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HCA Healthcare's (HCA) Q4 Earnings Top Estimates, Surge Y/Y

Zacks Equity Research

HCA Healthcare, Inc. HCA delivered fourth-quarter 2018 adjusted earnings of $2.99 per share, surpassing the Zacks Consensus Estimate by 15.4%. Moreover, the bottom line shot up nearly 41% year over year. This upside was backed by higher same facility admissions.

Quarterly Details

HCA Healthcare generated revenues of $12.3 billion, beating the Zacks Consensus Estimate by 0.9%. The top line was also up 6.2% from the year-ago period, primarily driven by increased admissions.

Same facility admissions and equivalent admissions were up, both by 1.9% in the quarter under review. Same facility revenue per equivalent admission grew 3.9%. Same facility inpatient surgeries and same facility outpatient surgeries were up 0.1% and 0.8%, respectively. Same facility revenue per equivalent admission rose 4.4% from the prior-year quarter.

In the fourth quarter, cash flow from operations totaled $2.2 billion, up 25.4% year over year, mainly owing to higher salaries and benefits plus other operating expenses.

Expenses escalated nearly 6.1% year over year to $9.8 billion. Moreover, the company incurred additional expenses and suffered a revenue loss projected at around 24 cents per share, which is related to the impact of hurricanes.

Adjusted EBITDA totaled $2.5 billion, up 6.2% year over year.

As of Dec 31, 2018, HCA Healthcare operated 179 hospitals and around 1,800 sites of care including surgery centers, freestanding emergency rooms, urgent care centers and physician clinics.

HCA Healthcare, Inc. Price, Consensus and EPS Surprise

HCA Healthcare, Inc. Price, Consensus and EPS Surprise | HCA Healthcare, Inc. Quote

Financial Update

As of Dec 31, 2018, the company had cash and cash equivalents of about $502 million, total debt of $32.8 billion and total assets of $39.2 billion, down 31.4% and 2.5% and up 2.4%, respectively.

During the reported quarter, capital expenditures totaled $1.1 billion excluding acquisitions. Cash flows from operating activities were $2.2 billion, up 25.4% year over year.

Share Buyback and Dividend Update

HCA Healthcare has announced a quarterly cash dividend of 40 cents per share, payable Mar 29, 2019 to stockholders of record at the close of business on Mar 1, 2019. In the quarter under consideration, the company bought back common stock for $335 million. As of Dec 31, 2018, it had stock worth $272 million remaining under its current repurchase authorization.

The board of directors has also authorized an additional share buyback program of up to $2 billion of its outstanding common stock.

Full-Year Update

For 2018, revenues increased 7% to $46 billion. Adjusted earnings per share came in at $10.66, up 79% year over year.

Guidance for 2019

The company expects revenues for 2019 in the band of $50.5-$51.5 billion. Adjusted EBITDA is projected between $9.35 billion and $9.75 billion. The company’s EPS is estimated to be between $9.60 and $10.20 per share. Capital expenditures are anticipated to be around $3.7 billion.

Our Take

The overall performance of HCA Healthcare in 2018 remains extremely impressive for investors. The momentum was consistently backed by same facility admissions and equivalent admissions, same facility emergency room growth and surgical growth. The company’s strong fundamentals are likely to drive its stock in 2019 as well.

Zacks Rank

HCA Healthcare sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Upcoming Releases From Medical Sector

Some other stocks worth considering from the medical sector are as follows:

Molina Healthcare, Inc MOH is set to report fourth-quarter 2018 earnings performance on Feb 11. The stock has an Earnings ESP of +2.89% and a Zacks Rank of 1.

Acadia Healthcare Company, Inc. ACHC is slated to report fourth-quarter earnings on Feb 20. It has a Zacks Rank #3 (Hold) and an Earnings ESP of +3.04%.

Universal Health Services, Inc. UHS has an Earnings ESP of +2.49%. This company with a Zacks Rank of 3 is scheduled to release fourth-quarter earnings on Feb 27.

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