Diving summary:
- HCA Health raised its full-year earnings and revenue outlook on Friday after newly approved state supplemental payment programs in the third quarter helped boost for-profit companies’ revenues beyond Wall Street expectations.
- The operator now expects revenue of between $75 billion and $76.5 billion, and net income of between $6.5 billion and $6.72 billion by 2025.
- Increased same-center equivalent admissions and higher surgical volumes also contributed to HCA’s $19.2 billion in revenue for the third quarter, a 9.6% year-over-year increase.
Diving information:
Analysts questioned whether HCA’s new outlook for 2025 could be cautious given its outperformance in the third quarter.
“We believe that the revised guidance, under a series of scenarios with [Medicaid state supplemental payment program] “The factors probably seem quite conservative,” Whit wrote Mayo in a note from Leerink Partners on Friday.
Finalized state Medicaid supplemental payment programs in Tennessee, Kansas and Texas added $240 million to HCA’s adjusted earnings before interest, taxes, depreciation and amortization during the quarter and contributed to about half of HCA’s year-over-year growth in hospitalization revenue per equivalent admission, Chief Financial Officer Mike Marks said on a call with investors Friday. tomorrow.
Government funds are intended to make up the shortfall between Medicaid reimbursement rates and actual costs of care, and providers depend on them financially.
HCA said other state supplemental payments, including those in Florida, Georgia and Virginia, could be approved by the end of the year, according to Marks. However, HCA does not expect CMS to approve any state supplemental payments during the government shutdown.
The system also saw a slight increase in volumes during the quarter, which helped boost revenue. Same-facility equivalent admissions increased 2.4% year over year, while emergency room visits and inpatient and outpatient surgeries increased approximately 1%.
Analysts on Friday’s investor call also pressed executives on the potential impact of disruptions to enhanced Affordable Care Act subsidies.
The subsidies, first implemented during the COVID-19 pandemic, will expire at the end of 2025 without further action by Congress. Without an extension, millions of people are expected to be left uninsured as premiums rise and providers are expected to lose billions in revenue. The fate of the subsidies is at the center of a funding battle between Democrats and Republicans that led to the government shutdown earlier this month.
Marks said HCA was not prepared to assess the potential impact of ACA market disruptions and said the circumstances surrounding any deal in Washington were “fluid.”
“When we get to the fourth quarter call… we’ll have a lot more information,” Marks said.
For now, CEO Sam Hazen said HCA, like other providers, will continue to push for an extension of the subsidy. Before the shutdown, the CEO said he saw “greater recognition from lawmakers of the negative impact this issue will have on families, small businesses and individuals than at the beginning of the year.”
However, “at this point… we still don’t know how this policy will play out,” Hazen said.
