Stock of the Day

May 16, 2022

HCA Healthcare (HCA)

$459.29
-$9.22 (-2.0%)
Market Cap: $99.44B

About HCA Healthcare

HCA Healthcare, Inc., through its subsidiaries, owns and operates hospitals and related healthcare entities in the United States. It operates general and acute care hospitals that offers medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic, and emergency services; and outpatient services, such as outpatient surgery, laboratory, radiology, respiratory therapy, cardiology, and physical therapy. The company also operates outpatient health care facilities consisting of freestanding ambulatory surgery centers, freestanding emergency care facilities, urgent care facilities, walk-in clinics, diagnostic and imaging centers, rehabilitation and physical therapy centers, radiation and oncology therapy centers, physician practices, and various other facilities. In addition, it operates behavioral hospitals, which provide therapeutic programs comprising child, adolescent and adult psychiatric care, adolescent and adult alcohol, drug abuse treatment, and counseling services. The company was formerly known as HCA Holdings, Inc. HCA Healthcare, Inc. was founded in 1968 and is headquartered in Nashville, Tennessee.

HCA Healthcare Bull Case

Here are some ways that investors could benefit from investing in HCA Healthcare, Inc.:

  • The stock is currently trading at $458.69, which is below the average analyst price target of $466.35, suggesting potential for upside as the consensus rating remains a Moderate Buy.
  • HCA Healthcare, Inc. recently reported Q2 2026 earnings of $7.59 per share, beating the consensus estimate of $7.56, while revenue of $20.23 billion exceeded expectations and grew 8.7% year-over-year.
  • The company maintains a consistent dividend policy, having recently paid a quarterly dividend of $0.78 per share, which annualizes to $3.12 and provides a yield of approximately 0.7% for income-focused investors.
  • Institutional interest remains strong, with 62.73% of the company's stock owned by institutional investors, indicating broad confidence in the long-term stability of the healthcare provider.
  • HCA Healthcare, Inc. is expanding its outpatient footprint, with recent reports highlighting a strategic goal to add 150 ambulatory surgery centers and 20 sites per hospital by 2030, positioning the company to capture growth in lower-cost care settings.

HCA Healthcare Bear Case

Investors should be bearish about investing in HCA Healthcare, Inc. for these reasons:

  • The stock has experienced significant volatility, trading down from a 52-week high of $556.52 to the current price of $458.69, reflecting a substantial drawdown that may signal underlying market concerns.
  • Legal risks are present, as Pomerantz LLP is currently investigating claims on behalf of investors of HCA Healthcare, Inc., which could lead to potential liabilities or reputational damage.
  • Operational challenges are emerging, with reports indicating that HCA nurses have raised questions over an AI-enabled scheduling tool, suggesting potential friction in workforce management and technology adoption.
  • Insider selling activity has been notable, with several executives, including Michael R. McAlevey and Jennifer Berres, selling thousands of shares in early 2026, which may indicate a lack of confidence in near-term stock performance.
  • The company is facing escalating payment disputes with insurers, as HCA hospitals have intensified their fight over reimbursement rates, which could impact future revenue margins and cash flow stability.

HCA Healthcare Stock is Ready to Climb Higher

Written By Jea Yu on 5/9/2022

HCA Healthcare Stock is Ready to Climb Higher

Hospital and healthcare facilities operator HCA Healthcare (NYSE: HCA) stock has been performing relatively strong compared to the benchmark indices during this bearish market sell-off. The nation’s largest hospital operator felt inflationary pressures as labor costs cut into margins more than expected. The labor challenges resulted in capacity restraints in the quarter, which impacted the number of treatments and services for patients. While COVID still impacts operations, the dissipating of infections has led to an increase in non-COVID admissions including inpatient surgeries. The Company has numerous initiatives in place to recruit and retain workers as well as ease capacity restraints but still expects a slower return to normal in the face of a tight labor market. HCA Healthcare has grown its facilities by 15% to approximately 2,500 by the end of 2021 and shares trade at 13X forward earnings. Prudent investors seeking exposure to a top healthcare provider can watch for opportunistic pullbacks in shares of HCA Healthcare.

Q1 Fiscal 2022 Earnings Release

On April 22, 2022, HCA Healthcare reported its fiscal Q1 2022 earnings report for the quarter ended March  2022. The Company reported an earnings-per-share (EPS) profit of $4.14 excluding non-recurring items versus consensus analyst estimates for a profit of $4.24, a (-$0.10) miss. Revenues grew 6.9% year-over-year (YoY) to $14.95 billion beating analyst estimates for $14.72 billion. Cash flows from operating activities totaled $1.345 billion. Same facility admissions rose 2.1% and same facility equivalent admission rose 5%. HCA Healthcare CEO Sam Hazen commented, “In the first quarter, we had a number of positive volume and revenue indicators. Unfortunately, they were offset by higher than expected inflationary pressures on labor costs.”

Lowered Guidance

HCA Healthcare lowered its full-year fiscal 2022 EPS of $18.40 to $19.20 versus $18.79 consensus analyst estimates. The Company expects revenues to come in between $60 billion to $62 billion versus $61.14 billion.

Conference Call Takeaways

CEO Hazen noted that the Omicron surge continued to influence it results in the quarter. The margins were compressed due to a challenging labor market, but the positive volume and revenue indicators were encouraging. Same-facility admissions rose 2% YoY. The Company delivered medical care to 49,000 COVID inpatients. Non-COVID admissions rose 2.2% YoY. Inpatient surgeries rose 1% YoY. Outpatient volumes improved as same-facility emergency room visits rose 15% YoY. Same-facility outpatient surgeries rose 7% and outpatient cardiac-related procedures rose 7%. CEO Hazen reassured, “We continue to believe that overall demand for health care remains strong in our markets across most categories, with favorable population trends and other contributing factors that developed during the pandemic driving it.” He did admit the bottom-line results were disappointed but topline metrics were positive. The Company experienced higher labor costs than expected, but they expect it to normalize through the year. The challenging labor contracts also resulted in constraining capacity at its facilities. This is also improving, and transfer centers are operating back to normal. The Company has numerous initiatives meant to offset labor pressures and focus on recruitment, retention, and capacity management. He concluded, “We do, however, have numerous initiatives underway around retention, recruitment, capacity management, and new care models that we believe will help offset some of these labor pressures. However, we now believe the improvement in our labor cost will be slower than originally anticipated. This factor primarily influenced our revised outlook for 2022.”

HCA Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames enables a precise view of the price playing field for HCA. The weekly rifle chart peaked around the $271.48 Fibonacci (fib) level. The weekly rifle chart pup breakdown triggered the sharp collapse in the earnings release. Shares fell through the weekly 50-period moving average (MA) at $241.74 as the falling 5-period MA is at $233.80 followed by the 15-period MA at $245.57. The weekly lower Bollinger Bands (BBs) sit ta $205.68. The weekly market structure low (MSL) triggers the breakout through $221.78. The daily rifle chart has a stalled downtrend with a flat 5-period MA at $218.13 and a falling 15-period MA at $232.15 as the stochastic bounce stalls just under the 20-band for a make or break. The daily lower BBs sits at $76.90 with daily 200-period MA resistance at $247.69 and 50-period MA at $232.35. Prudent investors can patiently wait for opportunistic pullback levels at the $217.77 fib, $212.22, $208.06 fib, $203.69, $198.34 fib, $195.31 fib, $184.50 fib, and $176.26 fib level. Upside trajectories range from the $249.24 fib up to the $300.14 fib level.   
HCA Healthcare Stock is Ready to Climb Higher

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