Mizuho Securities analyst Sheryl Skolnick is growing comfortable with the idea that outpatient treatments will be a growing source of revenue and profits at LifePoint Health. The Brentwood-based company's execs last week said the trend of rising outpatient surgeries continued this past spring, which led Skolnick to question whether hospital companies' results revolve as strongly around admissions as has long been assumed.
"The answer surprised us, but not enough to abandon the thesis that admits drive performance," Skolnick wrote on Monday, when she reiterated her 'buy' rating but trimmed his price target a bit to $93. Get more of her thoughts here.
LifePoint shares (Ticker: LPNT) are up slightly to $85.21 Wednesday morning. Year to date, they've risen almost 20 percent.
Avondale Partners analyst Paula Torch says investors should expect generally good second-quarter numbers from hospital operators in the coming weeks. The recent positive preview from industry leader HCA Holdings was a good tell and should generally translate to other operators. Torch expects LifePoint report earnings per share of $1.01, two cents above analysts’ consensus, on the back of good patient volumes, better cost controls and the upgrading of acquired hospitals. But she’s not as bullish on the prospects of Community Health Systems, which she expects will earn 88 cents per share, a penny less than consensus. But revenues should be strong, she says, helped by easier comparisons to last year’s Q2 and helping to offset spending on doctor recruitment at former HMA hospitals.
Marilyn Tavenner, the former administrator of the Centers for Medicare and Medicaid Services, has resigned her seat on the board of LifePoint Health. Tavenner was named a director of the Brentwood-based company only this past April, but is stepping down to focus on her new job as CEO of America's Health Insurance Plans, one of the biggest trade groups in the health care sector.
William F. Carpenter III, Chairman and Chief Executive Officer of LifePoint Health, said, “On behalf of LifePoint, I want to congratulate Marilyn on her appointment as AHIP President and CEO. While this means we must lose her as a member of our Board of Directors, the healthcare industry remains very fortunate to have Marilyn as a leader during this time of change. She will play an important role in making communities healthier by providing continued leadership in the efforts to improve access to quality, affordable care for all Americans. Our board understands her need to focus on this new endeavor, and we wish her the very best.”
We still have a bit of hospital stock news to pass on in the wake of the Supreme Court’s decision in favor in health insurance exchange subsidies. Mizuho Securities’ Sheryl Skolnick has upgraded shares of LifePoint Health to ‘buy’ from ‘neutral’ and set a price target of $95.71, which leaves about 10 percent of upside. Skolnick points out that Brentwood-based LifePoint (Ticker: LPNT) already is “nicely FCF positive” and will benefit from the higher exchange enrollments that are expected.
Newly public Community Healthcare Trust has picked up coverage from analysts at Evercore ISI. They have set a ‘buy’ rating on the Cool Springs-based real estate investment trust and see it climbing to $22 in the coming quarters. Community Healthcare (Ticker: CHCT) closed Monday at $19.07.
When Raymond James analyst John Ransom on Friday cut his rating for shares of Community Health Systems after they'd run up more than 12 percent Thursday on the heels of the Supreme Court's health insurance subsidies opinion, it suggested a straight valuation call.
That's only part of the story.
Ransom has some issues with the deep-down prospects for CHS' ability to grow profits. The Franklin-based company, he notes, doesn't have as much exposure to insurance exchanges and hasn't been helped by slow Medicaid expansion around the country. On top of that, he says the company has spent more money than expected on IT and M&A activities. That'll put something of a cap on growth — something investors will be watching closely given the strong numbers posted by the hospital sector in the spring of last year.
Paula Torch at Avondale Partners doesn't quite see it that way. She has raised her target for CHS to $77 from $62 (and for LifePoint Health to $94 from $84) and says the upcoming comparisons to last year's second quarter will be something to watch but won't change the fundamental dynamics at play.
“We believe that hospitals should be able to put up positive numbers given core strength with incremental benefits as utilization picks up for the exchanges. CYH is the best positioned to take advantage of a ramp in volumes given it has the easiest compares versus its peers,” she wrote.
SEE ALSO: Our post from Friday with additional analyst moves from anlaysts at Leerink, Oppenheimer and Jefferies
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