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LHC Group (LHCG)
Q4 2012 Earnings Call
March 07, 2013 11:00 am ET
Eric C. Elliott - Vice President of Investor Relations
Keith G. Myers - Co-Founder, Chairman and Chief Executive Officer
Peter J. Roman - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer
Donald D. Stelly - President and Chief Operating Officer
Darren Lehrich - Deutsche Bank AG, Research Division
Ralph Giacobbe - Crédit Suisse AG, Research Division
Previous Statements by LHCG
» LHC Group Management Discusses Q3 2012 Results - Earnings Call Transcript
» LHC Group, Inc. Q4 2008 Earnings Call Transcript
» LHC Group, Inc. Q3 2008 Earnings Call Transcript
Eric C. Elliott
Thank you, Jaimie, and welcome, everyone, to LHC Group's earnings conference call for the fourth quarter and year ended December 31, 2012. Hopefully everyone has received a copy of our earnings release. If not, you may obtain a copy along with other key information about LHC Group and the industry on our website at www.lhcgroup.com. In a moment, we'll hear from Keith Myers, Chief Executive Officer; Don Stelly, President and Chief Operating Officer; and Pete Roman, Chief Financial Officer of LHC Group.
Before that, I would like to remind everyone that statements included in this conference call and in our press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements include, but are not limited to, comments regarding our financial results for 2012 and beyond. Actual results could differ materially from those projected in forward-looking statements because of a number of risk factors and uncertainties, which are discussed in our annual and quarterly SEC filings. LHC Group shall have no obligation to update the information provided on this call to reflect subsequent events.
Now I'm pleased to introduce the CEO of LHC Group, Keith Myers.
Keith G. Myers
Thank you, Eric, and good morning, everyone. We're pleased with our operating results and the overall performance of our company and our team in 2012. Most importantly, our team of dedicated caregivers in communities throughout the country continue to provide the highest quality of care for the patients, families and communities we serve day-in and day-out. As we look ahead to the remainder of 2013 and beyond, we are well-positioned to continue increasing shareholder value by focusing on operating efficiencies and continuing to leverage overhead, while capitalizing on the opportunities we see ahead for both internal and external volume growth. We ended the year with solid momentum in both volume growth and cost containment. From 2011 to 2012, we were able to decrease G&A expense by $5 million, net of an approximately $3 million in additional annual G&A cost associated with our ongoing conversions to point-of-care technology, which is on budget and on schedule to be completed in early 2014. We are encouraged by the efficiencies being realized and the agencies that have already been converted. As most of you know, President Obama signed the sequestration order last Friday, March 1. Despite the broad unpopularity, there appears to be little in the works at this time to undo the across-the-board cut that has been ordered. Sequestration's impact on Medicare spending is triggered on the first day of the first month after the order is put into effect. In other words, the 2% sequestration cut to Medicare will begin on April 1.
With respect to Home Health services, there remains some uncertainty as to what will be impacted on and after April 1. Some observers have publicly commented that claims filed on and after that date will be subject to the 2% cut, while others believe episodes initiated on and after April 1 will be impacted by sequestration. For our 2013 guidance, we decided to calculate the impact of sequestration using the conservative approach of assuming they have stayed in place, as is for the remainder of 2013, and that all episodes ending on and after April 1 will be affected.
Turning to acquisitions. While we complete a few acquisitions in the first half of 2012, we have completed 2 of our best acquisitions in terms of potential over the last 8 months. The volume of inbound calls to our corporate development team related to potential acquisition or partnership opportunities continues to increase. With the triggering of sequestration, we anticipate this volume to increase even more. In July of 2012, we entered into a Home Health joint venture with Texas Health Resources and Methodist Health System. Texas Health Resources, headquartered in Arlington, is one of the nation's largest state-based non-for-profit health systems, with 25 owned and affiliated hospitals; and Dallas-based Methodist Health System is comprised of 7 hospitals. On March 1 of this year, we completed the acquisition of the Home Health service line of Addus HomeCare. The acquisition encompasses 19 Home Health agencies and 2 hospice agencies in 5 states, which includes Arkansas, South Carolina, California, Illinois and Nevada.
I'll now turn the call over to Don and Pete, but before doing so, I want to once again commend and thank our dedicated, hardworking employees for their unwavering commitment to those we are privileged to serve in communities across the country. I've never been more proud of our team. Their hard work, ingenuity and commitment to excellence, by all of the professional caregivers that make up this company, have positioned us to be very successful, not only in the current environment but long into the future.