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HCA (HCA) Down 11.6% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for HCA Holdings (HCA). Shares have lost about 11.6% in that time frame, underperforming the S&P 500.

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

HCA Healthcare Q4 Earnings Beat Estimates, Rise Y/Y

HCA Healthcare’s fourth-quarter 2019 adjusted earnings of $3.09 per share, surpassed the Zacks Consensus Estimate by 0.9%. Moreover, the bottom line inched up 3.3% year over year on the back of higher revenues and increased admissions.

Quarterly Details

HCA Healthcare generated revenues of $13.5 billion, beating the Zacks Consensus Estimate by 1.6%. The top line was also up 10.2% from the year-ago period.

Same facility equivalent admissions increased 5% year over year while same facility admissions rose 4.7%. Same facility revenue per equivalent admission also grew 1.1% year over year.

Salaries and benefits, supplies and other operating expenses increased 10.6 % year over year to $10.8 billion.

Adjusted EBITDA totaled $2.7 billion, up 9.2% year over year.

As of Dec 31, 2019, HCA Healthcare operated 184 hospitals.

Financial Update

As of Dec 31, 2019, the company had cash and cash equivalents of about $621 million, total debt of $33.72 billion and total assets of $45.05 billion.

In the reported quarter, capex came in at $1.27 billion minus acquisitions.

Cash flows provided by operating activities were $2.5 billion, up 15.2% year over year.

Dividend and Share Repurchase Update

HCA Healthcare announced a quarterly cash dividend of 43 cents per share payable Mar 31 to its stockholders of record at the close of business on Mar 2.

The company bought back shares worth $272 million in the fourth quarter and had $1.24 billion remaining under its current repurchase authorization as of Dec 31, 2019.

Full-Year Results

The company reported 2019 revenues of $51.3 billion, up 9.95% year over year.

Net income of the company was $10.07 per share, down 5.5% year over year.

2020 Outlook

Following fourth-quarter results, the company has provided its 2020 guidance.

It expects its 2020 revenues in the band of $53.5-$55.5 billion. Adjusted EBITDA is projected to a new range of $10.25-10.65 billion.

Capital expenditures are anticipated in the range of $4-$4.2 billion.

The company expects its EPS in the bracket of $11.30-$12.10 per share.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, HCA has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, HCA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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