Healthcare Business News

HCA's 2Q earnings exceed expectations

By Beth Kutscher
Posted: July 16, 2013 - 1:45 pm ET

Investors breathed a sigh of relief Tuesday as HCA, the country's largest hospital system, previewed better-than-expected financial results for the second quarter.

The Nashville-based chain exceeded expectations for both earnings and patient volume, and analysts credited efforts to heavily cut costs as helping to counteract modest growth in admissions.

While analysts had braced for a decline in patient volume, HCA reported a preliminary 1.3% increase in same-facility admissions, and a 2.9% increase in same-facility revenue per equivalent admission.

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The system also said it expects to report $806 million in income on revenue of almost $8.5 billion, compared with $699 million in income on $8.1 billion in revenue during the second quarter of last year.

Like its peers, HCA is coming off a tough start to the year, reporting an increase in same-facility admissions of only 0.1% for the first three months of 2013.

Its second-quarter results also come just weeks after Tenet Healthcare Corp., Dallas, cautioned that it expects to report admissions results that will be 3.5% lower than they were in the second quarter of 2012—raising concerns that 2013 might be a particularly challenging year for hospital operators.

Yet HCA’s preview not only boosted its own share price nearly 5%, but also buoyed Tenet and Community Health Systems, Franklin, Tenn., about 3%.

Early results from HCA, as the largest chain by hospital count and revenue, are closely watched as a bellwether for the industry.

Yet it remains to be seen whether other systems will report a similar rebound in patient numbers. A.J. Rice, an analyst at UBS, previously noted that HCA typically surpasses its peers in this area.

Community Health Systems will be the first investor-owned chain to report earnings, on July 24. HCA is scheduled to report final results on Aug. 1.

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