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HCA is shifting its leadership as it creates a new Ambulatory Operations Group. Dr. Michael Schlosser will become the chief clinical officer, overseeing medical standards across the company. Charles Gressle, who previously led the East Florida division, will head the new group focused on ambulatory care, which refers to medical services provided on an outpatient basis without an overnight hospital stay.
This reorganization highlights HCA's focus on expanding its reach outside of traditional hospital walls. Outpatient centers often have higher profit margins and are growing faster than inpatient care. Successfully growing this new group is key to the company's strategy of capturing more patient visits across entire cities.
Source: Business Wire
Goldman Sachs lowered its price target for HCA to $485 after the company adjusted its full-year expectations. A price target is what an analyst thinks the stock will be worth in the future. Despite the lower target, the firm kept its Buy rating, suggesting it still sees the stock as a good value at current prices.
This move follows HCA's recent report that a shift in its "payer mix", the ratio of patients with private insurance versus those with government plans or no insurance, is weighing on profits. While the lower target reflects these near-term pressures, the firm's Buy rating indicates they believe HCA's core business of running dominant hospital clusters remains intact.
Source: Goldman Sachs
HCA brought in $20.23 billion in revenue last quarter, which was about 9 percent higher than the same time last year and slightly ahead of what analysts expected. Earnings per share came in at $7.59. However, the company confirmed a shift in its "payer mix," which is the balance of how patients pay for their care. Specifically, HCA is seeing more patients who are uninsured or who use health insurance exchanges, which typically pay the hospital less than private employer-sponsored plans.
This shift is leaving less profit on each visit, even as more patients walk through the doors. Because of this, management has scaled back its financial goals for the rest of the year. For long-term owners, the main question is whether this is a temporary change as people switch insurance plans or a permanent trend that will make it harder for HCA to hit its profit targets.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Analysts lowered their price targets across the board in late July following a flurry of activity. Most analysts, 29 of 46, rate the stock a buy, and the average target of $455 suggests 6% upside from today's price.
Management has a perfect record of beating expectations over the last two years. They consistently set a bar they can clear, which makes their financial targets highly reliable for investors.
| Expectation | |
|---|---|
| EPS | $6.75 |
| Revenue | $19.37B |
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