Segment Information

The Company's reporting segments include (1) home health services, (2) hospice services, (3) home and community-based services, (4) facility-based services and (5) healthcare innovations (“HCI”). Reportable segments have been identified based upon how management has organized the business by services provided to customers and how the chief operating decision maker manages the business and allocates resources, consistent with the criteria in ASC 280, Segment Reporting.

The home health segment provides skilled medical services in patients’ homes largely to enable recipients to reduce or avoid periods of hospitalization and/or nursing home care. During the three months ended March 31, 2019, 71.3% of the home health services segment revenues were generated from the Medicare program, while the balance is generated from Medicaid and private insurance programs.

The hospice segment services are largely provided in patients’ homes and generally require specialized hospice nursing skills. Hospice services segment revenues are generated on a per diem basis and are primarily from Medicare, which accounted for 92.4% of hospice services segment revenues during the three months ended March 31, 2019.

The home and community-based segment provides traditional home and community-based services (generally provided by paraprofessional staff such as home health aides), which are generally of a custodial rather than skilled nature. Home and community-based services segment revenues are generated on a shift or hourly basis and are primarily from Managed Care, Commercial, and Other payor sources, which accounted for 74.9% of home and community-based services segment revenues during the three months ended March 31, 2019.

The facility-based segment services includes services primarily provided through LTACHs. The facility-based services segment is reimbursed primarily by Medicare under the LTACH prospective payment system, which accounted for 57.4% of facility-based services segment revenue during the three months ended March 31, 2019.

The HCI segment combines reporting on the Company’s developmental activities outside its other business segments. The HCI segment includes (a) Imperium Health Management, LLC, an ACO enablement company, (b) Long Term Solutions, Inc., an in-home assessment company serving the long-term care insurance industry, and (c) certain assets operated by Advanced Care House Calls, which provides primary medical care for patients with chronic and acute illnesses who have difficulty traveling to a doctor’s office. These activities are intended to ultimately, whether directly or indirectly, to benefit the Company’s patients and payors through the enhanced provision of services in the Company’s other segments. The activities all share a common goal of improving patient experiences and quality outcomes, while lowering costs. They include, but are not limited to, items such as: technology, information, population health management, risk-sharing, care-coordination and transitions, clinical advancements, enhanced patient engagement and informed clinical decision and technology enabled in-home clinical assessments.

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, 2019 and 2018 (amounts in thousands):



	Three Months Ended March 31, 2019
	Home health services			Hospice services			Home and community-based services			Facility-based services			HCI			Total
Net service revenue	$	363,035		$	51,736		$	51,785		$	27,701		$	8,328		$	502,585
Cost of service revenue	226,123			33,176			39,855			17,732			4,106			320,992
General and administrative expenses	104,839			14,853			10,982			9,177			5,370			145,221
Other intangible impairment charge	6,318			1			—			—			—			6,319
Operating income (loss)	25,755			3,706			948			792			(1,148		)	30,053
Interest expense	(2,138		)	(343		)	(301		)	(180		)	(90		)	(3,052		)
Income (loss) before income taxes and noncontrolling interest	23,617			3,363			647			612			(1,238		)	27,001
Income tax expense (benefit)	3,208			446			151			5			(210		)	3,600
Net income (loss)	20,409			2,917			496			607			(1,028		)	23,401
Less net income (loss) attributable to noncontrolling interests	3,780			601			(310		)	481			(7		)	4,545
Net income (loss) attributable to LHC Group, Inc.’s common stockholders	$	16,629		$	2,316		$	806		$	126		$	(1,021	)	$	18,856
Total assets	$	1,421,000		$	220,347		$	226,991		$	79,257		$	66,262		$	2,013,857



	Three Months Ended March 31, 2018
	Home health services			Hospice services			Home and community-based services			Facility-based services			HCI		Total
Net service revenue	$	204,187		$	42,626		$	14,091		$	30,150		$	—	$	291,054
Cost of service revenue	130,161			28,018			10,790			19,649			—		188,618
General and administrative expenses	66,289			13,298			3,298			9,146			—		92,031
Operating income	7,737			1,310			3			1,355			—		10,405
Interest expense	(1,088		)	(218		)	(72		)	(72		)	—		(1,450		)
Income (loss) before income taxes and noncontrolling interest	6,649			1,092			(69		)	1,283			—		8,955
Income tax expense	722			111			(15		)	159			—		977
Net income (loss)	5,927			981			(54		)	1,124			—		7,978
Less net income attributable to noncontrolling interests	2,236			417			21			309			—		2,983
Net income (loss) attributable to LHC Group, Inc.’s common stockholders	$	3,691		$	564		$	(75	)	$	815		$	—	$	4,995
Total assets	$	530,197		$	157,338		$	47,819		$	69,969		$	—	$	805,323