Vanguard’s Q2 lifts shares

EHR incentive payments help lift bottom line

Hospital operator Vanguard Health Systems said today it earned $12.2 million in its second fiscal quarter, down from $15.7 million a year earlier. Per diluted share, Vanguard’s profits came in at 14 cents, 2 cents below analysts’ expectations, but that didn’t seem to bother investors much: At around 1 p.m., shares of the Burton Hills-based company (Ticker: VHS) were trading up almost 3 percent to $14.02.

Same-store adjusted discharges at Vanguard’s hospitals rose 1.4 percent from the year before, but income from continuing operations from the company’s acute-care business fell to $7 million from $19.2 million. Making up some of that gap was a $3.4 million increase in income from Vanguard’s insurance segment.

Also contributing to the bottom line, Avondale Partners analyst Kevin Campbell wrote in a note to clients, were higher-than-expected incentive payments related to Vanguard’s use of electronic health records. The $14.5 million received by the company was $10 million more than Campbell had modeled and added 8 cents to EPS.

On a conference call with analysts and investors, Vanguard executives said results at their Arizona operations continue to be “challenging” but added they were focused on growing in their markets. Helping on that front is a broad sales and marketing push in many of the company’s metro markets. Where that plan has been fully rolled out, it produced a 2 percent increase in discharges and surgical procedures during fiscal Q2.