Lifepoint Hospitals Inc. has a market cap of $2.15 billion; its shares were traded at around $39.27 with a P/E ratio of 15.2 and P/S ratio of 0.7. Lifepoint Hospitals Inc. had an annual average earning growth of 18.7% over the past 10 years. GuruFocus rated Lifepoint Hospitals Inc. the business predictability rank of 4.5-star.LPNT is in the portfolios of Richard Snow of Snow Capital Management, L.P., David Dreman of Dreman Value Management, John Hussman of Hussman Economtrics Advisors, Inc., Diamond Hill Capital of Diamond Hill Capital Management Inc, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC.
This is the annual revenues and earnings per share of LPNT over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of LPNT.
Highlight of Business Operations:We generate revenues primarily through hospital services offered at our facilities. We generated $786.2 million and $735.5 million in revenues from continuing operations during the three months ended March 31, 2010 and 2009, respectively. For the three months ended March 31, 2010 and 2009, we derived 40.9% and 41.1%, respectively, of our revenues from the Medicare and Medicaid programs. Payments made to our hospitals pursuant to the Medicare and Medicaid programs for services rendered rarely exceed our costs for such services. As a result, we rely largely on payments made by private or commercial payors, together with certain limited services provided to Medicare recipients, to generate an operating profit.
Medicare Reimbursement Medicare payment methodologies have been, and can be expected to continue to be, revised significantly based on cost containment and policy considerations. On April 19, 2010, the Centers for Medicare and Medicaid Services (CMS) issued its hospital inpatient prospective payment system (IPPS) proposed rule for federal fiscal year (FFY) 2011, which begins on October 1, 2010. Among other things, the proposed rule would provide for a market basket increase of 2.4% in FFY 2011 for hospitals that successfully report the 2011 quality measures included in the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) program and an increase of 0.4% for hospitals that do not. It would also increase the outlier threshold and add 45 new patient care quality measures, 10 of which our hospitals would be required to report to in order to receive the full market basket increase in FFY 2012. In addition to the RHQDAPU program, the proposed rule would also, as required by Transitional Medical Assistance (TMA), Abstinence Education, and Qualifying Individuals Programs Extension Act of 2007 (the TMA Act), reduce IPPS payment rates by 2.9% in FFY 2011 to account for the increase in spending that CMS believes is a result solely of changes in hospital coding and discharge classification practices that occurred in connection with the implementation of the Medicare severity diagnosis-related group (MS-DRG) system. Although CMS did not specify any additional reductions for FFY 2012, it indicated that the 2.9% reduction in FFY 2011 would only recover half of the increase in spending that is required to be recouped under the TMA Act and that it would need to make additional IPPS payment reductions in the future. Overall, CMS anticipates that the payment changes in the proposed IPPS rule would decrease Medicare payments to acute care hospitals by 0.1% in FFY 2011. In addition, the Acts implemented a 0.25% reduction to hospital inpatient rates effective April 1, 2010 and October 1, 2010 and a 0.25% reduction to hospital outpatient rates retroactive to January 1, 2010, and CMS has indicated that those provisions will be handled through a separate rule.
Despite our declining inpatient admissions, equivalent admissions for the three months ended March 31, 2010 increased by 2.3% to 100,704 compared to 98,394 in the same period last year. The equivalent admissions improvement is primarily a result of increases in outpatient revenues in radiology, including CTs, MRIs and mammography procedures, increased utilization of our laboratory testing services and increases in our other higher reimbursement outpatient diagnostic services, including cardiac catheterizations. These increases contributed to an increase in our outpatient factor to 2.04 compared to 1.99 in the same period last year. Our revenues per equivalent admission increased 4.4% to $7,807 during the three months ended March 31, 2010 as compared to $7,475 for the same period last year. Similarly, these increases are the result of increases in our higher reimbursement outpatient diagnostic services. Additionally, we have experienced a slight increase in the average acuity of our services provided, as evidenced by a 2.3% increase in our Medicare case mix index to 1.32 as compared to 1.29 in the same period last year, as well as favorable commercial pricing, including third party payor contracting and Medicares hospital market basket updates.
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