HCA (HCA) Down 10.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for HCA Holdings (HCA). Shares have lost about 10.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is HCA due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
HCA Healthcare Q2 Earnings and Revenues Lag Estimates
HCA Healthcare reported second-quarter 2019 adjusted earnings of $2.21 per share, missing the Zacks Consensus Estimate by 11.2%. Moreover, the bottom line declined 3.5% year over year, mainly due to higher expenses.
HCA Healthcare generated revenues of $12.6 billion, missing the Zacks Consensus Estimate by 0.2%. However, the same was up 9.3% year over year on the back of higher admissions.
Same facility admissions and equivalent admissions were up 2.1% and 2.6%, respectively, in the quarter under review. Same facility revenue per equivalent admission grew 1.7% year over year. Same facility inpatient surgeries and same facility outpatient surgeries dipped 0.1% and were up 0.6%, respectively. Same facility revenue per equivalent admission inched up 1.7% from the prior-year quarter
Expenses increased nearly 10.6% year over year to $10.3 billion
Adjusted EBITDA totaled $2.2 billion, up 3% year over year.
As of Jun 30, 2019, HCA Healthcare operated 184 hospitals and around 2000 sites of care including surgery centers, freestanding emergency rooms, urgent care centers and physician clinics.
As of Jun 30, 2019, the company had cash and cash equivalents of about $2.43 billion, total debt of $20.7 billion and total assets of $45.5 billion, up 384%, down 164% and up 16%, respectively, from the levels at 2018 end.
During the reported quarter, capital expenditures totaled $964 million excluding acquisitions.
In the second quarter, cash flow from operations totaled $1.9 billion, up 26.2% year over year.
Share Repurchase and Dividend Update
In the second quarter of 2019, the company repurchased shares worth $242 million. HCA Healthcare has $1.75 billion shares left under its current share repurchase authorization as of Jun 30, 2019.
Moreover, its board announced a quarterly cash dividend of 40 cents per share on its common stock, payable Sep 30, 2019 to shareholders of record on Sep 3, 2019.
Guidance for 2019
The company expects full-year revenues to be in the $50.5-$51.5 billion band. Adjusted EBITDA is projected between $9.60 and $9.85 billion, wider than the prior projection of 9.45-$9.85 billion. EPS of the company is expected between $10.25 and $10.65, up from the prior projection of $9.80-$10.40 per share. Capital expenditures are anticipated to be around $3.7 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
Currently, HCA has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, HCA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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