HCA Healthcare narrowly beat Wall Street estimates for first-quarter profit on Friday but reported a decline in patient admissions during the flu season, sending its shares down about 8%.
As enhanced subsidies under Affordable Care Act plans begin to phase out, hospital operators are experiencing lower volumes for elective procedures, preventive visits, and diagnostic services. At the same time, rising levels of uncompensated care driven by a growing number of uninsured patients—are putting additional pressure on margins.
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HCA Healthcare said it did not see the usual seasonal rise in patient volumes, as respiratory-related admissions dropped 42% and respiratory-related emergency room visits declined 32% compared to the previous year.
The company also noted that a winter storm in January disrupted operations and reduced first-quarter volumes in several of its key markets, including Texas, Tennessee, North Carolina, and Virginia
“We view these factors as being temporal and not structural,” said Chief Financial Officer Michael Marks, adding that the impact of these two factors adversely impacted adjusted EBITDA by an estimated $180 million.
Barclays analyst Andrew Mok warned the results marked a “somewhat concerning start to the year”, especially if Affordable Care Act and commercial pressures worsen.
HCA Healthcare said it was able to offset the impact of lower patient volumes with support from certain Medicaid supplemental payment programs, which can boost reimbursements above standard Medicaid rates and help sustain managed-care hospital revenue.
The company also maintained its full-year forecast. J.P. Morgan analyst Benjamin Rossi noted that this aligns with HCA’s recent approach of avoiding outlook revisions after the first quarter, especially given typically slower volumes early in the year.
Revenue per equivalent admission at same facilities a metric that combines inpatient and outpatient activity rose 3.1%.
The company reported adjusted earnings of $7.15 per share, slightly above analysts’ expectations of $7.14 per share, according to LSEG. Total first-quarter revenue reached $19.11 billion, narrowly surpassing estimates of $19.10 billion.
