Market Overview

LifePoint Health Reports Second Quarter 2018 Results

Share:

Company Updates 2018 Guidance

LifePoint Health, Inc. (NASDAQ:LPNT) today announced results for the
second quarter and six months ended June 30, 2018.

Second Quarter 2018

The following highlights the Company's results of operations as
presented in accordance with U.S. generally accepted accounting
principles ("GAAP") for the second quarter ended June 30, 2018:

  • Same-hospital revenues totaled $1,571.0 million, an increase of 0.6%
    compared to the same period last year;
  • Net income totaled $54.8 million;
  • Diluted earnings per share attributable to LifePoint Health, Inc.
    stockholders was $1.33; and
  • Net cash provided by operating activities totaled $134.8 million, an
    increase of $24.2 million, or 21.9%, compared to the same period last
    year.

The Company's results of operations for the second quarters ended June
30, 2018 and 2017, included the following non-operational adjustments:

  • For the second quarter of 2018, the Company recognized a net gain of
    $3.2 million, or $0.06 earnings per diluted share, primarily related
    to the sale of an ancillary rehabilitation facility.
  • For the second quarter of 2017, the Company recognized a net gain of
    $4.5 million, or $0.07 earnings per diluted share, related to the
    transfer of certain of the Company's home health agencies and hospices
    to In-Home Healthcare Partnership ("IHHP"), a joint venture with LHC
    Group, Inc., which the Company does not consolidate.

Excluding the non-operational adjustments listed above, highlights of
the Company's results of operations, as adjusted on a non-GAAP basis,
for the second quarter ended June 30, 2018, were as follows:

  • Adjusted net income totaled $52.4 million;
  • Adjusted diluted earnings per share attributable to LifePoint Health,
    Inc. stockholders were $1.27; and
  • Adjusted EBITDA totaled $187.0 million.

Additional information regarding adjusted net income, adjusted diluted
earnings per share attributable to LifePoint Health, Inc. stockholders,
and adjusted EBITDA, including uses by management and others, and a
reconciliation to comparable GAAP measures of financial performance, is
set forth under the section titled "Unaudited Supplemental Information."

For the second quarter ended June 30, 2018, the Company's same-hospital
revenues increased $9.1 million, or 0.6%, to $1,571.0 million, compared
to $1,561.9 million for the same period last year. The increase in the
Company's same-hospital revenues consisted of a 0.5% increase in
same-hospital equivalent admissions and a 0.1% increase in same-hospital
revenues per equivalent admission for the second quarter ended June 30,
2018, compared to the same period last year. When adjusted to exclude
the impact of the transfer of the Company's home health and hospice
service lines to IHHP, the Company's same-hospital revenues increased
$13.3 million, or 0.8%, for the second quarter ended June 30, 2018,
compared to the same period last year.

When adjusted to exclude the aforementioned second quarter 2018 and 2017
non-operational adjustments, adjusted net income for the second quarter
ended June 30, 2018, was $52.4 million, compared to adjusted net income
of $43.2 million for the same period last year, and adjusted diluted
earnings per share attributable to LifePoint Health, Inc. stockholders
for the second quarter ended June 30, 2018, were $1.27, compared to
adjusted diluted earnings per share attributable to LifePoint Health,
Inc. stockholders of $0.96 for the same period last year.

Adjusted EBITDA for the second quarter ended June 30, 2018, was $187.0
million, or 11.9% of revenues, compared to $192.2 million, or 12.1% of
revenues, for the same period last year. This decrease was primarily the
result of the recognition of $4.3 million less in Medicare and Medicaid
electronic health record ("EHR") incentive income during the second
quarter of 2018 compared to the same period last year. The Company's EHR
incentive payments under this program substantially concluded in 2017.

Six Months Ended June 30, 2018

The following highlights the Company's results of operations as
presented in accordance with U.S. generally accepted accounting
principles ("GAAP") for the six months ended June 30, 2018:

  • Same-hospital revenues totaled $3,174.1 million, an increase of 0.5%
    compared to the same period last year;
  • Net income totaled $49.5 million;
  • Diluted earnings per share attributable to LifePoint Health, Inc.
    stockholders were $1.10; and
  • Net cash provided by operating activities totaled $235.4 million, an
    increase of $33.1 million, or 16.4%, compared to the same period last
    year.

The Company's results of operations for the six months ended June 30,
2018 and 2017, included the following non-operational adjustments:

  • For the six months ended June 30, 2018, the Company recognized a net
    charge of $69.5 million, or $1.38 loss per diluted share, primarily
    related to impairment losses recognized during the first quarter of
    2018 in connection with the Company's entry into definitive agreements
    to sell the assets of three hospital campuses located in Louisiana,
    partially offset by net gains related to the first quarter transfer of
    one of the Company's home health agencies to IHHP and the second
    quarter sale of an ancillary rehabilitation facility.
  • For the six months ended June 30, 2017, the Company recognized a net
    gain of $30.4 million, or $0.46 earnings per diluted share, related to
    the settlement of a contingent liability previously established in
    connection with a prior hospital acquisition, and the transfer of
    certain of the Company's home health agencies and hospices to IHHP.

Excluding the non-operational adjustments listed above, highlights of
the Company's results of operations, as adjusted on a non-GAAP basis,
for the six months ended June 30, 2018, were as follows:

  • Adjusted net income totaled $104.1 million;
  • Adjusted diluted earnings per share attributable to LifePoint Health,
    Inc. stockholders were $2.48; and
  • Adjusted EBITDA totaled $375.5 million.

For the six months ended June 30, 2018, the Company's same-hospital
revenues increased $16.0 million, or 0.5%, to $3,174.1 million, compared
to $3,158.1 million for the same period last year. The increase in the
Company's same-hospital revenues consisted of a 1.4% increase in
same-hospital revenues per equivalent admission, partially offset by a
0.9% decrease in same-hospital equivalent admissions for the six months
ended June 30, 2018, compared to the same period last year. When
adjusted to exclude the impact of the transfer of the Company's home
health and hospice service lines to IHHP, the Company's same-hospital
revenues increased $28.6 million, or 0.9%, for the six months ended June
30, 2018, compared to the same period last year.

When adjusted to exclude the aforementioned non-operational adjustments
recognized during the six months ended June 30, 2018 and 2017, adjusted
net income for the six months ended June 30, 2018, was $104.1 million,
compared to adjusted net income of $91.0 million for the same period
last year, and adjusted diluted earnings per share attributable to
LifePoint Health, Inc. stockholders for the six months ended June 30,
2018, were $2.48, compared to adjusted diluted earnings per share
attributable to LifePoint Health, Inc. stockholders of $2.03 for the
same period last year.

Adjusted EBITDA for the six months ended June 30, 2018, was $375.5
million, or 11.8% of revenues, compared to $387.8 million, or 12.0% of
revenues, for the same period last year. This decrease was primarily the
result of the recognition of $7.5 million less in Medicare and Medicaid
EHR incentive income during the six months ended June 30, 2018, compared
to the same period last year. The Company's EHR incentive payments under
this program substantially concluded in 2017.

Commenting on the results, William F. Carpenter III, Chairman and Chief
Executive Officer of LifePoint Health, said, "We are pleased with our
strong second quarter 2018 results. We delivered sequential improvement
in same hospital adjusted admissions and expanded margins as a result of
our continued focus on improving quality and efficiency throughout our
hospitals. We are excited about our recently announced merger with RCCH
Healthcare Partners and believe that together we will be able to
meaningfully extend our mission and ensure that non-urban communities
across the country have access to quality care, while generating new
opportunities for growth and partnerships that will help us navigate the
changing healthcare industry dynamics."

Proposed Merger

On July 22, 2018, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with RegionalCare Hospital Partners
Holdings, Inc. (D/B/A RCCH HealthCare Partners), a Delaware corporation
("RCCH"), and Legend Merger Sub, Inc., a Delaware corporation and wholly
owned subsidiary of RCCH ("Merger Sub"), pursuant to which Merger Sub
will merge with and into the Company (the "Merger"), with the Company
surviving the Merger as a subsidiary of RCCH on the terms and conditions
set forth in the Merger Agreement. RCCH is owned by certain funds
managed by affiliates of Apollo Global Management, LLC. At the effective
time of the Merger, each outstanding share of the Company's common stock
(other than common stock held directly by RCCH or Merger Sub, common
stock held by the Company as treasury stock, common stock held by any
subsidiary of either the Company or RCCH (other than Merger Sub) and
common stock owned by holders who have properly exercised appraisal
rights under Delaware law) will be converted into the right to receive
$65.00 in cash, without interest. The consummation of the proposed
Merger is subject to the satisfaction or waiver of specified closing
conditions, including (i) the affirmative vote in favor of the adoption
of the Merger Agreement by the holders of a majority of the outstanding
shares of the Company's common stock entitled to vote thereon, (ii)
receipt of certain regulatory approvals, including the expiration or
early termination of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii)
the absence of any statute, regulation, ruling or injunction or any
governmental entity or any other order prohibiting or enjoining
consummation of the Merger and (iv) other customary closing conditions.
Additional information about the proposed Merger is set forth in the
Company's Current Report on Form 8-K filed with the SEC on July 23, 2018
and the exhibits thereto, including the Merger Agreement.

2018 Guidance

The Company's revised guidance for 2018 is:

         
Revenues $6.25 - $6.32 billion
Same-hospital Revenue Growth 0.5% - 1.6%
Adjusted EBITDA $730 - $760 million
Adjusted Diluted EPS $4.50 - $4.93
Capital Expenditures $475 - $500 million
 

The Company's revised 2018 guidance contains a number of assumptions,
including:

  • The Company anticipates the sales of Mercy Regional Medical Center
    ("Mercy"), located in Ville Platte, Louisiana; Acadian Medical Center
    ("Acadian"), which is a campus of Mercy located in Eunice, Louisiana;
    and Minden Medical Center ("Minden"), located in Minden, Louisiana, to
    become effective on August 1, 2018.
  • Same-hospital revenue growth excludes the 2018 and 2017 results of the
    Company's hospitals that have previously been disposed, in addition to
    the 2018 and 2017 results of Mercy, Acadian and Minden.
  • 2018 guidance excludes the impact of net non-operating charges of
    $69.5 million, or $1.38 loss per diluted share, recognized in the
    first half of 2018, as well as, if applicable, the estimated future
    impact of items that are non-operational in nature, including items
    such as, but not limited to, gains or losses on early debt
    retirements, impairments of long-lived assets, impairments of
    goodwill, changes as a result of the adoption of new accounting
    standards and share repurchases.
  • 2018 guidance excludes the estimated impact of future acquisitions or
    disposals, other than Mercy, Acadian and Minden, if applicable.
  • 2018 guidance excludes the estimated impact of future expenses related
    to the Merger, including, but not limited to the following:
    • Transaction costs consisting of legal, accounting, transaction
      advisory, regulatory, filing and other related fees;
    • Integration costs consisting of consulting fees, employee-related
      expenses, and other costs incurred to create a combined operating
      entity following the Merger; and
    • Other additional expenses directly resulting from the Merger.
  • 2018 guidance is subject to certain risks, including those as set
    forth in the Company's "Forward-Looking Statements."

LifePoint Health (NASDAQ:LPNT) is a leading healthcare company
dedicated to Making Communities Healthier®. Through its subsidiaries, it
provides quality inpatient, outpatient and post-acute services close to
home. LifePoint owns and operates community hospitals, regional health
systems, physician practices, outpatient centers, and post-acute
facilities in 22 states. It is the sole community healthcare provider in
the majority of the non-urban communities it serves. More information
about the Company can be found at www.LifePointHealth.net.
All references to "LifePoint," "LifePoint Health" or the "Company" used
in this release refer to affiliates or subsidiaries of LifePoint Health,
Inc.

Additional Information and Where to Find It

This communication relates to the proposed merger transaction involving
LifePoint. In connection with the proposed merger, LifePoint plans to
file with the Securities and Exchange Commission (the "SEC") preliminary
and definitive proxy statements and other relevant documents. This
communication is not a substitute for the proxy statement or any other
document that LifePoint may file with the SEC or send to its
stockholders in connection with the proposed merger. BEFORE MAKING ANY
VOTING DECISION, STOCKHOLDERS OF LIFEPOINT ARE URGED TO READ ALL
RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT,
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security
holders will be able to obtain the proxy statement and other documents
filed by LifePoint with the SEC (when available) free of charge at the
SEC's website, www.sec.gov,
and LifePoint's website, www.LifePointHealth.net.

Participants in the Solicitation

LifePoint and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the holders of
LifePoint common stock in respect of the proposed transaction.
Information about the directors and executive officers of LifePoint is
set forth in LifePoint's Annual Report on Form 10-K for the year ended
December 31, 2017, filed with the SEC on February 23, 2018 and proxy
statement for its 2018 annual meeting of stockholders, filed with the
SEC on April 25, 2018. Additional information regarding potential
participants in the proxy solicitation and a description of their direct
and indirect interests, by security holdings or otherwise, will be
contained in the proxy statement and other relevant documents to be
filed by LifePoint with the SEC in respect of the proposed transaction.

Forward-Looking Statements. Certain statements contained in
this release, including LifePoint's revised guidance for the year ended
December 31, 2018, 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: the
possibility that the anticipated benefits from the proposed merger will
not be realized, or will not be realized within the expected time
periods; the occurrence of any event, change or other circumstances that
could give rise to termination of the proposed merger agreement; the
failure of our stockholders to adopt the merger agreement; operating
costs, loss and business disruption (including, without limitation,
difficulties in maintaining relationships with employees, business
partners or suppliers) may be greater than expected following the
announcement of the proposed merger; the retention of our key employees;
risks associated with the disruption of management's attention from
ongoing business operations due to the proposed merger; the inability to
obtain necessary regulatory approvals of the proposed merger or the
receipt of such approvals subject to conditions that are not
anticipated; the risk that a condition to closing the merger may not be
satisfied on a timely basis or at all; the risk that the proposed merger
fails to close for any other reason; the outcome of any legal
proceedings related to the proposed merger; the parties' ability to meet
expectations regarding the timing and completion of the proposed merger;
the impact of the proposed merger on our credit rating;
the
effects of actions to amend or impede the implementation of, or repeal
and replace, the Affordable Care Act, 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; the extent to which states support
increases, decreases or changes in Medicaid programs, or alter the
provision of healthcare to state residents through regulation or
otherwise; reductions in, or delays in receiving, Medicare or Medicaid
payments (including increased recoveries made by Recovery Audit
Contractors (RACs) and similar governmental agents); payer mix pressures
as a result of aging populations in non-urban communities; reductions in
reimbursements from commercial payers and risks associated with
consolidation among commercial insurance companies and shifts to
insurance plans with narrow networks, high deductibles or high
co-payments; 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.; our ability to successfully integrate acquired facilities
into our ongoing operations and to achieve the anticipated financial
results and synergies from such acquisitions, individually or in the
aggregate; the deterioration in the collectability of "bad debt" and
"patient due" accounts, and the number of individuals without insurance
coverage (or who are underinsured) who seek care at our facilities;
industry emphasis on value-based purchasing and bundled payment
arrangements; whether our efforts to reduce the cost of providing
healthcare while increasing the quality of care are successful; the
ability to attract, recruit or employ and retain qualified physicians,
nurses, medical technicians and other healthcare professionals and the
increasing costs associated with doing so, including the direct and
indirect costs associated with employing physicians and other healthcare
professionals; the loss of certain physicians in markets where such a
loss can have a disproportionate impact on our facilities in such
market; the application 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; risks due to cybersecurity
attack or security breach and our access to personal information of
patients and employees; our ability to successfully implement
standardized systems throughout the company; payer controls designed to
reduce inpatient services; our ability to generate sufficient cash flow
to fund all of our capital expenditure programs and commitments;
adverse
events in states where a large portion of our revenues are concentrated;
liabilities resulting from potential malpractice and related legal
claims brought against our facilities or the healthcare providers
associated with, or employed by, such facilities or affiliated entities;
our increased dependence on third parties to provide purchasing, revenue
cycle and payroll services and information technology and their ability
to do so effectively; our ability to acquire healthcare facilities on
favorable terms and the business risks, unknown or contingent
liabilities and other costs associated therewith; changes in
interpretations, assumptions, and expectations regarding the Tax Cuts
and Jobs Act, including additional guidance that may be issued by
federal and state taxing authorities; and 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.

   
LIFEPOINT HEALTH, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Dollars in millions, except per share amounts
 
Three Months Ended Six Months Ended
June 30, June 30,
2018   2017 2018   2017
  % of   % of   % of   % of
Amount Revenues Amount Revenues Amount Revenues Amount Revenues
Revenues $ 1,569.8 100.0 % $ 1,594.8 100.0 % $ 3,172.6 100.0 % $ 3,225.0 100.0 %
 
Salaries and benefits 740.2 47.2 762.0 47.8 1,502.7 47.4 1,558.9 48.3
Supplies 256.0 16.3 263.2 16.5 522.0 16.5 531.4 16.5
Other operating expenses, net 386.6 24.6 377.4 23.6 772.4 24.3 746.9 23.2
Depreciation and amortization 81.4 5.1 88.7 5.6 163.0 5.1 176.8 5.4
Interest expense, net 37.0 2.4 37.6 2.4 74.0 2.3 75.0 2.3
Other non-operating (gains) losses, net   (3.2 ) (0.2 )   (4.5 ) (0.3 )   69.5   2.2     (30.4 ) (0.9 )
  1,498.0   95.4     1,524.4   95.6     3,103.6   97.8     3,058.6   94.8  
 
Income before income taxes 71.8 4.6 70.4 4.4 69.0 2.2 166.4 5.2
Provision for income taxes   17.0   1.1     24.4   1.5     19.5   0.6     56.4   1.8  
Net income 54.8 3.5 46.0 2.9 49.5 1.6 110.0 3.4
Less: Net income attributable to noncontrolling interests and
redeemable noncontrolling interests
  (2.4 ) (0.2 )   (3.5 ) (0.2 )   (5.9 ) (0.2 )   (7.6 ) (0.2 )
Net income attributable to LifePoint Health, Inc. $ 52.4   3.3 % $ 42.5   2.7 % $ 43.6   1.4 % $ 102.4   3.2 %
 
Weighted average shares outstanding - basic 38.8 40.3 38.9 40.2
Effect of dilutive stock options and other stock-based awards   0.7     1.0     0.6     1.0  
Weighted average shares outstanding - diluted   39.5     41.3     39.5     41.2  
 
Earnings per share attributable to LifePoint Health, Inc.
stockholders:
Basic $ 1.35   $ 1.06   $ 1.12   $ 2.55  
Diluted $ 1.33   $ 1.03   $ 1.10   $ 2.49  

   
LIFEPOINT HEALTH, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
Dollars in millions
 
June 30, Dec. 31,
2018 2017
ASSETS
Current assets:
Cash and cash equivalents $ 143.8 $ 112.0
Accounts receivable 802.7 822.4
Inventories 152.9 153.1
Prepaid expenses 76.5 67.2
Other current assets   101.3     110.5  
1,277.2 1,265.2
Property and equipment:
Land 181.3 182.4
Buildings and improvements 2,557.5 2,564.7
Equipment 2,349.3 2,340.4
Construction in progress   341.6     353.8  
5,429.7 5,441.3
Accumulated depreciation   (2,426.0 )   (2,351.0 )
3,003.7 3,090.3
Intangible assets, net 78.2 76.3
Other long-term assets 123.2 116.8
Goodwill   1,733.8     1,737.8  
Total assets $ 6,216.1   $ 6,286.4  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 186.6 $ 210.3
Accrued salaries 203.9 216.3
Other current liabilities 277.4 296.0
Current maturities of long-term debt   22.6     22.3  
690.5 744.9
Long-term debt, net 2,905.8 2,877.4
Deferred income taxes 10.2 32.3
Long-term portion of reserves for self-insurance claims 141.0 140.9
Other long-term liabilities   85.9     80.1  
Total liabilities   3,833.4     3,875.6  
 
Redeemable noncontrolling interests 93.1 125.0
 
Equity:
LifePoint Health, Inc. stockholders' equity:
Preferred stock
Common stock 0.7 0.7
Capital in excess of par value 1,624.9 1,620.8
Accumulated other comprehensive loss (3.6 ) (3.6 )
Retained earnings 1,922.9 1,879.3
Common stock in treasury, at cost   (1,297.6 )   (1,254.7 )
Total LifePoint Health, Inc. stockholders' equity 2,247.3 2,242.5
Noncontrolling interests   42.3     43.3  
Total equity   2,289.6     2,285.8  
Total liabilities and equity $ 6,216.1   $ 6,286.4  
 

   
LIFEPOINT HEALTH, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions
 
Three Months Ended Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Cash flows from operating activities:
Net income $ 54.8 $ 46.0 $ 49.5 $ 110.0

Adjustments to reconcile net income to net cash provided by
operating activities:

Stock-based compensation 6.5 5.3 14.7 11.9
Depreciation and amortization 81.4 88.7 163.0 176.8
Other non-cash amortization 2.7 3.1 5.3 6.4
Other non-operating (gains) losses, net (3.2 ) (4.5 ) 69.5 (30.4 )
Deferred income taxes 3.4 0.1 (22.1 ) (1.0 )
Reserve for self-insurance claims, net of payments 0.5 (5.1 ) (1.6 ) (36.8 )

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

Accounts receivable 26.6 21.0 7.3 11.5
Inventories, prepaid expenses and other current assets 20.2 20.3 14.3 20.4
Accounts payable, accrued salaries and other current liabilities (50.7 ) (32.7 ) (82.0 ) (35.2 )
Income taxes payable/receivable (12.7 ) (30.5 ) 13.6 (22.2 )
Other   5.3     (1.1 )   3.9     (9.1 )
Net cash provided by operating activities   134.8     110.6     235.4     202.3  
 
Cash flows from investing activities:
Purchases of property and equipment (81.4 ) (89.2 ) (137.6 ) (157.7 )
Proceeds from home health partnership 2.1 1.5 14.9
Other   2.7     0.8     (4.0 )   (2.4 )
Net cash used in investing activities   (78.7 )   (86.3 )   (140.1 )   (145.2 )
 
Cash flows from financing activities:
Proceeds from borrowings 75.0 60.0 125.0 140.0
Payments of borrowings (64.4 ) (64.4 ) (93.8 ) (148.8 )
Repurchases of common stock (10.1 ) (20.5 ) (42.9 ) (26.4 )

Redemptions of noncontrolling interests and redeemable
noncontrolling interests, net of sales

(36.9 ) (0.2 ) (34.7 ) (0.2 )

Distributions to noncontrolling interests and redeemable
noncontrolling interests

(15.1 ) (3.0 ) (16.3 ) (4.8 )
Proceeds from exercise of stock options 0.4 5.9 1.7 15.3
Other   (1.3 )   3.0     (2.5 )   2.6  
Net cash used in financing activities   (52.4 )   (19.2 )   (63.5 )   (22.3 )
 
Change in cash and cash equivalents 3.7 5.1 31.8 34.8
Cash and cash equivalents at beginning of period   140.1     125.8     112.0     96.1  
Cash and cash equivalents at end of period $ 143.8   $ 130.9   $ 143.8   $ 130.9  
 
Supplemental disclosure of cash flow information:
Interest payments $ 65.5   $ 63.3   $ 72.2   $ 68.8  
Capitalized interest $ 3.7   $ 1.5   $ 6.9   $ 3.0  
Income tax payments, net $ 26.3   $ 54.8   $ 28.0   $ 79.6  
 

   
LIFEPOINT HEALTH, INC.
UNAUDITED STATISTICS
 
Three Months Ended Six Months Ended
June 30, June 30,
    %     %
2018 2017 Change 2018 2017 Change
Consolidated: (1)
Number of hospital campuses 71 72 (1.4 )% 71 72 (1.4 )%
Revenues (in millions) $ 1,569.8 $ 1,594.8 (1.6 ) $ 3,172.6 $ 3,225.0 (1.6 )
Admissions 63,714 65,956 (3.4 ) 130,150 136,016 (4.3 )
Equivalent admissions (2) 174,146 177,812 (2.1 ) 345,418 357,586 (3.4 )
Revenues per equivalent admission $ 9,014 $ 8,969 0.5 $ 9,185 $ 9,019 1.8
Medicare case mix index 1.53 1.50 2.0 1.54 1.50 2.7
Average length of stay (days) 4.8 4.9 (2.0 ) 4.9 5.0 (2.0 )
Inpatient surgeries 17,009 17,815 (4.5 ) 34,218 36,147 (5.3 )
Outpatient surgeries 69,100 69,482 (0.5 ) 135,737 138,407 (1.9 )
Total surgeries 86,109 87,297 (1.4 ) 169,955 174,554 (2.6 )
Emergency room visits 382,856 412,718 (7.2 ) 778,483 838,973 (7.2 )
Outpatient factor (3) 2.74 2.70 1.5 2.65 2.63 0.8
Net revenue days outstanding (days) 47.6 51.9 (8.3 ) 47.6 51.9 (8.3 )
 
Same-hospital: (4)

 

Number of hospital campuses 71 71

-

%

71 71 - %
Revenues (in millions) $ 1,571.0 $ 1,561.9 0.6 $ 3,174.1 $ 3,158.1 0.5
Admissions 63,714 63,914 (0.3 ) 130,150 131,848 (1.3 )
Equivalent admissions (2) 174,146 173,272 0.5 345,418 348,474 (0.9 )
Revenues per equivalent admission $ 9,021 $ 9,015 0.1 $ 9,189 $ 9,063 1.4
Medicare case mix index 1.53 1.50 2.0 1.54 1.50 2.7
Average length of stay (days) 4.8 5.0 (4.0 ) 4.9 5.0 (2.0 )
Inpatient surgeries 17,009 17,219 (1.2 ) 34,218 34,969 (2.1 )
Outpatient surgeries 69,100 68,060 1.5 135,737 135,457 0.2
Total surgeries 86,109 85,279 1.0 169,955 170,426 (0.3 )
Emergency room visits 382,856 399,111 (4.1 ) 778,483 811,336 (4.0 )
Outpatient factor (3) 2.74 2.71 1.1 2.65 2.64 0.4
Net revenue days outstanding (days) 47.4 51.9 (8.7 ) 47.4 51.9 (8.7 )
 

(1) Consolidated information includes the results of the
Company's same-hospital operations and the results of Rockdale Medical
Center located in Conyers, Georgia, which was sold effective October 1,
2017.

(2) Management and investors use equivalent admissions as a
general measure of combined inpatient and outpatient volume. The Company
computes equivalent admissions by multiplying admissions (inpatient
volumes) by the Outpatient factor. 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) The sum of gross inpatient revenue and gross outpatient
revenue divided by gross inpatient revenue.

(4) Same-hospital information includes the results of the
Company's health support center and the same 71 hospital campuses
operated during both the three months and six months ended June 30, 2018
and 2017. Same-hospital information excludes the Company's hospitals
that have previously been disposed.

LIFEPOINT HEALTH, INC.
UNAUDITED SUPPLEMENTAL INFORMATION

From time to time, the Company incurs certain non-recurring gains or
losses that are non-operational in nature and that it does not consider
relevant in assessing its ongoing operating performance. When
significant, LifePoint's management and Board of Directors typically
exclude these gains or losses when evaluating the Company's operating
performance and in certain instances when evaluating performance for
incentive compensation purposes. Additionally, the Company believes that
some investors and equity analysts exclude these or similar items when
evaluating the Company's current or future operating performance and in
making informed investment decisions regarding the Company. Accordingly,
the Company provides adjusted net income and adjusted diluted earnings
per share attributable to LifePoint Health, Inc. stockholders as a
supplement to the comparable GAAP measures of net income and diluted
earnings per share attributable to LifePoint Health, Inc. stockholders,
respectively. Adjusted net income and adjusted diluted earnings per
share attributable to LifePoint Health, Inc. stockholders should not be
considered measures of financial performance in accordance with GAAP,
and the items excluded from adjusted net income and adjusted diluted
earnings per share attributable to LifePoint Health, Inc. stockholders
are significant components in understanding and assessing financial
performance. Adjusted net income and adjusted diluted earnings per share
attributable to LifePoint Health, Inc. stockholders should not be
considered in isolation or as an alternative to net income or diluted
earnings per share attributable to LifePoint Health, Inc. stockholders
as presented in the unaudited condensed consolidated financial
statements.

The following table reconciles net income as reflected in the unaudited
condensed consolidated statements of income to adjusted net income (in
millions):

   

Three Months Ended

Six Months Ended

June 30,

June 30,

2018   2017 2018   2017
Net income $ 54.8 $ 46.0 $ 49.5 $ 110.0
Adjustments (net of income taxes):
Impairment losses 58.2
Gain on sale of ancillary rehabilitation facility (2.4 ) (2.4 )
Gains on home health partnership transaction (2.8 ) (1.2 ) (7.7 )
Gain on settlement of contingent liability               (11.3 )
Adjusted net income $ 52.4   $ 43.2   $ 104.1   $ 91.0  
 

The following table reconciles diluted earnings per share attributable
to LifePoint Health, Inc. stockholders as reflected in the unaudited
condensed consolidated statements of income to adjusted diluted earnings
per share attributable to LifePoint Health, Inc. stockholders:

   
Three Months Ended Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Diluted earnings per share attributable to

LifePoint Health, Inc. stockholders

$ 1.33 $ 1.03 $ 1.10 $ 2.49
Adjustments (net of income taxes):
Impairment losses 1.47
Gain on sale of ancillary rehabilitation facility (0.06 ) (0.06 )
Gains on home health partnership transaction (0.07 ) (0.03 ) (0.19 )
Gain on settlement of contingent liability               (0.27 )

Adjusted diluted earnings per share attributable to LifePoint
Health, Inc. stockholders

$ 1.27   $ 0.96   $ 2.48   $ 2.03  
 

LIFEPOINT HEALTH, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(Continued)

Adjusted EBITDA is defined by the Company as earnings before
depreciation and amortization; interest expense, net; other
non-operating (gains) losses, net; provision for income taxes; and net
income attributable to noncontrolling interests and redeemable
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, subject to further
permitted adjustments, for certain financial covenants. The Company
believes adjusted EBITDA is a measure of performance used by some
investors, equity analysts, rating agencies and lenders to make informed
decisions as to, among other things, the Company's ability to incur and
service debt and make capital expenditures. In addition, multiples of
current or projected adjusted EBITDA are used by some investors and
equity analysts to estimate current or prospective enterprise value.
Adjusted EBITDA should not be considered a measure of financial
performance in accordance with 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 condensed consolidated
financial statements as an indicator of financial performance. 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.

The following table reconciles net income as reflected in the unaudited
condensed consolidated statements of income to adjusted EBITDA (in
millions):

   
Three Months Ended June 30, Six Months Ended June 30,
2018   2017 2018   2017
  % of   % of   % of   % of
Amount Revenues Amount Revenues Amount Revenues Amount Revenues
Net income $ 54.8 3.5 % $ 46.0 2.9 % $ 49.5 1.6 % $ 110.0 3.4 %
Less: Net income attributable to noncontrolling interests and
redeemable noncontrolling interests
  (2.4 ) (0.2 )   (3.5 ) (0.2 )   (5.9 ) (0.2 )   (7.6 ) (0.2 )
Net income attributable to LifePoint Health, Inc. 52.4 3.3 42.5 2.7 43.6 1.4 102.4 3.2
 
Add: Depreciation and amortization 81.4 5.1 88.7 5.6 163.0 5.1 176.8 5.4
Interest expense, net 37.0 2.4 37.6 2.4 74.0 2.3 75.0 2.3

Other non-operating (gains) losses, net

(3.2 ) (0.2 ) (4.5 ) (0.3 ) 69.5 2.2 (30.4 ) (0.9 )
Provision for income taxes 17.0 1.1 24.4 1.5 19.5 0.6 56.4 1.8

Net income attributable to noncontrolling interests and redeemable
noncontrolling interests

  2.4   0.2     3.5   0.2     5.9   0.2     7.6   0.2  
Adjusted EBITDA $ 187.0   11.9 % $ 192.2   12.1 % $ 375.5   11.8 % $ 387.8   12.0 %
 

LIFEPOINT HEALTH, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(Continued)

The following table reconciles net income to Adjusted EBITDA as
presented for the Company's 2018 updated guidance ranges (in millions):

   
Low End High End
Net income $ 188.0 $ 207.0
Less:
Net income attributable to noncontrolling interest and redeemable
noncontrolling interests
  8.0   10.0
Net income attributable to LifePoint Health, Inc. 180.0 197.0
Add:
Depreciation and amortization 332.0 338.0
Interest expense, net 150.0 150.0
Provision for income taxes 60.0 65.0
Net income attributable to noncontrolling interests and redeemable
noncontrolling interests
  8.0   10.0
Adjusted EBITDA $ 730.0 $ 760.0
 

View Comments and Join the Discussion!