Shares of HCA Healthcare have slipped despite strong Q1 2025 earnings, solid network expansion, and a $6 billion buyback initiative.

Image Source: Pixabay

Key Takeaways

• HCA Healthcare stock closed at $327.92 on April 25, down 3.95%.
• Q1 2025 EPS rose over 20% to $6.45.
• Emergency room visits increased 4% year-over-year.
• The company completed $6 billion in share repurchases.
• Analysts project 5.4% annual revenue growth through 2028.

HCA Healthcare (HCA) reported a robust start to 2025, although shares closed at $327.92 on April 25, slipping 3.95% despite the upbeat earnings. Diluted earnings per share surged over 20% to $6.45, fueled by solid inpatient and emergency room volume growth. Revenue climbed to $18.32 billion, while net income ticked higher to $1.61 billion.

(Click on image to enlarge)

Image Source: Yahoo! Finance

The company highlighted a 2.6% year-over-year rise in inpatient admissions and a 2.8% boost in equivalent admissions. Emergency room visits rose 4%, helping to drive almost a 6% increase in same-facility revenue. Revenue per equivalent admission also grew about 3%.

Operating margins expanded, aided by a 9.3% drop in contract labor costs, and adjusted EBITDA margin improved by 110 basis points.

Expanding Network and Strategic Moves

HCA Healthcare's strategic focus on expansion was evident with a 3.3% rise in facilities, now totaling around 2,750, and a 2% increase in inpatient bed capacity. Inpatient occupancy rose to 77% from 75% a year ago.

Capital expenditures reached $991 million during Q1, reflecting continued investment in growth. The company spent $227 million on acquisitions, including Catholic Medical Center and Lehigh Medical Center, while proceeds from asset sales totaled $161 million.

To enhance shareholder value, HCA Healthcare completed a massive $6 billion share buyback and paid $180 million in dividends. A quarterly dividend of $0.72 per share was announced, reinforcing the company’s focus on returning cash to shareholders.

Positive Trends with a Few Concerns

Despite the strong numbers, outpatient surgical volumes declined slightly, attributed to lower acuity cases as well as reduced Medicaid and self-pay volumes. Behavioral health volumes also dipped, mainly due to the re-purposing of beds for medical-surgical use.

The company continues to monitor uncertainties around federal policy changes and tariffs on supplies, which could pose risks moving forward. Managed care admissions rose 5.4%, and exchange admissions surged 22.4%, pointing to a favorable payer mix that supports stable cash flows.

Looking Ahead: Growth Potential Remains

Analysts are optimistic about HCA Healthcare's future, forecasting 5.4% annual revenue growth and earnings reaching $7 billion by April 2028. At the recent price of $327.92, HCA Healthcare has been trading about 12% below the one-year target estimate of $371.34.

Over five years, HCA Healthcare has delivered a total return of over 216.59%, outpacing the S&P 500’s 94.77% gain during the same period. Recent financial achievements and shareholder-focused initiatives position HCA Healthcare to maintain positive momentum, although investors should weigh Medicaid uncertainties and external risks.

More By This Author: