- Preliminary earnings report stokes concerns of unpaid bills
- Higher labor costs also cut into hospital chain's profits
HCA Holdings Inc. shares dropped in late trading after the biggest U.S. hospital chain reported preliminary third-quarter earnings that missed analysts’ estimates, raising concerns across the industry of an increase in uninsured patients who can’t pay their bills.
The company expects to report net income of $1.17 a share for the quarter, Nashville, Tennessee-based HCA said Wednesday in a statement. The average estimate of analysts surveyed by Bloomberg was $1.22 a share. The shares slumped as much as 11 percent, and the stocks of hospital chains Community Health Systems Inc. and Tenet Healthcare Corp. also tumbled.
Patients without insurance rose to 8 percent of total visits, from 7.3 percent a year earlier, HCA said. Since HCA’s size makes it a bellwether for the industry, the results suggest an increase in unpaid bills for hospitals across the country, said Ana Gupte, an analyst with Leerink Partners in Boston. Meanwhile, the growth of patient volumes from the expansion of coverage under the Patient Protection and Affordable Care Act appears to be slowing, Gupte said.
“We see this report as disappointing already weak expectations and further impacting negative sentiment on the group,” she said in a note to clients.
Labor costs also increased as HCA depended on more contract workers, the company said.
HCA said full-year 2015 adjusted earnings will be $5.20 to $5.25 a share, narrowing its forecast on Aug. 8 of $4.90 to $5.30 a share. The company is scheduled to release full results for the third quarter on Oct. 27.