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July 16, 2014 12:00 AM

HCA earnings get bigger boost than expected from healthcare reform

Beth Kutscher
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    increase

    HCA, the country's largest for-profit hospital chain by revenue, Wednesday previewed strong second-quarter results, highlighting a 12.2% increase in income before taxes. It also raised its financial guidance for the year.

    The Nashville-based company is the first to offer investors a glimpse into what is widely expected to be a strong quarter for hospital operators. The chain's full results are scheduled for July 29.

    HCA expects to report $904 million in pretax income on $9.2 billion in revenue compared with $806 million in pretax income on $8.5 billion in revenue in the second quarter of 2013.

    After seeing only a modest impact from healthcare reform in the first quarter, HCA said the law's effect on second-quarter earnings has exceeded its expectations. Its revised financial projections assume a 2% to 3% impact on earnings before interest, taxes, depreciation and amortization, an increase from 1% to 2%.

    HCA also reported a 1.2% increase in same-facility admissions and a 2.2% increase in same-facility equivalent admissions. Its revenue per admission increase 5.4% on higher acuity patients.

    The magnitude of the increase was even more impressive given that HCA had a tough comp against last year's strong second quarter, wrote A.J. Rice, an analyst at UBS, in a research note.

    HCA shares were trading up nearly 10% after the announcement, which also boosted shares of peers Community Health Systems, Tenet Healthcare Corp., Universal Health Services and LifePoint Hospitals.

    “If HCA's performance is any indication, 2Q14 earnings season should be strong for acute-care hospital investors,” wrote Frank Morgan, an analyst at RBC Capital Partners.

    Other one-time items included a $142 million adjustment to Medicaid revenues after it underestimated its reimbursement from the Texas Medicaid Waiver program for providing indigent care.

    It also booked a loss of $226 million from retiring its debt, and a gain of $11 million from selling facilities.

    Follow Beth Kutscher on Twitter: @MHbkutscher

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    • News
      • Current News
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      • Transformation
        • Patients
        • Operations
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      • ESG
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      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Blogs
      • AI
      • Deals
      • Layoff Tracker
      • HIMSS 2023
    • Opinion
      • Breaking Bias
      • Commentaries
      • Letters
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - AI and Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Sponsored Video Series - One on One
      • Sponsored Video Series - Checking In with Dan Peres
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