LifePoint Health, Inc. (LPNT)

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Lifepoint Hospitals Inc. (LPNT)

Q4 2008 Earnings Call

February 20, 2009 10:00 am ET


William F. Carpenter III – President and Chief Executive Officer

David M. Dill – Executive Vice President and Chief Financial Officer


Shelley Gnall – Goldman Sachs

John Ransom - Raymond James & Associates

Whit Mayo - Robert Baird

Adam Feinstein - Barclays Capital

Jason Gurda - Leerink Swann

Albert Rice - Soleil - Pomeroy Research LLC

[Ann Wareheim - Van Campen]

Frank Morgan - RBC Capital Markets

Ralph Giacobbe - Credit Suisse

John Rex - J.P. Morgan

Darren Lehrich - Deutsche Bank

Pito Chickering - Deutsche Bank



Thank you for standing by and welcome to the LifePoint Hospitals fourth quarter and year end earnings conference call. (Operator Instructions)

Before I turn the call over to LifePoint, I've been asked by the company to read the following statement:

On today's call, LifePoint will be making forward-looking statements based upon management's current expectations. Numerous factors could cause LifePoint's results to differ from these expectations, and LifePoint has outlined these factors in its filings with the SEC. The company encourages you to review these filings. LifePoint also asks that you please review the cautionary language under the caption Important Legal Information in the company's press release issued this morning. The company undertakes no obligation to update or make any other forward-looking statements whether as a result of new information, future events, or otherwise. Also, please visit LifePoint's website for links to various information and filings.

(Operator Instructions)

I now have the pleasure of turning the conference over to Bill Carpenter, President and Chief Executive Officer of LifePoint Hospitals. Please go ahead, Mr. Carpenter.

William F. Carpenter III

Thank you, [Pamela], and welcome, everyone, to LifePoint Hospitals' fourth quarter and full year 2008 earnings call.

By now I'm sure you've seen the press release that we issued earlier this morning. We'll file our 10K this afternoon or on Monday.

After I make some opening remarks about our progress during the quarter and the year, David Dill, our Chief Financial Officer, will provide more detailed comments regarding the fourth quarter and the year ended December 31, 2008 as well as discuss guidance for 2009. After David's remarks, we will, as always, have some time for your questions.

First, the highlights of our fourth quarter and fiscal 2008 results: Revenue for the fourth quarter up 4.9%, EBITDA was up 3.5%, and EPS for the quarter was up 14.5%. For the year, revenues were up 5.2%, EBITDA was up 2.4%, and EPS was up 15.7%. The results that we posted this morning were driven in large part by the implementation and successful execution of the strategic goals that we outlined at the end of 2007 despite an economic environment that continues to be challenging. We're proud of this.

Now, we certainly see the same trends that others are seeing. In the fourth quarter and particularly throughout the second half of 2008, we saw volumes decline due to softer overall economic conditions. Although the impact of the economy on volumes is difficult to quantify, we know that it has and will have an impact. The increase in unemployment levels in our communities is consistent with the increase in communities throughout the country. We expect that volume is going to be more affected by patients' need to control out-of-pocket expenses and their tendency to delay treatment for as long as possible. We've seen a shift from in-patient admissions to outpatient visits, a decline in self-pay volumes, lower than expected bad debt, and fewer ER visits.

Against these trends, we're looking to maintain and improve metrics across the board. Fortunately, we have a strong balance sheet, ample liquidity and the ability to continue to make investments necessary to drive organic growth. We believe that our decision not to overleverage our business and careful management of our balance sheet has afforded us a unique strategic position within the industry.

As we told in 2008, we would be keenly focused on several strategic initiatives - improving quality of care that's provided at our hospitals, recruiting new physicians where needed and growing our existing assets by adding service lines or making other targeted investments, and also capitalizing on the best opportunities to grow through acquisitions, managing our expenses, maximizing operational efficiencies, and enhancing the strong bench of leaders across the company.

What this really means is that we have an intense focus on the parts of our business that really matter and we're taking a fresh look at what we can do better. I remain confident that we have the correct strategies in place to maintain our forward momentum into 2009 and beyond, even in the face of dramatic economic conditions.

Let me take just a few minutes to mention some examples of our progress. Improving the quality of care is something for which we always strive. You may have seen that LifePoint Hospitals was recently recognized in Modern Healthcare for having the highest [HCAF] scores among all investor-owned hospital companies. For the reported period, LifePoint was the only investor-owned company with an overall score above the national average in this important measure of patient satisfaction. I am very proud of the staff and physicians at each of our hospitals and am gratified that our patients have reported such positive experiences because it is caring for patients that is at the very heart of our business.

Regarding our growth efforts, in 2008 we added the number of physicians to our medical staffs that we said we would. We believe that we have retooled our physician recruiting efforts in a way that will continue to serve our hospitals and communities well going forward. We're off to a strong start in 2009 and recruiting results to date are well ahead of our past efforts.

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