HCA - Embedded Expectations Analysis - 2020 11 17
HCA Healthcare, Inc. (HCA:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 16.2x Uniform P/E, implying bearish expectations for the firm. Even with management's concerns about patient admissions, ambulatory surgery center volume, and near-term coronavirus headwinds, markets are overly pessimistic and equity upside is warrantedSpecifically, management may lack confidence in their ability to efficiently plan for their 2021 capital spending, sustain patient admissions, and improve ambulatory surgery center volume. Furthermore, they may have concerns about the continued decline in ER visits, the slow return of their lower acute services, and the pandemic's impact on their core business. Finally, they may be exaggerating their ability to produce positive performance, and they may have concerns about too much of their revenue coming from Medicare and Medicaid
Even with management's concerns about patient admissions, ambulatory surgery center volume, and near-term coronavirus headwinds, the firm's positioning in the market and its highly profitable operations suggest markets are overly bearish, and upside is warranted for HCA
HCA Healthcare is a holding company. Through its subsidiaries, partnerships and joint ventures, the company owns and operates hospitals and related health care entities. Most of the company's general, acute care hospitals provide medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic services and emergency services. The general, acute care hospitals also provide outpatient services such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology and physical therapy. The company's psychiatric hospitals provide therapeutic programs including child, adolescent and adult psychiatric care, adolescent and adult alcohol and drug abuse treatment and counseling.
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