Will hospital firms top last year’s strong second-quarter earnings?
Publicly traded hospital companies this week will face a high bar to beat last year’s results when they report second-quarter earnings.
It was in the second quarter of 2014 when chains began to see the financial benefits from insurance expansion under the Affordable Care Act, an uplift that continued the rest of the year.
Universal Health Services will report its second-quarter results Thursday and LifePoint Health will follow on Friday.
Investors will be watching to see whether the chains can keep up last year’s momentum. Healthcare reform has sent the national uninsured rate to historic lows, but that number is expected to level off and become the new normal.
Yet if HCA’s earnings preview this month is any indication, demand for healthcare services has not slowed. While HCA typically has the strongest volumes among its peers, it expects to report a robust 4.1% increase in same-hospital admissions, or 4.9% when adjusted for outpatient activity. Pre-tax income rose 8.8%, while second-quarter revenue increased 7.2% year over year. HCA will host an earnings call for investors on Aug. 5. ACA coverage expansion isn’t the only factor driving increased patient volume. Hospitals are seeing the benefit of an improving economy, and chains in particular have been more strategic about expanding in profitable markets and service lines.
“We had some strategies in advance of the ACA that have really shown to be very effective,” said Trevor Fetter, CEO of Tenet Healthcare Corp. The Dallasbased chain will release its results after market close on Aug. 3. Community Health Systems will follow that same day.