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HCA Healthcare's Organic & Inorganic Strategies Drive Growth

Zacks Equity Research

HCA Healthcare, Inc. HCA is poised for long-term growth on the back robust organic and inorganic growth, solid capital position and vast business scale.


HCA Healthcare’s growth strategy remains focused on investing in access points in its networks that provide convenience and choice to patients. In 2015, the company began acquiring and developing freestanding emergency rooms and urgent care centers. The company continued with this in 2018. Going forward, the company will continue to invest in market brands to better coordinate services between these diverse points of care, which should pave way for long-term growth.


In addition to hospital acquisitions, HCA Healthcare’s multi-year investments in medical technologies like PatientKeeper, iMobile and vitals monitoring devices, have moved out of their pilot phases and are now being deployed company-wide. The company is working to harness the power of big data to efficiently test methodologies, discover trends and provide information to support its physicians and clinicians, which in turn should improve the quality of care to patients. 


HCA Healthcare’s investments in information technology make it stand out in the hospital industry and among other players such as Community Health Systems, Inc. CYH, Tenet Healthcare Corporation THC and Universal Health Services, Inc. UHS and more. 


Expanding services and hiring physicians remain the primary growth drivers for HCA Healthcare. The quality of physicians employed by the company has improved patient volumes. The company’s continued effort in this arena should drive up volumes, consequently bolstering revenues. 


Further, strong cash flow generation by the company enables it to pursue accretive mergers and acquisitions in its targeted markets, while executing consistent share repurchase program and dividend payout.


Moreover, capital expenditure investment (carried on for about last two to three years and will continue for the next three years) is a key component of HCA Healthcare’s growth strategy. It is likely to translate into accelerating, above-average same store volume and revenue growth, thereby leading to margin expansion.


Nevertheless, ongoing shift of patients from costly inpatient facilities to low-cost outpatient facilities, home healthcare and the likes will have an effect of depressing patient admission volumes.


Increase in labor cost and shortage of nurses should be a pain and will drive salaries and benefits up, consequently raising operating cost.


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Universal Health Services, Inc. (UHS) : Free Stock Analysis Report
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Community Health Systems, Inc. (CYH) : Free Stock Analysis Report
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