LHCG - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the LHC Group Q4 2019 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will follow at that time. Please be advised that today’s call is being recorded. [Operator Instructions]

to conference like host, to now Mr. would hand over the your I Vice of Elliott, President Eric Senior Finance. you. Thank

may You begin.

Eric Elliott

Thank you, quarter earnings conference December Blue. LHC XXXX. call to I’d XX, for like to the fourth and ended welcome year everyone Group’s

copy Quarterly our quarter Everyone night. release XXXX and highlight we full I copy supplemental some the to last have of like year earnings deck posted this section should a of be Results as page. also and page. XX-Q, information a supplemental have that received Investor of call, would this will on of earnings on the our well the ultimately Relations The available found transcript the on release, as a when

deck of Our includes breakdown our all of and supplemental reconciliations adjustments.

during We call our will refer today. to measures non-GAAP these

In from have Chief Chief a Chairman and Josh comments Officer; Financial Officer. some Myers, prepared Executive Keith and Proffitt, we’ll moment,

our call, constitute of this we Securities Act. press release would included Before I Litigation the start, in in financial to remind statements the in Reform meaning our statements that within supplemental everyone information, conference Private like and forward-looking may

this are of but results from not could projected materially to, in to uncertainties, and statements our have on which the financial reflect comments annual factors shall risk include, of results beyond. for SEC differ statements These those subsequent are forward-looking in Actual a regarding number XXXX our because and call limited LHC update quarterly provided information Group discussed events. filings. and no to obligation

the Myers. I’m Chairman CEO Keith Group, pleased and Now to of introduce LHC

Keith Myers

of to number I part clinical me everyone, It’s delivering patient quality, thanking be begin serve. would to and for we highest of their in an of privileged are outcomes growing And your and and the morning’s Eric. our families and honor privilege and healthcare call. standards a communities patients, the satisfaction, of team. participating unwavering for by you, to thank dedication in to dialing professionals commitment you, Thank growing family for like this

another Group. was year XXXX record for LHC

last to of a quarter. an milestone daily we major surpassing addition of average census In recognized XXX,XXX patients,

partnerships and System, AtlantiCare Home Healthcare, form Health venture Home and others. with LifePoint, as Capital our Region Ochsner and also We and Norton such joint Health Methodist new partnerships Geisinger partners We THR with leading Health Hospice. expanded healthcare Medical successfully and Center and Hospice,

We number strong will rating experienced Joshua elaborate of in year industry from company we growth his And of face highest specific in rating. achieving agencies prepared a on of LHC five-star possible that a CMS, organic record remarks. further achieved and headwinds the the

most last I members I throughout a XX,XXX month discipline and the in professional success organization new country, to team created the believe in As by was for mentioned teamwork PDGM. the environment positioning strategically throughout LHC very Group and approximately our significant demonstrated manner accomplishment the

into our members emails calls I the and them attention from of clinical level innovative their of thinking clinical that system. received and to on IT We’ve to team for our testing, training, planning the models. of contributions and hundreds highlighting care educating team went entire and the thank appreciation proprietary models placed want care our on

With primary our their without to and focus patient and fulfill on able quality remain have our satisfaction. to to obligation partners flexible viable, help, stakeholders been and compromising healthy, our clinical we patients,

of poised things six our in seeing are already We outcomes are of each to do great excellent pillars and excellence.

in talk mean beyond. for what us and about PDGM to XXXX Now these I want preparations

opportunities and clinical the on and disruption growth early this aspects, Let’s this in XXXX the model caused ahead focus first is creating. by reimbursement new PDGM of short-term work QX the

more As a than transition many began of to know, ago. you our leadership preparations team PDGM clinical year to

focuses clinically past tireless on driven we co-morbidities, efforts improvements – have model, scores made appreciative their through proud year very and significant our diagnosis. of which efforts and are their functional over to We the evidence-based and how operating

half different and previous XXX patient to the and in resource the the XXX Throughout resource the improving at new ensure groups groups XXXX, piloted satisfaction, the while delivery time for of leading second our our we industry outcomes PDGM efficiencies same care walking cross better we care the of patients. managing could maintain of

also visits, use monitoring. of increasing telephonic and We remote tested our teaching the center call training and leveraging patient

that training increase of under and assessment the Our number two as early months other of the The telephone use streamlined patient care of methods structure health. the planned and with in going home first such of operational model. visits shows PDGM to everything clinical our as encounters benefits a is teaching

the percentage training and an in XX% Medicare month in patients That’s the month quarter. from increase of in fourth to the receiving For patients X,XXX we of throughout of channels visits remote one increased teaching our received over saw time. January, example, telephone XX%

more the that Another patients innovation example From to care patients. X minutes million XX we time home time with per to model are more February care equivalent August, XXXX, is in of visits home more with five of delivered XXX,XXX translate the more compared minutes were able in with our of spending quality February, August of month. to average XXXX in minute

ahead to statement that everything any of time. make the is seeing not able going takes lot surprises, and a we’re be of as To planned work

a us through of with We very for as approach to and You Family a us beyond. set approach post-integration. XXXX us the same Almost position heard those up went we took to similar XXXX success for in words from integration methodical

quarter. that Josh reflected training, our EBITDA earnings second of for in the had moment. It’s performance preparations and will XXXX Consistent throughout our with provided of we the outlook half all an also of the impact in up on a discuss in the XXXX, PDGM piloting ramp and the in fourth

our to home health XXXX. we in addition and specific aligned preparations, the segments growth PDGM for HCBS In

of Almost by The year-end. Homecare was Homebase implementation completed across all Family the locations

While time, a to in at the completing system. were same conversion HCBS one system we

the at quarter. of We several realigned operational during also and divisions health home the sales leadership our

core but model critical There high the still CMS’ place of delivering does privacy in-home the to to healthcare growth for or any our ready and in we’re negative growth, play to PDGM impact this one. right more as we comfort disruptions, numbers the role remain that clinical year. far it organic our care the of most accelerating combined get through This us years, a setting home so coming lot strengths. in reinforces efficient the growth beyond the on and of quality. room in was on residence. and XXXX and of did our supportive primary seen see organic we’ve the these most not improve goals. We XXXX As approach admissions, quality Despite our to and plays this appropriate and It

Congress we implementing CMS the of appreciative creating strongly, and that in And growing services. value PDGM in so are it in-home quality recognizes

and looking QX the a two an have XXXX, smaller to of increase the business. As first this from seen result in the number exit we calls transition agencies months of of in inbound

good the opportunities these volume. earn candidates existing we of can naturally in business locations market organic be could gains our as Some instead acquisition more others we into roll of through that our of and share growth acquiring

our we XXXX partners to in proposition us Our as positions is pipeline of XXXX XXXX. XXX.X ever. in joint believe amount in resonating completing as potential in and strongly acquisitions increasing value XXXX, as exceed this well to-date current million and After the venture environment with

several smaller the of we it far We too historic more that a as industry’s elimination the XX% and is early is RAF have so expectations say years. closures health out our to payments home described rural continue the the next expected. it It’s projected the PDGM by number, but is and with in smaller providers and accelerate consolidation agencies consolidation playing still whether had and among XXXX and opportunity the the right over driven will as

Change is nothing our new to team.

benefiting decades, time, a reimbursement appropriately timely a managed adapting consolidation past opportunities. the organization and the industry from and resulting three stronger as successfully and changes each manner in to We over result, have a better emerging through numerous change greatly

look beyond, we XXXX there is ahead As team our number priorities are of a to on. that focused and

from to and activity hospice scores areas as Executing enhancing disciplined contributions health, home growth increased in in leadership satisfaction hospital as health good future. patient our Organic our and for employee from joint position to Almost in and greater in growth, even CMS M&A industry Maintaining lead continuing capital quality, congressional and to capturing acquisitions. transition, recent continuing incremental other approach Family, and with incremental ventures the relations share and on retention. home allocation recruitment market well the ventures joint key around PDGM opportunities

results here’s Now, XXXX’s some Josh? Josh on to guidance. our color provide financial and

Josh Proffitt

you for and all everyone. call. our joining Thank you, Thank good Keith morning

yourself serving and serve our you my begin prepared the all appreciate do saying I’ll country as they what is of truly clinical every professionals much always, a remarks I give so day. of It you how to much and As across each privilege others. by

financial guidance website detail remarks reference among the performance, assumptions. and this supplemental summary on more breakdown my on posted Our supplemental the that information I’ll morning. sector deck in provides

fourth in the LHC financial For Almost detail big sequential home Family health strong another our takeaways. and the We here in that more quarter legacy locations will are quarter locations improvement of our at growth had continued I results, describe shortly.

piloting quarter was in we our on slightly revenue and due our below preparing a health PDGM in rollout of decline the focused model. mix for wide Home as company case fourth expectation a to

including the earnings related per $X.XX Our in to rate was quarter, a fourth the for approximately adjusted tax $X.XX share lower quarter.

and and had originally preparations, prepared strong anticipated little quarter, to QX are by successful PDGM changes from for accelerating a making shy and EBITDA realignment but we and XXXX into more a our we due was much these operational so what fourth the preparedness well beyond. disruptions

was As Keith in for XXXX the we everything us mentioned to prepare before, did future.

we and Almost PDGM scores, our Our are all and home improvement conversions, year system and the into completed and on heavy been of now set for realignment, future. this success have sales preparations up quality our focus health our well Family very operational

in EBITDA has in X.X% from Now for EBITDA adjusted Home highlights. basis. in a improved from segments XXXX. all And quarter continued from year-over-year year XX.X% the Facility-based in full year in XXXX improved improvement XXXX. XX.X% to EBITDA to to improved health X.X% EBITDA X.X%. adjusted improved from HCI Hospice X.X% to X.X% XXXX across adjusted last adjusted from X.X% XXXX margin to fourth XX.X% improved in Incremental in EBITDA X% on XXXX. adjusted and HCBS XXXX.

spot a growth with was again health this LHC admissions. home legacy bright growth delivering us locations XX.X% Organic in quarter for

increase former the are with a that that the pleased we evident a improvement last now launching AFAM all previously organic fact growth anticipated assets LHC the off on health turn locations, year. also than including We we locations. combined to XXXX starting basis X.X% we home across a point very dramatic when Family year a combined as XXXX, throughout from basis, that will continued on be Almost more reporting as solid their experienced page we in are It’s the admissions the

will at organic While we is former to growth, AFAM the way to combined supplemental X Almost this this of one we’ve you as the locations I’ll a to by basis for look this of the location Page is last look impact quarter, back from comparison. excluding be Family made admissions quarter. improvement health on refer the deck home organic the the at

You pace health that number growth projected was more see X.X% said XXXX. in entire QX X.X%. current In impressive ago, for and moment home combined QX, the for growth in were the Maybe growth will QX X.X% combined a to is company up the to for organic as rose we of I QX. it

longstanding for rate growth indications at QX. can for admissions We’re of clinical home acquired growth the you I for of of at known effect up XX% we X% target to currently locations benefit gains. X% to our of standards X% health, that market and for organic of think to LHC see a home combined and early operational Compared on with share of pacing Group possibly are our bringing the all PDGM the health

adjusted year would our XX Turning X was gross in XXXX of XX% basis consolidated QX margin deck, XXXX. point the improvement and a for XX to year-over-year the versus I of Page supplemental point note full a basis improvement that

XX.X% basis point as the year percent which expense down was was revenue XXXX. from a a G&A in improvement adjusted XX XXXX, for XX.X% of Consolidated full

XXXX the Our was year-over-year X.X% fourth consolidated up quarter XX.X% and from basis XXX XX% full adjusted improvement for which of is for XXXX. point the year, year in the EBITDA a for full

Page stats segment. XX the of Pages notes XX and highlight supplemental through results the key deck by the X

X.X% in EBITDA regard health addition In home basis X.X% regards maintained In cash the and HCBS our margin, G&A for made gains segment, points we the XXXX. hospice in gains G&A and delivered hospice growth we With were improvement lower our the segment, expense, XX.X% receivables. which These solid the for XXX segments. have volume we collections year, to EBITDA margin growth, is both gross expense. year XXXX, in organic attributable hospice, in to on and up to our in improved HCBS to margin from achieved our full full

Turning liquidity to of our deck, metrics the debt year. the XX we’ve for updated of Page all supplemental and

during You taxes cash I heavily in influenced it free to XX December the out of for the flow Driving by paid was million growth of a will XXXX, we will free XX, be for priority year. will us call quarterly the net the new continue know but cash flow on that that a progress timing adjusted will months PDGM and XXXX. model $XXX.X ended basis be how through

calls a HCBS out build XX by same days next conversion days six This of XX the as in to the months a the claims. continue of ago, receivables to AFAM due the year our unbilled work compared were link. quarter over fourth in should work itself mainly up locations through locations period DSOs in those to the

DSOs been an and relatively as have model CMS higher a the as quickly, claims point, under progresses issue be bit but year there PDGM we to out. expect could paying the still not settled up is this

we date better joint and as of and well acquisitions. revenue how XXXX, extensions to partnerships, through acquisitions annualized tuck-in acquired both and with partners could the closely with strategic these of and through million post-integration. new working During getting we are in not XXXX as We happier we be performance $XXX.X are existing ventures,

of hospitals have of that venture the agencies. partners a one-third only home health fraction joint are Our

experience, on. Maybe system. at agencies, ACO in starting that the to health have grow our value our are the that health is sure. room the among in seat table the they much measures to partner hospitals, even quality larger their but to partnership of a recognize We with and space for leading home who depend contractual don’t that two-thirds opportunity have we more strategic remaining care are With home provides business, health extensive can yet

PDGM of as remains The accelerate over several and of the the the industry health into home highly providers largest years. consolidation the impact the such should LHC next The fragmented. RAP Group payments elimination

business volumes increase growth. through inorganic the leading We and organic to expect incremental our and patient quality growth to also scores earning satisfaction drive with

before very an marketing and operations Almost approach Family We’ve new acquired to locations environment. effort. That what already approach out we seen can after will began the aggressive and can taking same a build happen in former solid patient be sales higher this scores and replicated in

growth in are health, We another for us home certainly known is hospice. but for engine

on are We we already an where intensive a health markets making established home presence. have very to push adding hospice

EBITDA times over solid next was have well this is we for and home to Net goal of XX% at of XXXX. of fund co-located year-end have to health leverage balance sheet adjusted our over all hospice. least growth Our X.XX years are the locations we where With a at $XXX activity. with liquidity, million five positioned

our We million capacity. an an and feature of accordion provide have additional $XXX facility credit $XXX million that available can on

introducing Now net billion our year. to range a moving of million. less is million Guidance service interest $X.XX EPS XXXX full to $X.XX, billion, in non-controlling EBITDA range for of and $XXX to the a of and guidance a in to in XXXX $X.XX revenue $X.XX $XXX range for

sequential diluted fully year. million, for shares rate timing in and efficiencies the throughout the We year the behavioral ramp revenue year assumptions of that full offsetting but cost will to main factor the assumption associated of tax for are increased and the with PDGM effective assuming are XX% an XX.X cut the

more and of we half upside that lesser disruption from disruption optimization cut standpoint, noted would we have reduction our and consistently revenue believe cost year, we We QX, extend then our in results XXXX see the second having with some a QX when will the thought normalized we EBITDA on initiatives. in the visit in throughout mitigate while entire

XX supplemental and more the on details Our deck. and of has guidance that progression Pages reflects XX

will understand To help work. that progression how

for first have guidance issued quarter. We the

$X.XX, of to to to net the interest EBITDA $XXX $X.XX range expecting range million $XX of revenue be $XX in less are in million, $XXX We of range EPS and million. service in to the the million non-controlling

rate adjustment. X% see the $XX approximately the The will due we’ll offset first incrementally improve of of million, $X.X Medicare to a PDGM impact This million X% should be quarter to to home impact mid-year. or health behavioral and by

Our extend our take and and cost the year. throughout improve will efficiencies a sequentially optimization also similar track

higher reduction million to of to tax vestings. stock million due also QX compared will an million The an $X to restricted on in tax benefit $X.X approximate impacted taxes be of benefit impact expense, in $X but first quarter XXXX, the we’ll income payroll excess from by

believe a will sequential the have flow We improvement of XXXX quarter-over-quarter.

We execution commitment in during for all our strong the country PDGM. preparations by are proud our and particularly the of XXXX, across teams

in the plan the place model in care We have XXXX and thrive to beyond. and

opportunity a consolidation progress competitive deliver look and growth our We differentiators pull to on forward with provide fronts have to to clear to advantages. XXXX. multiple historic that of We levers all throughout ahead us you reporting

my concludes are the to for floor Thank you. ready we questions. prepared That Blue, remarks. open

Operator

Thank Brian first comes [Operator of the Tanquilut you. Jefferies. Instructions] line Your from question from

your ask may You question.

Brian Tanquilut

for guess, you morning good question guys. I Josh. first Hey, my is

So line. some good through growth, about obviously on I think the of some But volume you think side. QX, flow the up as put line. that I missed as top X.X% And really about EBITDA obviously which

are the the So prep? part what changed. all strong very adjusted the QX if is mix weak the you’ve quarter-to-date. there? is think PDGM also revenue of volumes that’s case, if as that why already happened that about, case and get I mitigation and I PDGM But then your quarter And case

Josh Proffitt

you’re and on. questions, great Brian, spot Yes,

we admissions effect, QX, although, such had growth. top as good line for strong you mentioned, the So

which million in of episode into $X have about fell in forward of line our You $X.X mix That to does case had our straight roll Medicare, a depression to that on of a bottom piece in pricing results on top line per $XX QX. pricing QX. and million the the

then So $XXX even a may $XXX million in few I’ll with if you to just QX, for the give pieces revenue mitigated of One our be July that. bridge $XX QX. stick of top $X.X let’s you the million line by QX but offset, in fully help to revenue. million $XX in end, guidance million you’re and be from adjustment about call there’s effect around further million been That we’ve behavioral bridge minute a is top at saying that of should of of the it, will the to trying as range bridge.

You’ve to $X million crossover the for mix got it, case another, episodes XXXX. call continued $X from for million lower

same that through QX So is that in episodes. drag crossover down flowing affected those also

the is guide. as And starting that link QX lower a So hours factored disruption to have segment. due into but impactful, HCBS in QX. finalized not That’s from we we do then the in rolling, billable this our conversion that continue into

So QX. pieces you million I would the QX $X that those increased the from the roughly guide, add our payroll to QX I to get taxes think bridging Brian. bridge the would you top different And for bottom line three that line thing is other only on should then to help be, QX on in

Brian Tanquilut

I’ll pass to appreciate I I that. then guess, it Keith. And on

combined growth to, AFAM one, in to feel about the think JVs entity the past. about you going back it know the I Florida. historically forward, They’ve inflection I talked ability do ability for up looks back averages. about get sustain growth, How challenged growth you’ve or that we’re LHC starting been to in And number like there. then to see your it’s bouncing that As

thinking together, be post-XXXX growth? put I those about if So should I all how

Keith Myers

Yes, question. great that’s a

of historically, our through quarter. quarter, very a funneled model, strong So a of operations. results seeing go little that. sales I XXXX, be quarters, entire I’ll sales already two most that into the fourth where the Prior last the reference restructuring in up deeper beginning want And that. mid-point all to operated of we’re to happening efforts of in in fourth the we

of separating to improvement, leadership to began this quarter and where about thinking our from board market. at we of Turner and out XXX% always with operations landed up the But that actually focused the dedicated and way in second we sales assess the And opportunities C-suite of us do business. in for helped in structure. Brent help having all every as And one strongly on is members, year all and came we aspects look and sales in to a sales our last

see took early about XX that really beginning and out, signs days to After of improvement in to roll of QX. we off it started

It’s where replicable. happening. We we don’t so these it’s an and know though it’s and And from. as happening results know accident coming that’s not not why it’s are it’s why

to trajectory. business, we to confident legacy highly legacy market. clear trend that is continue LHC of our AFAM aspects a real every we’re ramp thing, this unique see in One on So all be to is growth side, last just this, both and on going this state

I think have per so potential does a Florida market you where we share us handful all a know the that, like have for but after Maryland providers. have not would agency of state only reminding you that, that

on in that and leading our will we Florida but a the market, sense? market within – I Does company think Florida growth So, be competitors, state. make every within that

Josh Proffitt

we just state. realignment, a specific add that operational with Florida, And to one efforts in this I’m to with was a connection ended on just Yes. did the that the glad ended. I in Josh. to executive Keith. and point thing you want because level around sales Brian, quarter Brian’s higher was the where question. is tag Keith sales Florida for fourth also over of

know, operational division Brian, as level across folks executives company. our the that we’ve got run to So partners you as

about tell not for itself Florida quarter. are growth the to pleased was in of And in in And combined we fourth we with I’ve one you, only the the X% combined focus an state positive really put company intense with leader Florida. the got QX,

our remember acquisition QX. to positive first I quarter can even of for it growth around The in Almost pacing And long positive that the state X% organic before is of Family. Florida

that Florida to pleased is for give give was mark, all X% the its has since office. to which same right when the Florida company, full XX% you about, I at also home we in asked here So there that want that you really

Brian Tanquilut

Got then and feedback from at leaving. gotten to bench is with question about the ability just my up a execute all so time air. that investors questions is, I the in it. do when or you And many think guess to related the last How Don one you’ve there’s balls guys

Keith Myers

Yes, so a that’s question. good

of Officer, the room is like still First – Advisor. all, Clinical I and Medical things I clear, regard company mean, Angie’s Senior to with basis. here Don, Begnaud, Ben me that. to on want works working been just a Doga, with consulting Dr. on with be and Don’s the early still And here quality with since in Chief initiatives since days, our Don them Angie

or So that divisional know, presidents, of in years more, them. clinical for have a team role we who have permissions we you those seasoned, strong been XX every tenured don’t health one of all are – all home nurses for of themselves, that

where day-to-day is. that’s And the operational leadership

time I bench, and the of about So hasn’t takeaway is been a structure we operating haven’t clinical has here I further a could lost long that go – now. on here lot but still a business Don’s leadership benefit. that’s Don guess there’s

Brian Tanquilut

guys. Thanks, it. Got

Keith Myers

Brian. Thanks,

Operator

Your of comes Joanna of line of Bank the question America. next from Gajuk

You question. may ask you

Joanna Gajuk

questions. for good taking Hi, much so morning. the Thanks

divisions. around QX, commentary clarify, PDGM just the for the experienced visit in and you’ve the because [indiscernible] so of the also realignment disruption So of to

to QX. I experience QX these, expecting that see guess, you much in disruptions from you in how So

Josh Proffitt

glad asked question. it. this Yes, I’m you Great Josh. is Joanna,

go I’ll address that’s specifically to question maybe So related. your then another even category and

to pushed operational As PDGM it that into all the preparedness, the we accelerate and fourth relates realignment, quarter.

be expect. in There we continued expect. or regard we there’s that from So no cost no that that adjustments disruption no around that will QX continued

the not but the getting that’s headwinds rate QX out of on rollout had done. of intentional and of operational spreading the all into realignment Likewise, just a the the can model, it kicking period and to time. that continuing over really and We were cut we and

side behind any replicates. and to there us cost that other and So fully you any severances see the any won’t are aspects of

base. and course had And home then will other behind cost highlight of around lastly, joined Family throughout on those now integration we’ve that all care conversion the we of I year not home and transaction be the report that category having us the forward would Almost adjustments the that the of either. and adjustments also going kinds this the pleased I’m is that to all of

Joanna Gajuk

in good. that yes, any costs question EBITDA, or the was any that Okay, sounds guess of other that included adjusted or excluded like I you for correct? the EBITDA it terms excluded, my and Because, XXXX expect in costs from either implementation adjusted don’t guidance

Josh Proffitt

Joanna. correct, That’s

Joanna Gajuk

guess impact then through And about, the talking good. Okay, year. how PDGM I flow will the

actions. So – can your you in models. give different staffing changes episode talk rolling kind also since about of to visits remind to an the We in the are per the you where us update of of out pieces terms us and in different and these past, reduction number

can this pacing you how how about the us and talking give see how that last kind is you stand can we’re where of going? update So compares we an time. versus So

Josh Proffitt

can as anything start jump to and I Sure, I’ll sure. ask well. in Keith can maybe leave

going it’s ramp the as throughout and far year. to pace how As

only pressure by There will As forward. QX guide, revenue be continued expect revenue to gone our evidenced but pressure, not the from be in we the QX. that not in QX. will same And quite July extent

or QX. And extremely know over patient rate out that’s the number patients alluded of really the feedback our patient strong. run receptivity remarks. based model increased know in Keith the I the care of side, is X,XXX And I encounters. On clinical Keith additional receiving getting mentioned there. his touches of cost telephonic over visits great model evidence such we are prepared that But the of to

of have the field. that care visits telephonic delivery the as was in That been incorporated model part

to from rate February have also at number running the seeing that. run of the We of center and increased in interventional lot where check its health we’re up related January That has centralized calls QX we’re call office. here in home a and a

quarter-over-quarter. I is as highlight you’re continues mature as but to know this that to this see ramp improvement we’ve continues for it again. going throughout want the PDGM, one extender you, to utilization unrelated to and highlighted that I progress to totally margin So year, and of

On Almost now have and our the completely delivery converted extender that care of instance base home home utilization side to models. Family we on deployed our care completely

depending have XX-XX around XX-XX. LHC depending in the XX-XX therapy care Almost been that certain level. PT extender or RNs, from areas, on you’re at a being and talking a if still of At being historically, to the lower We XX-XX, Family XX% and mix, extenders, is delivery with XX% on nursing the the cost anywhere discipline

a kind is there going to got which them we’ve of level the to care room throughout contributor year. big is that of EBITDA our model converted, be improvement a now final lot once So for deployment of

So might Joanna, put bow than than would to this, will I – tell then though slightly even QX. QX and you be would will that, much QX, be stronger I QX, stronger stronger will than not it definitely typically QX on be QX a be,

So I would it out that’s how kind model ramp. of to

Joanna Gajuk

getting the these we the Okay, than much I great. And then Yes, past of in going guess that’s It’s the used different at dynamics. to elimination. seasonality. how with be to that what terms was we because the discussion, briefly of of about talk the other because seasonality, cash in this and piece RAP QX past but you guess, I also the flow of in and I mentioned

with the give guess, you flow, I cash flow us you because home the a past, terms number for annual view expansion. CapEx in office will about of quantifying for Operating can so talk in cash So year. the and an current

Because this So XXXX seems like still a bit, know I whether CapEx a is the maybe lot. little don’t works. in the

XXXX. or So to things pushed

CapEx operating XXXX? Thank of kind about can just the flow So you. you then cash and talk for

Josh Proffitt

thanks, Yes, Johanna.

depending from elimination and flow but XXXX, the or XX% on roughly reduction best in research a million RAP $XX guess, today call RAP QX. as we’ll the the either estimate XX% The start full cash XX%. now of XXXX, impact the collections here cash is it of less or from the on in going reduction, qualification that, So $XX in versus to I million RAP the sit is I our

we one would similar off. time expect what will phenomenon for had. collections then we’ve our that’s in described, be on quarter collections rate throughout, level cash than a we’ve to the cash And happen first run QX historically As that

on a uptick feel a five of that’s confident of company described our be year XX of for cash. kind new a kind and one – norm. and So impact to wide then that to set will throughout still we’ve DSOs DSO we day The about time event the

So we given still that feel confident about we’ve that. the guidance in

we somewhere big be that million had range. our As our free CapEx year. it we cash And flow you cash million and $XX be for highlighted free to expect $XXX continued for the Joanna, office tell for of you efforts. around of expansion free flow, XXXX. relates component is a And in to one this cash then million XXXX of somewhere $XXX the home then the I would would flow the about which CapEx

but beginning, XXXX wrapped felt in were costs roll and here those will XXXX the CapEx that over the from – of with XXXX. little be at QX Some standpoint will of a in a in should it the remainder possibly of the we last up into year brunt have just

Joanna Gajuk

Great. terms the LHCG, Any more were hospice update my expect of ask you XXXX? squeeze, for in Can one remind you quick. us basing. fiscal for they What rate if I’ll even do

Josh Proffitt

X%. X.X% That to

Joanna Gajuk

update. The positive

go the Okay, back great. Thanks. to you. I’ll queue. Thank

Josh Proffitt

Right. Thanks, Joanna.

Operator

Your comes next of from Scott Fidel the Stephens. from line question

is line open. Your

Scott Fidel

well, Hi, the throughout in if mentioned specifically a hear give I thanks. topic you recertifications Good update back can sort the the been that that just saw you’re recertifications what half net to really and on XXXX, what that growth ad and as Medicare flip morning. of we of to of impact the but relative that the the And that had expecting well. an the the as terms build forward the episodes. you didn’t revenues Interested, admissions then also us know XQ. of you as topic interested between reported year, in around

Josh Proffitt

questions. Josh, good this Scott, Yes,

For QX, rate research, much XX%. typical run we our XX%, for experienced pretty

planning from we’re that And reason models seeing so not clinical our have care see that everything we’re working seeing different not far why recertification any perspective. change. the change, stay length into team of and been any would we don’t And QX, on, a anything through or

I have the for So of and would that same recertification to modeling historically stays we purposes, continue just model had. length

Scott Fidel

it. Got it. Got

at in of research So the this much on stable pieces point, pretty line by terms bottom that’s impact. the

Josh Proffitt

That’s right. Scott. That’s right,

Scott Fidel

hospice either on that on expecting some you And frame get back margins terms pickup in the hospice how see then XXXX on of growth or want framing also year. volume wanted terms a up and to what in then for segment follow revs in of you’re the just to just and or thoughts outlook margin the you after last did

Josh Proffitt

Yes.

lower X% hospice From the before admissions some and we’re We slightly We leadership progress of improve. top that the the year. in about of and did a on calls, a few this our expect top maybe health bit quarter side, for proud in starting to realignment in hospice. rolled of up continue our We growth and that QX. throughout saying been affected see were to the HCBS then that. admissions sequentially, But year X% over that would to very, on range perspective, X% we we past little there. made expect QX, quarter-over-quarter, I team. line QX area kind to to well in QX we’ve X% fruits to had in X% very home and as a line So the

say that margin pretty lastly, a from again, health. on I of discussion that’s perspective, the then as And guess, and length was stay your then home ADC I stable And question around would expectations.

they’ll in margins really those obviously, we XX.X%. for payroll about year, striving taxes were EBITDA depressed QX, get with But hospice and to For and we years, year, three last were the for to other. double-digit be

We’ve margin our percentage. been goal. to we EBITDA fully saying, can was if That that XX% in be XX% loaded

half that maybe back little as could the of XX.X% XX%, really at we to our year, to good segment. get if than hospice bit that a be be would for we that the So better

Scott Fidel

last Got one quick helpful. And then it. just That’s for me.

In Is there? else rate tax just terms drives that just normalization growth to that the all call the wanted at EPS XX%. lighter of of growth that? much pretty the out the little bit adjusted at the differential a midpoint of that And the X%. around the you anything between XXXX, EBITDA Or just

Josh Proffitt

No. That’s it.

You got it, Scott.

Scott Fidel

thanks. right, All Okay.

Operator

from Your the Markets. Capital next of question line Morgan RBC Frank of comes

open. is line Your

Frank Morgan

to different, and operations. because other share than the you there fast line Good morning. Is other Hey, I than – just marketing separation the doing amazing go direct realignment could starting separation between any the operational really is chart? anything specifically back report amazingly improvement on the see? that is with they’re of just that of us org So specific to this wanted you’re to some what color what different the on

Keith Myers

is This Frank. take I’ll that. Keith. Sure,

– have that we’ve had of to you his now a sales another President Senior reported have on Head we terms, like, to Sales for that a that done President of Operations Vice of President the Operations full supporting of solely is past. split the simple of people in Vice have we Senior and And what we President So supporting leaders. – Vice Operations Vice supports the Don or went into, operational that two, all focuses divisional leaders attention Senior on the in Senior that operations of that only focuses support. sales And and

Frank Morgan

you. Got

Keith Myers

Senior on analysts that support analysts have that XXX% of group sales work a Also focus President that for Vice sales. Everybody sales, are just that. specific there separated,

on focus three we to had really, that we realize is getting an sales because operations the company company operations was we and that were probably in such past, us sales got were in it the he an such that when nothing we Brent on So helped operations. times focus focused

Frank Morgan

within analysts. specifically the In there new they of that implemented mean, anything and Senior they’ve the Sales terms of us? I share far group, all with done that so specifically you is could this anything VP

Keith Myers

we out. individual so and sales to every to That’s mean their tracking there I we have the operations. we monitoring individual are with that it done report goals it Josh, and you day. daily done, do each and intensity I then operations that want and is to do – it specific the sales something in always goals some them but in throw mean, back then nuggets that in programs haven’t of how

Josh Proffitt

definitely even a to elements Yes. going was operationally. business lot I Keith. manage didn’t taken mean, several folks know concurrently to Not route that the concurrent is well now in prescriptive really fourth their are eye-opening. and prior monitor a just management, to you That that have mean, another us in every support of they team That now we But That’s them. there sales discipline this. do we planning pretty Frank, every put about management that data enough I but how I to is say. the track metrics the the think side. discipline our there what and giving on the morning. frankly rigor out quarter. forth whole rigor We is and and and being that new created level get handheld the metric They’ve morning, some I and the

rep, when And among have give of to I’ll you comradery sales bad and and folks you lot you, a times their themselves. can tell they give and credit, them get measures a competitiveness but them goals

from see were last kind also division you presidents the state to we had up The that nine is side multiple hold. realignment until really I’ll seven. quarter in And that of the on say health locations restructure, You that all went for thing take the example. divisions down Tennessee of in had fourth home in

state and both may Georgia presidents multiple in side. then operations on the of that the have sales and division And locations that’s

So been and so vice Almost through they each those has vice really speak. bear And overlap where not into from in were down only still gained regional the is to other they but Family presidents division were bumping fruit. between realigning the the to at presidents efficiency starting and LHC that area markets level

lot You more focused have a leadership.

Frank Morgan

just of sense. makes lot Maybe one off. That more and you. a hop I’ll Got

kind it better as an the of the out you you business Thank for see think that with stands initiative start then growth And rates? to reflected one us in better on called of to that of where In that AFAM side the scores. areas do there their any give how opportunity takes terms you rate you. of really coming off. hop color from long Can I’ll and was quality be

Keith Myers

So we expect rates. growth in to definitely the it see

Frank, earlier signs So I the that. little bit than we want expected. to emphasize we’re frankly, a seeing And

to planning We able we to pleased year, to growth in alluded report last weren’t until be QX. AFAM through report that we were trajectory all QX. As to

I getting discipline. distraction concurrent tools just described same the of giving team just of front And out much of the in on and the of same kind is so the way, and the of rigor Keith conversion that that sales those that members level

one. So I standpoint, I from that mean, the of think hit we’ve kind growth

to that all our On quality, one gotten to to program performance that all converted, you’re put they’re the along, but ramp about and continue fully we’ve our drive feel that instance. And now efforts on improvement that scores. the saying we really they’re now our see them that quality into been going we’ve good fully deployed quarter-over-quarter,

going to pleased improve, I’m at which you’re that continue quarter-over-quarter growth see side. they’re with and more to So the will to on where then lead organic

Frank Morgan

Thanks very much.

Keith Myers

Frank. Thanks

Operator

of Your next Bowers the from from line comes Justin Deutsche Bank. question

line Your is open.

Justin Bowers

everyone. Hey, good morning,

in QX. a So that of take talk wanted give I to back of have you to an that you step about just opportunity initiatives kind the done and guys some

Not DC regulatory AFAM. ready as the to all get the growth PDGM and to for issues Just and resume in mention well.

now too, in the pause then just kind as XXXX? investments So that I’ll the you’ve make to in you need until one. of do And you context made feel next like that we’re

Keith Myers

that Not built and would we’ve investments made we course say I the and for budget the If investments, need the the are investments any understand and the to around question the if sure guides is in the IT model in of XXXX, and question. those that I type operating things, further XXXX. if made we’ve the investments.

Justin Bowers

XQ, than I’ll offline. line to what does target rest year? that I to gains include With any And of How that respect type thinking has level, higher obviously it. incremental? then about mean, And announced the the how guide That’s for higher then me. much how would a or share top in the of the historical follow rest up relate at we pacing of versus in for the unannounced. the guidance, is just been. the much Got PDGM does be market secondly, M&A And Okay. are from the that XX% guide your excuse year? X% to

Josh Proffitt

Justin. Josh. questions, is Good This

growth into baked reverse So share order, gains guide. I in no there market guess, expectations our are or the

will bit pace know which could call We a So that expect just don’t fully the even little maybe happen. conservative. in you that. that We

alluded to well remarks, As experiencing X% a I prepared even that the in my quarter-to-date XX% to be QX. we’re contributor very could in that

typically guide any our which that X%. includes It’s guide admissions of below X% year, X% to health, XX% off. to year growth full signal to way X% that going this an That’s the think still just not we is for to in home – assumption trying X% tail to to year. early the For total for the we in it’s the

the company locations full Family. guiding are more of that We for Almost all without no with and

boost from in be big you upside XX% throughout to line. that the year a itself. that of could are projection, that that has sustains even this some really if start there baked to this run in markets the And some gains give the X% were question on, in? then that be it first any No. acquisitions could keeps seeing that if upside our there But momentum to rate current top And experienced share market and the some PDGM some in quarter,

future We the into at no acquisitions have all. baked guide

Justin Bowers

the clarification. for Thanks it. Got Okay.

Josh Proffitt

Justin. Thanks

Operator

line the from Blair. from Larew of comes William Matt question next Your

is line Your open.

Matt Larew

Hi, morning. good

a some and that with Almost In historical modeling to be sense years more And health may overlap, we the now last understand thinking I on the mean, Family or typically years with close in I the just agencies been last there ongoing of agency XX. always in from past how in line should home moving about some forward your wanted briefly two to averaged two around precedent? ask Just want and closures there’s years. line perspective. have about more trimming XX number XX a but to get

Josh Proffitt

the precedents. growth great with line is beyond behind prepared of Onesie-twosie Matt. everything done. and say, more there Hey, is question. we’ve XXXX closures But be This and always that done for And in the Josh. as and we’ve definitely to operationally would historical realignment in I us. That’s and the here all

right, that $X on so, experienced, will with drag million a number, I five the though we’ve the to I remember closures even out or the that point about business. if EBITDA can continue that was

right to closing we’re that definitely us question consolidating would and to Family. – market. instances in specific of back your within into many the locations the be we But expect pre-Almost others to answer precedent So you the just is

Matt Larew

may level folks more sort the where Josh. out? occur? some comp that changes then just on the Thanks, of a it to higher Is think changes? provided going therapy thinking that to mix effectuate or the therapy staffing in at the is incentives then to that a do past? PDPM, you the Do that? things about in PDGM side, it that Is PDGM And of giving just you’re maybe way some you And agency same and to of there can desert Keith, be level direction are willing offsets what the in provide between been it’s and help

Keith Myers

said Could therapy? you You repeat about the last of that? part

Matt Larew

Yes, sort team last they’re of SNF disincentivizing sure. Yes, has the of PDGM some that changes the on part where just therapy. was PDPM also and just made between the the side, in

sense forward? of Just operators to getting your whether therapy moving provide for be terms desert willing there and in able a may

Keith Myers

That’s Yes. clear. Okay.

us, change going But hear the may say, try would at benchmark. of providers of as difference still into delivery and – I – going to going model to patients in those in for therapy model we’re to avoid may full patients, mean, And that’s no there’s take our stories where some therapy. not over in models providers. you in they going time efficiently all. we I are we’re implementation time. imagine, operate But more opportunities be of providers, So the perhaps services. no clinical would to accepting certainly smaller that we’re accepting I there transition our therapy that, harvest and LHC to

that would business of systems. ventures for be comes and joint or our remember label announced health that. hospitals But much And white we from that – us with

or we fly employees brand under LHC their So brands. under their

all-comers the hospital. us expect to take they from So

And this so the that’s what throughout of history we’ve done company.

fit So just model. wouldn’t our

Josh Proffitt

pathways hate some same it Yes. drum the beating I over Matt to throughout efficiency Family, With more one occurs add, that of hit the instance converted all I how And and other license some to of top an would year. LPN but is Homecare not visit would proprietary Homebase only practice lend again, time. maybe over the on of our that thing I’ll of us the only RN the there an is Almost type of be at care them, itself out deploying to more but visibility a to this the much tools made of thing. appropriate more is by into our your versus

So that also extender utilization component the a is there. big key to upside

Matt Larew

acquisition on there in give it Thanks of contribution. from have update But on of gained in what’s you’ve you the benefits than going was could an rest just XXXX, seen to as in terms the us on announced, think knowledge and a terms you HCI well? of business was you XXXX business And in Josh. it were you And excited sold I know then just something the here would particularly when of one and that HCI, last about. less was be was component that the I

Josh Proffitt

great the this is like always get Yes, one just Matt. always we those questions, to And of doesn’t that It airtime. speak about. topics

to the out businesses, which just of was is $X.X contribution versus So bottom XXXX the segment million management of ACO XXXX that you’ve the contribution segment. company about underlying we stronger of in in the HCI line each the much Mostly of from EBITDA got business. from that core the Imperium, better operations got actually

long-term got LTS, is which insurance the assessment You’ve business.

you’ve our practitioners nurse got And then as well. business

their throughout improving operations. So the we’re those year, each of incrementally

expect very the and XXXX, contribute ancillary continue the the in So them and even other as as with benefits to to far that to pleased more so learnings go company.

a that independent As with gains not company, Imperium do where throughout share we manages and country as even five providers volume relationships star but the across upside have think XX and there management growth home about a half, there markets to you and agency preferred the a country from that unique market well. as almost have only in we receive we ACOs ACOs leading four health have is

much on expected. I are would what that you and the target very with tell the we benefits learnings So

Matt Larew

Okay, you. thank

Keith Myers

This is Keith.

things add that. just of to a me Let couple

let’s just go maybe practitioner for nurse around back the business our a thinking to to So HCI. help share minute,

we do in palliative is when – with throughout benefit as But were Part practitioners doing that of So model acquired that using it Family a health business was the there visits and business. launching was develop B. point some there nurse that organization. home a home intend to XXX approximately model And have business, referral. just that And care what it to maybe Almost we’re deploy to the bill

paint ACO country, our The others. will we model same I’ll with have in base business. models And the as so be chime Bruce were the chime maybe ACO care that you learn asset. and that on? second to largest payers value based utilize Bruce, the ask the bigger in managed in knowledge the we a for it that said able to that And we minute. could and to for vision Imperium, from here look But to particular grow take in and want and being

Bruce Greenstein

Yes.

provider. the adjust provider today a of our within that or with, what those that ACOs both add just through we to we’re a it’s and to we Imperium learnings, onto managed arrangement So in whether together preferred work terms under that

costs offer XXX our cost types, it we look as early with is attractive. across look becomes their in for and offering provider entirely our cost ACO as almost more total of our market is as managing all as finally even lowest moving home to we hospital costs, all days, on total day quality, the In mature along We’re health care and in focused it physician matures. the spot ACO right ACO of care, at but because fits a total sudden of the sweet a highest overall cost, continue

health to is doing and So health ACOs we their health as of their better total strategic to to end home providers make strategic improve educate pull, that better. and a outcomes continue lever market the care. learned decisions to cost on up home we And ACO

lot XXXX more our in a expect We referrals and coming happened therefore education way. of

Matt Larew

the Thank you detail. for

Operator

from question UBS. of the Your Whit comes Mayo from next line

open. Your line is

Bryan Ross

Ross Bryan Whit. for is this Hey, on

PDGM the one full year EBITDA XQ and the Just for mitigation on the be upside a the ranges, at But those impact helpful line is about just PDGM over of for XXXX. or PDGM, you’ve and XXXX dollar a what the if talked clarify basis? on the either looking end you in and potential it’d course low the could the or top in high level net embedded the exactly ranges, offsets of Thanks. percentage of EBITDA

Josh Proffitt

would I question of back how a – to the QX it. at I the the the PDGM take go there. is Josh. filling shot what that of and the Yes. from I’ve call we’ll Brian, I’ll Brian answered you at this effect to and Tanquilut be headwinds bridging start

broken the obviously sequential we’re quarter-over-quarter. giving ramp As far guidance not as, out quarterly

why and makes and kind sense. So QX we’ve given of and that through you walked we’ve bridged how

it’s seasonality a earlier, said margin As would point earlier, the growth not over and QX not only on effect. I be the I in initiatives QX cost place right going year then wouldn’t in throughout then side. side But and again think a quantifying forth kind now, it’s PDGM top experienced. I definite in typical and line anything to bake QX To the and and of or I top but we’ve on just as percentages trend take so that Joanna’s put mitigate line in these QX. the to

Bryan Ross

Thanks. Okay.

Operator

With to Keith I closing like Mr. for to turn back questions, Myers no more would it remarks. over

Keith Myers

either in have questions, Okay. next look you that. Elliott in we Josh to please he Eric to you like Thank and as arrange you you contact to Thank dialing for everyone myself, you’d and quarter. will talk any always, and for contact forward if if dialing or

Operator

your concludes and conference. a you Thank participation wonderful day. and this Ladies today’s for gentlemen, have

disconnect. all may You

LHC (LHCG) 27 Feb 202019 Q4 Earnings call transcript