SEC Comment Letter for LHC Group, Inc (CIK 0001303313) — Feb 25, 2005
LHC Group, Inc (CIK 0001303313)
Date: Feb. 25, 2005 · CIK: 0001303313 · Accession: 0000000000-05-009240
AI Filing Summary & Sentiment
File numbers found in text: 333-120792
Letter
Mail Stop 3-9 February 25, Keith G. Myers President and Chief Executive Officer LHC Group, LLC 420 West Pinhook, Rd. Suite A Lafayette, Louisiana 70503
Re: LHC Group, LLC. Registration Statement on Form S-1 Filed November 24, 2004 File Number 333-120792
Dear Mr. Myers:
We have reviewed your filing and have the following comments. Where indicated, we think you should revise your document in response to these comments. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provide us with supplemental information so we may better understand your disclosure. After reviewing this information, we may or may not raise additional comments.
Please understand that the purpose of our review process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or on any other aspect of our review. Feel free to call us at the telephone numbers listed at the end of this letter.
Risk Factors, p. 8
"If we fail to complete the evaluation of our internal control ...," p. 18
1) We note your response to comment 8. Unless you have reason to believe that you may not complete your evaluation on time, this risk factor is not appropriate. If you have reason to believe the evaluation will not be completed, then you should revise your risk factor discussion to indicate that you have reason to believe the evaluation will not be completed in a timely manner.
Non-GAAP Financial Measures, page 27
2) We note your response to comment 9. The company asserts that EBITDA is a liquidity measure, as such please directly reconcile it to the most directly comparable GAAP-based liquidity measure, without reconciling EBITDA first to a performance measure. It appears that the company feels that cash flow from operations is the most relevant liquidity measure, reconcile EBITDA directly to cash flow from operations without reconciling to net income.
3) In addition, the discussion provided by the company about the usefulness of this measure is very brief. Please provide a much more detailed discussion of how management uses this measure and what benefit is obtained by its inclusion in the document.
4) In the reconciliation on page 26 we note that the company removes two line items "Impairment loss" and "Non-operating income, including gain on sale of assets." The removal of these line items appears to have the affect of presenting an "adjusted" EBITDA instead of just EBITDA which would only remove depreciation/amortization, interest, and taxes. Please justify for us the appropriateness of removing these additional charges that appear to be recurring in nature.
Business, page 46 5) We note your response to comment 14. Please provide a more complete analysis supporting your determination. Your analysis should address revenues derived from each agreement, how many other providers are there that would be capable of providing the same services and level of service at a similar cost, and a description of the effects of any interruptions for each agreement. Your analysis should address your dependence on the joint ventures, cooperative endeavors, license leasing arrangements and management services agreements.
Critical Accounting Policies
Revenues, pages 46-47
6) Refer to your response to comment 12. We note that the company increased its disclosure here of how these estimates are calculated. Please revise this disclosure to also quantify the impact that adjustments to these estimates have had historically to allow an investor to better understand the materiality of these estimates.
Accounts Receivable and Allowances for Uncollectible Accounts, pages 47-48
7) Refer to your response to comment 13. We note that the company addresses some key elements in the way that its payment structure is organized in its response to us. Please revise the disclosure either here or in the Business section to reflect the more detailed information about the company`s billing system and operations provided in this response.
Notes to the Consolidated Financial Statements
General
8) The financial statements are now stale. Please update the audited financial statements to include through the year ended December 31, 2004.
2. Significant Accounting Policies
Accounts Receivable and Allowances for Uncollectible Accounts, page F-10
9) Refer to your response to comment 19. It appears that these amounts represent unearned revenue which seems to have different characteristics than amounts owed to a third party. These balances would become payable only in the instance that service was terminated. Please verify this understanding of the way these prepayments function. If this is true, then it appears that the appropriate balance sheet classification would be as unearned revenue.
11. Commitments and Contingencies
Contingencies, pages F-25 - F-26
10) Please refer to your responses to comments 22 and 23. It appears that your analysis does not follow the appropriate path through the literature given that this appears to be a financial instrument. Please discuss the applicability of SFAS 150, EITF 00-6, and ASR268 and other related literature to this agreement. It appears that the filing of the registration statement makes it appear that it is probable that this minority interest will become redeemable.
As appropriate, please amend your filing in response to these comments. You may wish to provide us with marked copies of the amendment to expedite our review. Please furnish a cover letter with your amendment that keys your responses to our comments and provides any requested supplemental information. Detailed cover letters greatly facilitate our review. Please file your cover letter on EDGAR under the form type label CORRESP. Please understand that we may have additional comments after reviewing your amendment and responses to our comments.
We direct your attention to Rules 460 and 461 regarding requesting acceleration of a registration statement. Please allow adequate time after the filing of any amendment for further review before submitting a request for acceleration. Please provide this request at least two business days in advance of the requested effective date.
You may contact Tabatha Akins at (202) 824-5547 or James Atkinson, at (202) 942-2826 if you have questions regarding comments on the financial statements and related matters. Please contact Zafar Hasan at (202) 942-7381or me at (202) 942-1840 with any other questions. Sincerely,
Jeffrey Riedler Assistant Director
cc: Steven Pottle Alston & Bird 1201 West Peachtree Street Atlanta, Georgia 30309-3424
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LHC Group, LLC. Page 2 of 5
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<TEXT>
Mail Stop 3-9 February 25,
2005
Keith G. Myers
President and Chief Executive Officer
LHC Group, LLC
420 West Pinhook, Rd.
Suite A
Lafayette, Louisiana 70503
Re: LHC Group, LLC.
Registration Statement on Form S-1
Filed November 24, 2004
File Number 333-120792
Dear Mr. Myers:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Risk Factors, p. 8
"If we fail to complete the evaluation of our internal control
...,"
p. 18
1) We note your response to comment 8. Unless you have reason to
believe that you may not complete your evaluation on time, this
risk
factor is not appropriate. If you have reason to believe the
evaluation will not be completed, then you should revise your risk
factor discussion to indicate that you have reason to believe the
evaluation will not be completed in a timely manner.
Non-GAAP Financial Measures, page 27
2) We note your response to comment 9. The company asserts that
EBITDA is a liquidity measure, as such please directly reconcile
it
to the most directly comparable GAAP-based liquidity measure,
without
reconciling EBITDA first to a performance measure. It appears
that
the company feels that cash flow from operations is the most
relevant
liquidity measure, reconcile EBITDA directly to cash flow from
operations without reconciling to net income.
3) In addition, the discussion provided by the company about the
usefulness of this measure is very brief. Please provide a much
more
detailed discussion of how management uses this measure and what
benefit is obtained by its inclusion in the document.
4) In the reconciliation on page 26 we note that the company
removes
two line items "Impairment loss" and "Non-operating income,
including
gain on sale of assets." The removal of these line items appears
to
have the affect of presenting an "adjusted" EBITDA instead of just
EBITDA which would only remove depreciation/amortization,
interest,
and taxes. Please justify for us the appropriateness of removing
these additional charges that appear to be recurring in nature.
Business, page 46
5) We note your response to comment 14. Please provide a more
complete analysis supporting your determination. Your analysis
should address revenues derived from each agreement, how many
other
providers are there that would be capable of providing the same
services and level of service at a similar cost, and a description
of
the effects of any interruptions for each agreement. Your
analysis
should address your dependence on the joint ventures, cooperative
endeavors, license leasing arrangements and management services
agreements.
Critical Accounting Policies
Revenues, pages 46-47
6) Refer to your response to comment 12. We note that the company
increased its disclosure here of how these estimates are
calculated.
Please revise this disclosure to also quantify the impact that
adjustments to these estimates have had historically to allow an
investor to better understand the materiality of these estimates.
Accounts Receivable and Allowances for Uncollectible Accounts,
pages
47-48
7) Refer to your response to comment 13. We note that the company
addresses some key elements in the way that its payment structure
is
organized in its response to us. Please revise the disclosure
either
here or in the Business section to reflect the more detailed
information about the company`s billing system and operations
provided in this response.
Notes to the Consolidated Financial Statements
General
8) The financial statements are now stale. Please update the
audited
financial statements to include through the year ended December
31,
2004.
2. Significant Accounting Policies
Accounts Receivable and Allowances for Uncollectible Accounts,
page
F-10
9) Refer to your response to comment 19. It appears that these
amounts represent unearned revenue which seems to have different
characteristics than amounts owed to a third party. These
balances
would become payable only in the instance that service was
terminated. Please verify this understanding of the way these
prepayments function. If this is true, then it appears that the
appropriate balance sheet classification would be as unearned
revenue.
11. Commitments and Contingencies
Contingencies, pages F-25 - F-26
10) Please refer to your responses to comments 22 and 23. It
appears
that your analysis does not follow the appropriate path through
the
literature given that this appears to be a financial instrument.
Please discuss the applicability of SFAS 150, EITF 00-6, and
ASR268
and other related literature to this agreement. It appears that
the
filing of the registration statement makes it appear that it is
probable that this minority interest will become redeemable.
As appropriate, please amend your filing in response to
these
comments. You may wish to provide us with marked copies of the
amendment to expedite our review. Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested supplemental information. Detailed cover letters
greatly facilitate our review. Please file your cover letter on
EDGAR under the form type label CORRESP. Please understand that we
may have additional comments after reviewing your amendment and
responses to our comments.
We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement. Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration. Please provide this
request at least two business days in advance of the requested
effective date.
You may contact Tabatha Akins at (202) 824-5547 or James
Atkinson, at (202) 942-2826 if you have questions regarding
comments
on the financial statements and related matters. Please contact
Zafar
Hasan at (202) 942-7381or me at (202) 942-1840 with any other
questions.
Sincerely,
Jeffrey Riedler
Assistant Director
cc: Steven Pottle
Alston & Bird
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
??
??
??
??
LHC Group, LLC.
Page 2 of 5
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