January 30, 2018 / 1:49 PM / in a year

HCA shares hit record as profit beats on strong patient volumes

(Reuters) - HCA Healthcare Inc (HCA.N), the largest U.S. for-profit hospital operator, on Tuesday reported better-than-expected quarterly earnings and revenue, helped by strong patient volumes.

Shares of the company rose more than 9 percent to a record of $106.84. That was in sharp contrast to the broader healthcare sector .SPXHC, which fell after Amazon AMZN.N, Berkshire Hathaway (BRKa.N) and JPMorgan (JPM.N) said they would form a healthcare company.

Hospital operators have been plagued by weak patient admissions in the past few quarters, but HCA has been buying hospitals from rivals in the face of the decline.

HCA, which last year made deals with Community Health Systems (CYH.N) and Tenet Healthcare (THC.N) to buy hospitals and medical centers, said on Tuesday it would continue its acquisition spree.

“With respect to the pipeline, we continue to have a lot of potential transactions that we’re looking at,” Chief Executive R Milton Johnson said on a post-earnings call with analysts.

HCA said same-facility equivalent admissions, which include patients who stay in the hospital overnight and those who are treated on an outpatient basis, rose 2.3 percent in the fourth quarter.

“HCA put up a very strong print amid the Amazon noise dominating healthcare this morning,” Evercore ISI analyst Michael Newshel said.

The company, the first among hospital operators to report fourth-quarter results, said it saw “modest” elements of flu activity in the quarter. Flu continues to be widespread across the United States and the season is on track to be one of the most severe since 2014/2015.

HCA, which also initiated a quarterly dividend, said it would invest $10.5 billion over the next three years, higher than its pervious target of $8.2 billion.

The announcement on dividend and budget shows HCA’s confidence in its long-term financial strength, BMO Capital Markets analyst Matthew Borsch said.

Net income attributable to HCA plunged 48.5 percent to $474 million, or $1.30 per share, as it booked a $301 million charge related to the recently passed U.S. tax reform.

Excluding items, the company earned $2.13 per share on revenue of $11.56 billion, beating the average analyst estimate of $1.87 for earnings and $11.17 billion for revenue, according to Thomson Reuters I/B/E/S.

Reporting by Manas Mishra in Bengaluru; Editing by Maju Samuel

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