- HCA Healthcare on Wednesday reported revenue of $11.5 billion for the second quarter of 2018, an increase of 7.4% compared to $10.7 billion during the same time period last year.
- Total reported admissions increased 4.5% year-over-year for the quarter, while same facility admissions increased 2.7% and same facility revenue per equivalent admission increased 3.6%.
- The Nashville-based company’s guidance ranges for 2018 have been updated to reflect its positive earnings for the first half of the fiscal year. HCA anticipates netting $46.5 billion in revenues for the year, compared to the prior estimate of $45.5 billion.
HCA had "very strong, high-quality" Q2 results that beat its revenue estimate by 1%, said Mizuho healthcare analyst Ann Hynes in a note. The fact that "the trends are continuing without the flu benefit leads us to believe there is an underlying positive shift in demand, which is in-line with our thesis for the hospital group," she wrote.
On its earnings call with investors, HCA President and COO Samuel Hazen said 12 of the company's 14 divisions saw growth in admissions, with facilities in Texas, the Gulf Coast, northern Florida and the South Atlantic markets seeing the highest growth. Hazen said the company's growth is showing "greater than the national average."
The health system saw a 1.7% rise in same facility inpatient surgeries and a 2.6% increase in same facility outpatient surgeries compared to the second quarter of 2017. Inpatient growth on the surgical side has been steadily increasing for the company.
"We continue to add capacity, we continue to upgrade technology within our surgical suites," Hazen said, adding that HCA is beginning to reap the rewards of those investments.
Investors took issue with HCA's emergency department performance. Emergency room visits for HCA decreased 0.8% on a same facility basis year-over-year. Hazen said that decrease partly reflects increases in competition, whether it be other emergency departments or substitutes such as urgent care.
"All of the declines are in the lower-acuity levels of business," Hazen said. "Our admissions through the ER were in fact up in the quarter, reflecting the higher acuity patients we're seeing in the emergency room."
Not shockingly, HCA found success with managed Medicare admissions, which made up about a third of all Medicare admissions. Same facility Medicare admissions increased 3.6%, with managed Medicare admissions increasing 11% compared to the second quarter of 2017.
HCA's adjusted EBITDA margin decreased 0.2% to 19.3% year-over-year. Executives said on the earnings call the EBITDA rate was negatively impacted by the divestiture of its hospital operations in Oklahoma, including Oklahoma University Medical Center and OUMC Edmond.
HCA ended 2017 on a positive note, with revenue for that year totaling $43.61 billion, compared to $41.49 in 2016.
"What we saw in 2017 was moderate demand growth in the first three quarters of the year in all of HCA's markets, but in the fourth quarter we started to see some elevation in demand growth in all our markets," Hazen said. "It is our belief that the fundamentals within our markets are strong. Having said that, we do think our strategies ... are showing themselves very competitively in the marketplace, and that's part of what we see as contributing to our growth."
HCA signed a letter of intent to acquire North Carolina nonprofit health system Mission Health earlier this year. Hazen said the due diligence process is "going well" and that the move is a "logical acquisition" for HCA. Executives elaborated further on acquisitions, saying the company anticipates "improved performance" in recent acquisitions, but added that they will remain a headwind year-over-year.
HCA and private equity partner KKR made a final offer to acquire fellow Nashville-based physician services company Envision Healthcare in the spring. As of last month, KKR is to acquire Envision without HCA.