HCA Holdings, Inc. (HCA)

HCA 
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HCA Holdings (HCA)

Q1 2013 Earnings Call

May 02, 2013 10:00 am ET

Executives

Victor L. Campbell - Senior Vice President

Richard M. Bracken - Chairman and Chief Executive Officer

R. Milton Johnson - President, Chief Financial Officer, Principal Accounting Officer and Director

Samuel N. Hazen - President of Operations

Juan Vallarino - Senior Vice President of Employer & Payer Engagement

Analysts

Justin Lake - JP Morgan Chase & Co, Research Division

Ralph Giacobbe - Crédit Suisse AG, Research Division

Albert J. Rice - UBS Investment Bank, Research Division

Andrew Schenker - Morgan Stanley, Research Division

Joshua R. Raskin - Barclays Capital, Research Division

Thomas Gallucci - Lazard Capital Markets LLC, Research Division

Christian Rigg - Susquehanna Financial Group, LLLP, Research Division

Sheryl R. Skolnick - CRT Capital Group LLC, Research Division

Kevin M. Fischbeck - BofA Merrill Lynch, Research Division

Darren Lehrich - Deutsche Bank AG, Research Division

Frank G. Morgan - RBC Capital Markets, LLC, Research Division

Matthew Borsch - Goldman Sachs Group Inc., Research Division

Gary P. Taylor - Citigroup Inc, Research Division

Presentation

Operator

Welcome to the HCA first quarter 2013 earnings release conference call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn it over to Senior Vice President, Mr. Vic Campbell. Please go ahead, sir.

Victor L. Campbell

Thank you, Jessica, and good morning to everyone.

Mark Kimbrough, our Chief Investor Relations Officer, and I, would like to welcome all of you on today's call. Including those listening to our webcast. With us here this morning is our Chairman and CEO, Richard Bracken; our President and CFO, Milton Johnson; and Sam Hazen, President of Operation. Several other members of the senior management team are here as well to assist during the Q&A session.

Before I turn the call over to Richard, let me remind everyone that should today's call contain any forward-looking statements, they're based on management's current expectations. Numerous risks, and uncertainties and other factors may cause actual results to differ materially from those that might be expressed today. Many of these factors are listed in today's press release and in our various SEC filings.

Many of the factors that will determine the company's future results are beyond the ability of the company to control or predict. In light of the significant uncertainties inherent in any forward-looking statement, you should not place undue reliance on these statements. The company undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information or future events. This morning's call is being recorded. Replay of the call will be available later today.

With that, I'll turn the call over to Richard.

Richard M. Bracken

Thanks, Vic, and good morning to all, and thank you for joining our call. Today, the company reported first quarter earnings, which are in-line with our pre-released expectations provided in our April 15 review. Summary information concerning our first quarter performance was provided in our release this morning. And in just a moment, we'll provide a more detailed review of our first quarter performance. However, before we proceed to this analysis, let me provide a few general observations about the quarter.

As we identified in our releases, one of the most significant observations for the quarter was the slowing of patient volume growth from our recent trends. Growth in same facility inpatient admissions for the quarter was up only slightly at 0.1%, well below our historical trends. And, of course, from a more meaningful comparison, this rate needs to be adjusted for the leap year effect that had 1 less day as compared to last year's first quarter.

Doing so, same facility inpatient admissions for the quarter grew by 1.3%. Even though this rate has improved from the as reported number, clearly, it was less than our recent trends. It should be noted that this is a slowdown in rate of growth also occurred in our outpatient volumes as reflected in our adjusted admissions performance.

Our analysis of first quarter volume related metrics has led us to the following general conclusions. The slowdown in inpatient volumes begun mid-quarter with January's as reported same facility admissions up 4.7%, February is down 3.6% and March is down 0.9%. Regardless of day alignment issues, performance clearly was challenged most in the month of February, and we did see some modest improvement sequentially in March.

The slower volume growth was felt across our portfolio of hospitals. However, it is interesting to note that roughly the same number of facilities did experience admissions growth in the quarter as compared to recent trends, but the growth that they did experience was generally less. And Finally the slowdown in volumes as experienced across all payer classes and service lines. And Sam will provide more analysis of our Q1 volume metrics in just a moment.

Please note that we feel we're not in a position at this time to state definitively if the slowdown of volumes we saw in the second half of the first quarter is an anomaly or if it's just a start of a new trend. Additional time must pass to make this determination. Also, while typically we don't comment on current quarter metrics, given the volume issues in the first quarter, we thought it important to point out today that April's inpatient volumes with the benefit of an additional business day increased approximately 4% over prior year. This is more consistent with our expectations.

While our operating teams manage the expense levels with a reduced volumes during the quarter, we maintain our investments in our service line strategies, technology and clinical improvement agendas. And we feel these investments are necessary for sustained growth over time.

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