HCA ( HCA) spent the second quarter in the recovery room.

For the first time in a year, the nation's largest for-profit hospital chain is set to meet Wall Street expectations. The company, hurt in recent periods by an industrywide bad-debt problem, announced on Wednesday that second-quarter operating profits should match the consensus estimate of 65 cents a share. Including a favorable adjustment to liability insurance reserves, the company predicts that it will actually top expectations by 7 cents.

It also reaffirmed full-year guidance, cut last quarter, of $2.60 to $2.70 a share.

HCA's favorable prognosis pushed the company's stock up 2.6% to $41.70 in heavy trading Wednesday. The rally proved contagious, with other hospital companies -- including LifePoint ( LPNT), Tenet ( THC) and Universal Health ( UHS) -- racking up even larger gains.

But Peter Young, a business consultant who caters to the hospital industry, saw only a few bright spots in HCA's report. Namely, he said that HCA's higher net revenue per patient -- up 5.7% in the quarter -- indicates that the company has managed to refine its business to focus on higher-margin services and sicker patients. Still, he noticed troubling symptoms of ongoing problems at the company.

Most importantly, he said, HCA's hospital admissions -- up just 0.4% from a year ago -- show that patients continue to favor outpatient clinics or, faced with rising co-payments, delay treatment altogether. HCA admission growth fell sequentially as well.

Young also noted that HCA's bad-debt expense, while down from last quarter, remains far higher than historical levels. He's doubtful it will improve anytime soon.

"Reaffirming lower-end guidance and the reported numbers seemingly indicate the decline in operational performance has leveled," Young admitted. "But the industry's future is still fraught with risk."

Smoothing Out

Prudential analyst David Shove remains worried about the sector as well. Still, he did forecast a healthy quarterly checkup for hospital companies just ahead of HCA's announcement. In a research note published Tuesday, Shove said that a sudden rise in Medicare admissions last month should allow hospital companies to meet profit expectations and could even signal a positive change in volume trends going forward.

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