HCA Holdings is a holding company. Through its subsidiaries, partnerships and joint ventures, Co. owns, manages or operates hospitals, surgery centers, emergency departments, care centers and diagnostic and imaging centers. At Dec 31 2013, Co. operated 165 hospitals, comprised of 159 general, acute care hospitals; five psychiatric hospitals; and one rehabilitation hospital. In addition, Co. operated 115 surgery centers. Co.'s facilities are located in 20 states and England. Co.'s general, acute care hospitals provide medical and surgical services, including inpatient care, intensive care, cardiac care, diagnostic services and emergency services.
HCA has no economic moat. HCA relies on superior execution for its success. Almost half of HCA's operations are in Texas and Florida. Changes in these states' Medicaid reimbursement programs or decisions to forgo Medicaid expansion could adversely affect HCA's operations. Medicare cuts could severely hurt HCA's reimbursement rates and leave insufficient breathing space to cover necessary capital expenditures or interest payments. HCA's has significant financial leverage..
HCA Holdings performed well in 2014 and will likely see favorable results over the near term. Healthcare reform has been a major catalyst for the company's recent growth. Provided that the healthcare regulatory environment stays relatively the same, HCA's growth over the next 3 to 5 years should accelerate as it gains market share. An aging population and the stronger-than-expected U.S. economic recovery are both positive trends that ought to support continued success. The company's high level of debt, however, is somewhat worrisome. If this is not properly managed, interest payments could balloon and have a severe impact on long-term growth. This stock has run up well in the past 2+ years. The stock is best suited for portfolio seeking short-term performance metrics.
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Strategic acquisitions have helped HCA in enhancing its network of hospitals and customer base in the US
Strong healthcare services portfolio making the company a preferred provider in the US
High level of indebtedness limiting financial flexibility
Concentration in few US states
Sluggish economic recovery could increase uninsured and patient due accounts
Stringent regulations could affect the company's business
Healthcare spending cuts may affect the company's profitability
Acquisition of Capella’s Grandview Medical
Center likely to help HCA further expand its geographic presence
Favorable demographic trends boosting demand for healthcare services
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The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.