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Will Rising Costs Hurt HCA Healthcare's (HCA) Q3 Earnings?
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HCA Healthcare, Inc. (HCA - Free Report) is set to report its third-quarter 2023 results on Oct 24, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for third-quarter earnings per share of $3.99 suggests a 1.5% increase from the prior-year figure of $3.93. The consensus mark witnessed no upward estimate revision in the past week against one downward movement. The consensus estimate for third-quarter revenues of $15.8 billion indicates a 5.4% increase from the year-ago reported figure.
HCA Healthcare beat the consensus estimate for earnings in three of the prior four quarters and missed on one occasion, with the average surprise being 5.4%. This is depicted in the graph below:
Before we get into what to expect for the to-be-reported quarter in detail, let’s see how the company performed in the last quarter.
Q2 Earnings Rewind
In the last reported quarter, the hospital company’s adjusted earnings per share of $4.29 beat the Zacks Consensus Estimate by 0.2%. The quarterly results gained from expanding patient volumes and increased surgeries. However, the upside was partly offset by escalating costs associated with salaries and benefits.
In the third quarter, HCA Healthcare’s revenues are expected to have gained on improved patient volumes. As senior individuals resumed elective procedures that were previously postponed due to pandemic-related limitations, patient volumes, occupancy rates and associated metrics are expected to have increased for HCA.
The Zacks Consensus Estimate for equivalent admissions indicates a 0.3% rise from the prior-year quarter’s reported figure. The consensus mark and our estimate for emergency room visits suggest a 1.4% year-over-year increase in the third quarter. Similarly, the consensus estimate and our model indicate the total number of hospitals to have remained flat at 182 compared with the year-ago period.
The Zacks Consensus Estimate and our estimate for outpatient surgery cases suggest 1.7% year-over-year growth in the quarter under review. The consensus estimate for revenues per equivalent admission indicates a 1.5% increase from a year ago. The consensus mark and our estimate for inpatient surgery cases suggest 2.2% year-over-year growth.
Furthermore, our estimate for the occupancy rate is pegged at 72% for the third quarter, indicating an increase from the year-ago level of 70.8%. The above-mentioned factors are likely to have positioned the company for year-over-year growth. However, with increased occupancy levels, HCA’s costs and expenses are expected to have increased in the third quarter, partially offsetting the upside.
Our estimate for total operating expenses suggests a nearly 5% year-over-year increase due to higher supplies, salaries and benefits costs, affecting profit growth levels, making an earnings beat uncertain. We expect the cost of supplies to have increased nearly 8% year over year in the quarter under discussion.
Also, the Zacks Consensus Estimate suggests the average length of stay to have declined nearly 5% year over year in the third quarter. We expect equivalent patient days to have witnessed a 0.4% year-over-year decrease.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for HCA Healthcare this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -1.94%. This is because the Most Accurate Estimate currently stands at $3.91 per share, lower than the Zacks Consensus Estimate of $3.99.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: HCA Healthcare currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for HCA Healthcare, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Apellis’ earnings per share for the to-be-reported quarter indicates a 49.1% year-over-year improvement. APLS beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 1.4%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +5.13% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 82 cents per share, which improved 3.8% in the past 30 days. AZN beat earnings estimates in all the past four quarters, the average surprise being 8.4%.
Jazz Pharmaceuticals plc (JAZZ - Free Report) has an Earnings ESP of +1.31% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Jazz Pharmaceuticals’ bottom line for the to-be-reported quarter has improved 0.8% in the past 60 days. The consensus mark for JAZZ’s revenues is pegged at $970.5 million, signaling 3.2% year-over-year growth.
Image: Bigstock
Will Rising Costs Hurt HCA Healthcare's (HCA) Q3 Earnings?
HCA Healthcare, Inc. (HCA - Free Report) is set to report its third-quarter 2023 results on Oct 24, before the opening bell.
What Do the Estimates Say?
The Zacks Consensus Estimate for third-quarter earnings per share of $3.99 suggests a 1.5% increase from the prior-year figure of $3.93. The consensus mark witnessed no upward estimate revision in the past week against one downward movement. The consensus estimate for third-quarter revenues of $15.8 billion indicates a 5.4% increase from the year-ago reported figure.
HCA Healthcare beat the consensus estimate for earnings in three of the prior four quarters and missed on one occasion, with the average surprise being 5.4%. This is depicted in the graph below:
HCA Healthcare, Inc. Price and EPS Surprise
HCA Healthcare, Inc. price-eps-surprise | HCA Healthcare, Inc. Quote
Before we get into what to expect for the to-be-reported quarter in detail, let’s see how the company performed in the last quarter.
Q2 Earnings Rewind
In the last reported quarter, the hospital company’s adjusted earnings per share of $4.29 beat the Zacks Consensus Estimate by 0.2%. The quarterly results gained from expanding patient volumes and increased surgeries. However, the upside was partly offset by escalating costs associated with salaries and benefits.
Now let’s see how things have shaped up before the third-quarter earnings announcement.
Q3 Factors to Note
In the third quarter, HCA Healthcare’s revenues are expected to have gained on improved patient volumes. As senior individuals resumed elective procedures that were previously postponed due to pandemic-related limitations, patient volumes, occupancy rates and associated metrics are expected to have increased for HCA.
The Zacks Consensus Estimate for equivalent admissions indicates a 0.3% rise from the prior-year quarter’s reported figure. The consensus mark and our estimate for emergency room visits suggest a 1.4% year-over-year increase in the third quarter. Similarly, the consensus estimate and our model indicate the total number of hospitals to have remained flat at 182 compared with the year-ago period.
The Zacks Consensus Estimate and our estimate for outpatient surgery cases suggest 1.7% year-over-year growth in the quarter under review. The consensus estimate for revenues per equivalent admission indicates a 1.5% increase from a year ago. The consensus mark and our estimate for inpatient surgery cases suggest 2.2% year-over-year growth.
Furthermore, our estimate for the occupancy rate is pegged at 72% for the third quarter, indicating an increase from the year-ago level of 70.8%. The above-mentioned factors are likely to have positioned the company for year-over-year growth. However, with increased occupancy levels, HCA’s costs and expenses are expected to have increased in the third quarter, partially offsetting the upside.
Our estimate for total operating expenses suggests a nearly 5% year-over-year increase due to higher supplies, salaries and benefits costs, affecting profit growth levels, making an earnings beat uncertain. We expect the cost of supplies to have increased nearly 8% year over year in the quarter under discussion.
Also, the Zacks Consensus Estimate suggests the average length of stay to have declined nearly 5% year over year in the third quarter. We expect equivalent patient days to have witnessed a 0.4% year-over-year decrease.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for HCA Healthcare this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -1.94%. This is because the Most Accurate Estimate currently stands at $3.91 per share, lower than the Zacks Consensus Estimate of $3.99.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: HCA Healthcare currently carries a Zacks Rank #3.
Stocks to Consider
While an earnings beat looks uncertain for HCA Healthcare, here are some companies from the broader Medical space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Apellis Pharmaceuticals, Inc. (APLS - Free Report) has an Earnings ESP of +13.77% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Apellis’ earnings per share for the to-be-reported quarter indicates a 49.1% year-over-year improvement. APLS beat earnings estimates twice in the past four quarters and missed on two occasions, the average surprise being 1.4%.
AstraZeneca PLC (AZN - Free Report) has an Earnings ESP of +5.13% and a Zacks Rank #3.
The Zacks Consensus Estimate for AstraZeneca’s bottom line for the to-be-reported quarter is pegged at 82 cents per share, which improved 3.8% in the past 30 days. AZN beat earnings estimates in all the past four quarters, the average surprise being 8.4%.
Jazz Pharmaceuticals plc (JAZZ - Free Report) has an Earnings ESP of +1.31% and is a Zacks #2 Ranked player.
The Zacks Consensus Estimate for Jazz Pharmaceuticals’ bottom line for the to-be-reported quarter has improved 0.8% in the past 60 days. The consensus mark for JAZZ’s revenues is pegged at $970.5 million, signaling 3.2% year-over-year growth.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.