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Why Is HCA (HCA) Up 8.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for HCA Holdings (HCA - Free Report) . Shares have added about 8.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is HCA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

HCA Healthcare’s Q3 Earnings Beat Estimates, Up Y/Y

HCA Healthcare, Inc. reported third-quarter 2018 adjusted earnings of $2.16 per share, surpassing the Zacks Consensus Estimate by 11.9%. Moreover, the bottom line shot up nearly 78.5% year over year. This upside was backed by higher same facility admissions.

The company’s net income per share of $2.15 in the third quarter includes 1 cent gained from the sale of facilities and 2 cents from the loss on retirement of debt.

Quarterly Details

HCA Healthcare generated revenues of $11.4 billion, beating the Zacks Consensus Estimate of $11.3 billion by 1.6%. The top line was up 7.1% from the year-ago period, primarily driven by higher admissions.

Same facility equivalent admissions increased 3.4% year over year while same facility admissions rose 3.1%. Same facility revenues per equivalent admission grew 3.9%.

In the third quarter, cash flow from operations totaled $1.721 billion.

Expenses increased nearly 4.7% year over year to $10.3 billion.

Adjusted EBITDA totaled $2.1 billion, up 18.0% year over year.

As of Sep 30, 2018, HCA operated 179 hospitals and around 1,800 sites of care including surgery centers, freestanding emergency rooms, urgent care centers and physician clinics.

Financial Update

As of Sep 30, 2018, the company had cash and cash equivalents of about $868 million, total debt of $33.2 billion and total assets of $37.7 billion.

During the reported quarter, capital expenditures summed $880 million excluding acquisitions. Cash flows from operating activities were $1.5 billion, up 12.6% year over year.

Dividend Update

HCA Healthcare has announced a quarterly cash dividend of 35 cents per share payable Dec 28 to stockholders of record at the close of business on Dec 3, 2018.

2018 Outlook Updated

The company expects 2018 revenues in the range of $46-$47 billion, up from its prior estimate of $45.5-$46.5 billion. Moreover, it now anticipates adjusted EBIDTA to be between $8.7 and $8.9 billion, up from the prior guided range of $8.65-$8.85 billion. EPS is projected to be in the range of $9.05-$9.45, up from $9-$9.40. The company reiterates its capex view of about $3.5 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, HCA has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, HCA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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