LifePoint Hospitals Reports First Quarter 2008 Results

LifePoint Hospitals, Inc. (NASDAQ: LPNT) today announced results for the first quarter ended March 31, 2008. For the first quarter ended March 31, 2008, revenues from continuing operations were $699.9 million, up 5.8% from $661.2 million for the same period a year ago. Income from continuing operations for the quarter increased 2.4% to $39.7 million, or $0.72 per diluted share, compared with income from continuing operations for the first quarter of 2007 of $38.8 million, or $0.68 per diluted share. Net income for the quarter increased 40.1% to $41.8 million, or $0.76 per diluted share, compared with net income of $29.8 million, or $0.53 per diluted share, for the same period a year ago. In commenting on the results, William F. Carpenter III, president and chief executive officer of LifePoint Hospitals, said, "We are pleased with our first quarter results and the strong start to 2008. We are on target to achieve our guidance issued in February for full year 2008 and have raised our EPS guidance to reflect a favorable tax adjustment in the first quarter and the impact of our share repurchase program. We continued to benefit from improving performance at the hospital level, confirmation that our growth and operating strategies are gaining traction. Despite a challenging environment, we look forward to continuing growth and progress in 2008 and beyond as a result of these efforts.” A listen-only simulcast, as well as a 30-day replay, of LifePoint Hospitals’ first quarter 2008 conference call will be available on line at www.lifepointhospitals.com and www.earnings.com today, Thursday, May 1, 2008, beginning at 9:00 a.m. Eastern Time. LifePoint Hospitals, Inc. is a leading hospital company focused on providing healthcare services in non-urban communities in 17 states. Of the Company’s 48 hospitals, 44 are in communities where LifePoint Hospitals is the sole community hospital provider. LifePoint Hospitals’ non-urban operating strategy offers continued operational improvement by focusing on five guiding principles that outline the Company’s vision: delivering compassionate, high quality patient care; supporting physicians; creating an outstanding environment for employees; providing unmatched community value; and ensuring fiscal responsibility. Headquartered in Brentwood, Tennessee, LifePoint Hospitals is affiliated with approximately 21,000 employees. More information about LifePoint Hospitals can be found on its website, www.lifepointhospitals.com. 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 LifePoint’s future results are beyond LifePoint’s 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 risks and uncertainties, including, without limitation: (i) effective efforts by government and commercial third-party payors to reduce healthcare spending, including changes in the manner in which payments are made to hospitals or insured persons; (ii) an increase in "high deductible" health insurance plans, and increased co-pays and deductibles; (iii) continuing increases in "bad debt" or the cost of providing care to uninsured or under-insured persons who are not able to pay all or any part of such costs; (iv) the rising number of uninsured or under-insured individuals in the United States; (v) a reduction in funding for state Medicaid programs, the implementation of cost limits placed on hospitals by Federal legislation, and a reduction of Medicaid payments resulting from a successful challenge to one or more state Medicaid programs; (vi) amounts collected from uninsured accounts receivable and the adequacy of our reserves for bad debt; (vii) lower rates of hospital admissions and adjusted admissions; (viii) periodic changes or reductions in Medicare and Medicaid reimbursement payments including the implementation of MS-DRGs and proposed changes to the Medicare outpatient prospective payment system; (ix) the increasing relationship of clinical quality to reimbursement rates; (x) rising operating costs including the increasing cost of hospital supplies and medical technology; (xi) the availability, cost and terms of contractual labor and healthcare service providers including nurses and certain physicians such as anesthesiologists, radiologists and emergency room physicians; (xii) the ability to recruit and retain independent and employed physicians, other healthcare service providers and effective management personnel; (xiii) adverse changes in or requirements of state and federal laws, regulations, policies and procedures applicable to the Company; (xiv) increased scrutiny from accreditation agencies such as The Joint Commission; (xv) whether capital expenditures and other aspects of our business plan intended, at least in part, to allow our hospitals to provide a larger portion of the healthcare services sought by residents in our markets will be effective; (xvi) whether we are able to execute successfully strategies to significantly grow patient volumes and revenues; (xvii) changes in the Company's operating or expansion strategies and, if made, our ability to successfully execute such changed strategies; (xviii) the highly competitive nature of the healthcare business, including competition from outpatient facilities, physicians on the medical staffs of our hospitals, physician offices and facilities in larger towns and cities; (xix) the ability to make acquisitions or divestitures, and to enter into joint ventures, on favorable terms and conditions, and to successfully integrate and operate acquired facilities; (xx) the increasing pressure to allow physicians to own a portion of our hospitals, and our ability to effectively manage hospitals with physician partners; (xxi) the geographic concentration of LifePoint's operations and changes in general economic conditions in the Company's markets; (xxii) the ability to successfully operate and integrate newly-acquired and de novo facilities; (xxiii) the availability and terms of capital and liquidity to fund LifePoint's business strategies; (xxiv) the Company's substantial indebtedness and changes in interest rates, our credit ratings, the amount or terms of our indebtedness and our liquidity; (xxv) changes in, or interpretations of, generally accepted accounting principles or practices; (xxvi) volatility in the market value of LifePoint's common stock; (xxvii) the ability to manage successfully risks, including those that could result in losses to us because we are significantly self-insured; (xxviii) the availability, cost and terms of insurance coverage; (xxix) malpractice litigation and costs, and the risks associated with credentialing decisions and governmental investigations; (xxx) the potential adverse impact of government investigations and litigation involving the business practices of healthcare providers, including whistleblowers investigations; (xxxi) our reliance on information technology systems maintained by HCA -IT and the cost and other difficulties associated with converting facilities from one information system to another; (xxxii) the ability to successfully negotiate and implement our future agreements for information technology and systems; (xxxiii) the costs of complying with the Americans with Disabilities Act and related litigation; and (xxxiv) those other risks and uncertainties described from time to time in LifePoint's filings with the Securities and Exchange Commission. Therefore, LifePoint’s 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 "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, 2008 2007 Amount Ratio Amount Ratio Revenues $ 699.9 100.0 % $ 661.2 100.0 %   Salaries and benefits 275.4 39.4 256.8 38.8 Supplies 95.5 13.6 92.2 13.9 Other operating expenses 125.3 17.9 114.6 17.4 Provision for doubtful accounts 82.7 11.8 73.1 11.1 Depreciation and amortization 33.3 4.8 32.5 4.9 Interest expense, net   22.5   3.2     26.4   4.0     634.7   90.7     595.6   90.1     Income from continuing operations before minority interests and income taxes 65.2 9.3 65.6 9.9 Minority interests in earnings of consolidated entities   0.7   0.1     0.3   -   Income from continuing operations before income taxes 64.5 9.2 65.3 9.9 Provision for income taxes   24.8   3.5     26.5   4.0   Income from continuing operations   39.7   5.7     38.8   5.9     Discontinued operations, net of income taxes: Loss from discontinued operations (0.2 ) - (1.0 ) (0.2 ) Impairment adjustment (charge) 2.3 0.3 (7.9 ) (1.2 ) Net loss on sale of hospitals   -   -     (0.1 ) -   Income (loss) from discontinued operations   2.1   0.3     (9.0 ) (1.4 ) Net income $ 41.8   6.0 % $ 29.8   4.5 %   Basic earnings (loss) per share: Continuing operations $ 0.73 $ 0.69 Discontinued operations   0.04     (0.16 ) Net income $ 0.77   $ 0.53     Diluted earnings (loss) per share: Continuing operations $ 0.72 $ 0.68 Discontinued operations   0.04     (0.15 ) Net income $ 0.76   $ 0.53             LIFEPOINT HOSPITALS, INC. UNAUDITED EARNINGS (LOSS) PER SHARE CALCULATION Dollars and shares in millions, except per share amounts     Three Months Ended March 31, 2008 2007 Income from continuing operations $ 39.7 $ 38.8 Income (loss) from discontinued operations   2.1   (9.0 ) $ 41.8 $ 29.8     Basic weighted average number of shares 54.1 55.8 Other share equivalents   1.1   1.0   Diluted weighted average number of shares and equivalents   55.2   56.8     Basic earnings (loss) per share: Continuing operations $ 0.73 $ 0.69 Discontinued operations: Loss from discontinued operations - (0.02 ) Impairment adjustment (charge)   0.04   (0.14 ) Income (loss) from discontinued operations   0.04   (0.16 )     Net income $ 0.77 $ 0.53     Diluted earnings (loss) per share: Continuing operations $ 0.72 $ 0.68 Discontinued operations: Loss from discontinued operations - (0.01 ) Impairment adjustment (charge)   0.04   (0.14 ) Income (loss) from discontinued operations   0.04   (0.15 )     Net income $ 0.76 $ 0.53             LIFEPOINT HOSPITALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS In millions     March 31, 2008 Dec. 31, 2007 (1) (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 32.9 $ 53.1 Accounts receivable, less allowances for doubtful accounts of $389.0 and $376.3 at March 31, 2008 and December 31, 2007, respectively   318.3 304.5 Inventories 69.0 69.3 Prepaid expenses 14.4 12.4 Income taxes receivable 3.9 27.9 Deferred tax assets 124.5 113.6 Other current assets   21.0     20.6   584.0 601.4 Property and equipment: Land 72.7 72.8 Buildings and improvements 1,237.3 1,219.6 Equipment 693.1 674.1 Construction in progress   22.3     34.1   2,025.4 2,000.6 Accumulated depreciation   (612.7 )   (582.9 ) 1,412.7 1,417.7   Deferred loan costs, net 36.8 38.6 Intangible assets, net 57.3 52.4 Other 4.3 4.4 Goodwill   1,512.0     1,512.0   $ 3,607.1   $ 3,626.5     LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 96.3 $ 95.6 Accrued salaries 66.5 66.7 Accrued interest 13.9 10.6 Other current liabilities 76.1 88.1 Current maturities of long-term debt   0.5     0.5   253.3 261.5   Long-term debt 1,516.6 1,516.9 Deferred income taxes 103.3 113.2 Professional and general liability claims and other liabilities 140.0 120.0 Long-term income tax liability 70.9 55.5   Minority interests in equity of consolidated entities 15.6 15.2   Stockholders’ equity: Preferred stock - - Common stock 0.6 0.6 Capital in excess of par value 1,092.7 1,084.9 Unearned ESOP compensation (2.3 ) (3.1 ) Accumulated other comprehensive loss (31.6 ) (19.8 ) Retained earnings 564.6 522.8 Common stock in treasury, at cost   (116.6 )   (41.2 )   1,507.4     1,544.2   $ 3,607.1   $ 3,626.5   (1) Derived from audited financial statements.           LIFEPOINT HOSPITALS, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS In millions     Three Months Ended March 31, 2008 2007 Cash flows from operating activities: Net income $ 41.8 $ 29.8 Adjustments to reconcile net income to net cash provided by operating activities: (Income) loss from discontinued operations (2.1 ) 9.0 Stock-based compensation 6.4 3.6 ESOP expense (non-cash portion) 1.8 2.2 Depreciation and amortization 33.3 32.5 Amortization of deferred loan costs 1.8 1.3 Minority interests in earnings of consolidated entities 0.7 0.3 Deferred income taxes (benefit) 1.3 (18.4 ) Reserve for professional and general liability claims, net 1.1 (0.5 ) Increase (decrease) in cash from operating assets and liabilities, net of effects from divestitures: Accounts receivable (8.6 ) (7.5 ) Inventories and other current assets (3.2 ) (11.2 ) Accounts payable and accrued expenses 3.8 (33.2 ) Income taxes payable/receivable 22.6 42.3 Other   4.4     1.2   Net cash provided by operating activities – continuing operations 105.1 51.4 Net cash (used in) provided by operating activities – discontinued operations   (4.1 )   12.4   Net cash provided by operating activities   101.0     63.8     Cash flows from investing activities: Purchase of property and equipment (33.4 ) (31.7 ) Other   (0.3 )   (0.2 ) Net cash used in investing activities – continuing operations (33.7 ) (31.9 ) Net cash used in investing activities – discontinued operations   -     (0.2 ) Net cash used in investing activities   (33.7 )   (32.1 )   Cash flows from financing activities: Proceeds from borrowings - 40.0 Payments of borrowings - (52.4 ) Proceeds from exercise of stock options - 1.0 Proceeds from employee stock purchase plans 0.4 0.7 Repurchase of common stock (87.6 ) - Other   (0.3 )   (0.3 ) Net cash used in financing activities   (87.5 )   (11.0 )   Change in cash and cash equivalents (20.2 ) 20.7 Cash and cash equivalents at beginning of period   53.1     12.2   Cash and cash equivalents at end of period $ 32.9   $ 32.9     Supplemental disclosure of cash flow information: Interest payments $ 17.1   $ 28.8   Capitalized interest $ 0.1   $ 0.7   Income taxes paid, net $ 0.9   $ 2.4                 LIFEPOINT HOSPITALS, INC. UNAUDITED STATISTICS     Three Months Ended March 31, 2008 2007 % Change Continuing Operations: (1) Number of hospitals at end of period 48 48 - % Admissions 52,358 52,207 0.3 Equivalent admissions (2) 99,533 99,454 0.1 Licensed beds at end of period 5,637 5,666 (0.5 ) Weighted average licensed beds 5,637 5,666 (0.5 ) Revenues per equivalent admission $ 7,031 $ 6,649 5.7 Outpatient factor (2) 1.90 1.91 (0.5 ) Emergency room visits 234,066 222,275 5.3 Inpatient surgeries 14,264 14,971 (4.7 ) Outpatient surgeries 35,950 36,923 (2.6 ) Average daily census 2,528 2,496 1.3 Average length of stay 4.4 4.3 2.3 Medicare case mix index 1.27 1.25 1.6 (1) Continuing operations excludes the operations of hospitals that the Company classifies as discontinued operations. (2) Management and investors use equivalent admissions as a general measure of combined inpatient and outpatient volume. Equivalent admissions is computed by multiplying admissions (inpatient volumes) by the outpatient factor (the sum of gross inpatient revenue and gross outpatient revenue divided 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.                   LIFEPOINT HOSPITALS, INC. UNAUDITED SUPPLEMENTAL INFORMATION Dollars in millions   Adjusted EBITDA is defined as earnings before depreciation and amortization, interest expense, minority interests in earnings of consolidated entities, income taxes and discontinued operations. 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, 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 U.S. generally accepted accounting principles 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, 2008 2007 Amount Ratio Amount Ratio Revenues $ 699.9 100.0 % $ 661.2 100.0 %   Salaries and benefits 275.4 39.4 256.8 38.8 Supplies 95.5 13.6 92.2 13.9 Other operating expenses 125.3 17.9 114.6 17.4 Provision for doubtful accounts   82.7 11.8     73.1 11.1     578.9 82.7     536.7 81.2   Adjusted EBITDA $ 121.0 17.3 % $ 124.5 18.8 %           The following table reconciles adjusted EBITDA as presented above to net income as reflected in the unaudited condensed consolidated statements of operations:     Three Months EndedMarch 31, 2008 2007 Adjusted EBITDA $ 121.0 $ 124.5   Less: Depreciation and amortization 33.3 32.5 Interest expense, net 22.5 26.4 Minority interests in earnings of consolidated entities 0.7 0.3 Provision for income taxes 24.8 26.5 (Income) loss from discontinued operations   (2.1 )   9.0 Net income $ 41.8   $ 29.8