LHC Group

Good morning and welcome to the LHC Group First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your telephone keypad. To withdraw your question, please press star and then two. And please note, this event is being recorded. I would now like to turn the conference over to Eric Elliott, Senior Vice President of Finance. Please go ahead.

Thank you, Robert, and good morning, everyone. I'd like to welcome you to LHC Group's earnings conference call for the first quarter ended March 31, 2021. We issued our earnings release last night, and I would like to also highlight that we have posted some supplemental information on the quarterly results section of our investor relations page. The supplemental deck, as well as a copy of the earnings release, the 10Q, and ultimately a transcript of this call, one available, can be found on this page as well. Our supplemental deck includes our full year 2021 guidance assumptions, the impact of COVID-19, detail on a breakdown among sector performance, and a significant amount of detail on the monthly trends. All of our non-GAAP reconciliations and breakdown of adjustments are included as well. We will reference this information in our remarks today. We expect today's prepared comments from Keith Myers, Chairman and Chief Executive Officer, Josh Proffitt, President, and Dale Mackle, Chief Financial Officer, to run for approximately 20 minutes to allow time for Q&A. Before we start, I would like to point everyone to our forward-looking statements on page two of our supplemental presentation and encourage you to read them carefully. They apply to statements made in this call, in our press release, and in our supplemental financial information. Now I'll turn the call over to Keith.

Thank you, Eric, and thank you, everyone. As always, I want to begin by thanking our more than 30,000 LHC Group colleagues who daily live out our mission and vision of caring for people in need in communities we are privileged to serve throughout our country. I also want to acknowledge our recently published environmental, social, and governance report that is available on our website. Since our founding nearly three decades ago, our goal has always been to be an invaluable asset and a responsible contributing citizen of each community we are privileged to be part of and serve, well beyond being a valued community health care provider. This new ESG report brings to light the many activities and actions our team members throughout the country have undertaken to provide an even broader positive impact in the thousands of communities we are privileged to serve throughout our country today. Now I'd like to begin by providing some perspective on how our policy efforts and current legislative and regulatory activity are providing tailwinds that are shaping our business and that of the broader in-home healthcare services industry in a very positive way. We view 2021 as the beginning of a new extended period of perhaps unprecedented opportunity for LHC Group, in part due to the heightened awareness in the wake of COVID of our full range of capabilities as a high-performing in-home healthcare services provider organization with a national footprint and legislative and regulatory tailwinds, including innovative waivers from CMS, flexibilities for remote certification of home care, telehealth, continued legislative relief from the 2% sequestration cut throughout the remainder of 2021, and broadly supported policies that aim to significantly increase access to in-home healthcare services. As I mentioned on our last earnings call, we are encouraged by the current administration's plans to increase funding by up to $400 billion over the next 10 years to expand healthcare services delivered in the home. In addition, at least one legislative draft circulating on the Hill by Senator Casey, chair of the Aging Committee, and Senator Hassan and others exceeds this goal by creating a new entitlement under the Social Security Act for home and community-based services. Among other things, this proposal increases the Federal Medicaid Assistance Program, or FMAP, funding to 100% for home and community-based services, and for the first time, proposes to nationalize a presumption for in-home healthcare services. We are particularly encouraged by the administration, the Senate, and the House's focus on ways to improve coordination of the traditional Medicare home health benefit with Medicaid in-home services. For decades now, proven and time-tested innovative state Medicaid programs such as the Passport Program in Ohio that you've heard me mention before and the Oregon Health Plan have given seniors the choice to age in place by being cared for in the comfort and privacy of their own homes as an alternative to more costly long-term institutional care. Our Choose Home legislation builds on these successful state programs, which deem seniors eligible for in-home health care services as a first option, blending the traditional home health Medicare benefit with Medicaid non-skill services. We continue to build congressional support for this legislation and expect it to be introduced later this year. I would also point out that the proposed rules for fiscal 2022 related to hospice and LTAS are also very positive for us and will provide additional momentum later this year and in 2022. For more details on our policy efforts and policy-related focus areas, I would point you to the policy tailwind summaries we have provided on pages 7 and 8 of our supplemental text. On January 8th, 2021, CMS formally recommended expansion of the home value-based purchasing demonstration from its current nine states to a nationwide program. We strongly believe that given our proven capabilities as a national in-home healthcare services provider, consistently delivering higher quality outcomes and patient satisfaction, at materially lower cost, resulting in consistent, incremental earned performance-based incentives. Expansion of home health value-based purchasing would provide additional opportunities for us to leverage our proven, efficient, and effective in-home healthcare services delivery model to drive organic growth. To shed additional light on the significance of opportunity there were over nine million attributed ACO lives in markets LHC served through our current footprint of home health providers in 2020 of these nine million ACO attributed lives roughly nine hundred and twenty five thousand approximately 10.3%, received home health services in 2020. We, LHC Group, provided home health services to only 9% of those individuals that received home health. From a provider performance perspective, however, LHC was a top performer. with an average home health spend per patient in excess of 18% below the average home health spend per patient. And for all providers, 1.4% below the average total cost of care for the entire 925,000 patients that received home health. All that to say, our proven ability to consistently deliver high quality outcomes and higher patient satisfaction at consistently lower cost across our footprint that currently serves over 60% of the population in our country. We have good reason to be confident in our ability to significantly grow our market share as performance-based payment models become more popular and traditional fee-for-service models transition to models that place a greater emphasis on objective measures of effectiveness, outcomes, quality, and patient satisfaction, and away from reimbursement models based solely on the volume of provider activity. Turning to M&A, Our active pipeline of acquisitions and hospital joint venture opportunities we are pursuing at this time total slightly over $500 million in trailing 12-month revenues, with over $300 million, or 60% of that amount, being opportunities where we are currently in exclusive discussions with sellers. Of the $500 million, and trailing 12-month revenue, 71% is hospice, 28% is home health, and the remaining roughly 1% is home and community-based services or personal care. With the amount of high quality and high probability M&A opportunities in our pipeline today and the overall M&A momentum we see at this point in early May, We are confident that we will surpass our budgeted target range of $150 million to $200 million of acquired revenue in 2021. We also expect 2021 to be a rapid year for our hospice segments. as a result of the increased acquisition volume, of course, but also due to additional investments we've made over the past year in our hospice segment. Our commitment to hospice services as part of our continuum of care is nothing new. My wife, Ginger, and our founding clinical leadership team opened our first hospice location in 1998. which was co-located in the same market as our first home health agency that opened just four years earlier in 1994. The vision of our clinical leadership team from day one has always been to provide hospice services in each community we serve as a part of our continuum of care with home health. With a higher volume of anticipated M&A growth in 2021 and beyond, we look forward to making meaningful strides toward fulfilling our founding vision of providing home health and hospice as a coordinated continuum of care in each community we serve. In summary, the significant advances we see on the legislative and regulatory front, combined with our continued organic growth, significant expansion in M&A activity, and a 9.1% year-over-year increase in admissions from our growing national network of physician referral sources and hospital JV partners. In addition to ACOs and payers, other payers demonstrate that we have managed through the COVID pandemic with a level of professionalism and dependability that has resulted in an even higher level of trust respect, and loyalty among the many patients, family members, physicians, discharge planners, hospital partners, community referral sources, and payers who collectively make up our customs base. Without question, today we are a better, stronger, more agile, and more responsive organization than we were at the beginning of 2020. Our experiences, lessons learned, and improvements implemented over the past five quarters have created a new normal in our day-to-day operations throughout our organization that will continue to benefit our organization, and more importantly, the patients, families, and communities we serve in the future. We will never rest on our laurels. never take success for granted. We are a continuous learning organization committed to continuous improvement and a relentless pursuit of excellence in all that we do at every level of this organization every day. And now I'll turn it over to Josh to provide more color on growth and operations, and Dale to provide more detail related to financial results and guidance before we begin Q&A. Josh?