Columbia/HCA Healthcare Corp.'s first-quarter earnings met Wall Street analysts' expectations but raised concerns as to whether the company can sustain its current growth rate.
The nation's largest publicly traded hospital chain reported a 15% rise in net income to $479 million, or 70 cents per share, for the quarter ended March 31, compared with $416 million, or 61 cents per share, in the year-ago quarter. Revenues rose 8% to $5.3 billion.
Reflecting its efforts to control more than hospitals, Nashville-based Columbia said its outpatient revenues now account for 38% of total revenues, compared with 36% in the year-ago period. In addition to its more than 340 hospitals, Columbia operates 148 freestanding surgery centers and more than 570 home-care outlets.
In a summary report to investors, analysts at Robertson Stephens & Co. in New York said Columbia's earnings were on target. "Margins were better than we estimated and showed very strong cost controls at the hospital operating levels," the report said.
However, the report said analysts had counted on a 12% growth rate for the company's revenues, and it attributed the slower growth to fewer acquisitions. In the first quarter, Columbia signed letters of intent to acquire eight hospitals, compared with 13 during the year-ago period.
Columbia told analysts hospital acquisitions may slow through the rest of the year as its deals to acquire not-for-profit hospitals come under more scrutiny (See related story, p. 6).
In addition to regulatory challenges, analysts said changes in Medicare reimbursement and the ongoing federal investigation into Columbia's business practices may hurt Columbia's efforts to sustain a 15% bottom-line growth rate beyond 1997.