On October 18, 2021, LHC Group, Inc. provided a preview of its expected results for the third quarter which ended on September 30, 2021, as well as an update to its previously reported guidance for the year ending on December 31, 2021.
Founded in 1994, LHC Group, Inc. is a national provider of in-home healthcare services and innovations for communities around the nation. The company’s 30,000 employees deliver home health, hospice, home and community-based services, and facility-based care in 35 states and the District of Columbia, reaching 60% of the U.S. population aged 65 and older.
In their quarterly report preview, LHC Group reported several headwinds that they experienced during the third quarter. The company saw a decline of 1.5% in the average daily home health census, going from 85,553 in the second quarter of 2021 to 84,258 in the third quarter. Additionally, LHC Group saw 39 home health and three hospice locations closed during the third quarter. LHC Group attributed the decreasing census and recent closings in part due to the impact of Hurricane Ida, which caused the company to lose the equivalent of 120 operating days from temporary location closures.
LHC Group also experienced capacity constraints due to clinicians having to quarantine. In fact, the number of clinicians on quarantine increased from 0.25% at the end of the second quarter of 2021 to 3.00% by the end of the third quarter, peaking at 4.0% in the Southeastern states. This drastic change resulted in an estimated revenue impact of $12 million and EBITDA of $4.8 million. LHC Group responded to the high numbers of quarantined staff by utilizing more nursing contract labor, which unfavorably impacted EBITDA by $3.4 million in the third quarter of 2021 in comparison to the previous quarter.
Based on the headwinds mentioned, LHC Group expects to see a net service revenue of approximately $565.5 million and adjusted net income of approximately $45.5 million. Additionally, the company expects adjusted earnings per share of approximately $1.45 and adjusted EBITDA, less non-controlling interest, of approximately $69 million, inclusive of a net Medicare Shared Savings Program payment of $11 million.
Going forward, these headwinds already appear to be waning in the fourth quarter of 2021. During October, LHC Group reported an increase of 1,162, or 1.4%, in its average daily Home Health census compared to the third-quarter results. Also, the percentage of clinicians in quarantine declined by 60 basis points to 2.4% as of the week that ended on October 15, 2021. Additionally, LHC Group reported that the hospice sector experienced four consecutive months of normalized length of stay, which resulted in continuing sequential and year-over-year growth in average daily census.
LHC Group also reported a year-over-year increase in demand for home health and hospice services. “We continue to experience year-over-year growth in traditional patient referrals driven by an increasing preference by patients, referral sources and payors for high-quality healthcare services delivered in the home as opposed to inpatient post-acute settings,” said Keith Myers, LHC Group chairman and CEO.
LHC Group also reported changes to its full-year 2021 guidance, based on the expected third-quarter results and improvement in operating trends we’re already seeing in the fourth quarter. The company is adjusting its net service revenue of $2.2 billion to $2.205 billion, compared to the previous adjustment of $2.215 billion to $2.265 billion. Adjusted EBITDA, less non-controlling interest, is being changed from $265 million to $270 million, compared with the previous adjustment from $290 million to $300 million. LHC Group is also changing adjusted earnings per diluted share to range from $5.75 to $5.85, compared with $6.30 to $6.50 previously.
LHC Group’s new adjusted guidance ranges reflect a number of assumptions that are subject to change based on the impact of the COVID-19 pandemic on the market. These guidance ranges do not take into account potential future reimbursement changes, future acquisitions, new locations opened, location closures or any potential future legal expenses. Nor do they consider the impact of future COVID-19 related costs and expenses, which the company is estimating to be approximately $45 million during 2021.
LHC Group will host a conference call on Thursday, November 4, 2021, at 9:00 a.m. Eastern time to discuss its third quarter 2021 results.
