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HCA Healthcare (HCA) Q2 Earnings & Revenues Lag, Stock Dips

HCA Healthcare, Inc. HCA reported second-quarter 2017 adjusted earnings of $1.77 per share, which missed the Zacks Consensus Estimate of $1.80.

The earnings miss can be traced back to an increase in expenses, which outpaced revenue growth.

Shares were down 4.24% in pre-market trading, reflecting investors’ disappointment.

HCA Healthcare posted revenues of $10.73 billion, a tad below the Zacks Consensus Estimate of $10.74 billion. The reported figure was up from 4% from the year-ago quarter.

For the quarter ended Jun 30, 2017, the provision for doubtful accounts increased 18.1% year over year to $1.83 million.

Quarter Details

Adjusted EBITDA totaled $2.090 billion, up 1.9% year over year.

Same facility equivalent admissions increased 1.3% year over year, while same facility admissions increased 0.8%. Same facility revenue per equivalent admission rose 2%.

Salaries and benefits, supplies and other operating expenses increased 4.6% year over year to $8.656 billion.

As of Jun 30, 2017, HCA Healthcare operated 172 hospitals and 119 freestanding surgery centers.

HCA Holdings, Inc. Price, Consensus and EPS Surprise

HCA Holdings, Inc. Price, Consensus and EPS Surprise | HCA Holdings, Inc. Quote

Financial Update

As of Jun 30, 2017, the company had cash and cash equivalents of $705 million, total debt of $31.7 billion and total assets of $34.6 billion.

During the reported quarter, capital expenditures totaled $733 million, excluding acquisitions. Cash flows provided by operating activities totaled $1.404 billion, up 4.1% year over year.

As of Jun 30, 2017, the company’s total debt/adjusted EBITDA was 3.83x compared with 3.82x as of Dec 31, 2016.

During the quarter, the company repurchased 6.4 million shares for $542 million. It had $887 million remaining under its existing repurchase authorization as of Jun 30, 2017.

Guidance for 2017

The company updated its 2017 earnings guidance. It expects revenues of $43 billion to $44 billion, adjusted EBIDTA of $8.35 to $8.50 billion, EPS of $7.00–$7.30 and capital expenditures of nearly $2.9 billion.

Recently, the company announced that it will acquire Highlands Regional Medical Center in Sebring, FL, and Weatherford Regional Medical Center outside Fort Worth, TX, from the subsidiaries of Community Health Systems, Inc. CYH.

Zacks Rank and Peer Performance

HCA Healthcare presently carries a Zacks Rank #3 (Hold).

Some better-ranked stock in the same space are Cigna Corp. CI and Acadia Healthcare Company Inc. ACHC. While Cigna sports a Zacks Rank #1 (Strong Buy), Acadia Healthcare carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Acadia Healthcare surpassed earnings estimates in two of the last four quarters with an average positive surprise of 1.74%.

Cigna surpassed earnings estimates in three of the last four quarters with an average positive surprise of 1.35%.  

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