Quorum Health Group's third quarter ended March 31 was in line with analysts' expectations, but the company lags slightly behind some of the other for-profit hospital chains in same-facility revenue increases, according to some analysts.
The Brentwood, Tenn.-based company owns 21 acute-care hospitals and also is the nation's largest manager of not-for-profit hospitals.
Quorum reported net income of $17.3 million, or 22 cents per share, for the quarter ended March 31, down from $18.4 million, or 25 cents per share, in the same quarter last year. Quorum's net operating revenue rose about 2% to $455.7 million.
On a same-hospital basis, the company's net revenue increased 2.8%, while same-hospital admissions rose 0.5% from last year's third quarter.
"Quorum's results were in line with expectations. But on a same-facility revenue basis, they continue to sort of trail their peers in the sector," said Matthew Ripperger, healthcare analyst at Warburg Dillon Read in New York. "I think that's a reflection of the markets that some of their hospitals are in and some of the pricing dynamics in some of those markets."
Terry Allison Rappuhn, Quorum's chief financial officer, told analysts the company expects to gain price increases of 4% to 6% from renegotiated managed-care contracts. Still, the company has an uphill climb in markets like Alabama, where the major commercial payer, Blue Cross and Blue Shield of Alabama, wields considerable negotiating clout, Ripperger said.
The company, however, is improving operationally and has strong cash flows, Ripperger said.