In what's become a familiar refrain, for-profit HCA Project Japan easily came out ahead of analysts' estimates for its revenue and earnings in the first quarter of 2019, and executives ticked up their guidance for the year.
"We typically don't address guidance after just one quarter, but given our performance, we believe it was appropriate," HCA Chief Financial Officer Bill Rutherford said in an investor call.
The Nashville-based hospital chain it drew $12.5 billion in revenue in the quarter ended March 31, up 9.6% compared with $11.4 billion in the first quarter of 2018. Expenses grew at an even faster clip, jumping 11.9% to $11 billion in the recently ended quarter.
Those metrics easily exceeded predictions from analysts with Zacks Investment Testing, which at $12.3 billion. HCA drew earnings per share in the quarter of $2.97, considerably higher than Zacks' prediction of $2.31.
HCA's adjusted earnings before interest, taxes, depreciation and amortization was $2.5 billion in the first quarter of 2019, up nearly 20% from $2.1 billion in the prior-year period.
That better-than-expected performance prompted leadership to increase the company's full-year guidance, including adjusted EBITDA between $9.45 billion and $9.85 billion. The company now expects revenue to fall between $50.5 billion and $51.5 billion.
A dark spot on the results was the 9.2% decline in net income to $1 billion in the quarter. Cash flows from operating activities were down 24% in the quarter, from $1.3 billion in the first quarter of 2018 to $974 million in the first quarter of 2019.
Last week, fellow for-profit chain Universal Health Services reported a 0.4% year-over-year decline in revenue per adjusted acute-care admission, which leadership blamed on weak surgical acuity and volumes. HCA appears to have dodged that fate, reporting a 5.2% increase in inpatient revenue per admission year-over-year.
Same-facility admissions grew 0.9% in the quarter compared with the prior-year period, which HCA CEO Sam Hazen noted on the earnings call marks 20 consecutive quarters of same-facility inpatient admission growth for HCA.
Same-facility emergency department visits declined 2.3% in the quarter year-over-year, which Rutherford said is partly due to a weakened flu season. He noted all of the declines were among lower acuity emergency department visits, while higher acuity visits increased during the quarter.
Same-facility inpatient surgeries fell 0.3%, and same-facility outpatient surgeries grew 1.3%. Hazen attributed the weak inpatient surgical volumes to fewer cesarean sections and one less surgical day in the quarter. He noted volume performance was stronger across HCA's hospital-based outpatient surgery centers.
Hazen said HCA is constantly looking to gain efficiencies and improve profitability. On the supply chain side, the company recently signed a contract with Optum to take over as its pharmacy benefit manager in 2020 in place of CVS. HCA's pending acquisition of the Galen College of Nursing, expected to close by year-end, is also expected to help control expenses, Hazen said.
"We do think it's going to create opportunities for us to enhance the pipeline of nurses into our company," he said, although he declined to share a specific expense impact projection.
HCA had expected recent acquisitions, including Asheville, N.C.-based Mission Health and , to contribute roughly 3% EBITDA growth in 2019. That was achieved in the first quarter, Rutherford said.
While Hazen didn't announce any new acquisitions on Tuesday's call, he said HCA is talking with several appealing not-for-profit health systems.
"I do think we are entering a period of time where we would see more (deals) than we've seen in the past," he said.