HCA quarterly revenue rises

Karin Miller

Wednesday, April 23, 2003 | 9:51 a.m.

NASHVILLE, Tenn. -- HCA Inc.'s profit rose nearly 22 percent in the first quarter, boosted by one-time gains on asset sales. Excluding those gains, earnings at the nation's largest hospital operator would have been up a more modest 8.6 percent.

The company had warned last week that a weaker-than-expected flu season combined with a decline in skilled nursing home admissions and the closing of obstetrics services in seven hospitals tempered earnings growth for the quarter.

HCA earned $469 million, or 90 cents a share, in the three months ended March 31, up from $385 million, or 74 cents a share, a year earlier.

Excluding gains of $42 million, or 8 cents a share, the company said its earnings were 82 cents a share.

Revenue rose 8.2 percent to $5.3 billion from $4.9 billion a year earlier.

In the Las Vegas area, HCA owns two hospitals and is building a third.

HCA lowered its earnings estimates to between 81 and 83 cents per share last week.

Analysts surveyed by Thomson First Call had originally predicted earnings of 88 cents per share for the quarter but lowered their consensus to 81 cents per share after the announcement, which caused stock prices to plunge.

In trading on the New York Stock Exchange, HCA shares rose 16 cents to close Tuesday at $12.74.

During the quarter, same facility admissions declined 0.4 percent and same facility equivalent admissions declined 0.9 percent, in part because of a 9 percent decline in pulmonary and flu-related admissions, the company said. The company also cited the closure of 17 skilled nursing units and obstetrics services in seven hospitals since the first quarter of 2002.

"We do not believe the first quarter declines in hospital volumes are indicative of a long-term trend," said HCA Chairman and CEO Jack Bovender. "While we may experience weaker than expected volume trends from time to time due to seasonal disease patterns and other market-specific factors, the overall demographic trends in the country and our market presence in fast growing major metropolitan areas should drive, we believe, continuing growth for HCA."

After the company predicted the lower-than-expected earnings, Stephens Inc. analyst Nancy Weaver dropped her estimate of annual profits from $3.13 per share to a more conservative $2.95 per share, but said she still thinks it's a good, cheap stock.

She said the light flu season accounted for only a small part of the company's drop in admissions, "but HCA did not have any wiggle room in their numbers. So when they missed, they really missed."

HCA owns and operates more than 250 hospitals and other health care facilities in 22 states, England and Switzerland.