HCA Healthcare 2Q Profit Rises, Revenue Falls -- Update
July 22 2020 - 3:59PM
Dow Jones News
By Melanie Evans and Dave Sebastian
HCA Healthcare Inc., one of the nation's largest hospital
chains, said its profit rose on federal relief aid aimed at helping
businesses navigate the coronavirus pandemic and due to the
resumption of some hospital procedures.
The turnaround in the second quarter came as patients returned
to operating rooms for medical procedures that had been postponed
in the spring. But company executives said Wednesday they were
prepared for renewed volatility as coronavirus cases surge again in
some parts of the U.S.
HCA's profit in the first quarter had fallen from the same
period last year, as traffic across most of the chain's medical
services dropped.
"The second quarter was a remarkable 91 days for the company,"
Chief Executive Sam Hazen said on an investor call after the
company released its earnings. "It started with a level of
uncertainty and uneasiness that was very high as the pandemic
began," he said.
Surgeries have steadily rebounded since a low-point in April,
company executives said. HCA is responding to new surges in
coronavirus cases in some states where it operates by alternating
between scaling back and restarting procedures. "We do believe
we're going to have to manage through Covid again," Mr. Hazen said.
"But our ability to scale up, scale down, scale up, I think has now
been proven."
HCA's earnings, among the first of hospital companies to be
reported, offer an early look at how the pandemic is disrupting
business across the $1 trillion hospital sector and how much
benefit hospitals reap from federal relief, including payouts from
a $175 billion aid fund. The government stimulus came through the
Cares Act, which Congress passed in March to provide economic
relief to help counter the impact of the pandemic.
Congress awarded the funds to offset revenue losses and higher
expenses to hospitals that verified their need. HCA has so far been
awarded $1.7 billion in relief, including $1.4 billion through June
30, but has yet to claim all of it, executives said on the
call.
The Nashville, Tenn.-based hospital operator on Wednesday
reported net income of $1.08 billion, or $3.16 a share, compared
with $783 million, or $2.25 a share, in the comparable quarter last
year. The company said it recognized $822 million, or $1.73 a
share, in gains from the government stimulus funds.
The company declined to give guidance for the year, maintaining
the view that it couldn't predict how the pandemic and economic
contraction will continue to affect company performance. HCA was
among many companies that withdrew guidance as the first quarter
closed and disruption from the pandemic intensified into a sharp
economic contraction.
"We're still very much early days in how this will play out,"
said Megan Neuburger, a managing director with Fitch Ratings and
hospital credit analyst.
Revenue across the U.S. hospital sector plunged after a
widespread halt to nonessential care under state orders for several
weeks in March and April.
Hospitals have since intermittently stopped common, and often
lucrative, surgeries. Analysts say the recession is also expected
to slow health-care use as Americans lose health insurance and
income with layoffs.
Hospitals across the South and West have delayed some surgeries
again as coronavirus cases surge in those areas, but curbs have
been more limited this time as hospitals push to maintain the
services. Texas ordered hospitals in a widening number of counties
to once again halt some surgeries. In Florida, hospitals have
voluntarily suspended some surgeries.
HCA operates 91 hospitals in both states, nearly half of its
total hospitals.
Executives on Wednesday said cases in its Texas hospitals might
have peaked, but the surge is still underway in Florida. It has so
far treated 33,000 Covid-19 patients, including more than 5,000 now
in its hospitals, Mr. Hazen said.
The hospital chain said it avoided employee layoffs by reducing
salaries of those idled by the shutdown. Many hospitals have
furloughed and laid off workers, sharply curbed capital spending
and slashed discretionary spending as operating rooms emptied out
early in the year.
HCA's second-quarter sales fell 12.2% to $11.07 billion.
Analysts polled by FactSet were looking for $10.1 billion.
The company said same-facility admissions fell 12.8% for the
quarter, while same-facility equivalent admissions declined 20.1%.
Emergency-room visits fell 32.9%, inpatient surgeries declined
15.7% and outpatient surgeries fell 32.6% -- all on a same-facility
basis, which excludes facilities the company sold or closed in the
prior year, the company said. Same-facility revenue per equivalent
admission rose 10% for the quarter.
(END) Dow Jones Newswires
July 22, 2020 15:44 ET (19:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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