Bloomberg News

HCA’s Third-Quarter Earnings to Miss Analysts’ Estimates

October 16, 2012

HCA Holdings Inc. (HCA:US), the largest for- profit U.S. hospital chain, provided a preliminary look at third-quarter earnings that fell short of analysts’ estimates even as admissions at the company’s facilities rose.

Net income jumped sixfold to $360 million, or 78 cents a share, while sales rose 11 percent to $8.06 billion, Nashville, Tennessee-based HCA said in a statement today. Adjusted for sales of facilities, profit was 77 cents a share, short of the average 80-cent projection of 23 analysts’ estimates (HCA:US) compiled by Bloomberg. Complete results will be given on or around Nov. 1.

HCA tumbled and its results dragged other hospital stocks down, including Community Health Systems Inc. (CYH:US) and Tenet (THS:US) Healthcare Corp. HCA’s softer earnings, despite a 2.1 percent rise in admissions at comparable facilities, are probably due to more patients who may be uninsured or on Medicare, said Sheryl Skolnick, an analyst at CRT Capital in Stamford, Connecticut.

“It depends on who shows up in the bed,” she said in an e-mail. “It can really make a difference on your margin.”

The slightly lower-than-expected revenue from HCA, an industry bellwether, may portend similar problems for other for- profit hospitals, Skolnick said. Analysts had estimated $8.07 billion in revenue, according to the average of estimates.

HCA fell 1.4 percent, or 45 cents, to $31.52 at 12:26 p.m. New York time, and was as low as $30.64. Tenet dropped 0.5 percent to $24.05, while Community Health fell 1.3 percent to $28.19.

Special Dividend

HCA tried to reward shareholders, telling them it would pay a special dividend (HCA:US) of $2.50 a share, funded partly by $2 billion in new senior notes. Proceeds from the debt sale will also go toward other corporate activities and may be used to repay a term loan, HCA said in a separate statement.

Bank of America Corp., Barclays Plc, Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Wells Fargo & Co. are helping manage the offering.

HCA’s net income in the year-earlier period was $61 million, or 11 cents a share.

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • HCA
    (HCA Holdings Inc)
    • $55.22 USD
    • 0.27
    • 0.49%
  • CYH
    (Community Health Systems Inc)
    • $42.78 USD
    • -0.57
    • -1.33%
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