LHC Group, Inc. (LHCG)
Q1 2008 Earnings Call Transcript
May 1, 2008 11:00 am ET
Eric Elliott – VP of IR
Keith Myers – Chairman and CEO
Pete Roman – SVP, CFO and Treasurer
John Indest – President and COO
Brian Tanquilut – Jefferies & Co.
David MacDonald – SunTrust Robinson Humphrey
Whit Mayo – Stephens, Inc.
Newton Juhng – BB&T Capital Markets
Sudeep Singh – Deutsche Bank
Sheryl Skolnick – CRT Capital Group
Stephen Anderson – Wachovia Securities
Greg Williams – Sidoti & Co.
Eric Gommel – Stifel Nicolaus
Ralph Giacobbe – Credit Suisse
Previous Statements by LHCG
» LHC Group, Inc. Q4 2008 Earnings Call Transcript
» LHC Group, Inc. Q3 2008 Earnings Call Transcript
» LHC Group, Inc. Q2 2008 Earnings Call Transcript
I would now like to turn the presentation over to your host for today's call, Mr. Eric Elliott, Vice President of Investor Relations. Please proceed.
Thank you, operator, and welcome everyone to LHC Group's first quarter 2008 financial results conference call. In a moment we'll hear from Keith Myers, Chief Executive Officer of LHC Group, John Indest, President and Chief Operating Officer, and Pete Roman, Chief Financial Officer.
Before that, I'd like to remind everyone that statements included in this conference call 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 2008 and beyond. Such statements are subject to a number of risks and uncertainties such as changes in reimbursement, changes in government regulations, changes in the company's relationships with referral sources, increased competition for its services, increased competition for joint venture and acquisition candidates, and changes in the interpretation of government regulations. Therefore, actual results may differ materially from any financial outlook presented herein.
Further information or potential factors that could affect the company's financial results can be found in the company's Form 10-K for the year ended December 31, 2007. LHC Group shall have no obligation to update the information provided on this call to reflect subsequent events.
Now, I am pleased to introduce the CEO of LHC Group, Keith Myers.
Thanks, Eric, and welcome, everyone. The first quarter of 2008 was a repeat performance of Q4 2000 for the LHC Group team where we successfully negotiated a significant change in reimbursement once again. Our performance is a tribute to the hard working, dedicated employees of LHC Group who faced the adversity of a new reimbursement environment head on. The depth and experience of our management team has once again proven to be the competitive edge that enables us to transform challenges into opportunities. Our continued success acknowledges the long-term commitment to excellence that is ingrained in our culture, and in every member of the LHC Group family. Our commitment to the patients, families, and communities we serve is at the heart of everything we do.
Now, I'll touch on some of the highlights of the quarter and then turn it over to Pete Roman, our CFO, to review financial results, and John Indest, our President and Chief Operating Officer, who will provide an update on operations. Starting with acquisitions in Q1, we have added seven acquired locations in four states. On January 1, we acquired 100% of the assets of Access Home Health Agency in Springfield, Missouri. The service area of this acquisition spans 20 counties in southwest Missouri. The primary service area has an estimated total population of 857,000, with almost 15% over the age of 65. Total annual Medicare revenue for this agency is approximately $2.9 million.
The purchase of Access Home Health Agency represents LHC Group's initial entry into the state of Missouri. Also on January 1, we entered into a partnership agreement with Marshall Medical Center to provide home health services in Guntersville, Alabama, and the surrounding areas. Marshall Medical Center consists of two hospitals, Marshall Medical Center North, a 90-bed hospital located in Guntersville, and Marshall Medical Center South, a 150-bed hospital located in Boaz. The service area of this acquisition spans eight counties in northeast Alabama, two of which were not covered by LHC Group agencies. This brings LHC Group's total service area in Alabama to 41 counties. The primary service area has an estimated total population of 864,000 with almost 14% over the age of 65. Total annual Medicare revenue for this agency is approximately $1 million.
Then on April 1, we acquired 100% of the assets of Home Care Connections and Rivercrest Home Health. The acquisition consists of four locations in Amarillo, Odessa, Uvalde, and San Antonio, Texas. The service area of this acquisition spans 64 counties in Texas, which brings LHC Group's total service area to Texas to 102 counties. The primary service area of this acquisition has an estimated total population of 4.8 million, with almost 11% over the age of 65, and total annual Medicare revenue of approximately $8 million.
And today, May 1, we acquired River West Home Care located in Plaquemine, Louisiana. The primary service area of this acquisition has an estimated total population of 1.3 million, with almost 11% over the age of 65, and total annual Medicare revenue at approximately $500,000, currently.
Moving on to de novo locations, de novos continue to contribute significantly to our organic growth. In the first quarter, we opened six new de novo locations in four states, and have 18 additional de novo locations in six states scheduled throughout the remaining three quarters of 2008.
With regard to our acquisition pipeline, we continue our disciplined process of identifying targets that are fairly priced and have significant upside potential through internal growth and geographic expansion through new de novo locations. Because of our stringent criteria, only a small percentage of the opportunities presented to us are approved by senior management for consideration. In the first quarter, we realized an increase in the volume of opportunities presented to us, which has resulted in increased pipeline activity.