HCA Posts $17.5B In Revenue In Q2 And Raises Full-Year Guidance

Dive Brief:

• HCA Healthcare reported second-quarter earnings that handily beat Wall Street expectations.
• The Nashville, Tennessee-based operator posted $17.5 billion in revenue, a net income of $1.5 billion and a 5.8% increase in same facility admissions. During a call Tuesday, HCA’s executive team attributed the company’s success to broad demand for services and an ability to manage expenses.
• HCA updated its full-year revenue guidance following the results. It now expects to draw between $69.8 billion and $71.8 billion, up from the originally forecast $67.8 billion to $70.3 billion. 

Dive Insight:

Analysts expected HCA, which operates 188 hospitals and approximately 2,400 ambulatory care sites across 20 states and the United Kingdom, to have a solid second quarter. 

The health system was coming off a strong first quarter in which the business enjoyed broad growth that CEO Sam Hazen said touched every aspect of the business — even hard-to-grow areas like obstetrics. 

Leerink Partners characterized this quarter’s results as “exceptionally strong,” noting HCA eclipsed expectations for EBITDA by nearly 10% and issued new guidance that sits 5% above Wall Street’s projections.

In addition to the increase in same facility admissions this quarter, same facility emergency room visits jumped 5.5% compared to the prior year period. Hazen also noted strong growth in HCA’s cardiac procedures and inpatient rehabilitation services.

Analysts on Tuesday’s call questioned whether HCA would be able to maintain this rate of growth moving forward, noting the health system reported similarly strong volume trends in previous quarters. Hazen said yes.

“We have had — including 2023 — really solid volume growth,” Hazen said. “I think when we pull up and we look at volume for the company and overall demand for our services, it starts with the markets that we serve. We are in markets … that we think have solid characteristics that are going to support organic growth.”

However, outpatient surgeries dipped for the second consecutive quarter, falling by 1.8% compared to the same period in 2023. 

When pressed by analysts about the reduction in outpatient surgeries, Hazen said “pretty much 100% of volume decline” came from dips in the Medicaid and uninsured self-pay populations. 

Hazen expects that some volumes will recover in the back half of the year as the Medicaid redetermination process settles and as patients enter new payer classes and seek care.

The health system is also working to improve capacity management to meet demand, according to leadership. HCA’s inpatient bed capacity is up 2% year over year, and outpatient facility capacity overall is up 5% year over year, Hazen said. 

The health system is also undergoing an emergency room revitalization program to reduce wait times, according to the executive. 

The initiative comes amid an ongoing lawsuit over HCA’s emergency room wait times, filed by the North Carolina attorney general’s office and Buncombe County, North Carolina. The suit alleges HCA degraded emergency department services at Mission Hospital after acquiring it in 2019, drastically increasing wait times from an average of 9 minutes, 41 seconds in 2020 to 17 minutes, 41 seconds by the third quarter of 2023, according to Buncombe County.

Hazen said the revitalization initiative has dropped wait times from 11 to 9 minutes, which he called a starting point.

“We have room to go,” Hazen said.

HCA has eyes on expansion down the line, with Hazen telling investors the company is “built to be bigger.” But the company is not upwardly adjusting targets for capital spending at this time.

The health system remains focused on selective mergers and acquisitions within markets it currently operates in.

“Will we enter new markets? Hopefully, yes, but those opportunities haven’t necessarily presented themselves,” Hazen said. 

HCA’s stock price surged Tuesday following the results.