HCA Surges Thanks to Obamacare

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HCA Surges Thanks to Obamacare

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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.

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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%.

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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.

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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.

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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.

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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.

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Fool-worthy thoughts Full 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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