HCA results miss expectations

CHICAGO (Reuters) - Hospital operator HCA Holdings Inc (HCA.N) said quarterly profit and revenue fell short of expectations because of a decline in complex surgical cases performed at its facilities, sending shares down 15 percent.

Demand for cardiovascular, neurological and joint procedures was softer than expected, HCA executives said Monday on a conference call.

The profit and revenue shortfall at the largest U.S. hospital operator caught investors off guard and weighed on other hospital stocks.

"The market is concerned that this is the start of a trend, as opposed to one data point," said CRT Capital Group analyst Sheryl Skolnick.

Hospitals have struggled in the recession as Americans who lost their jobs and health insurance have shunned medical care.

"HCA reported disappointing results this morning, which serves as a harbinger of bad things to come for the hospitals this quarter," Jefferies analyst Arthur Henderson said in a note to clients.

HCA executives on the call said it was unclear yet whether overall market demand had slumped or the company had lost share, noting its patient trends have been favorable for the past several quarters and its hospitals have been gaining share in surgical services.

"We don't know exactly if the market shrank in the second quarter in overall demand or if we did in fact lose market share," said Samuel Hazen, HCA president of operations. "Anecdotally, we don't think, across the various divisions, that that is in fact the case."

HCA, which went public in March, said same-facility admissions rose 1.8 percent, as a 3.7 percent rise in medical admissions offset a 1.6 percent decline in surgical admissions. Emergency room visits increased 4.5 percent on a same-facility basis.

Second-quarter net income fell to $229 million, or 43 cents per share, from $293 million, or 67 cents per share, a year earlier.

Excluding items, earnings of 51 cents per share were 8 cents below the average estimate of analysts, according to Thomson Reuters I/B/E/S.

"While the company had favorable admissions growth during the quarter, we experienced a shift in service mix from more complex surgical cases to less acute medical cases," HCA Chief Executive Officer Richard Bracken said in a statement. "This resulted in lower than anticipated revenue growth and earnings."

Adjusted earnings before interest, tax, depreciation and amortization declined 4.7 percent to $1.4 billion.

Revenue increased 4 percent to $8.06 billion.

The company said it expects adjusted EBITDA growth in the range of 3 percent to 5 percent for the full year, down from a previous forecast for mid-single-digit growth.

Oppenheimer analyst Michael Wiederhorn said pricing was hurt by the decline in specialized surgical procedures, despite stable admissions trends.

"We believe this is a trend that will become increasingly evident across the hospitals this quarter," Wiederhorn said.

Shares of Nashville, Tennessee-based HCA were down 15.3 percent at $29.31 on the New York Stock Exchange on Monday morning, off an earlier low at $28.58.

Shares of other hospital operators also declined, with Tenet Healthcare Corp (THC.N) down 4.2 percent at $6.00, Community Health Systems Inc (CYH.N) down 4.6 percent at $25.77, Health Management Associates Inc (HMA.N) down 5.1 percent at $9.75, and Universal Health Services Inc (UHS.N) down 4.9 percent at $50.92.

(Reporting by Susan Kelly and Lewis Krauskopf, editing by Gerald E. McCormick, Matthew Lewis and Gunna Dickson)