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HCA Holdings (HCA) Beats Q2 Earnings, Raises FY16 View

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HCA Holdings Inc. (HCA - Free Report) reported second-quarter 2016 adjusted earnings of $1.66 per share, which beat the Zacks Consensus Estimate by 11 cents. Further, earnings surged 21.2% on a year-over-year basis.

The upside was driven by a 4.3% increase in revenues to almost $10.32 billion which, however, lagged the Zacks Consensus Estimate of $10.46 billion.

Quarter Details

Same facility equivalent admissions increased 1.6% and same facility admissions inched up 0.6% in the quarter.
 

 

Same facility Medicare admissions and equivalent admissions increased 1.2% and 2.1%, respectively. This includes both traditional and managed Medicare. Managed Medicare admissions increased 3.9% on a same facility basis, and now represent 33.5% of HCA Holdings’ total Medicare admissions.

Same facility Medicaid admissions and equivalent admissions increased 0.5% and 2.1%, respectively, in the quarter.

Same facility self-pay and charity admissions increased 5.7% in the quarter. These represent 7.5% of HCA Holdings’ total admissions compared to 7.1% reported in the year-ago quarter.

Managed care and other, which includes exchange admissions, decreased 1.6%, and equivalent admissions decreased 0.8% on a same facility basis in the quarter. Same facility emergency room (ER) visits increased 4.1%. Same facility self-pay and charity ER visits represent 19.4% of the company’s total ER visits in the quarter.

Inpatient surgeries increased 1.8% while outpatient surgeries increased 1.5% in the second quarter of 2016, on a same facility basis.

Same facility revenue per equivalent admission increased 2.1%. Same facility managed care and other revenue per equivalent admission grew 5.8% in the quarter.
 

HCA HOLDINGS Price, Consensus and EPS Surprise

HCA HOLDINGS Price, Consensus and EPS Surprise | HCA HOLDINGS Quote

Same facility charity care and uninsured discounts increased $863 million in the quarter. Same facility charity care discounts totaled $1.097 billion, an increase of $207 million from the year-ago quarter, while same facility uninsured discounts grossed $3.09 billion, an increase of $656 million on a year-over-year basis.

Behavioral health admissions grew 3.7% while rehab admissions inched up 1.7%. Deliveries were down 1.5% on a year-over-year basis while neonatal admissions fell 2.6% in the quarter. Cardiology procedure volumes grew approximately 2%, trauma volumes rose 14%, and observation visits were up 7.5%.

Overall, average length of stay increased 0.6%, which was driven mainly by the growth in acuity or case mix index.

Guidance

For full-year 2016, revenues are expected in the range of $41 billion to $42 billion, while EBITDA is forecasted in the range of $8.1 billion to $8.3 billion.

HCA Holdings plans to invest $2.7 billion to expand its service capabilities and overall capacity. In 2016, approximately 350 new inpatient beds and 100 new ER beds will come online, with another 550 inpatient beds and 200 ER beds scheduled for 2017. The company forecasts strong growth from its investments on trauma, cardiology and rehab services.

Adjusted earnings are projected in the range of $6.40 to $6.70 per share, up from the previous range of $6.20 to $6.65.

Capital expenditure is forecasted at approximately $2.7 billion.

Zacks Rank & Key Picks

HCA Holdings carries a Zacks Rank #2 (Buy).

Better-ranked stocks include WellCare Health , Abiomed and Natus Medical . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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