A series of 2016 hospital acquisitions by LifePoint Health is expected to add $1.25 billion of revenue this year to the company, but be slightly dilutive to earnings until those hospitals are fully absorbed within the year, the company said in an earnings release Friday.
Over the past few months, investor-owned LifePoint bought hospital and health systems in Columbus, Ga., Columbia, S.C, and Hickory and Sanford, N.C. The acquisitions were announced and funded in 2015, but officially closed in 2016.
LifePoint expects those hospitals, which the company anticipates will post a relatively low EBITDA margin of 5% in 2016, to be dilutive to earnings per share in 2016 of 60 cents, the company said while providing earnings guidance in its earnings release.
But by 2017, they are expected to be contributing meaningfully to earnings.
“Overall, 2015 was a transformative year underscored by our continued progress on acquisitions, which will add approximately $1.25 billion of revenue this year,” said LifePoint CEO William Carpenter III in the earnings release.
“We expect that as we bring these and other recent acquisitions up to company average margins over the coming years, they will drive significant Adjusted EDITDA growth.”
Brentwood, Tenn.-based LifePoint owns and operates hospitals across 22 states.
In an earning call with analysts this morning, LifePoint CFO Leif Murphy said that the hospitals it acquires at best are earning EBITDA margins in the low single digits.
But with operational changes that LifePoint brings forward and additions to patient quality and physician staff, LifePoint's acquired hospitals are earning EBITDA margins in the double-digits within three years.
LifePoint finished 2015 with higher revenue and net income in its fiscal fourth quarter and for the year ended Dec. 31.
In the fourth quarter, the company posted net income of $55.4 million, or $1.16 per diluted share, compared with net income of $26.7 million, or 48 cents, in the year-earlier quarter. Revenue in the quarter was $1.37 billion vs. $1.26 billion in the year-earlier period.
LifePoint in 2015 posted net income of $193 million, or $3.95 per diluted share, compared with net income in 2014 of $134.9 million, or $2.69 per diluted share.
Revenue jumped in 2015 to $5.21 billion vs. $4.48 billion in 2014.