HCA guides 2013 below Street

Doubtful accounts spike, management mum on 2014 post-reform plans

HCA Holdings executives on Tuesday said the hospital giant earned $314 million in the fourth quarter, or 68 cents per diluted share, which was well down from the $1.9 billion it posted a year earlier. The quarterly number did include pretax legal claim costs of $175 million related to a recent judgment against the company in Kansas City. Adjusted EBITDA declined 2 percent to $1.6 billion as cash flow from operations totaled $1.3 billion.

Revenues at Nashville-based HCA rose 8.5 percent to $8.4 billion, helped by same-facility equivalent admissions growth of 5.0 percent. Same-store emergency room visits climbed 12.7 percent, boosted by a "strong" flu season.

But costs also rose markedly during the quarter. HCA's provision for doubtful accounts spiked more than $400 million from late 2011 to $1.1 billion and the company's spending on salaries, benefits and supplies rose about 11 percent from the year before to almost $5.4 billion.

Those factors helped limit any upside for HCA shares Tuesday. Heading into the close, the stock (Ticker: HCA) was down about 0.5 percent at $37.45. Earlier in the day, it had reached $39.60, its highest level since the company returned to the stock market in the spring of 2011.

“We are pleased with our operating performance in the fourth quarter. Many of our key operating metrics met our expectations reflecting the strength of our delivery networks,” said Richard Bracken, HCA’s chairman and CEO.

Nevertheless, Bracken and his team issued 2013 revenue and profit guidance that is well below analysts' projections. Their forecast for adjusted earnings per share is $3 to $3.30, while the Street's consensus as of Tuesday morning had been at $3.46. Likewise, the revenue guidance of $33.5 billion to $34.5 billion was about 10 percent below analysts' expectations.

On their morning conference call with investors and analysts, HCA execs said all of HCA’s hospitals have achieved “meaningful use” status, meaning HCA facilities are in compliance — to the degree they can be — with the most recent electronic health record regulations in affect as promulgated by the Centers for Medicare & Medicaid Services.

And as of the second quarter 2012, HCA officials said that for every market in which HCA has facilities, they control at least 20 percent of those markets.

HCA’s C-level group was reticent about announcing plans and details in response to the Affordability Care Act and possible avenues of dealing with the expected revenue loss from CMS mandated patient outcomes. All agreed the rules will be more clear mid-year and there will be plenty of opportunities to discuss. Jefferies analyst Brian Tanquilut says that lack of detail also may have spooked investors.

Concerning acquisition, Bracken said those possibilities always exist especially now that HCA entertains more of these possibilities than ever before.