10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-33989

LHC GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	71-0918189
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

901 Hugh Wallis Road South

Lafayette, LA 70508

(Address of principal executive offices including zip code)

(337) 233-1307

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	ý
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

Number of shares of common stock, par value $0.01, outstanding as of May 2, 2016: 18,122,084 shares.

LHC GROUP, INC.

INDEX

		Page
Part I. Financial Information
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets — March 31, 2016 and December 31, 2015		3
Condensed Consolidated Statements of Income — Three months ended March 31, 2016 and 2015		4
Condensed Consolidated Statement of Changes in Equity — Three months ended March 31, 2016		5
Condensed Consolidated Statements of Cash Flows — Three months ended March 31, 2016 and 2015		6
Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
Part II. Other Information
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	33
Signatures		34

2

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)

(Unaudited)

	March 31,   2016			December 31,   2015
ASSETS
Current assets:
Cash	$	5,593		$	6,139
Receivables:
Patient accounts receivable, less allowance for uncollectible accounts of $28,617 and $26,712, respectively	117,761			110,350
Other receivables	2,507			2,093
Amounts due from governmental entities	964			1,081
Total receivables, net	121,232			113,524
Prepaid income taxes	1,575			1,949
Prepaid expenses	10,519			10,833
Other current assets	6,265			5,835
Receivable due from insurance carrier	—			550
Total current assets	145,184			138,830
Property, building and equipment, net of accumulated depreciation of $41,017 and $38,907, respectively	38,191			38,096
Goodwill	296,240			290,694
Intangible assets, net of accumulated amortization of $9,097 and $8,496, respectively	100,863			96,405
Other assets	2,375			2,029
Total assets	$	582,853		$	566,054
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities	$	24,912		$	24,586
Salaries, wages, and benefits payable	39,506			28,098
Self-insurance reserve	11,109			9,636
Current portion of long-term debt	243			241
Amounts due to governmental entities	4,729			7,055
Legal settlement payable	—			550
Total current liabilities	80,499			70,166
Deferred income taxes	23,605			23,729
Income tax payable	3,415			3,415
Revolving credit facility	96,000			98,000
Long-term debt, less current portion	485			543
Total liabilities	204,004			195,853
Noncontrolling interest — redeemable	12,463			12,408
Stockholders’ equity:
LHC Group, Inc. stockholders’ equity:
Common stock — $0.01 par value; 40,000,000 shares authorized; 22,370,384 and 22,224,423 shares issued in 2016 and 2015, respectively	224			222
Treasury stock — 4,814,522 and 4,776,560 shares at cost, respectively	(38,560		)	(37,139		)
Additional paid-in capital	115,654			113,793
Retained earnings	285,392			277,706
Total LHC Group, Inc. stockholders’ equity	362,710			354,582
Noncontrolling interest — non-redeemable	3,676			3,211
Total equity	366,386			357,793
Total liabilities and equity	$	582,853		$	566,054

See accompanying notes to condensed consolidated financial statements.

3

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share and per share data)

(Unaudited)

	Three Months Ended    March 31,
	2016			2015
Net service revenue	$	222,552		$	193,079
Cost of service revenue	135,601			114,426
Gross margin	86,951			78,653
Provision for bad debts	4,601			5,259
General and administrative expenses	66,240			59,298
Operating income	16,110			14,096
Interest expense	(885		)	(545		)
Income before income taxes and noncontrolling interest	15,225			13,551
Income tax expense	5,342			4,729
Net income	9,883			8,822
Less net income attributable to noncontrolling interests	2,197			2,017
Net income attributable to LHC Group, Inc.’s common stockholders	$	7,686		$	6,805
Earnings per share — basic and diluted:
Net income attributable to LHC Group, Inc.’s common stockholders	$	0.44		$	0.39
Weighted average shares outstanding:
Basic	17,485,766			17,322,791
Diluted	17,633,549			17,489,483

See accompanying notes to the condensed consolidated financial statements.

4

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(Amounts in thousands, except share data)

(Unaudited)

	Common Stock								Additional Paid-In Capital		Retained Earnings		Noncontrolling Interest Non Redeemable			Total Equity
	Issued			Treasury
	Amount		Shares	Amount			Shares
Balance as of December 31, 2015	$	222	22,224,423	$	(37,139	)	(4,776,560	)	$	113,793	$	277,706	$	3,211		$	357,793
Net income	—		—	—			—		—		7,686		326			8,012
Acquired noncontrolling interest	—		—	—			—		—		—		372			372
Noncontrolling interest distributions	—		—	—			—		—		—		(369		)	(369		)
Other	—		—	—			—		—		—		136			136
Nonvested stock compensation	—		—	—			—		982		—		—			982
Issuance of vested stock	—		140,620	—			—		—		—		—			—
Treasury shares redeemed to pay income tax	—		—	(1,421		)	(37,962	)	—		—		—			(1,421		)
Excess tax benefits — vesting nonvested stock	—		—	—			—		651		—		—			651
Issuance of common stock under Employee Stock Purchase Plan	2		5,341	—			—		228		—		—			230
Balance as of March 31, 2016	$	224	22,370,384	$	(38,560	)	(4,814,522	)	$	115,654	$	285,392	$	3,676		$	366,386

(1) Net income excludes net income attributable to noncontrolling interest-redeemable of $1.9 million during the three months endingMarch 31, 2016. Noncontrolling interest-redeemable is reflected outside of permanent equity on the condensed consolidated balance sheets. See Note 9 of the Notes to Condensed Consolidated Financial Statements.

See accompanying notes to condensed consolidated financial statements.

5

LHC GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Three Months Ended   March 31,
	2016			2015
Operating activities:
Net income	$	9,883		$	8,822
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	2,948			2,716
Provision for bad debts	4,601			5,259
Stock-based compensation expense	982			991
Deferred income taxes	(124		)	(183		)
Impairment of intangibles and other	—			79
Loss on disposal of assets	204			284
Changes in operating assets and liabilities, net of acquisitions:
Receivables	(12,446		)	(7,026		)
Prepaid expenses and other assets	(162		)	(2,549		)
Prepaid income taxes	374			2,478
Accounts payable and accrued expenses	13,110			10,624
Net amounts due to/from governmental entities	(2,209		)	1,109
Net cash provided by operating activities	17,161			22,604
Investing activities:
Purchases of property, building and equipment	(2,622		)	(2,958		)
Cash paid for acquisitions, primarily goodwill and intangible assets	(10,577		)	(567		)
Other	273			—
Net cash used in investing activities	(12,926		)	(3,525		)
Financing activities:
Proceeds from line of credit	4,000			—
Payments on line of credit	(6,000		)	(13,000		)
Proceeds from employee stock purchase plan	230			210
Payments on debt	(56		)	(57		)
Noncontrolling interest distributions	(2,185		)	(2,242		)
Excess tax benefits from vesting of stock awards	651			642
Withholding taxes paid on stock-based compensation	(1,421		)	(1,122		)
Net cash used in financing activities	(4,781		)	(15,569		)
Change in cash	(546		)	3,510
Cash at beginning of period	6,139			531
Cash at end of period	$	5,593		$	4,041
Supplemental disclosures of cash flow information:
Interest paid	$	749		$	447
Income taxes paid	$	4,466		$	1,787

See accompanying notes to condensed consolidated financial statements.

6

LHC GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization

LHC Group, Inc. (the “Company”) is a health care provider specializing in the post-acute continuum of care primarily for Medicare beneficiaries. The Company provides home health services, hospice services, community-based services, and facility-based services, the latter primarily through long-term acute care hospitals (“LTACHs”). As of March 31, 2016, the Company, through its wholly- and majority-owned subsidiaries, equity joint ventures and controlled affiliates, operated 367 service providers in 25 states within the continental United States.

Unaudited Interim Financial Information

The condensed consolidated balance sheets as of March 31, 2016 and December 31, 2015, and the related condensed consolidated statements of income for the three months ended March 31, 2016 and 2015, condensed consolidated statement of changes in equity for the three months ended March 31, 2016, condensed consolidated statements of cash flows for the three months ended March 31, 2016 and 2015 and related notes (collectively, these financial statements and the related notes are referred to herein as the “interim financial information”) have been prepared by the Company. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from the interim financial information presented. This report should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 as filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2016, which includes information and disclosures not included herein.

2. Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenue and expenses during the reporting period. Actual results could differ from those estimates.

Critical Accounting Policies

The Company’s most critical accounting policies relate to the principles of consolidation, revenue recognition and accounts receivable and allowances for uncollectible accounts.

Principles of Consolidation

The interim financial information includes all subsidiaries and entities controlled by the Company. Control is defined by the Company as ownership of a majority of the voting interest of an entity. The interim financial information includes entities in which the Company receives a majority of the entities’ expected residual returns and absorbs a majority of the entities’ expected losses. Third party equity interests in the consolidated joint ventures are reflected as noncontrolling interests in the Company’s interim financial information.

The following table summarizes the percentage of net service revenue earned by type of ownership or relationship the Company had with the operating entity:

7

	Three Months Ended    March 31,
Ownership type	2016		2015
Wholly-owned subsidiaries	56.7	%	54.6	%
Equity joint ventures	41.6		43.2
License leasing arrangements	0.9		1.3
Management services	0.8		0.9
	100.0	%	100.0	%

All significant intercompany accounts and transactions have been eliminated in the Company’s accompanying interim financial information. Business combinations accounted for under the acquisition method have been included in the interim financial information from the respective dates of acquisition.

The following describes the Company’s consolidation policy with respect to its various ventures excluding wholly-owned subsidiaries:

Equity Joint Ventures

The members of the Company’s equity joint ventures participate in profits and losses in proportion to their equity interests. The Company consolidates these entities as the Company has voting control over the entities.

License Leasing Arrangements

The Company, through wholly-owned subsidiaries, leases home health licenses necessary to operate certain of its home nursing and hospice agencies. The Company owns 100% of the equity of these subsidiaries and consolidates them based on such ownership.

Management Services

The Company has various management services agreements under which the Company manages certain operations of agencies. The Company does not consolidate these agencies because the Company does not have an ownership interest in, and does not have an obligation to absorb losses of, the entities that own the agencies or the right to receive the benefits from those entities.

Revenue Recognition

The Company reports net service revenue at the estimated net realizable amount due from Medicare, Medicaid and others for services rendered. The Company assesses the patient's ability to pay for their healthcare services at the time of patient admission based on the Company's verification of the patient's insurance coverage under the Medicare, Medicaid, and other commercial or managed care insurance program. All such payors contribute to the net service revenue of the Company’s home health services, hospice services, community-based services, and facility-based services.

The following table sets forth the percentage of net service revenue earned by category of payor for the three months ended March 31, 2016 and 2015:

	Three Months Ended    March 31,
Payor:	2016		2015
Medicare	74.4	%	74.7	%
Medicaid	1.7		1.4
Other	23.9		23.9
	100.0	%	100.0	%

The following table sets forth the percentage of net service revenue contributed from each reporting segment for the three months ended March 31, 2016 and 2015:

8

	Three Months Ended    March 31,
Reporting segment:	2016		2015
Home health services	72.5	%	75.9	%
Hospice services	13.9		8.7
Community-based services	4.7		5.1
Facility-based services	8.9		10.3
	100.0	%	100.0	%

Medicare

Home Health

The Company’s home nursing Medicare patients are classified into one of 153 home health resource groups prior to receiving services. Based on the patient’s home health resource group, the Company is entitled to receive a standard prospective Medicare payment for delivering care over a 60-day period referred to as an episode. The Company recognizes revenue based on the number of days elapsed during an episode of care within the reporting period.

Final payments from Medicare may reflect one of four retroactive adjustments to ensure the adequacy and effectiveness of the total reimbursement: (a) an outlier payment if the patient’s care was unusually costly; (b) a low utilization adjustment if the number of visits was fewer than five; (c) a partial payment if the patient transferred to another provider before completing the episode; or (d) a payment adjustment based upon the level of therapy services required. In calculating net service revenue, management estimates the impact of these payment adjustments based on historical experience and records this estimate as the services are rendered using the expected level of services that will be provided.

Hospice Services

The Company is paid by Medicare under a per diem payment system. The Company receives one of four predetermined daily or hourly rates based upon the level of care the Company furnished. The Company records net service revenue from hospice services based on the daily or hourly rate and recognizes revenue as hospice services are provided.

Hospice payments are subject to an inpatient cap and an overall Medicare payment cap. The inpatient cap relates to individual programs receiving more than 20% of its total Medicare reimbursement from inpatient care services and the overall Medicare payment cap relates to individual providers receiving reimbursements in excess of a “cap amount,” calculated by multiplying the number of beneficiaries during the period by a statutory amount that is indexed for inflation. The determination for each cap is made annually based on the 12-month period ending on October 31 of each year. The Company monitors its limits on a provider-by-provider basis and records an estimate of its liability for reimbursements received in excess of the cap amount. Beginning with the cap year October 1, 2014, CMS implemented a new process requiring hospice providers to self-report their cap liabilities and remit applicable payment by March 31 of the following year.

Facility-Based Services

The Company is reimbursed by Medicare for services provided under the LTACH prospective payment system. Each patient is assigned a long-term care diagnosis-related group. The Company is paid a predetermined fixed amount intended to reflect the average cost of treating a Medicare patient classified in that particular long-term care diagnosis-related group. For selected patients, the amount may be further adjusted based on length of stay and facility-specific costs, as well as in instances where a patient is discharged and subsequently re-admitted, among other factors. The Company calculates the adjustment based on a historical average of these types of adjustments for claims paid. Similar to other Medicare prospective payment systems, the rate is also adjusted for geographic wage differences. Revenue is recognized for the Company’s LTACHs as services are provided.

Medicaid, managed care and other payors

The Company’s Medicaid reimbursement is based on a predetermined fee schedule applied to each service provided. Therefore, revenue is recognized for Medicaid services as services are provided based on this fee schedule. The Company’s managed care and other payors reimburse the Company based upon a predetermined fee schedule or an episodic basis, depending on the terms of the applicable contract. Accordingly, the Company recognizes revenue from managed care and other payors in the same manner as the Company recognizes revenue from Medicare or Medicaid.

9

Accounts Receivable and Allowances for Uncollectible Accounts

The Company reports accounts receivable net of estimated allowances for uncollectible accounts and adjustments. Accounts receivable are uncollateralized and consist of amounts due from Medicare, other third-party payors and patients. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value. The credit risk for other concentrations of receivables is limited due to the significance of Medicare as the primary payor. The Company believes the credit risk associated with its Medicare accounts, which have historically exceeded 55% of its patient accounts receivable, is limited due to (i) the historical collection rate from Medicare and (ii) the fact that Medicare is a U.S. government payor. The Company does not believe that there are any other concentrations of receivables from any particular payor that would subject it to any significant credit risk in the collection of accounts receivable.

The provision for bad debts is based upon the Company’s assessment of historical and expected net collections, business and economic conditions and trends in government reimbursement. Uncollectible accounts are written off when the Company has determined the account will not be collected.

A portion of the estimated Medicare prospective payment system reimbursement from each submitted home nursing episode is received in the form of a request for anticipated payment (“RAP”). The Company submits a RAP for 60% of the estimated reimbursement for the initial episode at the start of care. The full amount of the episode is billed after the episode has been completed. The RAP received for that particular episode is deducted from the final payment. If a final bill is not submitted within the greater of 120 days from the start of the episode, or 60 days from the date the RAP was paid, any RAP received for that episode will be recouped by Medicare from any other Medicare claims in process for that particular provider. The RAP and final claim must then be resubmitted. For subsequent episodes of care contiguous with the first episode for a particular patient, the Company submits a RAP for 50% instead of 60% of the estimated reimbursement.

The Company’s services to the Medicare population are paid at prospectively set amounts that can be determined at the time services are rendered. The Company’s Medicaid reimbursement is based on a predetermined fee schedule applied to each individual service it provides. The Company’s managed care contracts and contracts with other payors provide for payments based upon a predetermined fee schedule or an episodic basis, depending on the terms of the applicable contract. The Company is able to calculate its actual amount due at the patient level and adjust the gross charges down to the actual amount at the time of billing. This negates the need to record an estimated contractual allowance when reporting net service revenue for each reporting period.

Other Significant Accounting Policies

Earnings Per Share

Basic per share information is computed by dividing the relevant amounts from the condensed consolidated statements of income by the weighted-average number of shares outstanding during the period, under the treasury stock method. Diluted per share information is also computed using the treasury stock method, by dividing the relevant amounts from the condensed consolidated statements of income by the weighted-average number of shares outstanding plus potentially dilutive shares.

The following table sets forth shares used in the computation of basic and diluted per share information:

	Three Months Ended    March 31,
	2016	2015
Weighted average number of shares outstanding for basic per share calculation	17,485,766	17,322,791
Effect of dilutive potential shares:
Options	2,023	5,487
Nonvested stock	145,760	161,205
Adjusted weighted average shares for diluted per share calculation	17,633,549	17,489,483
Anti-dilutive shares	181,101	191,065

Recently Adopted Accounting Pronouncements

10

In April 2015, the FASB issued ASU No. 2015-3, Simplifying the Presentation of Debt Issuance Costs, ("ASU 2015-3") which requires an entity to present debt issuance costs related to a recognized debt liability as a direct deduction from that liability. The Company adopted this standard during the three months ended March 31, 2016. In August 2015, the FASB issued ASU No. 2015-15, Interest - Imputation of Interest, which stated ASU No. 2015-3 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements; therefore, ASU No. 2015-3 will not have an effect on the Company's consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

On May 28, 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers, ("ASU 2014-9") which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-9 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2018. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-9 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In February 2016, the FASB issued ASU No. 2016-2, Leases, ("ASU 2016-2") which requires lessees to recognize qualifying leases on the statement of financial position. Qualifying leases will be classified as right-of-use assets and lease liabilities. The new standard is effective on January 1, 2019. Early adoption is permitted. ASU 2016-2 mandates a modified retrospective transition method for all entities. The Company is evaluating the effect that ASU 2016-2 will have on its consolidated financial statements and related disclosures.

In March 2016, as part of its Simplification Initiative, the FASB issued ASU No. 2016-9, Compensation - Stock Compensation (ASU 2016-09), which finalizes Proposed ASU No. 2015-270 of the same name, and seeks to reduce complexity in accounting standards. The areas for simplification in ASU 2016-09, involve several aspects of the accounting for share-based payment transaction, including (1) accounting for income taxes, (2) classification of excess tax benefits on the statement of cash flow, (3) forfeitures, (4) minimum statutory tax withholding requirements, (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes, (6) the practical expedient for estimating the expected term, and (7) intrinsic value. The new standard is effective on January 1, 2017. The Company is currently evaluating the impact of adopting this guidance.

3. Acquisitions and Disposals

The Company acquired the majority-ownership of three home health agencies and six hospice agencies during the three months ended March 31, 2016. The total aggregate purchase prices for the Company’s acquisitions were $10.8 million, of which $10.5 million was paid in cash. The purchase prices are determined based on the Company’s analysis of comparable acquisitions and the target market’s potential future cash flows.

The Company's home health services segment and hospice services segment recognized goodwill of $0.7 million and $5.1 million, respectively. Goodwill generated from the acquisitions was recognized based on the expected contributions of each acquisition to the overall corporate strategy. The Company expects its portion of goodwill to be fully tax deductible. The acquisitions were accounted for under the acquisition method of accounting, and, accordingly, the accompanying interim financial information includes the results of operations of the acquired entities from the date of acquisition.    

The following table summarizes the aggregate consideration paid for the acquisitions and the amounts of the assets acquired and liabilities assumed at the acquisition dates, as well as their fair value at the acquisition dates and the noncontrolling interest acquired (amounts in thousands):

11

Consideration
Cash	$	10,504
Fair value of total consideration transferred
Recognized amounts of identifiable assets acquired and liabilities assumed
Trade name	2,623
Certificates of needs/licenses	2,224
Other identifiable intangible assets	141
Other assets and (liabilities), net	69
Total identifiable assets	5,057
Noncontrolling interest	372
Goodwill, including noncontrolling interest of $308	$	5,819

Trade names, certificates of need and licenses are indefinite-lived assets and, therefore, not subject to amortization. Acquired trade names that are not being used actively are amortized over the estimated useful life on the straight line basis. Trade names are valued using the relief from royalty method, a form of the income approach. Certificates of needs are valued using the replacement cost approach based on registration fees and opportunity costs. Licenses are valued based on the estimated direct costs associated with recreating the asset, including opportunity costs based on an income approach. In the case of states with a moratorium in place, the licenses are valued using the multi period excess earnings method. The other identifiable assets include non-compete agreements that are amortized over the life of the agreements, ranging from one to three years. Noncontrolling interest is valued at fair value by applying a discount to the value of the acquired entity for lack of control.

The Company conducted a preliminary assessment of deferred income tax accounting and the calculation of the final net working capital adjustment and has recognized provisional amounts in its initial accounting for the acquisition of Halcyon Healthcare, LLC ("Halcyon") for all identified liabilities in accordance with the requirements of ASC Topic 805. During the three months ended March 31, 2016, a net working capital adjustment of $0.3 million was recorded in goodwill and the provisional amounts initially recognized for Halcyon. The Company is continuing its review of these matters during the measurement period.

4. Goodwill and Intangibles

The changes in recorded goodwill by reporting unit for the three months ended March 31, 2016 were as follows (amounts in thousands):

	Home health reporting unit		Hospice reporting unit			Community - based reporting unit		Facility-based reporting unit		Total
Balance as of December 31, 2015	$	202,995	$	58,136		$	17,972	$	11,591	$	290,694
Goodwill from acquisitions	721		4,790			—		—		5,511
Goodwill related to noncontrolling interests	—		308			—		—		308
Goodwill related to prior period net working capital adjustments............................................	—		(273		)	—		—		(273		)
Balance as of March 31, 2016	$	203,716	$	62,961		$	17,972	$	11,591	$	296,240

Intangible assets consisted of the following as of March 31, 2016 and December 31, 2015 (amounts in thousands):

12

	March 31, 2016
	Remaining useful life	Gross carrying amount		Accumulated amortization			Net carrying amount
Indefinite-lived assets:
Trade names	Indefinite	$	63,242	$	—		$	63,242
Certificates of need/licenses	Indefinite	32,031		—			32,031
Total		$	95,273	$	—		$	95,273
Definite-lived assets:
Trade names	2 years — 5 years	$	9,127	$	(4,781	)	$	4,346
Non-compete agreements	1 month — 3 years	5,560		(4,316		)	1,244
Total		$	14,687	$	(9,097	)	$	5,590
Balance as of March 31, 2016		$	109,960	$	(9,097	)	$	100,863

	December 31, 2015
	Remaining useful life	Gross carrying amount		Accumulated amortization			Net carrying amount
Indefinite-lived assets:
Trade names	Indefinite	$	60,762	$	—		$	60,762
Certificates of need/licenses	Indefinite	29,807		—			$	29,807
Total		$	90,569	$	—		$	90,569
Definite-lived assets:
Trade names	2 months — 5 years	$	8,985	$	(4,385	)	$	4,600
Non-compete agreements	3 months — 2 years	5,347		(4,111		)	1,236
Total		$	14,332	$	(8,496	)	$	5,836
Balance as of December 31, 2015		$	104,901	$	(8,496	)	$	96,405

Intangible assets of $68.6 million, net of accumulated amortization, were related to the home health services segment, $23.8 million were related to the hospice services segment, $7.6 million were related to the community-based services segment, and $0.9 million were related to the facility-based services segment as of March 31, 2016. The Company recorded $0.6 million of amortization expense during the three months ended March 31, 2016 and 2015. This was recorded in general and administrative expenses.

5. Debt

Credit Facility

On June 18, 2014, the Company entered into a Credit Agreement (the “Credit Agreement”) with Capital One, National Association, which provides a senior, secured revolving line of credit commitment with a maximum principal borrowing limit of $225.0 million and a letter of credit sub-limit equal to $15.0 million. The Credit Agreement replaced the Third Amended and Restated Credit Agreement with Capital One, National Association, dated August 31, 2012. The expiration date of the Credit Agreement is June 18, 2019. Revolving loans under the Credit Agreement bear interest at either a (1) Base Rate, which is defined as a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate in effect on such day plus 0.5% (b) the Prime Rate in effect on such day and (c) the Eurodollar Rate for a one month interest period on such day plus 1.0%, plus a margin ranging from 0.75% to 1.5% per annum or (2) Eurodollar rate plus a margin ranging from 1.75% to 2.5% per annum. Swing line loans bear interest at the Base Rate. The Company is limited to 15 Eurodollar borrowings outstanding at the same time. The Company is required to pay a commitment fee for the unused commitments at rates ranging from 0.225% to 0.375% per annum depending upon the Company’s consolidated Leverage Ratio, as defined in the Credit Agreement. The Base Rate at March 31, 2016 was 4.50% and the Eurodollar rate was 2.43%.

As of March 31, 2016 and December 31, 2015, respectively, the Company had $96.0 million and $98.0 million drawn and letters of credit totaling $9.8 million outstanding under its credit facilities with Capital One, National Association.

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As of March 31, 2016, the Company had $119.2 million available for borrowing under the Credit Agreement with Capital One, National Association.

6. Income Taxes

As of March 31, 2016, an unrecognized tax benefit of $3.4 million was recorded in income tax payable, which, if recognized, would decrease the Company’s effective tax rate. All of the Company’s unrecognized tax benefit is due to the settlement with the United States of America, which was announced September 30, 2011. On July 30, 2014, the Internal Revenue Service (“IRS”) issued a notice of proposed adjustment asserting that a portion of the original tax deduction claimed by the Company associated with the settlement with the United States of America should be disallowed. The Company is currently appealing this proposed adjustment with IRS Appeals. The Company intends to vigorously defend its original position of the deductibility of the full settlement amount on its 2011 tax return.

7. Stockholder’s Equity

Equity Based Awards

The 2010 Long Term Incentive Plan (the “2010 Incentive Plan”) is administered by the Compensation Committee of the Company’s Board of Directors. A total of 1,500,000 shares of the Company’s common stock were reserved and 309,937 shares are currently available for issuance pursuant to awards granted under the 2010 Incentive Plan. A variety of discretionary awards for employees, officers, directors, and consultants are authorized under the 2010 Incentive Plan, including incentive or non-qualified statutory stock options and nonvested stock. All awards must be evidenced by a written award certificate which will include the provisions specified by the Compensation Committee of the Board of Directors. The Compensation Committee determines the exercise price for non-statutory stock options. The exercise price for any option cannot be less than the fair market value of the Company’s common stock as of the date of grant.

Share Based Compensation

Nonvested Stock

During the three months ended March 31, 2016, the Company’s independent directors were granted 15,300 nonvested shares of common stock under the Second Amended and Restated 2005 Non-Employee Directors Compensation Plan. The shares were drawn from the 1,500,000 shares of common stock reserved for issuance under the 2010 Incentive Plan. The shares vest 100% on the one year anniversary date. During the three months ended March 31, 2016, employees were granted 165,800 nonvested shares of common stock pursuant to the 2010 Incentive Plan. The shares vest over a five year period, conditioned on continued employment. The fair value of nonvested shares of common stock is determined based on the closing trading price of the Company’s common stock on the grant date. The weighted average grant date fair value of nonvested shares of common stock granted during the three months ended March 31, 2016 was $37.43.

The following table represents the nonvested stock activity for the three months ended March 31, 2016:

	Number of shares		Weighted average grant date fair value
Nonvested shares outstanding as of December 31, 2015	527,091		$	26.64
Granted	181,100		$	37.43
Vested	(140,620	)	$	25.86
Forfeited	(12,566	)	$	24.36
Nonvested shares outstanding as of March 31, 2016	555,005		$	30.41

During the three months ended March 31, 2016, an independent director of the Company received a share based award, which will be settled in cash at March 1, 2017. The amount of such cash payment will equal the fair market value of 1,700 shares on the settlement date.

As of March 31, 2016, there was $13.7 million of total unrecognized compensation cost related to nonvested shares of common stock granted. That cost is expected to be recognized over the weighted average period of 3.47 years. The total fair

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value of shares of common stock vested during the three months ended March 31, 2016 was $3.6 million. The Company records compensation expense related to nonvested stock awards at the grant date for shares of common stock that are awarded fully vested, and over the vesting term on a straight line basis for shares of common stock that vest over time. The Company recorded $1.0 million of compensation expense related to nonvested stock grants in the three months ended March 31, 2016 and 2015.

Employee Stock Purchase Plan

In 2006, the Company adopted the Employee Stock Purchase Plan whereby eligible employees may purchase the Company’s common stock at 95% of the market price on the last day of the calendar quarter. There were 250,000 shares of common stock initially reserved for the plan. In 2013, the Company adopted the Amended and Restated Employee Stock Purchase Plan, which reserved an additional 250,000 shares of common stock to the plan.

The table below details the shares of common stock issued during 2016:

	Number of shares	Per share price
Shares available as of December 31, 2015	213,760
Shares issued during three months ended March 31, 2016	5,341	$	43.03
Shares available as of March 31, 2016	208,419

Stock Options

As of March 31, 2016, 5,500 options were issued and exercisable. During the three months ended March 31, 2016, no options were exercised or forfeited and no options were granted.

Treasury Stock

In conjunction with the vesting of the nonvested shares of common stock, recipients incur personal income tax obligations. The Company allows the recipients to turn in shares of common stock to satisfy minimum tax obligations. During the three months ended March 31, 2016, the Company redeemed 37,962 shares of common stock valued at $1.4 million, related to these tax obligations.

8. Commitments and Contingencies

Contingencies

The Company is involved in various legal proceedings arising in the ordinary course of business. Although the results of litigation cannot be predicted with certainty, management believes the outcome of pending litigation will not have a material adverse effect, after considering the effect of the Company’s insurance coverage, on the Company’s interim financial information.

On October 18, 2013, a derivative complaint was filed by a purported Company shareholder against certain of the Company’s current and former executive officers, employees and members of its Board of Directors in the United States District Court for the Western District of Louisiana, styled Plummer v. Myers, et al., Case No. 6:13-cv-2899-JTT-CMH. The action was brought derivatively on behalf of the Company, which is also named as a nominal defendant. Plaintiff generally alleges that the individual defendants breached their fiduciary duties owed to the Company. The complaint also alleges claims for insider selling and unjust enrichment against the Company’s Chairman and Chief Executive Officer and the Company’s former President and Chief Operating Officer.

On December 30, 2013, a related derivative complaint was filed by a purported Company shareholder against certain of the Company’s current and former executive officers, employees and members of its Board of Directors in the United States District Court of the Western District of Louisiana, styled McCormack v. Myers, et al., Case No. 6:13-cv-3301-JTT-CMH. The action was brought derivatively on the Company’s behalf and the Company was also named as a nominal defendant. Plaintiff generally alleges that the individual defendants breached their fiduciary duties owed to the Company and wasted corporate assets. Plaintiff also alleges that the Company’s Chairman and Chief Executive Officer caused false and misleading statements to be issued in violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder and that the Company’s Directors are control persons under Section 20(a) of the Exchange Act. The complaint also alleges claims for insider selling,

15

misappropriation of information and unjust enrichment against the Company’s Chairman and Chief Executive Officer and the Company’s former President and Chief Operating Officer.

On March 25, 2014, the McCormack derivative action was consolidated with the Plummer derivative action described above and stayed. On October 7, 2015, the parties entered into a Stipulation of Settlement. On October 19, 2015, Plaintiffs filed an Unopposed Motion for Preliminary Approval of Proposed Derivative Settlement. On October 26, 2015, the District Court entered an Order Preliminarily Approving Settlement in the amount of $0.6 million. On January 11, 2016, the District Court entered its Order and Final Judgment approving the settlement and dismissing the consolidated action with prejudice. The Company's insurance carrier has funded the entire settlement amount, which was immediately releasable to Plaintiffs' counsel on January 11, 2016. The time for appeal has passed and no appeals were filed. This matter is now concluded. At December 31, 2015, the Company's balance sheet reflected the entire settlement in current assets as a receivable due from insurance carrier and correspondingly reflected the entire settlement in current liabilities as a legal settlement payable.

Joint Venture Buy/Sell Provisions

Most of the Company’s joint ventures include a buy/sell option that grants to the Company and its joint venture partners the right to require the other joint venture party to either purchase all of the exercising member’s membership interests or sell to the exercising member all of the non-exercising member’s membership interest, at the non-exercising member’s option, within 30 days of the receipt of notice of the exercise of the buy/sell option. In some instances, the purchase price is based on a multiple of the historical or future earnings before income taxes and depreciation and amortization of the equity joint venture at the time the buy/sell option is exercised. In other instances, the buy/sell purchase price will be negotiated by the partners and subject to a fair market valuation process. The Company has not received notice from any joint venture partners of their intent to exercise the terms of the buy/sell agreement nor has the Company notified any joint venture partners of its intent to exercise the terms of the buy/sell agreement.

Compliance

The laws and regulations governing the Company’s operations, along with the terms of participation in various government programs, regulate how the Company does business, the services offered and its interactions with patients and the public. These laws and regulations, and their interpretations, are subject to frequent change. Changes in existing laws or regulations, or their interpretations, or the enactment of new laws or regulations could materially and adversely affect the Company’s operations and financial condition.

The Company is subject to various routine and non-routine governmental reviews, audits and investigations. In recent years, federal and state civil and criminal enforcement agencies have heightened and coordinated their oversight efforts related to the health care industry, including referral practices, cost reporting, billing practices, joint ventures and other financial relationships among health care providers. Violation of the laws governing the Company’s operations, or changes in the interpretation of those laws, could result in the imposition of fines, civil or criminal penalties and/or termination of the Company’s rights to participate in federal and state-sponsored programs and suspension or revocation of the Company’s licenses. The Company believes that it is in material compliance with all applicable laws and regulations.

9. Noncontrolling interest

Noncontrolling Interest-Redeemable

A majority of the Company’s equity joint venture agreements include a provision that requires the Company to purchase the noncontrolling partner’s interest upon the occurrence of certain triggering events, such as death or bankruptcy of the partner or the partner’s exclusion from the Medicare or Medicaid programs. These triggering events and the related repurchase provisions are specific to each individual equity joint venture; if the repurchase provision is triggered in any one equity joint venture, the remaining equity joint ventures would not be impacted. Upon the occurrence of a triggering event, the Company would be required to purchase the noncontrolling partner’s interest at either the fair value or the book value at the time of purchase, as stated in the applicable joint venture agreement. The Company has never been required to purchase the noncontrolling interest of any of its equity joint venture partners, and the Company believes the likelihood of a triggering event occurring is remote. According to authoritative guidance, redeemable noncontrolling interests must be reported outside of permanent equity on the consolidated balance sheet in instances where there is a repurchase provision with a triggering event that is outside the control of the Company.

The following table summarizes the activity of noncontrolling interest-redeemable for the three months ended March 31, 2016 (amounts in thousands):

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Balance as of December 31, 2015	$	12,408
Net income attributable to noncontrolling interest-redeemable	1,871
Noncontrolling interest-redeemable distributions	(1,816		)
Balance as of March 31, 2016	$	12,463

10. Allowance for Uncollectible Accounts

The following table summarizes the activity in the allowance for uncollectible accounts for the three months ended March 31, 2016 (amounts in thousands):

Balance as of December 31, 2015	$	26,712
Additions	4,601
Deductions	(2,696		)
Balance as of March 31, 2016	$	28,617

11. Fair Value of Financial Instruments

The carrying amounts of the Company’s cash, receivables, accounts payable and accrued liabilities approximate their fair values because of their short maturity. The estimated fair value of intangible assets acquired was calculated using level 3 inputs based on the present value of anticipated future benefits. For the three months ended March 31, 2016, the carrying value of the Company’s long-term debt approximates fair value as the interest rates approximate current rates.

12. Segment Information

The Company’s reportable segments consist of home health services, hospice services, community-based services, and facility-based services. The accounting policies of the segments are the same as those described in the summary of significant accounting policies, as described in Note 2 of the Notes to Condensed Consolidated Financial Statements.

The following tables summarize the Company’s segment information for the three months ended March 31, 2016 and 2015 (amounts in thousands):

	Three Months Ended March 31, 2016
	Home health services			Hospice services			Community-based services			Facility-based services			Total
Net service revenue	$	161,387		$	30,824		10,443			$	19,898		$	222,552
Cost of service revenue	96,712			19,627			7,727			11,535			135,601
Provision for bad debts	3,455			775			82			289			4,601
General and administrative expenses	49,558			8,990			2,079			5,613			66,240
Operating income	11,662			1,432			555			2,461			16,110
Interest expense	(678		)	(91		)	(41		)	(75		)	(885		)
Income before income taxes and noncontrolling interest	10,984			1,341			514			2,386			15,225
Income tax expense	3,850			420			228			844			5,342
Net income	7,134			921			286			1,542			9,883
Less net income attributable to noncontrolling interests	1,594			317			(43		)	329			2,197
Net income attributable to LHC Group, Inc.’s common stockholders	$	5,540		$	604		$	329		$	1,213		$	7,686
Total assets	$	400,924		$	111,308		$	33,133		$	37,488		$	582,853

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	Three Months Ended March 31, 2015
	Home health services			Hospice services			Community-based services			Facility-based services			Total
Net service revenue	$	146,592		$	16,851		$	9,773		$	19,863		$	193,079
Cost of service revenue	85,546			10,099			6,900			11,881			114,426
Provision for bad debts	4,476			347			180			256			5,259
General and administrative expenses	46,454			4,888			2,217			5,739			59,298
Operating income	10,116			1,517			476			1,987			14,096
Interest expense	(430		)	(60		)	(6		)	(49		)	(545		)
Income before income taxes and noncontrolling interest	9,686			1,457			470			1,938			13,551
Income tax expense	3,657			620			45			407			4,729
Net income	6,029			837			425			1,531			8,822
Less net income attributable to noncontrolling interests	1,521			246			(20		)	270			2,017
Net income attributable to LHC Group, Inc.’s common stockholders	$	4,508		$	591		$	445		$	1,261		$	6,805
Total assets	$	385,653		$	34,019		$	32,971		$	38,321		$	490,964

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ITEM 2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains certain statements and information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements relate to future plans and strategies, anticipated events or trends, future financial performance and expectations and beliefs concerning matters that are not historical facts or that necessarily depend upon future events. The words “may,” “should,” “could,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential” and similar expressions are intended to identify forward-looking statements. Specifically, this report contains, among others, forward-looking statements about:

• our expectations regarding financial condition or results of operations for periods after March 31, 2016;

• our critical accounting policies;

• our business strategies and our ability to grow our business;

• our participation in the Medicare and Medicaid programs;

• the impact of healthcare reform;

• the reimbursement levels of Medicare and other third-party payors;

• the prompt receipt of payments from Medicare and other third-party payors;

• our future sources of and needs for liquidity and capital resources;

• the effect of any changes in market rates on our operations and cash flows;

• our ability to obtain financing;

• our ability to make payments as they become due;

• the outcomes of various routine and non-routine governmental reviews, audits and investigations;

• our expansion strategy, the successful integration of recent acquisitions and, if necessary, the ability to relocate or restructure our current facilities;

• the value of our proprietary technology;

• the impact of legal proceedings;

• our insurance coverage;

• the costs of medical supplies;

• our competitors and our competitive advantages;

• our ability to attract and retain valuable employees;

• the price of our stock;

• our compliance with environmental, health and safety laws and regulations;

• our compliance with health care laws and regulations;

• our compliance with SEC laws and regulations and Sarbanes-Oxley requirements;

• the impact of federal and state government regulation on our business; and

• the impact of changes in our future interpretations of fraud, anti-kickback or other laws.

The forward-looking statements included in this report reflect our current views about future events and are based on assumptions and are subject to known and unknown risks and uncertainties. Many important factors could cause actual results

19

or achievements to differ materially from any future results or achievements expressed in or implied by our forward-looking statements. Many of the factors that will determine future events or achievements are beyond our ability to control or predict. Important factors that could cause actual results or achievements to differ materially from the results or achievements reflected in our forward-looking statements include, among other things, the factors discussed in the Part II, Item 1A. “Risk Factors,” included in this report and in our other filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”), as updated by our subsequent filings with the SEC. This report should be read in conjunction with the 2015 Form 10-K, and all of our other filings, including quarterly reports on Form 10-Q and current reports on Form 8-K made with the SEC through the date of this report.

You should read this report, the information incorporated by reference into this report and the documents filed as exhibits to this report completely and with the understanding that our actual future results or achievements may differ materially from what we expect or anticipate.

The forward-looking statements contained in this report reflect our views and assumptions only as of the date this report is filed with the SEC. Except as required by law, we assume no responsibility for updating any forward-looking statements.

We qualify all of our forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Unless the context otherwise requires, “we,” “us,” “our,” and the “Company” refer to LHC Group, Inc. and its consolidated subsidiaries.

OVERVIEW

We provide quality cost-effective post-acute health care services to our patients. As of March 31, 2016, we have 367 service providers in 25 states: Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia and Wisconsin. Our services are classified into four segments: (1) home health services; (2) hospice services; (3) community-based services and (4) facility-based services offered through our long-term acute care hospitals (“LTACHs”).

Through our home health services segment, we offer a wide range of services, including skilled nursing, medically-oriented social services, and physical, occupational and speech therapy. As of March 31, 2016, we operated 284 home health services locations, of which 170 are wholly-owned, 108 are majority-owned through equity joint ventures, three are under license lease arrangements and the operations of the remaining three locations are only managed by us. We intend to increase the number of home nursing agencies that we operate through continued acquisitions and organic development.

Through our hospice services segment, we offer a wide range of services, including pain and symptom management, emotional and spiritual support, inpatient and respite care, homemaker services, and counseling. As of March 31, 2016, we operated 61 hospice locations, of which 46 are wholly-owned, 13 are majority-owned through equity joint ventures and two are under license lease arrangements. We intend to increase the number of hospice agencies that we operate through continued acquisitions and organic development.

Through our community-based services segment, our services are performed by skilled nursing and paraprofessional personnel, and include assistance with activities of daily living to the elderly, chronically ill, and disabled patients. As of March 31, 2016, we operated 11 community-based services locations, 10 are wholly-owned and one is majority-owned through equity joint ventures. We intend to increase the number of community-based agencies that we operate through continued acquisitions and organic development.

We provide facility-based services principally through our LTACHs. As of March 31, 2016, we operated six LTACHs with 8 locations, of which all but one are located within host hospitals. Of these facility-based services locations, three are wholly-owned and five are majority-owned through equity joint ventures. We also wholly-own and operate a family health center, a pharmacy, and a family health clinic.

The Joint Commission is a nationwide commission that establishes standards relating to the physical plant, administration, quality of patient care and operation of medical staffs of health care organizations. Currently, Joint Commission accreditation of home nursing and hospice agencies is voluntary. However, some managed care organizations use Joint Commission accreditation as a credentialing standard for regional and state contracts. As of March 31, 2016, the Joint

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Commission had accredited 264 of our 284 home health services locations and 34 of our 61 hospice agencies. Those not yet accredited are working towards achieving this accreditation. As we acquire companies, we apply for accreditation 12 to 18 months after completing the acquisition.

The percentage of net service revenue contributed from each reporting segment for the three months ended March 31, 2016 and 2015 was as follows:

	Three Months Ended    March 31,
Type of segment	2016		2015
Home health services	72.5	%	75.9	%
Hospice services	13.9		8.7
Community-based services	4.7		5.1
Facility-based services	8.9		10.3
	100.0	%	100.0	%

Recent Developments

Home Health Services

When the Patient Protection and Affordable Care Act (“PPACA”) was enacted in 2010, it changed a number of Medicare payment rates, including the reinstatement of the 3% home health rural add-on, which began on April 1, 2010 (expiring January 1, 2016). Other changes from PPACA that took effect on or after January 1, 2011 are:

• reduced the market basket adjustment to be determined by CMS for each of 2011, 2012 and 2013 by 1%;

• instituting a full productivity adjustment beginning in 2015; and

• rebased the base payment rate for Medicare beginning in 2014 and phasing in over a four year period.

On April 14, 2015, legislation was passed, which limits any increase in home health payments to 1% for fiscal year 2018, and extended the 3% rural home health safeguard for two years through December 31, 2017.

On October 30, 2015, CMS released a Final Rule (effective January 1, 2016) regarding payment rates for home health services provided during calendar year 2016. The national, standardized 60-day episode payment rate increased to $2,965.12 in 2016. The rural rate will be $3,054.07. This is a net 0.01% increase in the national, standardized 60-day episode payment rate, due to application of (1) rebasing decrease of $80.95, (2) case-mix adjustment decrease of 0.97%, (3) net market basket increase of 1.9%, (4) case-mix recalibration budget neutrality adjustment increase of 1.87%, and (5) wage index budget neutrality adjustment increase of 0.11%. The home health market basket percentage increase for 2016 is 2.3% and the multifactor productivity adjustment is 0.4% for a net home health market basket of 1.9%. CMS reduced its estimate of nominal case-mix growth between 2012 and 2014 from 3.41% to 2.88% (0.53%) and spread the adjustment over three years at 0.97% each year to account for nominal case-mix growth. The finalized payment policies results in a 1.4% reduction in Medicare payments for all home health agencies.

In addition, CMS finalized its proposal to implement a Home Health Value-Based Purchasing ("HHVBP") program that is intended to incentivize the delivery of high-quality patient care. The HHVBP program would withhold 3% to 8% of Medicare payments, which would be redistributed to participating home health agencies depending on their performance relative to specified measures. The HHVBP would apply to all home health agencies in Arizona, Florida, Iowa, Massachusetts, Maryland, Nebraska, North Carolina, Tennessee, and Washington.

Hospice

On July 31, 2015, CMS released a Final Rule that updated the Medicare hospice payment rates and wage index for fiscal year 2016, which is estimated to be an increase in payment rates of 1.1%. Beginning January, 1, 2016, CMS finalized its proposal for two routine home care rates, in a budget-neutral manner, to provide separate payment rates for the first 60 days of

21

care and care beyond 60 days. In addition to the two routine home care rates, CMS is implementing a service intensity add-on payment that would help to promote and compensate for the provision of skilled visits at end of life. As finalized, fiscal year 2016 will be the seventh and final year of the Budget Neutrality Adjustment Factor for hospice. CMS updated the aggregate hospice cap to $27,820.75 for the 2016 cap year. CMS is also changing the hospice inpatient and aggregate cap year to coincide with the fiscal year (October 1 to September 30) beginning October 1, 2017. The following table shows the hospice Medicare payment rates for fiscal year 2016, which began on October 1, 2015 and will end September 30, 2016:

Description	Rate per patient day
Routine Home Care days 1-60 (effective January 1, 2016)	$	186.84
Routine Home Care days 60+ (effective January 1, 2016)	$	146.83
Continuous Home Care	$	944.79
Full Rate = 24 hours of care
$39.37 = hourly rate
Inpatient Respite Care	$	167.45
General Inpatient Care	$	720.11

On April 21, 2016, CMS issued a proposed rule updating Medicare payment rates and the wage index for hospices for fiscal year 2017, which is estimated to increase payment rates by 2%. The 2% payment rate increase is based on estimated 2.8% inpatient hospital market basket update, reduced by a 0.5% productivity adjustment, and by 0.3% adjustment set by the PPACA. The hospice cap amount for the 2017 hospice cap year will be $28,377.

Community-Based Services

Community-based services are care services, which are primarily performed by skilled nursing and paraprofessional personnel, and include assistance with activities of daily living to the elderly, chronically ill, and disabled patients. Revenue is generated on an hourly basis and our current primary payors are TennCare Managed Care Organization and Medicaid. Approximately 82% of our net service revenue in this segment was generated in Tennessee.

Facility-Based Services

On December 26, 2013, President Obama signed into law the Bipartisan Budget Act of 2013 (Public Law 113-67). This new law prevents a scheduled payment reduction for physicians and other practitioners who treat Medicare patients from taking effect on January 1, 2014. Included in the legislation are the following changes to LTACH reimbursement:

• Medicare discharges from LTACHs will continue to be paid at full LTACH PPS rates if:

• the patient spent at least three days in a short-term care hospital (“STCH”) intensive care unit (“ICU”) during a STCH stay that immediately preceded the LTACH stay, or

• the patient was on a ventilator for more than 96 hours in the LTACH (based on the MS-LTACH DRG assigned) and had a STCH stay immediately preceding the LTACH stay.

• Also, the LTACH discharge cannot have a principal diagnosis that is psychiatric or rehabilitation.

• All other Medicare discharges from LTACHs will be paid at a new “site neutral” rate, which is the lesser of:

• the IPPS comparable per diem amount determined using the formula in the short-stay outlier regulation at 42 C.F.R. § 412.529(d)(4) plus applicable outlier payments, or

• 100% of the estimated cost of the services involved.

• The above new payment policy will be effective for LTACH cost reporting periods beginning on or after October 1, 2015, and the site neutral payment rate will be phased-in over two years. Two of our LTACH providers have a cost report period beginning June 1, 2016 and four of our LTACH providers have a cost report period beginning September 1, 2016.

• For cost reporting periods beginning on or after October 1, 2015, discharges paid at the site neutral payment rate or by a Medicare Advantage plan (Part C) will be excluded from the LTACH average length-of-stay (“ALOS”) calculation.

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• For cost reporting periods beginning in fiscal year 2016 and later, CMS will notify LTACHs of their “LTACH discharge payment percentage” (i.e., the number of discharges not paid at the site neutral payment rate divided by the total number of discharges).

• For cost reporting periods beginning in fiscal year 2020 and later, LTACHs with less than 50% of their discharges paid at the full LTACH PPS rates will be switched to payment under the IPPS for all discharges in subsequent cost reporting periods. However, CMS will set up a process for LTACHs to seek reinstatement of LTACH PPS rates for applicable discharges.

• MedPAC will study the impact of the above changes on quality of care, use of hospice and other post-acute care settings, different types of LTACHs and growth in Medicare spending on LTACHs. MedPAC is to submit a report to Congress with any recommendations by June 30, 2019. The report is to also include MedPAC’s assessment of whether the 25 Percent rule should continue to be applied.

• 25 Percent rule relief for freestanding LTACHs, HWHs and satellite facilities will be extended without interruption for cost reporting periods beginning on or after December 29, 2007 through December 28, 2016. Grandfathered HWHs will be permanently exempt from the 25 Percent rule. CMS must report to Congress by December 18, 2015 on whether the 25 Percent rule should continue to be applied.

• The moratorium on new LTACH facilities and increases in LTACH beds will be renewed for the period from April 1, 2014 to September 30, 2017. Although the introductory language only refers to a moratorium extension for LTACH bed increases, the amendment to the Medicare, Medicaid, and SCHIP Extension Act (“MMSEA”) would extend both moratoriums. No exceptions will apply during this extension of the moratoriums. The original rule renewed the moratorium for the period beginning January 1, 2015; however, a provision within HR4302 accelerated the moratorium period beginning on April 1, 2014.

• Not later than October 1, 2015, CMS will establish a new functional status quality measure for change in mobility of ventilator patients.

• As part of the fiscal year 2015 or 2016 rulemaking, CMS is to study payment rates and regulations that apply to the special category of neoplastic disease LTACHs and may adjust such payment rates.

On August 4, 2014, CMS released its final rule for LTACH Medicare reimbursement for fiscal year 2015, which began on October 1, 2014 and ended on September 30, 2015. In the aggregate, payments for fiscal year 2015 increased by 1.1% over fiscal year 2014 rates. The 1.1% increase consisted of a 2.9% inflationary market basket update, offset by a 0.5% reduction for the productivity adjustment, and a 0.2% reduction to the market basket as defined by PPACA. LTACH payment rates were also reduced by approximately 1.3% for the "one-time" budget neutrality adjustment factor under the last year of a three-year phase-in and increased by 0.2% for wage index budget neutrality adjustment.

On July 31, 2015, CMS issued a Final Rule to update fiscal year 2016 payment policies and rates under the IPPS and LTACH PPS, which affects discharges occurring in cost reporting periods beginning on or after October 1, 2015. CMS projects that LTACH PPS rates would decrease by 6.9%. This estimated decrease is preliminary attributable to the statutory decrease in payment rates for site neutral LTACH PPS cases that do not meet the clinical criteria to qualify for higher LTACH rates in cost reporting years beginning on or after October 1, 2015. Cases that do qualify for higher LTACH PPS rates will see a payment rate increase of 1.7% (based on market basket update of 2.4% adjusted by a multi-factor productivity adjustment of -0.5 percentage point and an additional adjustment of -0.2 percentage point in accordance with the Affordable Care Act). CMS also finalized its proposal to implement a transitional blended payment rate (50% site neutral rate and 50% LTACH PPS rates) for site neutral discharges occurring in fiscal years 2016 and 2017.

On April 18, 2016, CMS released a Proposed Rule to update fiscal year 2017 LTACH reimbursement and policies under the LTACH PPS, which affects discharges occurring in cost reporting periods beginning on or after October 1, 2016. CMS projects that overall LTACH PPS spending would decrease by 6.9%. This estimated decrease is attributable to the statutory decrease in payment rates for site neutral LTACH PPS cases that do not meet the clinical criteria to qualify for higher LTACH rates in cost reporting years beginning on or after October 1, 2016. Cases that do qualify for higher LTACH PPS rates will see a payment rate increase of 0.3% (based on market basket update of 2.7% reduced by a multi-factor productivity adjustment of 0.5%, minus an additional adjustment of 0.75 percentage point in accordance with the PPACA, less 1.1% adjustment for high cost outlier spending in 2016, plus a 0.25% adjustment for short stay outliers in 2016). CMS also proposes to begin enforcement of the 25 percent rule which will cap the number of patients treated at an LTACH who have been referred from all locations of a hospital. Grandfathered LTACH facilities are exempt from the 25 percent rule, while rural LTACHs will have a threshold of 50% and MSA-dominant hospitals will have a threshold between 25% and 50%. CMS will have two separate outlier pools and thresholds for LTACH-appropriate patients and for site-neutral patients. For 2017, CMS proposes to increase

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its fixed-loss threshold to $22,728 from 2016’s $16,432, to limit outlier spending at no more than 8% of total LTACH spending (2016 outlier payments may reach 9.1%). CMS is applying the proposed inpatient fixed-loss threshold of $23,681 for site neutral patients.

None of the above described estimated changes to Medicare payments for home health, hospice and LTACHs include the deficit reduction sequester cuts to Medicare that began on April 1, 2013, which reduced Medicare payments by 2% for patients whose service dates ended on or after April 1, 2013.

RESULTS OF OPERATIONS

Three months ended March 31, 2016 compared to three months ended March 31, 2015

Consolidated financial statements

The following table summarizes our consolidated results of operations for the three months ended March 31, 2016 and 2015 (amounts in thousands, except percentages which are percentages of consolidated net service revenue, unless indicated otherwise):

	2016							2015						Increase (Decrease)			Percentage Change
Net service revenue	$	222,552						$	193,079					$	29,473		15.3	%
Cost of service revenue	135,601			60.9	%			114,426			59.3	%		21,175			18.5
Provision for bad debts	4,601			2.1				5,259			2.7			(658		)	(12.5	)
General and administrative expenses	66,240			29.8				59,298			30.7			6,942			11.7
Income tax expense	5,342			41.0		(1	)	4,729			41.0		(1)	613			13.0
Noncontrolling interest	2,197							2,017						180
Total non-operating expense	(885		)					(545		)				(340		)
Net income attributable to LHC Group, Inc.’s common stockholders	$	7,686						$	6,805					$	881

(1) Effective tax rate as a percentage of income from continuing operations attributable to LHC Group, Inc.’s common stockholders.

Net service revenue

The following table sets forth each of our segment’s revenue growth or loss, admissions, census, episodes, patient days, and billable hours for the three months ended March 31, 2016 and the related change from the same period in 2015 (amounts in thousands, except admissions, census, episode data, patient days and billable hours):

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	Same Store(1)		De Novo(2)		Organic(3)		Organic Growth (Loss) %		Acquired(4)		Total		Total Growth (Loss) %
Home health services
Revenue	$	157,975	$	524	$	158,499	8.1	%	$	2,888	$	161,387	10.1	%
Revenue Medicare	$	119,334	$	373	$	119,707	5.3		$	2,419	$	122,126	7.4
New Admissions	38,423		125		38,548		7.2		576		39,124		8.8
New Medicare Admissions	25,610		79		25,689		3.3		447		26,136		5.1
Average Census	37,212		244		37,456		2.8		762		38,218		4.9
Average Medicare Census	27,458		171		27,629		1.4		617		28,246		3.7
Home Health Episodes	47,271		299		47,570		1.9		916		48,486		3.9
Hospice services
Revenue	$	19,700	$	866	$	20,566	22.0		$	10,258	$	30,824	82.9
Revenue Medicare	$	18,305	$	857	$	19,162	22.7		$	9,493	$	28,655	83.5
New Admissions	1,627		19		1,646		11.1		817		2,463		66.3
New Medicare Admissions	1,425		18		1,443		12.3		709		2,152		67.5
Average Census	1,582		68		1,650		21.5		775		2,425		78.6
Average Medicare Census	1,463		66		1,529		21.8		719		2,248		79.0
Patient days	143,991		6,164		150,155		22.9		70,539		220,694		80.6
Community-based services
Revenue	$	10,285	$	—	$	10,285	5.2		$	158	$	10,443	6.8
Billable hours	296,753		—		296,753		0.9		7,734		304,487		3.6
Facility-based services
LTACHs
Revenue	$	18,808	$	—	$	18,808	(2.0	)	—		$	18,808	(2.0	)
Patient days	15,537		—		15,537		(3.9	)	—		15,537		(3.9	)

(1) Same store — location that has been in service with us for greater than 12 months.

(2) De Novo — internally developed location that has been in service with us for 12 months or less.

(3) Organic — combination of same store and de novo.

(4) Acquired — purchased location that has been in service with us for 12 months or less.

Total organic revenue and patient metrics increased in our home health services segment, hospice services segment, and community-based services segment due to the successful execution of same store growth strategies.

Organic growth is primarily generated by population growth in areas covered by mature agencies, agencies five years old or older, and by increased market share in acquired and developing agencies. Historically, acquired agencies have the highest growth in admissions and average census in the first 24 months after acquisition, and have the highest contribution to organic growth, measured as a percentage of growth, in the second full year of operation after the acquisition.

Cost of service revenue

The following table summarizes cost of service revenue (amounts in thousands, except percentages, which are percentages of the segment’s respective net service revenue):

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	Three Months Ended March 31,
	2016				2015
Home health services
Salaries, wages and benefits	$	87,412	54.2	%	$	77,653	53.0	%
Transportation	5,475		3.4		4,864		3.3
Supplies and services	3,825		2.4		3,029		2.1
Total	$	96,712	59.9	%	$	85,546	58.4	%
Hospice services
Salaries, wages and benefits	$	14,013	45.5	%	$	7,092	42.1	%
Transportation	1,324		4.3		693		4.1
Supplies and services	4,290		13.9		2,314		13.7
Total	$	19,627	63.7	%	$	10,099	59.9	%
Community-based services
Salaries, wages and benefits	$	7,589	72.7	%	$	6,786	69.4	%
Transportation	65		0.6		60		0.6
Supplies and services	73		0.7		54		0.6
Total	$	7,727	74.0	%	$	6,900	70.6	%
Facility-based services
Salaries, wages and benefits	$	7,594	38.2	%	$	7,678	38.6	%
Transportation	66		0.3		56		0.3
Supplies and services	3,875		19.5		4,147		20.9
Total	$	11,535	58.0	%	$	11,881	59.8	%

Consolidated cost of service revenue for the three months ended March 31, 2016 was $135.6 million, or 60.9% of net service revenue, compared to $114.4 million, or 59.3% of net service revenue, for the same period in 2015. The increase in consolidated cost of service revenue was primarily due to an increase in patient admissions and census growth due to the successful execution of same store growth strategies. In addition, cost of service revenue increased in the home health services and hospice services segments by $2.1 million and $7.9 million, respectively, due to acquisitions.

Provision for bad debts

Consolidated provision for bad debts for the three months ended March 31, 2016 was $4.6 million, or 2.1% of net service revenue, compared to $5.3 million, or 2.7% of net service revenue, for the same period in 2015. In 2015, provision for bad debts in the home health segment included additional reserves for 2014 patient claims associated with two payors. Those adjustments were an isolated occurrence and increased bad debt reserves above normal levels.

General and administrative expenses

The following table summarizes general and administrative expenses (amounts in thousands, except percentages, which are percentages of the segment’s respective net service revenue):

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	Three Months Ended March 31,
	2016				2015
Home health services
General and administrative	$	47,671	29.5	%	$	44,492	30.4	%
Depreciation and amortization	1,887		1.2		1,962		1.3
Total	$	49,558	30.7	%	$	46,454	31.7	%
Hospice services
General and administrative	$	8,472	27.5	%	$	4,567	27.1	%
Depreciation and amortization	518		1.7		321		1.9
Total	$	8,990	29.2	%	$	4,888	29.0	%
Community-based services
General and administrative	$	1,982	19.0	%	$	2,174	22.2	%
Depreciation and amortization	97		0.9		43		0.4
Total	2,079		19.9	%	$	2,217	22.6	%
Facility-based services
General and administrative	$	5,168	26.0	%	$	5,349	26.9	%
Depreciation and amortization	445		2.2		390		2.0
Total	$	5,613	28.2	%	$	5,739	28.9	%

Consolidated general and administrative expenses for the three months ended March 31, 2016 was $66.2 million, or 29.8% of net service revenue, compared to $59.3 million, or 30.7% of net service revenue, for the same period in 2015. The increase in consolidated general and administrative expenses was primarily due to an increase in the number of service providers resulting from acquisitions since March 31, 2015. General and administrative expenses for the home health services and hospice services segments increased $1.2 million and $3.6 million, respectively, due to such acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our principal source of liquidity for operating activities is the collection of patient accounts receivable, most of which are collected from governmental and third party commercial payors. We also have the ability to obtain additional liquidity, if necessary, through our credit facility, which provides for aggregate borrowings, including outstanding letters of credit, up to $225 million.

Our reported cash flows from operating activities are affected by various external and internal factors, including the following:

• Operating Results — Our net income has a significant effect on our operating cash flows. Any significant increase or decrease in our net income could have a material effect on our operating cash flows.

• Timing of Acquisitions — We use our operating and/or financing cash flows for acquisitions. When the acquisitions occur at or near the end of a period, our cash outflows significantly increase.

• Timing of Payroll — Our employees are paid bi-weekly on Fridays; therefore, operating cash flows decline in reporting periods that end on a Friday.

• Self Insurance Plan Funding — We are self-funded for health insurance and workers compensation purposes. Any significant changes in the amount of insurance claims submitted could have a direct effect on our operating cash flows.

• Medical Supplies — A significant expense associated with our business is the cost of medical supplies. Any increase in the cost of medical supplies, or in the use of medical supplies by our patients, could have a material effect on our operating cash flows:

The following table summarizes changes in cash (amounts in thousands):

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	Three Months Ended March 31,
	2016			2015
Net cash provided by (used in):
Operating activities	$	17,161		$	22,604
Investing activities	(12,926		)	(3,525		)
Financing activities	(4,781		)	(15,569		)

Cash provided by operating activities changed due to net working capital associated with acquisitions.

Cash used in investing activities increased due to acquisition of Heartlite Hospice and two additional acquisitions which occurred during the three months ended March 31, 2016. There were no similar acquisitions during the same period in March 31, 2015.

Cash used in financing activities decreased due to the net repayment of our line of credit during the three months ended March 31, 2015.

Accounts Receivable and Allowance for Uncollectible Accounts

For home health services, hospice services, and community-based services, we calculate the allowance for uncollectible accounts as a percentage of total patient receivables. The percentage changes depending on the payor and increases as the patient receivables age. For facility-based services, we calculate the allowance for uncollectible accounts based on a claim by claim review.

As of March 31, 2016, our allowance for uncollectible accounts, as a percentage of patient accounts receivable, was approximately 19.6%, or $28.6 million, compared to 19.5% or $26.7 million at December 31, 2015. Days sales outstanding as of March 31, 2016 and December 31, 2015 was 48 and 46 days, respectively.

The following table sets forth as of March 31, 2016, the aging of accounts receivable (amounts in thousands):

Payor	0-90		91-180		181-365		Over 365		Total
Medicare	$	65,667	$	8,972	$	6,040	$	5,210	$	85,889
Medicaid	4,225		1,109		645		402		6,381
Other	32,924		6,769		7,622		6,793		54,108
Total	$	102,816	$	16,850	$	14,307	$	12,405	$	146,378

The following table sets forth as of December 31, 2015, the aging of accounts receivable (amounts in thousands):

Payor	0-90		91-180		181-365		Over 365		Total
Medicare	$	65,910	$	8,244	$	4,971	$	4,960	$	84,085
Medicaid	2,994		1,033		903		561		5,491
Other	26,794		7,248		7,699		5,745		47,486
Total	$	95,698	$	16,525	$	13,573	$	11,266	$	137,062

Indebtedness

As of March 31, 2016, we had $119.2 million available for borrowing under our credit facility with $96.0 million drawn under our credit facility and $9.8 million of letters of credit outstanding. At December 31, 2015, we had $98.0 million drawn and $9.8 million of letters of credit outstanding under our credit facility.

For a discussion on our Credit Agreement with Capital One National Association, see Note 5 of the Notes to Condensed Consolidated Financial Statements, which is incorporated herein by reference.

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A letter of credit fee equal to the applicable Eurodollar rate multiplied-by the face amount of the letter of credit is charged upon the issuance and on each anniversary date while the letter of credit is outstanding. The agent’s standard up-front fee and other customary administrative charges will also be due upon issuance of the letter of credit along with a renewal fee on each anniversary date of such issuance while the letter of credit is outstanding. Borrowings accrue interest under the Credit Agreement at either the Base Rate or the Eurodollar rate are subject to the applicable margins set forth below:

Leverage Ratio	Eurodollar Margin		Base Rate Margin		Commitment Fee Rate
≤1.00:1.00	1.75	%	0.75	%	0.225	%
>1.00:1.00 ≤ 1.50:1.00	2.00	%	1.00	%	0.250	%
>1.50:1.00 ≤ 2.00:1.00	2.25	%	1.25	%	0.300	%
>2.00:1.00	2.50	%	1.50	%	0.375	%

Our Credit Agreement contains customary affirmative, negative and financial covenants. For example, without prior approval of our bank group, we are materially restricted in incurring additional debt, disposing of assets, making investments, allowing fundamental changes to our business or organization, and making certain payments in respect of stock or other ownership interests, such as dividends and stock repurchases, up to $50 million. Under our Credit Agreement, we are also required to meet certain financial covenants with respect to minimum fixed charge coverage and leverage ratios.

Our Credit Agreement also contains customary events of default. These include bankruptcy and other insolvency events, cross-defaults to other debt agreements, a change in control involving us or any subsidiary guarantor, and the failure to comply with certain covenants.

At March 31, 2016, we were in compliance with all covenants contained in the Credit Agreement governing our credit facility.

Contingencies

For a discussion of contingencies, see Note 8 of the Notes to Condensed Consolidated Financial Statements, which is incorporated herein by reference.

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.

Critical Accounting Policies

For a discussion of critical accounting policies, see Note 2 of the Notes to Condensed Consolidated Financial Statements, which is incorporated herein by reference.

Accounts Receivable and Allowances for Uncollectible Accounts

We report accounts receivable net of estimated allowances for uncollectible accounts and adjustments. Accounts receivable are uncollateralized and primarily consist of amounts due from Medicare, other third-party payors, and patients. To provide for accounts receivable that could become uncollectible in the future, we establish an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value.

The collection of outstanding receivables is our primary source of cash collections and is critical to our operating performance. Because Medicare is our primary payor, the credit risk associated with receivables from other payors is limited. We believe the credit risk associated with our Medicare accounts, which represent approximately 55% of our patient accounts receivable as of March 31, 2016 and December 31, 2015, respectively, is limited due to (i) the historical collections from Medicare and (ii) the fact that Medicare is a U.S. government payor. We do not believe that there are any other significant

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concentrations of receivables from any particular payor that would subject it to any significant credit risk in the collection of accounts receivable.

The amount of the provision for bad debts is based upon our assessment of historical and expected net collections, business and economic conditions and trends in government reimbursement. Quarterly, we perform a detailed review of historical writeoffs and recoveries as well as recent collection trends. Uncollectible accounts are written off when we have exhausted collection efforts and concluded the account will not be collected.

Although our estimated reserves for uncollectible accounts are based on historical experience and the most current collection trends, this process requires significant judgment and interpretation of the observed trends and the actual collections could differ from our estimates.

Insurance

We retain significant exposure for our employee health insurance, workers compensation, employment practices and professional liability insurance programs. Our insurance programs require us to estimate potential payments on filed claims and/or claims incurred but not reported. Our estimates are based on information provided by the third-party plan administrators, historical claim experience, expected costs of claims incurred but not paid and expected costs associated with settling claims. Each month we review the insurance-related recoveries and liabilities to determine if any adjustments are required.

Our employee health insurance program is self-funded, with stop-loss coverage on claims that exceed $0.2 million for any individually covered employee or employee family member. We are responsible for workers’ compensation claims up to $0.5 million per individual incident.

Malpractice, employment practices and general liability claims for incidents which may give rise to litigation have been asserted against us by various claimants. The claims are in various stages of processing and some may ultimately be brought to trial. We are aware of incidents that have occurred through March 31, 2016 that may result in the assertion of additional claims. We currently carry professional, general liability and employment practices insurance coverage (on a claims made basis) for this exposure. We also carry D&O coverage (also on a claims made basis) for potential claims against our directors and officers, including securities actions, with a deductible of $1.0 million per security claims and $0.5 million on other claims.

We estimate our liabilities related to these programs using the most current information available. As claims develop, we may need to change the recorded liabilities and change our estimates. These changes and adjustments could be material to our financial statements, results of operations and financial condition.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our exposure to market risk relates to changes in interest rates for borrowings under our credit facility. Our letter of credit fees and interest accrued on our debt borrowings are subject to the applicable Eurodollar or Base Rate. A hypothetical basis point increase in interest rates on the average daily amounts outstanding under the credit facility would have increased interest expense by $0.2 million for the three months ended March 31, 2016.

ITEM 4.    CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) that are designed to ensure that information that we are required to disclose in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report.

Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) were effective as of March 31, 2016.

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Changes in Internal Controls Over Financial Reporting

There have not been any changes in our internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act, during the quarterly period ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS.

For a discussion of legal proceedings, see Note 8 of the Notes to Condensed Consolidated Financial Statements, which is incorporated herein by reference.

ITEM 1A.    RISK FACTORS.

There have been no material changes from the information included in Part I, Item 1A. “Risk Factors” of the Company’s 2015 Form 10-K.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

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ITEM 6.    EXHIBITS.

3.1	Certificate of Incorporation of LHC Group, Inc. (previously filed as an Exhibit 3.1 to the Form S-1/A (File No. 333-120792) on February 14, 2005).
3.2	Bylaws of LHC Group, Inc. as amended on December 31, 2007 (previously filed as Exhibit 3.2 to the Form 10-Q on May 9, 2008).
4.1	Specimen Stock Certificate of LHC Group’s Common Stock, par value $0.01 per share (previously filed as Exhibit 4.1 to the Form S-1/ A (File No. 333-120792) on February 14, 2005).
10.1	Amendment to LHC Group, Inc. Second Amended and Restated 2005 Non-Employee Directors Compensation Plan, effective January 20, 2015.
31.1	Certification of Keith G. Myers, Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Joshua L. Proffitt, Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer and Chief Financial Officer of LHC Group, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.DEF	XBRL Definition Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

*    This exhibit is furnished to the SEC as an accompanying document and is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, and the document will not be deemed incorporated by reference into any filing under the Securities Act of 1933.

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SIGNATURES

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, thereunto duly authorized.

	LHC GROUP, INC.
Date: May 5, 2016	/s/ Joshua L. Proffitt
	Joshua L. Proffitt
	Executive Vice President and Chief Financial Officer       (Principal financial officer)

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Keith G. Myers, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of LHC Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2016

/s/ Keith G. Myers

Keith G. Myers

Chief Executive Officer (Principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a),

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joshua L. Proffitt, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of LHC Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 5, 2016

/s/ Joshua L. Proffitt

Joshua L. Proffitt

Executive Vice President and Chief Financial Officer

(Principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of LHC Group, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Keith G. Myers, Chief Executive Officer of the Company, and Joshua L. Proffitt, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 5, 2016

/s/ Keith G. Myers

Keith G. Myers

Chief Executive Officer

(Principal executive officer)

/s/ Joshua L. Proffitt

Joshua L. Proffitt

Executive Vice President and Chief Financial Officer

(Principal financial officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 02, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
Trading Symbol	LHCG
Entity Registrant Name	LHC Group, Inc
Entity Central Index Key	0001303313
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,122,084

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash	$ 5,593	$ 6,139
Receivables:
Patient accounts receivable, less allowance for uncollectible accounts of $28,617 and $26,712, respectively	117,761	110,350
Other receivables	2,507	2,093
Amounts due from governmental entities	964	1,081
Total receivables, net	121,232	113,524
Prepaid income taxes	1,575	1,949
Prepaid expenses	10,519	10,833
Other current assets	6,265	5,835
Receivable due from insurance carrier		550
Total current assets	145,184	138,830
Property, building and equipment, net of accumulated depreciation of $41,017 and $38,907, respectively	38,191	38,096
Goodwill	296,240	290,694
Intangible assets, net of accumulated amortization of $9,097 and $8,496, respectively	100,863	96,405
Other assets	2,375	2,029
Total assets	582,853	566,054
Current liabilities:
Accounts payable and other accrued liabilities	24,912	24,586
Salaries, wages, and benefits payable	39,506	28,098
Self-insurance reserve	11,109	9,636
Current portion of long-term debt	243	241
Amounts due to governmental entities	4,729	7,055
Legal settlement payable		550
Total current liabilities	80,499	70,166
Deferred income taxes	23,605	23,729
Income tax payable	3,415	3,415
Revolving credit facility	96,000	98,000
Long-term debt, less current portion	485	543
Total liabilities	204,004	195,853
Noncontrolling interest — redeemable	12,463	12,408
LHC Group, Inc. stockholders’ equity:
Common stock --- $0.01 par value; 40,000,000 shares authorized; 22,370,384 and 22,224,423 shares issued in 2016 and 2015, respectively	224	222
Treasury stock --- 4,814,522 and 4,776,560 shares at cost, respectively	(38,560)	(37,139)
Additional paid-in capital	115,654	113,793
Retained earnings	285,392	277,706
Total LHC Group, Inc. stockholders’ equity	362,710	354,582
Noncontrolling interest — non-redeemable	3,676	3,211
Total equity	366,386	357,793
Total liabilities and equity	$ 582,853	$ 566,054

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Patient accounts receivable, allowance for uncollectible accounts	$ 28,617	$ 26,712
Property, building and equipment, accumulated depreciation	41,017	38,907
Intangible assets, accumulated amortization	$ 9,097	$ 8,496
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized	40,000,000	40,000,000
Common stock, issued	22,370,384	22,224,423
Treasury stock at cost, shares	4,814,522	4,776,560

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Statement [Abstract]
Net service revenue	$ 222,552	$ 193,079
Cost of service revenue	135,601	114,426
Gross margin	86,951	78,653
Provision for bad debts	4,601	5,259
General and administrative expenses	66,240	59,298
Operating income	16,110	14,096
Interest expense	(885)	(545)
Income before income taxes and noncontrolling interest	15,225	13,551
Income tax expense	5,342	4,729
Net income	9,883	8,822
Less net income attributable to noncontrolling interests	2,197	2,017
Net income attributable to LHC Group, Inc.’s common stockholders	$ 7,686	$ 6,805
Earnings Per Share, Basic and Diluted [Abstract]
Net income attributable to LHC Group, Inc.'s common stockholders	$ 0.44	$ 0.39
Weighted average shares outstanding:
Basic	17,485,766	17,322,791
Diluted	17,633,549	17,489,483

XML

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands	Total		Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings	Noncontrolling Interest Non Redeemable
Beginning balance, Amount at Dec. 31, 2015	$ 357,793		$ 222	$ (37,139)	$ 113,793	$ 277,706	$ 3,211
Beginning balance, Shares at Dec. 31, 2015			22,224,423
Beginning balance, Treasury Shares at Dec. 31, 2015	(4,776,560)			(4,776,560)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Acquired noncontrolling interest	$ 372						372
Noncontrolling Interest Distributions	(369)						(369)
Net income	8,012	[1]				7,686	326
Noncontrolling Interest, Other Increase (Decrease)	136						136
Nonvested stock compensation	982				982
Issuance of vested stock			140,620
Treasury shares redeemed to pay income tax	$ (1,421)			$ (1,421)
Treasury shares redeemed to pay income tax, Shares	(37,962)			(37,962)
Excess tax benefits — vesting nonvested stock	$ 651				651
Issuance of common stock under Employee Stock Purchase Plan	$ 230		$ 2		228
Issuance of common stock under Employee Stock Purchase Plan, Shares	5,341		5,341
Ending balance, Amount at Mar. 31, 2016	$ 366,386		$ 224	$ (38,560)	$ 115,654	$ 285,392	$ 3,676
Ending balance, Shares at Mar. 31, 2016			22,370,384
Ending balance, Treasury Shares at Mar. 31, 2016	(4,814,522)			(4,814,522)

[1] Net income excludes net income attributable to noncontrolling interest-redeemable of $1.9 million during the three months ending March 31, 2016. Noncontrolling interest-redeemable is reflected outside of permanent equity on the condensed consolidated balance sheets. See Note 9 of the Notes to Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)
Statement of Stockholders' Equity [Abstract]
Net income attributable to noncontrolling interest-redeemable	$ 1,871

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating activities:
Net income	$ 9,883	$ 8,822
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	2,948	2,716
Provision for bad debts	4,601	5,259
Stock-based compensation expense	982	991
Deferred income taxes	(124)	(183)
Impairment of intangibles and other		79
Loss on disposal of assets	204	284
Changes in operating assets and liabilities, net of acquisitions:
Receivables	(12,446)	(7,026)
Prepaid expenses and other assets	(162)	(2,549)
Prepaid income taxes	374	2,478
Accounts payable and accrued expenses	13,110	10,624
Net amounts due to/from governmental entities	(2,209)	1,109
Net cash provided by operating activities	17,161	22,604
Investing activities:
Purchases of property, building and equipment	(2,622)	(2,958)
Cash paid for acquisitions, primarily goodwill and intangible assets	(10,577)	(567)
Other	273
Net cash used in investing activities	(12,926)	(3,525)
Financing activities:
Proceeds from line of credit	4,000	0
Payments on line of credit	(6,000)	(13,000)
Proceeds from employee stock purchase plan	230	210
Payments on debt	(56)	(57)
Noncontrolling interest distributions	(2,185)	(2,242)
Excess tax benefits from vesting of stock awards	651	642
Withholding taxes paid on stock-based compensation	(1,421)	(1,122)
Net cash used in financing activities	(4,781)	(15,569)
Change in cash	(546)	3,510
Cash at beginning of period	6,139	531
Cash at end of period	5,593	4,041
Supplemental disclosures of cash flow information:
Interest paid	749	447
Income taxes paid	$ 4,466	$ 1,787

XML

Organization

3 Months Ended

Mar. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

LHC Group, Inc. (the “Company”) is a health care provider specializing in the post-acute continuum of care primarily for Medicare beneficiaries. The Company provides home health services, hospice services, community-based services, and facility-based services, the latter primarily through long-term acute care hospitals (“LTACHs”). As of March 31, 2016, the Company, through its wholly- and majority-owned subsidiaries, equity joint ventures and controlled affiliates, operated 367 service providers in 25 states within the continental United States.

Unaudited Interim Financial Information

The condensed consolidated balance sheets as of March 31, 2016 and December 31, 2015, and the related condensed consolidated statements of income for the three months ended March 31, 2016 and 2015, condensed consolidated statement of changes in equity for the three months ended March 31, 2016, condensed consolidated statements of cash flows for the three months ended March 31, 2016 and 2015 and related notes (collectively, these financial statements and the related notes are referred to herein as the “interim financial information”) have been prepared by the Company. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from the interim financial information presented. This report should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 as filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2016, which includes information and disclosures not included herein.

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Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenue and expenses during the reporting period. Actual results could differ from those estimates.

Critical Accounting Policies

The Company’s most critical accounting policies relate to the principles of consolidation, revenue recognition and accounts receivable and allowances for uncollectible accounts.

Principles of Consolidation

The interim financial information includes all subsidiaries and entities controlled by the Company. Control is defined by the Company as ownership of a majority of the voting interest of an entity. The interim financial information includes entities in which the Company receives a majority of the entities’ expected residual returns and absorbs a majority of the entities’ expected losses. Third party equity interests in the consolidated joint ventures are reflected as noncontrolling interests in the Company’s interim financial information.

The following table summarizes the percentage of net service revenue earned by type of ownership or relationship the Company had with the operating entity:

	Three Months Ended    March 31,
Ownership type	2016		2015
Wholly-owned subsidiaries	56.7	%	54.6	%
Equity joint ventures	41.6		43.2
License leasing arrangements	0.9		1.3
Management services	0.8		0.9
	100.0	%	100.0	%

All significant intercompany accounts and transactions have been eliminated in the Company’s accompanying interim financial information. Business combinations accounted for under the acquisition method have been included in the interim financial information from the respective dates of acquisition.

The following describes the Company’s consolidation policy with respect to its various ventures excluding wholly-owned subsidiaries:

Equity Joint Ventures

The members of the Company’s equity joint ventures participate in profits and losses in proportion to their equity interests. The Company consolidates these entities as the Company has voting control over the entities.

License Leasing Arrangements

The Company, through wholly-owned subsidiaries, leases home health licenses necessary to operate certain of its home nursing and hospice agencies. The Company owns 100% of the equity of these subsidiaries and consolidates them based on such ownership.

Management Services

The Company has various management services agreements under which the Company manages certain operations of agencies. The Company does not consolidate these agencies because the Company does not have an ownership interest in, and does not have an obligation to absorb losses of, the entities that own the agencies or the right to receive the benefits from those entities.

Revenue Recognition

The Company reports net service revenue at the estimated net realizable amount due from Medicare, Medicaid and others for services rendered. The Company assesses the patient's ability to pay for their healthcare services at the time of patient admission based on the Company's verification of the patient's insurance coverage under the Medicare, Medicaid, and other commercial or managed care insurance program. All such payors contribute to the net service revenue of the Company’s home health services, hospice services, community-based services, and facility-based services.

The following table sets forth the percentage of net service revenue earned by category of payor for the three months ended March 31, 2016 and 2015:

	Three Months Ended    March 31,
Payor:	2016		2015
Medicare	74.4	%	74.7	%
Medicaid	1.7		1.4
Other	23.9		23.9
	100.0	%	100.0	%

The following table sets forth the percentage of net service revenue contributed from each reporting segment for the three months ended March 31, 2016 and 2015:

	Three Months Ended    March 31,
Reporting segment:	2016		2015
Home health services	72.5	%	75.9	%
Hospice services	13.9		8.7
Community-based services	4.7		5.1
Facility-based services	8.9		10.3
	100.0	%	100.0	%

Medicare

Home Health

The Company’s home nursing Medicare patients are classified into one of 153 home health resource groups prior to receiving services. Based on the patient’s home health resource group, the Company is entitled to receive a standard prospective Medicare payment for delivering care over a 60-day period referred to as an episode. The Company recognizes revenue based on the number of days elapsed during an episode of care within the reporting period.

Final payments from Medicare may reflect one of four retroactive adjustments to ensure the adequacy and effectiveness of the total reimbursement: (a) an outlier payment if the patient’s care was unusually costly; (b) a low utilization adjustment if the number of visits was fewer than five; (c) a partial payment if the patient transferred to another provider before completing the episode; or (d) a payment adjustment based upon the level of therapy services required. In calculating net service revenue, management estimates the impact of these payment adjustments based on historical experience and records this estimate as the services are rendered using the expected level of services that will be provided.

Hospice Services

The Company is paid by Medicare under a per diem payment system. The Company receives one of four predetermined daily or hourly rates based upon the level of care the Company furnished. The Company records net service revenue from hospice services based on the daily or hourly rate and recognizes revenue as hospice services are provided.

Hospice payments are subject to an inpatient cap and an overall Medicare payment cap. The inpatient cap relates to individual programs receiving more than 20% of its total Medicare reimbursement from inpatient care services and the overall Medicare payment cap relates to individual providers receiving reimbursements in excess of a “cap amount,” calculated by multiplying the number of beneficiaries during the period by a statutory amount that is indexed for inflation. The determination for each cap is made annually based on the 12-month period ending on October 31 of each year. The Company monitors its limits on a provider-by-provider basis and records an estimate of its liability for reimbursements received in excess of the cap amount. Beginning with the cap year October 1, 2014, CMS implemented a new process requiring hospice providers to self-report their cap liabilities and remit applicable payment by March 31 of the following year.

Facility-Based Services

The Company is reimbursed by Medicare for services provided under the LTACH prospective payment system. Each patient is assigned a long-term care diagnosis-related group. The Company is paid a predetermined fixed amount intended to reflect the average cost of treating a Medicare patient classified in that particular long-term care diagnosis-related group. For selected patients, the amount may be further adjusted based on length of stay and facility-specific costs, as well as in instances where a patient is discharged and subsequently re-admitted, among other factors. The Company calculates the adjustment based on a historical average of these types of adjustments for claims paid. Similar to other Medicare prospective payment systems, the rate is also adjusted for geographic wage differences. Revenue is recognized for the Company’s LTACHs as services are provided.

Medicaid, managed care and other payors

The Company’s Medicaid reimbursement is based on a predetermined fee schedule applied to each service provided. Therefore, revenue is recognized for Medicaid services as services are provided based on this fee schedule. The Company’s managed care and other payors reimburse the Company based upon a predetermined fee schedule or an episodic basis, depending on the terms of the applicable contract. Accordingly, the Company recognizes revenue from managed care and other payors in the same manner as the Company recognizes revenue from Medicare or Medicaid.

Accounts Receivable and Allowances for Uncollectible Accounts

The Company reports accounts receivable net of estimated allowances for uncollectible accounts and adjustments. Accounts receivable are uncollateralized and consist of amounts due from Medicare, other third-party payors and patients. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value. The credit risk for other concentrations of receivables is limited due to the significance of Medicare as the primary payor. The Company believes the credit risk associated with its Medicare accounts, which have historically exceeded 55% of its patient accounts receivable, is limited due to (i) the historical collection rate from Medicare and (ii) the fact that Medicare is a U.S. government payor. The Company does not believe that there are any other concentrations of receivables from any particular payor that would subject it to any significant credit risk in the collection of accounts receivable.

The provision for bad debts is based upon the Company’s assessment of historical and expected net collections, business and economic conditions and trends in government reimbursement. Uncollectible accounts are written off when the Company has determined the account will not be collected.

A portion of the estimated Medicare prospective payment system reimbursement from each submitted home nursing episode is received in the form of a request for anticipated payment (“RAP”). The Company submits a RAP for 60% of the estimated reimbursement for the initial episode at the start of care. The full amount of the episode is billed after the episode has been completed. The RAP received for that particular episode is deducted from the final payment. If a final bill is not submitted within the greater of 120 days from the start of the episode, or 60 days from the date the RAP was paid, any RAP received for that episode will be recouped by Medicare from any other Medicare claims in process for that particular provider. The RAP and final claim must then be resubmitted. For subsequent episodes of care contiguous with the first episode for a particular patient, the Company submits a RAP for 50% instead of 60% of the estimated reimbursement.

The Company’s services to the Medicare population are paid at prospectively set amounts that can be determined at the time services are rendered. The Company’s Medicaid reimbursement is based on a predetermined fee schedule applied to each individual service it provides. The Company’s managed care contracts and contracts with other payors provide for payments based upon a predetermined fee schedule or an episodic basis, depending on the terms of the applicable contract. The Company is able to calculate its actual amount due at the patient level and adjust the gross charges down to the actual amount at the time of billing. This negates the need to record an estimated contractual allowance when reporting net service revenue for each reporting period.

Other Significant Accounting Policies

Earnings Per Share

Basic per share information is computed by dividing the relevant amounts from the condensed consolidated statements of income by the weighted-average number of shares outstanding during the period, under the treasury stock method. Diluted per share information is also computed using the treasury stock method, by dividing the relevant amounts from the condensed consolidated statements of income by the weighted-average number of shares outstanding plus potentially dilutive shares.

The following table sets forth shares used in the computation of basic and diluted per share information:

	Three Months Ended    March 31,
	2016	2015
Weighted average number of shares outstanding for basic per share calculation	17,485,766	17,322,791
Effect of dilutive potential shares:
Options	2,023	5,487
Nonvested stock	145,760	161,205
Adjusted weighted average shares for diluted per share calculation	17,633,549	17,489,483
Anti-dilutive shares	181,101	191,065

Recently Adopted Accounting Pronouncements

In April 2015, the FASB issued ASU No. 2015-3, Simplifying the Presentation of Debt Issuance Costs, ("ASU 2015-3") which requires an entity to present debt issuance costs related to a recognized debt liability as a direct deduction from that liability. The Company adopted this standard during the three months ended March 31, 2016. In August 2015, the FASB issued ASU No. 2015-15, Interest - Imputation of Interest, which stated ASU No. 2015-3 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements; therefore, ASU No. 2015-3 will not have an effect on the Company's consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

On May 28, 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers, ("ASU 2014-9") which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-9 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2018. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-9 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In February 2016, the FASB issued ASU No. 2016-2, Leases, ("ASU 2016-2") which requires lessees to recognize qualifying leases on the statement of financial position. Qualifying leases will be classified as right-of-use assets and lease liabilities. The new standard is effective on January 1, 2019. Early adoption is permitted. ASU 2016-2 mandates a modified retrospective transition method for all entities. The Company is evaluating the effect that ASU 2016-2 will have on its consolidated financial statements and related disclosures.

In March 2016, as part of its Simplification Initiative, the FASB issued ASU No. 2016-9, Compensation - Stock Compensation (ASU 2016-09), which finalizes Proposed ASU No. 2015-270 of the same name, and seeks to reduce complexity in accounting standards. The areas for simplification in ASU 2016-09, involve several aspects of the accounting for share-based payment transaction, including (1) accounting for income taxes, (2) classification of excess tax benefits on the statement of cash flow, (3) forfeitures, (4) minimum statutory tax withholding requirements, (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes, (6) the practical expedient for estimating the expected term, and (7) intrinsic value. The new standard is effective on January 1, 2017. The Company is currently evaluating the impact of adopting this guidance.

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Acquisitions and Disposals

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Acquisitions and Disposals

Acquisitions and Disposals

The Company acquired the majority-ownership of three home health agencies and six hospice agencies during the three months ended March 31, 2016. The total aggregate purchase prices for the Company’s acquisitions were $10.8 million, of which $10.5 million was paid in cash. The purchase prices are determined based on the Company’s analysis of comparable acquisitions and the target market’s potential future cash flows.

The Company's home health services segment and hospice services segment recognized goodwill of $0.7 million and $5.1 million, respectively. Goodwill generated from the acquisitions was recognized based on the expected contributions of each acquisition to the overall corporate strategy. The Company expects its portion of goodwill to be fully tax deductible. The acquisitions were accounted for under the acquisition method of accounting, and, accordingly, the accompanying interim financial information includes the results of operations of the acquired entities from the date of acquisition.    

The following table summarizes the aggregate consideration paid for the acquisitions and the amounts of the assets acquired and liabilities assumed at the acquisition dates, as well as their fair value at the acquisition dates and the noncontrolling interest acquired (amounts in thousands):

Consideration
Cash	$	10,504
Fair value of total consideration transferred
Recognized amounts of identifiable assets acquired and liabilities assumed
Trade name	2,623
Certificates of needs/licenses	2,224
Other identifiable intangible assets	141
Other assets and (liabilities), net	69
Total identifiable assets	5,057
Noncontrolling interest	372
Goodwill, including noncontrolling interest of $308	$	5,819

Trade names, certificates of need and licenses are indefinite-lived assets and, therefore, not subject to amortization. Acquired trade names that are not being used actively are amortized over the estimated useful life on the straight line basis. Trade names are valued using the relief from royalty method, a form of the income approach. Certificates of needs are valued using the replacement cost approach based on registration fees and opportunity costs. Licenses are valued based on the estimated direct costs associated with recreating the asset, including opportunity costs based on an income approach. In the case of states with a moratorium in place, the licenses are valued using the multi period excess earnings method. The other identifiable assets include non-compete agreements that are amortized over the life of the agreements, ranging from one to three years. Noncontrolling interest is valued at fair value by applying a discount to the value of the acquired entity for lack of control.

The Company conducted a preliminary assessment of deferred income tax accounting and the calculation of the final net working capital adjustment and has recognized provisional amounts in its initial accounting for the acquisition of Halcyon Healthcare, LLC ("Halcyon") for all identified liabilities in accordance with the requirements of ASC Topic 805. During the three months ended March 31, 2016, a net working capital adjustment of $0.3 million was recorded in goodwill and the provisional amounts initially recognized for Halcyon. The Company is continuing its review of these matters during the measurement period.

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Goodwill and Intangibles

3 Months Ended

Mar. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

Goodwill and Intangibles

The changes in recorded goodwill by reporting unit for the three months ended March 31, 2016 were as follows (amounts in thousands):

	Home health reporting unit		Hospice reporting unit			Community - based reporting unit		Facility-based reporting unit		Total
Balance as of December 31, 2015	$	202,995	$	58,136		$	17,972	$	11,591	$	290,694
Goodwill from acquisitions	721		4,790			—		—		5,511
Goodwill related to noncontrolling interests	—		308			—		—		308
Goodwill related to prior period net working capital adjustments............................................	—		(273		)	—		—		(273		)
Balance as of March 31, 2016	$	203,716	$	62,961		$	17,972	$	11,591	$	296,240

Intangible assets consisted of the following as of March 31, 2016 and December 31, 2015 (amounts in thousands):

	March 31, 2016
	Remaining useful life	Gross carrying amount		Accumulated amortization			Net carrying amount
Indefinite-lived assets:
Trade names	Indefinite	$	63,242	$	—		$	63,242
Certificates of need/licenses	Indefinite	32,031		—			32,031
Total		$	95,273	$	—		$	95,273
Definite-lived assets:
Trade names	2 years — 5 years	$	9,127	$	(4,781	)	$	4,346
Non-compete agreements	1 month — 3 years	5,560		(4,316		)	1,244
Total		$	14,687	$	(9,097	)	$	5,590
Balance as of March 31, 2016		$	109,960	$	(9,097	)	$	100,863

	December 31, 2015
	Remaining useful life	Gross carrying amount		Accumulated amortization			Net carrying amount
Indefinite-lived assets:
Trade names	Indefinite	$	60,762	$	—		$	60,762
Certificates of need/licenses	Indefinite	29,807		—			$	29,807
Total		$	90,569	$	—		$	90,569
Definite-lived assets:
Trade names	2 months — 5 years	$	8,985	$	(4,385	)	$	4,600
Non-compete agreements	3 months — 2 years	5,347		(4,111		)	1,236
Total		$	14,332	$	(8,496	)	$	5,836
Balance as of December 31, 2015		$	104,901	$	(8,496	)	$	96,405

Intangible assets of $68.6 million, net of accumulated amortization, were related to the home health services segment, $23.8 million were related to the hospice services segment, $7.6 million were related to the community-based services segment, and $0.9 million were related to the facility-based services segment as of March 31, 2016. The Company recorded $0.6 million of amortization expense during the three months ended March 31, 2016 and 2015. This was recorded in general and administrative expenses.

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Debt

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Debt

Debt

Credit Facility

On June 18, 2014, the Company entered into a Credit Agreement (the “Credit Agreement”) with Capital One, National Association, which provides a senior, secured revolving line of credit commitment with a maximum principal borrowing limit of $225.0 million and a letter of credit sub-limit equal to $15.0 million. The Credit Agreement replaced the Third Amended and Restated Credit Agreement with Capital One, National Association, dated August 31, 2012. The expiration date of the Credit Agreement is June 18, 2019. Revolving loans under the Credit Agreement bear interest at either a (1) Base Rate, which is defined as a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate in effect on such day plus 0.5% (b) the Prime Rate in effect on such day and (c) the Eurodollar Rate for a one month interest period on such day plus 1.0%, plus a margin ranging from 0.75% to 1.5% per annum or (2) Eurodollar rate plus a margin ranging from 1.75% to 2.5% per annum. Swing line loans bear interest at the Base Rate. The Company is limited to 15 Eurodollar borrowings outstanding at the same time. The Company is required to pay a commitment fee for the unused commitments at rates ranging from 0.225% to 0.375% per annum depending upon the Company’s consolidated Leverage Ratio, as defined in the Credit Agreement. The Base Rate at March 31, 2016 was 4.50% and the Eurodollar rate was 2.43%.

As of March 31, 2016 and December 31, 2015, respectively, the Company had $96.0 million and $98.0 million drawn and letters of credit totaling $9.8 million outstanding under its credit facilities with Capital One, National Association.

As of March 31, 2016, the Company had $119.2 million available for borrowing under the Credit Agreement with Capital One, National Association.

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Income Taxes

3 Months Ended

Mar. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

As of March 31, 2016, an unrecognized tax benefit of $3.4 million was recorded in income tax payable, which, if recognized, would decrease the Company’s effective tax rate. All of the Company’s unrecognized tax benefit is due to the settlement with the United States of America, which was announced September 30, 2011. On July 30, 2014, the Internal Revenue Service (“IRS”) issued a notice of proposed adjustment asserting that a portion of the original tax deduction claimed by the Company associated with the settlement with the United States of America should be disallowed. The Company is currently appealing this proposed adjustment with IRS Appeals. The Company intends to vigorously defend its original position of the deductibility of the full settlement amount on its 2011 tax return.

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Stockholder's Equity

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Stockholder's Equity

Stockholder’s Equity

Equity Based Awards

The 2010 Long Term Incentive Plan (the “2010 Incentive Plan”) is administered by the Compensation Committee of the Company’s Board of Directors. A total of 1,500,000 shares of the Company’s common stock were reserved and 309,937 shares are currently available for issuance pursuant to awards granted under the 2010 Incentive Plan. A variety of discretionary awards for employees, officers, directors, and consultants are authorized under the 2010 Incentive Plan, including incentive or non-qualified statutory stock options and nonvested stock. All awards must be evidenced by a written award certificate which will include the provisions specified by the Compensation Committee of the Board of Directors. The Compensation Committee determines the exercise price for non-statutory stock options. The exercise price for any option cannot be less than the fair market value of the Company’s common stock as of the date of grant.

Share Based Compensation

Nonvested Stock

During the three months ended March 31, 2016, the Company’s independent directors were granted 15,300 nonvested shares of common stock under the Second Amended and Restated 2005 Non-Employee Directors Compensation Plan. The shares were drawn from the 1,500,000 shares of common stock reserved for issuance under the 2010 Incentive Plan. The shares vest 100% on the one year anniversary date. During the three months ended March 31, 2016, employees were granted 165,800 nonvested shares of common stock pursuant to the 2010 Incentive Plan. The shares vest over a five year period, conditioned on continued employment. The fair value of nonvested shares of common stock is determined based on the closing trading price of the Company’s common stock on the grant date. The weighted average grant date fair value of nonvested shares of common stock granted during the three months ended March 31, 2016 was $37.43.

The following table represents the nonvested stock activity for the three months ended March 31, 2016:

	Number of shares		Weighted average grant date fair value
Nonvested shares outstanding as of December 31, 2015	527,091		$	26.64
Granted	181,100		$	37.43
Vested	(140,620	)	$	25.86
Forfeited	(12,566	)	$	24.36
Nonvested shares outstanding as of March 31, 2016	555,005		$	30.41

During the three months ended March 31, 2016, an independent director of the Company received a share based award, which will be settled in cash at March 1, 2017. The amount of such cash payment will equal the fair market value of 1,700 shares on the settlement date.

As of March 31, 2016, there was $13.7 million of total unrecognized compensation cost related to nonvested shares of common stock granted. That cost is expected to be recognized over the weighted average period of 3.47 years. The total fair value of shares of common stock vested during the three months ended March 31, 2016 was $3.6 million. The Company records compensation expense related to nonvested stock awards at the grant date for shares of common stock that are awarded fully vested, and over the vesting term on a straight line basis for shares of common stock that vest over time. The Company recorded $1.0 million of compensation expense related to nonvested stock grants in the three months ended March 31, 2016 and 2015.

Employee Stock Purchase Plan

In 2006, the Company adopted the Employee Stock Purchase Plan whereby eligible employees may purchase the Company’s common stock at 95% of the market price on the last day of the calendar quarter. There were 250,000 shares of common stock initially reserved for the plan. In 2013, the Company adopted the Amended and Restated Employee Stock Purchase Plan, which reserved an additional 250,000 shares of common stock to the plan.

The table below details the shares of common stock issued during 2016:

	Number of shares	Per share price
Shares available as of December 31, 2015	213,760
Shares issued during three months ended March 31, 2016	5,341	$	43.03
Shares available as of March 31, 2016	208,419

Stock Options

As of March 31, 2016, 5,500 options were issued and exercisable. During the three months ended March 31, 2016, no options were exercised or forfeited and no options were granted.

Treasury Stock

In conjunction with the vesting of the nonvested shares of common stock, recipients incur personal income tax obligations. The Company allows the recipients to turn in shares of common stock to satisfy minimum tax obligations. During the three months ended March 31, 2016, the Company redeemed 37,962 shares of common stock valued at $1.4 million, related to these tax obligations.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Contingencies

The Company is involved in various legal proceedings arising in the ordinary course of business. Although the results of litigation cannot be predicted with certainty, management believes the outcome of pending litigation will not have a material adverse effect, after considering the effect of the Company’s insurance coverage, on the Company’s interim financial information.

On October 18, 2013, a derivative complaint was filed by a purported Company shareholder against certain of the Company’s current and former executive officers, employees and members of its Board of Directors in the United States District Court for the Western District of Louisiana, styled Plummer v. Myers, et al., Case No. 6:13-cv-2899-JTT-CMH. The action was brought derivatively on behalf of the Company, which is also named as a nominal defendant. Plaintiff generally alleges that the individual defendants breached their fiduciary duties owed to the Company. The complaint also alleges claims for insider selling and unjust enrichment against the Company’s Chairman and Chief Executive Officer and the Company’s former President and Chief Operating Officer.

On December 30, 2013, a related derivative complaint was filed by a purported Company shareholder against certain of the Company’s current and former executive officers, employees and members of its Board of Directors in the United States District Court of the Western District of Louisiana, styled McCormack v. Myers, et al., Case No. 6:13-cv-3301-JTT-CMH. The action was brought derivatively on the Company’s behalf and the Company was also named as a nominal defendant. Plaintiff generally alleges that the individual defendants breached their fiduciary duties owed to the Company and wasted corporate assets. Plaintiff also alleges that the Company’s Chairman and Chief Executive Officer caused false and misleading statements to be issued in violation of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder and that the Company’s Directors are control persons under Section 20(a) of the Exchange Act. The complaint also alleges claims for insider selling, misappropriation of information and unjust enrichment against the Company’s Chairman and Chief Executive Officer and the Company’s former President and Chief Operating Officer.

On March 25, 2014, the McCormack derivative action was consolidated with the Plummer derivative action described above and stayed. On October 7, 2015, the parties entered into a Stipulation of Settlement. On October 19, 2015, Plaintiffs filed an Unopposed Motion for Preliminary Approval of Proposed Derivative Settlement. On October 26, 2015, the District Court entered an Order Preliminarily Approving Settlement in the amount of $0.6 million. On January 11, 2016, the District Court entered its Order and Final Judgment approving the settlement and dismissing the consolidated action with prejudice. The Company's insurance carrier has funded the entire settlement amount, which was immediately releasable to Plaintiffs' counsel on January 11, 2016. The time for appeal has passed and no appeals were filed. This matter is now concluded. At December 31, 2015, the Company's balance sheet reflected the entire settlement in current assets as a receivable due from insurance carrier and correspondingly reflected the entire settlement in current liabilities as a legal settlement payable.

Joint Venture Buy/Sell Provisions

Most of the Company’s joint ventures include a buy/sell option that grants to the Company and its joint venture partners the right to require the other joint venture party to either purchase all of the exercising member’s membership interests or sell to the exercising member all of the non-exercising member’s membership interest, at the non-exercising member’s option, within 30 days of the receipt of notice of the exercise of the buy/sell option. In some instances, the purchase price is based on a multiple of the historical or future earnings before income taxes and depreciation and amortization of the equity joint venture at the time the buy/sell option is exercised. In other instances, the buy/sell purchase price will be negotiated by the partners and subject to a fair market valuation process. The Company has not received notice from any joint venture partners of their intent to exercise the terms of the buy/sell agreement nor has the Company notified any joint venture partners of its intent to exercise the terms of the buy/sell agreement.

Compliance

The laws and regulations governing the Company’s operations, along with the terms of participation in various government programs, regulate how the Company does business, the services offered and its interactions with patients and the public. These laws and regulations, and their interpretations, are subject to frequent change. Changes in existing laws or regulations, or their interpretations, or the enactment of new laws or regulations could materially and adversely affect the Company’s operations and financial condition.

The Company is subject to various routine and non-routine governmental reviews, audits and investigations. In recent years, federal and state civil and criminal enforcement agencies have heightened and coordinated their oversight efforts related to the health care industry, including referral practices, cost reporting, billing practices, joint ventures and other financial relationships among health care providers. Violation of the laws governing the Company’s operations, or changes in the interpretation of those laws, could result in the imposition of fines, civil or criminal penalties and/or termination of the Company’s rights to participate in federal and state-sponsored programs and suspension or revocation of the Company’s licenses. The Company believes that it is in material compliance with all applicable laws and regulations.

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Noncontrolling interest

3 Months Ended

Mar. 31, 2016

Noncontrolling Interest [Abstract]

Noncontrolling interest

Noncontrolling interest

Noncontrolling Interest-Redeemable

A majority of the Company’s equity joint venture agreements include a provision that requires the Company to purchase the noncontrolling partner’s interest upon the occurrence of certain triggering events, such as death or bankruptcy of the partner or the partner’s exclusion from the Medicare or Medicaid programs. These triggering events and the related repurchase provisions are specific to each individual equity joint venture; if the repurchase provision is triggered in any one equity joint venture, the remaining equity joint ventures would not be impacted. Upon the occurrence of a triggering event, the Company would be required to purchase the noncontrolling partner’s interest at either the fair value or the book value at the time of purchase, as stated in the applicable joint venture agreement. The Company has never been required to purchase the noncontrolling interest of any of its equity joint venture partners, and the Company believes the likelihood of a triggering event occurring is remote. According to authoritative guidance, redeemable noncontrolling interests must be reported outside of permanent equity on the consolidated balance sheet in instances where there is a repurchase provision with a triggering event that is outside the control of the Company.

The following table summarizes the activity of noncontrolling interest-redeemable for the three months ended March 31, 2016 (amounts in thousands):

Balance as of December 31, 2015	$	12,408
Net income attributable to noncontrolling interest-redeemable	1,871
Noncontrolling interest-redeemable distributions	(1,816		)
Balance as of March 31, 2016	$	12,463

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Allowance for Uncollectible Accounts

3 Months Ended

Mar. 31, 2015

Valuation and Qualifying Accounts [Abstract]

Allowance for Uncollectible Accounts

Allowance for Uncollectible Accounts

The following table summarizes the activity in the allowance for uncollectible accounts for the three months ended March 31, 2016 (amounts in thousands):

Balance as of December 31, 2015	$	26,712
Additions	4,601
Deductions	(2,696		)
Balance as of March 31, 2016	$	28,617

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying amounts of the Company’s cash, receivables, accounts payable and accrued liabilities approximate their fair values because of their short maturity. The estimated fair value of intangible assets acquired was calculated using level 3 inputs based on the present value of anticipated future benefits. For the three months ended March 31, 2016, the carrying value of the Company’s long-term debt approximates fair value as the interest rates approximate current rates.

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Segment Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company’s reportable segments consist of home health services, hospice services, community-based services, and facility-based services. The accounting policies of the segments are the same as those described in the summary of significant accounting policies, as described in Note 2 of the Notes to Condensed Consolidated Financial Statements.

The following tables summarize the Company’s segment information for the three months ended March 31, 2016 and 2015 (amounts in thousands):

	Three Months Ended March 31, 2016
	Home health services			Hospice services			Community-based services			Facility-based services			Total
Net service revenue	$	161,387		$	30,824		10,443			$	19,898		$	222,552
Cost of service revenue	96,712			19,627			7,727			11,535			135,601
Provision for bad debts	3,455			775			82			289			4,601
General and administrative expenses	49,558			8,990			2,079			5,613			66,240
Operating income	11,662			1,432			555			2,461			16,110
Interest expense	(678		)	(91		)	(41		)	(75		)	(885		)
Income before income taxes and noncontrolling interest	10,984			1,341			514			2,386			15,225
Income tax expense	3,850			420			228			844			5,342
Net income	7,134			921			286			1,542			9,883
Less net income attributable to noncontrolling interests	1,594			317			(43		)	329			2,197
Net income attributable to LHC Group, Inc.’s common stockholders	$	5,540		$	604		$	329		$	1,213		$	7,686
Total assets	$	400,924		$	111,308		$	33,133		$	37,488		$	582,853

	Three Months Ended March 31, 2015
	Home health services			Hospice services			Community-based services			Facility-based services			Total
Net service revenue	$	146,592		$	16,851		$	9,773		$	19,863		$	193,079
Cost of service revenue	85,546			10,099			6,900			11,881			114,426
Provision for bad debts	4,476			347			180			256			5,259
General and administrative expenses	46,454			4,888			2,217			5,739			59,298
Operating income	10,116			1,517			476			1,987			14,096
Interest expense	(430		)	(60		)	(6		)	(49		)	(545		)
Income before income taxes and noncontrolling interest	9,686			1,457			470			1,938			13,551
Income tax expense	3,657			620			45			407			4,729
Net income	6,029			837			425			1,531			8,822
Less net income attributable to noncontrolling interests	1,521			246			(20		)	270			2,017
Net income attributable to LHC Group, Inc.’s common stockholders	$	4,508		$	591		$	445		$	1,261		$	6,805
Total assets	$	385,653		$	34,019		$	32,971		$	38,321		$	490,964

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Percentage Equity Ownership, License Leasing Arrangements

100.00%

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenue and expenses during the reporting period. Actual results could differ from those estimates.

Critical Accounting Policies

Critical Accounting Policies

The Company’s most critical accounting policies relate to the principles of consolidation, revenue recognition and accounts receivable and allowances for uncollectible accounts.

Principles of Consolidation

Principles of Consolidation

The interim financial information includes all subsidiaries and entities controlled by the Company. Control is defined by the Company as ownership of a majority of the voting interest of an entity. The interim financial information includes entities in which the Company receives a majority of the entities’ expected residual returns and absorbs a majority of the entities’ expected losses. Third party equity interests in the consolidated joint ventures are reflected as noncontrolling interests in the Company’s interim financial information.

The following table summarizes the percentage of net service revenue earned by type of ownership or relationship the Company had with the operating entity:

	Three Months Ended    March 31,
Ownership type	2016		2015
Wholly-owned subsidiaries	56.7	%	54.6	%
Equity joint ventures	41.6		43.2
License leasing arrangements	0.9		1.3
Management services	0.8		0.9
	100.0	%	100.0	%

All significant intercompany accounts and transactions have been eliminated in the Company’s accompanying interim financial information. Business combinations accounted for under the acquisition method have been included in the interim financial information from the respective dates of acquisition.

The following describes the Company’s consolidation policy with respect to its various ventures excluding wholly-owned subsidiaries:

Equity Joint Ventures

The members of the Company’s equity joint ventures participate in profits and losses in proportion to their equity interests. The Company consolidates these entities as the Company has voting control over the entities.

License Leasing Arrangements

The Company, through wholly-owned subsidiaries, leases home health licenses necessary to operate certain of its home nursing and hospice agencies. The Company owns 100% of the equity of these subsidiaries and consolidates them based on such ownership.

Management Services

The Company has various management services agreements under which the Company manages certain operations of agencies. The Company does not consolidate these agencies because the Company does not have an ownership interest in, and does not have an obligation to absorb losses of, the entities that own the agencies or the right to receive the benefits from those entities.

Revenue Recognition

Revenue Recognition

The Company reports net service revenue at the estimated net realizable amount due from Medicare, Medicaid and others for services rendered. The Company assesses the patient's ability to pay for their healthcare services at the time of patient admission based on the Company's verification of the patient's insurance coverage under the Medicare, Medicaid, and other commercial or managed care insurance program. All such payors contribute to the net service revenue of the Company’s home health services, hospice services, community-based services, and facility-based services.

The following table sets forth the percentage of net service revenue earned by category of payor for the three months ended March 31, 2016 and 2015:

	Three Months Ended    March 31,
Payor:	2016		2015
Medicare	74.4	%	74.7	%
Medicaid	1.7		1.4
Other	23.9		23.9
	100.0	%	100.0	%

The following table sets forth the percentage of net service revenue contributed from each reporting segment for the three months ended March 31, 2016 and 2015:

	Three Months Ended    March 31,
Reporting segment:	2016		2015
Home health services	72.5	%	75.9	%
Hospice services	13.9		8.7
Community-based services	4.7		5.1
Facility-based services	8.9		10.3
	100.0	%	100.0	%

Medicare

Home Health

The Company’s home nursing Medicare patients are classified into one of 153 home health resource groups prior to receiving services. Based on the patient’s home health resource group, the Company is entitled to receive a standard prospective Medicare payment for delivering care over a 60-day period referred to as an episode. The Company recognizes revenue based on the number of days elapsed during an episode of care within the reporting period.

Final payments from Medicare may reflect one of four retroactive adjustments to ensure the adequacy and effectiveness of the total reimbursement: (a) an outlier payment if the patient’s care was unusually costly; (b) a low utilization adjustment if the number of visits was fewer than five; (c) a partial payment if the patient transferred to another provider before completing the episode; or (d) a payment adjustment based upon the level of therapy services required. In calculating net service revenue, management estimates the impact of these payment adjustments based on historical experience and records this estimate as the services are rendered using the expected level of services that will be provided.

Hospice Services

The Company is paid by Medicare under a per diem payment system. The Company receives one of four predetermined daily or hourly rates based upon the level of care the Company furnished. The Company records net service revenue from hospice services based on the daily or hourly rate and recognizes revenue as hospice services are provided.

Hospice payments are subject to an inpatient cap and an overall Medicare payment cap. The inpatient cap relates to individual programs receiving more than 20% of its total Medicare reimbursement from inpatient care services and the overall Medicare payment cap relates to individual providers receiving reimbursements in excess of a “cap amount,” calculated by multiplying the number of beneficiaries during the period by a statutory amount that is indexed for inflation. The determination for each cap is made annually based on the 12-month period ending on October 31 of each year. The Company monitors its limits on a provider-by-provider basis and records an estimate of its liability for reimbursements received in excess of the cap amount. Beginning with the cap year October 1, 2014, CMS implemented a new process requiring hospice providers to self-report their cap liabilities and remit applicable payment by March 31 of the following year.

Facility-Based Services

The Company is reimbursed by Medicare for services provided under the LTACH prospective payment system. Each patient is assigned a long-term care diagnosis-related group. The Company is paid a predetermined fixed amount intended to reflect the average cost of treating a Medicare patient classified in that particular long-term care diagnosis-related group. For selected patients, the amount may be further adjusted based on length of stay and facility-specific costs, as well as in instances where a patient is discharged and subsequently re-admitted, among other factors. The Company calculates the adjustment based on a historical average of these types of adjustments for claims paid. Similar to other Medicare prospective payment systems, the rate is also adjusted for geographic wage differences. Revenue is recognized for the Company’s LTACHs as services are provided.

Medicaid, managed care and other payors

The Company’s Medicaid reimbursement is based on a predetermined fee schedule applied to each service provided. Therefore, revenue is recognized for Medicaid services as services are provided based on this fee schedule. The Company’s managed care and other payors reimburse the Company based upon a predetermined fee schedule or an episodic basis, depending on the terms of the applicable contract. Accordingly, the Company recognizes revenue from managed care and other payors in the same manner as the Company recognizes revenue from Medicare or Medicaid.

Accounts Receivable and Allowances for Uncollectible Accounts

Accounts Receivable and Allowances for Uncollectible Accounts

The Company reports accounts receivable net of estimated allowances for uncollectible accounts and adjustments. Accounts receivable are uncollateralized and consist of amounts due from Medicare, other third-party payors and patients. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value. The credit risk for other concentrations of receivables is limited due to the significance of Medicare as the primary payor. The Company believes the credit risk associated with its Medicare accounts, which have historically exceeded 55% of its patient accounts receivable, is limited due to (i) the historical collection rate from Medicare and (ii) the fact that Medicare is a U.S. government payor. The Company does not believe that there are any other concentrations of receivables from any particular payor that would subject it to any significant credit risk in the collection of accounts receivable.

The provision for bad debts is based upon the Company’s assessment of historical and expected net collections, business and economic conditions and trends in government reimbursement. Uncollectible accounts are written off when the Company has determined the account will not be collected.

A portion of the estimated Medicare prospective payment system reimbursement from each submitted home nursing episode is received in the form of a request for anticipated payment (“RAP”). The Company submits a RAP for 60% of the estimated reimbursement for the initial episode at the start of care. The full amount of the episode is billed after the episode has been completed. The RAP received for that particular episode is deducted from the final payment. If a final bill is not submitted within the greater of 120 days from the start of the episode, or 60 days from the date the RAP was paid, any RAP received for that episode will be recouped by Medicare from any other Medicare claims in process for that particular provider. The RAP and final claim must then be resubmitted. For subsequent episodes of care contiguous with the first episode for a particular patient, the Company submits a RAP for 50% instead of 60% of the estimated reimbursement.

The Company’s services to the Medicare population are paid at prospectively set amounts that can be determined at the time services are rendered. The Company’s Medicaid reimbursement is based on a predetermined fee schedule applied to each individual service it provides. The Company’s managed care contracts and contracts with other payors provide for payments based upon a predetermined fee schedule or an episodic basis, depending on the terms of the applicable contract. The Company is able to calculate its actual amount due at the patient level and adjust the gross charges down to the actual amount at the time of billing. This negates the need to record an estimated contractual allowance when reporting net service revenue for each reporting period.

Earnings Per Share

Earnings Per Share

Basic per share information is computed by dividing the relevant amounts from the condensed consolidated statements of income by the weighted-average number of shares outstanding during the period, under the treasury stock method. Diluted per share information is also computed using the treasury stock method, by dividing the relevant amounts from the condensed consolidated statements of income by the weighted-average number of shares outstanding plus potentially dilutive shares.

The following table sets forth shares used in the computation of basic and diluted per share information:

	Three Months Ended    March 31,
	2016	2015
Weighted average number of shares outstanding for basic per share calculation	17,485,766	17,322,791
Effect of dilutive potential shares:
Options	2,023	5,487
Nonvested stock	145,760	161,205
Adjusted weighted average shares for diluted per share calculation	17,633,549	17,489,483
Anti-dilutive shares	181,101	191,065

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In April 2015, the FASB issued ASU No. 2015-3, Simplifying the Presentation of Debt Issuance Costs, ("ASU 2015-3") which requires an entity to present debt issuance costs related to a recognized debt liability as a direct deduction from that liability. The Company adopted this standard during the three months ended March 31, 2016. In August 2015, the FASB issued ASU No. 2015-15, Interest - Imputation of Interest, which stated ASU No. 2015-3 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements; therefore, ASU No. 2015-3 will not have an effect on the Company's consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

On May 28, 2014, the FASB issued ASU No. 2014-9, Revenue from Contracts with Customers, ("ASU 2014-9") which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-9 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on January 1, 2018. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-9 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

In February 2016, the FASB issued ASU No. 2016-2, Leases, ("ASU 2016-2") which requires lessees to recognize qualifying leases on the statement of financial position. Qualifying leases will be classified as right-of-use assets and lease liabilities. The new standard is effective on January 1, 2019. Early adoption is permitted. ASU 2016-2 mandates a modified retrospective transition method for all entities. The Company is evaluating the effect that ASU 2016-2 will have on its consolidated financial statements and related disclosures.

In March 2016, as part of its Simplification Initiative, the FASB issued ASU No. 2016-9, Compensation - Stock Compensation (ASU 2016-09), which finalizes Proposed ASU No. 2015-270 of the same name, and seeks to reduce complexity in accounting standards. The areas for simplification in ASU 2016-09, involve several aspects of the accounting for share-based payment transaction, including (1) accounting for income taxes, (2) classification of excess tax benefits on the statement of cash flow, (3) forfeitures, (4) minimum statutory tax withholding requirements, (5) classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes, (6) the practical expedient for estimating the expected term, and (7) intrinsic value. The new standard is effective on January 1, 2017. The Company is currently evaluating the impact of adopting this guidance.

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Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2016

Accounting Policies [Abstract]

Percentage of Net Service Revenue Earned by Type of Ownership or Relationship with Operating Entity

The following table summarizes the percentage of net service revenue earned by type of ownership or relationship the Company had with the operating entity:

	Three Months Ended    March 31,
Ownership type	2016		2015
Wholly-owned subsidiaries	56.7	%	54.6	%
Equity joint ventures	41.6		43.2
License leasing arrangements	0.9		1.3
Management services	0.8		0.9
	100.0	%	100.0	%

Percentage of Net Service Revenue Earned by Category of Payor

The following table sets forth the percentage of net service revenue earned by category of payor for the three months ended March 31, 2016 and 2015:

	Three Months Ended    March 31,
Payor:	2016		2015
Medicare	74.4	%	74.7	%
Medicaid	1.7		1.4
Other	23.9		23.9
	100.0	%	100.0	%

Percentage of Net Service Revenue Contributed from Each Reporting Segment

The following table sets forth the percentage of net service revenue contributed from each reporting segment for the three months ended March 31, 2016 and 2015:

	Three Months Ended    March 31,
Reporting segment:	2016		2015
Home health services	72.5	%	75.9	%
Hospice services	13.9		8.7
Community-based services	4.7		5.1
Facility-based services	8.9		10.3
	100.0	%	100.0	%

Shares Used in Computation of Basic and Diluted Per Share Information

The following table sets forth shares used in the computation of basic and diluted per share information:

	Three Months Ended    March 31,
	2016	2015
Weighted average number of shares outstanding for basic per share calculation	17,485,766	17,322,791
Effect of dilutive potential shares:
Options	2,023	5,487
Nonvested stock	145,760	161,205
Adjusted weighted average shares for diluted per share calculation	17,633,549	17,489,483
Anti-dilutive shares	181,101	191,065

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Acquisitions and Disposals (Tables)

3 Months Ended

Mar. 31, 2016

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the aggregate consideration paid for the acquisitions and the amounts of the assets acquired and liabilities assumed at the acquisition dates, as well as their fair value at the acquisition dates and the noncontrolling interest acquired (amounts in thousands):

Consideration
Cash	$	10,504
Fair value of total consideration transferred
Recognized amounts of identifiable assets acquired and liabilities assumed
Trade name	2,623
Certificates of needs/licenses	2,224
Other identifiable intangible assets	141
Other assets and (liabilities), net	69
Total identifiable assets	5,057
Noncontrolling interest	372
Goodwill, including noncontrolling interest of $308	$	5,819

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Goodwill and Intangibles (Tables)

3 Months Ended

Mar. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in Recorded Goodwill by Reporting Unit

The changes in recorded goodwill by reporting unit for the three months ended March 31, 2016 were as follows (amounts in thousands):

	Home health reporting unit		Hospice reporting unit			Community - based reporting unit		Facility-based reporting unit		Total
Balance as of December 31, 2015	$	202,995	$	58,136		$	17,972	$	11,591	$	290,694
Goodwill from acquisitions	721		4,790			—		—		5,511
Goodwill related to noncontrolling interests	—		308			—		—		308
Goodwill related to prior period net working capital adjustments............................................	—		(273		)	—		—		(273		)
Balance as of March 31, 2016	$	203,716	$	62,961		$	17,972	$	11,591	$	296,240

Summary of Changes in Intangible Assets

Intangible assets consisted of the following as of March 31, 2016 and December 31, 2015 (amounts in thousands):

	March 31, 2016
	Remaining useful life	Gross carrying amount		Accumulated amortization			Net carrying amount
Indefinite-lived assets:
Trade names	Indefinite	$	63,242	$	—		$	63,242
Certificates of need/licenses	Indefinite	32,031		—			32,031
Total		$	95,273	$	—		$	95,273
Definite-lived assets:
Trade names	2 years — 5 years	$	9,127	$	(4,781	)	$	4,346
Non-compete agreements	1 month — 3 years	5,560		(4,316		)	1,244
Total		$	14,687	$	(9,097	)	$	5,590
Balance as of March 31, 2016		$	109,960	$	(9,097	)	$	100,863

	December 31, 2015
	Remaining useful life	Gross carrying amount		Accumulated amortization			Net carrying amount
Indefinite-lived assets:
Trade names	Indefinite	$	60,762	$	—		$	60,762
Certificates of need/licenses	Indefinite	29,807		—			$	29,807
Total		$	90,569	$	—		$	90,569
Definite-lived assets:
Trade names	2 months — 5 years	$	8,985	$	(4,385	)	$	4,600
Non-compete agreements	3 months — 2 years	5,347		(4,111		)	1,236
Total		$	14,332	$	(8,496	)	$	5,836
Balance as of December 31, 2015		$	104,901	$	(8,496	)	$	96,405

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Stockholder's Equity (Tables)

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Nonvested Stock Activity

The following table represents the nonvested stock activity for the three months ended March 31, 2016:

	Number of shares		Weighted average grant date fair value
Nonvested shares outstanding as of December 31, 2015	527,091		$	26.64
Granted	181,100		$	37.43
Vested	(140,620	)	$	25.86
Forfeited	(12,566	)	$	24.36
Nonvested shares outstanding as of March 31, 2016	555,005		$	30.41

Shares of Common Stock Issued During 2016 Under Employee Stock Purchase Plan

The table below details the shares of common stock issued during 2016:

	Number of shares	Per share price
Shares available as of December 31, 2015	213,760
Shares issued during three months ended March 31, 2016	5,341	$	43.03
Shares available as of March 31, 2016	208,419

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Noncontrolling interest (Tables)

3 Months Ended

Mar. 31, 2016

Noncontrolling Interest [Abstract]

Summary of Activity of Noncontrolling Interest-Redeemable

The following table summarizes the activity of noncontrolling interest-redeemable for the three months ended March 31, 2016 (amounts in thousands):

Balance as of December 31, 2015	$	12,408
Net income attributable to noncontrolling interest-redeemable	1,871
Noncontrolling interest-redeemable distributions	(1,816		)
Balance as of March 31, 2016	$	12,463

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Allowance for Uncollectible Accounts (Tables)

3 Months Ended

Mar. 31, 2016

Valuation and Qualifying Accounts [Abstract]

Allowance for Uncollectible Accounts

The following table summarizes the activity in the allowance for uncollectible accounts for the three months ended March 31, 2016 (amounts in thousands):

Balance as of December 31, 2015	$	26,712
Additions	4,601
Deductions	(2,696		)
Balance as of March 31, 2016	$	28,617

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment Information

The following tables summarize the Company’s segment information for the three months ended March 31, 2016 and 2015 (amounts in thousands):

	Three Months Ended March 31, 2016
	Home health services			Hospice services			Community-based services			Facility-based services			Total
Net service revenue	$	161,387		$	30,824		10,443			$	19,898		$	222,552
Cost of service revenue	96,712			19,627			7,727			11,535			135,601
Provision for bad debts	3,455			775			82			289			4,601
General and administrative expenses	49,558			8,990			2,079			5,613			66,240
Operating income	11,662			1,432			555			2,461			16,110
Interest expense	(678		)	(91		)	(41		)	(75		)	(885		)
Income before income taxes and noncontrolling interest	10,984			1,341			514			2,386			15,225
Income tax expense	3,850			420			228			844			5,342
Net income	7,134			921			286			1,542			9,883
Less net income attributable to noncontrolling interests	1,594			317			(43		)	329			2,197
Net income attributable to LHC Group, Inc.’s common stockholders	$	5,540		$	604		$	329		$	1,213		$	7,686
Total assets	$	400,924		$	111,308		$	33,133		$	37,488		$	582,853

	Three Months Ended March 31, 2015
	Home health services			Hospice services			Community-based services			Facility-based services			Total
Net service revenue	$	146,592		$	16,851		$	9,773		$	19,863		$	193,079
Cost of service revenue	85,546			10,099			6,900			11,881			114,426
Provision for bad debts	4,476			347			180			256			5,259
General and administrative expenses	46,454			4,888			2,217			5,739			59,298
Operating income	10,116			1,517			476			1,987			14,096
Interest expense	(430		)	(60		)	(6		)	(49		)	(545		)
Income before income taxes and noncontrolling interest	9,686			1,457			470			1,938			13,551
Income tax expense	3,657			620			45			407			4,729
Net income	6,029			837			425			1,531			8,822
Less net income attributable to noncontrolling interests	1,521			246			(20		)	270			2,017
Net income attributable to LHC Group, Inc.’s common stockholders	$	4,508		$	591		$	445		$	1,261		$	6,805
Total assets	$	385,653		$	34,019		$	32,971		$	38,321		$	490,964

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Organization - Additional Information (Detail)	Mar. 31, 2016 ServiceProvider State
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of service providers operated | ServiceProvider	367
Number of states in which Company operates | State	25

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Significant Accounting Policies - Percentage of Net Service Revenue Earned by Type of Ownership or Relationship with Operating Entity (Detail)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Health Care Organization, Revenue [Abstract]
Percentage of net service revenue	100.00%	100.00%
Wholly-owned subsidiaries
Health Care Organization, Revenue [Abstract]
Percentage of net service revenue	56.70%	54.60%
Equity joint ventures
Health Care Organization, Revenue [Abstract]
Percentage of net service revenue	41.60%	43.20%
License leasing arrangements
Health Care Organization, Revenue [Abstract]
Percentage of net service revenue	0.90%	1.30%
Management services
Health Care Organization, Revenue [Abstract]
Percentage of net service revenue	0.80%	0.90%

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Significant Accounting Policies - Percentage of Net Service Revenue Earned by Category of Payor (Detail)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Significant Accounting Policies [Line Items]
Percentage of net service revenue	100.00%	100.00%
Medicare revenue
Significant Accounting Policies [Line Items]
Percentage of net service revenue	74.40%	74.70%
Medicaid revenue
Significant Accounting Policies [Line Items]
Percentage of net service revenue	1.70%	1.40%
Other revenue
Significant Accounting Policies [Line Items]
Percentage of net service revenue	23.90%	23.90%

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Significant Accounting Policies - Percentage of Net Service Revenue Contributed from Each Reporting Segment (Detail) - Sales Revenue, Segment	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Health Care Organization, Revenue [Abstract]
Percentage of net service revenue	100.00%	100.00%
Home health services
Health Care Organization, Revenue [Abstract]
Percentage of net service revenue	72.50%	75.90%
Hospice Services
Health Care Organization, Revenue [Abstract]
Percentage of net service revenue	13.90%	8.70%
Community-based services
Health Care Organization, Revenue [Abstract]
Percentage of net service revenue	4.70%	5.10%
Facility-based services
Health Care Organization, Revenue [Abstract]
Percentage of net service revenue	8.90%	10.30%

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Significant Accounting Policies - Shares Used in Computation of Basic and Diluted Per Share Information (Detail) - shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Weighted average shares outstanding:
Weighted average number of shares outstanding for basic per share calculation	17,485,766	17,322,791
Effect of dilutive potential shares:
Options	2,023	5,487
Nonvested stock	145,760	161,205
Adjusted weighted average shares for diluted per share calculation	17,633,549	17,489,483
Anti-dilutive shares	181,101	191,065

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Significant Accounting Policies - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2016 Group time PeriodicRate
Summary Of Significant Accounting Policies [Line Items]
Percentage Equity Ownership, License Leasing Arrangements	100.00%
Number of Medicare home health resource groups | Group	153
Number of days from date RAP paid to submit final Medicare bill	60 days
Low utilization adjustment visits | time	5
Selected hospice, periodic rate used to calculate revenue	1
Number of hospice, periodic rates used to calculate revenue	4
Minimum percentage of Medicare reimbursement from inpatient care services that subjects individual programs to inpatient cap	20.00%
Determination period for hospice Medicare inpatient reimbursement cap	12 months
Medicare credit risk for accounts receivable	55.00%
Reimbursement for initial episode of care	60.00%
Number of days from start of episode to submit final Medicare bill	120 days
Reimbursement for subsequent episodes of care	50.00%

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Acquisitions and Disposals - Additional Information (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) Agency
Business Acquisition [Line Items]
Business Combination, Consideration Transferred	$ 10,800
Cash paid for acquisitions, primarily goodwill and intangible assets	10,504
Other	$ 273
Home health services
Business Acquisition [Line Items]
Number of entities acquired | Agency	3
Home health reporting unit [Member]
Business Acquisition [Line Items]
Goodwill, Acquired During Period	$ 700
Hospice reporting unit
Business Acquisition [Line Items]
Number of entities acquired | Agency	6
Goodwill, Acquired During Period	$ 5,100
Other	$ 273
Minimum
Business Acquisition [Line Items]
Non-compete Agreement Amortization Period, Years	one
Maximum
Business Acquisition [Line Items]
Non-compete Agreement Amortization Period, Years	three

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Acquisitions and Disposals - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Line Items]
Payments to Acquire Businesses, Gross	$ 10,504
Trade Name Acquired	2,623
Certificate of Need/Licenses Acquired	2,224
Finite-lived Intangible Assets Acquired	141
Other Assets and (Liabilities), Net; Acquired (Assumed)	69
Fair Value of Assets Acquired	5,057
Acquired noncontrolling interest	372
Goodwill, Acquired During Period, Including Noncontrolling Interest of $308	5,819
Goodwill related to noncontrolling interests	$ 308

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Goodwill and Intangibles - Schedule of Changes in Recorded Goodwill by Reporting Unit (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)
Goodwill [Roll Forward]
Balance at beginning of period	$ 290,694
Goodwill from acquisitions	5,511
Goodwill related to noncontrolling interests	308
Other	273
Balance at end of period	296,240
Home health reporting unit [Member]
Goodwill [Roll Forward]
Balance at beginning of period	202,995
Goodwill from acquisitions	721
Goodwill related to noncontrolling interests	0
Balance at end of period	203,716
Hospice reporting unit
Goodwill [Roll Forward]
Balance at beginning of period	58,136
Goodwill from acquisitions	4,790
Goodwill related to noncontrolling interests	308
Other	273
Balance at end of period	62,961
Community-based reporting unit
Goodwill [Roll Forward]
Balance at beginning of period	17,972
Goodwill from acquisitions	0
Goodwill related to noncontrolling interests	0
Balance at end of period	17,972
Facility-based reporting unit
Goodwill [Roll Forward]
Balance at beginning of period	11,591
Goodwill from acquisitions	0
Goodwill related to noncontrolling interests	0
Balance at end of period	$ 11,591

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Goodwill and Intangibles- Summary of Changes in Intangible Assets (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Finite And Infinite Lived Intangible Assets [Line Items]
Indefinite-lived assets, carrying amount	$ 95,273	$ 90,569
Definite-lived assets, gross carrying amount	14,687	14,332
Intangible assets, gross carrying amount	109,960	104,901
Definite-lived assets, accumulated amortization	(9,097)	(8,496)
Definite-lived assets, net carrying amount	5,590	5,836
Intangible assets, net carrying amount	100,863	96,405
Certificates of need/licenses
Finite And Infinite Lived Intangible Assets [Line Items]
Indefinite-lived assets, carrying amount	32,031	29,807
Trade names
Finite And Infinite Lived Intangible Assets [Line Items]
Indefinite-lived assets, carrying amount	63,242	60,762
Definite-lived assets, gross carrying amount	9,127	8,985
Definite-lived assets, accumulated amortization	(4,781)	(4,385)
Definite-lived assets, net carrying amount	$ 4,346	$ 4,600
Trade names | Minimum
Finite And Infinite Lived Intangible Assets [Line Items]
Estimated useful life	2 years	2 months
Trade names | Maximum
Finite And Infinite Lived Intangible Assets [Line Items]
Estimated useful life	5 years	5 years
Non-compete agreements
Finite And Infinite Lived Intangible Assets [Line Items]
Definite-lived assets, gross carrying amount	$ 5,560	$ 5,347
Definite-lived assets, accumulated amortization	(4,316)	(4,111)
Definite-lived assets, net carrying amount	$ 1,244	$ 1,236
Non-compete agreements | Minimum
Finite And Infinite Lived Intangible Assets [Line Items]
Estimated useful life	1 month	3 months
Non-compete agreements | Maximum
Finite And Infinite Lived Intangible Assets [Line Items]
Estimated useful life	3 years	2 years

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Goodwill and Intangibles - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, net carrying amount	$ 100,863	$ 96,405
Amortization of Intangible Assets	600
Home health services
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, net carrying amount	68,600
Hospice Services
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, net carrying amount	23,800
Community-based services
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, net carrying amount	7,600
Facility-based services
Indefinite-lived Intangible Assets [Line Items]
Intangible assets, net carrying amount	$ 900

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Debt - Additional Information (Detail) $ in Thousands		9 Months Ended
	Jun. 18, 2014 USD ($) Instruments	Sep. 30, 2014	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Maximum principal borrowing amount	$ 225,000
Letter of credit, sub-limit amount	$ 15,000
Credit facility scheduled to expire		Jun. 18, 2019
Line of credit facility, description		(a) the Federal Funds Rate in effect on such day plus 0.5% (b) the Prime Rate in effect on such day and (c) the Eurodollar Rate for a one month interest period on such day plus 1.0%, plus a margin ranging from 0.75% to 1.5% per annum or Eurodollar rate plus a margin ranging from 1.75% to 2.5% per annum. Swing line loans bear interest at the Base Rate.
Line of credit facility drawn			$ 96,000	$ 98,000
Letter of credit outstanding			9,800
Available credit under agreement			$ 119,200
Minimum
Debt Instrument [Line Items]
Commitment fee rates for unused commitments	0.225%
Maximum
Debt Instrument [Line Items]
Commitment fee rates for unused commitments	0.375%
Federal funds rate
Debt Instrument [Line Items]
Line of credit facility interest rate	0.50%
Eurodollar
Debt Instrument [Line Items]
Line of credit facility interest rate	1.00%	2.43%
Line of credit facility, borrowing outstanding | Instruments	15
Eurodollar | Minimum
Debt Instrument [Line Items]
Line of credit facility interest rate	1.75%
Eurodollar | Maximum
Debt Instrument [Line Items]
Line of credit facility interest rate	2.50%
Base rate
Debt Instrument [Line Items]
Line of credit facility interest rate		4.50%
Base rate | Minimum
Debt Instrument [Line Items]
Line of credit facility interest rate	0.75%
Base rate | Maximum
Debt Instrument [Line Items]
Line of credit facility interest rate	1.50%

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Income Taxes - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2016 USD ($)
Income Tax Disclosure [Abstract]
Tax payable as an unrecognized tax benefit	$ 3.4

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Shareholders' Equity - Nonvested Stock Activity (Detail)	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]
Nonvested shares outstanding, Number of Shares, Beginning Balance | shares	527,091
Granted, Number of Shares | shares	181,100
Vested, Number of Shares | shares	(140,620)
Forfeited, Number of Shares | shares	12,566
Nonvested shares outstanding, Number of Shares, Ending Balance | shares	555,005
Nonvested shares outstanding, Weighted average grant date fair value, Beginning Balance | $ / shares	$ 26.64
Granted, Weighted average grant date fair value | $ / shares	37.43
Vested, Weighted average grant date fair value | $ / shares	25.86
Forfeited, Weighted average grant date fair value | $ / shares	24.36
Nonvested shares outstanding, Weighted average grant date fair value, Ending Balance | $ / shares	$ 30.41

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Stockholder's Equity - Shares of Common Stock Issued During 2016 Under Employee Stock Purchase Plan (Detail)	3 Months Ended
	Mar. 31, 2016 $ / shares shares
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares available, Beginning balance	213,760
Shares issued during period (shares)	5,341
Shares available, Ending Balance	208,419
Shares issued during period (per share price) | $ / shares	$ 43.03

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Stockholder's Equity - Additional Information (Detail) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Document Fiscal Year Focus	2016
Stockholders' Equity Note [Abstract]
Common stock reserved and available for issuance	1,500,000
Common stock shares available for grant	309,937
Percentage of directors' stock grant vested on one year anniversary date	100.00%
Period of Vested Shares	5 years
Granted, Weighted average grant date fair value | $ / shares	$ 37.43
Share based award, settled in cash	1,700
Total unrecognized compensation cost related to nonvested shares of common stock granted | $	$ 13,700
Weighted average period of cost recognized	3 years 5 months 19 days
Total fair value of shares of common stock vested | $	$ 3,600
Compensation expense related to nonvested stock grants | $	$ 1,000
Price of shares issued under Employee Stock Purchase Plan as a percentage of FMV	95.00%
Number of shares reserved for the Employee Stock Purchase Plan	250,000
Additional shares authorized for issuance	250,000
Stock options issued and exercisable	5,500
Options exercised	0
Options granted	0
Shares redeemed to satisfy personal tax obligations	37,962
Treasury shares redeemed to pay income tax | $	$ 1,421
Director
Stockholders' Equity Note [Abstract]
Non vested stock grants to Independent director	15,300
Director Period of Vested Shares	1 year
Employee
Stockholders' Equity Note [Abstract]
Nonvested stock grants to employees	165,800

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Commitments and Contingencies - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2016 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Settlement amount	$ 0.6
Period of joint venture buy/sell option	30 days

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Noncontrolling interest - Summary of Activity of Noncontrolling Interest-Redeemable (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($)
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Noncontrolling interest-redeemable, Beginning balance	$ 12,408
Net income attributable to noncontrolling interest-redeemable	1,871
Noncontrolling interest-redeemable distributions	(1,816)
Noncontrolling interest-redeemable, Ending balance	$ 12,463

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Allowance for Uncollectible Accounts - Allowance for Uncollectible Accounts Activity and Ending Balances (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Allowance for Doubtful Accounts Receivable [Roll Forward]
Beginning balance	$ 26,712
Additions	4,601	$ 5,259
Deductions	(2,696)
Ending balance	$ 28,617

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Segment Information - Segment Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2015
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]
Net service revenue	$ 222,552	$ 193,079
Cost of service revenue	135,601	114,426
Provision for bad debts	4,601	5,259
General and administrative expenses	66,240	59,298
Operating income	16,110	14,096
Interest expense	(885)	(545)
Income before income taxes and noncontrolling interest	15,225	13,551
Income tax expense	5,342	4,729
Net income	9,883	8,822
Less net income attributable to noncontrolling interests	2,197	2,017
Net income attributable to LHC Group, Inc.’s common stockholders	7,686	6,805
Total assets	582,853	490,964	$ 566,054
Home health services
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]
Net service revenue	161,387	146,592
Cost of service revenue	96,712	85,546
Provision for bad debts	3,455	4,476
General and administrative expenses	49,558	46,454
Operating income	11,662	10,116
Interest expense	(678)	(430)
Income before income taxes and noncontrolling interest	10,984	9,686
Income tax expense	3,850	3,657
Net income	7,134	6,029
Less net income attributable to noncontrolling interests	1,594	1,521
Net income attributable to LHC Group, Inc.’s common stockholders	5,540	4,508
Total assets	400,924	385,653
Community-based services
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]
Net service revenue	10,443	9,773
Cost of service revenue	7,727	6,900
Provision for bad debts	82	180
General and administrative expenses	2,079	2,217
Operating income	555	476
Interest expense	(41)	(6)
Income before income taxes and noncontrolling interest	514	470
Income tax expense	228	45
Net income	286	425
Less net income attributable to noncontrolling interests	(43)	(20)
Net income attributable to LHC Group, Inc.’s common stockholders	329	445
Total assets	33,133	32,971
Hospice Services
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]
Net service revenue	30,824	16,851
Cost of service revenue	19,627	10,099
Provision for bad debts	775	347
General and administrative expenses	8,990	4,888
Operating income	1,432	1,517
Interest expense	(91)	(60)
Income before income taxes and noncontrolling interest	1,341	1,457
Income tax expense	420	620
Net income	921	837
Less net income attributable to noncontrolling interests	317	246
Net income attributable to LHC Group, Inc.’s common stockholders	604	591
Total assets	111,308	34,019
Facility-based services
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]
Net service revenue	19,898	19,863
Cost of service revenue	11,535	11,881
Provision for bad debts	289	256
General and administrative expenses	5,613	5,739
Operating income	2,461	1,987
Interest expense	(75)	(49)
Income before income taxes and noncontrolling interest	2,386	1,938
Income tax expense	844	407
Net income	1,542	1,531
Less net income attributable to noncontrolling interests	329	270
Net income attributable to LHC Group, Inc.’s common stockholders	1,213	1,261
Total assets	$ 37,488	$ 38,321