Dive Brief:
- Rebounding volumes, higher patient acuity and a more favorable payer mix positioned HCA to bring in $15.28 billion in revenue for the third quarter, up nearly 15% from the prior-year period.
- The Nashville-based chain also posted $2.27 billion in net income for the third quarter, more than triple the profit from the same time last year, and it beat Wall Street expectations on both earnings and revenue.
- COVID-19 patients accounted for 13% of total admissions during the third quarter, compared to 3% in the second quarter and 10% in the first quarter of this year, CEO Sam Hazen said on a Friday call with investors. HCA again upped its full-year guidance and now expects to bring in revenues of $58.7 billion to $59.3 billion by the end of the year.
Dive Insight:
The third quarter was a period in which cases of the delta variant of the coronavirus rose sharply and strained hospitals again in many areas of the country.
But Cowen analysts deemed HCA a top pick to beat expectations, after the chain raised its full-year guidance in July as it forecasted demand for care and services to continue throughout the year. That seems to have been the case, as the company again upped its full-year guidance.
Driven by the delta variant, HCA experienced its most intense surge of COVID-19 patients ever during the quarter, which drove significant demand for its services, Hazen said on the call.
Volume metrics overall during the quarter were mostly positive, though mixed.
"Surgery volumes were constrained because capacity was used for treating COVID patients," Hazen said.
Same-facility inpatient surgeries declined 4.9%, while same facility outpatient surgeries rose 6.4% during the quarter compared to the prior-year period. Same-facility admissions and equivalent admissions rose 6.8% and 9.3%, respectively, during the third quarter compared to the same period last year.
Meanwhile, same-facility emergency room visits soared 31% in the third quarter compared to the prior year period.
Expenses have been a key concern for hospital operators and investors, especially labor costs that are still high above pre-pandemic levels, according to a recent Kaufman Hall survey.
Analysts on the call pressed executives on how they're handling labor costs, which rose for HCA in the third quarter.
The chain used contract labor, overtime, bonuses and "whatever it took to staff to the patient load that we had," resulting in about 10% to 12% of full-time staff being placed in premium pay categories, CFO Bill Rutherford said.
HCA expects that to trend down as COVID-19 cases decline, in line with past surges, Rutherford said.
And the operator posted strong EBITDA margins, underscoring "exceptionally strong cost controls despite labor/COVID activity," SVB Leerink analysts said in a note.
But HCA expects it will continue treating COVID-19 patients into the next year, and predicts about 3% to 5% of total admissions in 2022 will be COVID-19 related, Hazen said. That compares to an estimated 9% for 2021.