HCA

HCA Healthcare Inc

Healthcare


Presented:07/18/2018
Price:$106.59
Cap:$37.23B
Current Price:$401.26
Cap:$103.55B

Presented

Date07/18/2018
Price$106.59
Market Cap$37.23B
Ent Value$68.87B
P/E Ratio14.44x
Book ValueN/A
Div Yield1.05%
Shares O/S349.30M
Ave Daily Vol1,725,507
Short Int2.17%

Current

Price$401.26
Market Cap$103.55B
HCA Healthcare, Inc. is a health care services company, which engages in operating hospitals, freestanding surgery centers and emergency rooms, and urgent care centers. It offers a full range of services to accommodate such medical specialties as internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and obstetrics, as well as diagnostic and emergency services. The company was founded on November 22, 2010 and is headquartered in Nashville, TN.

Publicly traded companies mentioned herein: HCA Healthcare Inc (HCA), Universal Health Services Inc (UHS)

Highlights

The presenter is long shares of HCA Healthcare (HCA) and likes the risk/reward setup heading into year’s end/Q1 2019. The thesis is predicated on some “decent size” headwinds that hurt profitability in early 2018 flipping to tailwinds for 2019. For example, the way CMS changed payments to disproportionate share hospitals (DSHs) in 2017 resulted in less money flowing to for-profit hospitals, including HCA; and M&A drag. Both of these should reverse looking out 6 - 12 months and should provide a 4% tailwind for EBITDA. The consensus presently expects HCA to grow EBITDA 4% - 4.5% in 2019 (YoY); but layering 4% - 6% core growth on top of the tailwinds results in 8% - 9% EBITDA growth YoY. This is a big delta for a hospital, and if correct, EPS could be $10.50 in 2019 (vs the Street at $9.50). Assuming a 13x - 14x multiple to earnings, or 8.8x - 8.9x EBITDA, gets the presenter to a $140 target over the next 6 - 12 months.

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Idea Discussion

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