HCA Prelim Results Lag Est, Up Y/Y - Analyst Blog

By Zacks Equity Research,

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HCA Holdings, Inc. ( HCA ) announced its preliminary financial results for the third quarter of 2012. The company expects to record operating income of $355 million or 77 cents per share, representing a substantial increase from $318 million or 60 cents per share recorded in the year-ago quarter. However, the operating income per share projection lags the Zacks Consensus Estimate of 78 cents.

Operating income excludes non-recurring items, such as gains on sale of facilities of $5 million or 1 cent per share in the third quarter of 2012 and $1 million in the year-ago quarter, along with post-tax losses on retirement of debt amounting to $256 million ($406 million pre-tax) or 49 cents per share in the prior-year quarter. Including these items, net income is projected to be $360 million or 78 cents per share, showing a steep upsurge from $61 million or 11 cents per share in the third quarter of 2011.

HCA expects revenues of $8.062 billion in the third quarter of 2012, up 11% from $7.258 billion in the year-ago quarter. However, revenues are significantly lower than the Zacks Consensus Estimate of $8.932 billion.

HCA's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) projection stands at $1.533 billion, up from $1.412 billion in the prior-year quarter. Depreciation and amortization is expected to be $417 million, while interest expense should be around $446 million. Provision for taxes is anticipated to be about $220 million. Additionally, net income attributable to non-controlling interests will likely be $95 million.

Meanwhile, same facility admissions increased 2.1% year over year in the third quarter of 2012 and same facility equivalent admissions inched up 2.6%. Further, debt-to-adjusted EBITDA was about 4.1x at the end of the third quarter, compared to 4.5x at the end of 2011.

HCA also revealed its plan of declaring a special cash dividend of $2.50 per share in the last quarter of 2012. The dividend will be paid out of funds borrowed under the company's revolving credit facilities or from other loans. However, the payment is subject to legal and contractual restrictions and is not yet final.

After making adjustments for the special dividend and borrowings required for it, the debt-to-adjusted EBITDA figure for September 30, 2012 stands at 4.3x. However, these preliminary results are open to change as the finalization of HCA's quarterly financial and accounting procedures are not yet over. The final results are expected to be revealed on November 1, 2012.

HCA, which competes with Tenet Healthcare Corp. ( THC ), carries a Zacks #3 Rank (short-term Hold). We maintain a long-term 'Neutral' recommendation on the shares.

HCA HOLDINGS (HCA): Free Stock Analysis Report

TENET HEALTH (THC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: HCA , THC

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