HCA Healthcare Helps Offset Losses in Healthcare Sector ETFs | ETF Trends

HCA Healthcare Inc. (NYSE: HCA) shares jumped Friday, paring losses in healthcare sector-related exchange traded funds, after beating second quarter earnings expectations.

The iShares U.S. Healthcare Providers ETF (IHF) dipped 0.2%.

Meanwhile, HCA Healthcare shares were up 12.4%. HCA makes up 3.8% of IHF’s underlying portfolio.

The healthcare-services company showed a net income of $1.16 billion, or $3.9 per share, compared to expectations of net income and per-share earnings of $1.12 billion and $3.66, the Wall Street Journal reported.

Additionally, revenue increased to $14.82 billion compared to $14.44 billion for the same quarter last year and analysts’ expectations of $14.73 billion.

Overall, HCA’s second-quarter results before interest, taxes, depreciation, and amortization were $3 billion, compared to Wall Street expectations of $2.8 billion, Bloomberg reported.

The results suggest “upside potential amid easing staffing headwinds when travel-nursing contracts signed during the January omicron wave expire in September and medical- and surgical-care recovery accelerates after summer vacations,” Bloomberg Intelligence analyst Glen Losev said in a note.

HCA’s results surprised on the upside given the ongoing hurdles the healthcare industry faces. Specifically, many hospitals face higher costs associated with factors like nurse pay, along with staffing issues, in face of the ongoing spikes in COVID-19 cases.

In the first quarter, the company previously warned of higher labor costs higher, but recruitment increased while turnover fell, so the company was able to reduce its spending on contract labor, Barron’s reported. For example, costs for the June contract labor were down 22% month-over-month.

Meanwhile, patients have been putting off visits to the doctors outside of COVID-19 cases. Hospital admission rates, though, have improved, with those related to COVID-19 dropping by 18% year-over-year, but same-facility equivalent admission rates increased by 0.5%.

If COVID-19 cases continue to surge in the months ahead, market observers have warned that HCA’s performance could take a hit as the company is forced to handle increased COVID-19 patients and further push off elective surgeries.

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