LifePoint Health's fourth-quarter earnings dipped as the hospital company experienced fewer baby deliveries.
That was a key reason why volumes declined at the 67 hospitals LifePoint owned before buying five more hospitals in late 2015 and early 2016, the company disclosed Friday.
LifePoint posted net income of $46.6 million in the fourth quarter compared with net income of $55.4 million in the prior-year quarter. Revenue jumped to $1.61 billion in the quarter from $1.37 billion largely as a result of the hospital acquisitions.
During an earnings call with analysts Friday, LifePoint Chief Financial Officer Michael Coggin pointed to the fewer baby deliveries and fewer readmissions under new Medicare rules for the declines at its so-called legacy hospitals.
Earlier this month, physician-staffing giant Mednax alluded to the same slowing of births nationally as a reason for declines in revenue from its neonatology physicians.
Nationwide over the past decade, births have dropped sequentially from about 4.4 million annually to 4 million.
During LifePoint's fourth quarter, same-facility admissions at the 67 pre-acquisition spree hospitals dipped 1%, inpatient surgeries were down 6% and total surgeries were down 2%.
With the five acquired hospitals included, those numbers were all solidly positive in the fourth quarter. Admissions grew 16% and inpatient surgeries 13% year-over-year.
CEO Bill Carpenter told analysts Friday that LifePoint is seeing margins improve at its acquired hospitals as the company continues to expand service lines at the hospitals and implement quality and business processes.
LifePoint, the nation's fourth-largest investor-owned hospital company, typically buys not-for-profit hospitals that are the sole providers in their communities and improves their margins from the low single digits to double digits over three years.
The company hasn't made an acquisition in about a year as it has focused on absorbing the facilities acquired in 2014 and 2015 that increased LifePoint's annual revenue by about $2 billion. LifePoint's 2016 revenue finished at $6.36 billion.
Those acquired hospitals include 137-bed Central Carolina Hospital in Sanford, N.C. and the 355-bed Frye Regional Medical Center in Hickory, N.C., purchased through a joint venture between LifePoint and Duke University Health System known as Duke LifePoint.
As part of 2017 guidance released Friday, the acquired hospitals are expected to generate about $55 million in additional earnings before interest, taxes, depreciation and amortization for the year, while legacy hospitals are expected to add $20 million, Coggin said.
For 2017, LifePoint expects adjusted EBITDA in a range of $785 million to $815 million vs. actual adjusted EBITDA in 2016 of $746.5 million.
