HCA Healthcare, Inc. (NYSE:HCA) Q2 2023 Earnings Call Transcript

Bill Rutherford: Yes. I mean, we’re pleased with the labor environment. We did mention our contract labor is down 20% versus the prior year. It’s improved as well sequentially between Q2 and Q1. Our hiring metrics are up, turnover is down. And I think that portends good things for us going through the balance of the year. We mentioned before, our contract labor cost as a percentage of our SWB was under 7%. I think it was 6.8% in the quarter. So again, I think we’re pleased with that. Especially as we go through the summer months, some of our hires get through kind of their orientation process. And then we get into the balance of the year, we would expect some continued improvement.

Operator: The next question comes from Gary Taylor with Cowen.

Gary Taylor: Just two quick ones for me. Bill, I might have missed it, but I know often you kind of run through some of the managed care metrics on admissions — adjusted admission and surgeries, I wondering if you could rattle off a few of those for us? And then secondly, I just want to make sure I understood on the Envision joint venture, I think we were thinking that was maybe roughly $250 million of revenue. But do all the expenses lie in the SWB line? Is that where those reside down to kind of a roughly EBITDA breakeven?

Bill Rutherford: Yes. Gary, let me start with that. Some of our managed care, I think as we mentioned in the same mentioned her comments, really favorable payer mix. Our managed care admissions were up over 4% in the quarter. Adjusted admissions were 5%. I think we mentioned that in our prepared comments. Emergency visits managed care were up 9.8% in the quarter, and again, good acuity of case mix growth. So we’re really pleased with the payer mix that we’re seeing, and that showed itself in the commercial trends. Relative to the Valesco joint venture, your numbers are really close. About 70% to 75% of the revenue is in SWB and the rest is in other operating. And you’re right, it’s basically a breakeven proposition a little north of $220 million of revenue that we had in the quarter as we consolidated that.

Operator: And your next question will come from Justin Lake with Wolfe Research.

Justin Lake: Question on the pricing in the quarter. So with strong acuity and strong and strong payer mix, maybe can you remind us, is there anything in the second quarter that I might have slipped that, drove the pricing? I would have expected it to be a little bit better given those mix items and strong commercial pricing. And then, Bill, can you just give us what you expect in the back half of the year for volumes? Would that be the guidance?

Bill Rutherford: Yes. Justin, nothing specific I will call out. I mean, obviously when we do year-over-year comparisons, COVID was still an impact for us. We had roughly $40 million of COVID support payments last year that we don’t have this year. Our COVID admissions were 3% of total last year, roughly 1%. So that’s still influencing a little bit on the revenue line. On our volume projections for the balance of the year, I think we’ll be largely consistent. We’ve seen thus far, our year-to-date admissions same facility are about 3.3%. I would think for the full year, we hover around 3% as well for the balance of the year. Our adjusted admissions year-to-date are 5.6%. I would think by the time we finish full year, it’s still 5% to 6% adjusted admissions. So I think the volume trends we would expect in the second half of the year will be pretty consistent with what we’ve seen in the first half of the year.

Operator: And the next question will come from Phil Chickering with Detroit Bank.

Phil Chickering: As I look at the implied revenue raise and EBITDA raise at the back half of the year, I’m trying to understand the flow-through of how much revenue raises should flow through into EBITDA upside. So how is it tracking in sort of 2023 versus sort of pre-COVID years?