In response to an analyst question, Coggin said LifePoint has a policy to keep its debt at no higher than four times EBITDA. The company's debt level today is 3.8 times EBITDA, he said.
Carpenter said LifePoint on Tuesday reaffirmed its financial guidance for 2016 to signal investors that the change in CFO is expected to be smooth and made because Murphy received a career opportunity at Team Health. “He got that call he couldn't refuse,” Carpenter said.
The LifePoint presentation Wednesday was webcast.
Brentwood, Tenn.-based LifePoint, whose three-year plan is to buy non-urban hospitals and invest in physicians, technology and quality to move their margins from the single digits into the mid-teens, hit a snag in the second quarter.
Carpenter explained to Baird analysts that one high-powered specialist at a hospital he has refused to name cost LifePoint about $10 million when they had to let him go during the second quarter.
The physician had behaved in a way that caused some fellow physicians to quit and another group to threaten to leave, Carpenter said. That's when LifePoint entered negotiations with the physician to part ways, he said.
It took two local physicians to replace the physician's volume, though the impact wasn't too significant since the hospital is the only one in its particular market.
But a hefty severance and costs of physician recruitment pulled second-quarter earnings down by the $10 million, he said.
That, along with a $5 million tab to replace a physician billing system in one of LifePoint's markets, contributed heavily to LifePoint posting nearly a 60% drop in net income in the quarter to $20.1 million, or 39 cents per share, from $49.8 million, or $1.05, in the year-earlier period.
Revenue in the quarter grew to $1.8 billion from $1.5 billion in the year-earlier quarter, mostly on hospital acquisitions.