Why HCA Holdings Stock Tumbled Monday

Health and Healthcare

Published: April 17, 2017 12:10 pm

Last Updated: January 12, 2020 12:56 pm

Health care services provider HCA Holdings Inc. (NYSE: HCA) revealed Monday morning its preliminary financial and operating results for the first quarter of 2017. The report sent the share price down about 3.6% in early trading Monday after the company said both revenues and net income would come in below analysts’ expectations.

For the quarter, HCA said it expects revenues of $10.62 billion, compared with year-ago quarterly revenues of $10.26 billion. The consensus estimate from analysts calls for revenues of $10.78 billion.

Net income is now estimated at approximately $659 million, or $1.74 per diluted share. In the first quarter of 2016, HCA posted earnings per diluted share of $1.69. Analysts are looking for earnings per share of $1.79.

In its announcement, HCA said:

Results for the first quarter of 2017 were affected by changes in payer mix and the loss of one day when compared to the first quarter of 2016. Same facility Medicare admissions comprised 48.1 percent of the first quarter 2017 admissions, compared to 47.0 percent in the prior year’s first quarter. In the first quarter of 2017, same facility managed care/health exchange admissions comprised 27.4 percent of admissions, compared to 28.6 percent in the prior year’s first quarter.

Admissions to facilities operating a year ago (same facility admissions) rose 1.2% year over year in the first quarter, and same facility equivalent admissions increased by 1.6%. Same facility emergency room admissions rose 1.1%. Same facility revenue per equivalent admission is expected to increase approximately 1.7% in the first quarter of 2017 compared to the same period last year.

HCA did not change its financial guidance for the 2017 fiscal year ending in December. Analysts currently expect full-year revenues of $43.3 billion and earnings per share of $7.39.

Shares traded down about 3% in the noon hour Monday, at $85.07 in a 52-week range of $67.00 to $91.03. The consensus 12-month price target on the stock is $94.41.

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