Operating Costs, Bad Debt Take Toll on LifePoint Hospitals

Higher operating costs, lower admission growth in some markets and reserves for bad debt pushed LifePoint Hospital’s (Nasdaq: LPNT) fourth quarter income from continuing operations down 18.7 percent year over year.

The Brentwood, Tenn.-based hospital said income from continuing operations for the quarter ended December 31 was $31 million or 54 cents per diluted share, compared with income of $38.1 million or 67 cents per diluted share in the fourth quarter of 2006. Analysts were forecasting 57 cents a share. Revenue from continuing operations rose 4.7 percent to $629.1 million for the quarter.

CRT Capital Group analyst Sheryl Skolnick told Reuters New Service that the comparable figure would have been 50 cents per share if results were not helped by a lower-than-expected tax rate.

"This is a very significant miss," Skolnick said. "This is a really poor quality of earnings quarter."

LifePoint said bad debt accounted for $81.3 million of revenue or 12.4 percent, compared to 10.6 percent during the year ago period. Charity care was $11.4 million for the quarter, down about $800,000 on a same store basis from last year. Operating expense increased to 18 percent, the company said.

LifePoint added that patient admissions in the fourth quarter dropped 4.2 compared to a year ago, although revenue per admission rose 8 percent.

For the year ended December 31, revenues from continuing operations rose 9.7 percent to $2.6 billion from $2.4 billion a year ago. Income from continuing operations decreased 12.9 percent to $125.9 million or $2.20 a share for the year, compared to $144.5 million or $2.57 a share a year ago.

LifePoint warned that 2008 revenue will likely fall short of analyst estimates, impacted in part by patients enrolled in high deductible plans who opt to forgo needed healthcare. The company said it will continue to look for acquisition opportunities and hopes to acquire between 1-3 hospitals this year.

LifePoint operates 49 hospitals in non-urban communities in 18 states. The company said 44 of its hospitals are in communities where LifePoint is the only hospital.