Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 01, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
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 | 18,279,658 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 16,922 | $ 3,264 |
Receivables: | ||
Patient accounts receivable, less allowance for uncollectible accounts of $26,089 and $29,036, respectively | 145,508 | 124,803 |
Other receivables | 4,705 | 5,115 |
Amounts due from governmental entities | 830 | 942 |
Total receivables, net | 151,043 | 130,860 |
Prepaid income taxes | 4,879 | 0 |
Prepaid expenses | 11,437 | 9,821 |
Other current assets | 7,331 | 5,796 |
Total current assets | 191,612 | 149,741 |
Property, building and equipment, net of accumulated depreciation of $41,876 and $35,226, respectively | 47,562 | 43,251 |
Goodwill | 392,689 | 307,317 |
Intangible assets, net of accumulated amortization of $12,607 and $10,968, respectively | 130,779 | 102,006 |
Other assets | 2,411 | 11,756 |
Total assets | 765,053 | 614,071 |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 40,355 | 26,805 |
Salaries, wages, and benefits payable | 53,289 | 34,265 |
Self-insurance reserve | 9,524 | 10,691 |
Current portion of long-term debt | 261 | 252 |
Amounts due to governmental entities | 4,564 | 4,955 |
Income tax payable | 3,499 | |
Total current liabilities | 107,993 | 80,467 |
Deferred income taxes | 38,186 | 31,941 |
Revolving credit facility | 119,000 | 87,000 |
Long-term debt, less current portion | 93 | 544 |
Total liabilities | 265,272 | 199,952 |
Noncontrolling interest — redeemable | 13,206 | 12,567 |
LHC Group, Inc. stockholders’ equity: | ||
Common stock --- $0.01 par value; 40,000,000 shares authorized; 22,635,322 and 22,429,041 shares issued in 2017 and 2016, respectively | 226 | 224 |
Treasury stock --- 4,890,181 and 4,828,679 shares at cost, respectively | (42,226) | (39,135) |
Additional paid-in capital | 125,208 | 119,748 |
Retained earnings | 345,967 | 314,289 |
Total LHC Group, Inc. stockholders’ equity | 429,175 | 395,126 |
Noncontrolling interest — non-redeemable | 57,400 | 6,426 |
Total equity | 486,575 | 401,552 |
Total liabilities and equity | $ 765,053 | $ 614,071 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Patient accounts receivable, allowance for uncollectible accounts | $ 26,089 | $ 29,036 |
Property, building and equipment, accumulated depreciation | 41,876 | 35,226 |
Intangible assets, accumulated amortization | $ 12,607 | $ 10,968 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized | 40,000,000 | 40,000,000 |
Common stock, issued | 22,635,322 | 22,429,041 |
Treasury stock at cost, shares | 4,890,181 | 4,828,679 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Net service revenue | $ 272,872 | $ 230,797 | $ 779,700 | $ 679,380 |
Cost of service revenue | 172,856 | 140,832 | 488,384 | 413,561 |
Gross margin | 100,016 | 89,965 | 291,316 | 265,819 |
Provision for bad debts | 3,194 | 3,275 | 8,238 | 11,658 |
General and administrative expenses | 75,669 | 66,999 | 221,077 | 201,296 |
(Gain) Loss on disposal of assets | (177) | 142 | (23) | 1,389 |
Operating income | 21,330 | 19,549 | 62,024 | 51,476 |
Interest expense | (995) | (816) | (2,615) | (2,167) |
Income before income taxes and noncontrolling interest | 20,335 | 18,733 | 59,409 | 49,309 |
Income tax expense | 7,445 | 6,562 | 20,410 | 15,500 |
Net income | 12,890 | 12,171 | 38,999 | 33,809 |
Less net income attributable to noncontrolling interests | 1,984 | 2,555 | 7,321 | 7,043 |
Net income attributable to LHC Group, Inc.’s common stockholders | $ 10,906 | $ 9,616 | $ 31,678 | $ 26,766 |
Earnings per share attributable to LHC Group, Inc.'s common stockholders: | ||||
Basic | $ 0.61 | $ 0.55 | $ 1.79 | $ 1.53 |
Diluted | $ 0.61 | $ 0.54 | $ 1.77 | $ 1.52 |
Weighted average shares outstanding: | ||||
Basic | 17,740,818 | 17,588,163 | 17,704,561 | 17,546,773 |
Diluted | 18,010,522 | 17,719,473 | 17,931,700 | 17,664,284 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Noncontrolling Interest Non Redeemable |
Beginning balance, Amount at Dec. 31, 2016 | $ 401,552 | $ 224 | $ (39,135) | $ 119,748 | $ 314,289 | $ 6,426 |
Beginning balance, Shares at Dec. 31, 2016 | 22,429,041 | |||||
Beginning balance, Treasury Shares at Dec. 31, 2016 | (4,828,679) | (4,828,679) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | $ 31,350 | 31,678 | (328) | |||
Acquired noncontrolling interest | 52,492 | 52,492 | ||||
Noncontrolling Interest Distributions | (1,472) | (1,472) | ||||
Sale of noncontrolling interest | 630 | 348 | 282 | |||
Purchase of additional controlling interest | (184) | (184) | ||||
Nonvested stock compensation | 4,522 | 4,522 | ||||
Issuance of vested stock | $ 2 | (2) | ||||
Issuance of vested stock, Shares | 191,463 | |||||
Treasury shares redeemed to pay income tax | $ (3,091) | $ (3,091) | ||||
Treasury shares redeemed to pay income tax, Shares | (61,502) | (61,502) | ||||
Issuance of common stock under Employee Stock Purchase Plan | $ 776 | 776 | ||||
Issuance of common stock under Employee Stock Purchase Plan, Shares | 14,818 | |||||
Ending balance, Amount at Sep. 30, 2017 | $ 486,575 | $ 226 | $ (42,226) | $ 125,208 | $ 345,967 | $ 57,400 |
Ending balance, Shares at Sep. 30, 2017 | 22,635,322 | |||||
Ending balance, Treasury Shares at Sep. 30, 2017 | (4,890,181) | (4,890,181) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) (Parenthetical) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Net income attributable to noncontrolling interest-redeemable | $ 7,649 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Operating activities: | ||
Net income | $ 38,999 | $ 33,809 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 9,680 | 9,024 |
Provision for bad debts | 8,238 | 11,658 |
Stock-based compensation expense | 4,522 | 3,518 |
Deferred income taxes | 6,245 | 6,062 |
Gain (Loss) on disposal of assets | (23) | 1,389 |
Goodwill and Intangible Asset Impairment | 81 | |
Changes in operating assets and liabilities, net of acquisitions: | ||
Receivables | (19,569) | (21,175) |
Prepaid expenses and other assets | (3,859) | 450 |
Prepaid income taxes | (4,879) | (2,482) |
Accounts payable and accrued expenses | 26,038 | 17,633 |
Income taxes payable | (3,499) | |
Net amounts due to/from governmental entities | (279) | (2,043) |
Net cash provided by operating activities | 61,695 | 57,843 |
Investing activities: | ||
Purchases of property, building and equipment | (7,944) | (14,576) |
Cash paid for acquisitions, primarily goodwill and intangible assets | (61,247) | (20,332) |
Other | 273 | |
Net cash used in investing activities | (69,191) | (34,635) |
Financing activities: | ||
Proceeds from line of credit | 63,000 | 38,000 |
Payments on line of credit | (31,000) | (44,000) |
Proceeds from employee stock purchase plan | 776 | 663 |
Payments on debt | (192) | (156) |
Noncontrolling interest distributions | (8,406) | (6,859) |
Excess tax benefits from vesting of stock awards | 1,293 | |
Withholding taxes paid on stock-based compensation | (3,091) | (1,931) |
Purchase of additional controlling interest | (184) | |
Sale of noncontrolling interest | 251 | 52 |
Proceeds from exercise of stock options | 0 | 109 |
Net cash (used in) provided by financing activities | 21,154 | (12,829) |
Change in cash | 13,658 | 10,379 |
Cash at beginning of period | 3,264 | 6,139 |
Cash at end of period | 16,922 | 16,518 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 2,694 | 2,329 |
Income taxes paid | $ 22,376 | $ 11,390 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2017 | |
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. 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 September 30, 2017 , the Company, through its wholly- and majority-owned subsidiaries, equity joint ventures, controlled affiliates, and management agreements, operated 449 service providers in 27 states within the continental United States. Unaudited Interim Financial Information The condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016 , and the related condensed consolidated statements of income for the three and nine months ended September 30, 2017 and 2016 , condensed consolidated statement of changes in equity for the nine months ended September 30, 2017 , condensed consolidated statements of cash flows for the nine months ended September 30, 2017 and 2016 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 nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 . 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, 2016. The report was filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2017, and includes information and disclosures not included herein. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
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, 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 through direct ownership of majority interest or controlling member ownership of such entities. 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 Nine Months Ended Ownership type 2017 2016 2017 2016 Wholly-owned subsidiaries 50.6 % 57.6 % 52.1 % 57.3 % Equity joint ventures 47.5 40.7 46.1 41.0 Other 1.9 1.7 1.8 1.7 100.0 % 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 Company consolidates equity joint venture entities as the Company has controlling interests in the entities, has voting control over these entities, or has ability to exercise significant influence in the entities. The members of the Company's equity joint ventures participate in profits and losses in proportion to their equity interests. The Company also consolidates entities which have license leasing arrangements as the Company owns 100% of the equity of these subsidiaries. The Company has various management services agreements under which the Company manages certain operations of agencies. The Company does not consolidate these agencies because the Company does not have an ownership interest in, nor does it have an obligation to absorb losses of, or right to receive benefits from the entities that own the agencies. Revenue Recognition The Company reports net service revenue at the estimated net realizable amount due from Medicare, Medicaid, and others 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. Medicare contributes to the net service revenue of the Company’s home health services, hospice services, and facility-based services. Medicaid and other payors contribute to the net service revenue of all Company's services. The following table sets forth the percentage of net service revenue earned by category of payor for the three and nine months ended September 30, 2017 and 2016 : Three Months Ended Nine Months Ended Payor: 2017 2016 2017 2016 Medicare 71.0 % 74.3 % 71.5 % 74.7 % Medicaid 1.8 1.9 1.8 1.8 Managed Care, Commercial, and Other 27.2 23.8 26.7 23.5 100.0 % 100.0 % 100.0 % 100.0 % Medicare Home Health Services 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 will reflect base payment adjustments for case-mix and geographic wage differences and 2% sequestration reduction for episodes beginning after March 31, 2013. In addition, final payments 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. Adjustments outlined above are automatically recognized in net service revenue when changes occur during the period in which the services are provided to the patient. Net service revenue and related patient accounts receivable are recorded at amounts estimated to be realized from Medicare for services rendered. Hospice Services Hospice services provided by the Company are paid by Medicare under a per diem payment system. The Company receives one of four predetermined daily rates based upon the level of care the Company furnishes. 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, Center for Medicare and Medicaid Services ("CMS") implemented a new process requiring hospice providers to self-report their cap liabilities and remit applicable payment by March 31 of the following year. 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 consist of amounts due from Medicare, Medicaid, 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 50% 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 amount of 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 Medicare population is 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 are structured similar to either the Medicare or Medicaid payment methodologies. 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 Nine Months Ended 2017 2016 2017 2016 Weighted average number of shares outstanding for basic per share calculation 17,740,818 17,588,163 17,704,561 17,546,773 Effect of dilutive potential shares: Options — — — 1,146 Nonvested stock 269,704 131,310 227,139 116,365 Adjusted weighted average shares for diluted per share calculation 18,010,522 17,719,473 17,931,700 17,664,284 Anti-dilutive shares — 20,001 137,400 214,856 Recently Adopted Accounting Pronouncements In March 2016, as part of its Simplification Initiative, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation ("ASU 2016-09"), which seeks to reduce complexity in accounting standards. The areas for simplification in ASU 2016-09, involve several aspects of the accounting for share-based payment transaction, including (1) accounting for income taxes, (2) classification of excess tax benefits on the statement of cash flow, (3) forfeitures, (4) minimum statutory tax withholding requirements, (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes, (6) the practical expedient for estimating the expected term, and (7) intrinsic value. The Company adopted the new standard on its effective date on January 1, 2017 and elected to apply this adoption prospectively. All excess tax benefits and deficiencies in the current and future periods will be recognized as income tax expense in the Company's consolidated financial statements in the reporting period in which they occur. The Company recorded excess tax benefits of $1.0 million in income tax expense for the nine months ended September 30, 2017 . Additionally, the Company elected to continue to apply an estimated rate of forfeiture to its compensation expense for share-based awards. Recently Issued Accounting Pronouncements On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , ("ASU 2014-09") 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 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for reporting periods beginning after December 15, 2017. The standard permits the use of either the full retrospective or cumulative effect transition method. As the Company progresses with evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures, the Company does not expect a material impact on its consolidated financial statements upon implementation on January 1, 2018. Currently, the Company anticipates adopting the new standard using the full retrospective method for all periods presented. In February 2016, the FASB issued ASU No. 2016-02, Leases , ("ASU 2016-02") which requires lessees to recognize qualifying leases on the statement of financial position. Qualifying leases will be classified as right-of-use assets and lease liabilities. The new standard is effective on January 1, 2019. Early adoption is permitted. ASU 2016-02 mandates a modified retrospective transition method for all entities. The Company anticipates that the adoption of ASU 2016-02 will result in a material increase in total assets and total liabilities. The Company continues to evaluate the effect that ASU 2016-02 will have on its related disclosures. |
Acquisitions and Joint Ventures
Acquisitions and Joint Ventures | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Acquisitions and Joint Ventures | Acquisitions and Joint Ventures On January 1, 2017, the Company formed a joint venture with LifePoint Health, Inc. ("LifePoint"). LifePoint contributed 28 home health agencies, 12 hospice agencies, and one inpatient hospice unit to the joint venture during the nine months ended September 30, 2017. The Company acquired majority ownership of the membership interests of these agencies. These providers conduct home health operations in Arizona, Colorado, Louisiana, Michigan, North Carolina, Pennsylvania, Tennessee, Texas, and Virginia; and hospice operations in Michigan, North Carolina, Pennsylvania, Tennessee, and Virginia. On June 1, 2017, the Company formed a joint venture with Baptist Memorial Health Care ("Baptist"). Baptist contributed three home health agencies and six hospice agencies to the joint venture during the nine months ended September 30, 2017. The Company acquired majority ownership of the membership interests of these agencies. These providers conduct home health and hospice operations in Mississippi and Tennessee. On September 1, 2017, the Company formed a joint venture with Christus Continuing Care (“Christus”). Christus contributed seven home health agencies, five hospice agencies, one inpatient hospice unit, one community-based agency, and six LTACH agencies to the joint venture during the nine months ended September 30, 2017. The Company acquired majority ownership of the membership interests of these agencies. These providers conduct home health, hospice, and community-based operations in Louisiana and Texas; and LTACH operations in Arkansas, Louisiana, and Texas. In separate transactions, the Company acquired two home health agencies, two hospice agencies, one inpatient hospice unit, and one pharmacy during the nine months ended September 30, 2017. The total aggregate purchase price for these transactions was $76.7 million , of which $10.4 million was paid in December 2016 and $61.2 million was primarily paid in cash during the nine months ended September 30, 2017. The purchase prices were determined based on the Company’s analysis of comparable acquisitions and the target market’s potential future cash flows. Goodwill generated from the acquisitions was recognized based on the expected contributions of each acquisition to the overall corporate strategy. The Company expects its portion of goodwill to be fully tax deductible. The acquisitions were accounted for under the acquisition method of accounting. Accordingly, the accompanying interim financial information includes the results of operations of the acquired entities from the date of acquisition. The following table summarizes the aggregate consideration paid for the acquisitions and the amounts of the assets acquired and liabilities assumed at the acquisition dates, as well as their fair value at the acquisition dates and the noncontrolling interest acquired during the nine months ended September 30, 2017 (amounts in thousands): Consideration Cash $ 71,677 Fair value of total consideration transferred Recognized amounts of identifiable assets acquired and liabilities assumed: Patient accounts receivable 6,532 Trade name 13,953 Certificates of need/licenses 16,447 Other identifiable intangible assets 6 Other assets and (liabilities), net 2,121 Total identifiable assets 39,059 Noncontrolling interest 52,492 Goodwill, including noncontrolling interest of $34,313 $ 85,110 The Company conducted preliminary assessments and recognized provisional amounts in its initial accounting for the acquisitions of majority ownership of three joint venture partnerships for all identified assets in accordance with the requirements of ASC Topic 805. The Company is continuing its review of these matters during the measurement period. If new information about facts and circumstances that existed at the acquisition date is obtained and indicates adjustments are necessary, the acquisition accounting will be revised to adjust to the provisional amounts initially recognized. |
Goodwill and Intangibles
Goodwill and Intangibles | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangibles | Goodwill and Intangibles The changes in recorded goodwill by reporting unit for the nine months ended September 30, 2017 were as follows (amounts in thousands): Home health reporting unit Hospice reporting unit Community - based reporting unit Facility-based reporting unit Total Balance as of December 31, 2016 $ 210,839 $ 64,234 $ 18,820 $ 13,424 $ 307,317 Goodwill from acquisitions 29,448 15,188 4,285 1,876 50,797 Goodwill related to noncontrolling interests 20,781 9,674 2,856 1,002 34,313 Goodwill related to disposals (80 ) — — — (80 ) Goodwill related to prior period net working capital adjustments............................................ (5 ) — — 347 342 Balance as of September 30, 2017 $ 260,983 $ 89,096 $ 25,961 $ 16,649 $ 392,689 Intangible assets consisted of the following as of September 30, 2017 and December 31, 2016 (amounts in thousands): September 30, 2017 Remaining useful life Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived assets : Trade names Indefinite $ 78,590 $ — $ 78,590 Certificates of need/licenses Indefinite 49,773 — 49,773 Total $ 128,363 $ — $ 128,363 Definite-lived assets: Trade names 2 months — 9 years $ 9,291 $ (7,184 ) $ 2,107 Non-compete agreements 2 month — 2 years 5,732 (5,423 ) 309 Total $ 15,023 $ (12,607 ) $ 2,416 Balance as of September 30, 2017 $ 143,386 $ (12,607 ) $ 130,779 December 31, 2016 Remaining useful life Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived assets : Trade names Indefinite $ 64,672 $ — $ 64,672 Certificates of need/licenses Indefinite 33,327 — $ 33,327 Total $ 97,999 $ — $ 97,999 Definite-lived assets: Trade names 8 months — 9 years $ 9,294 $ (5,991 ) $ 3,303 Non-compete agreements 2 months — 3 years 5,681 (4,977 ) 704 Total $ 14,975 $ (10,968 ) $ 4,007 Balance as of December 31, 2016 $ 112,974 $ (10,968 ) $ 102,006 Intangible assets of $87.8 million , net of accumulated amortization, were related to the home health services segment, $31.8 million were related to the hospice services segment, $9.0 million were related to the community-based services segment, and $2.2 million were related to the facility-based services segment as of September 30, 2017 . The Company recorded $1.6 million and $1.8 million of amortization expense during the nine months ended September 30, 2017 and 2016 , respectively. This was recorded in general and administrative expenses. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
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 expiration date of the Credit Agreement is June 18, 2019 . Revolving loans under the Credit Agreement bear interest at, as selected by the Company, 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 September 30, 2017 was 5.25% and the Eurodollar rate was 3.24% . As of September 30, 2017 and December 31, 2016 , respectively, the Company had $119.0 million and $87.0 million drawn and letters of credit totaling $11.0 million outstanding under its credit facilities with Capital One, National Association. As of September 30, 2017 , the Company had $95.0 million available for borrowing under the Credit Agreement with Capital One, National Association. |
Stockholder's Equity
Stockholder's Equity | 9 Months Ended |
Sep. 30, 2017 | |
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 were reserved and 391,414 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 nine months ended September 30, 2017 , the Company’s independent directors were granted 11,700 nonvested shares of common stock under the Second Amended and Restated 2005 Non-Employee Directors Compensation Plan. The shares were drawn from the 1,500,000 shares of common stock reserved for issuance under the 2010 Incentive Plan. The shares vest 100% on the one year anniversary date. During the nine months ended September 30, 2017 , employees were granted 139,310 nonvested shares of common stock pursuant to the 2010 Incentive Plan. The shares vest over a period of five years , 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 nine months ended September 30, 2017 was $48.52 . The following table represents the nonvested stock activity for the nine months ended September 30, 2017 : Number of shares Weighted average grant date fair value Nonvested shares outstanding as of December 31, 2016 574,711 $ 31.61 Granted 151,010 $ 48.52 Vested (191,463 ) $ 28.91 Forfeited (3,793 ) $ 39.30 Nonvested shares outstanding as of September 30, 2017 530,465 $ 37.35 As of September 30, 2017 , there was $14.9 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 3.13 years . The total fair value of shares of common stock vested during the nine months ended September 30, 2017 was $5.5 million . 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 $4.5 million and $3.5 million of compensation expense related to nonvested stock grants in the nine months ended September 30, 2017 and 2016 , 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 2017 : Number of shares Per share price Shares available as of December 31, 2016 189,611 Shares issued during the three months ended March 31, 2017 5,891 $ 43.42 Shares issued during the three months ended June 30, 2017 4,152 $ 51.21 Shares issued during the three months ended September 30, 2017.......................................................... 4,775 $ 64.49 Shares available as of September 30, 2017 174,793 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 nine months ended September 30, 2017 , the Company redeemed 61,502 shares of common stock valued at $3.1 million , related to these tax obligations. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Contingencies The Company provides services in a highly regulated industry and is a party to various proceedings and regulatory and other governmental and internal audits and investigations in the ordinary course of business (including audits by Zone Program Integrity Contractors ("ZPICs") and Recovery Audit Contractors ("RACs") and investigations resulting from the Company's obligation to self-report suspected violations of law). Management cannot predict the ultimate outcome of any regulatory and other governmental and internal audits and investigations. While such audits and investigations are the subject of administrative appeals, the appeals process, even if successful, may take several years to resolve. The Department of Justice, CMS, or other federal and state enforcement and regulatory agencies may conduct additional investigations related to the Company's businesses in the future. These audits and investigations have caused and could potentially continue to cause delays in collections and recoupments from governmental payors and may subject the Company to sanctions, damages, extrapolation of damage findings, additional recoupments, fines, and other penalties (some of which may not be covered by insurance), which may, either individually or in the aggregate, have a material adverse effect on the Company's business and financial condition. 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. 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 | 9 Months Ended |
Sep. 30, 2017 | |
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. The Company has never been required to purchase the noncontrolling interest of any of its equity joint venture partners, and the Company believes the likelihood of a triggering event occurring is remote. 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 nine months ended September 30, 2017 (amounts in thousands): Balance as of December 31, 2016 $ 12,567 Net income attributable to noncontrolling interest-redeemable 7,649 Noncontrolling interest-redeemable distributions (6,933 ) Sale of noncontrolling interest-redeemable (77 ) Balance as of September 30, 2017 $ 13,206 |
Allowance for Uncollectible Acc
Allowance for Uncollectible Accounts | 9 Months Ended |
Sep. 30, 2017 | |
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 nine months ended September 30, 2017 (amounts in thousands): Balance as of December 31, 2016 $ 29,036 Additions 8,238 Deductions (11,185 ) Balance as of September 30, 2017 $ 26,089 The allowance for uncollectible accounts declined to 15.2% from 18.9% of patient accounts receivable over the nine months ended September 30, 2017 . This was due to a reduction in provision of bad debts due to more timely cash collections and an increase in amounts collected. Patient accounts receivable over 180 days decreased 17% during the nine months ended September 30, 2017 due to the Company's continued process improvements. The maturity of the Company's back office and field operations, the use of the point-of-care platform, and the use of other technology advancements in reporting and analytics were the drivers of improved collections. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2017 | |
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 nine months ended September 30, 2017 , the carrying value of the Company’s long-term debt approximates fair value as the interest rates approximate current rates. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information 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, as described in Note 2 of the Notes to Condensed Consolidated Financial Statements. The following tables summarize the Company’s segment information for the three and nine months ended September 30, 2017 and 2016 (amounts in thousands): Three Months Ended September 30, 2017 Home health services Hospice services Community-based services Facility-based services Total Net service revenue $ 198,978 $ 41,291 12,146 $ 20,457 $ 272,872 Cost of service revenue 123,204 27,441 8,971 13,240 172,856 Provision for bad debts 2,661 234 30 269 3,194 General and administrative expenses 55,980 11,263 2,387 6,039 75,669 (Gain) loss on disposal of assets 20 13 — (210 ) (177 ) Operating income 17,113 2,340 758 1,119 21,330 Interest expense (746 ) (149 ) (50 ) (50 ) (995 ) Income before income taxes and noncontrolling interest 16,367 2,191 708 1,069 20,335 Income tax expense 5,703 931 338 473 7,445 Net income 10,664 1,260 370 596 12,890 Less net income (loss) attributable to noncontrolling interests 1,759 273 (21 ) (27 ) 1,984 Net income attributable to LHC Group, Inc.’s common stockholders $ 8,905 $ 987 $ 391 $ 623 $ 10,906 Total assets $ 515,562 $ 156,296 $ 44,621 $ 48,574 $ 765,053 Three Months Ended September 30, 2016 Home health services Hospice services Community-based services Facility-based services Total Net service revenue $ 167,529 $ 35,322 $ 11,793 $ 16,153 $ 230,797 Cost of service revenue 100,057 21,243 9,100 10,432 140,832 Provision for bad debts 2,049 797 190 239 3,275 General and administrative expenses 50,293 9,491 2,263 4,952 66,999 Loss on disposal of assets 20 5 — 117 142 Operating income 15,110 3,786 240 413 19,549 Interest expense (612 ) (90 ) (41 ) (73 ) (816 ) Income before income taxes and noncontrolling interest 14,498 3,696 199 340 18,733 Income tax expense 5,133 1,275 83 71 6,562 Net income 9,365 2,421 116 269 12,171 Less net income attributable to noncontrolling interests 1,853 553 — 149 2,555 Net income attributable to LHC Group, Inc.’s common stockholders $ 7,512 $ 1,868 $ 116 $ 120 $ 9,616 Total assets $ 425,923 $ 119,906 $ 33,549 $ 34,075 $ 613,453 Nine Months Ended September 30, 2017 Home health services Hospice services Community-based services Facility-based services Total Net service revenue $ 575,180 $ 116,249 $ 33,807 $ 54,464 $ 779,700 Cost of service revenue 352,896 75,187 24,905 35,396 488,384 Provision for bad debts 5,796 1,393 404 645 8,238 General and administrative expenses 165,153 32,404 6,957 16,563 221,077 (Gain) loss on disposal of assets 39 21 — (83 ) (23 ) Operating income 51,296 7,244 1,541 1,943 62,024 Interest expense (1,961 ) (393 ) (130 ) (131 ) (2,615 ) Income before income taxes and noncontrolling interest 49,335 6,851 1,411 1,812 59,409 Income tax expense 16,712 2,439 602 657 20,410 Net income 32,623 4,412 809 1,155 38,999 Less net income (loss) attributable to noncontrolling interests 6,053 1,038 (7 ) 237 7,321 Net income attributable to LHC Group, Inc.’s common stockholders $ 26,570 $ 3,374 $ 816 $ 918 $ 31,678 Nine Months Ended September 30, 2016 Home health services Hospice services Community-based services Facility-based services Total Net service revenue $ 492,090 $ 100,051 $ 32,823 $ 54,416 $ 679,380 Cost of service revenue 294,359 61,836 24,656 32,710 413,561 Provision for bad debts 8,122 2,364 488 684 11,658 General and administrative expenses 150,948 27,787 6,557 16,004 201,296 Loss on disposal of assets 811 329 46 203 1,389 Operating income 37,850 7,735 1,076 4,815 51,476 Interest expense (1,640 ) (232 ) (106 ) (189 ) (2,167 ) Income before income taxes and noncontrolling interest 36,210 7,503 970 4,626 49,309 Income tax expense 11,026 2,484 413 1,577 15,500 Net income 25,184 5,019 557 3,049 33,809 Less net income (loss) attributable to noncontrolling interests 5,002 1,368 (57 ) 730 7,043 Net income attributable to LHC Group, Inc.’s common stockholders $ 20,182 $ 3,651 $ 614 $ 2,319 $ 26,766 |
Significant Accounting Polici19
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Percentage Equity Ownership, License Leasing Arrangements | 100.00% |
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, 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 through direct ownership of majority interest or controlling member ownership of such entities. 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 Nine Months Ended Ownership type 2017 2016 2017 2016 Wholly-owned subsidiaries 50.6 % 57.6 % 52.1 % 57.3 % Equity joint ventures 47.5 40.7 46.1 41.0 Other 1.9 1.7 1.8 1.7 100.0 % 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 Company consolidates equity joint venture entities as the Company has controlling interests in the entities, has voting control over these entities, or has ability to exercise significant influence in the entities. The members of the Company's equity joint ventures participate in profits and losses in proportion to their equity interests. The Company also consolidates entities which have license leasing arrangements as the Company owns 100% of the equity of these subsidiaries. The Company has various management services agreements under which the Company manages certain operations of agencies. The Company does not consolidate these agencies because the Company does not have an ownership interest in, nor does it have an obligation to absorb losses of, or right to receive benefits from the entities that own the agencies. |
Revenue Recognition | Revenue Recognition The Company reports net service revenue at the estimated net realizable amount due from Medicare, Medicaid, and others 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. Medicare contributes to the net service revenue of the Company’s home health services, hospice services, and facility-based services. Medicaid and other payors contribute to the net service revenue of all Company's services. The following table sets forth the percentage of net service revenue earned by category of payor for the three and nine months ended September 30, 2017 and 2016 : Three Months Ended Nine Months Ended Payor: 2017 2016 2017 2016 Medicare 71.0 % 74.3 % 71.5 % 74.7 % Medicaid 1.8 1.9 1.8 1.8 Managed Care, Commercial, and Other 27.2 23.8 26.7 23.5 100.0 % 100.0 % 100.0 % 100.0 % Medicare Home Health Services 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 will reflect base payment adjustments for case-mix and geographic wage differences and 2% sequestration reduction for episodes beginning after March 31, 2013. In addition, final payments 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. Adjustments outlined above are automatically recognized in net service revenue when changes occur during the period in which the services are provided to the patient. Net service revenue and related patient accounts receivable are recorded at amounts estimated to be realized from Medicare for services rendered. Hospice Services Hospice services provided by the Company are paid by Medicare under a per diem payment system. The Company receives one of four predetermined daily rates based upon the level of care the Company furnishes. 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, Center for Medicare and Medicaid Services ("CMS") implemented a new process requiring hospice providers to self-report their cap liabilities and remit applicable payment by March 31 of the following year. 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 consist of amounts due from Medicare, Medicaid, 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 50% 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 amount of 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 Medicare population is 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 are structured similar to either the Medicare or Medicaid payment methodologies. 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 Nine Months Ended 2017 2016 2017 2016 Weighted average number of shares outstanding for basic per share calculation 17,740,818 17,588,163 17,704,561 17,546,773 Effect of dilutive potential shares: Options — — — 1,146 Nonvested stock 269,704 131,310 227,139 116,365 Adjusted weighted average shares for diluted per share calculation 18,010,522 17,719,473 17,931,700 17,664,284 Anti-dilutive shares — 20,001 137,400 214,856 |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In March 2016, as part of its Simplification Initiative, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation ("ASU 2016-09"), which seeks to reduce complexity in accounting standards. The areas for simplification in ASU 2016-09, involve several aspects of the accounting for share-based payment transaction, including (1) accounting for income taxes, (2) classification of excess tax benefits on the statement of cash flow, (3) forfeitures, (4) minimum statutory tax withholding requirements, (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes, (6) the practical expedient for estimating the expected term, and (7) intrinsic value. The Company adopted the new standard on its effective date on January 1, 2017 and elected to apply this adoption prospectively. All excess tax benefits and deficiencies in the current and future periods will be recognized as income tax expense in the Company's consolidated financial statements in the reporting period in which they occur. The Company recorded excess tax benefits of $1.0 million in income tax expense for the nine months ended September 30, 2017 . Additionally, the Company elected to continue to apply an estimated rate of forfeiture to its compensation expense for share-based awards. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , ("ASU 2014-09") 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 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for reporting periods beginning after December 15, 2017. The standard permits the use of either the full retrospective or cumulative effect transition method. As the Company progresses with evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures, the Company does not expect a material impact on its consolidated financial statements upon implementation on January 1, 2018. Currently, the Company anticipates adopting the new standard using the full retrospective method for all periods presented. In February 2016, the FASB issued ASU No. 2016-02, Leases , ("ASU 2016-02") which requires lessees to recognize qualifying leases on the statement of financial position. Qualifying leases will be classified as right-of-use assets and lease liabilities. The new standard is effective on January 1, 2019. Early adoption is permitted. ASU 2016-02 mandates a modified retrospective transition method for all entities. The Company anticipates that the adoption of ASU 2016-02 will result in a material increase in total assets and total liabilities. The Company continues to evaluate the effect that ASU 2016-02 will have on its related disclosures. |
Significant Accounting Polici20
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 Nine Months Ended Ownership type 2017 2016 2017 2016 Wholly-owned subsidiaries 50.6 % 57.6 % 52.1 % 57.3 % Equity joint ventures 47.5 40.7 46.1 41.0 Other 1.9 1.7 1.8 1.7 100.0 % 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 nine months ended September 30, 2017 and 2016 : Three Months Ended Nine Months Ended Payor: 2017 2016 2017 2016 Medicare 71.0 % 74.3 % 71.5 % 74.7 % Medicaid 1.8 1.9 1.8 1.8 Managed Care, Commercial, and Other 27.2 23.8 26.7 23.5 100.0 % 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 Nine Months Ended 2017 2016 2017 2016 Weighted average number of shares outstanding for basic per share calculation 17,740,818 17,588,163 17,704,561 17,546,773 Effect of dilutive potential shares: Options — — — 1,146 Nonvested stock 269,704 131,310 227,139 116,365 Adjusted weighted average shares for diluted per share calculation 18,010,522 17,719,473 17,931,700 17,664,284 Anti-dilutive shares — 20,001 137,400 214,856 |
Acquisitions and Joint Ventur21
Acquisitions and Joint Ventures (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the aggregate consideration paid for the acquisitions and the amounts of the assets acquired and liabilities assumed at the acquisition dates, as well as their fair value at the acquisition dates and the noncontrolling interest acquired during the nine months ended September 30, 2017 (amounts in thousands): Consideration Cash $ 71,677 Fair value of total consideration transferred Recognized amounts of identifiable assets acquired and liabilities assumed: Patient accounts receivable 6,532 Trade name 13,953 Certificates of need/licenses 16,447 Other identifiable intangible assets 6 Other assets and (liabilities), net 2,121 Total identifiable assets 39,059 Noncontrolling interest 52,492 Goodwill, including noncontrolling interest of $34,313 $ 85,110 |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 nine months ended September 30, 2017 were as follows (amounts in thousands): Home health reporting unit Hospice reporting unit Community - based reporting unit Facility-based reporting unit Total Balance as of December 31, 2016 $ 210,839 $ 64,234 $ 18,820 $ 13,424 $ 307,317 Goodwill from acquisitions 29,448 15,188 4,285 1,876 50,797 Goodwill related to noncontrolling interests 20,781 9,674 2,856 1,002 34,313 Goodwill related to disposals (80 ) — — — (80 ) Goodwill related to prior period net working capital adjustments............................................ (5 ) — — 347 342 Balance as of September 30, 2017 $ 260,983 $ 89,096 $ 25,961 $ 16,649 $ 392,689 |
Summary of Changes in Intangible Assets | Intangible assets consisted of the following as of September 30, 2017 and December 31, 2016 (amounts in thousands): September 30, 2017 Remaining useful life Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived assets : Trade names Indefinite $ 78,590 $ — $ 78,590 Certificates of need/licenses Indefinite 49,773 — 49,773 Total $ 128,363 $ — $ 128,363 Definite-lived assets: Trade names 2 months — 9 years $ 9,291 $ (7,184 ) $ 2,107 Non-compete agreements 2 month — 2 years 5,732 (5,423 ) 309 Total $ 15,023 $ (12,607 ) $ 2,416 Balance as of September 30, 2017 $ 143,386 $ (12,607 ) $ 130,779 December 31, 2016 Remaining useful life Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived assets : Trade names Indefinite $ 64,672 $ — $ 64,672 Certificates of need/licenses Indefinite 33,327 — $ 33,327 Total $ 97,999 $ — $ 97,999 Definite-lived assets: Trade names 8 months — 9 years $ 9,294 $ (5,991 ) $ 3,303 Non-compete agreements 2 months — 3 years 5,681 (4,977 ) 704 Total $ 14,975 $ (10,968 ) $ 4,007 Balance as of December 31, 2016 $ 112,974 $ (10,968 ) $ 102,006 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Nonvested Stock Activity | The following table represents the nonvested stock activity for the nine months ended September 30, 2017 : Number of shares Weighted average grant date fair value Nonvested shares outstanding as of December 31, 2016 574,711 $ 31.61 Granted 151,010 $ 48.52 Vested (191,463 ) $ 28.91 Forfeited (3,793 ) $ 39.30 Nonvested shares outstanding as of September 30, 2017 530,465 $ 37.35 |
Shares of Common Stock Issued During 2016 Under Employee Stock Purchase Plan | The table below details the shares of common stock issued during 2017 : Number of shares Per share price Shares available as of December 31, 2016 189,611 Shares issued during the three months ended March 31, 2017 5,891 $ 43.42 Shares issued during the three months ended June 30, 2017 4,152 $ 51.21 Shares issued during the three months ended September 30, 2017.......................................................... 4,775 $ 64.49 Shares available as of September 30, 2017 174,793 |
Noncontrolling interest (Tables
Noncontrolling interest (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Noncontrolling Interest [Abstract] | |
Summary of Activity of Noncontrolling Interest-Redeemable | The following table summarizes the activity of noncontrolling interest-redeemable for the nine months ended September 30, 2017 (amounts in thousands): Balance as of December 31, 2016 $ 12,567 Net income attributable to noncontrolling interest-redeemable 7,649 Noncontrolling interest-redeemable distributions (6,933 ) Sale of noncontrolling interest-redeemable (77 ) Balance as of September 30, 2017 $ 13,206 |
Allowance for Uncollectible A25
Allowance for Uncollectible Accounts (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
Allowance for Uncollectible Accounts | The following table summarizes the activity in the allowance for uncollectible accounts for the nine months ended September 30, 2017 (amounts in thousands): Balance as of December 31, 2016 $ 29,036 Additions 8,238 Deductions (11,185 ) Balance as of September 30, 2017 $ 26,089 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | The following tables summarize the Company’s segment information for the three and nine months ended September 30, 2017 and 2016 (amounts in thousands): Three Months Ended September 30, 2017 Home health services Hospice services Community-based services Facility-based services Total Net service revenue $ 198,978 $ 41,291 12,146 $ 20,457 $ 272,872 Cost of service revenue 123,204 27,441 8,971 13,240 172,856 Provision for bad debts 2,661 234 30 269 3,194 General and administrative expenses 55,980 11,263 2,387 6,039 75,669 (Gain) loss on disposal of assets 20 13 — (210 ) (177 ) Operating income 17,113 2,340 758 1,119 21,330 Interest expense (746 ) (149 ) (50 ) (50 ) (995 ) Income before income taxes and noncontrolling interest 16,367 2,191 708 1,069 20,335 Income tax expense 5,703 931 338 473 7,445 Net income 10,664 1,260 370 596 12,890 Less net income (loss) attributable to noncontrolling interests 1,759 273 (21 ) (27 ) 1,984 Net income attributable to LHC Group, Inc.’s common stockholders $ 8,905 $ 987 $ 391 $ 623 $ 10,906 Total assets $ 515,562 $ 156,296 $ 44,621 $ 48,574 $ 765,053 Three Months Ended September 30, 2016 Home health services Hospice services Community-based services Facility-based services Total Net service revenue $ 167,529 $ 35,322 $ 11,793 $ 16,153 $ 230,797 Cost of service revenue 100,057 21,243 9,100 10,432 140,832 Provision for bad debts 2,049 797 190 239 3,275 General and administrative expenses 50,293 9,491 2,263 4,952 66,999 Loss on disposal of assets 20 5 — 117 142 Operating income 15,110 3,786 240 413 19,549 Interest expense (612 ) (90 ) (41 ) (73 ) (816 ) Income before income taxes and noncontrolling interest 14,498 3,696 199 340 18,733 Income tax expense 5,133 1,275 83 71 6,562 Net income 9,365 2,421 116 269 12,171 Less net income attributable to noncontrolling interests 1,853 553 — 149 2,555 Net income attributable to LHC Group, Inc.’s common stockholders $ 7,512 $ 1,868 $ 116 $ 120 $ 9,616 Total assets $ 425,923 $ 119,906 $ 33,549 $ 34,075 $ 613,453 Nine Months Ended September 30, 2017 Home health services Hospice services Community-based services Facility-based services Total Net service revenue $ 575,180 $ 116,249 $ 33,807 $ 54,464 $ 779,700 Cost of service revenue 352,896 75,187 24,905 35,396 488,384 Provision for bad debts 5,796 1,393 404 645 8,238 General and administrative expenses 165,153 32,404 6,957 16,563 221,077 (Gain) loss on disposal of assets 39 21 — (83 ) (23 ) Operating income 51,296 7,244 1,541 1,943 62,024 Interest expense (1,961 ) (393 ) (130 ) (131 ) (2,615 ) Income before income taxes and noncontrolling interest 49,335 6,851 1,411 1,812 59,409 Income tax expense 16,712 2,439 602 657 20,410 Net income 32,623 4,412 809 1,155 38,999 Less net income (loss) attributable to noncontrolling interests 6,053 1,038 (7 ) 237 7,321 Net income attributable to LHC Group, Inc.’s common stockholders $ 26,570 $ 3,374 $ 816 $ 918 $ 31,678 Nine Months Ended September 30, 2016 Home health services Hospice services Community-based services Facility-based services Total Net service revenue $ 492,090 $ 100,051 $ 32,823 $ 54,416 $ 679,380 Cost of service revenue 294,359 61,836 24,656 32,710 413,561 Provision for bad debts 8,122 2,364 488 684 11,658 General and administrative expenses 150,948 27,787 6,557 16,004 201,296 Loss on disposal of assets 811 329 46 203 1,389 Operating income 37,850 7,735 1,076 4,815 51,476 Interest expense (1,640 ) (232 ) (106 ) (189 ) (2,167 ) Income before income taxes and noncontrolling interest 36,210 7,503 970 4,626 49,309 Income tax expense 11,026 2,484 413 1,577 15,500 Net income 25,184 5,019 557 3,049 33,809 Less net income (loss) attributable to noncontrolling interests 5,002 1,368 (57 ) 730 7,043 Net income attributable to LHC Group, Inc.’s common stockholders $ 20,182 $ 3,651 $ 614 $ 2,319 $ 26,766 |
Organization - Additional Infor
Organization - Additional Information (Detail) | Sep. 30, 2017ServiceProviderState |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of service providers operated | ServiceProvider | 449 |
Number of states in which Company operates | State | 27 |
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 | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
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 | 50.60% | 57.60% | 52.10% | 57.30% |
Equity joint ventures | ||||
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 47.50% | 40.70% | 46.10% | 41.00% |
Other | ||||
Health Care Organization, Revenue [Abstract] | ||||
Percentage of net service revenue | 1.90% | 1.70% | 1.80% | 1.70% |
Significant Accounting Polici29
Significant Accounting Policies - Percentage of Net Service Revenue Earned by Category of Payor (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
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 | 71.00% | 74.30% | 71.50% | 74.70% |
Medicaid revenue | ||||
Significant Accounting Policies [Line Items] | ||||
Percentage of net service revenue | 1.80% | 1.90% | 1.80% | 1.80% |
Managed Care, commercial, and other revenue | ||||
Significant Accounting Policies [Line Items] | ||||
Percentage of net service revenue | 27.20% | 23.80% | 26.70% | 23.50% |
Significant Accounting Polici30
Significant Accounting Policies - Shares Used in Computation of Basic and Diluted Per Share Information (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Weighted average shares outstanding: | ||||
Weighted average number of shares outstanding for basic per share calculation | 17,740,818 | 17,588,163 | 17,704,561 | 17,546,773 |
Effect of dilutive potential shares: | ||||
Options | 0 | 0 | 0 | 1,146 |
Nonvested stock | 269,704 | 131,310 | 227,139 | 116,365 |
Adjusted weighted average shares for diluted per share calculation | 18,010,522 | 17,719,473 | 17,931,700 | 17,664,284 |
Anti-dilutive shares | 0 | 20,001 | 137,400 | 214,856 |
Significant Accounting Polici31
Significant Accounting Policies - Additional Information (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($)GrouptimePeriodicRate | |
Summary Of Significant Accounting Policies [Line Items] | |
Percentage Equity Ownership, 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 |
Medicare sequestration reduction for episodes beginning after March 31, 2013 | 2.00% |
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 | 50.00% |
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% |
Excess tax benefits | $ | $ 1 |
Acquisitions and Joint Ventur32
Acquisitions and Joint Ventures - Additional Information (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017Agency | Jun. 30, 2017Agency | Sep. 30, 2017USD ($)Agency | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Business Acquisition [Line Items] | |||||
Business Combination, Consideration Transferred | $ | $ 76,700 | ||||
Payments to Acquire Businesses, Gross | $ | $ 61,247 | $ 20,332 | $ 10,400 | ||
LifePoint | |||||
Business Acquisition [Line Items] | |||||
Number of home health agencies acquired | 28 | ||||
Number of hospice agencies acquired | 12 | ||||
Number of in-patient hospice unit agencies acquired | 1 | ||||
Baptist | |||||
Business Acquisition [Line Items] | |||||
Number of home health agencies acquired | 3 | ||||
Number of hospice agencies acquired | 6 | ||||
Christus | |||||
Business Acquisition [Line Items] | |||||
Number of home health agencies acquired | 7 | ||||
Number of hospice agencies acquired | 5 | ||||
Number of in-patient hospice unit agencies acquired | 1 | ||||
Community-Based Service Agencies Acquired | 1 | ||||
Number of Long-Term Acute Care Hospitals Acquired | 6 | ||||
Other acquisitions | |||||
Business Acquisition [Line Items] | |||||
Number of home health agencies acquired | 2 | ||||
Number of hospice agencies acquired | 2 | ||||
Number of in-patient hospice unit agencies acquired | 1 | ||||
Number of pharmacies acquired | 1 |
Acquisitions and Joint Ventur33
Acquisitions and Joint Ventures - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Line Items] | |
Payments to Acquire Businesses, Gross | $ 71,677 |
Accounts Receivable Acquired | 6,532 |
Trade Name Acquired | 13,953 |
Certificate of Need/Licenses Acquired | 16,447 |
Finite-lived Intangible Assets Acquired | 6 |
Other Assets and (Liabilities), Net; Acquired (Assumed) | 2,121 |
Fair Value of Assets Acquired | 39,059 |
Acquired noncontrolling interest | 52,492 |
Goodwill, Acquired During Period, Including Noncontrolling Interest of $34,313 | 85,110 |
Goodwill related to noncontrolling interests | $ 34,313 |
Goodwill and Intangibles - Sche
Goodwill and Intangibles - Schedule of Changes in Recorded Goodwill by Reporting Unit (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 307,317 |
Goodwill from acquisitions | 50,797 |
Goodwill related to noncontrolling interests | 34,313 |
Change in Goodwill Related to Disposal | (80) |
Other | 342 |
Balance at end of period | 392,689 |
Home health reporting unit [Member] | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 210,839 |
Goodwill from acquisitions | 29,448 |
Goodwill related to noncontrolling interests | 20,781 |
Change in Goodwill Related to Disposal | (80) |
Other | (5) |
Balance at end of period | 260,983 |
Hospice reporting unit | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 64,234 |
Goodwill from acquisitions | 15,188 |
Goodwill related to noncontrolling interests | 9,674 |
Balance at end of period | 89,096 |
Community-based reporting unit | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 18,820 |
Goodwill from acquisitions | 4,285 |
Goodwill related to noncontrolling interests | 2,856 |
Balance at end of period | 25,961 |
Facility-based reporting unit | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 13,424 |
Goodwill from acquisitions | 1,876 |
Goodwill related to noncontrolling interests | 1,002 |
Other | 347 |
Balance at end of period | $ 16,649 |
Goodwill and Intangibles- Summa
Goodwill and Intangibles- Summary of Changes in Intangible Assets (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived assets, carrying amount | $ 128,363 | $ 97,999 |
Definite-lived assets, gross carrying amount | 15,023 | 14,975 |
Intangible assets, gross carrying amount | 143,386 | 112,974 |
Definite-lived assets, accumulated amortization | (12,607) | (10,968) |
Definite-lived assets, net carrying amount | 2,416 | 4,007 |
Intangible assets, net carrying amount | 130,779 | 102,006 |
Certificates of need/licenses | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived assets, carrying amount | 49,773 | 33,327 |
Trade names | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Indefinite-lived assets, carrying amount | 78,590 | 64,672 |
Definite-lived assets, gross carrying amount | 9,291 | 9,294 |
Definite-lived assets, accumulated amortization | (7,184) | (5,991) |
Definite-lived assets, net carrying amount | $ 2,107 | $ 3,303 |
Trade names | Minimum | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Estimated useful life | 2 months | 8 months |
Trade names | Maximum | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Estimated useful life | 9 years | 9 years |
Non-compete agreements | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Definite-lived assets, gross carrying amount | $ 5,732 | $ 5,681 |
Definite-lived assets, accumulated amortization | (5,423) | (4,977) |
Definite-lived assets, net carrying amount | $ 309 | $ 704 |
Non-compete agreements | Minimum | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Estimated useful life | 2 months | 2 months |
Non-compete agreements | Maximum | ||
Finite And Infinite Lived Intangible Assets [Line Items] | ||
Estimated useful life | 2 years | 3 years |
Goodwill and Intangibles - Addi
Goodwill and Intangibles - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Indefinite-lived Intangible Assets [Line Items] | |||
Document Period End Date | Sep. 30, 2017 | ||
Intangible assets, net carrying amount | $ 130,779 | $ 102,006 | |
Amortization of Intangible Assets | 1,600 | $ 1,800 | |
Home health services | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Intangible assets, net carrying amount | 87,800 | ||
Hospice Services | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Intangible assets, net carrying amount | 31,800 | ||
Community-based services | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Intangible assets, net carrying amount | 9,000 | ||
Facility-based services | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Intangible assets, net carrying amount | $ 2,200 |
Debt - Additional Information (
Debt - Additional Information (Detail) $ in Thousands | Jun. 18, 2014USD ($)Instruments | Sep. 30, 2014 | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) |
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. | |||
Line of credit facility drawn | $ 119,000 | $ 87,000 | ||
Letter of credit outstanding | 11,000 | |||
Available credit under agreement | $ 95,000 | |||
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% | 3.24% | ||
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 | 5.25% | |||
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% |
Stockholders' Equity - Nonveste
Stockholders' Equity - Nonvested Stock Activity (Detail) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | |
Nonvested shares outstanding, Number of Shares, Beginning Balance | shares | 574,711 |
Granted, Number of Shares | shares | 151,010 |
Vested, Number of Shares | shares | (191,463) |
Forfeited, Number of Shares | shares | 3,793 |
Nonvested shares outstanding, Number of Shares, Ending Balance | shares | 530,465 |
Nonvested shares outstanding, Weighted average grant date fair value, Beginning Balance | $ / shares | $ 31.61 |
Granted, Weighted average grant date fair value | $ / shares | 48.52 |
Vested, Weighted average grant date fair value | $ / shares | 28.91 |
Forfeited, Weighted average grant date fair value | $ / shares | 39.30 |
Nonvested shares outstanding, Weighted average grant date fair value, Ending Balance | $ / shares | $ 37.35 |
Stockholder's Equity - Shares o
Stockholder's Equity - Shares of Common Stock Issued During 2016 Under Employee Stock Purchase Plan (Detail) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Shares available, Beginning balance | 189,611 | 189,611 | ||
Shares issued during period (shares) | 4,775 | 4,152 | 5,891 | |
Shares available, Ending Balance | 174,793 | 174,793 | ||
Shares issued during period (per share price) | $ 64.49 | $ 51.21 | $ 43.42 |
Stockholder's Equity - Addition
Stockholder's Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Stockholders' Equity Note [Abstract] | ||
Common stock reserved and available for issuance | 1,500,000 | |
Common stock shares available for grant | 391,414 | |
Percentage of directors' stock grant vested on one year anniversary date | 100.00% | |
Granted, Weighted average grant date fair value | $ 48.52 | |
Total unrecognized compensation cost related to nonvested shares of common stock granted | $ 14,900 | |
Weighted average period of cost recognized | 3 years 1 month 17 days | |
Total fair value of shares of common stock vested | $ 5,500 | |
Compensation expense related to nonvested stock grants | $ 4,500 | $ 3,500 |
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 | |
Shares redeemed to satisfy personal tax obligations | 61,502 | |
Treasury shares redeemed to pay income tax | $ 3,091 | |
Employee | ||
Stockholders' Equity Note [Abstract] | ||
Nonvested stock grants to employees | 139,310 | |
Employee Period of Vested Shares | 5 years | |
Director | ||
Stockholders' Equity Note [Abstract] | ||
Nonvested stock grants to Independent directors | 11,700 | |
Director Period of Vested Shares | 1 year |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Period of joint venture buy/sell option | 30 days |
Noncontrolling interest - Summa
Noncontrolling interest - Summary of Activity of Noncontrolling Interest-Redeemable (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |
Noncontrolling interest-redeemable, Beginning balance | $ 12,567 |
Net income attributable to noncontrolling interest-redeemable | 7,649 |
Noncontrolling interest-redeemable distributions | (6,933) |
Sale of noncontrolling interest-redeemable | (77) |
Noncontrolling interest-redeemable, Ending balance | $ 13,206 |
Allowance for Uncollectible A43
Allowance for Uncollectible Accounts - Allowance for Uncollectible Accounts Activity and Ending Balances (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Beginning balance | $ 29,036 | |||
Additions | $ 3,194 | $ 3,275 | 8,238 | $ 11,658 |
Deductions | (11,185) | |||
Ending balance | $ 26,089 | $ 26,089 |
Allowance for Uncollectible A44
Allowance for Uncollectible Accounts - Additional Information (Details) | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Valuation of Qualifying Accounts [Abstract] | ||
Allowance for Uncollectible Accounts Percent of Accounts Receivable | 15.20% | 18.90% |
Decrease in patient accounts receivable over 180 days during the reporting period due to process improvements | 17.00% | |
Age of patient accounts receivable used to calculate collection process improvements | 180 days |
Segment Information - Segment I
Segment Information - Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||
Net service revenue | $ 272,872 | $ 230,797 | $ 779,700 | $ 679,380 | |
Cost of service revenue | 172,856 | 140,832 | 488,384 | 413,561 | |
Provision for bad debts | 3,194 | 3,275 | 8,238 | 11,658 | |
General and administrative expenses | 75,669 | 66,999 | 221,077 | 201,296 | |
(Gain) Loss on disposal of assets | (177) | 142 | (23) | 1,389 | |
Operating income | 21,330 | 19,549 | 62,024 | 51,476 | |
Interest expense | (995) | (816) | (2,615) | (2,167) | |
Income before income taxes and noncontrolling interest | 20,335 | 18,733 | 59,409 | 49,309 | |
Income tax expense | 7,445 | 6,562 | 20,410 | 15,500 | |
Net income | 12,890 | 12,171 | 38,999 | 33,809 | |
Less net income (loss) attributable to noncontrolling interests | 1,984 | 2,555 | 7,321 | 7,043 | |
Net income attributable to LHC Group, Inc.’s common stockholders | 10,906 | 9,616 | 31,678 | 26,766 | |
Total assets | 765,053 | 613,453 | 765,053 | 613,453 | $ 614,071 |
Home health services | |||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||
Net service revenue | 198,978 | 167,529 | 575,180 | 492,090 | |
Cost of service revenue | 123,204 | 100,057 | 352,896 | 294,359 | |
Provision for bad debts | 2,661 | 2,049 | 5,796 | 8,122 | |
General and administrative expenses | 55,980 | 50,293 | 165,153 | 150,948 | |
(Gain) Loss on disposal of assets | 20 | 20 | 39 | 811 | |
Operating income | 17,113 | 15,110 | 51,296 | 37,850 | |
Interest expense | (746) | (612) | (1,961) | (1,640) | |
Income before income taxes and noncontrolling interest | 16,367 | 14,498 | 49,335 | 36,210 | |
Income tax expense | 5,703 | 5,133 | 16,712 | 11,026 | |
Net income | 10,664 | 9,365 | 32,623 | 25,184 | |
Less net income (loss) attributable to noncontrolling interests | 1,759 | 1,853 | 6,053 | 5,002 | |
Net income attributable to LHC Group, Inc.’s common stockholders | 8,905 | 7,512 | 26,570 | 20,182 | |
Total assets | 515,562 | 425,923 | 515,562 | 425,923 | |
Community-based services | |||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||
Net service revenue | 12,146 | 11,793 | 33,807 | 32,823 | |
Cost of service revenue | 8,971 | 9,100 | 24,905 | 24,656 | |
Provision for bad debts | 30 | 190 | 404 | 488 | |
General and administrative expenses | 2,387 | 2,263 | 6,957 | 6,557 | |
(Gain) Loss on disposal of assets | 0 | 0 | 0 | 46 | |
Operating income | 758 | 240 | 1,541 | 1,076 | |
Interest expense | (50) | (41) | (130) | (106) | |
Income before income taxes and noncontrolling interest | 708 | 199 | 1,411 | 970 | |
Income tax expense | 338 | 83 | 602 | 413 | |
Net income | 370 | 116 | 809 | 557 | |
Less net income (loss) attributable to noncontrolling interests | (21) | 0 | (7) | (57) | |
Net income attributable to LHC Group, Inc.’s common stockholders | 391 | 116 | 816 | 614 | |
Total assets | 44,621 | 33,549 | 44,621 | 33,549 | |
Hospice Services | |||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||
Net service revenue | 41,291 | 35,322 | 116,249 | 100,051 | |
Cost of service revenue | 27,441 | 21,243 | 75,187 | 61,836 | |
Provision for bad debts | 234 | 797 | 1,393 | 2,364 | |
General and administrative expenses | 11,263 | 9,491 | 32,404 | 27,787 | |
(Gain) Loss on disposal of assets | 13 | 5 | 21 | 329 | |
Operating income | 2,340 | 3,786 | 7,244 | 7,735 | |
Interest expense | (149) | (90) | (393) | (232) | |
Income before income taxes and noncontrolling interest | 2,191 | 3,696 | 6,851 | 7,503 | |
Income tax expense | 931 | 1,275 | 2,439 | 2,484 | |
Net income | 1,260 | 2,421 | 4,412 | 5,019 | |
Less net income (loss) attributable to noncontrolling interests | 273 | 553 | 1,038 | 1,368 | |
Net income attributable to LHC Group, Inc.’s common stockholders | 987 | 1,868 | 3,374 | 3,651 | |
Total assets | 156,296 | 119,906 | 156,296 | 119,906 | |
Facility-based services | |||||
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | |||||
Net service revenue | 20,457 | 16,153 | 54,464 | 54,416 | |
Cost of service revenue | 13,240 | 10,432 | 35,396 | 32,710 | |
Provision for bad debts | 269 | 239 | 645 | 684 | |
General and administrative expenses | 6,039 | 4,952 | 16,563 | 16,004 | |
(Gain) Loss on disposal of assets | (210) | 117 | (83) | 203 | |
Operating income | 1,119 | 413 | 1,943 | 4,815 | |
Interest expense | (50) | (73) | (131) | (189) | |
Income before income taxes and noncontrolling interest | 1,069 | 340 | 1,812 | 4,626 | |
Income tax expense | 473 | 71 | 657 | 1,577 | |
Net income | 596 | 269 | 1,155 | 3,049 | |
Less net income (loss) attributable to noncontrolling interests | (27) | 149 | 237 | 730 | |
Net income attributable to LHC Group, Inc.’s common stockholders | 623 | 120 | 918 | 2,319 | |
Total assets | $ 48,574 | $ 34,075 | $ 48,574 | $ 34,075 |