HCA Healthcare Earnings: Analysts Revise Forecasts Ahead of Earnings Call

HCA Healthcare, Inc. (NYSE: HCA) is set to report its fourth-quarter earnings on Friday, January 24, 2025, and analysts have been busy revising their estimates in anticipation of the company's performance. The Nashville-based healthcare provider has seen a mix of positive and negative revisions from the most accurate analysts, reflecting a range of sentiments about the company's upcoming earnings report.

Analysts' Revisions: A Mixed Bag

The recent revisions in earnings and revenue estimates by the most accurate analysts reflect a mixed sentiment towards HCA Healthcare's upcoming earnings report. While some analysts have maintained their Buy ratings and raised price targets, others have downgraded the stock or cut their price targets. This indicates that there is some uncertainty among analysts about the company's future prospects. However, the consensus estimates for earnings per share (EPS) and revenue still suggest growth compared to the prior-year period, which could lead to a positive earnings surprise.



Key Factors Influencing Analysts' Revisions

Several key factors have influenced analysts' revisions for HCA Healthcare's fourth-quarter results:

1. Patient Volumes and Occupancy Rates: Analysts expect HCA Healthcare's fourth-quarter revenues to benefit from rising patient volumes and occupancy rates. This is supported by the Zacks Consensus Estimate for admissions, which indicates a 3.1% year-over-year growth, and the same for equivalent patient days, hinting at a 3.9% increase. This growth is likely driven by the resumption of elective procedures by seniors and an aging U.S. population.
2. Network Expansion: HCA Healthcare's continued network expansion is expected to help capture rising patient volumes, contributing to the company's top-line growth. This is evident in the company's acquisition of 41 urgent care centers from FastMed in 2023 to bolster its existing Texas markets.
3. Revenue per Equivalent Admission: Along with growing volumes, analysts anticipate that rising revenue per equivalent admission will also boost HCA Healthcare's top line. This is supported by the Zacks Consensus Estimate for same facility revenue per equivalent admission, which indicates a 6.9% year-over-year increase.
4. Payer Mix and Acuity: The payer mix improved year over year, with commercial volumes representing 36.2% of equivalent admissions. Additionally, the acuity of HCA's inpatient services, as reflected in its case mix index, increased slightly compared to last year. These factors helped generate same facility revenue growth of 10%.
5. Adjusted EBITDA: Analysts expect HCA Healthcare's adjusted EBITDA to total $3.618 billion in the fourth quarter, up 16% over the fourth quarter of 2023. This includes a modest benefit from Medicaid supplemental payments.

These factors, combined with HCA Healthcare's strong performance in the first three quarters of 2024, suggest that the company is well-positioned to deliver solid financial results in the fourth quarter. However, it is essential to consider potential headwinds, such as political uncertainties related to healthcare policies and the potential expiration of Affordable Care Act subsidies, which could impact the company's future performance.



Analysts' Revised Estimates vs. Consensus Estimates

Based on the data provided, analysts' revised estimates for HCA Healthcare's earnings per share (EPS) and revenue for the fourth quarter of 2024 differ from the consensus estimates. Here's a comparison and some insights drawn from the differences:

1. EPS estimates:
* Consensus estimate: $5.99
* Average of analysts' revised estimates: $6.14
* Difference: +$0.15 (+2.51%)

Analysts have generally increased their EPS estimates for HCA Healthcare, with the average of revised estimates being higher than the consensus estimate. This suggests that analysts expect the company to perform better than previously anticipated.

2. Revenue estimates:
* Consensus estimate: $18.1 billion
* Average of analysts' revised estimates: $18.23 billion
* Difference: +$0.13 billion (+0.72%)

Analysts have also increased their revenue estimates for HCA Healthcare, with the average of revised estimates being higher than the consensus estimate. This indicates that analysts expect the company's top line to grow more than initially forecasted.

Insights from the differences:

* The upward revisions in both EPS and revenue estimates suggest that analysts have a more optimistic outlook for HCA Healthcare's fourth-quarter performance compared to the consensus estimates.
* The relatively small differences between the consensus estimates and the average of analysts' revised estimates indicate that analysts' expectations are generally aligned, with a slight upward bias.
* The positive revisions may be driven by factors such as strong patient volumes, occupancy rates, and revenue per equivalent admission, as well as the company's continued network expansion and strategic acquisitions.
* However, it's essential to consider that analysts' estimates are subject to change, and actual results may differ from these expectations. Additionally, other factors, such as changes in the political landscape or regulatory environment, could impact HCA Healthcare's performance.

In conclusion, HCA Healthcare's upcoming earnings report is expected to reflect a mix of positive and negative revisions from analysts. While some analysts have increased their estimates, others have downgraded the stock or cut their price targets. The consensus estimates for EPS and revenue still suggest growth compared to the prior-year period, which could lead to a positive earnings surprise. However, investors should remain cautious and consider potential headwinds that could impact the company's future performance.