LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

(Unaudited)

March 31,
2022

December 31,
2021

ASSETS

Current assets:

     Cash

$           7,680

$          9,809

     Receivables:

          Patient accounts receivable

376,968

348,820

          Other receivables

11,219

13,780

               Total receivables

388,187

362,600

     Prepaid taxes

13,195

—

     Prepaid income taxes

19,004

7,531

     Prepaid expenses

22,636

28,401

     Other current assets

34,538

24,801

               Total current assets

485,240

433,142

Property, building and equipment, net of accumulated depreciation of $101,643 and $98,394, respectively

156,673

153,959

Goodwill

1,747,504

1,748,426

Intangible assets, net of accumulated amortization of $20,772 and $19,152, respectively

397,973

400,002

Operating lease right of use asset

111,954

113,399

Other assets

44,196

46,693

               Total assets

$    2,943,540

$   2,895,621

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Accounts payable and other accrued liabilities

$       103,151

$        98,118

     Salaries, wages, and benefits payable

86,049

100,532

     Self-insurance reserves

41,331

33,784

     Contract liabilities - deferred revenue

43,922

106,489

     Current operating lease payable

37,633

37,630

     Amounts due to governmental entities

4,475

5,447

     Current liabilities - deferred employer payroll tax

26,790

26,790

               Total current liabilities

343,351

408,790

Deferred income taxes

76,749

70,026

Income taxes payable

7,537

7,320

Revolving credit facility

773,270

661,197

Long-term operating lease liabilities

77,287

78,688

               Total liabilities

1,278,194

1,226,021

Noncontrolling interest — redeemable

17,539

17,501

Commitments and contingencies

Stockholders' equity:

     LHC Group, Inc. stockholders' equity:

          Preferred stock – $0.01 par value; 5,000,000 shares authorized; none issued or outstanding

—

—

          Common stock — $0.01 par value; 60,000,000 shares authorized; 36,687,528 and 36,549,524
          shares issued, and 30,558,774 and 30,634,414 shares outstanding, respectively

367

365

          Treasury stock —  6,128,754 and  5,915,110 shares at cost, respectively

(193,470)

(164,790)

          Additional paid-in capital

984,784

979,642

          Retained earnings

770,479

751,025

               Total LHC Group, Inc. stockholders' equity

1,562,160

1,566,242

Noncontrolling interest — non-redeemable

85,647

85,857

               Total stockholders' equity

1,647,807

1,652,099

               Total liabilities and stockholders' equity

$    2,943,540

$   2,895,621

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)

Three Months Ended  

 March 31,

2022

2021

Net service revenue

$       571,495

$       524,835

Cost of service revenue (excluding depreciation and amortization)

350,388

310,272

Gross margin

221,107

214,563

General and administrative expenses

184,359

163,249

Impairment of intangibles and other

1,229

177

Operating income

35,519

51,137

Interest expense

(4,171)

(263)

Income before income taxes and noncontrolling interest

31,348

50,874

Income tax expense

6,369

9,441

Net income

24,979

41,433

     Less net income attributable to noncontrolling interests

5,525

6,774

Net income attributable to LHC Group, Inc.'s common stockholders

$         19,454

$         34,659

Earnings per share:

          Basic

$              0.64

$              1.11

          Diluted

$              0.64

$              1.10

Weighted average shares outstanding:

          Basic

30,478

31,165

          Diluted

30,603

31,432

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

Three Months Ended 

 March 31,

2022

2021

Operating activities:

     Net income

$       24,979

$       41,433

     Adjustments to reconcile net income to net cash provided by operating activities:

          Depreciation and amortization expense

5,617

4,999

          Amortization of operating lease right of use asset

10,128

8,918

          Stock-based compensation expense

4,376

3,513

          Deferred income taxes

6,723

7,717

          Loss on disposal of assets

155

31

          Impairment of intangibles and other

1,229

177

     Changes in operating assets and liabilities, net of acquisitions:

          Receivables

(25,538)

(28,805)

          Prepaid expenses

5,765

(3,980)

          Other assets

(7,192)

1,627

          Prepaid income taxes

(11,473)

—

          Prepaid taxes

(13,195)

—

          Accounts payable and accrued expenses

10,602

(2,894)

          Salaries, wages, and benefits payable

(6,936)

20,451

          Contract liabilities - deferred revenue

(62,567)

—

          Operating lease liabilities

(10,046)

(8,925)

          Income taxes payable

217

1,119

          Net amounts due to/from governmental entities

2,200

(575)

Net cash (used in) provided by operating activities

(64,956)

44,806

Investing activities:

     Purchases of property, building and equipment

(6,442)

(4,849)

     Proceeds from sale of property, building and equipment

—

45

     Proceeds from sale of an entity

—

200

     Minority interest investments

(100)

—

Net cash used in investing activities

(6,542)

(4,604)

Financing activities:

     Proceeds from line of credit

374,428

—

     Payments on line of credit

(262,355)

(20,000)

     Proceeds from employee stock purchase plan

698

649

     Payments on repurchasing common stock

(34,565)

—

     Noncontrolling interest distributions

(5,697)

(5,704)

     Withholding taxes paid on stock-based compensation

(3,140)

(9,541)

     Purchase of additional controlling interest

—

(142)

     Sale of noncontrolling interest

—

284

Net cash provided by (used in) financing activities

69,369

(34,454)

Change in cash

(2,129)

5,748

Cash at beginning of period

9,809

286,569

Cash at end of period

$         7,680

$     292,317

Non-Cash Financing Activity:

Supplemental disclosures of cash flow information:

Interest paid

$          3,519

$            495

Income taxes paid

$        10,944

$            621

Non-Cash Operating Activity:

Operating right of use assets in exchange for lease obligations

$          9,371

$       11,748

Reduction to right of use assets and liabilities

$            (688)

$              —

Non-Cash Investing Activity:

Net working capital adjustment

$           (102)

$              —

Accrued capital expenditures

$             372

$         1,973

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)

Three Months Ended March 31, 2022

Home health
services

Hospice
services

Home and
community-
based
services

Facility-
based
services

HCI

Total

Net service revenue

$     387,892

$   101,906

$    44,340

$     32,139

$      5,218

$     571,495

Cost of service revenue (excluding depreciation and amortization)

228,207

66,065

28,955

24,205

2,956

350,388

General and administrative expenses

126,807

31,345

11,418

11,428

3,361

184,359

Impairment of intangibles and other

449

726

54

—

—

1,229

Operating income (loss)

32,429

3,770

3,913

(3,494)

(1,099)

35,519

Interest expense

(2,970)

(498)

(413)

(208)

(82)

(4,171)

Income (loss) before income taxes and noncontrolling interest

29,459

3,272

3,500

(3,702)

(1,181)

31,348

Income tax expense (benefit)

4,769

596

2,258

(962)

(292)

6,369

Net income (loss)

24,690

2,676

1,242

(2,740)

(889)

24,979

Less net income (loss) attributable to noncontrolling interests

4,596

680

85

171

(7)

5,525

Net income (loss) attributable to LHC Group, Inc.'s common stockholder

$       20,094

$       1,996

$      1,157

$      (2,911)

$        (882)

$       19,454

Total assets

$  1,756,250

$   803,004

$  240,195

$     80,831

$    63,260

$  2,943,540

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Amounts in thousands)

(Unaudited)

Three Months Ended March 31, 2021

Home health
services

Hospice
services

Home and
community-
based
services

Facility-
based
services

HCI

Total

Net service revenue

$     373,828

$     62,734

$     49,125

$     33,369

$       5,779

$    524,835

Cost of service revenue (excluding depreciation and amortization)

212,373

38,570

34,872

21,175

3,282

310,272

General and administrative expenses

119,397

18,127

11,529

11,257

2,939

163,249

Impairment of intangibles and other

177

—

—

—

—

177

Operating income (loss)

41,881

6,037

2,724

937

(442)

51,137

Interest expense

(182)

(36)

(24)

(14)

(7)

(263)

Income (loss) before income taxes and noncontrolling interest

41,699

6,001

2,700

923

(449)

50,874

Income tax expense (benefit)

7,890

1,067

518

57

(91)

9,441

Net income (loss)

33,809

4,934

2,182

866

(358)

41,433

Less net income (loss) attributable to noncontrolling interests

4,849

1,015

279

657

(26)

6,774

Net income (loss) attributable to LHC Group, Inc.'s common stockholders

$       28,960

$       3,919

$       1,903

$          209

$         (332)

$      34,659

Total assets

$  1,785,486

$   308,009

$   262,538

$     97,692

$     69,129

$ 2,522,854

LHC GROUP, INC. AND SUBSIDIARIES

SELECT CONSOLIDATED KEY STATISTICAL AND FINANCIAL DATA

(Unaudited)

Three Months Ended

March 31,

Key Data:

2022

2021

Home Health Services:

Locations

546

531

Total new admissions

113,122

107,922

Episodic new admissions

68,154

67,392

Average daily census

85,347

83,938

Average episodic daily census

53,278

54,597

Completed episodes

100,527

101,736

Average reimbursement per completed episodes

$

2,934

$

2,856

Total visits

2,118,072

2,057,632

Total episodic visits

1,287,101

1,288,653

Average visits per episodes

12.8

12.7

Organic growth: (1)

Revenue

0.6

%

3.1

%

Episodic revenue

(1.8)

%

1.4

%

Total new admissions

1.6

%

(0.4)

%

Episodic new admissions

(2.4)

%

(4.3)

%

Average daily census

(0.8)

%

10.1

%

Average episodic daily census

(5.0)

%

3.5

%

Completed episodes

(3.2)

%

(0.7)

%

Hospice Services:

Locations

169

120

Admissions

8,376

5,451

Average daily census

7,065

4,411

Patient days

635,821

396,974

Average revenue per patient day

$

163.04

$

161.88

Organic growth: (1)

Total new admissions

4.0

%

7.5

%

Home and Community-Based Services:

Locations

135

129

Average daily census

12,079

13,711

Billable hours

1,673,692

1,901,281

Revenue per billable hour

$

27.15

$

26.04

Facility-Based Services:

Long-term Acute Care

Locations

12

12

Average revenue per patient day

$

1,449

$

1,518

Average Daily Census

228

235

(1)

Organic growth is calculated as the sum of same store plus de novo for the period divided by total from the same period in the prior year.

RECONCILIATION OF ADJUSTED NET INCOME ATTRIBUTABLE TO LHC GROUP, INC.

(Amounts in thousands)

(Unaudited)

Three Months Ended
 March 31,

2022

2021

Net income attributable to LHC Group, Inc.'s common stockholders

$

19,454

$

34,659

Add (net of tax):

   Acquisition, de novo and legal expenses ⁽¹⁾

3,019

—

   Closures/relocations/consolidations ⁽²⁾

2,132

131

   COVID-19 impact:

      PPE, supplies and wages ⁽³⁾

—

8,852

   ERP implementation⁽⁴⁾

1,692

—

   Cost improvement initiatives ⁽⁵⁾

3,642

—

   Cost report and contract settlements ⁽⁶⁾

3,498

—

Adjusted net income attributable to LHC Group, Inc.'s common stockholders

$

33,437

$

43,642

RECONCILIATION OF ADJUSTED NET INCOME

ATTRIBUTABLE TO LHC GROUP, INC. PER DILUTED SHARE

(Unaudited)

Three Months Ended
 March 31,

2022

2021

Net income attributable to LHC Group, Inc.'s common stockholders

$

0.64

$

1.10

Add (net of tax):

   Acquisition and de novo expenses ⁽¹⁾

0.10

—

   Closures/relocations/consolidations ⁽²⁾

0.07

0.01

   COVID-19 impact:

      PPE, supplies and wages ⁽³⁾

—

0.28

   ERP implementation⁽⁴⁾

0.05

—

   Cost improvement initiatives ⁽⁵⁾

0.12

—

   Cost report and contract settlements ⁽⁶⁾

0.11

—

Adjusted net income attributable to LHC Group, Inc.'s common stockholders

$

1.09

$

1.39

RECONCILIATION OF EBITDA AND ADJUSTED EBITDA

(Amounts in thousands)

(Unaudited)

Three Months Ended

2022

2021

Net income attributable to LHC Group, Inc.'s common stockholders

$

19,454

$

34,659

Add:

   Income tax expense

6,369

9,441

   Interest expense, net

4,171

263

   Depreciation and amortization 

5,617

4,999

   Adjustment items ^(*)

18,904

12,167

Adjusted EBITDA

$

54,515

$

61,529

* Adjustment items (pre-tax):

   Acquisition, de novo and legal expenses ⁽¹⁾

4,081

—

   Closures/relocation/consolidations ⁽²⁾

2,882

177

   COVID-19 PPE, supplies and other expenses ⁽³⁾

—

11,990

   ERP implementation ⁽⁴⁾

2,287

—

   Cost improvement initiatives ⁽⁵⁾

4,924

—

   Cost report and contract settlements ⁽⁶⁾

4,730

—

Total adjustments

$

18,904

$

12,167

1.

Expenses and other costs associated with recently announced or completed acquisitions, de novos and the pending acquisition by UnitedHealth Group. ($4.1 million pre-tax in the three months ended March 31, 2022).

2.

Loss on the sale of an asset and other expenses associated with a closure or consolidation, including impairment ($2.9 million pre-tax in the three months ended March 31, 2022); expenses associated with the impairment on a closed home health location which occurred in the first quarter of 2021($0.2 million pre-tax in the three months ended March 31, 2021).

3.

COVID-19 related expenses for purchases of personal protective equipment (PPE), supplies and wage adjustments (No adjustments were made in the three months ended March 31, 2022; $12.0 million pre-tax in the three months ended March 31, 2021).

4.

Expenses and other costs associated with the implementation of an Enterprise Resource Planning software ($2.3 million pre-tax in the three months ended March 31, 2022).

5.

Expenses associated with cost improvement initiatives implemented in the first quarter of 2022, which consisted of contract terminations and general and administrative cost reductions ($4.9 million pre-tax in the three months ended March 31, 2022).

6.

Expenses associated with a 2004 cost report settlement along with other disputed contract settlements ($4.7 million pre-tax in the three months ended March 31, 2022).

Contact:

Eric Elliott

Senior Vice President of Finance

(337) 233-1307

[email protected]