HCA beats quarterly profit estimates despite weaker flu season volume

HCA Healthcare narrowly beat Wall Street estimates for first-quarter profit on Friday but faced a dip in patient admissions during the flu season, sending shares of the hospital operator down 9.5 per cent premarket.

As enhanced subsidies under Affordable Care Act plans phase out, hospital operators are seeing lower volumes for elective care, preventive visits and diagnostics. Rising uncompensated care from a higher share of uninsured patients is also pressuring margins.

HCA said it did not experience a typical volume increase associated with the flu season as respiratory-related admissions fell 42 per cent, and respiratory-related emergency room visits were down 32 per cent, year-over-year.

A winter storm in January also negatively impacted first-quarter volumes in some of the hospital operator’s markets.

Barclays analyst Andrew Mok warned the results marked a “somewhat concerning start to the year,” especially if Affordable Care Act and commercial pressures worsen.

HCA was able to offset the drag from lower volumes, it said, with the help of certain Medicaid supplemental payment programs, which can lift patient reimbursement above base Medicaid rates and support managed-care hospital revenue.

The company maintained its annual forecasts.

J.P.Morgan analyst Benjamin Rossi said the decision fits with HCA’s commentary in recent years regarding an intention to avoid outlook adjustments after the first quarter, particularly given seasonally slower volumes early in the year.

The company reported a 0.9 per cent increase in same-facility admissions, a metric that helps measure how each facility is performing, while emergency room visits increased 0.3 per cent during the quarter ended March 31.

Revenue per equivalent admission at same facilities - a measure combining inpatient and outpatient volumes - rose 3.1 per cent.

The company earned adjusted profit of US$7.15 per share, compared with analysts’ estimates of $7.14 per share, according to data compiled by LSEG.

Total revenue for the first quarter came in at $19.11 billion, slightly beating estimates of $19.10 billion.

(Reporting by Siddhi Mahatole and Christy Santhosh in Bengaluru; Editing by Devika Syamnath)