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LifePoint Hospitals, Inc. (LPNT)
Q2 2008 Earnings Call
August 8, 2008 10:00 am ET
William F. Carpenter III - President and Chief Executive Officer
David M. Dill - Executive Vice President and Chief Financial Officer
Darren Lehrich - Deutsche Bank
Gary Lieberman - Stanford Group Company
Adam Feinstein - Lehman Brothers
Ralph Giacobbe - Credit Suisse
Shelley Gnall - Goldman Sachs
Tom Gallucci - Merrill Lynch
Kemp Dolliver - Cowen & Company
Frank Morgan - Jefferies & Co
Robert Hawkins - Stifel Nicolaus & Company
John Ransom - Raymond James & Associates
[Witt Mayo] - Robert W. Baird & Co., Inc.
Welcome to the LifePoint Hospitals second quarter earnings conference call.
Previous Statements by LPNT
» LifePoint Hospitals, Inc. Q4 2008 Earnings Call Transcript
» Lifepoint Hospitals Inc. Q3 2008 Earnings Call Transcript
» LifePoint Hospitals, Inc. Q1 2008 Earnings Call Transcript
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). It is my pleasure to turn the conference over to Bill Carpenter, President and Chief Executive Officer of LifePoint Hospitals.
Welcome everyone to LifePoint Hospitals second quarter 2008 earnings call. By now I expect that you have reviewed our press release that we issued this morning covering our results for the quarter. As I am sure you’ve noticed our press release also contains updated guidance for the year. David will discuss our results and updated guidance in a moment, but before her does I would like to make a few comments.
As I think about the quarter, I am pleased that we are beginning to see real impact, real incremental EBITDA growth from the organic growth strategies that we began implementing shortly after I became CEO. As I have said before, I’m convinced and our leadership teams are convinced that the key driver of our success over the next two to three years will be the heightened execution of our strategic initiatives.
I have spoken before about our deep dive strategy and the organic growth opportunities in high margin service lines that we either identified or confirmed through these intensive and focused reviews of several of our largest hospitals. I said that as a result of these efforts we developed hospital specific plans to drive growth in key profitable product lines. These plans included, among other things, identifying capital projects to enhance capabilities at the hospital level; developing recruiting plans to add specialists needed to offer the identified services; and adding corporate level support to over see these projects.
For our early deep dive hospitals we have now had time to implement these plans and we are seeing significant results: specifically through the second quarter early deep dive hospitals are meeting or exceeding the EBITDA targets that we set for them through the end of 2008. Said another way, early deep dive hospitals have already through the first six months of the year met or exceeded their full year 2008 targets. This gives us a great deal of confidence that as hospital specific plans are fully implemented at other deep dive hospitals, we will also see improved EBITDA growth from them and sustainable EBITDA across the company. Our targeted efforts are yielding fruit and we are very optimistic that this growth is starting to compound within the deep dive hospitals.
As we continue to work our plan I am more confident then ever that we’ll achieve organic growth from existing assets that we’ll strengthen our hospitals and we’ll seize greater market share in our existing communities. As you know, true organic growth requires, among other things, time, up front investments, sometimes completion of construction projects and physicians from recruitment as well as an unwavering focus and determination to achieve results. We’re making, and we will continue to make, investments in capital and people that are intended to drive organic growth and there is no doubt that we are focused and that we remain committed to our growth plan.
As evidenced by our deep diver results, I also believe that greater and more systemic results will come from our other hospitals with time. We are on track.
Now with regard to volume for the quarter, a portion of our volume is explained by a decline in self-pay admissions. The closure of two OB and one rehab unit and a shift, in many instances, in lower acuity and short length of stay admissions from inpatient to the outpatient setting. Much of this is positive. Also, we believe soft economies in our markets probably played a role with respect to volume.
Could our volume results be better? Sure they could. Our short fall on net physician ads during 2007 certainly has created a drag on volumes during the first half of 2008. Still, I’m pleased that we delivered EPS results that generally meet or exceed expectations. We accomplished this by carefully managing the operations of our hospitals. Our strategic initiatives around solid operations contributed to our results. We have improved, for example, our already excellent revenue cycle and supply chain functions. A great deal of hard work in these and other areas is paying off.