HCA previews big Q1 miss

Hospital giant made 'adjustments to its cost structure' as volume growth all but disappeared

So there really was something to those weak HMA earnings...

HCA Holdings on Monday afternoon said it expects its first-quarter profits to come in far below analysts' expectations, mainly because of lower patient volumes. Investors pushed shares of Middle Tennessee's largest company (Ticker: HCA) down 4.7 percent in after-hours trading to $35 — after they had given up 4.2 percent in the regular session.

Executives at HCA said they expect to report first-quarter earnings before taxes of $639 million, which is about $100 million below what the Street had been looking for. A year ago, that number was $963 million.

At issue were slowdowns in both admissions and outpatient volumes, "both of which were distributed across our portfolio and occurred largely during the second half of the period." The company's same-facility equivalent admissions benchmark rose just 0.4 percent in the quarter (after adjusting for the extra business day in 2012's Q1) after climbing 5 percent in Q4.

Despite the volume shortfall, Chairman and CEO Richard Bracken and his team aren't adjusting the full-year guidance. Revenues are still expected to come in between $33.5 billion and $34.5 billion and earnings per share are forecast to be $3 to $3.30. Helping the company stay close to those targets were a Medicare adjustment worth $170 million in adjusted EBITDA and various "adjustments to its cost structure" — i.e., staffing cuts — made as traffic trends began to soften in February and March.

HCA's Q1 profits preview came six days after smaller rival Health Management Associates said it would report earnings that were well off the mark, also because of lower volumes. Following that news, shares of hospital companies all fell, but some analysts discounted HMA's report on the grounds that the company's facilities are heavily concentrated in Florida.