LifePoint's Sinking Feeling
thestreet.com
4/27/2007 11:46 AM EDT
LifePoint (LPNT) investors seem lost after the sudden departure of the company's respected CFO.
They have to wonder why Michael Culotta, the company's veteran finance chief, has chosen to leave so soon after CEO William Carpenter's arrival. The company itself has offered no explanation.
"The company does not know if he has resigned to take another position," says Sheryl Skolnick, senior vice president of CRT Capital Group. But "Carpenter did say that a search for Mr. Culotta's replacement has already begun -- so how sudden could this 'resignation' have been?"
LifePoint has assured investors that no major accounting problems loom. Yet, without further information, the company has left Skolnick and others worried that Culotta departed because of conflicts with management. Now, everyone seems to feel a bit uneasy about LifePoint's remaining leaders, particularly Carpenter.
Meanwhile, Skolnick has already expressed concern about the "team player" that Carpenter said he will seek as Culotta's replacement.
"Sorry, but we don't think the CFO should completely be a team player," she said. "At the end of the day, the CFO needs to be the one to say: 'The buck stops here' on financial matters."
Peter Young, a business consultant at HealthCare Strategic Issues, believes that Culotta is a competent CFO who sees trouble on the way. Young notes that LifePoint operates hospitals in rural Southern towns where manufacturing plants -- which often rank as the largest employer -- have been struggling to operate and moving elsewhere as a result. Notably, he says, LifePoint loses lucrative commercially insured cases when that happens.
Moreover, Young adds, tough industry conditions have only made the situation worse.
"When economic hard times befall smaller towns and the payer mix deteriorates, doctors and other in-demand licensed healthcare providers move on to greener pastures -- but the hospital is still there," he explained. "I'd say a competent CFO has the ability to foresee the operating environment ahead and, perhaps in this case, had disagreements with management over agenda" as well.
Lehman Brothers analyst Adam Feinstein promptly downgraded LifePoint's stock from overweight to equal-weight as a direct result of the CFO's departure. Feinstein worries about the possible disruptions and volatile stock performance that could now lie ahead.
Feinstein lowered his price target on the shares from $41 to $38 as well. His firm makes a market in, and regularly trades, LifePoint securities.
Skolnick, who has a similar fair-value rating on LifePoint herself, no doubt viewed that downgrade as more than justified.
"LifePoint still has an untried CEO and an unnamed CFO," she stressed. "That's not a recipe for a buy-rated stock, that's for sure. ... The uncertainty as to why Mr. Culotta resigned, coupled with the fact that the CEO is still untried, could -- and, we believe, should -- create significant pressure on the stock."
The stock indeed took an immediate hit, falling 4.6% to $36.30 on Friday.
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9 comments:
Interesting...
"Peter Young, a business consultant at HealthCare Strategic Issues, believes that Culotta is a competent CFO who sees trouble on the way. Young notes that LifePoint operates hospitals in rural Southern towns where manufacturing plants -- which often rank as the largest employer -- have been struggling to operate and moving elsewhere as a result. Notably, he says, LifePoint loses lucrative commercially insured cases when that happens.
Moreover, Young adds, tough industry conditions have only made the situation worse.
"When economic hard times befall smaller towns and the payer mix deteriorates, doctors and other in-demand licensed healthcare providers move on to greener pastures -- but the hospital is still there," he explained. "I'd say a competent CFO has the ability to foresee the operating environment ahead and, perhaps in this case, had disagreements with management over agenda" as well."
And the good news just keeps rolling in....Ever notice the only "Good" news you ever hear from this company is when the stock goes up a bit?
From: http://www.kpvi.com/global/story.asp?s=6434915
Public comment about an out-of-state private company's interest in Portneuf Medical Center may not be limited to just one. Political specialist, Doug Andersen, has learned two additional Tennessee-based groups have talked with PMC.
Chairman Kelly Hirning says, in the past two weeks, officials with both HCA Healthcare and LifePoint Hospitals expressed interest in PMC. HCA, which owns EIRMC in Idaho falls, actually looked at PMC last summer but was turned away by the board. Phone calls placed to both groups were not returned however PMC says they initiated the contact.
This latest information is being made public after Pocatello Mayor Roger Chase publicly praised the recent offer from Capella. Both HCA and LifePoint have access to significant capital and own or operate dozens of hospitals across the country. The board studied the issue and in February recommended to County Commissioners a community-based not-for-profit option.
Friday afternoon, the PMC board chair said: "While the County Commissioners may ultimately choose a for-profit option, we strongly recommend they take a deep look at the many possibilities for governance. The stakes for the county are too high to hastily sell off interest in PMC without a deliberative community discussion about all of the options..." which, says Hirning, "hasn't even come close to happening."
A panel of citizens has been put together to aid Commissioners in making the final decision. They've held three meetings. Another is scheduled for May 1st where they'll hear about a 501c3; the not-for-profit model.
The most interesting part: "Friday afternoon, the PMC board chair said: "While the County Commissioners may ultimately choose a for-profit option, we strongly recommend they take a deep look at the many possibilities for governance. The stakes for the county are too high to hastily sell off interest in PMC without a deliberative community discussion about all of the options..." which, says Hirning, "hasn't even come close to happening."
Maybe someone from Danville should make the fine folks at Portneuf aware of this blog.
"Maybe someone from Danville should make the fine folks at Portneuf aware of this blog."
Ah, the wonders of modern technology...someone at Portneuf is now aware of this blog.
Maybe this is part of our problem...people keep saying "maybe someone should..."
Maybe someone should go to the public hearings. Actually, we all need to be there. Hopefully there won't be too many people resting in the fact that they thought "maybe someone should..."
There used to be a post on this blog that i thought was great.
It said something like "Stop bitching. Start a revolution"
It seems like for some folks it should say "Keep bitching. Maybe someone will start a revolution"
Just a thought.
At Portneuf, a "panel of citizens has been put together to aid Commissioners in making the final decision."
What a novel idea. Let's put the citizens commission together to advise us BEFORE the sale.
Let's give some credit to those folks from Idaho.
Didn't know where to post this but..I understand another "O" is leaving Friday. Bill Keith, COO. When he came to DRMC, LPNT told us that he was "experienced and would help turn things around"...well...
So now, we're left with Art and Ruth. Everyone has Art's number and we're quickly closing in on Ruth. Her style of communication is different, taking a select few under her wing to gather information she needs and giving others enough rope to eventually hang themselves.
It's obvious to some of us that she is still very much a "company" woman and that's ok, she's doing what she needs to do. It's just sickening to see so many being used by her.
I hope someone is taking pictures....because we are experiencing the biggest train wreck to hit Danville since the old '97 jumped the tracks.
So true : Danville's newest "tourist attraction":
The wreck of the old 2007.
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