Stock Report: HCA Holdings, Inc. (HCA)

Stock Report: HCA Holdings, Inc. (HCA)  - HE II HCA 6 14 13

THE HEDGEYE EDGE

We have forecasts of physician office visits, maternity trends, and a deep understanding of the positives and negatives of Obamacare.  In addition we think we understand the long term drivers of volume, pricing, and costs for the Hospital industry.  HCA stands to benefit across all of them.

 

TIMESPAN

INTERMEDIATE TERM (the next 3 months or more)

We have identified a number of drivers in the near term and longer term that act as tailwinds to the hospital industry, and HCA in particular.

  1. Utilization:  Based on our analysis of the historical data around demographics, labor trends, confidence, pent up demand created by the Great Recession, insurance coverage, policy, and many other factors, we have built a regression forecast for medical utilization.   We believe medical utilization is improving and will drive improving admission trends among hospital operators including HCA.
  2. Maternity:  The worst decline in births in the last 40 years appears over.  At 25% of Hospital inpatient admissions, accelerating maternity trends will have a very positive impact on volumes and profits.
  3. Pent up demand and Acuity: Many people avoided medical costs over the last several years.  With unemployment claims falling, employment rising, we expect deferred care returns.  In addition, because some have waited, many untreated conditions have likely worsened, meaning patient acuity in the rebound is likely to be higher as well, which means a higher revenue per case for hospitals. 

LONG-TERM (the next 3 years or less)

  1. Consolidation among hospitals will provide pricing power and purchasing power. 
  2. Affordable Care Act will insure and pay for patients who were formerly  treated, but were considered charity care, and their bills written off as bad debt.  We expect an additional 8-13% of EBITDA growth for HCA from this tailwind alone.  There may be additional patient volume from individuals who are getting insurance given the huge gap in utilization between the uninsured, which is near zero, and the insured.

 

ONE-YEAR TRAILING CHART

Stock Report: HCA Holdings, Inc. (HCA)  - HE II HCA chart 6 14 13

 


SECTOR SPOTLIGHT | Live Q&A with Healthcare Analyst Tom Tobin Today at 2:30PM ET

Join us for this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more