HCA Healthcare Sees Profits Drop, Costs Flatten in Q2

The health system survived a bumpy start to the year dealing with contract labor and other expenses.

Profits were down for HCA Healthcare in the second quarter of the year as compared to Q2 of 2021, but the health system pointed to declining costs as reason for optimism for the remainder of the year.

The Nashville, Tennessee-based facility operator announced net income of $1.15 billion in its Q2 earnings report, a fall from the $1.45 billion it raked in during the same period last year.

Revenue, however, was up year over year, with $14.82 billion earned over the past three months, compared to $14.43 billion in 2021.

Meanwhile, same facility admissions declined 1.2% and same facility equivalent admissions increased 0.5% in Q2, compared to last year.

"Many aspects of our business were positive considering the challenges we faced with the labor market and other inflationary pressures on costs," said Sam Hazen, CEO of HCA Healthcare. "Our teams executed well as they have in the past through other difficult environments."

In the earnings call, HCA Healthcare leaders said operating costs were flattening from the highs during earlier stages of the COVID-19 pandemic.

Labor contracts usage, in particular, fell in Q2 and is expected to continue declining through the rest of the year, alleviating some of the expenses on the bottom line.

HCA Healthcare CFO Bill Rutherford said in the call: "[Contract labor] was at a peak high in the first quarter really due to the COVID services, and we anticipated to be able to see sequential improvement. And indeed, that's what we saw. We thought it would first start with being able to modify the rates that we were seeing in the market in terms of the average early rate. And indeed, we saw that and we were able to execute on that as the quarter went through.

"We finished with June at rates we were anticipating when we reset our guidance after quarter. And I think over the course of the year, we'll continue to see hopefully a reduction in the utilization of that contract labor."