News Release

BRENTWOOD, Tenn.--(BUSINESS WIRE)--Oct. 26, 2012-- LifePoint Hospitals, Inc. (NASDAQ: LPNT) today announced results for the third quarter and nine months ended September 30, 2012.

For the third quarter ended September 30, 2012, revenues from continuing operations were $820.2 million, up 11.0% from $739.2 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, 2012, decreased 50.7% to $19.2 million, or $0.39 per diluted share, compared with $38.9 million, or $0.77 per diluted share, for the same period last year.

For the first nine months of 2012, revenues from continuing operations were $2,498.5 million, up 11.3% from $2,244.8 million for the same period a year ago. Income from continuing operations attributable to LifePoint Hospitals, Inc. stockholders for the first nine months of 2012 decreased 7.6% to $115.4 million, or $2.38 per diluted share, compared with $125.0 million, or $2.43 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, “This was a challenging quarter for LifePoint. Our financial results were adversely affected by specific costs associated with investments we made that are critical to future growth and by operational changes in our business. We remain focused on improving operating efficiencies in light of the current environment, advancing our strategy of delivering high quality care and service, expanding in existing markets and through acquisitions in faster growing markets, as well as developing talent. We are confident our plan will deliver results and continue to generate value for our stockholders.”

The Company provides the following table and explanations for certain items that adversely affected the Company’s financial performance for the three months ended September 30, 2012:

The following provides additional information pertaining to the significant items incurred and summarized in the table above:

• Acquisition transaction expenses of $6.2 million pertaining to the Company’s acquisition of Marquette General Health System;
• The Company recognized $2.6 million of additional expenses based on its estimated liability for a prior period repayment obligation;
• Retention and severance expenses of $1.8 million were recognized in connection with the Company’s shared centralized resource initiatives; and
• The Company’s estimated lost revenue, net of operating costs, associated with Hurricane Isaac of $1.5 million.

In addition to the information highlighted above, the Company’s financial performance for the three months ended September 30, 2012, was adversely affected by other items as follows: During the three months ended September 30, 2012, the Company’s Recovery Audit Contractor experience resulted in a net reduction to revenue of approximately $4.0 million. As a result of increasing observation visits, the Company estimates that its reimbursement declined approximately $2.0 million in the quarter. The Company continues to employ an increasing number of physicians and, as a result, its net physician practice losses for the three months ended September 30, 2012, increased by approximately $3.5 million as compared with the same period in the prior year. Finally, beginning in the three months ended September 30, 2012, the Company experienced a decline in reimbursement of approximately $2.8 million, compared with the same period in the prior year, relating to a decrease in funding from a New Mexico indigent care program.

A listen-only simulcast, as well as a 30-day replay, of LifePoint Hospitals’ third quarter 2012 conference call will be available on line at www.lifepointhospitals.com/news/press-releases and www.earnings.com today, Friday, October 26, 2012, 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 56 hospital campuses in 19 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, including LifePoint’s updated guidance for the year ended December 31, 2012, 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 outcome of elections and any change in healthcare reform legislation or regulation, including how or whether healthcare reform is repealed or implemented (and including whether LifePoint and its hospitals successfully adapt);(ii) other changes in government programs, including whether states support increases, decreases or changes in Medicaid programs, implement healthcare exchanges or alter the provision of healthcare to state residents through regulation or otherwise; (iii) reductions in Medicare or Medicaid payments (and payments from other governmental payors), whether driven by budget deficits, programmatic changes or otherwise, including the increasing amount of recoveries made by Recovery Audit Contractors and similar governmental agents; (iv) reductions in reimbursements from commercial payors, whether as a change in our revenue mix, service mix, reduction in commercial rates or otherwise; (v) LifePoint’s ability to acquire hospitals and other healthcare providers (especially through in-market transactions) on favorable terms, the business risks and costs associated with acquiring hospitals and other providers and the uncertainty in operating and integrating such hospitals and other providers; (vi) the ongoing, adverse effects from high rates of unemployment, which could intensify if economic conditions deteriorate; (vii) the failure or closure of certain manufacturing facilities and other employers, especially in our markets that are dependent on a small number of local employers; (viii) the growth of “bad debt” and “patient due” accounts, the number of individuals without insurance coverage (or who are underinsured) who seek care at our hospitals, and deterioration in the collectability of these accounts; (ix) the number of individuals who have been and are self-rationing access to healthcare (or delaying or not seeking healthcare services); (x) whether our core strategies will result in anticipated operating results, including measurable quality and satisfaction improvements; (xi) whether our efforts to reduce the cost of providing healthcare while increasing the quality of care are successful; (xii) the ability to attract, recruit and retain qualified physicians, nurses, medical technicians and other healthcare professionals and the increasing costs associated with doing so, including the direct costs associated with employing physicians and other healthcare professionals; (xiii) the loss of certain physicians in markets where such a loss can have a disproportionate impact on our hospital in such market; (xiv) the application, interpretation and enforcement of increasingly stringent and complex laws and regulations governing our operations and healthcare generally (and changing interpretations of applicable laws and regulations) and related enforcement activity; (xv) legal obligations that providers must self-disclose violations, the possibility that fines and penalties (including the penalty of exclusion) may be levied against hospitals and individuals in connection with enforcement activities, and the additional costs incurred in connection with efforts to comply with such laws and regulations; (xvi) 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; (xvii) adverse events in states where a large portion of LifePoint’s revenues are concentrated; (xviii) 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; (xix) liabilities resulting from potential malpractice and related legal claims brought against LifePoint’s hospitals or the healthcare providers associated with, or employed by such hospitals or affiliated entities; (xx) our increased dependence on third parties to provide purchasing, revenue cycle, payroll and information technology and whether they are able to do so effectively; (xxi) the continued viability of Duke – LifePoint Healthcare and our partnership with Duke University Medical Center; and (xxii) those other risks and uncertainties described from time to time in LifePoint’s filings with the Securities and Exchange Commission. Specifically, without limiting the cautionary statements made above, with respect to LifePoint’s updated guidance for the year ended December 31, 2012, management has assumed, among other things, that (1) RAC and similar take backs in the fourth quarter will not exceed those made in the third quarter of 2012 and (2) governmental and commercial payor programs, and in particular their reimbursement levels, will remain stable. 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 “our,” “LifePoint,” “LifePoint Hospitals” and the “Company” as used throughout this release refer to LifePoint Hospitals, Inc. and its subsidiaries.

Adjusted Diluted Earnings Per Share (“EPS”) attributable to LifePoint Hospitals, Inc. stockholders is defined by the Company as diluted EPS attributable to LifePoint Hospitals, Inc. stockholders before acquisition transaction expenses, prior period repayment obligation expense, retention and severance expenses and Hurricane Isaac impact. The Company believes Adjusted Diluted EPS attributable to LifePoint Hospitals, Inc. stockholders is useful to investors to properly reflect the ongoing operating performance of the Company adjusting for timing differences. Adjusted Diluted EPS attributable to LifePoint Hospitals, Inc. stockholders should not be considered as a measure of financial performance under U.S. generally accepted accounting principles (“GAAP”), and the items excluded from Adjusted Diluted EPS attributable to LifePoint Hospitals, Inc. stockholders are significant components in understanding and assessing financial performance. Adjusted Diluted EPS attributable to LifePoint Hospitals, Inc. stockholders 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 Diluted EPS attributable to LifePoint Hospitals, Inc. stockholders is not a measurement determined in accordance with GAAP and is susceptible to varying calculations, Adjusted Diluted EPS attributable to LifePoint Hospitals, Inc. stockholders as presented may not be comparable to other similarly titled measures of other companies.

The following table reconciles Adjusted Diluted EPS attributable to LifePoint Hospitals, Inc. stockholders as presented earlier to Diluted EPS attributable to LifePoint Hospitals, Inc. stockholders as reflected in the unaudited condensed consolidated statements of operations:

Source: LifePoint Hospitals, Inc.

LifePoint Hospitals, Inc.
Jeff Sherman, 615-372-8501
Executive Vice President and Chief Financial Officer