Nashville, Tennessee-based health system giant HCA Healthcare saw its shares jump Wednesday after reporting better-than-expected results in the second quarter.
Shares were trading above $121 Wednesday afternoon, up from a closing price the previous day of less than $110 after posting earnings of nearly $1.1 billion in the second quarter ending June 30.
That was up compared to $783 million in profit in the second quarter of 2019 despite seeing major volume declines. That was attributed in part due to $822 million government stimulus income during the second quarter of 2020 from the Coronavirus Aid, Relief, and Economic Security Act that reduced expenses and increased diluted earnings per share by $1.73.
CEO Samuel Hazen also pointed to cost cutting measures executed in the second quarter that collectively cut salaries and benefits, supplies and other operating expenses by 11% compared to the prior year.
"The improvement in our financial results was generally better and broader than we expected," Hazen said during a conference call with analysts. "But we believe it is too early for us to make any conclusive statements about the future or provide any guidance for the rest of the year. As we manage the company through these remarkable times, we are mindful of our mission as well as the many uncertainties which remain amid the broader recovery of the economy, uninsured levels, government regulations, state budgets and the resurgence and duration of COVID-19.”
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Same facility admissions dropped 12.8%, and same facility equivalent admissions declined 20.1% during the quarter. Same facility inpatient surgeries declined 15.7%, and same facility outpatient surgeries declined 32.6% in the second quarter of 2020, compared to the same period of 2019.
Inpatient revenue per admission was up 10%. Hazen said that was, in part, because overall acuity was higher with the inpatient case mix index growing 3% over the same period last year. HCA's payer mix was better in the second quarter with commercial business making up 28% of admissions compared to 26% the same quarter a year earlier.
Overall, HCA reported $11.1 billion in revenue for the quarter, down from $12.6 billion the same quarter a year earlier.
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Patient volumes across most service lines were significantly impacted in April due to state and local policies implemented to contain the spread of COVID-19 and preserve personal protective equipment, officials said. But patient volumes gradually improved in May and June as states began to reopen and allow for nonemergent procedures.
The company also saw $27 million in losses on sales of facilities during the second quarter of 2020 compared to gains on sales of facilities of $18 million during the second quarter of 2019.
Signs of peaks in hot spots
Officials addressed the resurgence of the virus in certain areas of the country where HCA has facilities such as Texas and Florida, which have seen spikes in cases and hospitalizations in recent weeks. In both states, hospitals have seen an increase in inpatient census in July compared to June, and the health system restricted elective care to better respond, Hazen said.
"In Texas, which was a little bit ahead of Florida in respect to resurgence, I think the company has done an incredible job at responding to the needs of our communities as have our competitors, and I think it's a testament to the healthcare system in the country and its ability to respond to these challenges," Hazen said. "What we’ve seen in Texas is that our volumes for COVID patients have peaked and actually started to decline, whereas in Florida, we’ve seen a flattening out and a very modest growth rate over the last week, and we hope Florida is maybe a week behind what's going on inside of Texas."