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 EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017 2018
2017 Amount
% ofRevenues
Amount
% ofRevenues
Amount
% ofRevenues
Amount
% ofRevenues
Revenues $ 1,557.0 100.0 % $ 1,576.0 100.0 % $ 4,729.6 100.0 % $
4,801.0 100.0 % Salaries and benefits 761.1 48.9 748.5 47.5
2,263.8 47.9 2,307.4 48.1 Supplies 254.7 16.4 262.4 16.6 776.7 16.4
793.8 16.5 Other operating expenses, net 379.5 24.3 389.1 24.7
1,151.9 24.3 1,136.0 23.7 Depreciation and amortization 80.9 5.2
87.2 5.5 243.9 5.3 264.0 5.5 Interest expense, net 36.8 2.4 37.3
2.4 110.8 2.3 112.3 2.3 Other non-operating losses (gains), net
40.1 2.6 (3.7 ) (0.2 ) 109.6
2.3 (34.1 ) (0.7 ) 1,553.1 99.8
1,520.8 96.5 4,656.7 98.5
4,579.4 95.4 Income before
income taxes 3.9 0.2 55.2 3.5 72.9 1.5 221.6 4.6
(Benefit) provision for
income taxes
(19.4 ) (1.3 ) 25.3 1.6 0.1
– 81.7 1.7 Net income 23.3 1.5
29.9 1.9 72.8 1.5 139.9 2.9
Less: Net income attributable to
noncontrolling interests and redeemable noncontrolling
interests
(1.0 ) (0.1 ) (2.4 ) (0.2 ) (6.9 ) (0.1 )
(10.0 ) (0.2 ) Net income attributable to LifePoint Health,
Inc. $ 22.3 1.4 % $ 27.5 1.7 % $ 65.9 1.4 % $
129.9 2.7 % Weighted average shares outstanding -
basic 38.7 39.9 38.9 40.1 Effect of dilutive stock options and
other stock-based awards 1.2 1.0
0.7 1.0 Weighted average shares outstanding -
diluted 39.9 40.9 39.6
41.1 Earnings per share attributable to
LifePoint Health, Inc. stockholders: Basic $ 0.57 $ 0.69
$ 1.70 $ 3.24 Diluted $ 0.56 $ 0.67
$ 1.66 $ 3.16
LIFEPOINT HEALTH, INC.
UNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS
Dollars in millions
Sept. 30,2018
Dec. 31,2017
ASSETS Current assets: Cash and cash equivalents $ 160.1 $
112.0 Accounts receivable 803.7 822.4 Inventories 154.6 153.1
Prepaid expenses 80.4 67.2 Other current assets 121.7
110.5 1,320.5 1,265.2 Property and equipment: Land
180.3 182.4 Buildings and improvements 2,539.0 2,564.7 Equipment
2,353.2 2,340.4 Construction in progress 397.5
353.8 5,470.0 5,441.3 Accumulated depreciation
(2,462.6 ) (2,351.0 ) 3,007.4 3,090.3 Intangible assets, net
78.1 76.3 Other long-term assets 137.2 116.8 Goodwill
1,733.7 1,737.8 Total assets $ 6,276.9
$ 6,286.4
LIABILITIES AND EQUITY Current
liabilities: Accounts payable $ 204.9 $ 210.3 Accrued salaries
217.8 216.3 Other current liabilities 265.5 296.0 Current
maturities of long-term debt 27.2 22.3
715.4 744.9 Long-term debt, net 2,859.8 2,877.4 Deferred income
taxes 42.5 32.3 Long-term portion of reserves for self-insurance
claims 142.1 140.9 Other long-term liabilities 84.8
80.1 Total liabilities 3,844.6
3,875.6 Redeemable noncontrolling interests 95.8
125.0 Equity: LifePoint Health, Inc. stockholders’ equity:
Preferred stock – – Common stock 0.7 0.7 Capital in excess of par
value 1,649.7 1,620.8 Accumulated other comprehensive loss (3.6 )
(3.6 ) Retained earnings 1,945.2 1,879.3 Common stock in treasury,
at cost (1,297.6 ) (1,254.7 ) Total LifePoint Health,
Inc. stockholders’ equity 2,294.4 2,242.5 Noncontrolling interests
42.1 43.3 Total equity 2,336.5
2,285.8 Total liabilities and equity $ 6,276.9
$ 6,286.4
LIFEPOINT HEALTH, INC.
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Dollars in millions
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017
2018 2017 Cash flows from
operating activities: Net income $ 23.3 $ 29.9 $ 72.8 $ 139.9
Adjustments to reconcile net income to net
cash provided by operating activities:
Stock-based compensation 28.0 7.0 42.7 18.9 Depreciation and
amortization 80.9 87.2 243.9 264.0 Other non-cash amortization 2.7
2.8 8.0 9.2 Other non-operating losses (gains), net 40.1 (3.7 )
109.6 (34.1 )
Deferred income taxes
32.3 5.4 10.2 4.4 Reserve for self-insurance claims, net of
payments 3.8 (0.2 ) 2.2 (37.0 ) Increase (decrease) in cash from
operating assets and liabilities,
net of effects from acquisitions and
divestitures:
Accounts receivable (0.5 ) (9.2 ) 6.8 2.3 Inventories, prepaid
expenses and other current assets (0.2 ) (14.6 ) 14.1 5.8 Accounts
payable, accrued salaries and other current liabilities 12.9 4.8
(69.1 ) (30.4 ) Income taxes payable/receivable (50.9 ) (19.6 )
(37.3 ) (41.8 ) Other (9.5 ) 1.3 (5.6 )
(7.8 ) Net cash provided by operating activities
162.9 91.1 398.3 293.4
Cash flows from investing activities: Purchases of
property and equipment (105.6 ) (108.5 ) (243.2 ) (266.2 ) Proceeds
from sale of businesses 8.9 95.1 10.4 110.0 Other (3.7 )
0.2 (7.7 ) (2.2 ) Net cash used in
investing activities (100.4 ) (13.2 ) (240.5 )
(158.4 ) Cash flows from financing activities:
Proceeds from borrowings – 25.0 125.0 165.0 Payments of borrowings
(44.3 ) (29.3 ) (138.1 ) (178.1 ) Repurchases of common stock –
(35.0 ) (42.9 ) (61.4 ) Redemptions of noncontrolling interests and
redeemable
noncontrolling interests, net of sales
(0.1 ) (0.4 ) (34.8 ) (0.6 ) Distributions to noncontrolling
interests and redeemable
noncontrolling interests
(1.9 ) (2.4 ) (18.2 ) (7.2 ) Proceeds from exercise of stock
options 0.2 0.4 1.9 15.7 Other (0.1 ) (1.4 )
(2.6 ) 1.2 Net cash used in financing activities
(46.2 ) (43.1 ) (109.7 ) (65.4 )
Change in cash and cash equivalents 16.3 34.8 48.1 69.6 Cash and
cash equivalents at beginning of period 143.8
130.9 112.0 96.1 Cash and cash
equivalents at end of period $ 160.1 $ 165.7 $ 160.1
$ 165.7 Supplemental disclosure of cash flow
information: Interest payments $ 8.0 $ 5.9 $ 80.2
$ 74.7 Capitalized interest $ 3.9 $ 2.2
$ 10.8 $ 5.2 Income tax payments, net of refunds $
(0.8 ) $ 39.5 $ 27.2 $ 119.1
LIFEPOINT HEALTH, INC.
UNAUDITED STATISTICS
Three Months Ended
September 30,
Nine Months Ended
September 30,
% % 2018
2017 Change 2018
2017 Change Consolidated: (1) Number of hospital
campuses 68 72 (5.6 )% 68 72 (5.6 )% Revenues (in millions) $
1,557.0 $ 1,576.0 (1.2 ) $ 4,729.6 $ 4,801.0 (1.5 ) Admissions
63,118 66,199 (4.7 ) 193,268 202,215 (4.4 ) Equivalent admissions
(2) 170,801 177,475 (3.8 ) 516,219 535,061 (3.5 ) Revenues per
equivalent admission $ 9,116 $ 8,880 2.6 $ 9,162 $ 8,973 2.0
Medicare case mix index 1.51 1.51 - 1.53 1.50 2.0 Average length of
stay (days) 4.8 4.9 (2.0 ) 4.8 5.0 (4.0 ) Inpatient surgeries
16,990 18,294 (7.1 ) 51,208 54,441 (5.9 ) Outpatient surgeries
65,788 67,688 (2.8 ) 201,525 206,095 (2.2 ) Total surgeries 82,778
85,982 (3.7 ) 252,733 260,536 (3.0 ) Emergency room visits 377,356
415,119 (9.1 ) 1,155,839 1,254,092 (7.8 ) Outpatient factor (3)
2.71 2.68 1.1 2.67 2.65 0.8 Net revenue days outstanding (days)
48.4 53.4 (9.4 ) 48.4 53.4 (9.4 ) Same-hospital: (4) Number
of hospital campuses 68 68 - % 68 68 - % Revenues (in millions) $
1,548.5 $ 1,516.3 2.1 $ 4,668.0 $ 4,621.0 1.0 Admissions 62,579
62,533 0.1 189,481 191,182 (0.9 ) Equivalent admissions (2) 169,214
168,026 0.7 504,967 506,823 (0.4 ) Revenues per equivalent
admission $ 9,151 $ 9,024 1.4 $ 9,244 $ 9,118 1.4 Medicare case mix
index 1.51 1.51 - 1.53 1.50 2.0 Average length of stay (days) 4.8
5.0 (4.0 ) 4.9 5.0 (2.0 ) Inpatient surgeries 16,853 17,278 (2.5 )
50,226 51,435 (2.4 ) Outpatient surgeries 65,269 64,798 0.7 197,840
196,974 0.4 Total surgeries 82,122 82,076 0.1 248,066 248,409 (0.1
) Emergency room visits 372,981 387,774 (3.8 ) 1,124,445 1,171,607
(4.0 ) Outpatient factor (3) 2.70 2.69 0.4 2.67 2.65 0.8 Net
revenue days outstanding (days) 48.8 53.6 (9.0 ) 48.8 53.6 (9.0 )
(1) Consolidated information includes the results of the
Company’s same-hospital operations, the results of Rockdale Medical
Center located in Conyers, Georgia, which was sold effective
October 1, 2017, and the results of Mercy Regional Medical Center
(“Mercy”) located in Ville Platte, Louisiana, Acadian Medical
Center, which is a campus of Mercy located in Eunice, Louisiana,
and Minden Medical Center located in Minden, Louisiana, which were
sold effective August 1,2018. (2) Management and investors use
equivalent admissions as a general measure of combined inpatient
and outpatient volume. The Company computes equivalent admissions
by multiplying admissions (inpatient volumes) by the Outpatient
factor. The equivalent admissions computation “equates” outpatient
revenue to the volume measure (admissions) used to measure
inpatient volume resulting in a general measure of combined
inpatient and outpatient volume. (3) The sum of gross inpatient
revenue and gross outpatient revenue divided by gross inpatient
revenue. (4) Same-hospital information includes the results of the
Company’s health support center and the same 68 hospital campuses
operated during both the three months and nine months ended
September 30, 2018 and 2017. Same-hospital information excludes the
Company’s hospitals that have previously been disposed.
LIFEPOINT HEALTH, INC.
UNAUDITED SUPPLEMENTAL
INFORMATION
From time to time, the Company incurs certain non-recurring
gains or losses that are non-operational in nature and that it does
not consider relevant in assessing its ongoing operating
performance. When significant, LifePoint’s management and Board of
Directors typically exclude these gains or losses when evaluating
the Company’s operating performance and in certain instances when
evaluating performance for incentive compensation purposes.
Additionally, the Company believes that some investors and equity
analysts exclude these or similar items when evaluating the
Company’s current or future operating performance and in making
informed investment decisions regarding the Company. Accordingly,
the Company provides normalized net income and normalized diluted
earnings per share attributable to LifePoint Health, Inc.
stockholders as a supplement to the comparable GAAP measures of net
income and diluted earnings per share attributable to LifePoint
Health, Inc. stockholders, respectively. Normalized net income and
normalized diluted earnings per share attributable to LifePoint
Health, Inc. stockholders should not be considered measures of
financial performance in accordance with GAAP, and the items
excluded from normalized net income and normalized diluted earnings
per share attributable to LifePoint Health, Inc. stockholders are
significant components in understanding and assessing financial
performance. Normalized net income and normalized diluted earnings
per share attributable to LifePoint Health, Inc. stockholders
should not be considered in isolation or as an alternative to net
income or diluted earnings per share attributable to LifePoint
Health, Inc. stockholders as presented in the unaudited condensed
consolidated financial statements.
The following table reconciles net income as reflected in the
unaudited condensed consolidated statements of income to normalized
net income (in millions):
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017
2018 2017 Net income $
23.3 $ 29.9 $ 72.8 $ 139.9 Adjustments (net of income taxes):
Impairment losses 23.0 13.4 80.7 13.4 Merger-related expenses 7.6 –
7.6 – Accelerated vesting of certain stock-based awards 20.0 – 20.0
– Deferred tax benefit for tax accounting method change (23.6 ) –
(23.6 ) – Gains on IHHP transaction – (8.4 ) (1.2 ) (14.0 ) Gain on
sale of ancillary rehabilitation facility – – (2.4 ) – Gain on
settlement of contingent liability – –
– (11.3 ) Normalized net income $ 50.3
$ 34.9 $ 153.9 $ 128.0
The following table reconciles diluted earnings per share
attributable to LifePoint Health, Inc. stockholders as reflected in
the unaudited condensed consolidated statements of income to
normalized diluted earnings per share attributable to LifePoint
Health, Inc. stockholders:
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2018 2017
2018 2017 Diluted
earnings per share attributable to
LifePoint Health, Inc. stockholders
$ 0.56 $ 0.67 $ 1.66 $ 3.16 Adjustments (net of income taxes):
Impairment losses 0.58 0.33 2.04 0.33 Merger-related expenses 0.19
– 0.19 – Accelerated vesting of certain stock-based awards 0.50 –
0.50 – Deferred tax benefit for tax accounting method change (0.59
) – (0.59 ) – Gains on IHHP transaction – (0.20 ) (0.03 ) (0.34 )
Gain on sale of ancillary rehabilitation facility – – (0.06 ) –
Gain on settlement of contingent liability – –
– (0.28 ) Normalized diluted earnings
per share attributable to
LifePoint Health, Inc. stockholders
$ 1.24 $ 0.80 $ 3.71 $ 2.87
LIFEPOINT HEALTH, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
(Continued)
Adjusted EBITDA is defined by the Company as earnings before
depreciation and amortization; interest expense, net; other
non-operating losses (gains), net; (benefit) provision for income
taxes; and net income attributable to noncontrolling interests and
redeemable noncontrolling interests (when applicable for the
periods presented). Additionally, normalized EBITDA excludes the
$21.6 million of additional stock-based compensation expense
recognized during the third quarter of 2018, primarily 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. LifePoint’s management and Board of Directors
use adjusted EBITDA and normalized EBITDA to evaluate the Company’s
operating performance and as a measure of performance for incentive
compensation purposes. LifePoint’s credit facilities use adjusted
EBITDA, subject to further permitted adjustments, for certain
financial covenants. The Company believes adjusted EBITDA and
normalized EBITDA are measures of performance used by some
investors, equity analysts, rating agencies and lenders to make
informed decisions as to, among other things, the Company’s ability
to incur and service debt and make capital expenditures. In
addition, multiples of current or projected adjusted EBITDA and
normalized EBITDA are used by some investors and equity analysts to
estimate current or prospective enterprise value. Adjusted EBITDA
and normalized EBITDA should not be considered measures of
financial performance in accordance with GAAP, and the items
excluded from adjusted EBITDA and normalized EBITDA are significant
components in understanding and assessing financial performance.
Adjusted EBITDA and normalized EBITDA should not be considered in
isolation or as an alternative to net income, cash flows generated
by operating, investing or financing activities or other financial
statement data presented in the condensed consolidated financial
statements as an indicator of financial performance. Because
adjusted EBITDA and normalized EBITDA are not measurements
determined in accordance with GAAP and are susceptible to varying
calculations, adjusted EBITDA and normalized EBITDA as presented
may not be comparable to other similarly titled measures of other
companies.
The following table reconciles net income as reflected in the
unaudited condensed consolidated statements of income to adjusted
EBITDA and normalized EBITDA (in millions):
Three Months Ended September 30, Nine
Months Ended September 30, 2018
2017 2018 2017
Amount
% ofRevenues
Amount
% ofRevenues
Amount
% ofRevenues
Amount
% ofRevenues
Net income $ 23.3 1.5 % $ 29.9 1.9 % $ 72.8 1.5 % $ 139.9 2.9 %
Less: Net income attributable to noncontrolling interests and
redeemable noncontrolling interests (1.0 ) (0.1 )
(2.4 ) (0.2 ) (6.9 ) (0.1 ) (10.0 ) (0.2 ) Net income
attributable to LifePoint Health, Inc. 22.3 1.4 27.5 1.7 65.9 1.4
129.9 2.7 Adjust: Depreciation and amortization 80.9 5.2
87.2 5.5 243.9 5.3 264.0 5.5 Interest expense, net 36.8 2.4 37.3
2.4 110.8 2.3 112.3 2.3
Other non-operating
losses (gains), net
40.1 2.6 (3.7 ) (0.2 ) 109.6 2.3 (34.1 ) (0.7 ) (Benefit) provision
for income taxes (19.4 ) (1.3 ) 25.3 1.6 0.1 – 81.7 1.7 Net income
attributable to noncontrolling interests and redeemable
noncontrolling interests 1.0 0.1 2.4
0.2 6.9 0.1 10.0
0.2 Adjusted EBITDA 161.7 10.4
176.0 11.2 537.2 11.4
563.8 11.7 Add: Accelerated vesting of certain
stock-based awards 21.6 1.4 – –
21.6 0.4 – –
Normalized EBITDA $ 183.3 11.8 % $ 176.0 11.2 % $
558.8 11.8 % $ 563.8 11.7 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181026005119/en/
LifePoint Health, Inc.Michael S. Coggin,
615-920-7000Executive Vice President andChief Financial
Officer
LifePoint Health, Inc. (NASDAQ:LPNT)
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