Faced with mounting bills from the uninsured, LifePoint ( LPNT) has issued weak guidance for the coming year.

The rural hospital chain announced on Friday that it expects 2007 profits to come in at $2.42 to $2.52 a share. On average, Wall Street analysts were projecting full-year profits of $2.62 instead.

Increases in bad debt expense and charity care -- which could total 15% of the company's 2007 revenue combined -- continue to hurt the bottom line.

On a bright note, LifePoint issued top-line guidance of $2.68 billion to $2.69 billion, in line with Wall Street estimates. The company expects patient volumes to grow by 1% to 2% despite the tough industry environment. It offered a simple formula for that success.

"Physician recruiting and relationship building remain the major focus for all of our management teams because we recognize that active physician recruiting and healthy physician relationships are key components in growing our business," LifePoint CEO William Carpenter said on Friday. "We firmly believe that we can strengthen LifePoint's long-term growth through our continued commitment to carefully selected capital projects and the expansion of our services."

Still, investors hoped for better. They pushed shares of LifePoint down 31 cents to $33.25 in early-morning trading.

Realistic goals

Stephens analyst Whit Mayo had anticipated "conservative, yet beatable" guidance from the company.

On Thursday, Mayo noted that LifePoint issued a "very bleak outlook" for 2006 that now looks low in hindsight. Thus, he predicted more of the same.

"The company has little to gain from being overly optimistic or ominous, but we continue to believe that its larger, more important core markets are turning," wrote Mayo, who has an overweight rating on the company's stock. "While we were early on our upgrade in September, expectations appear modest coupled with a valuation limiting downside risk and catalysts looming from improved operations and potential dispositions."

Mayo went on to mention an important wild card, however.

The "swing factor (is) likely to be bad debt," he acknowledged. "We expect bad debt to get worse before its gets better for the industry -- and believe that guidance from Triad, LifePoint and Universal Health Services will reflect that reality."

Mayo nevertheless remains upbeat about LifePoint's operations and continued volume growth. His firm has investment banking ties to the company.

Jefferies analyst Frank Morgan sounds more cautious. He highlights signs of progress at the company but foresees additional work ahead.

"Management continues to emphasize physician recruitment as key to driving volumes and top-line growth," Morgan noted on Thursday. "While the strategy is sound, it appears to be in its early stages."

Morgan has a hold recommendation and a $35 price target on LifePoint's stock. His firm makes a market in the company's securities.