HCA Holdings Profit Misses Analysts’ Reduced Estimates

HCA Holdings Inc., the largest for-profit U.S. hospital chain, reported profit that missed analyst estimates as growth in patient visits continued to moderate.

First-quarter earnings excluding one-time items were 79 cents a share, the Nashville, Tennessee-based company said today in a statement. The results were 3 cents less than the average of 24 analysts’ estimates compiled by Bloomberg. Same facility equivalent admissions, the company’s main measure of growth, fell 0.7 percent before adjustments.

HCA isn’t in a position to say whether the admissions weakness is the start of a new trend or an anomaly, Chief Executive Officer Richard Bracken said on a conference call with analysts and investors today. Patient volume in April rose about 4 percent over a year earlier, he said.

“We have a calendar headwind, and the nice thing about it, it shifts,” Brian Tanquilut, an analyst at Jefferies & Co, said by telephone. “It’s setting them up for a better second quarter.”

HCA, which oversees 162 hospitals and 113 freestanding outpatient surgery centers, has been struggling with a slowdown in admissions growth and weakness in outpatient volumes. Hospitals also are being squeezed by pressures to improve patient care and curb costs as the U.S. health overhaul focuses on tying government reimbursement rates to quality of care.

“Unfavorable timing of New Year’s Day and Easter this year and the loss of a day versus Leap Year last year was mostly responsible for the sharp drop in admissions for the sector, as was a weaker flu season,” Vicki Bryan, an analyst at New York-based debt researcher Gimme Credit LLC, said in a note yesterday to investors.

Industry Admissions

HCA rose 2.5 percent to $40.47 at the close of the market. The shares gained 50 percent in the past 12 months.

Net income in the quarter declined to $344 million, or 74 cents a share, from $540 million, or $1.18, a year earlier, the company said. Revenue rose 0.4 percent to $8.4 billion.

Tenet Healthcare Corp., the third-largest for-profit hospital chain in the U.S., reported two days ago that its first-quarter inpatient admissions fell 4 percent while outpatient admissions rose 2.2 percent. Community Health Systems Inc., the second-largest chain, saw a 4.4 percent decrease in total admissions.

Same facility outpatient surgery cases at HCA dropped 4.3 percent, while inpatient surgery cases fell 2.6 percent, according to the statement.

Full-Year Forecast

An analysis of the volume weakening appears to be largely related to first quarter calendar changes, such as Easter and New Year’s, Samuel Hazen, HCA’s president of operations, said on today’s call. HCA initiated expense management steps in late February that include restricting discretionary spending and reducing workforce.

HCA had told investors April 15 that its first quarter wouldn’t be as good as some expected, preparing them for declines in both earnings and revenue. The company today reaffirmed its annual earnings forecast of $3 to $3.30 a share excluding one-time items.

The Affordable Care Act’s expansion of government-administered health programs starting in 2014 is projected to benefit hospitals that now have high levels of uncompensated care.

HCA on April 29 led hospital stocks higher after the U.S. government proposed new Medicare payment rates that would soften the blow of federal cuts.

The company was taken public in 2011 by an investment group led by Bain Capital LLC of Boston and New York-based KKR & Co. Bain and KKR each hold stakes of about 16 percent, according to data compiled by Bloomberg.

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