LHC Group, Inc. (NASDAQ:LHCG) Q3 2019 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 09:00 am ET

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LHC Group, Inc. (NASDAQ:LHCG) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instruction]. Our first question comes from the line of Brian Tanquilut of Jefferies. Your line is open.

Executive
Brian Tanquilut

Hey, good morning guys. Keith, I guess my first question for you, as I think about Almost Family, it seems like the growth there is still a little bit negative, but shows an improvement in the ones that have seen the conversion. If you don't mind just walking us through how do you think the growth will progress over the course of the next 12 months? And then what is it that happened with those 130 locations? Just qualitatively if you can share with us what changes happened as you converted that drove that upside over Q3 versus Q2?

Executive
Keith Myers

Don, you want to take the first part?

Executive
Donald D. Stelly

Yeah, this is Don. I think first of all, we all along, we talked about the conversion to this instance being a distraction and it was. I mean you got to think in these agencies they're already taking care of patients and doing the day-to-day necessity and then we add this on top of it. But the real answer lies in the quality improvement, the clinical processes, because we have to remember, other than our internal benchmarks, which we use with SHP, the quality results that we report are in arrears. But the referral sources, the physicians, the hospital partners see it concurrently. So we're having a much better product for sale number one. Number two, with that conversion behind us in the sales force having the product and having the metrics that we overlay, there is much greater efficiency and proficiency in the sales cycle. So you add those two together and that's what we're seeing and I think it really gives us a lot of confidence that we're going to bode in 2020.

Executive
Brian Tanquilut

That makes sense. And then I guess, Josh, as I think about the margin performance in the home health business, is there anything you would call out as I look at the gross margin line declining 90 basis points year-over-year?

Executive
Joshua L. Proffitt

Yeah, no, Brian. Again, thanks for the questions. Nothing I would call out, I mean the 90 basis points year-over-year is just your typical wage increases, merit increases. things of that nature on the gross margin line. I'm very pleased that we're still able to leverage more of our G&A and our back office infrastructure and deliver an almost 11% EBITDA margin which is consistent from year-over-year period. And that's a really good EBITDA margin for our Home Health segment. As we highlighted, other segments continue to grow, but to be at around 11% EBITDA margin for home health, we feel really good about that.

Executive
Brian Tanquilut

And then my last, I'm sorry, go ahead.

Executive
Keith Myers

Brian I could just chime in on that you know that thinking back of the whole history of LHC, certainly from the time we went public in 2005 to now, that's been a consistent theme all along. We've always, we've always had a little more of