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HCA (HCA) Up 3.8% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for HCA Holdings (HCA - Free Report) . Shares have added about 3.8% 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 its most recent earnings report in order to get a better handle on the important drivers.

HCA Healthcare Q3 Earnings Beat Estimates, Improve Y/Y

HCA Healthcare reported third-quarter 2019 adjusted earnings of $2.23 per share, surpassing the Zacks Consensus Estimate by 4.2%. Moreover, the bottom line inched up nearly 3.2% year over year on the back of higher revenues.

The company’s net income per share of $1.76 in the quarter under review was down 18% year over rear. 

Quarterly Details

HCA Healthcare generated revenues of $12.7 billion, beating the Zacks Consensus Estimate by 1.6%. The reported figure was up 10.9% from the year-ago period.

Same facility equivalent admissions increased 4.2% year over year while same facility admissions rose 3.2%. Same facility revenue per equivalent admission also grew 2%.

Salaries and benefits, supplies and other operating expenses increased 11.2 % year over year to $10.4 billion.

Adjusted EBITDA totaled $2.3 billion, up 9% year over year.

As of Sep 30, 2019, HCA Healthcare operated 184 hospitals and around 2000 sites of care including surgery centers, freestanding emergency rooms, urgent care centers and physician clinics.

Financial Update

As of Sep 30, 2019, the company had cash and cash equivalents of about $559 million, total debt of $34.2 billion and total assets of $43.9 billion.
During the reported quarter, capital expenditures totaled $1.1 billion excluding acquisitions. Cash flows provided by operating activities were $2.1 billion, up 23.5% year over year.

Dividend and Share Repurchase Update

HCA Healthcare announced a quarterly cash dividend of 40 cents per share payable Dec 27 to stockholders of record at the close of business on Dec 2.
The company bought back shares worth $239 million in the third quarter and had shares worth $1.5 billion remaining under its current repurchase authorization as of Sep 30, 2019.

2019 Outlook

The company still expects its 2019 revenues in the band of $50.5-$51.5 billion. Adjusted EBITDA is tapered to a new range of $9.65-$9.85 billion from the earlier band of $9.60-$9.85 billion. Capital expenditures are anticipated to be around $3.8 billion. The company upped the lower end of its earlier EPS guidance from $10.25-$10.65 to $10.30-$10.65.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise 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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