Hospital Operator HCA Soars on Earnings Beat

One of the peculiar consequences of the COVID-19 pandemic was that many hospitals and other healthcare facilities took financial hits when the crisis started, as many patients avoided the facilities out of fear of exposing themselves to the deadly virus. People delayed many non-essential elective procedures—a major profit center for hospitals—out of an abundance of caution.

With vaccination rates rising in the United States and many parts of the country starting to return to normalcy, the hospital industry is starting to recover. HCA Healthcare (NYSE: HCA) just delivered a beat-and-raise on Tuesday, sending shares up by 15% as of 12:30 p.m. EDT.

Bouncing back

Revenue in the second quarter came in at $14.4 billion, ahead of the consensus estimate of $13.6 billion. Same facility admissions jumped by 17.5%, while same-facility equivalent admissions were up 26.8%. The business is rebounding across the board as pandemic-related restrictions, which had previously been impacting demand and procedure volumes, have eased in recent months.

HCA Healthcare believes that it is more relevant to compare its results to 2019 as opposed to 2020 due to the unprecedented nature of last year.

MetricQ2’ 19Q2’ 21% Change
Equivalent Admissions903,419946,2121.4%
Patient Days2,530,5482,629,9503.9%
Equivalent Patient Days4,412,3484,535,6782.8%
Inpatient Surgery Cases140,473136,460(2.9%)
Outpatient Surgery Cases253,441262,1073.4%
ER Visits2,253,3372,128,428(5.5%)
Data source: SEC filings.

“With the effects of the pandemic moderating in the second quarter, we experienced a strong rebound in demand for healthcare services,” CEO Sam Hazen said in a statement. “We continue to invest aggressively in our strategic agenda, which is building greater clinical capabilities to serve our communities while also developing more comprehensive enterprise resources to support caregivers and differentiate our local networks.”

That all resulted in net income of $1.45 billion, or $4.36 per share, easily beating the $3.16 per share in profit Wall Street was expecting. Adjusted EBITDA in the second quarter was $3.22 billion, including $822 million in government stimulus income. 

Looking ahead

Thanks to the momentum HCA is seeing, the company boosted its full-year guidance. Revenue in 2021 is now forecast in the range of $57 billion to $58 billion, up from its prior outlook of $54 billion to $55.5 billion. This is the second consecutive quarter that HCA has increased its outlook after raising it in April.

Adjusted EBITDA for 2021 should be $12.1 billion to $12.5 billion, which should result in earnings per share of $16.30 to $17.10. HCA Healthcare expects to spend approximately $3.7 billion in capital expenditures this year.

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool recommends HCA Healthcare. Millennial Money is part of The Motley Fool network. Millennial Money has a disclosure policy.

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