LifePoint Health, Inc. (LPNT)

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Lifepoint Hospitals (LPNT)

Q3 2013 Earnings Call

October 25, 2013 10:00 am ET


William F. Carpenter - Chairman, Chief Executive Officer and Chairman of Quality Committee

Leif M. Murphy - Chief Financial Officer and Executive Vice President

David M. Dill - President and Chief Operating Officer


Justin Lake - JP Morgan Chase & Co, Research Division

Jason Gurda - KeyBanc Capital Markets Inc., Research Division

Albert J. Rice - UBS Investment Bank, Research Division

Joshua R. Raskin - Barclays Capital, Research Division

Darren P. Lehrich - Deutsche Bank AG, Research Division

Ralph Giacobbe - Crédit Suisse AG, Research Division

Frank G. Morgan - RBC Capital Markets, LLC, Research Division

John W. Ransom - Raymond James & Associates, Inc., Research Division

Gary P. Taylor - Citigroup Inc, Research Division

Ryan K. Halsted - Wells Fargo Securities, LLC, Research Division

Whit Mayo - Robert W. Baird & Co. Incorporated, Research Division



Before we begin -- ladies and gentlemen, before we begin the call today, 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 for you to 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.

Welcome to the LifePoint Hospitals' Third Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Friday, October 25, 2013.

I would now like to turn the conference over to Bill Carpenter, Chairman and Chief Executive Officer, LifePoint Hospitals. Please go ahead, sir.

William F. Carpenter

Thank you, and welcome, everyone to LifePoint Hospitals' Third Quarter 2013 Earnings Call. We hope you've had a chance to review the press release we issued earlier this morning.

I'm pleased to report that we had a solid third quarter. Before I discuss our results, I'd like to introduce you to Leif Murphy, who is joining us today in his new position as Chief Financial Officer, after serving for 2 years as our Executive Vice President and Chief Development Officer. For those of you who don't already know him, Leif has nearly 20 years of experience in our industry with extensive knowledge of health care finance. He continues to play an important role in our development strategy and we're very pleased to have him expand his role on our team. Leif, welcome.

I'll begin the call today by taking you through our key observations from this quarter, and then I'll turn it over to Leif to discuss our results in greater detail. Following our prepared remarks, Leif and I, as well as David Dill, our President and Chief Operating Officer, will be available to answer your questions.

Let me start with a few financial highlights. Revenues from continuing operations grew to almost $900 million, an increase of 9.7% compared to the same period last year. EBITDA was $134.3 million, up 25.1% and diluted EPS was $0.68, a 74.4% increase from the third quarter of 2012.

Adjusted for certain items that adversely affected our financial performance in the third quarter of 2012, EBITDA and EPS each increased by approximately 13%. The operating environment for health care companies continues to evolve and our strategy positions LifePoint well to navigate the shifting landscape.

While in-patient volumes remain soft in the third quarter, we achieved growth in outpatient volumes, primarily as a result of improved outpatient surgical cases, and our recent acquisitions performed well. We're focused on continuing to strengthen our operations and increase market share through strategic acquisitions and organic growth initiatives and we are seeing progress in both areas.

Our acquisition pipeline for both LifePoint and Duke LifePoint remains strong, as community hospitals continue to seek the benefits of scale and the additional resources available through a partnership with a large organization such as ours. The additional regulatory burdens imposed by health care reform are causing hospital boards to pursue strategic partnerships, which we believe will serve as an additional catalyst for the growth that we've seen over the past several years.

Our growth strategy remains focused on acquiring hospitals in faster-growing markets with a more diversified employer base, as well as building networks throughout our regions and strengthening service lines in our facilities. Under the LifePoint umbrella, we're working to expand our network in the upper peninsula of Michigan and complement Duke LifePoint's Marquette General Health System through the acquisitions of Bell Hospital and Portage Health.

We also expect to complete the acquisition of Fauquier Health, which will be LifePoint's 6th hospital in Virginia and will further enhance our statewide presence with a new footprint in Northern Virginia. We expect to close these transactions in the fourth quarter.

On the Duke LifePoint side, we continue to see a growing level of interest in our innovative and fully-operational partnership, which combines the clinical and quality resources of Duke with the financial and operational resources of LifePoint. As we discussed last quarter, we entered into a memorandum of understanding in the form of joint venture with Wilson Medical Center, which further expands our network in Eastern North Carolina and particularly our exposure to the Greater Raleigh area and is expected to close in early 2014.

In the third quarter, we signed an MOU to acquire Rutherford Regional Health System. Rutherford establishes our position in Western North Carolina and adds to the network we hope to continue building in the state. We expect to complete this acquisition in the first quarter of 2014.

In addition to our acquisition activities, we continue to make regular investments in our operations to ensure that our hospitals are preferred facilities among both patients and physicians. Through our efforts, we are exceeding our Hospital Engagement Network targets for reducing readmissions and hospital-acquired conditions.

We also continue to move forward with our growth initiatives. With respect to our emergency departments, we continue to make sustained improvements in our quality and patient satisfaction results across the organization. In the third quarter, we began to roll out a program that will result in 30 of our hospitals, including all of our largest hospitals, achieving a chest pain center of excellence designation during 2014.

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