HCA Healthcare beat Wall Street expectations in the second quarter and raised its full-year outlook off of increases in admissions, emergency room visits and surgeries, as more patients returned to hospitals for care.
HCA, the largest for-profit hospital operator in the country, reported revenue of $15.9 billion in results released Thursday, up from $14.8 billion in the second quarter of 2022.
HCA’s results were solid, but below elevated investor expectations, analysts commented. That led HCA’s stock to fall 3% in Thursday morning trade following the earnings’ release.
The Nashville, Tennessee-based operator saw demand for services increase broadly in the second quarter.
Admissions, emergency room visits, inpatient surgeries and outpatient surgeries were up 2.2%, 3.7%, 1.8% and 3.3% respectively on a year-over-year basis.
On an earnings call Thursday morning, CEO Sam Hazen called the growth “broad-based,” noting rebounding demand was not limited to certain geographies.
Investors pushed Hazen on whether the rate of growth will continue in the back half of the year. Hazen reiterated HCA expects between 5% to 6% equivalent admissions for 2023.
“We feel that, within our markets, there's unique attributes that are driving solid demand for healthcare services,” Hazen said. “Across the board, we're experiencing population growth within our markets, [and] we're investing very significantly in our strategy and our positioning within these communities so that we can respond to our patient needs [and] put our facilities in the best position to grow.”
HCA is the second hospital operator to report strengthening volume in the second quarter. On Tuesday, United Health Services reported higher-than-expected revenue, with its CFO telling investors that increased demand for outpatient services and elective surgeries drove growth.
HCA’s operating expenses, including salaries and supplies, increased in the quarter compared with 2022. However, Hazen told investors he believes HCA has “healthy operating margins” and that he was particularly pleased with positive indicators in the labor market.
“We saw improvements across virtually all key labor metrics,” Hazen told investors. Turnover across the system declined by 17% year over year, while nurse hiring increased by 9%. As a result, HCA has been able to cut contract labor costs by 20% year over year, according to the CEO.
HCA reported a data breach in July that impacted an estimated 11 million patients and has become the subject of multiple class action lawsuits.
The lawsuits haven’t disrupted the operator’s day-to-day operations and aren’t expected to impact HCA’s business or financial results, Hazen said on the call.