(Reuters) — HCA Holdings Inc. on Tuesday reported quarterly earnings just shy of analysts' expectations, and its top executive said the U.S. hospital chain had not yet benefited from President Barack Obama's healthcare reform law.
Shares of HCA fell 3.8 percent to $50.61 in midday trading.
“As expected, healthcare reform had minimal impact on the company's first-quarter results,” Chief Executive Officer R. Milton Johnson said. “However, we remain optimistic regarding the potential long-term benefits.”
Hospital stocks, including HCA, got a boost last week after smaller U.S. chain LifePoint Hospitals Inc. said participation in private insurance marketplaces and expanded Medicaid services for the poor were exceeding its expectations.
HCA, the largest U.S. for-profit hospital operator, said first-quarter net income rose to $347 million, or 76 cents a share, from $344 million, or 74 cents a share, a year earlier.
Excluding one-time costs for legal claims and the early retirement of debt as well as the impact of facilities sales, the company earned 84 cents a share. Analysts on average had expected 85 cents, according to Thomson Reuters I/B/E/S.
Revenue increased 4.6% to $8.83 billion.
The company affirmed the 2014 outlook it gave in February for earnings of $3.45 to $3.75 a share, excluding special items, on revenue of $35.5 billion to $36.5 billion.
HCA continued its track record of generally stronger patient volume trends than its peers, said CRT Capital Research analyst Sheryl Skolnick. The company said it had generated more revenue from patients even as it admitted fewer people to its facilities.
Hospitals are expected to gain a clearer picture of health reform's impact on patient volumes in the second half of the year.
HCA is not expected to benefit as much as some of its competitors from the expansion of Medicaid because it has fewer hospitals in states that opted to expand their participation in the federal program for the poor.
HCA hospitals during the quarter admitted 1,700 patients who were insured through the exchanges, or less than 1% of a base of 440,000 total admissions, company officials said on a conference call.
Half of those patients had previously visited HCA hospitals. Of that group, one-third enrolled in an exchange program after being uninsured.
Patients insured through the exchanges grew as the quarter progressed, with admissions of those customers doubling in March from February.
“We saw encouraging signs from healthcare reform during the quarter and found them to be consistent with our expectations,” Johnson said on the call.
The company said admissions to facilities it had operated for at least one year declined 0.6 percent in the quarter from a year earlier, but revenue per equivalent admission rose 3.7 percent.
Admissions fell at U.S. hospitals during the economic downturn as people who lacked health insurance or faced higher out-of-pocket expenses avoided seeking medical care. The health reform law and its exchanges are expected to benefit the industry this year by expanding insurance availability to more patients.