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Why Is HCA (HCA) Up 9.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for HCA Healthcare (HCA - Free Report) . Shares have added about 9.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is HCA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

HCA Healthcare Beats on Q2 Earnings, Ups 2024 EPS View

HCA Healthcare reported a second-quarter 2024 adjusted earnings per share (EPS) of $5.50, which beat the Zacks Consensus Estimate by 10.7%. The bottom line improved 28.2% year over year.

Revenues amounted to $17.5 billion, which improved 10.3% year over year in the quarter under review. The top line outpaced the consensus mark by 2.2%.

The strong quarterly results benefited from rising admissions and a higher number of inpatient surgeries, which contributed substantially to the top line of HCA Healthcare. However, rising salaries and benefits expenses partially offset the positives.

Quarterly Details

Same-facility equivalent admissions increased 5.2% year over year in the second quarter, while same-facility admissions grew 5.8% year over year. Both metrics beat consensus estimate by 1.6%.

Same-facility revenue per equivalent admission rose 4.4% year over year in the quarter under review and surpassed the consensus estimate by 1.4%.

Same-facility inpatient surgeries grew 2.6% year over year and beat our growth estimate of 1.3%. Same-facility outpatient surgeries declined 2.1% year over year and lagged our growth estimate of 0.7%. Additionally, same-facility emergency room visits rose 5.5% year over year in the second quarter and beat our growth estimate of 4.3%.

Salaries and benefits, supplies and other operating expenses of $13.9 billion escalated 8.9% year over year and came higher than our estimate of $13.8 billion.

Adjusted EBITDA improved 16.2% year over year to $3.6 billion in the quarter under review.

HCA Healthcare operated 188 hospitals and roughly 2,400 ambulatory sites of care across 20 states and the United Kingdom as of Jun 30, 2024.

Financial Update (as of Jun 30, 2024)

HCA Healthcare exited the second quarter with cash and cash equivalents of $831 million, down from the 2023-end level of $935 million. It had a leftover capacity of $7.1 billion under its credit facilities at the second-quarter end.

Total assets of $57.4 billion increased from $56.2 billion at 2023-end.

Long-term debt, excluding debt issuance costs and discounts, declined to $36.3 billion from $37.2 billion at the end of 2023.

Capital expenditures were $1.28 billion minus acquisitions during the quarter under review.

Cash Flows

HCA Healthcare generated cash from operations of $2 billion in the second quarter of 2024, which declined 20.4% year over year.

Capital Deployment Update

HCA Healthcare bought back shares worth $1.4 billion in the second quarter. It had a leftover capacity of $4.2 billion under its buyback authorization as of Jun 30, 2024.

The board of directors declared its quarterly cash dividend of 66 cents per share, which will be paid on Sep 30, 2024, to its shareholders of record as of Sep 16.

2024 View Raised

Annual revenues are presently estimated to be between $69.8 billion and $71.8 billion in 2024. The midpoint of the outlook indicates an 8.9% rise from the 2023 reported figure.

Management is currently projecting adjusted EBITDA to be in the range of $13.8-$14.3 billion for 2024. The midpoint of the outlook suggests 10.2% growth from the 2023 figure.

Net income attributable to HCA Healthcare is presently anticipated to be between $5.7 billion and $6 billion. The midpoint of the outlook suggests 11.6% growth from the 2023 figure.

EPS is currently forecasted to be in the $21.60-$22.8 band for 2024. The midpoint of the guidance implies a 17% rise from the 2023 figure.

Capital expenditures, excluding acquisitions, are expected to be around $5.1-$5.3 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

The consensus estimate has shifted 8.26% due to these changes.

VGM Scores

At this time, HCA has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise HCA has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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