Lower Patient Debt Helps LifePoint Double Second Quarter Profits
As bad debt goes down, profits jump at rural hospital operator LifePoint. But the company cautioned that bad debt could rise again later in the year.
Rural hospital operator LifePoint Hospitals (Nasdaq: LPNT) turned in a solid second quarter performance by doubling profits, growing revenues and posting lower patient debt.
The Brentwood, Tenn.-based company raised its full-year outlook after it said Friday that net income for the quarter ended June 30, 2008 increased 128.9 percent to $30.5 million, or 57 cents per diluted share. LifePoint reported net income of $13.4 million, or $0.23 per diluted share for the same period a year ago. Income from continuing operations increased 28 percent to $31.5 million, or $0.59 per diluted share, compared $24.6 million, or $0.43 per diluted share during the year ago period.
Revenues, meanwhile, were $681 million, up 4.1 percent from $654.3 million for the same period a year ago.
LifePoint said it set aside $76.7 million for patient debt or 11.3 percent of net revenue in the quarter. During the same period last year, LifePoint set aside $81.2 million or 12.4 percent of revenue.
Life Point executive David Dill said the weak economy pushed self-pay admission down during quarter, but he expects bad debt expense will increase up during the second half because of the impact of the softening economy.
“We’ve built into our expectations that bad debt will go up,” Dill said during a conference call to discuss earnings.
LifePoint said overall admissions declined 1.3 percent and it did 3.9 percent fewer inpatient surgeries. However, revenues per admission were up 5.2 percent.
LifePoint’s raised its 2008 outlook, despite expecting year-over-year admissions to remain flat. The company now expects profits between $2.55 and $2.70 a share on revenue of between $2.73 billion and $2.78 billion. Previously, LifePoint forecast profits between $2.35to $2.65 a share.
For the first half of 2008, net income increased 67.5 percent to $72.3 million or $1.33 cents a share, while revenues from continuing operations grew 5 percent to $1.4 billion.
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