HCA Healthcare reported second-quarter net income of nearly $1.5 billion, beating expectations and partially due to a sizable drop in contract labor costs.
The Nashville, Tennessee-based system said Tuesday its quarterly contract labor expenses decreased by more than 25% from the second quarter of 2023. Contract labor costs have been on a decline during the last couple years, though labor costs tend to dip between the first and second quarter because of the timing of payroll taxes, the system said.
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HCA said it earned $1.46 billion, or $5.53 per share during the quarter, compared with $1.19 billion, or $4.29 per share, in 2023's second quarter. Quarterly revenue of $17.49 billion compared with $15.86 billion in the year-ago period.
The system said it saw a 10% decrease in Medicaid patients during the quarter. Medicaid redeterminations have affected other health systems and payers as well.
Increased patient volume, including inpatient care services, benefited HCA's bottom line. HCA said it expects patient volume to increase by 4% to 6% this year.
The system said it plans to invest $5.1 billion to $5.3 billion toward efforts including improving staff retention and emergency room productivity and investing in outpatient services.
During a call with financial analysts, HCA said it expected its outpatient revenue to grow, with ambulatory surgical center revenue slated to grow by at least 8% this year.
HCA also said it has no plans for additional expansion and plans to focus its cash flow solely towards existing facilities and services.
As a result of its performance, HCA raised its 2024 guidance. Annual revenues should be in the range of $69.75 billion to $71.75 billion, versus a previous estimate of $67.75 billion to $70.25 billion. Guidance for net income was raised to between almost $5.68 billion to $5.98 billion, versus an earlier estimate of $5.2 billion to $5.6 billion.