HCA Healthcare missed second-quarter estimates and cut its full-year earnings forecast, which caused shares to fall 4%. HCA isn’t the only hospital system that saw its stock tumble as uncertainty about healthcare reform hurts hospital stocks. Community Health Systems and Tenet Healthcare were both down on Tuesday.
In its earnings report, HCA Healthcare announced a 4% increase in revenues to $10.73 billion and adjusted revenue totaled $2 billion.
The health system said the poor results are because of higher expenses and lower-than-expected patient volumes. While the equivalent admissions — intakes from both inpatient and outpatient settings — rose 1.3%, expenses increased from 80.2% of revenue to 80.6% in Q2 compared to the same time in 2016. In addition, company executives attributed some of the weaker-than-expected result on their international operations. Mizuho Securities USA analyst Sheryl Skolnick was quoted in Reuters stating the company needs external growth to combat its "slowing organic growth."
HCA Healthcare changed its expectations per share for the year to between $7 and $7.30, which is down from $7.20 to $7.60.
Despite not meeting second-quarter estimates, HCA Healthcare isn't slowing down its desire to buy more hospitals. HCA Healthcare, which has 174 hospitals and 119 freestanding surgery centers in 20 U.S. states and in the United Kingdom, is expanding its footprint.
This week, HCA announced it is buying 126-bed Highlands Regional Medical Center in Sebring, Fla., from Community Health Systems, which is looking to divest 30 hospitals this year. HCA was also involved in three deals in the second quarter.
HCA isn't the only large system looking to expand. A recent analysis by Kaufman, Hall & Associates, LLC found that hospital and health system mergers and acquisitions increased 15% in the second quarter compared to last year. Large health systems like HCA were especially active. Through the first half of 2017, there were six transactions of health systems with nearly $1 billion or more in revenues announced during the first half of the year. There were only four in all of 2016.
Despite its recent purchases, HCA Healthcare's stocks took a hit on Tuesday — as did many health systems. The market is uneasy with healthcare given the potential changes coming from Washington. Until there is some certainty about a path forward, hospitals will likely continue to feel the brunt of an uneasy market.