LifePoint Hospitals Reports Third Quarter 2011 Results

LifePoint Hospitals, Inc. (NASDAQ: LPNT) today announced results for the third quarter and nine months ended September 30, 2011.

For the third quarter ended September 30, 2011, revenues from continuing operations were $877.2 million, up 5.4% from $832.3 million for the same period a year ago. Income from continuing operations attributable to LifePoint Hospitals, Inc. stockholders for the third quarter ended September 30, 2011, increased 1.1% to $38.9 million, or $0.77 per diluted share, compared with $38.5 million, or $0.72 per diluted share, for the same period last year.

For the first nine months of 2011, revenues from continuing operations were $2,643.4 million, up 9.7% from $2,409.1 million for the same period a year ago. Income from continuing operations attributable to LifePoint Hospitals, Inc. stockholders for the first nine months of 2011 increased 4.8% to $125.0 million, or $2.43 per diluted share, compared with $119.3 million, or $2.21 per diluted share, for the same period last year.

In commenting on the results, William F. Carpenter III, chairman and chief executive officer of LifePoint Hospitals, said, "We’re pleased with our third quarter results and with the progress we have made throughout 2011. The quality of patient care provided in our hospitals continues to improve as we work more closely with our physicians. In addition, we are making strategic investments in our existing assets, as well as in new markets, while effectively controlling costs. We are confident that we have the right strategies, teams and tools in place to drive enhanced value for our shareholders.”

The Company noted that same store net revenues per equivalent admission were up 2.4% in the quarter versus the same period in the prior year. After normalizing for the $12.4 million of prior period revenue related to Alabama provider tax payments booked in the third quarter of 2010 and a deceleration in the amount of self pay revenue growth that the Company experienced in the third quarter of 2011, same store net revenues per equivalent admission would have increased by approximately 5.3%. The Company also noted that $11.0 million of meaningful use incentives was excluded from the net revenues per equivalent admission calculation.

The Company recognized $11.0 million of Medicaid meaningful use incentives and incurred $3.6 million of operating costs and approximately $1.1 million of depreciation in the quarter. On a year-to-date basis, the Company has recorded $15.2 million of Medicaid meaningful use incentives while incurring $7.9 million of operating costs and $2.8 million of depreciation.

The Company affirms the full year 2011 guidance given in its second quarter release on July 29, 2011, which included Adjusted EBITDA in a range of $525 – $545 million and Diluted EPS in a range of $2.95 – $3.15. The Company expects to be at the high end of the guidance range for both Adjusted EBITDA and Diluted EPS.

A listen-only simulcast, as well as a 30-day replay, of LifePoint Hospitals’ third quarter 2011 conference call will be available on line at www.lifepointhospitals.com/news/press-releases and www.earnings.com today, Friday, October 28, 2011, beginning at 10:00 a.m. Eastern Time.

LifePoint Hospitals, Inc. is a leading hospital company focused on providing quality healthcare services close to home. Through its subsidiaries, LifePoint operates 53 hospital campuses in 18 states. With a mission of "Making Communities Healthier®,” LifePoint is the sole community hospital provider in the majority of the communities it serves. More information about the Company, which is headquartered in Brentwood, Tennessee, can be found on its website, www.LifePointHospitals.com. All references to "LifePoint,” "LifePoint Hospitals,” or the "Company” used in this release refer to LifePoint Hospitals, Inc. or its affiliates.

Important Legal Information. 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 LifePoint’s future results are beyond LifePoint’s 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: (i) the effect and implementation of healthcare reform legislation and other changes in government programs including efforts to reduce healthcare expenditures; (ii) reductions in Medicare or Medicaid payments, whether driven by budget deficits, programmatic changes or otherwise; (iii) reductions in revenues from commercial payors, whether as a change in our revenue mix, reduction in commercial rates or otherwise;(iv) LifePoint’s ability to acquire hospitals on favorable terms, the business risks associated with acquiring additional hospitals and the uncertainty in operating and integrating such hospitals;(v) the ongoing, adverse effects from the recent economic recession including high rates of unemployment, which could intensify if credit conditions deteriorate; (vi) the failure of certain employers, or the closure of certain manufacturing and other facilities, especially in markets where LifePoint’s hospitals depend on a small number of local employers; (vii) the growth of uninsured and "patient due” accounts, and deterioration in the collectability of these accounts;(viii) whether our core strategies will result in anticipated operating results; (ix) whether our efforts to reduce the cost of providing healthcare while increasing the quality of care are successful; (x) the ability to attract, recruit and retain qualified physicians, nurses, medical technicians and other healthcare professionals; (xi) the loss of certain physicians in markets where such a loss can have a disproportionate impact on LifePoint’s hospitals; (xii) the increasingly stringent and complex legal and regulatory environment (and changing interpretations of applicable laws and regulations), increased legal and regulatory obligations and related enforcement activity, new obligations that providers must self-disclose violations, and the additional costs incurred in connection with efforts to comply with such laws and regulations; (xiii) competition from other hospitals and outpatient facilities providing services similar to those LifePoint offers and from physicians providing services in their offices that could be provided in LifePoint’s hospitals; (xiv) adverse events in states a large portion of LifePoint’s revenues are concentrated; (xv) any interruption of or restriction in LifePoint’s access to licensed information (and information technology systems) or failure in LifePoint’s ability to integrate changes to LifePoint’s existing information systems or information systems of acquired hospitals; (xvi) liabilities resulting from potential malpractice and related legal claims brought against LifePoint’s hospitals; and (xvii) those other risks and uncertainties described from time to time in LifePoint’s filings with the Securities and Exchange Commission. Therefore, LifePoint’s 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.

All references to "LifePoint,” "LifePoint Hospitals” and the "Company” as used throughout this release refer to LifePoint Hospitals, Inc. and its subsidiaries.

LIFEPOINT HOSPITALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION
Dollars in millions

Adjusted EBITDA is defined by the Company as earnings before depreciation and amortization; interest expense, net; debt extinguishment costs; provision for income taxes; loss (income) from discontinued operations and net income attributable to noncontrolling interests. LifePoint’s management and Board of Directors use Adjusted 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 for certain financial covenants. The Company believes Adjusted EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. In addition, multiples of current or projected Adjusted EBITDA are used to estimate current or prospective enterprise value. Adjusted EBITDA should not be considered as a measure of financial performance under U.S. generally accepted accounting principles ("GAAP”), and the items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Adjusted 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 consolidated financial statements as an indicator of financial performance or liquidity. Because Adjusted EBITDA is not a measurement determined in accordance with GAAP and is susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies.

The following table reconciles Adjusted EBITDA as presented above to net income attributable to LifePoint Hospitals, Inc. as reflected in the unaudited condensed consolidated statements of operations:

LIFEPOINT HOSPITALS, INC.
UNAUDITED SUPPLEMENTAL INFORMATION (Continued)
Dollars in millions

Cash Revenues is defined by the Company as reported revenues less the provision for doubtful accounts. Cash Revenues is a common analytical indicator within the health care industry. Cash Revenues should not be considered as a measure of financial performance under GAAP. Because Cash Revenues is not a measurement determined in accordance with GAAP and is susceptible to varying calculations, Cash Revenues, as presented, may not be comparable to other similarly titled measures of other companies.

⁽¹⁾ Salaries and benefits, supplies and other operating expenses, as a percentage of Cash Revenues (a non-GAAP financial measure), present the impact on these ratios due to the adjustment of deducting the provision for doubtful accounts from reported revenues and results in these ratios being non-GAAP financial measures. The Company’s management and Board of Directors finds this information useful to evaluate certain expense category trends without the influence of whether adjustments to revenues for uninsured accounts are recorded as revenue adjustments (charity care and uninsured discounts) or operating expenses (provision for doubtful accounts). Thus, the expense category trends are generally analyzed as a percentage of Cash Revenues. These non-GAAP financial measures should not be considered alternatives to GAAP financial measures. The Company’s management believes this supplemental information provides management and the users of its financial statements with useful information for period-to-period comparisons. Investors are encouraged to use GAAP measures when evaluating the Company’s overall financial performance.