Reflecting a lackluster performance by Columbia/HCA Healthcare Corp., the publicly traded hospital sector posted another period of earnings declines in this year's second quarter, according to a newly released analysis.
Hospital companies suffered a 25.4% drop in adjusted earnings growth on a 4% increase in revenues for the quarter ended June 30, according to the analysis released by WDI Healthcare Markets Group, a Hilton Head, S.C.-based healthcare advisory and investment banking firm, and Atlanta-based KPMG Health Care Transaction Services.
Financial figures from 910 publicly traded healthcare companies were used in the second-quarter analysis. Nonrecurring expenses and income resulting from restructuring, acquisitions and mergers are subtracted from companies' earnings to calculate adjusted earnings.
Without Columbia, the hospital sector's adjusted earnings increased a strong 23.1% on an 11.7% gain in revenues.
For the second quarter, Nashville-based Columbia reported an 81% decrease in net income to $78 million, or 12 cents per share, compared with net income of $412 million, or 62 cents per share, in the year-ago quarter. Revenues dropped 1% to $4.8 billion.
Even though Columbia is making a financial recovery from problems mostly attributed to continuing federal probes into the company's billing practices, its financials are still far off what they were in the past, says WDI Chief Executive Officer Jack Cumming.
"They're still bringing the segment down," Cumming says.
For the healthcare industry overall, adjusted earnings rose 11.5% on a 14.3% increase in revenues compared with the year-ago quarter. The figures were down slightly from the first quarter, when the industry's adjusted earnings rose 15.2% on a 15.3% increase in revenues.
According to the analysis, Columbia's and other companies' performance also hurt overall returns for the provider and services sector. The sector, comprising more than 250 publicly traded companies, reported a 15.6% decline in adjusted earnings on revenue growth of 20.3%. During the first quarter, the sector's adjusted earnings fell 8.5% on revenue growth of 22.2%.
Struggling Oxford Health Plans, Norwalk, Conn., weighed heavily on the performance of two sectors. Adjusted earnings for the managed-care sector plummeted 61% on a 23% increase in revenues, reflecting Oxford's $258 million net loss during the quarter. Exclusive of Oxford, adjusted earnings increased 3% on a 23.5% gain in revenues. Oxford's performance also dragged down the providers segment.
Laboratory services posted the largest change for the quarter, with adjusted earnings up 87.2% on a 3% decline in revenues. By comparison, lab services' adjusted earnings soared 211.2% on a 3% revenue decline during the first quarter. Despite the change, Cumming says the sector continues to perform well.
Outpatient services also posted strong overall numbers. Adjusted earnings in the sector increased 47.7% on a 29.1% increase in revenues. Torrance, Calif.-based Total Renal Care Holdings led the way, posting a 90% increase in earnings to $25.7 million, with a 60.4% increase in revenues to $288.4 million.