A month has gone by since the last earnings report for HCA Holdings (HCA). Shares have added about 1.8% in that time frame, underperforming 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 catalysts.
HCA Healthcare's Earnings Miss in Q1, Decrease Y/Y
HCA Healthcare reported first-quarter 2020 adjusted earnings of $2.33 per share, missing the Zacks Consensus Estimate by 10.7%. Moreover, the bottom line declined 21.5% year over year due to lower patient volumes.
HCA Healthcare’s revenues of $12.8 billion lagged the Zacks Consensus Estimate by 1.6%. However, the top line was up 2.7% from the year-ago period.
Same facility equivalent admissions dipped 0.4% year over year while same facility admissions inched up 0.6%. Same facility revenue per equivalent admission also grew 1.6% year over year.
Same facility inpatient surgeries and same facility outpatient surgeries slid 1.8% and 5.9%, respectively, year over year due to the government-implemented rules to fight COVID-19.
Patient volumes across most services contracted in the last two weeks of the quarter.
Salaries and benefits, supplies and other operating expenses increased 6.8% year over year to $10.7 billion.
Adjusted EBITDA totaled $2.2 billion, down 13.4% year over year.
As of Mar 31, 2020, HCA Healthcare operated 186 hospitals.
As of Mar 31, 2020, the company had cash and cash equivalents of about $731 million, total debt of $34.86 billion and total assets worth $45.421 billion.
In the reported quarter, capex came in at $853 million minus acquisitions.
Cash flows provided by operating activities were $1.375 billion, up 41.2% year over year.
Dividend and Share Buyback Update
HCA Healthcare suspended its quarterly dividend program due to the COVID-19 effect and expects to resume it later.
In the quarter under review, HCA Healthcare bought back shares worth $441 million. As of Mar 31, 2020, it had shares of $2.8 billion left under its suspended buyback authorization.
Due to the uncertainty related to the COVID-19 impact, the company withdrew its 2020 guidance.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -139.92% due to these changes.
At this time, HCA has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise HCA has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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