Hospital conglomerate HCA Healthcare (NYSE:HCA) reported its second-quarter results on Wednesday, July 25. Revenue continued to climb at a moderate pace on the back of growing admissions. At the same time, a lower tax rate and stock buybacks helped drive earnings per share up 32%.

Let's put the company's results under a microscope to find out what else went right during the period.

Four medical professionals in blue scrubs walk down a hallway.

Image source: Getty Images.

HCA Healthcare Q2 results: The raw numbers

Metric

Q2 2018

Q2 2017

Year-Over-Year Change

Revenue

$11.53 billion

$10.73 billion

7.4%

Adjusted EBITDA

$2.23 billion

$2.09 billion

6.6%

Net income 

$820 million

$657 million

25%

EPS

$2.31

$1.75

32% 

Data source: HCA Healthcare. EBITDA = earnings before interest, taxes, depreciation, and amortization.

What happened with HCA Healthcare this quarter?

  • Same-facility equivalent admissions rose 2.8%.
  • Operating expenses grew 7.5% during the period, slightly outpacing overall revenue growth. 
  • HCA recognized a tax benefit of $121 million, or $0.34 per share, during the period related to the Tax Cuts and Jobs Act.
  • Cash balance at quarter end totaled $868 million. Total debt was $33.2 billion. 
  • Cash flows from operating activities grew 13% to $1.6 billion.
  • HCA spent $470 million on stock-buybacks during the quarter. A total of 4.67 million shares were repurchased during the period. At quarter end, management still has the green light to buy back up to $910 million in additional stock. 

What management had to say

CEO R. Milton Johnson kept his commentary on the quarter focused on business growth drivers:

Revenue growth driven by solid volume and rate growth combined with good expense management provided strong adjusted EBITDA growth for the quarter. This is the third consecutive quarter of a solid adjusted EBITDA growth for the company.

President and COO Samuel N. Hazen also offered investors some positive commentary on the macro environment:

HCA has now grown same-facility admissions in 17 consecutive quarters. We believe this consistent pattern of growth is a result of positive macro factors in our markets and a comprehensive growth agenda that is both well-resourced and well executed.

Looking forward

The strong quarter caused management to boost guidance for the full year 2018. Here's a look at the updated numbers and their implied growth rates:

Metric Updated 2018 Guidance 2017 Actual Implied Change (at Midpoint for Revenue)
Revenue $45.5 billion to $46.5 billion $43.6 billion 5.5%
Adjusted EBITDA $8.65 billion to $8.85 billion $8.23 billion 6.3%
EPS $9 to $9.40 $5.95 55%

Data source: HCA Holdings.

This updated guidance compares favorably to the 4.3% revenue growth rate and 47% EPS growth rate that management had projected last quarter. However, management reminded investors that this range includes a $1.25 boost to EPS related to the recent changes to the U.S. tax code.

Overall, HCA's steadily improving results continue to show that the business is executing at a high level. With a large share repurchase authorization in place and a newly initiated dividend program ramping up, this business remains well positioned to continue delivering for its shareholders.