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LHC Group Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 10, 2011 05:22PM

LHC Group (LHCG) filed Quarterly Report for the period ended 2011-03-31. Lhc Group has a market cap of $513.3 million; its shares were traded at around $27.49 with a P/E ratio of 11 and P/S ratio of 0.8. Lhc Group had an annual average earning growth of 30.4% over the past 5 years.

Highlight of Business Operations:

On November 2, 2010, CMS issued the final rule covering payment rates for home health services in calendar year (“CY”) 2011. CMS set the base payment rate for Medicare home nursing at $2,192.07 per 60-day episode for CY 2011, a decrease of 5.2% from the CY 2010 base payment rate of $2,312.94. The decrease for CY 2011 includes the following adjustments to the base rate, as compared to the CY 2010 base rate, in accordance with the Affordable Care Act: (1) a reduction of 1% to the 2.1% inflation update increase to the market basket; (2) a 3.79% case-mix weight adjustment decrease; and (3) a shift of the outlier payment allowance beginning in 2011 that will result in a one-time 2.5% reduction to the base payment rate. These changes are effective for all episodes completed during 2011; accordingly, all episodes in progress at December 31, 2010 were impacted.

LTACHs. On July 30, 2010, CMS issued a final rule establishing FY 2011 policies and payment rates for inpatient services furnished to Medicare beneficiaries by acute care hospitals, LTACHs, and certain excluded hospitals. The federal standard rate for 2011 LTACH-PPS rate year (“RY”), which began October 1, 2010 and ends September 30, 2011, is $39,600 per Medicare discharge and the high cost outlier threshold is $18,785. This is a decrease of 0.8% from the RY 2010 standard rate of $39,896 and an increase of 1.9% from the RY 2010 high cost outlier threshold of $18,425. Pursuant to the final rule, CMS also updated LTACH rates by increasing the market basket by 2.5%, but reducing the inflation update by 0.5% as required by the Affordable Care Act. Further, CMS applied an adjustment of negative 2.5% to the LTACH standard payment rate to account for the estimated increase in spending in FYs 2008 and 2009 due to documentation and coding that did not reflect increases in patients’ severity of illness. CMS estimated that aggregate payments to LTACHs would increase by approximately 0.5%, taking into account all provisions in the final rule that would affect spending.

At March 31, 2011, the Company’s allowance for uncollectible accounts, as a percentage of patient accounts receivable, was approximately 9.8%, or $8.7 million, compared to 10.9% or $9.8 million at December 31, 2010. Days sales outstanding as of March 31, 2011 was 45 days compared to 46 days as of December 31, 2010.

Consolidated net service revenue for the three months ended March 31, 2011 was $161.8 million, an increase of $16.6 million, or 11.4%, from $145.2 million for the three months ended March 31, 2010. Home-Based services net service revenue increased $13.8 million and facility-based net service revenue increased $2.8 million. Organic growth for the period was 4.5%, which includes the 5.2% CMS home health base rate reduction.

Home-Based Services. Net service revenue for home-based services for the three months ended March 31, 2011 was $141.8 million, an increase of $13.8 million, or 10.8%, from $128.0 million for the three months ended March 31, 2010. Total admissions increased 20.7% to 27,113 during the current period, compared to 22,470 for the same period in 2010. Average home-based patient census for the three months ended March 31, 2011 increased 12.8% to 35,299 patients as compared to 31,282 patients for the three months ended March 31, 2010.

Read the The complete Report

Stocks Discussed: LHCG,
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