The hospital operator continues to report favorable earnings thanks in part to an uptick in demand for services.
HCA Healthcare beat expectations with a hearty second quarter that allowed the health system to increase its 2024 outlook as it heads into the back half of the year.
For the quarter, HCA reported net income of $1.46 billion, up from $1.19 billion earned in the same period in 2023, and $17.5 billion in revenues, clear of the consensus estimate of $17.05 billion.
As a result, the hospital chain operator revised its guidance range for net income to $5.67 billion to $5.97 billion and its revenue to $69.75 billion to $71.75 billion. Those figures are up form previous projections of $5.2 billion to $5.6 billion for net income and $67.3 billion to $70.3 billion for revenue.
Much of the success for the quarter was attributed a boost in patient volume as same facility admissions increased 5.8% year-over-year. Meanwhile, same facility equivalent admissions rose 5.2%, same facility emergency room visits were up 5.5%, same facility inpatient surgeries increased 2.6%, and same facility outpatient surgeries declined 2.1%. Same facility revenue per equivalent admission jumped 4.4% year-over-year.
“The company's results for the second quarter were positive across the board and reflected strong demand for our services,” HCA CEO Sam Hazen told investors in an earnings call. “In addition, our teams continue to execute our strategic plan effectively and produce positive outcomes for our patients while also enhancing efficiencies in our facilities, including better throughput and case management.”
Hazen said the decline in outpatient surgeries was explained by lower volumes in Medicaid and self-pay populations, which he expects to improve in the second half of the year as patients part of the redetermination process show up in different seasonality categories.
HCA’s ability to manage expenses was also a boon for the system in the quarter. CFO Mike Marks relayed to investors that labor costs improved 200 basis points from the previous year as contract labor declined 25.7% year-over-year and represented 4.8% of total labor expenses.
When asked by analysts whether HCA is targeting M&A to enter new markets, Hazen said the system “is built to be bigger” but will be selective with acquisitions that fit its model.
“Will we enter new markets? Hopefully, yes, but those opportunities haven't necessarily presented themselves,” Hazen said.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
In its second quarter earnings report, HCA Healthcare brought in net income of $1.46 billion and revenues of $17.5 billion, which exceeded the consensus estimate of $17.05 billion.
The system saw positive patient volume growth as same facility admissions jumped 5.8% year-over-year.
HCA revised its guidance range for the year, saying it expects net income of $5.67 billion to $5.97 billion and revenue of $69.75 billion to $71.75 billion.