad debts 8,121 646 871 426 10,064 General and administrative expenses 94,030 9,999 4,285 11,354 119,668 Operating income 25,122 3,895 573 2,864 32,454 Interest expense (868 ) (121 ) (12 ) (98 ) (1,099 ) Income before income taxes and noncontrolling interest 24,254 3,774 561 2,766 31,355 Income tax expense 8,397 1,343 260 949 10,949 Net income 15,857 2,431 301 1,817 20,406 Less net income (loss) attributable to noncontrolling interests 3,772 499 (72 ) 452 4,651 Net income attributable to LHC Group, Inc.’s common stockholders $ 12,085 $ 1,932 $ 373 $ 1,365 $ 15,755 Six Months Ended June 30, 2014 Home health services Hospice services Community-based services Facility- based services Total Net service revenue $ 273,654 $ 32,290 $ 9,286 $ 37,318 $ 352,548 Cost of service revenue 160,078 19,048 6,589 23,146 208,861 Provision for bad debts 6,324 198 398 805 7,725 General and administrative expenses 91,855 9,233 2,388 10,826 114,302 Operating income (loss) 15,397 3,811 (89 ) 2,541 21,660 Interest expense (964 ) (122 ) (10 ) (122 ) (1,218 ) Income (loss) before income taxes and noncontrolling interest 14,433 3,689 (99 ) 2,419 20,442 Income tax expense 5,675 876 54 670 7,275 Net income (loss) 8,758 2,813 (153 ) 1,749 13,167 Less net income attributable to noncontrolling interests 2,148 536 (4 ) 358 3,038 Net income (loss) attributable to LHC Group, Inc.’s common stockholders $ 6,610 $ 2,277 $ (149 ) $ 1,391 $ 10,129 |
Significant Accounting Polici20
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Critical Accounting Policies | Critical Accounting Policies The Company’s most critical accounting policies relate to the principles of consolidation, revenue recognition and accounts receivable and allowances for uncollectible accounts. |
Principles of Consolidation | Principles of Consolidation The interim financial information includes all subsidiaries and entities controlled by the Company. Control is defined by the Company as ownership of a majority of the voting interest of an entity. The interim financial information includes entities in which the Company receives a majority of the entities’ expected residual returns and absorbs a majority of the entities’ expected losses. Third party equity interests in the consolidated joint ventures are reflected as noncontrolling interests in the Company’s interim financial information. The following table summarizes the percentage of net service revenue earned by type of ownership or relationship the Company had with the operating entity: Three Months Ended Six Months Ended 2015 2014 2015 2014 Wholly-owned subsidiaries 54.5 % 54.5 % 54.2 % 52.0 % Equity joint ventures 43.6 42.9 43.7 45.3 License leasing arrangements 1.0 1.8 1.2 1.9 Management services 0.9 0.8 0.9 0.8 100.0 % 100.0 % 100.0 % 100.0 % All significant intercompany accounts and transactions have been eliminated in the Company’s accompanying interim financial information. Business combinations accounted for under the acquisition method have been included in the interim financial information from the respective dates of acquisition. The following describes the Company’s consolidation policy with respect to its various ventures excluding wholly-owned subsidiaries: Equity Joint Ventures The members of the Company’s equity joint ventures participate in profits and losses in proportion to their equity interests. The Company consolidates these entities as the Company has voting control over the entities. License Leasing Arrangements The Company, through wholly-owned subsidiaries, leases home health licenses necessary to operate certain of its home nursing and hospice agencies. The Company owns 100% of the equity of these entities and consolidates them based on such ownership. Management Services The Company has various management services agreements under which the Company manages certain operations of agencies and facilities. The Company does not consolidate these agencies or facilities because the Company does not have an ownership interest in, and does not have an obligation to absorb losses of, the entities that own the agencies and facilities or the right to receive the benefits from those entities. |
Revenue Recognition | Revenue Recognition The Company reports net service revenue at the estimated net realizable amount due from Medicare, Medicaid and other commercial or managed care insurance programs for services rendered. The Company assesses the patient's ability to pay for their healthcare services at the time of patient admission based on the Company's verification of the patient's insurance coverage under the Medicare, Medicaid, and other commercial or managed care insurance program. All such payors contribute to the net service revenue of the Company’s home health services, hospice services, community-based services, and facility-based services. The following table sets forth the percentage of net service revenue earned by category of payor for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended 2015 2014 2015 2014 Payor: Medicare 74.0 % 75.3 % 74.3 % 76.9 % Medicaid 1.5 1.4 1.5 1.3 Other 24.5 23.3 24.2 21.8 100.0 % 100.0 % 100.0 % 100.0 % The following table sets forth the percentage of net service revenue contributed from each reporting segment for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended 2015 2014 2015 2014 Home health services 76.6 % 77.2 % 76.3 % 77.7 % Hospice services 9.3 9.0 9.0 9.1 Community-based services 5.1 4.5 5.1 2.6 Facility-based services 9.0 9.3 9.6 10.6 100.0 % 100.0 % 100.0 % 100.0 % Medicare Home Health The Company’s home nursing Medicare patients are classified into one of 153 home health resource groups prior to receiving services. Based on the patient’s home health resource group, the Company is entitled to receive a standard prospective Medicare payment for delivering care over a 60 -day period referred to as an episode. The Company recognizes revenue based on the number of days elapsed during an episode of care within the reporting period. Final payments from Medicare may reflect one of four retroactive adjustments to ensure the adequacy and effectiveness of the total reimbursement: (a) an outlier payment if the patient’s care was unusually costly; (b) a low utilization adjustment if the number of visits was fewer than five ; (c) a partial payment if the patient transferred to another provider before completing the episode; or (d) a payment adjustment based upon the level of therapy services required. In calculating net service revenue, management estimates the impact of these payment adjustments based on historical experience and records this estimate as the services are rendered using the expected level of services that will be provided. Hospice Services The Company is paid by Medicare under a per diem payment system. The Company receives one of four predetermined daily or hourly rates based upon the level of care the Company furnished. The Company records net service revenue from hospice services based on the daily or hourly rate and recognizes revenue as hospice services are provided. Hospice payments are subject to an inpatient cap and an overall Medicare payment cap. The inpatient cap relates to individual programs receiving more than 20% of its total Medicare reimbursement from inpatient care services and the overall Medicare payment cap relates to individual providers receiving reimbursements in excess of a “cap amount,” calculated by multiplying the number of beneficiaries during the period by a statutory amount that is indexed for inflation. The determination for each cap is made annually based on the 12 -month period ending on October 31 of each year. The Company monitors its limits on a provider-by-provider basis and records an estimate of its liability for reimbursements received in excess of the cap amount. Beginning with the cap year October 1, 2014, CMS implemented a new process requiring hospice providers to self-report their cap liabilities and remit applicable payment by March 31, 2016. Facility-Based Services The Company is reimbursed by Medicare for services provided under the LTACH prospective payment system. Each patient is assigned a long-term care diagnosis-related group. The Company is paid a predetermined fixed amount intended to reflect the average cost of treating a Medicare patient classified in that particular long-term care diagnosis-related group. For selected patients, the amount may be further adjusted based on length of stay and facility-specific costs, as well as in instances where a patient is discharged and subsequently re-admitted, among other factors. The Company calculates the adjustment based on a historical average of these types of adjustments for claims paid. Similar to other Medicare prospective payment systems, the rate is also adjusted for geographic wage differences. Revenue is recognized for the Company’s LTACHs as services are provided. Medicaid, Managed Care and Other Payors The Company’s Medicaid reimbursement is based on a predetermined fee schedule applied to each service provided. Therefore, revenue is recognized for Medicaid services as services are provided based on this fee schedule. The Company’s managed care and other payors reimburse the Company based upon a predetermined fee schedule or an episodic basis, depending on the terms of the applicable contract. Accordingly, the Company recognizes revenue from managed care and other payors in the same manner as the Company recognizes revenue from Medicare or Medicaid. |
Accounts Receivable and Allowances for Uncollectible Accounts | Accounts Receivable and Allowances for Uncollectible Accounts The Company reports accounts receivable net of estimated allowances for uncollectible accounts and adjustments. Accounts receivable are uncollateralized and primarily consist of amounts due from Medicare, other third-party payors and patients. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value. The credit risk for other concentrations of receivables is limited due to the significance of Medicare as the primary payor. The Company believes the credit risk associated with its Medicare accounts, which have historically exceeded 55% of its patient accounts receivable, is limited due to (i) the historical collection rate from Medicare and (ii) the fact that Medicare is a U.S. government payor. The Company does not believe that there are any other concentrations of receivables from any particular payor that would subject it to any significant credit risk in the collection of accounts receivable. The provision for bad debts is based upon the Company’s assessment of historical and expected net collections, business and economic conditions and trends in government reimbursement. Uncollectible accounts are written off when the Company has determined the account will not be collected. A portion of the estimated Medicare prospective payment system reimbursement from each submitted home nursing episode is received in the form of a request for anticipated payment (“RAP”). The Company submits a RAP for 60% of the estimated reimbursement for the initial episode at the start of care. The full amount of the episode is billed after the episode has been completed. The RAP received for that particular episode is deducted from the final payment. If a final bill is not submitted within the greater of 120 days from the start of the episode, or 60 days from the date the RAP was paid, any RAP received for that episode will be recouped by Medicare from any other Medicare claims in process for that particular provider. The RAP and final claim must then be resubmitted. For subsequent episodes of care contiguous with the first episode for a particular patient, the Company submits a RAP for 50% instead of 60% of the estimated reimbursement. The Company’s services to the Medicare population are paid at prospectively set amounts that can be determined at the time services are rendered. The Company’s Medicaid reimbursement is based on a predetermined fee schedule applied to each individual service it provides. The Company’s managed care contracts and contracts with other payors provide for payments based upon a predetermined fee schedule or an episodic basis, depending on the terms of the applicable contract. Because of its payor mix, the Company is able to calculate its actual amount due at the patient level and adjust the gross charges down to the actual amount at the time of billing. This negates the need to record an estimated contractual allowance when reporting net service revenue for each reporting period. |
Earnings Per Share | Earnings per Share Basic per share information is computed by dividing the relevant amounts from the condensed consolidated statements of income by the weighted-average number of shares outstanding during the period, under the treasury stock method. Diluted per share information is also computed using the treasury stock method, by dividing the relevant amounts from the condensed consolidated statements of income by the weighted-average number of shares outstanding plus potentially dilutive shares. The following table sets forth shares used in the computation of basic and diluted per share information: Three Months Ended Six Months Ended 2015 2014 2015 2014 Weighted average number of shares outstanding for basic per share calculation 17,410,971 17,233,264 17,366,141 17,190,070 Effect of dilutive potential shares: Options 3,717 3,750 2,741 4,031 Nonvested stock 114,412 40,210 159,219 74,455 Adjusted weighted average shares for diluted per share calculation 17,529,100 17,277,224 17,528,101 17,268,556 Anti-dilutive shares — 187,179 190,385 210,570 |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements On May 28, 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers, ("ASU 2014-9") which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-9 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2018. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-9 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. |
Significant Accounting Polici21
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Percentage of Net Service Revenue Earned by Type of Ownership or Relationship with Operating Entity | The following table summarizes the percentage of net service revenue earned by type of ownership or relationship the Company had with the operating entity: Three Months Ended Six Months Ended 2015 2014 2015 2014 Wholly-owned subsidiaries 54.5 % 54.5 % 54.2 % 52.0 % Equity joint ventures 43.6 42.9 43.7 45.3 License leasing arrangements 1.0 1.8 1.2 1.9 Management services 0.9 0.8 0.9 0.8 100.0 % 100.0 % 100.0 % 100.0 % |
Percentage of Net Service Revenue Earned by Category of Payor | The following table sets forth the percentage of net service revenue earned by category of payor for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended 2015 2014 2015 2014 Payor: Medicare 74.0 % 75.3 % 74.3 % 76.9 % Medicaid 1.5 1.4 1.5 1.3 Other 24.5 23.3 24.2 21.8 100.0 % 100.0 % 100.0 % 100.0 % |
Percentage of Net Service Revenue Contributed from Each Reporting Segment | The following table sets forth the percentage of net service revenue contributed from each reporting segment for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended 2015 2014 2015 2014 Home health services 76.6 % 77.2 % 76.3 % 77.7 % Hospice services 9.3 9.0 9.0 9.1 Community-based services 5.1 4.5 5.1 2.6 Facility-based services 9.0 9.3 9.6 10.6 100.0 % 100.0 % 100.0 % 100.0 % |
Shares Used in Computation of Basic and Diluted Per Share Information | The following table sets forth shares used in the computation of basic and diluted per share information: Three Months Ended Six Months Ended 2015 2014 2015 2014 Weighted average number of shares outstanding for basic per share calculation 17,410,971 17,233,264 17,366,141 17,190,070 Effect of dilutive potential shares: Options 3,717 3,750 2,741 4,031 Nonvested stock 114,412 40,210 159,219 74,455 Adjusted weighted average shares for diluted per share calculation 17,529,100 17,277,224 17,528,101 17,268,556 Anti-dilutive shares — 187,179 190,385 210,570 |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Recorded Goodwill by Reporting Unit | The changes in recorded goodwill by reporting unit for the six months ended June 30, 2015 were as follows (amounts in thousands): Home health reporting unit Hospice Community-based reporting unit Facility-based reporting unit Total Balance as of December 31, 2014 $ 196,296 $ 14,793 $ 17,339 $ 11,591 $ 240,019 Goodwill from acquisitions 138 — 204 — 342 Goodwill related to noncontrolling interests 14 — 22 — 36 Goodwill related to disposal (156 ) — (27 ) — (183 ) Balance as of June 30, 2015 $ 196,292 $ 14,793 $ 17,538 $ 11,591 $ 240,214 |
Summary of Changes in Intangible Assets | Intangible assets consisted of the following as of June 30, 2015 and December 31, 2014 (amounts in thousands): June 30, 2015 Estimated useful life Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived assets : Trade names Indefinite $ 54,855 $ — $ 54,855 Certificates of need/licenses Indefinite 19,259 — 19,259 Indefinite-lived balance at end of period $ 74,114 $ — $ 74,114 Definite-lived assets: Trade names 2 months — 5 years $ 8,227 $ (3,633 ) $ 4,594 Non-compete agreements 1 month — 3 years 4,224 (3,905 ) 319 Definite-lived balance at end of period $ 12,451 $ (7,538 ) $ 4,913 Balance as of June 30, 2015 $ 86,565 $ (7,538 ) $ 79,027 December 31, 2014 Estimated useful life Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived assets : Trade names Indefinite $ 54,732 $ — $ 54,732 Certificates of need/licenses Indefinite 19,058 — 19,058 Indefinite-lived balance at end of period $ 73,790 $ — $ 73,790 Definite-lived assets: Trade names 2 months — 5 years $ 8,230 $ (2,797 ) $ 5,433 Non-compete agreements 3 months — 3 years 4,225 (3,763 ) 462 Definite-lived balance at end of period $ 12,455 $ (6,560 ) $ 5,895 Balance as of December 31, 2014 $ 86,245 $ (6,560 ) $ 79,685 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Nonvested Stock Activity | The following table represents the nonvested stock activity for the six months ended June 30, 2015 : Number of Shares Weighted average grant date fair value Nonvested shares outstanding as of December 31, 2014 524,287 $ 22.56 Granted 191,065 $ 33.80 Vested (166,529 ) $ 23.32 Forfeited (15,880 ) $ 22.44 Nonvested shares outstanding as of June 30, 2015 532,943 $ 26.35 |
Shares of Common Stock Issued During 2015 Under Employee Stock Purchase Plan | The table below details the shares of common stock issued during 2015: Number of Shares Per share price Shares available as of December 31, 2014 236,483 Shares issued during three months ended March 31, 2015 7,068 $ 29.62 Shares issued during three months ended June 30, 2015 5,702 $ 31.38 Shares available as of June 30, 2015 223,713 |
Noncontrolling interest (Tables
Noncontrolling interest (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Noncontrolling Interest [Abstract] | |
Summary of Activity of Noncontrolling Interest-Redeemable | The following table summarizes the activity of noncontrolling interest-redeemable for the six months ended June 30, 2015 (amounts in thousands): Balance as of December 31, 2014 $ 11,517 Net income attributable to noncontrolling interest-redeemable 3,785 Noncontrolling interest-redeemable distributions (3,321 ) Balance as of June 30, 2015 $ 11,981 |
Allowance for Uncollectible A25
Allowance for Uncollectible Accounts (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
Allowance for Uncollectible Accounts | The following table summarizes the activity in the allowance for uncollectible accounts for the six months ended June 30, 2015 (amounts in thousands): Balance as of December 31, 2014 $ 18,582 Additions 10,064 Deductions (4,746 ) Balance as of June 30, 2015 $ 23,900 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | The following tables summarize the Company’s segment information for the three and six months ended June 30, 2015 and 2014 (amounts in thousands): Three Months Ended June 30, 2015 Home health services Hospice services Community-based services Facility- based services Total Net service revenue $ 153,272 $ 18,632 $ 10,312 $ 17,956 $ 200,172 Cost of service revenue 87,045 10,844 7,456 11,294 116,639 Provision for bad debts 3,645 299 691 170 4,805 General and administrative expenses 47,576 5,111 2,068 5,615 60,370 Operating income 15,006 2,378 97 877 18,358 Interest expense (438 ) (61 ) (6 ) (49 ) (554 ) Income before income taxes and noncontrolling interest 14,568 2,317 91 828 17,804 Income tax expense (1) 4,740 723 215 542 6,220 Net income (loss) 9,828 1,594 (124 ) 286 11,584 Less net income attributable to noncontrolling interests 2,251 253 (52 ) 182 2,634 Net income (loss) attributable to LHC Group, Inc.’s common stockholders $ 7,577 $ 1,341 $ (72 ) $ 104 $ 8,950 Total assets $ 400,906 $ 36,178 $ 33,131 $ 38,830 $ 509,045 (1) During the three months ended, June 30, 2015, the Company's internal allocation methodology for recording income tax expense was changed to record each segment's respective tax expense on pretax net income at the Company's effective tax rate of 41.0%; the change was done on a year-to-date basis. Prior to this quarter, income tax expense was allocated to each segment based on their respective percentage of equity. There is no impact on the Company's consolidated income tax expense. Three Months Ended June 30, 2014 Home health services Hospice services Community-based services Facility- based services Total Net service revenue $ 145,861 $ 17,068 $ 8,399 $ 17,539 $ 188,867 Cost of service revenue 84,278 10,151 5,945 11,153 111,527 Provision for bad debts 3,701 93 367 202 4,363 General and administrative expenses 47,661 4,789 2,065 5,208 59,723 Operating income 10,221 2,035 22 976 13,254 Interest expense (657 ) (83 ) (7 ) (83 ) (830 ) Income before income taxes and noncontrolling interest 9,564 1,952 15 893 12,424 Income tax expense 3,405 530 31 386 4,352 Net income (loss) 6,159 1,422 (16 ) 507 8,072 Less net income attributable to noncontrolling interests 1,541 335 (4 ) 139 2,011 Net income (loss) attributable to LHC Group, Inc.’s common stockholders $ 4,618 $ 1,087 $ (12 ) $ 368 $ 6,061 Total assets $ 390,542 $ 35,530 $ 34,712 $ 36,841 $ 497,625 Six Months Ended June 30, 2015 Home health services Hospice services Community-based services Facility- based services Total Net service revenue $ 299,864 $ 35,483 $ 20,085 $ 37,819 $ 393,251 Cost of service revenue 172,591 20,943 14,356 23,175 231,065 Provision for bad debts 8,121 646 871 426 10,064 General and administrative expenses 94,030 9,999 4,285 11,354 119,668 Operating income 25,122 3,895 573 2,864 32,454 Interest expense (868 ) (121 ) (12 ) (98 ) (1,099 ) Income before income taxes and noncontrolling interest 24,254 3,774 561 2,766 31,355 Income tax expense 8,397 1,343 260 949 10,949 Net income 15,857 2,431 301 1,817 20,406 Less net income (loss) attributable to noncontrolling interests 3,772 499 (72 ) 452 4,651 Net income attributable to LHC Group, Inc.’s common stockholders $ 12,085 $ 1,932 $ 373 $ 1,365 $ 15,755 Six Months Ended June 30, 2014 Home health services Hospice services Community-based services Facility- based services Total Net service revenue $ 273,654 $ 32,290 $ 9,286 $ 37,318 $ 352,548 Cost of service revenue 160,078 19,048 6,589 23,146 208,861 Provision for bad debts 6,324 198 398 805 7,725 General and administrative expenses 91,855 9,233 2,388 10,826 114,302 Operating income (loss) 15,397 3,811 (89 ) 2,541 21,660 Interest expense (964 ) (122 ) (10 ) (122 ) (1,218 ) Income (loss) before income taxes and noncontrolling interest 14,433 3,689 (99 ) 2,419 20,442 Income tax expense 5,675 876 54 670 7,275 Net income (loss) 8,758 2,813 (153 ) 1,749 13,167 Less net income attributable to noncontrolling interests 2,148 536 (4 ) 358 3,038 Net income (loss) attributable to LHC Group, Inc.’s common stockholders $ 6,610 $ 2,277 $ (149 ) $ 1,391 $ 10,129 |
Organization - Additional Infor
Organization - Additional Information (Detail) - Jun. 30, 2015 | ServiceProviderState |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of service providers operated | 337 |
Number of states in which Company operates | State | 28 |
Significant Accounting Polici28
Significant Accounting Policies - Percentage of Net Service Revenue Earned by Type of Ownership or Relationship with Operating Entity (Detail) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 100.00% | 100.00% | 100.00% | 100.00% |
Wholly-owned subsidiaries | ||||
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 54.50% | 54.50% | 54.20% | 52.00% |
Equity joint ventures | ||||
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 43.60% | 42.90% | 43.70% | 45.30% |
License leasing arrangements | ||||
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 1.00% | 1.80% | 1.20% | 1.90% |
Management services | ||||
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 0.90% | 0.80% | 0.90% | 0.80% |
Significant Accounting Polici29
Significant Accounting Policies - Percentage of Net Service Revenue Earned by Category of Payor (Detail) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Significant Accounting Policies [Line Items] | ||||
Percentage of net service revenue | 100.00% | 100.00% | 100.00% | 100.00% |
Medicare revenue | ||||
Significant Accounting Policies [Line Items] | ||||
Percentage of net service revenue | 74.00% | 75.30% | 74.30% | 76.90% |
Medicaid revenue | ||||
Significant Accounting Policies [Line Items] | ||||
Percentage of net service revenue | 1.50% | 1.40% | 1.50% | 1.30% |
Other revenue | ||||
Significant Accounting Policies [Line Items] | ||||
Percentage of net service revenue | 24.50% | 23.30% | 24.20% | 21.80% |
Significant Accounting Polici30
Significant Accounting Policies - Percentage of Net Service Revenue Contributed from Each Reporting Segment (Detail) - Sales Revenue, Segment | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 100.00% | 100.00% | 100.00% | 100.00% |
Home health services | ||||
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 76.60% | 77.20% | 76.30% | 77.70% |
Hospice services | ||||
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 9.30% | 9.00% | 9.00% | 9.10% |
Community-based services | ||||
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 5.10% | 4.50% | 5.10% | 2.60% |
Facility-based services | ||||
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 9.00% | 9.30% | 9.60% | 10.60% |
Significant Accounting Polici31
Significant Accounting Policies - Shares Used in Computation of Basic and Diluted Per Share Information (Detail) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Weighted average shares outstanding: | ||||
Weighted average number of shares outstanding for basic per share calculation | 17,410,971 | 17,233,264 | 17,366,141 | 17,190,070 |
Effect of dilutive potential shares: | ||||
Options | 3,717 | 3,750 | 2,741 | 4,031 |
Nonvested stock | 114,412 | 40,210 | 159,219 | 74,455 |
Adjusted weighted average shares for diluted per share calculation | 17,529,100 | 17,277,224 | 17,528,101 | 17,268,556 |
Anti-dilutive shares | 0 | 187,179 | 190,385 | 210,570 |
Significant Accounting Polici32
Significant Accounting Policies - Additional Information (Detail) - Jun. 30, 2015 | GrouptimePeriodicRate |
Summary Of Significant Accounting Policies [Line Items] | |
License leasing arrangements | 100.00% |
Number of Medicare home health resource groups | Group | 153 |
Number of days from date RAP paid to submit final Medicare bill | 60 days |
Low utilization adjustment visits | time | 5 |
Selected hospice, periodic rate used to calculate revenue | 1 |
Number of hospice, periodic rates used to calculate revenue | 4 |
Minimum percentage of Medicare reimbursement from inpatient care services that subjects individual programs to inpatient cap | 20.00% |
Determination period for hospice Medicare inpatient reimbursement cap | 12 months |
Medicare credit risk for accounts receivable | 55.00% |
Reimbursement for initial episode of care | 60.00% |
Number of days from start of episode to submit final Medicare bill | 120 days |
Reimbursement for subsequent episodes of care | 50.00% |
Acquisitions and Disposals - Ad
Acquisitions and Disposals - Additional Information (Detail) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | |
Business Acquisition [Line Items] | ||
Cash paid for acquisitions, primarily goodwill and intangible assets | $ 566 | $ 65,103 |
Fair value of the acquired intangible assets | 400 | |
Goodwill | $ 200 | |
Home health services | ||
Business Acquisition [Line Items] | ||
Number of entities acquired | 1 | |
Community-based services | ||
Business Acquisition [Line Items] | ||
Number of entities acquired | 1 |
Goodwill and Intangibles - Sche
Goodwill and Intangibles - Schedule of Changes in Recorded Goodwill by Reporting Unit (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 240,019 |
Goodwill from acquisitions | 342 |
Goodwill related to noncontrolling interests | 36 |
Goodwill related to disposal | (183) |
Balance at end of period | 240,214 |
Home health reporting unit | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 196,296 |
Goodwill from acquisitions | 138 |
Goodwill related to noncontrolling interests | 14 |
Goodwill related to disposal | (156) |
Balance at end of period | 196,292 |
Hospice reporting unit | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 14,793 |
Goodwill from acquisitions | 0 |
Goodwill related to noncontrolling interests | 0 |
Goodwill related to disposal | 0 |
Balance at end of period | 14,793 |
Community-based reporting unit | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 17,339 |
Goodwill from acquisitions | 204 |
Goodwill related to noncontrolling interests | 22 |
Goodwill related to disposal | (27) |
Balance at end of period | 17,538 |
Facility-based reporting unit | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 11,591 |
Goodwill from acquisitions | 0 |
Goodwill related to noncontrolling interests | 0 |
Goodwill related to disposal | 0 |
Balance at end of period | $ 11,591 |
Goodwill and Intangibles- Summa
Goodwill and Intangibles- Summary of Changes in Intangible Assets (Detail) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Dec. 31, 2014 | |
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived assets, carrying amount | $ 74,114 | $ 73,790 |
Definite-lived assets, gross carrying amount | 12,451 | 12,455 |
Intangible assets, gross carrying amount | 86,565 | 86,245 |
Definite-lived assets, accumulated amortization | (7,538) | (6,560) |
Intangible assets, accumulated amortization ending balance | (7,538) | (6,560) |
Definite-lived assets, net carrying amount | 4,913 | 5,895 |
Intangible assets, net carrying amount | 79,027 | 79,685 |
Certificates of need/licenses | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived assets, carrying amount | 19,259 | 19,058 |
Trade names | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived assets, carrying amount | 54,855 | 54,732 |
Definite-lived assets, gross carrying amount | 8,227 | 8,230 |
Definite-lived assets, accumulated amortization | (3,633) | (2,797) |
Definite-lived assets, net carrying amount | $ 4,594 | $ 5,433 |
Trade names | Minimum | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Estimated useful life | 2 months | 3 months |
Trade names | Maximum | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Estimated useful life | 5 years | 5 years |
Non-compete agreements | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Definite-lived assets, gross carrying amount | $ 4,224 | $ 4,225 |
Definite-lived assets, accumulated amortization | (3,905) | (3,763) |
Definite-lived assets, net carrying amount | $ 319 | $ 462 |
Non-compete agreements | Minimum | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Estimated useful life | 1 month | 3 months |
Non-compete agreements | Maximum | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Estimated useful life | 3 years | 3 years |
Goodwill and Intangibles - Addi
Goodwill and Intangibles - Additional Information (Detail) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, net carrying amount | $ 79,027 | $ 79,685 |
Home health services | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, net carrying amount | 65,700 | |
Hospice services | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, net carrying amount | 5,000 | |
Community-based services | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, net carrying amount | 7,300 | |
Facility-based services | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Intangible assets, net carrying amount | $ 1,000 |
Debt - Additional Information (
Debt - Additional Information (Detail) $ in Thousands | Jun. 18, 2014USD ($)Instruments | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) |
Debt Instrument [Line Items] | |||
Maximum principal borrowing amount | $ 225,000 | ||
Letter of credit, sub-limit amount | $ 15,000 | ||
Credit facility scheduled to expire | Jun. 18, 2019 | ||
Line of credit facility, description | (a) the Federal Funds Rate in effect on such day plus 0.5% (b) the Prime Rate in effect on such day and (c) the Eurodollar Rate for a one month interest period on such day plus 1.0%, plus a margin ranging from 0.75% to 1.5% per annum or Eurodollar rate plus a margin ranging from 1.75% to 2.5% per annum. Swing line loans bear interest at the Base Rate. | ||
Document Period End Date | Jun. 30, 2015 | ||
Line of credit facility, interest rate at period end | 1.94% | ||
Line of credit facility drawn | $ 40,000 | $ 60,000 | |
Letters of Credit Outstanding, Amount | 7,100 | ||
Available credit under agreement | $ 177,900 | ||
Minimum | |||
Debt Instrument [Line Items] | |||
Commitment fee rates for unused commitments | 0.225% | ||
Maximum | |||
Debt Instrument [Line Items] | |||
Commitment fee rates for unused commitments | 0.375% | ||
Federal funds rate | |||
Debt Instrument [Line Items] | |||
Line of credit facility interest rate | 0.50% | ||
Eurodollar | |||
Debt Instrument [Line Items] | |||
Line of credit facility interest rate | 1.00% | 1.94% | |
Line of credit facility, borrowing outstanding | Instruments | 15 | ||
Eurodollar | Minimum | |||
Debt Instrument [Line Items] | |||
Line of credit facility interest rate | 1.75% | ||
Eurodollar | Maximum | |||
Debt Instrument [Line Items] | |||
Line of credit facility interest rate | 2.50% | ||
Base rate | |||
Debt Instrument [Line Items] | |||
Line of credit facility interest rate | 4.00% | ||
Base rate | Minimum | |||
Debt Instrument [Line Items] | |||
Line of credit facility interest rate | 0.75% | ||
Base rate | Maximum | |||
Debt Instrument [Line Items] | |||
Line of credit facility interest rate | 1.50% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) $ in Millions | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Income Tax Disclosure [Abstract] | |
Tax payable as an unrecognized tax benefit | $ 3.4 |
Shareholders' Equity - Nonveste
Shareholders' Equity - Nonvested Stock Activity (Detail) - 6 months ended Jun. 30, 2015 - $ / shares | Total |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | |
Nonvested shares outstanding, Number of Shares, Beginning Balance | 524,287 |
Granted, Number of Shares | 191,065 |
Vested, Number of Shares | (166,529) |
Forfeited, Number of Shares | (15,880) |
Nonvested shares outstanding, Number of Shares, Ending Balance | 532,943 |
Nonvested shares outstanding, Weighted average grant date fair value, Beginning Balance | $ 22.56 |
Granted, Weighted average grant date fair value | 33.80 |
Vested, Weighted average grant date fair value | 23.32 |
Forfeited, Weighted average grant date fair value | 22.44 |
Nonvested shares outstanding, Weighted average grant date fair value, Ending Balance | $ 26.35 |
Stockholder's Equity - Shares o
Stockholder's Equity - Shares of Common Stock Issued During 2014 Under Employee Stock Purchase Plan (Detail) - $ / shares | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2015 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Shares available, Beginning balance | 236,483 | 236,483 | |
Shares issued during period (shares) | 5,702 | 7,068 | |
Shares available, Ending Balance | 223,713 | 223,713 | |
Shares issued during period (per share price) | $ 31.38 | $ 29.62 |
Stockholder's Equity - Addition
Stockholder's Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Stockholders' Equity Note [Abstract] | ||
Common stock reserved and available for issuance | 1,500,000 | |
Common stock shares available for grant | 499,037 | |
Document Period End Date | Jun. 30, 2015 | |
Percentage of directors' stock grant vested on one year anniversary date | 100.00% | |
Period of Vested Shares | 5 years | |
Granted, Weighted average grant date fair value | $ 33.80 | |
Share based award, settled in cash | 1,800 | |
Total unrecognized compensation cost related to nonvested shares of common stock granted | $ 11,300 | |
Weighted average period of cost recognized | 3 years 3 months 1 day | |
Total fair value of shares of common stock vested | $ 3,900 | $ 3,600 |
Compensation expense related to nonvested stock grants | $ 2,100 | |
Price of shares issued under Employee Stock Purchase Plan as a percentage of FMV | 95.00% | |
Number of shares reserved for the Employee Stock Purchase Plan | 250,000 | |
Additional shares authorized for issuance | 250,000 | |
Stock options exercised, Shares | 9,500 | |
Options, Weighted Average Exercise Price | $ 15.21 | |
Options granted | 0 | |
Options outstanding | 5,500 | |
Options, Outstanding, Weighted Average Exercise Price | $ 19.75 | |
Shares redeemed to satisfy personal tax obligations | 38,797 | |
Treasury shares redeemed to pay income tax | $ 1,329 | |
Options forfeited | 0 | |
Director | ||
Stockholders' Equity Note [Abstract] | ||
Non vested stock grants to Independent director | 16,200 | |
Director Period of Vested Shares | 1 year | |
Employee | ||
Stockholders' Equity Note [Abstract] | ||
Nonvested stock grants to employees | 174,865 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - 6 months ended Jun. 30, 2015 - USD ($) $ in Millions | Total |
Commitments and Contingencies Disclosure [Abstract] | |
Settlement amount | $ 7.9 |
Period of joint venture buy/sell option | 30 days |
Noncontrolling interest - Summa
Noncontrolling interest - Summary of Activity of Noncontrolling Interest-Redeemable (Detail) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |
Noncontrolling interest-redeemable, Beginning balance | $ 11,517 |
Net income attributable to noncontrolling interest-redeemable | 3,785 |
Noncontrolling interest-redeemable distributions | (3,321) |
Noncontrolling interest-redeemable, Ending balance | $ 11,981 |
Allowance for Uncollectible A44
Allowance for Uncollectible Accounts - Allowance for Uncollectible Accounts Activity and Ending Balances (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Beginning balance | $ 18,582 | |||
Additions | $ 4,805 | $ 4,363 | 10,064 | $ 7,725 |
Deductions | (4,746) | |||
Ending balance | $ 23,900 | $ 23,900 |
Segment Information - Segment I
Segment Information - Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||
Net service revenue | $ 200,172 | $ 188,867 | $ 393,251 | $ 352,548 | |
Cost of service revenue | 116,639 | 111,527 | 231,065 | 208,861 | |
Provision for bad debts | 4,805 | 4,363 | 10,064 | 7,725 | |
General and administrative expenses | 60,370 | 59,723 | 119,668 | 114,302 | |
Operating income | 18,358 | 13,254 | 32,454 | 21,660 | |
Interest expense | (554) | (830) | (1,099) | (1,218) | |
Income before income taxes and noncontrolling interest | 17,804 | 12,424 | 31,355 | 20,442 | |
Income tax expense | 6,220 | 4,352 | 10,949 | 7,275 | |
Net income (loss) | 11,584 | 8,072 | 20,406 | 13,167 | |
Less net income attributable to noncontrolling interests | 2,634 | 2,011 | 4,651 | 3,038 | |
Net income (loss) attributable to LHC Group, Inc.’s common stockholders | 8,950 | 6,061 | 15,755 | 10,129 | |
Total assets | 509,045 | 497,625 | 509,045 | 497,625 | $ 491,739 |
Home health services | |||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||
Net service revenue | 153,272 | 145,861 | 299,864 | 273,654 | |
Cost of service revenue | 87,045 | 84,278 | 172,591 | 160,078 | |
Provision for bad debts | 3,645 | 3,701 | 8,121 | 6,324 | |
General and administrative expenses | 47,576 | 47,661 | 94,030 | 91,855 | |
Operating income | 15,006 | 10,221 | 25,122 | 15,397 | |
Interest expense | (438) | (657) | (868) | (964) | |
Income before income taxes and noncontrolling interest | 14,568 | 9,564 | 24,254 | 14,433 | |
Income tax expense | 4,740 | 3,405 | 8,397 | 5,675 | |
Net income (loss) | 9,828 | 6,159 | 15,857 | 8,758 | |
Less net income attributable to noncontrolling interests | 2,251 | 1,541 | 3,772 | 2,148 | |
Net income (loss) attributable to LHC Group, Inc.’s common stockholders | 7,577 | 4,618 | 12,085 | 6,610 | |
Total assets | 400,906 | 390,542 | 400,906 | 390,542 | |
Hospice services | |||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||
Net service revenue | 18,632 | 17,068 | 35,483 | 32,290 | |
Cost of service revenue | 10,844 | 10,151 | 20,943 | 19,048 | |
Provision for bad debts | 299 | 93 | 646 | 198 | |
General and administrative expenses | 5,111 | 4,789 | 9,999 | 9,233 | |
Operating income | 2,378 | 2,035 | 3,895 | 3,811 | |
Interest expense | (61) | (83) | (121) | (122) | |
Income before income taxes and noncontrolling interest | 2,317 | 1,952 | 3,774 | 3,689 | |
Income tax expense | 723 | 530 | 1,343 | 876 | |
Net income (loss) | 1,594 | 1,422 | 2,431 | 2,813 | |
Less net income attributable to noncontrolling interests | 253 | 335 | 499 | 536 | |
Net income (loss) attributable to LHC Group, Inc.’s common stockholders | 1,341 | 1,087 | 1,932 | 2,277 | |
Total assets | 36,178 | 35,530 | 36,178 | 35,530 | |
Community-based services | |||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||
Net service revenue | 10,312 | 8,399 | 20,085 | 9,286 | |
Cost of service revenue | 7,456 | 5,945 | 14,356 | 6,589 | |
Provision for bad debts | 691 | 367 | 871 | 398 | |
General and administrative expenses | 2,068 | 2,065 | 4,285 | 2,388 | |
Operating income | 97 | 22 | 573 | (89) | |
Interest expense | (6) | (7) | (12) | (10) | |
Income before income taxes and noncontrolling interest | 91 | 15 | 561 | (99) | |
Income tax expense | 215 | 31 | 260 | 54 | |
Net income (loss) | (124) | (16) | 301 | (153) | |
Less net income attributable to noncontrolling interests | (52) | (4) | (72) | (4) | |
Net income (loss) attributable to LHC Group, Inc.’s common stockholders | (72) | (12) | 373 | (149) | |
Total assets | 33,131 | 33,131 | |||
Facility-based services | |||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||
Net service revenue | 17,956 | 17,539 | 37,819 | 37,318 | |
Cost of service revenue | 11,294 | 11,153 | 23,175 | 23,146 | |
Provision for bad debts | 170 | 202 | 426 | 805 | |
General and administrative expenses | 5,615 | 5,208 | 11,354 | 10,826 | |
Operating income | 877 | 976 | 2,864 | 2,541 | |
Interest expense | (49) | (83) | (98) | (122) | |
Income before income taxes and noncontrolling interest | 828 | 893 | 2,766 | 2,419 | |
Income tax expense | 542 | 386 | 949 | 670 | |
Net income (loss) | 286 | 507 | 1,817 | 1,749 | |
Less net income attributable to noncontrolling interests | 182 | 139 | 452 | 358 | |
Net income (loss) attributable to LHC Group, Inc.’s common stockholders | 104 | 368 | 1,365 | 1,391 | |
Total assets | $ 38,830 | $ 36,841 | $ 38,830 | $ 36,841 |