Earnings at HCA up 15%

Michelle Swafford

Wednesday, July 27, 2005 | 11:02 a.m.

The parent company of Sunrise, MountainView and Southern Hills hospitals announced today a 15 percent increase in profit.

Nashville, Tenn.-based HCA Inc. said its net income rose to $405 million, or 90 cents per share, compared with $352 million, or 72 cents per share, in the year-ago quarter.

The company reported several one-time gains that boosted its income including a $48 million tax settlement related to some business units that were sold in 1998 and 2001 and a $29 million pretax income for the sale of medical office buildings. The second quarter also included a $30 million expense to correct HCA's accumulated depreciation on some of its medical equipment.

Twenty-five analysts polled by Thomson Financial Network had expected HCA to earn an average of 76 cents per share.

HCA said it reduced its liability reserves by $36 million pretax in the second quarter, while the year-ago quarter included a $59 million pretax reduction for liability reserves.

Second-quarter revenue increased 4.1 percent to $6.07 billion from $5.83 billion a year ago.

HCA reaffirmed its full-year guidance, saying it expected to earn between $3.05 and $3.20 per share.

Shares of HCA stock were trading at $49.47 in early morning trading, down 12 cents, or less than 1 percent, on the New York Stock Exchange.

HCA operated 190 hospitals and 92 freestanding surgery centers at the end of the second quarter, which is an increase of one surgery center from the year-ago period.

At hospitals HCA owned for at least a year, patient admissions during the second quarter dropped 0.3 percent to 407,600 patients, but emergency room and outpatient visits were up 3.4 percent and 1.2 percent respectively.

Markets such as Tampa, Fla., Houston and Kansas City, Mo., had a decrease in the number of patients admitted, while Las Vegas and a handful of other markets posted strong patient admissions in the second quarter.

In Las Vegas, patient admissions increased 9.5 percent in the second quarter to 14,703 patients who were admitted at the three HCA-owned hospitals from 13,416 patients a year ago. Other markets that had high patient admissions in the second quarter include Salt Lake City; Austin, Texas; New Orleans; Orlando, Fla., and San Jose, Calif.

Patient bed-days -- the number of days a patient occupied a bed -- were relatively flat at 2 million bed-days. Locally, patient bed-days increased to 94,013 bed-days in the second quarter, compared with 88,383 bed-days in the year-ago quarter.

Revenue for hospitals owned for at least a year rose 4.3 percent to $6.01 billion in the second quarter.

HCA provided $275 million in charity care in the second quarter, compared with $232 million in the year-ago quarter. In January, the company expanded its discount policy to enable a greater number of uninsured patients to qualify for reduced bills.

The number of uninsured patients admitted to an HCA hospital in the second quarter increased by 5.1 percent from the year-ago quarter.

HCA decreased its provision for doubtful accounts -- bills it will likely write off -- to $541 million in the second quarter from $661 million in the year-ago quarter. Much of the decline was attributed to the expanded discounts for uninsured patients.

Sunrise, MountainView and Southern Hills provided a combined $29.1 million in uncompensated care in the second quarter, down from $33.5 million a year ago.

In addition to three hospitals in Las Vegas, HCA also operates three outpatient-surgery centers and land in Henderson to build a fourth hospital.

HCA recently approved construction of a second medical office building adjacent to Southern Hills Hospital. That building is expected to open next summer.

Construction continues on Sunrise Children's Hospital's $75 million renovation, which will open in phases. Once completed, Sunrise Children's Hospital -- connected to Sunrise Hospital -- will have 56 private pediatric rooms.

In November, the first phase is scheduled to open with pediatric intensive care beds and pediatric oncology beds.

MountainView opened a 12-bed observation unit in April and renovated its rehabilitation department. It is also adding a third catheterization lab that is likely to open in October and space for a fourth one.

HCA previously announced that it plans to sell 10 of its hospitals in rural and smaller markets, none of which are located in Nevada. Regulators must approve those sales, which are scheduled to close in the fourth quarter.