LifePoint Hospitals Inc. Reports Operating Results (10-K)
Lifepoint Hospitals Inc. has a market cap of $1.98 billion; its shares were traded at around $39.97 with a P/E ratio of 13.2 and P/S ratio of 0.6. Lifepoint Hospitals Inc. had an annual average earning growth of 19.8% over the past 10 years. GuruFocus rated Lifepoint Hospitals Inc. the business predictability rank of 5-star.
Highlight of Business Operations:On August 2, 2011, the Budget Control Act of 2011 (the BCA) was enacted. The BCA increased the nations debt ceiling while taking steps to reduce the federal deficit. The deficit reduction component was implemented in two phases. In the first phase, the BCA imposed caps that reduced discretionary (non-entitlement) spending by more than $900 billion over 10 years, beginning in FFY 2012. Second, a bipartisan Congressional Joint Select Committee on Deficit Reduction (the Committee) was charged with identifying at least $1.5 trillion in deficit reduction, which could include entitlement provisions like Medicare reimbursement to providers. On November 21, 2011, the Committee announced that its members were unable to agree on any measures to reduce the deficit, and as a result, $1.2 trillion in across-the-board spending
The Affordable Care Act also requires HHS to implement a value-based purchasing program for inpatient hospital services. The Affordable Care Act requires HHS to reduce inpatient hospital payments for all discharges by a percentage beginning at 1% in FFY 2013 and increasing by 0.25% each fiscal year up to 2% in FFY 2017 and subsequent years. HHS will pool the amount collected from these reductions to fund payments to reward hospitals that meet or exceed certain quality performance standards established by HHS. HHS will determine the amount each hospital that meets or exceeds the quality performance standards will receive from the pool of dollars created by these payment reductions.
As of December 31, 2011, our consolidated debt, excluding the unamortized discount of convertible debt instruments, was approximately $1,652.8 million. We also have the ability to incur significant amounts of additional indebtedness, subject to the conditions imposed by the terms of our credit agreement and the agreements or indentures governing any additional indebtedness that we incur in the future. As of December 31, 2011, revolving loans available for borrowing under our credit agreement, as amended, with Citicorp North America, Inc., as administrative agent, and a syndicate of lenders (the Credit Agreement) were up to $320.2 million, net of outstanding letters of credit of $29.8 million. Additionally, our Credit Agreement contains uncommitted accordion features that permit us to borrow at a later date additional aggregate principal amounts of up to $650.0 million under the term A and the term B loan components and up to $300.0 million under the revolving loan component, subject to obtaining additional lender commitments and the satisfaction of other conditions. Our Term A Loans and Revolving Loans mature on December 15, 2012. At December 31, 2011, there were no Term A Loans or Revolving Loans outstanding. We are currently working on maturity date extensions, potential increases in available capacity and additional flexibility in terms for our Credit Agreement. If we are unable to refinance or extend principal payments due at maturity of our various debt instruments, our cash flow may not be sufficient to repay maturing debt and fund other operating requirements.
The limitations in our Credit Agreement, our indenture or other instruments governing indebtedness that we may incur in the future may restrict our ability to repay existing outstanding indebtedness. Subject to certain conditions, holders of the 3½% convertible senior subordinated notes due 2014 and the 3¼% convertible senior subordinated debentures due 2025 may convert their securities for cash, and if applicable, shares in common stock prior to the maturation of the notes offered hereby. Failure to repay the 3½% convertible senior subordinated notes due 2014 or 3¼% convertible senior subordinated debentures due 2025 upon maturity or upon conversion of the securities may result in a default.
Our Board of Directors has authorized the repurchase of outstanding shares of our common stock either in the open market or through privately negotiated transactions, subject to market conditions, regulatory constraints and other customary factors in accordance with repurchase plans adopted in 2009, 2010 and 2011. The 2009 repurchase plan provided for the repurchase of up to $100.0 million shares of our common stock and expired in February 2011. The 2010 repurchase plan provided for the repurchase of up to $150.0 million shares of our common stock, and we have repurchased all shares authorized for repurchase under this plan. The 2011 repurchase plan provides for the repurchase of up to $250.0 million shares of our common stock, and, in connection with this repurchase plan, we entered into a trading plan in accordance with the SEC Rule 10b5-1 (the 10b5-1 Trading Plan) on December 15, 2011. The 10b5-1 Trading Plan will expire on February 22, 2012 unless earlier terminated in accordance with its terms. We are not obligated to repurchase
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