hca's surprising surge thanks to obamacare

HCA Surges Thanks to Obamacare

HCA Holdings Inc.

"Results for the second quarter of 2014 exceeded our internal expectations, both in terms of core operations and healthcare reform," said CEO R. Milton Johnson.

Driving HCA’s surprising surge

•Second quarter sales will total $9.23 billion.Up from $8.45 billion last year.

•Admissions at facilities open at least a year grew by 1.2%.

Higher admissions tied to reform driven enrollment expansion and an improving economy.

•Revenue per equivalent admission grew 5.4%.

Driving HCA’s surprising surge

•Second quarter net income will total $904 million.Up from $806 million last year.

•EPS will be $1.07.Up from $0.91 last year and ahead of $0.92 analyst estimates.

•Positively impacted by falling unreimbursed care thanks to Medicaid and exchange insurance enrollment.

Driving HCA’s surprising surge

•Reform will boost adjusted EBITDA by between 2% and 3% this year.

• Above its prior outlook for a 1% to 2% benefit.

Driving HCA’s surprising surge

•Better than expected results prompt management to bump up full year guidance.•Revenue is expected to total $36 billion to $36.5 billion.•EPS is expected to be between $4 and $4.25.

• Significant increase from prior $3.45 to $3.75 guidance.

Driving HCA’s surprising surge•Guidance improves valuation.

• Pre guidance P/E of between 15.12 and 16 (not including today’s move).• Post guidance P/E of between 13.8 and 12.99 (not including today’s move).

•Suggests upside from current 2017 EPS estimates for $4.96.

Fool-worthy thoughtsFull results will be reported on July 29th.Admission and pricing supports results for Tenet Healthcare.Reform enrollment likely reduced bad debt expense.8 million public exchange enrollees and 6 million new Medicaid enrollees boost care demand.

• Supports investment in outpatient facilities.• Urgent care and stand-alone ER’s.

Capital expenditure forecast is unchanged at $2.2 billion.Analyst upward revisions likely.

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