EUR 850.00 For Business Accounts Only

Morningstar | HCA Updated Forecasts and Estimates from 20 May 2019

HCA Healthcare has built a leading position in the healthcare provider arena in the United States, becoming one of the largest hospital companies among for-profit and nonprofit peers. Through internal investment and external acquisition, the firm has developed unrivaled scale that we think gives it a unique edge in the industry. This scale translates into a defined economic moat underscored by cost advantages provided by the firm’s ability to better negotiate with commercial payers and supplies vendors. This moat allows HCA to operate as one of the most efficient acute-care companies in the country, driving industry-best margins while earning an attractive return on invested capital for shareholders.Over the years, management has strategically positioned HCA to make it one of the most compelling investments in the provider space. Its focus on urban geographies demonstrating better-than-national-average population growth, particularly in Texas and Florida, creates a volume tailwind that we anticipate will continue for the foreseeable future. Further, its minimal exposure to states that have expanded Medicaid damps potential downside from unforeseen legislative changes, protecting the company from any meaningful unexpected increase in exposure to uninsured populations.Management has shown impressive foresight in building a business that should prove resilient to the ever-changing landscape of U.S. healthcare. Expanding its ambulatory surgery center and patient outreach business, developing sizable purchase volume in its HealthTrust group purchasing organization, and consolidating its acute-care franchise in existing markets has been the necessary strategy to best dig an economic moat in the provider space, in our view. We expect more of the same over time as management focuses on capital expenditures, strategic acquisitions, and shareholder return as the primary uses of capital. Longtime shareholders have been well rewarded by intelligent capital-allocation decisions; we think this is likely to continue, illustrated by management’s initiation of a common dividend for the first time since returning to the public markets.