Market Overview

LifePoint Health Reports Third Quarter 2018 Results

Share:

LifePoint Health, Inc. (NASDAQ:LPNT) today announced results for the
third quarter and nine months ended September 30, 2018.

Third 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 third quarter ended September 30, 2018:

  • Same-hospital revenues totaled $1,548.5 million, an increase of 2.1%
    compared to the same period last year;
  • Net income totaled $23.3 million;
  • Diluted earnings per share attributable to LifePoint Health, Inc.
    stockholders were $0.56; and
  • Net cash provided by operating activities totaled $162.9 million, an
    increase of $71.8 million, or 78.8%, compared to the same period last
    year.

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

  • For the third quarter of 2018, the Company recognized losses in the
    aggregate of $40.1 million, or $0.77 loss per diluted share, comprised
    of an impairment loss recognized in connection with the Company's
    entry into a proposed settlement agreement to terminate its lease and
    operation of a hospital campus located in Louisiana and the
    recognition of merger-related expenses;
  • Also, for the third quarter of 2018, the Company recognized additional
    salaries and benefits expense of $21.6 million, or $0.50 loss per
    diluted share, related to the acceleration of the vesting of
    outstanding stock-based awards for the Company's chief executive
    officer, as a result of his announced retirement;
  • Lastly, for the third quarter of 2018, the Company recognized a
    deferred tax benefit of $23.6 million, or $0.59 earnings per diluted
    share, related to a tax accounting method change for recognizing the
    tax deductibility of certain self-pay revenues; and
  • For the third quarter of 2017, the Company recognized a net gain of
    $3.7 million, or $0.13 loss per diluted share when adjusted for the
    impact of income taxes, comprised of a gain 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, and an impairment loss for the
    write-off of allocated goodwill in connection with the sale of a
    hospital campus located in Georgia.

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

  • Normalized net income totaled $50.3 million;
  • Normalized diluted earnings per share attributable to LifePoint
    Health, Inc. stockholders were $1.24; and
  • Normalized EBITDA totaled $183.3 million.

Additional information regarding normalized net income, normalized
diluted earnings per share attributable to LifePoint Health, Inc.
stockholders, adjusted EBITDA and normalized 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 third quarter ended September 30, 2018, the Company's
same-hospital revenues increased $32.2 million, or 2.1%, to $1,548.5
million, compared to $1,516.3 million for the same period last year. The
increase in the Company's same-hospital revenues consisted of a 0.7%
increase in same-hospital equivalent admissions and a 1.4% increase in
same-hospital revenues per equivalent admission for the third quarter
ended September 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 $35.9 million, or 2.4%, for the third quarter ended
September 30, 2018, compared to the same period last year.

When adjusted to exclude the aforementioned third quarter 2018 and 2017
non-operational adjustments, normalized net income for the third quarter
ended September 30, 2018, was $50.3 million, compared to normalized net
income of $34.9 million for the same period last year, and normalized
diluted earnings per share attributable to LifePoint Health, Inc.
stockholders for the third quarter ended September 30, 2018, were $1.24,
compared to normalized diluted earnings per share attributable to
LifePoint Health, Inc. stockholders of $0.80 for the same period last
year.

Normalized EBITDA for the third quarter ended September 30, 2018, was
$183.3 million, or 11.8% of revenues, compared to $176.0 million, or
11.2% of revenues, for the same period last year. This increase was
primarily a result of the aforementioned increase in same-hospital
revenues and effective cost management.

Nine Months Ended September 30, 2018

The following highlights the Company's results of operations as
presented in accordance with GAAP for the nine months ended September
30, 2018:

  • Same-hospital revenues totaled $4,668.0 million, an increase of 1.0%
    compared to the same period last year;
  • Net income totaled $72.8 million;
  • Diluted earnings per share attributable to LifePoint Health, Inc.
    stockholders were $1.66; and
  • Net cash provided by operating activities totaled $398.3 million, an
    increase of $104.9 million, or 35.8%, compared to the same period last
    year.

In addition to the aforementioned third quarter 2018 and 2017
non-operational adjustments, the Company's results of operations for the
nine months ended September 30, 2018 and 2017, included the following
additional non-operational adjustments:

  • For the nine months ended September 30, 2018, the Company recognized
    an additional net charge of $69.5 million, or $1.37 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; and
  • For the nine months ended September 30, 2017, the Company recognized
    additional gains in the aggregate of $30.4 million, or $0.42 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 nine months ended September 30, 2018, were as follows:

  • Normalized net income totaled $153.9 million;
  • Normalized diluted earnings per share attributable to LifePoint
    Health, Inc. stockholders were $3.71; and
  • Normalized EBITDA totaled $558.8 million.

For the nine months ended September 30, 2018, the Company's
same-hospital revenues increased $47.0 million, or 1.0%, to $4,668.0
million, compared to $4,621.0 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 0.4% decrease in same-hospital equivalent admissions for the
nine months ended September 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 $63.3 million, or 1.4%, for the nine
months ended September 30, 2018, compared to the same period last year.

When adjusted to exclude the aforementioned non-operational adjustments
recognized during the nine months ended September 30, 2018 and 2017,
normalized net income for the nine months ended September 30, 2018, was
$153.9 million, compared to normalized net income of $128.0 million for
the same period last year, and normalized diluted earnings per share
attributable to LifePoint Health, Inc. stockholders for the nine months
ended September 30, 2018, were $3.71, compared to normalized diluted
earnings per share attributable to LifePoint Health, Inc. stockholders
of $2.87 for the same period last year.

Normalized EBITDA for the nine months ended September 30, 2018, was
$558.8 million, or 11.8% of revenues, compared to $563.8 million, or
11.7% of revenues, for the same period last year. This decrease was
primarily the result of the recognition of $9.4 million less in Medicare
and Medicaid electronic health record ("EHR") incentive income during
the nine months ended September 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 operating results for the third quarter of 2018, driven by same
hospital revenue growth, effective cost management, and strong operating
cash flows. We believe that these results are a reflection of our
organization's disciplined approach to operations and our commitment to
‘Making Communities Healthier.' As we proceed through the process to
complete our pending merger with RCCH HealthCare Partners, I am
confident that LifePoint is poised for continued growth and success into
the future."

Merger Update

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 (which
waiting period expired on September 4, 2018), (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 Securities and Exchange Commission ("SEC") on July
23, 2018, and the exhibits thereto, including the Merger Agreement, and
the Company's proxy statement on Schedule 14A filed with the SEC on
September 27, 2018.

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 has filed a
proxy statement and other relevant documents with the SEC and first
mailed the proxy statement to its stockholders on September 27, 2018.
This communication is not a substitute for the proxy statement or any
other document that LifePoint has filed with the SEC or sent 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 statements 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, is 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 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 proposed 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
September 30,

Nine Months Ended
September 30,

2018     2017   2018     2017  
Amount  
View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com