Transcript No Slide Title

“SERVING THE NON-URBAN COMMUNITY”
FORWARD-LOOKING STATEMENTS
This presentation includes forward-looking statements based on current management expectations. Numerous factors exist which may
cause results to differ from these expectations. Many of the factors that will determine our future results are beyond our ability to control
or predict with accuracy. Such forward-looking statements, particularly those statements regarding the effects of the proposed merger
between LifePoint Hospitals and Province Healthcare Company, reflect LifePoint Hospitals’ current expectations and beliefs, are not
guarantees of performance of LifePoint Hospitals or the newly formed combined entity 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. For
example, such risks, uncertainties, assumptions and other factors include, without limitation, the possibility that (1) the companies may be
unable to obtain the required stockholder approvals; (2) problems may arise in successfully integrating the businesses of the two
companies; (3) the acquisition may involve unexpected costs; (4) the combined company may be unable to achieve cost-cutting
synergies; (5) the businesses may suffer as a result of uncertainty surrounding the acquisition; and (6) the combined company may be
subject to future regulatory or legislative actions. These forward-looking statements are also subject to various risks and uncertainties,
including, without limitation, (i) reduction in payments to healthcare providers by government and commercial third-party payors, as well
as cost-containment efforts of insurers and other payors; (ii) the possibility of adverse changes in, and requirements of, applicable laws,
regulations, policies and procedures, including those required by our corporate integrity agreement; (iii) our ability to manage healthcare
risks and the lack of state and federal tort reform; (iv) uncertainty associated with compliance with HIPAA regulations; (v) our ability to
enter into and renew payor arrangements on acceptable terms; (vi) our ability to maintain and increase patient volumes and control costs;
(vii) the availability, cost and terms of insurance coverage; (viii) the highly competitive nature of the healthcare business, including the
competition to recruit and retain physicians; (ix) the ability to attract and retain qualified management and personnel; (x) the geographic
concentration of our operations; (xi) our ability to acquire hospitals on favorable terms and to complete budgeted capital improvements
successfully; (xii) our ability to operate and integrate newly acquired facilities successfully; (xiii) the availability and terms of capital to
fund our business strategy; (xiv) changes in our liquidity or indebtedness; (xv) the potential adverse impact of government investigations
and litigation involving the business practices of healthcare providers; (xvi) the successful development and license of software and
management information systems; (xvii) changes in generally accepted accounting principles or practices; (xviii) volatility in the market
value of our common stock; (xix) changes in general economic conditions and changes in the manner in which employers provide
healthcare coverage to their employees; (xx) our reliance on information technology systems maintained by HCA Inc.; (xxi) our ability to
comply with all aspects of the Sarbanes-Oxley law; and (xxii) those risks and uncertainties described from time to time in our filings with
the SEC, including those related to the proposed transaction between LifePoint Hospitals and Province Healthcare. Therefore, our future
results may differ materially from those described in this release. We undertake 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.
WHO WE ARE AND
HOW WE ARE DIFFERENT
 Spin-off of 23 hospitals from HCA on
May 11, 1999, with full indemnification
 “Pure Play” non-urban, communitybased healthcare provider
 Employees are shareholders through
ESOP and ESPP
 Entered into Corporate Integrity
Agreement with OIG (Office of
Inspector General) in December 2000
 Sole acute care facility in 28 of 29
markets
OPERATING PHILOSOPHY
“High Five”
Expanding the scope
and quality of care
for patients
Supplying the
necessary equipment
and resources to
physicians
Creating an outstanding work
environment for employees
Strengthening the
hospital’s central role
within the community
Managing financial performance
responsibly for stakeholders
LIFEPOINT HOSPITALS
Wyoming
Lander (89)
Riverton (70)
Utah
Price (84)
Vernal (39)
Kansas
Dodge City (110)
Louisiana
Ville Platte (102)
LaPlace (106)
CORPORATE OFFICE
# of licensed beds shown in ( )
Alabama
Andalusia (113)
Haleyville (99)
Russellville (100)
Winfield (71)
CON State
Florida
Bartow (56)
Palatka (141)
CON State
Kentucky
Georgetown (75)
Lebanon (75)
Mayfield (107)
Maysville (101)
Paris (58)
Russellville (92)
Somerset (234)
Versailles (25)
CON State
West Virginia
Logan (132)
Logan (19)
CON State
Tennessee
Athens (118)
Carthage (63)
Lawrenceburg (107)
Livingston (114)
Pulaski (95)
Sewanee (41)
Winchester (157)
CON State
DISCIPLINED APPROACH
TO ACQUISITIONS
Market Criteria
 Non urban hospitals
 Sole or significant market
provider
 Strong community support
 Ability to grow adjusted
EBITDA margins
 Solid existing physician base
ACQUISITION HISTORY
($ in millions)
Date
Acquired
Market
Location
Purchase Licensed
Revenues
Price**
Beds
River Parishes
Spring View
Logan General/
Guyan Valley
07/04
LaPlace, LA
$36
$24
106
10/03
12/02
Lebanon, KY
Logan, WV
$22
$75
$16
$87
75
151
Lakeland/
Northwest
Russellville
Ville Platte
12/02
Haleyville/
Winfield, AL
$38
$22
170
10/02
12/01
10/01
01/01
Russellville, AL
Ville Platte, LA
Athens, TN
Versailles, KY
$27
$22
$24
$ 6
$20
$11
$17
$ 1
100
116
118
25
07/00
06/00
Lander, WY
Palatka, FL
$20
$49
$30
$49
81
141
Athens
Bluegrass*
Lander
Putnam
* Operating Lease
** Excluding working capital
FOCUSED CAPITAL
EXPENDITURE PROGRAM
Capital Expenditures
($ in millions)
$72.1
Routine
Expansion
$60.7
$23.6
$52.4
$18.8
$17.3
$35.8
$16.3
$41.9
$48.5
$35.1
$56.7
$14.5
$42.2
$19.5
2001
2002
2003
YTD Sep. 03 YTD Sep. 04
TARGETED CAPITAL
EXPENDITURE PROGRAM
($ in millions)
No. of
Projects
2000
2001
2002
2003
OR
12
$ 6.4
$11.9
$10.2
$ 8.4
$ 0.7
MRI
18
3.0
4.1
8.7
6.5
3.6
CT
11
0.6
3.6
1.3
-
2.3
ER
5
1.7
0.7
0.5
3.3
7.9
Rehab
7
-
0.5
2.8
1.7
2.3
Patient room addition
3
-
-
1.4
7.2
10.3
Cardiac Cath Lab
5
-
-
3.1
2.0
-
MOB
14
-
1.2
6.8
6.4
4.4
Misc. Expansions
11
0.1
0.5
5.6
8.8
21.4
2004E
FINANCIAL DRIVERS AND
RESULTS
NET REVENUE BY QUARTER*
($ in millions)
$247.5
$238.2
16.2%
$174.4
11.3%
$170.7
2003
1st Qtr.
15.6%
2004
2002
2003
2nd Qtr.
$194.6
$175.2
25.4%
22.1%
$229.2
$219.4
$214.1
$212.9
2002
$253.7
17.7%
25.2%
2004
2002
2003
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2004
2002
2003
4th Qtr.
NET REVENUE BY QUARTER –
SAME FACILITY*
($ in millions)
$241.1
$232.1
$214.1
$212.9
13.2%
2003
2004
1st Qtr.
$237.5
$219.4
8.3%
2003
$222.9
8.4%
2004
2nd Qtr.
2003
2004
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2003
4th Qtr.
EQUIVALENT ADMISSIONS BY QUARTER*
47,188
43,303
43,147
9.0%
35,924
20.5%
2002
2003
1st Qtr.
42,651
8.6%
3.3%
34,464
2002
37,707
23.0%
34,448
23.8%
25.2%
2004
46,377
46,331
44,556
2003
2nd Qtr.
2004
2002
2003
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2004
2002
2003
4th Qtr.
EQUIVALENT ADMISSIONS BY
QUARTER – SAME FACILITY*
43,303
45,719
43,147
5.6%
2003
43,171
42,651
0.1%
2004
1st Qtr.
2003
43,453
44,928
1.9%
2004
2nd Qtr.
2003
2004
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2003
4th Qtr.
ADMISSIONS BY QUARTER*
24,526
23,722
22,577
21,550
8.6%
19,663
20,846
2.1%
17,683
14.8%
22,480
21,997
7.8%
17,513
21.9%
2002
2003
1st Qtr.
2004
2002
19,629
2003
2nd Qtr.
20.9%
19.0%
2004
2002
2003
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2004
2002
2003
4th Qtr.
NET REVENUE PER EQUIVALENT
ADMISSION BY QUARTER – SAME FACILITY*
$5,270
$4,917
$5,372
$4,961
$5,145
2004
1st Qtr.
2003
$4,959
6.4%
8.3%
7.2%
2003
$5,474
2004
2nd Qtr.
2003
2004
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2003
4th Qtr.
VOLUME – ER VISITS*
110,842
110,369
98,882
100,115
102,957
104,227
93,137
6.2%
78,429
2.8%
81,521
2003
1st Qtr.
83,381
2004
2002
2003
2nd Qtr.
86,591
28.0%
25.0%
22.8%
18.8%
2002
5.9%
2004
2002
2003
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2004
2002
2003
4th Qtr.
VOLUME – OP SURGERIES*
19,367
18,604
17,246
7.9%
15,473
2003
1st Qtr.
2.9%
15,466
2004
2002
2003
2nd Qtr.
18,277
18,074
7.2%
15,544
15.7%
11.5%
2002
18,404
17,891
16,398
11.5%
16.3%
2004
2002
2003
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2004
2002
2003
4th Qtr.
VOLUME – IP SURGERIES*
6,658
6,650
5,894
12.8%
5,338
2003
1st Qtr.
2002
2003
2nd Qtr.
6,281
5,774
8.8%
5,244
12.5%
2004
3.5%
8.4%
5,461
10.4%
2002
6,212 6,427
6,141
18.5%
2004
2002
2003
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2004
2002
2003
4th Qtr.
REVENUES – PAYOR MIX
COMBINED I/P AND O/P*
3Q03
Medicaid
10.6%
9.8%
Other 4.2%
Self-Pay
3Q04
Medicare
35.2%
Medicaid
11.6%
Self-Pay
10.6%
Other
4.1%
40.2%
34.5%
39.2%
Commercial and
Managed Care
Commercial and
Managed Care
9 Months – 9/30/03
Medicaid
10.9%
8.6%
Other 4.1%
Self-Pay
Medicare
36.6%
9 Months – 9/30/04
Medicaid
Self-Pay
11.1%
9.4%
Other 3.8%
38.7%
39.8%
Commercial and
Managed Care
Medicare
Commercial and
Managed Care
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
Medicare
37.0%
EXPENSE MANAGEMENT*
Labor
Supplies
Bad Debt
Other
(% of net revenue)
(% of net revenue)
(% of net revenue)
(% of net revenue)
39.2%
2002
40.2%
2003
12.4%
2002
13.0%
2003
7.0%
2002
8.5%
18.1%
17.8%
2003
2002
2003
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
EXPENSE MANAGEMENT*
Labor
Supplies
Bad Debt
Other
(% of net revenue)
(% of net revenue)
(% of net revenue)
(% of net revenue)
39.9%
40.3%
12.8%
12.7%
10.2%
3Q03
3Q04
3Q03
3Q04
3Q03
9.6%
3Q04
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
17.5%
17.4%
3Q03
3Q04
ADJUSTED EBITDA BY QUARTER*
($ in millions)
$56.8
$51.7
$50.9
$46.0
$41.8
23.4%
10.4%
$42.5
$38.2
$40.6
21.7%
$46.2
$43.0
5.6%
$48.1
4.2%
18.3%
10.9%
2002
2003
1st Qtr.
2004
2002
2003
2nd Qtr.
2004
2002
2003
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2004
2002
2003
4th Qtr.
ADJUSTED EBITDA BY QUARTER –
SAME FACILITY*
($ in millions)
$56.3
$51.2
$45.9
21.6%
$49.5
$43.1
$42.5
16.3%
20.2%
2003
2004
1st Qtr.
2003
$47.7
2004
2nd Qtr.
2003
2004
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2003
4th Qtr.
MARGINS BY QUARTER –
SAME FACILITY*
23.3%
22.0%
21.6%
170bps
19.8%
19.6%
220bps
2003
2004
1st Qtr.
2003
21.0%
2004
2nd Qtr.
21.4%
140bps
2003
2004
3rd Qtr.
* Excludes Bartow Memorial Hospital, which LifePoint Hospitals is expecting to exchange
for another hospital in the fourth quarter of 2004 or first quarter of 2005.
2003
4th Qtr.
UNAUDITED SUPPLEMENTAL
INFORMATION
($ in millions)
Adjusted EBITDA
Years Ended December 31,
2002
2003
$ 166.8
$ 179.6
Depreciation and amortization
(35.0)
(43.1)
Interest expense, net
(13.3)
(12.8)
Debt retirement costs
(31.0)
-
ESOP expense
(9.7)
(6.9)
Minority interests in earnings of consolidated entities
(2.2)
(0.7)
(32.7)
(45.9)
(1.4)
(1.7)
Provision for income taxes
Loss from discontinued operations, net of income taxes
Net income
$
41.5
$
68.5
Adjusted EBITDA is defined as earnings before depreciation and amortization, interest expense, debt retirement costs, ESOP expense, gain on
previously impaired assets, minority interest in earnings of consolidated entity, income taxes and discontinued operations. Our management uses
adjusted EBITDA to evaluate our operating performance and as a measure of performance for incentive compensation purposes. We believe 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 accounting principles generally accepted in the United States, 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 accounting principles generally accepted in the United States and is susceptible to varying calculations, adjusted EBITDA as presented
may not be comparable to other similarly titled measures of other companies.
UNAUDITED SUPPLEMENTAL
INFORMATION
($ in millions)
Adjusted EBITDA
Depreciation and amortization
Interest expense, net
Debt retirement costs
Three Months Ended
September 30,
Nine Months Ended
September 30,
2003
2004
2003
2004
$ 43.0
$ 50.9
$ 131.5
$ 159.4
(10.2)
(12.1)
(31.5)
(34.5)
(3.3)
(3.1)
(9.9)
(9.7)
-
-
-
(1.5)
ESOP expense
(1.8)
(2.3)
(4.9)
(7.1)
Minority interests in earnings of consolidated entities
(0.3)
(0.1)
(0.5)
(0.7)
(11.0)
(13.2)
(34.2)
(42.1)
(0.2)
(0.4)
(1.3)
(1.5)
Provision for income taxes
Loss from discontinued operations, net of income taxes
Net income
$ 16.2
$ 19.7
$ 49.2
$ 62.3
Adjusted EBITDA is defined as earnings before depreciation and amortization, interest expense, debt retirement costs, ESOP expense, gain on
previously impaired assets, minority interests in earnings of consolidated entities, income taxes and discontinued operations. Our management uses
adjusted EBITDA to evaluate our operating performance and as a measure of performance for incentive compensation purposes. We believe 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 accounting principles generally accepted in the United States, 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 accounting principles generally accepted in the United States and is susceptible to varying calculations, adjusted EBITDA as presented
may not be comparable to other similarly titled measures of other companies.
CONSISTENT EARNINGS
PER SHARE HISTORY
2000
2001 (a)
2002 (b)
2003
2004 (c)
$1.76
$1.07
$0.90
$0.60
$0.45
$0.36
$0.25
$0.13
$0.48
$0.40
$0.18
$0.11
$0.50
$0.42
$0.33
$0.20
$0.14
$0.44
$0.50
$0.54
$0.27
$0.16
$(0.07)
1st Qtr.
(a)
(b)
(c)
2nd Qtr.
3rd Qtr.
4th Qtr.
Includes effect of debt retirement costs of $(0.04) for second quarter 2001 and $(0.04) for full year.
Includes effect of debt retirement costs of $(0.02), $(0.41), $(0.06) and $(0.01) in first, second, third
and fourth quarters 2002, respectively, and $(0.50) for full year.
Includes effect of debt retirement costs of $(0.02) for second quarter 2004.
Year
ADJUSTED EARNINGS
PER SHARE HISTORY
Exclusive of Debt Retirement Costs
2000
2001 (a)
2002 (b)
2003
2004 (c)
$1.56
$0.94
$0.60
$0.45
$0.38
$0.25
$0.13
$0.50
$0.40
$0.34
$0.22
$0.11
1st Qtr.
$1.76
2nd Qtr.
$0.50
$0.42
$0.39
$0.45
$0.50
$0.54
$0.27
$0.20
$0.14
3rd Qtr.
$0.16
4th Qtr.
(a) Excludes effect of debt retirement costs of $(0.04) for second quarter 2001 and
$(0.04) for full year.
(b) Excludes effect of debt retirement costs. Represents $(0.02), $(0.41), $(0.06) and
$(0.01) in first, second, third and fourth quarters 2002, respectively, and $(0.50) for
year.
(c) Excludes effect of debt retirement costs of $(0.02) for second quarter 2004.
Year
CAPITALIZATION
($ in millions)
12/31/03
9/30/04
Total Debt
Bank Debt
41/2% Convertible Notes
$ 20.0
$
-
250.0
221.0
270.0
221.0
Total Stockholders’ Equity
394.3
477.7
Total Capitalization
$664.3
$698.7
Total Debt
Total Debt/Capitalization
Total Debt/LTM Adjusted EBITDA
LTM Adjusted EBITDA/Interest Expense
40.6%
1.5x
14.0x
31.6%
1.1x
16.5x
WHY INVEST IN LIFEPOINT?
 Less than 10% of rural hospitals are
owned by proprietary owners
 Community involvement
 Solid payor base
 Our focus on recruiting quality
physicians
 Opportunities for physicians and
employees to enhance their quality
of life in rural communities
“SERVING THE NON-URBAN COMMUNITY”
To learn more about LifePoint Hospitals, Inc.
please visit our website at
www.lifepointhospitals.com