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Hospitals may complete more mergers this year (The Tennessean)

Hospitals may complete more mergers this year (The Tennessean)
by Getahn Ward, The Tennessean | Jan 26, 2011

Expect another wave of mergers and acquisitions in the hospital sector this year.

That forecast was among predictions offered by four Wall Street analysts who took part in a luncheon panel hosted by the Nashville Health Care Council on Wednesday.

Hospital chains, including those based in Nashville, should find more opportunities to buy smaller, weaker individual hospitals or systems facing pressure from insurers over what they get paid for services, said Kemp Dolliver, a Boston-based analyst at Avondale Partners.

Dolliver also mentioned LifePoint Hospitals of Brentwood among his favorite stock picks. LifePoint’s stock rose 20 cents per share on Nasdaq on Wednesday, closing at $35.55.

“Most competitors underestimated what they (LifePoint) can do this year,” the analyst said, citing the chain’s acquisition of the former Sumner Regional Health Systems of Gallatin and a more stable “same-store sales” picture among the hospital company’s positives.

“They’re the least-leveraged company, so therefore there’s capacity for acquisitions and more share repurchases,” Dolliver said.

Dolliver also recommended pharmacy benefits manager Express Scripts’ stock, citing a projected increase in the generic drug business as something that should boost profitability. The company also managed to sign two of its major clients to five-year agreements, which is another plus and a sign of stability.

Express Scripts’ stock increased 29 cents a share in Nasdaq trading on Wednesday to close at $57.63 per share. That is within $1.14 of its 52-week high.

LifePoint promotes Dill

Also, LifePoint has promoted David Dill to president, a title formerly held by William F. “Bill” Carpenter III who remains chairman and chief executive of the hospital operator. Dill, 42, remains chief operating officer as well.

Dill had been LifePoint’s executive vice president and chief operating officer nearly two years.

He joined the company as chief financial officer in 2007.

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