LifePoint Hospitals, Inc. (LPNT)
Q2 2013 Earnings Call
July 26, 2013 10:00 am ET
William F. Carpenter - Chairman, Chief Executive Officer and Chairman of Quality Committee
Jeffrey S. Sherman - Chief Financial Officer and Executive Vice President
David M. Dill - President and Chief Operating Officer
Joshua R. Raskin - Barclays Capital, Research Division
Albert J. Rice - UBS Investment Bank, Research Division
Ralph Giacobbe - Crédit Suisse AG, Research Division
Kevin M. Fischbeck - BofA Merrill Lynch, Research Division
Andrew Schenker - Morgan Stanley, Research Division
Frank G. Morgan - RBC Capital Markets, LLC, Research Division
Gary P. Taylor - Citigroup Inc, Research Division
Darren P. Lehrich - Deutsche Bank AG, Research Division
Thomas Gallucci - Lazard Capital Markets LLC, Research Division
Whit Mayo - Robert W. Baird & Co. Incorporated, Research Division
John W. Ransom - Raymond James & Associates, Inc., Research Division
Christian Rigg - Susquehanna Financial Group, LLLP, Research Division
Previous Statements by LPNT
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I'd now like to turn the conference over to Bill Carpenter, Chairman and Chief Executive Officer. Please go ahead, sir.
William F. Carpenter
Thank you. And welcome, everyone, to LifePoint Hospitals' second quarter 2013 earnings call. We hope you've had a chance to review the press release we issued earlier this morning. After my initial remarks, Jeff Sherman, our Chief Financial Officer, will discuss in detail LifePoint's results for the second quarter. After our prepared remarks, Jeff and I, as well as David Dill, our President and Chief Operating Officer, will be available to answer your questions.
I'll begin with a few highlights from the quarter. Revenues from continuing operations grew to $895 million, an increase of 8.2% compared to the same period last year. Year-over-year, EBITDA was $117 million, down 15.8%, and EPS was $0.57, a 31% decline. The changes in EBITDA and EPS were due primarily to year-over-year reductions and supplemental payments from 3 state programs. Jeff will provide greater detail in his remarks and update you on our guidance for the second half of the year.
The operating environment remains challenging. To offset these challenges and position the company for the benefits of health care reform, we're focusing our strategy on the most compelling opportunities for growth. This includes making appropriate investments at our hospitals, pursuing meaningful acquisitions and returning value to our shareholders.
Our investments in our facilities are designed to ensure that our hospitals are places where people choose to come for care and where physicians want to practice. Our acquisitions program is very active. We have differentiated LifePoint as the partner of choice for many community hospitals through our quality improvement initiatives, strong balance sheet and unique relationship with Duke University, as well as regional partnerships with other providers.
As we've discussed, since 2009, our acquisition strategy has been to move into faster growing markets, with a more diversified employer base. This strategy has been producing tangible results. We're building networks throughout our regions and strengthening service lines in our facilities. A good illustration of that strategy is our pending acquisitions of Bell Hospital and Portage Hospital in Michigan, and Fauquier Health in Virginia. Bell and Portage will each be LifePoint Hospitals that will complement Duke LifePoint's market general health system and expand our network in the Upper Peninsula.
In addition, Fauquier is LifePoint's 6th hospital in Virginia and will further enhance our state-wide presence with a new footprint in Northern Virginia. As some of you may have seen in our press release earlier this week, Duke LifePoint has entered into a memorandum of understanding to form a joint venture with Wilson Medical Center, which continues the expansion of our network into Eastern North Carolina. Once finalized, we expect these 4 new hospitals to contribute approximately $400 million in new net revenue to our portfolio, which is similar to what we added to the company through acquisitions in 2012.
We're focused on growing our existing market share and regional network presence through organic growth initiatives, as well as acquisitions. Our sequential results demonstrate improvement in in-patient and outpatient volumes, with adjusted admissions for the quarter in line with our original guidance.
Last month, we announced the appointment of a National Physician Advisory Board, comprised of leading physicians who practice in LifePoint communities. This board will provide guidance on matters related to clinical quality, physician engagement and innovative models of health care delivery.
We're 18 months into our work related to our CMS Hospital Engagement Network contract. I'm pleased with the results and we have already exceeded our year-end target of a 40% reduction in preventable harms. This initiative and its results are directly aligned with the mission and vision of our organization.
We continue to implement various initiatives that should improve our processes and reduce costs, including our shared services agreement with Parallon. We expect this arrangement to contribute positively to our results in the second half of 2013 and beyond.
On the talent front, we have had a great response to our LifePoint learning academy and remain focused on continuously improving our recruitment and professional development efforts through training and other initiatives. While the outcome of health care reform is evolving, we continue to believe it will be a net positive for LifePoint and we are positioning the company to benefit from these changes.