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Analyst Blog

HCA Holdings Inc. (HCA - Snapshot Report) reported fourth-quarter 2013 operating net income of 92 cents per share which surpassed the Zacks Consensus Estimate of 86 cents by nearly 7%. The results also exceeded the prior-year earnings by a penny.

Continued focus on enhancing patient quality and experience, efficiency and growth aided the outperformance.

Operational Update

Total revenues grossed $8.84 billion during the quarter which came almost in line with the Zacks Consensus Estimate. However, the results increased 4.8% year over year. The top-line growth is attributable to greater revenue per equivalent admission and improvements in total surgical volume of same facility.

Revenue per equivalent admission rose 3.9% on a same facility basis. Growth was aided by changes in payor mix and increasing acuity.

Same facility equivalent admissions decreased 1% year over year during the reported quarter. Same facility admissions also declined 1.8% year over year in the quarter under review. The decline was attributable to lower pulmonary and short-stay admissions.

Operating expense per equivalent admission increased 3.5% year over year in fourth quarter of 2013.

Total expense of HCA Holdings amounted to $7.17 billion during the quarter, up 3.7% year over year. The increase in expenses was driven by higher salaries and benefits, supplies and other operating expenses.

Adjusted earnings before interest tax depreciation and amortization (EBITDA) increased 6.7% year over year to $1.71 billion in the reported quarter.

HCA Holdings operated with 165 hospitals during the reported quarter, 3 more from the year-ago quarter.

The company also operated in 115 freestanding outpatient surgery centers during the quarter, up from 112 centers reported in the comparable year-ago period.

Full-year 2013 Highlights

HCA Holdings’ net income excluding losses on sales facilities, legal claim costs and loss on retirement of debt came at $3.41 per share for the full-year 2013, down 8.1% from 2012 number.

Total revenues of HCA Holdings grossed $34.18 billion for 2013, up 3.5% year over year.

Net cash provided from operating activities slid 11.9% to $3.68 billion during 2013.

Financial Update

HCA Holdings exited the third quarter of 2013 with total assets of $28.83 billion, up 2.7% from 2012-end.

As of Sep 30, 2013, HCA Holdings had cash and cash equivalents of $414 million which plunged 41.3% from the prior-year end level.

Long-term debt of HCA Holdings stood at $27.59 billion at the end of 2013. It increased 0.3% from Dec 31, 2012-level.

Net cash flows from operating activities stood at $1.23 billion during the quarter, down 2.9% year over year.

Share Repurchase

During the reported quarter, HCA Holdings repurchased nearly 10.6 million shares for approximately $500 million from some of its sponsors using the draws under its revolving credit facilities.

Guidance

HCA Holdings expects its 2014 revenues to lie in the range of $35.50 billion and $36.50 billion. Additionally, adjusted earnings per share for 2014 are expected to hover between $3.45 and $3.75.

Zacks Rank

HCA Holdings presently holds a Zacks Rank #3 (Hold). Better-ranked stocks in the healthcare sector include Almost Family Inc. (AFAM - Snapshot Report), Addus HomeCare Corporation (ADUS - Snapshot Report) and VCA Antech Inc. (WOOF - Snapshot Report). While Almost Family carries a Zacks Rank #1 (Strong Buy), both Addus HomeCare and VCA Antech bear a Zacks Rank #2 (Buy).

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