HCA Healthcare shares drop as third-quarter profit falls below expectations

Results were dragged down by HCA’s physician-staffing joint venture, which performed below expectations, HCA CEO Sam Hazen said in a statement.

Recent comments from company management about increasing physician-subsidy payments had already dampened investor expectations for the quarter, Jefferies analysts wrote in a report Friday. HCA in early April closed on a transaction to increase its ownership in Valesco Physician Services, its physician-staffing joint venture with Envision Healthcare. Hospital-staffing firm American Physician Partners filed for bankruptcy last month, underscoring challenges in the business.

Same-facility equivalent admissions rose 4.1% from a year earlier, HCA reported, while same-facility emergency-room visits increased 3.5%.

Surgery cases also ticked up in the quarter, with same-facility inpatient surgeries up 1.6% from a year earlier and same-facility outpatient surgeries up 0.9%.

Third-quarter revenues included $397 million related to a Florida directed-payment program that ended Sept. 30, HCA said. The directed-payment program gives funding to hospitals that provide inpatient and outpatient services to Medicaid managed-care enrollees.

HCA narrowed its full-year revenue and earnings guidance range, saying it now expects revenue of $63.5 billion to $64.5 billion, compared with previous guidance of $63.25 billion to $64.75 billion, and earnings per share of $17.80 to $18.50, versus earlier guidance of $17.70 to $18.90.

HCA’s stock has gained 0.4% in the year to date, while the S&P 500
SPX
has gained 9.8%.