8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 2, 2006

LHC GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation) 8082
(Commission File Number) 71-0918189
(I.R.S. Employer
Identification No.)

420 West Pinhook Rd., Suite A
Lafayette, LA 70503
(Address of Principal Executive Offices, including Zip Code)

(337) 233-1307
(Registrant’s telephone number, including area code)

N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1 PRESS RELEASE DATED 11-2-06

Item 2.02 Results of Operations and Financial Condition.

     On November 2, 2006, LHC Group, Inc. (the “Company”) issued a press release reporting on its financial results for the quarter ended September 30, 2006. A copy of that press release is furnished with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

     The information included or incorporated in this report, including Exhibit 99.1, is being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

     Exhibit 99.1 Press Release, dated November 2, 2006, announcing the Company’s financial results for the quarter ended September 30, 2006.

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

LHC GROUP, INC.
By:	/s/ Barry E. Stewart
	Barry E. Stewart
	Senior Vice President and Chief Financial Officer

Dated: November 2, 2006

INDEX TO EXHIBITS

EXHIBIT NO.	DESCRIPTION
99.1	Press Release, dated November 2, 2006, announcing the Company’s financial results for the quarter ended September 30, 2006.

EX-99.1

Exhibit 99.1

LHC GROUP ANNOUNCES THIRD QUARTER AND NINE MONTH 2006 FINANCIAL RESULTS
Quarterly Net Service Revenue Increases 50.4% to $58.1 Million
Net Income Increases to $5.3 Million, EPS is $0.30

LAFAYETTE, LA, November 2, 2006 — LHC Group, Inc. (NASDAQ: LHCG), a provider of post-acute healthcare services primarily in rural markets in the southern United States, announced today its financial results for the third quarter and first nine months of 2006.

Third Quarter Financial Results

Net service revenue for the third quarter ended September 30, 2006, was $58.1 million, an increase of 50.4%, from $38.6 million in 2005. For the three months ended September 30, 2006 and 2005, 80.9% and 85.1% respectively, of net service revenue was derived from Medicare. For the current quarter, home-based services accounted for 78.1% of revenue, and facility-based services was 21.9% of revenue, compared with 68.5% and 31.5% respectively, for the comparable quarter last year.

Net income in the third quarter of 2006 reached $5.3 million, or $0.30 per diluted share. For the quarter ended September 30, 2005, net income was $2.8 million, or $0.17 per diluted share.

Home-Based Services

Net service revenue for the three months ended September 30, 2006 was $45.3 million, an increase of 71.6%, from $26.4 million for the three months ended September 30, 2005. Organic growth in this service sector was approximately $10.5 million, or 43.3% during the period. Total admissions were 7,377 during the period, versus 4,220 for the same period in 2005, a 74.8% increase. Organic growth in admissions were 26.2%. The Company also monitors patient census as a key performance indicator within its home based services. LHC Group’s average home based patient census for the three months ended September 30, 2006 was 13,524 patients, an increase of 81.0% as compared to 7,471 patients for the three months ended September 30, 2005. Organic growth in home-based patient census was 26.0%.

Facility-Based Services

Net service revenue for the three months ended September 30, 2006 was $12.7 million, an increase of $0.5 million, or 4.5%, from $12.2 million for the three months ended September 30, 2005. Organic growth in this service sector made up the entire growth during the period. The increase in net service revenue resulted in part due to an increase in patient days of 2.1% to 11,674 in the three months ended September 30, 2006 from 11,437 in the three months ended September 30, 2005. Outpatient visits decreased to 4,287 at September 30, 2006, a 56.1% decrease as compared to 9,768 for the three months ended September 30, 2005 due to the sale of one of our clinics.

DSO

Days sales outstanding, or DSO, for the three months ended September 30, 2006 was 72 days compared to 79 days for the same three-month period in 2005. DSO, when adjusted for acquisitions and unbilled accounts receivables, was 66 days. The adjustment takes into account $4.4 million of unbilled receivables that the Company is delayed in billing at this time due to the lag time in receiving the change of ownership after acquiring companies. There were no such adjustments for the comparable period in 2005.

Although the Center for Medicare & Medicaid Services (CMS) withheld payments during the last part of September, we were able to decrease DSO 5 days in the third quarter as compared to the second quarter. This decrease includes the 7 DSO day increase due to the withheld payments. The withholding was due to a brief hold placed on Medicare payments for all claims during the last 9 days of the Federal fiscal year (September 22 through September 30, 2006). These payment delays were mandated by section 5203 of the Deficit Reduction Act of 2005. All claims held during

this time were paid on October 2, 2006.

Nine Month Financial Results

Net service revenue for the nine months ended September 30, 2006, was $154.1 million, an increase of 40.1%, from $110.0 million in 2005. For the nine months ended September 30, 2006 and 2005, 82.9% and 85.2% respectively, of net service revenue was derived from Medicare. For the current nine months, home-based services accounted for 74.4% of revenue, and facility-based services was 25.6% of revenue, compared with 69.1% and 30.9% respectively, for the comparable nine months last year.

Net income in the nine months of 2006 reached $13.7 million, or $0.81 per diluted share. For the nine months ended September 30, 2005, the Company reported net income of $6.9 million, or $0.50 per diluted share.

Home-Based Services

Net service revenue for the nine months ended September 30, 2006 was $114.6 million, an increase of 50.8%, from $76.0 million for the nine months ended September 30, 2005. Organic growth in this service sector was approximately $24.1 million, or 33.5% during the period. Total admissions were 18,799 during the period, versus 12,377 for the same period in 2005, a 51.9% increase. Organic growth in admissions were 18.5%. LHC Group’s average home based patient census for the nine months ended September 30, 2006 was 13,306 patients, an increase of 81.1% as compared to 7,349 patients for the nine months ended September 30, 2005. Organic growth in home-based patient census was 24.7%.

Facility-Based Services

Net service revenue for the nine months ended September 30, 2006 was $39.5 million, an increase of $5.5 million, or 16.0%, from $34.0 million for the nine months ended September 30, 2005. Organic growth in this service sector was approximately $5.5 million which made up the total growth during the period. The increase in net service revenue resulted in part due to an increase in patient days of 6.7% to 34,483 in the nine months ended September 30, 2006 from 32,332 in the nine months ended September 30, 2005. Outpatient visits decreased to 18,219 at September 30, 2006, a 44.6% decrease as compared to 32,892 for the nine months ended September 30, 2005 due to the sale of one of our clinics.

Eventful, Successful Third Quarter

Keith G. Myers, President and Chief Executive Officer of LHC Group, said, “LHC Group had an eventful and successful third quarter in 2006, a continuing tribute to the dedication of our people. During the third quarter of 2006, we enhanced our market position with the acquisition of the Kentucky-based assets of Lifeline Home Health Care, a privately-held company based in Somerset, Kentucky, which is a Certificate of Need (CON) State. We completed that transaction, which represents LHC Group’s largest acquisition to date. We are well into the process of system conversion and are pleased with the progress that we have made to date. Lifeline’s impressive operations in Kentucky are on track to be another great success story for the LHC Group Family.”

Myers also stated, “Before the quarter ended, we announced our plans to acquire the Florida-based assets of Lifeline Home Health Care and began managing these facilities in late September. On November 1, 2006 we completed the acquisition, which marks LHC Group’s expansion into the state of Florida. The population of the areas covered by the acquisition is approximately 1.46 million, with about 25% over the age of 65.

“We also completed the acquisition of Union City, TN effective November 1. This acquisition provides us entry into another important CON state in our targeted expansion geography.

Myers concluded, “the Company closed its follow-on public offering increasing the liquidity and traded volume on the public markets. The Company used the net proceeds of approximately $21 million from the offering to fund the Lifeline transactions, and for other general corporate purposes.”

The company will host a conference call Thursday, November 2nd at 10:00a.m. EDT, which will be simultaneously broadcast live over the internet. Keith Myers, President and CEO; Barry Stewart, Sr. Vice President and CFO; and John Indest, Executive Vice President and COO will host the call. To access the webcast, please log on to: www.lhcgroup.com under the investor relations section.

A telephone replay will be available for one week by dialing (888) 286-8010 from the US, or (617) 801-6888 for international callers, and entering the pass code #70617387. A replay of the webcast will also be archived on LHC Group’s website.

About LHC Group, Inc.

LHC Group is a provider of post-acute healthcare services primarily in rural markets in the southern United States. LHC Group provides home-based services through its home nursing agencies and hospices and facility-based services through its long-term acute care hospitals and rehabilitation facilities.

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which may be identified by words such as “believe,” “expect,” “anticipate,” “intend,” “estimate” or similar expressions, include statements regarding the integration and future prospects of LHC’s recently completed acquisitions. Forward-looking statements involve a number of risks and uncertainties and there can be no assurance that any forward-looking statements will prove to be accurate. Important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements include: changes in reimbursement, changes in government regulations, changes in our relationships with referral sources, increased competition for our services, increased competition for joint venture and acquisition candidates and changes in the interpretation of government regulations. LHC Group undertakes no obligation to update or revise any forward-looking statements. Further information regarding risks, uncertainties and other factors that could adversely affect LHC Group or cause actual results to differ materially from those anticipated in forward-looking statements are included in LHC Group’s Form 10Q for the quarter ended June 30, 2006 filed with the Securities and Exchange Commission.

LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	Sept 30,		December 31,
	2006		2005
	(unaudited)
	(in thousands, except share
	data)
Cash	$	30,589	$	17,398
Total assets		150,749		104,618
Total debt		4,687		5,427
Total stockholders’ equity		114,620		78,444

-more-

LHC GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended Sept 30,						Nine Months Ended Sept 30,
	2006			2005			2006			2005
	(unaudited)
	(in thousands, except share and per share data)
Net service revenue	$	58,077		$	38,611		$	154,113		$	110,037
Cost of service revenue		30,067			20,233			80,143			56,516
Gross margin		28,010			18,378			73,970			53,521
General and administrative expenses		18,817			11,792			50,496			32,207
Equity-based compensation expense(1)		—			—			—			3,856
Operating income		9,193			6,586			23,474			17,458
Interest expense		83			133			230			891
Non-operating income, including (gain) loss on sales of assets		(364	)		175			(645	)		(389	)
Income from continuing operations before income taxes and minority interest and cooperative endeavor allocations		9,474			6,278			23,889			16,956
Income tax expense		2,943			2,061			7,162			4,806
Minority interest and cooperative endeavor allocations		1,362			924			3,460			3,556
Income from continuing operations		5,169			3,293			13,267			8,594
Gain (Loss) from discontinued operations (net of income taxes (benefit) of $58 and $(328) in the three months ended Sept 30, 2006 and 2005, respectively) and $(147) and $(1,019) in the nine months ended Sept 30, 2006 and 2005, respectively)		102			(535	)		(272	)		(1,662	)
Gain on sale of discontinued operations (net of income taxes of $360 for the nine months ended Sept 30, 2006		—			—			667			—
Net income		5,271			2,758			13,662			6,932
Redeemable minority interests		(72	)		(404	)		942			(1,743	)
Net income (loss) available to common stockholders	$	5,199		$	2,354		$	14,604		$	5,189
Earnings per share — basic:
Income from continuing operations	$	0.29		$	0.20		$	0.79		$	0.62
Loss from discontinued operations, net		0.01			(0.03	)		(0.02	)		(0.12	)
Gain on sale of discontinued operations, net		—			—			0.04			—
Net income		0.30			0.17			0.81			0.50
Redeemable minority interests		—			(0.03	)		0.05			(0.13	)
Net income (loss) available to common shareholders	$	0.30		$	0.14		$	0.86		$	0.37
Earnings per share — diluted:
Income from continuing operations	$	0.29		$	0.20		$	0.79		$	0.62
Loss from discontinued operations, net		0.01			(0.03	)		(0.02	)		(0.12	)
Gain on sale of discontinued operations, net		—			—			0.04			—
Net income		0.30			0.17			0.81			0.50
Redeemable minority interests		—			(0.03	)		0.05			(0.13	)
Net income (loss) available to common shareholders	$	0.30		$	0.14		$	0.86		$	0.37
Weighted average shares outstanding:
Basic		17,557,576			16,591,870			16,895,929			13,976,659
Diluted		17,574,221			16,594,774			16,907,681			14,049,940

⁽¹⁾ Equity-based compensation related to the KEEP units and does not include stock-based compensation related to FAS 123(R)

LHC GROUP, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

	Three Months Ended Sept 30, 2006
	Home-Based		Facility-Based
	Services		Services		Total
	(in thousands)
Net service revenue	$	45,348	$	12,729	$	58,077
Cost of service revenue		21,773		8,294		30,067
General and administrative expenses		15,104		3,713		18,817
Equity-based compensation expense		—		—		—
Operating income		8,471		722		9,193
	Three Months Ended Sept 30, 2005
	Home-Based		Facility-Based
	Services		Services		Total
	(in thousands)
Net service revenue	$	26,434	$	12,177	$	38,611
Cost of service revenue		12,349		7,884		20,233
General and administrative expenses		8,851		2,941		11,792
Equity-based compensation expense		—		—		—
Operating income		5,234		1,352		6,586
	Nine Months Ended Sept 30, 2006
	Home-Based		Facility-Based
	Services		Services		Total
	(in thousands)
Net service revenue	$	114,601	$	39,512	$	154,113
Cost of service revenue		55,553		24,590		80,143
General and administrative expenses		39,249		11,247		50,496
Equity-based compensation expense		—		—		—
Operating income		19,799		3,675		23,474
	Nine Months Ended Sept 30, 2005
	Home-Based		Facility-Based
	Services		Services		Total
	(in thousands)
Net service revenue	$	75,984	$	34,053	$	110,037
Cost of service revenue		35,617		20,899		56,516
General and administrative expenses		23,750		8,457		32,207
Equity-based compensation expense		2,699		1,157		3,856
Operating income		13,918		3,540		17,458