LifePoint Hospitals Inc. (NASDAQ: LPNT) By: Greg Boehmer Christen Brown Mike Jacobson Bill Schwartz Josh Stanley
LifePoint (LPNT): Overview NASDAQ: LPNT Own and operate 51 hospitals in 19 states. –One of the largest hospital groups in US Focus on non-urban healthcare –“… Offers potential for significant operational improvement.” - Website Medical, surgical, and outpatient services.
LifePoint (LPNT): Overview
LifePoint: History Spun off from HCA,Inc in Agreed to acquire Providence Healthcare Company in August –$1.7 billion in cash, stock and debt. Transaction completed in –26 new hospitals added.
William F. Carpenter III President and Chief Executive Officer Joined in Served as executive vice president, general counsel and secretary, chief development officer and corporate governance officer. Prior member of the Nashville law firm, Waller, Lansden, Dortch & Davis. –Specialized in general corporate and healthcare law. Board of directors –Federation of American Hospitals –Psychiatric Solutions, Inc.
Michael J. Culotta Chief Financial Officer Joined in Previously spent 25 years with Ernst & Young LLP. –Became partner in Board of Directors - Evolved Digital Systems, Inc. Previous Chairman of the Board of the Tennessee Valley Region of the American Red Cross Blood Services. Previous Treasurer of the Nashville Area Chapter of the American Red Cross Board member for the Nashville Healthcare Counsel and the Nashville Ballet.
William M. Gracey Chief Operating Officer Joined in Served in a number of multi- facility executive and hospital CEO positions with HCA. Fellow - American College of Healthcare Executives. Board Member of the Tennessee Hospital Association, Board Member - Board of Governors of the Federation of American Hospitals. Preceptor of the Year - Virginia Commonwealth University's Healthcare Administration Graduate Program.
Board of Directors Owen G. Shell Jr.ChairmanOwen G. Shell Jr. William F. Carpenter III Richard H. Evans DeWitt Ezell Jr. Michael P. Haley Ricki Tigert Helfer William V. Lapham John E. Maupin Jr., D.D.S.
Stock Screener (3/20/07) Price/Earnings14.67 Price/Book1.48 Debt to Equity1.152 Return on Equity10.39% Current Ratio2.026
Percent Return LPNT, CHY, HMA
Competitors LPNTCYHHMA Industry Market Cap:2.11B3.46B2.68B3.24B Employees:14,00021,600N/A4.70K Qtrly Rev Growth (yoy):16.70%20.90%12.00%0.00% Revenue (ttm):2.37B4.19B4.07B Gross Margin (ttm):86.12%86.01%68.57%77.92% EBITDA (ttm):463.20M567.82M728.81M474.03M Oper Margins (ttm):13.72%8.94%12.56%6.76% Net Income (ttm):131.50M168.71M256.31M36.65M EPS (ttm): P/E (ttm): PEG (5 yr expected): P/S (ttm): CYHCYH = Community Health Systems, Inc. HMAHMA = Health Management Associates Inc. IndustryIndustry = Hospitals
DCF Results Growth Rate10%12% Perpetuity Rate5%4% Discount Rate10% PV of Projected Cash Flows PV of Terminal Value CF Fair Value Shs. Outstanding (millions)57.37 Per Share Fair Value Share Price (3/20/07)38.00 Margin %9.30%-10.70%
Revenues by Payor Mix
Key Challenges Increase in provisions for doubtful accounts: Went from 197 to 273 from 05 to 06. Difficulty in recruiting and retaining physicians Substantial indebtedness: 1.6 billion in debt Medicare Changes: changes in regulations and standards by govt. Integrating acquired hospitals Shortage of nursing and technician personnel Changes in company’s Chief Executive Officer and Chairman
Future initiatives and competitive advantages. Own 52 hospitals nation wide: Plan to acquire 2 more hospitals in Will be seeking to add 172 admitting physicians in 2007 Formed Joint venture with physicians in Lake Havasu They are sole provider of medical care in all but 5 of their locations Acquired on April 15, hospitals in non urban communities Run hospitals in primarily non urban communities because of certain specific advantages. –Less competitive than urban markets: smaller populations fewer hospitals –Community Focus –Acquisition Opportunities- –Paying down debt: Interest rate swap effective Nov 30, 06
LifePoint: Recommendation Passed initial and secondary screens. Young company but DCF is positive. Recommendation (strong sell to strong buy): BUY