HCA ended 2018 with hike in revenue, admissions
- HCA Healthcare beat analyst expectations on revenue with a year-over-year increase of 6.2% in the fourth quarter of 2018 to a total of $12.27 billion. Net income totaled $1.06 billion, or $3.01 per diluted share, compared to $474 million, or $1.30 per diluted share, in the fourth quarter of 2017, according to earnings released Tuesday morning.
- Admissions for the Nashville-based hospital giant rose 1.7% year over year, though emergency room visits declined by 1.8% and inpatient surgeries dropped 0.6%. HCA executives attributed the quarter's growth to "solid volume increases" and admissions. Corporate tax cuts enacted at the end of 2017 also helped results.
- For the year, revenues totaled $46.68 billion, compared to $43.61 billion in 2017. HCA issued its guidance for 2019, estimating revenues will range between $50.5 and $51.5 billion.
The results reinforce HCA's status as a favorite on Wall Street, as it weathers reimbursement and other industry pressures with relative ease compared to rivals.
Executives on the company's earnings call said the completion of its $1.5 billion acquisition of Asheville, North Carolina-based health Mission Health is imminent. The addition will add seven facilities to HCA's portfolio.
The hospital operator's projections for 2019 are similar to the growth it forecast for 2018, with some margin expansion related to pending acquisitions. CEO Sam Hazen, who took over for retired CEO R. Milton Johnson this year, alluded to this in the company's third quarter earnings call.
"We continue to expect HCA to deliver strong organic volume and earnings growth, particularly as the company continues to see the benefits of the CapEx program that mgmt rolled out beginning in 2015, and as new capital projects are executed through 2020," Jefferies analysts wrote in a note published Monday evening. "HCA should continue to generate strong FCF, which could also prompt its Board to raise the company's dividend this year."
The hospital chain estimated it took a $31 million hit in expenses and revenue losses associated with Hurricane Michael, an estimate published prior to collecting insurance on its affected Florida panhandle facilities. On the other hand, HCA collected $49 million from an insurance recovery related to Hurricane Harvey in 2017.
Executives on the earnings call said admissions have increased for the 19th consecutive quarter, a feat that goes against the industry grain as HCA competitors continue to struggle with volumes trending downward.
The hospital chain also reported a tax benefit of $236 million related to the impact of big corporate tax cuts enacted at the end of 2017.
Hazen said the company will be looking to add programs to key service lines in order to generate a higher revenue per patient and continue to capitalize on rural markets and "drive downstream business" into its hospitals from rural areas.
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