News Column

LifePoint Hospitals Reports First Quarter 2014 Results

April 25, 2014

First Quarter Revenue Exceeds $1 Billion, Up 8.2% Over Prior-Year Period

BRENTWOOD, Tenn.--(BUSINESS WIRE)-- LifePoint Hospitals, Inc. (NASDAQ: LPNT) today announced results for the first quarter ended March 31, 2014.

For the first quarter ended March 31, 2014, revenues from continuing operations were $1,007.2 million, up 8.2% from $931.1 million for the same period a year ago. Adjusted EBITDA for the first quarter ended March 31, 2014, increased 6.2% to $145.8 million compared with $137.4 million for the same period a year ago. Income from continuing operations attributable to LifePoint Hospitals, Inc. stockholders for the first quarter ended March 31, 2014, increased 14.9% to $37.1 million, or $0.78 per diluted share, compared with $32.3 million, or $0.69 per diluted share, for the same period a year ago. The Company’s results of operations for the first quarter ended March 31, 2014, included the reversal of a previously established federal tax valuation allowance, which resulted in an increase to net income of $6.0 million, or $0.13 per diluted share.

In commenting on the results, William F. Carpenter III, chairman and chief executive of LifePoint Hospitals, said, “We had a good start to 2014, with over $1 billion in revenues driven by our disciplined growth strategy. Medicaid expansion and insurance exchange enrollment are each yielding participation rates at the high end of our reform estimates, and we are well positioned to capitalize on these trends moving forward. We are making progress on our previously announced acquisitions and are excited about additional opportunities in our pipeline. Our team has done an outstanding job of skillfully managing costs in a challenging volume environment. Throughout our hospitals, the implementation of quality initiatives has enabled us to enhance our patient care while delivering solid results.”

A listen-only simulcast, as well as a 30-day replay, of LifePoint Hospitals’ first quarter 2014 conference call will be available on line at www.lifepointhospitals.com/news/press-releases today, Friday, April 25, 2014, beginning at 10:00 a.m. Eastern Time.

LifePoint Hospitals, Inc. is a leading hospital company focused on providing quality healthcare services close to home. Through its subsidiaries, LifePoint operates 61 hospital campuses in 20 states. With a mission of “Making Communities Healthier®,” LifePoint is the sole community hospital provider in the majority of the communities it serves. More information about the Company, which is headquartered in Brentwood, Tennessee, can be found on its website, www.LifePointHospitals.com. All references to “LifePoint,” “LifePoint Hospitals,” or the “Company” used in this release refer to LifePoint Hospitals, Inc. or its affiliates.

Important Legal Information. Certain statements contained in this release are based on current management expectations and are “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, and are intended to qualify for the safe harbor protections from liability provided by the Private Securities Litigation Reform Act of 1995.Numerous factors exist which may cause results to differ from these expectations.Many of the factors that will determine our future results are beyond our ability to control or predict with accuracy.Such forward-looking statements reflect the current expectations and beliefs of the management of LifePoint, are not guarantees of performance and are subject to a number of risks, uncertainties, assumptions and other factors that could cause actual results to differ from those described in the forward-looking statements.These forward-looking statements may also be subject to other risk factors and uncertainties, including without limitation: (i) the effects related to the enactment and implementation of healthcare reform, the possible enactment of additional federal or state healthcare reforms and possible changes in healthcare reform laws and other federal, state or local laws or regulations affecting the healthcare industry including the timing of the implementation of reform; (ii) the extent to which states support increases, decreases or changes in Medicaid programs, implement healthcare exchanges or alter the provision of healthcare to state residents through regulation or otherwise; (iii) delays in receiving payments for services provided, reductions in Medicare or Medicaid payments (including increased recoveries made by Recovery Audit Contractors (RAC) and similar governmental agents), compared to the timing of expanded coverage; (iv) reductions in reimbursements from commercial payors, whether due to a change in our revenue mix, service mix, reduction in commercial rates or otherwise; (v) our ability to acquire hospitals and other healthcare providerson favorable terms, the business risks and costs associated therewith and the uncertainty in operating and integrating such hospitals and other providers; (vi) our ongoing ability to demonstrate meaningful use of certified electronic health record technology and recognize income for the related Medicare or Medicaid incentive payments; (vii) the failure or closure of employers in our markets, especially those that are dependent on a small number of local employers; (viii) the growth of “bad debt” and “patient due” accounts, the number of individuals without insurance coverage (or who are underinsured) who seek care at our hospitals, and deterioration in the collectability of these accounts; (ix) changes in general economic conditions nationally and regionally in our markets; (x) whether our core strategies will result in anticipated operating results, including measureable quality and satisfaction improvements; (xi) whether our efforts to reduce the cost of providing healthcare while increasing the quality of care are successful; (xii) the ability to attract, recruit and retain qualified physicians, nurses, medical technicians and other healthcare professionals and the increasing costs associated with doing so, including the direct costs associated with employing physicians and other healthcare professionals; (xiii) the loss of certain physicians in markets where such a loss can have a disproportionate impact on our hospital in such market; (xiv) the application, interpretation and enforcement of increasingly stringent and complex laws and regulations governing our operations and healthcare generally (and changing interpretations of applicable laws and regulations), related enforcement activity and the potentially adverse impact of known and unknown government investigations, litigation and other claims that may be made against us; (xv) any interruption of or restriction in our access to licensed information (and information technology systems) or failure in our ability to integrate changes to LifePoint’s existing information systems or information systems of acquired hospitals; (xvi) the highly competitive nature of the health care business; (xvii) adverse events in states where a large portion of our revenues are concentrated; (xviii) the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities, and any changes in accounting practices; (xix) liabilities resulting from potential malpractice and related legal claims brought against our hospitals or the healthcare providers associated with, or employed by, such hospitals or affiliated entities; (xx) our increased dependence on third parties to provide purchasing, revenue cycle and payroll services and information technology and whether they are able to do so effectively; (xxi) the continued viability of our operations through joint venture entities, the largest of which is Duke LifePoint Healthcare, our partnership with a wholly controlled affiliate of Duke University Health Systems, Inc.; and (xxii) those other risks and uncertainties described from time to time in our filings with the Securities and Exchange Commission.Therefore, our future results may differ materially from those described in this release.LifePoint undertakes no obligation to update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

All references to “our,” “LifePoint,” “LifePoint Hospitals” and the “Company” as used throughout this release refer to LifePoint Hospitals, Inc. and its subsidiaries.

   

LIFEPOINT HOSPITALS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Dollars in millions, except per share amounts

 
Three Months Ended

March 31,

2014       2013  
Amount     % of RevenuesAmount       % of Revenues
Revenues before provision for doubtful accounts $ 1,182.8 $ 1,100.2
Provision for doubtful accounts   175.6     169.1  
Revenues 1,007.2 100.0 % 931.1 100.0 %
 
Salaries and benefits 474.8 47.1 433.2 46.5
Supplies 157.0 15.6 144.7 15.5
Other operating expenses 243.5 24.2 221.5 23.8
Other income (13.9 ) (1.4 ) (5.7 ) (0.6 )
Depreciation and amortization 61.1 6.1 55.8 6.0
Interest expense, net 33.9 3.4 23.9 2.6
Debt transaction costs         4.4   0.5  
  956.4   95.0     877.8   94.3  
 
Income from continuing operations before income taxes 50.8 5.0 53.3 5.7
Provision for income taxes   13.1   1.3     20.3   2.2  
Income from continuing operations 37.7 3.7 33.0 3.5
Income from discontinued operations, net of income taxes         0.1   0.1  
Net income 37.7 3.7 33.1 3.6
Less: Net income attributable to noncontrolling interests   (0.6 )     (0.7 ) (0.1 )
Net income attributable to LifePoint Hospitals, Inc. $ 37.1   3.7 % $ 32.4   3.5 %
 
Earnings per share attributable to LifePoint Hospitals, Inc. stockholders:
 
Basic $ 0.81   $ 0.71  
Diluted $ 0.78   $ 0.69  
 
Amounts attributable to LifePoint Hospitals, Inc. stockholders:
Income from continuing operations, net of income taxes $ 37.1 $ 32.3
Income from discontinued operations, net of income taxes       0.1  
Net income $ 37.1   $ 32.4  


   

LIFEPOINT HOSPITALS, INC.

UNAUDITED EARNINGS PER SHARE CALCULATIONS

In millions, except per share amounts

 
Three Months Ended

March 31,
2014     2013
Income from continuing operations $ 37.7$ 33.0
Less: Net income attributable to noncontrolling interests (0.6) (0.7)
Income from continuing operations attributable to LifePoint Hospitals, Inc. stockholders 37.1 32.3
Income from discontinued operations, net of income taxes 0.1
Net income attributable to LifePoint Hospitals, Inc.$ 37.1$ 32.4
 
Weighted average shares outstanding - basic 45.9 45.8
Effect of dilutive securities:
Stock options and other stock-based awards 1.5 1.4
3 ½% convertible senior subordinated notes due May 15, 2014 0.4
Weighted average shares outstanding - diluted 47.8 47.2
 
Earnings per share attributable to LifePoint Hospitals, Inc. stockholders:
Basic $ 0.81$ 0.71
Diluted $ 0.78$ 0.69


           

LIFEPOINT HOSPITALS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

In millions

 

 
March 31,

2014

Dec. 31,

2013

ASSETS
Current assets:
Cash and cash equivalents $ 532.3 $ 637.9

Accounts receivable, less allowances for doubtful accounts of $729.2 and $741.2 at March 31, 2014 and December 31, 2013, respectively

654.9 595.7
 
Inventories 105.0 102.0
Prepaid expenses 38.7 38.0
Deferred tax assets 166.6 147.7
Other current assets   69.2     72.9  
1,566.7 1,594.2
 
Property and equipment:
Land 127.9 112.3
Buildings and improvements 2,040.3 2,019.6
Equipment 1,501.4 1,469.9
Construction in progress   54.1     58.7  
3,723.7 3,660.5
Accumulated depreciation   (1,506.8 )   (1,463.3 )
2,216.9 2,197.2
 
Deferred loan costs, net 29.7 31.1
Intangible assets, net 73.1 72.6
Other 39.5 40.7
Goodwill   1,633.8     1,651.0  
Total assets $ 5,559.7   $ 5,586.8  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 144.3 $ 135.9
Accrued salaries 129.6 139.6
Income taxes payable 55.0 2.5
Other current liabilities 204.1 194.7
Current maturities of long-term debt   588.4     583.0  
1,121.4 1,055.7
 
Long-term debt 1,793.5 1,793.8
Deferred income tax liabilities 210.3 233.1
Long-term portion of reserves for self-insurance claims 140.7 139.8
Other long-term liabilities 57.2 55.4
Long-term income tax liability   16.8     16.6  
Total liabilities   3,339.9     3,294.4  
 
Redeemable noncontrolling interests 76.9 59.8
 
Equity:
LifePoint Hospitals, Inc. stockholders’ equity:
Preferred stock
Common stock 0.7 0.7
Capital in excess of par value 1,482.8 1,470.7
Accumulated other comprehensive income 3.4 3.4
Retained earnings 1,384.1 1,347.0
Common stock in treasury, at cost   (747.5 )   (611.7 )
Total LifePoint Hospitals, Inc. stockholders’ equity 2,123.5 2,210.1
Noncontrolling interests   19.4     22.5  
Total equity   2,142.9     2,232.6  
Total liabilities and equity $ 5,559.7   $ 5,586.8  


     

LIFEPOINT HOSPITALS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in millions

 
Three Months Ended

March 31,
  2014           2013  
Cash flows from operating activities:
Net income $ 37.7 $ 33.1
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations (0.1 )
Stock-based compensation 6.7 6.8
Depreciation and amortization 61.1 55.8
Amortization of physician minimum revenue guarantees 3.9 4.5
Amortization of debt discounts and deferred loan costs 7.3 7.1
Debt transaction costs 4.4
Deferred income tax benefit (41.6 ) (7.1 )
Reserve for self-insurance claims, net of payments 6.1 4.6

Increase (decrease) in cash from operating assets and liabilities, net of effects from acquisitions and divestitures:

 
Accounts receivable (50.5 ) (29.5 )
Inventories and other current assets 23.1 (6.1 )
Accounts payable and accrued expenses (0.3 ) (10.2 )
Income taxes payable/receivable 52.5 27.0
Other   2.6     1.5  
Net cash provided by operating activities - continuing operations 108.6 91.8
Net cash provided by operating activities - discontinued operations       0.4  
Net cash provided by operating activities   108.6     92.2  
 
Cash flows from investing activities:
Purchases of property and equipment (22.5 ) (38.5 )
Acquisitions, net of cash acquired (60.6 ) (1.3 )
Other   (0.5 )   0.2  
Net cash used in investing activities   (83.6 )   (39.6 )
 
Cash flows from financing activities:
Proceeds from borrowings 323.0
Payments of borrowings (313.6 )
Repurchases of common stock (135.8 ) (7.1 )
Payment of debt financing costs (0.4 ) (0.9 )
Proceeds from exercise of stock options 7.2 23.6
Other   (1.6 )   (2.2 )
Net cash (used in) provided by financing activities   (130.6 )   22.8  
 
Change in cash and cash equivalents (105.6 ) 75.4
Cash and cash equivalents at beginning of period   637.9     85.0  
Cash and cash equivalents at end of period $ 532.3   $ 160.4  
 
Supplemental disclosure of cash flow information:
Interest payments $ 3.7   $ 7.2  
Capitalized interest $ 0.2   $ 0.4  
Income tax payments, net $ 2.3   $ 0.5  


     

LIFEPOINT HOSPITALS, INC.

UNAUDITED STATISTICS

 
Three Months Ended

March 31,

  2014         2013       %

Change

 
Continuing Operations: (1)
Number of hospitals 61 57 7.0 %
Admissions 52,066 52,249 (0.4 )
Equivalent admissions (2) 121,210 116,463 4.1
Revenues per equivalent admission $ 8,309 $ 7,995 3.9
Medicare case mix index 1.38 1.37 0.7
Average length of stay (days) 4.8 4.7 2.1
Inpatient surgeries 13,477 13,540 (0.5 )
Outpatient surgeries 45,834 44,036 4.1
Total surgeries 59,311 57,576 3.0
Emergency room visits 297,432 292,084 1.8
Outpatient factor (2) 2.33 2.23 4.5
 
Same-hospital: (3)
Number of hospitals 57 57 %
Admissions 49,457 52,249 (5.3 )
Equivalent admissions (2) 114,295 116,463 (1.9 )
Revenues per equivalent admission $ 8,125 $ 7,995 1.6
Medicare case mix index 1.38 1.37 0.7
Average length of stay (days) 4.6 4.7 (2.1 )
Inpatient surgeries 12,736 13,540 (5.9 )
Outpatient surgeries 42,897 44,036 (2.6 )
Total surgeries 55,633 57,576 (3.4 )
Emergency room visits 281,092 292,084 (3.8 )
Outpatient factor (2) 2.31 2.23 3.6
 

(1) Continuing operations information includes the results of our hospital support center, our same-hospital operations and our recent acquisitions completed in 2014 and 2013.

 

(2) Management and investors use equivalent admissions as a general measure of combined inpatient and outpatient volume. We compute equivalent admissions by multiplying admissions (inpatient volumes) by the outpatient factor (the sum of gross inpatient revenue and gross outpatient revenue and then dividing the resulting amount by gross inpatient revenue). The equivalent admissions computation “equates” outpatient revenue to the volume measure (admissions) used to measure inpatient volume resulting in a general measure of combined inpatient and outpatient volume.

 

(3) Same-hospital information includes the results of our hospital support center and the same 57 hospitals operated during the three months ended March 31, 2014 and 2013. Same-hospital information excludes the results of our recent acquisitions completed in 2014 and 2013 and our hospitals that have previously been disposed, with the exception of Scott Memorial Hospital, which we acquired effective January 1, 2013, through our joint venture with Norton Healthcare, Inc. and which is included in our same-hospital information.

 



LIFEPOINT HOSPITALS, INC.

UNAUDITED SUPPLEMENTAL INFORMATION

Dollars in millions, except Diluted EPS amounts

Adjusted EBITDA is defined by the Company as earnings before depreciation and amortization; interest expense, net; debt transaction costs; provision for income taxes; income from discontinued operations, net of income taxes; and net income attributable to noncontrolling interests. LifePoint’s management and Board of Directors use Adjusted EBITDA to evaluate the Company’s operating performance and as a measure of performance for incentive compensation purposes. LifePoint’s credit facilities use Adjusted EBITDA for certain financial covenants. The Company believes Adjusted EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. In addition, multiples of current or projected Adjusted EBITDA are used to estimate current or prospective enterprise value. Adjusted EBITDA should not be considered as a measure of financial performance under U.S. generally accepted accounting principles (“GAAP”), and the items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.

      Three Months Ended March 31,
2014         2013  
Amount       % of RevenuesAmount       % of Revenues
Revenues before provision for doubtful accounts $ 1,182.8 $ 1,100.2
Provision for doubtful accounts   175.6     169.1  
Revenues 1,007.2 100.0 % 931.1 100.0 %
 
Salaries and benefits 474.8 47.1 433.2 46.5
Supplies 157.0 15.6 144.7 15.5
Other operating expenses 243.5 24.2 221.5 23.8
Other income   (13.9 ) (1.4 )   (5.7 ) (0.6 )
  861.4   85.5     793.7   85.2  
Adjusted EBITDA $ 145.8   14.5 % $ 137.4   14.8 %
 


The following table reconciles Adjusted EBITDA as presented above to net income attributable to LifePoint Hospitals, Inc. as reflected in the unaudited condensed consolidated statements of operations:

     
Three Months Ended March 31,
  2014         2013  
Adjusted EBITDA $ 145.8 $ 137.4
Less: Depreciation and amortization 61.1 55.8
Interest expense, net 33.9 23.9
Debt transaction costs 4.4
Provision for income taxes 13.1 20.3
Income from discontinued operations, net of income taxes (0.1 )
Net income attributable to noncontrolling interests   0.6   0.7  
Net income attributable to LifePoint Hospitals, Inc. $ 37.1 $ 32.4  





LifePoint Hospitals, Inc.

Leif Murphy, 615-920-7664

Executive Vice President and

Chief Financial Officer


Source: LifePoint Hospitals, Inc.


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