said third-quarter earnings rose because of a charge in the year-ago quarter and were roughly unchanged before it, as the company was able to squeeze enough revenue out of its average hospital to offset a higher provision for doubtful accounts.
HCA also slashed 2003 and 2004 earnings guidance because of new Medicare rules governing high-risk "outlier" procedures and said it was reviewing its dividend.
The Nashville, Tenn., hospital operator earned $306 million, or 61 cents a share, on revenue of $5.5 billion in the latest quarter, compared with earnings of $200 million, or 38 cents a share, on revenue of $4.9 billion last year. The latest quarter had a 1-cent gain from a hospital sale. The year-ago quarter had a pretax investment-impairment charge of $168 million, or 20 cents a share after tax, and another 2-cent expense related to a since-resolved federal investigation.
Analysts were forecasting earnings of 61 cents a share on revenue of $5.8 billion in the latest third quarter. The shares were recently down $1.60, or 4.2%, to $36.75 on Instinet.
Same-facility admissions for the quarter rose 0.2%, and were up 1% backing out skilled nursing beds and obstetric units closed within the last 12 months. Same-facility revenue rose 6.9%, while same-facility revenue per equivalent admission rose 7.1%.
HCA's provision for doubtful accounts rose to 10.3% of consolidated revenues in the third quarter of 2003 compared to 8.3% in the third quarter of 2002. It cited a "continuation of trends associated with growth of uninsured and self-pay accounts and a deterioration of the collectibility of these accounts."
Due to the Medicare changes, HCA now expects to earn $2.56 to $2.60 a share in 2003, well below the $2.80 a share expected by analysts surveyed by Thomson First Call. The impact will linger into 2004, when the company now expects to earn $2.85 to $2.95 a share, not the $3.06 a share forecast by analysts.
"HCA's senior management and board of directors are evaluating a change to the company's existing dividend policy and expects to announce any changes in the company's existing dividend policy in the first quarter of 2004," it added. HCA currently pays an 8-cent dividend.