Dive Brief:
- The third-quarter earnings preview released last week by HCA Holdings came up short compared to analysts' expectations.
- The report was in stark contrast to HCA's previous previews since the implementation of ACA, when it was typically able to hint at better-than-projected results.
- With investors looking to HCA as a signpost for the industry, experts expect similar announcements from HCA's peers as they release their earnings in the coming weeks.
Dive Insight:
HCA's earnings could have an industry-wide impact as investors look for signs of a slowdown from the initial ACA market surge.
The company reported the initial boom of insured patients was offset by increased labor costs. In addition, they reported their third quarter included more uninsured patients and a drop in those covered by private insurance.
“This disappointing report from the hospital bellwether HCA confirms worst investor fears of worsening bad debt and a tapering off of the volume swell from the Affordable Care Act,” Leerink Partners analyst Ana Gupte said in a note after the announcement, adding the information “further colors our negative view of the acute inpatient sector.”
Some other analysts had a more optimistic outlook; Avondale Partners analyst Paula Torch suggested an overcorrection in the market offered an opportunuity to buy, while UBS analyst A.J. Rice suggest the weak third-quarter results were part of a normal cycle. “For our part, we think we're setting up like we do in many years for the group to bottom out… and gradually rally post-earnings for the six months into the spring of 2016," he was quoted by Modern Healthcare.