HCA makes profit, but stock declines

NASHVILLE, Tenn. -- HCA Inc. reported on Tuesday that fourth- quarter results swung to a profit, but the performance fell short of Wall Street expectations, pushing the stock lower.

In the quarter ending Dec. 31, net income totaled $317 million, or 63 cents a share, compared with a net loss of $102 million, or 20 cents a share, a year earlier. But one-time charges that included settlement of fraud charges by the federal government and gains on sales of facilities lowered the earnings per share to 58 cents.

Analysts surveyed by Thomson First Call had been expecting 60 cents per share from the nation's largest for-profit hospital company.

Shares of HCA fell $1.26 to close at $45.04 on the New York Stock Exchange.

The company said revenues for the quarter increased 11.4 percent to $5.6 billion from $5 billion in the same period a year ago.

The Nashville-based company also announced it was changing its dividend strategy, raising it to 13 cents a share from 2 cents.

"The company is signaling to investors that earnings growth isn't going to be as easy to come by in the future as it was in the past," said John Eade, an analyst for Argus Research in New York. "That happens to multibillion-dollar companies as they mature. This is a clear signal to investors that management wants to generate returns but may not do so through earnings growth and will focus on dividends."

Net income for 2003 totaled $1.3 billion, or $2.61 a share, compared with $833 million, or $1.59 a share, in 2002.

Analysts surveyed by Thomson First Call expected the company to earn $2.63 a share for the year.

For the year ended Dec. 31, 2003, HCA said revenues increased 10.5 percent to $21.8 billion from $19.7 billion in 2002.

The company's consolidated hospital admissions, including 11 hospitals in the Kansas City area acquired April 1, 2003, increased 3.3 percent last year. Same-facility admissions increased 0.6 percent for the year, the company said.

Excluding skilled nursing beds and obstetric units closed in the past 12 months, same-facility admissions increased 1.4 percent for the year.

On a conference call with analysts, HCA chairman and chief executive Jack O. Bovender Jr. said the company will continue to repurchase shares.

Last year, HCA repurchased 31.1 million common shares at an average cost of $35.75 each, or about $1.1 billion. Since 1997, HCA has repurchased about 234.5 million shares at an average cost of $29.51 each, or $6.9 billion. The company had 491 million shares outstanding on Dec. 31.

The company expects to earn $2.85 to $2.90 a share for 2004.

On Dec. 31, 2003, HCA operated 191 hospitals and 83 ambulatory surgery centers in 23 states, London, England, and Geneva, Switzerland. At the end of 2002, the company opted 179 hospitals and 78 ambulatory surgery centers.

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