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Why Is HCA (HCA) Up 18.8% Since Last Earnings Report?

It has been about a month since the last earnings report for HCA Holdings (HCA). Shares have added about 18.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is HCA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

HCA Healthcare Q3 Earnings Miss Estimates, Down Y/Y

HCA Healthcare's third-quarter 2020 adjusted earnings of $1.92 per share missed the Zacks Consensus Estimate by 28.6%. Further, the bottom line declined 13.9% year over year due to lower patient admissions and higher costs.

Quarterly Details

HCA Healthcare’s revenues of $13.3 billion beat the Zacks Consensus Estimate by 0.1%. The top line also improved 4.9% from the year-ago period.

Same facility equivalent admissions declined 9% year over year, while same facility admissions tumbled 3.8% year over year. However, same facility revenue per equivalent admission grew 14.8% year over year on account of higher acuity of patients treated and favorable payer mix witnessed in the third quarter.

Same facility inpatient surgeries and same facility outpatient surgeries slid 6.8% and 6.3%, respectively, year over year.

Salaries and benefits, supplies and other operating expenses inched up 0.6% year over year to $10.5 billion.

Adjusted EBITDA totaled $2.1 billion, down 10.2% year over year.

As of Sep 30, 2020, HCA Healthcare operated 187 hospitals.

Financial Update

As of Sep 30, 2020, the company had cash and cash equivalents of $6.6 billion, comparing favorably from the 2019-end figure of $621 million. Total assets came in at $51.02 billion as of Sep 30, 2020, up 13.2% from 2019-end level.

Total debt of nearly $31 billion as of Sep 30, 2020 decreased 8.2% from 2019-end level.

In the reported quarter, capex came in at $489 million minus acquisitions.

Cash flows provided by operating activities were $2.7 billion, up 27.8% year over year.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 7.53% due to these changes.

VGM Scores

Currently, HCA has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, HCA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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