Q3 Hospital Chains Earnings Review: First Prize Goes to HCA Healthcare (NYSE:HCA)

As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the hospital chains industry, including HCA Healthcare (NYSE:HCA) and its peers.

Hospital chains operate scale-driven businesses that rely on patient volumes, efficient operations, and favorable payer contracts to drive revenue and profitability. These organizations benefit from the essential nature of their services, which ensures consistent demand, particularly as populations age and chronic diseases become more prevalent. However, profitability can be pressured by rising labor costs, regulatory requirements, and the challenges of balancing care quality with cost efficiency. Dependence on government and private insurance reimbursements also introduces financial uncertainty. Looking ahead, hospital chains stand to benefit from tailwinds such as increasing healthcare utilization driven by an aging population that generally has higher incidents of disease. AI can also be a tailwind in areas such as predictive analytics for more personalized treatment and efficiency (intake, staffing, resourcing allocation). However, the sector faces potential headwinds such as labor shortages that could push up wages as well as substantial investments needs for digital infrastructure to support telehealth and electronic health records. Regulatory scrutiny, and reimbursement cuts are also looming topics that could further strain margins.

The 4 hospital chains stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 1.9%.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.4% since the latest earnings results.

Best Q3: HCA Healthcare (NYSE:HCA)

With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE:HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.

HCA Healthcare reported revenues of $19.16 billion, up 9.6% year on year. This print exceeded analysts’ expectations by 3.3%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates.

"Our teams continued to execute our agenda at a high level, and we remain disciplined in our efforts to improve care for our patients by increasing access, investing in advanced technology, and training our people,” said Sam Hazen, Chief Executive Officer of HCA Healthcare.

HCA Healthcare scored the biggest analyst estimates beat and highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 9.2% since reporting and currently trades at $480.50.

We think HCA Healthcare is a good business, but is it a buy today? Read our full report here, it’s free for active Edge members.

Universal Health Services (NYSE:UHS)

With a network spanning 39 states and three countries, Universal Health Services (NYSE:UHS) operates acute care hospitals and behavioral health facilities across the United States, United Kingdom, and Puerto Rico.

Universal Health Services reported revenues of $4.50 billion, up 13.4% year on year, outperforming analysts’ expectations by 2.8%. The business had a strong quarter with a solid beat of analysts’ full-year EPS guidance estimates and a beat of analysts’ EPS estimates.

Universal Health Services scored the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 5.4% since reporting. It currently trades at $225.50.

Is now the time to buy Universal Health Services? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Acadia Healthcare (NASDAQ:ACHC)

With a network of over 250 facilities serving patients in 38 states and Puerto Rico, Acadia Healthcare (NASDAQ:ACHC) operates facilities providing mental health and substance use disorder treatment services across the United States.

Acadia Healthcare reported revenues of $851.6 million, up 4.4% year on year, exceeding analysts’ expectations by 0.7%. Still, it was a slower quarter as it posted a significant miss of analysts’ full-year EPS guidance estimates and full-year EBITDA guidance missing analysts’ expectations.

Acadia Healthcare delivered the weakest full-year guidance update in the group. As expected, the stock is down 30.4% since the results and currently trades at $14.39.

Read our full analysis of Acadia Healthcare’s results here.

Tenet Healthcare (NYSE:THC)

With a network spanning nine states and serving primarily urban and suburban communities, Tenet Healthcare (NYSE:THC) operates a nationwide network of hospitals, ambulatory surgery centers, and outpatient facilities providing acute care and specialty healthcare services.

Tenet Healthcare reported revenues of $5.29 billion, up 3.3% year on year. This print surpassed analysts’ expectations by 0.6%. Zooming out, it was a satisfactory quarter as it also produced a beat of analysts’ EPS estimates but same-store sales in line with analysts’ estimates.

Tenet Healthcare had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is down 9.7% since reporting and currently trades at $195.22.

Read our full, actionable report on Tenet Healthcare here, it’s free for active Edge members.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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