Morningstar | LPNT Updated Forecasts and Estimates from 01 Oct 2018
No-moat LifePoint Health reported second-quarter results that were more or less in line with our estimates on both an absolute and per-adjusted-admission basis. Management provided updated guidance that lowered its outlook for 2018 primarily on the back of the previously announced sale of three Louisiana hospitals set to close in August. Given the firm's pending sale to Apollo Global Management, we intend to leave our fair value estimate unchanged from the $65 cash takeout offer as we believe the deal is highly likely to close over the coming months. As a reminder, the LifePoint board has until Aug. 22 to seek a more compelling financial proposal for shareholders. We doubt a strategic buyer will emerge within this timeframe and think receiving a superior bid from another private equity group would be a remote possibility.Overall same-facility trends appear to be maintaining or slightly improving over recent results, with 60 basis points of revenue growth underpinned by 50 basis-points of equivalent admissions growth and 10 basis points of positive pricing. Consolidated EBITDA margin clocked in at 11.9%, up on both a year over year and sequential basis after adjusting for income received from the electronic health record incentive program that ended in 2017. These results are supportive of the takeover, in our view, and we think investors would be well served to book recent gains and look for more compelling investment opportunities elsewhere.
LifePoint Health owns and operates community hospitals, regional health systems, physician practices, outpatient centers, and post-acute facilities. At Dec 31 2017, the company operated 71 hospital campuses in 22 states throughout the U.S., having a total of 9,254 licensed beds. The company's hospitals provide medical and surgical services commonly available in hospitals in non-urban markets. These services include general surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, pediatric services, and, in some of the company's hospitals, specialized services such as open-heart surgery, nursing, psychiatric care and neuro-surgery. In several markets, the company also provides outpatient services.
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