醫(yī)療設(shè)施行業(yè)Q4總結(jié)：醫(yī)院結(jié)果表現(xiàn)強(qiáng)勁展望向好

1、7 March 2019 Americas/United States Equity Research Healthcare FacilitiesResearchAnalystsA.J.Rice2123258134 HYPERLINK mailto:aj.rice JailendraSingh212 3258121 HYPERLINK mailto:jailendra.singh Caleb Harris,CPA212 3257458 HYPERLINK mailto:caleb.harris EduardoRon212 3257491 HYPERLINK mailto:eduardo.ron

2、 Healthcare FacilitiesQUARTERLYQUARTERLYQ4 Recap: Hospital Results Strong Despite Flu Comp; 2019 Outlooks Skew PositivelySolid Q4 Relative to Expectations for All Four Covered Hospital Companies: Each of the public hospital companies that we cover (CYH, HCA, THC, and UHS) reported EBITDA ahead of co

3、nsensus expectations. The top line was also ahead of expectations for each of the four hospital companies. Street expectations ahead of the quarter were reasonable relative to the tough flu comp vs.4Q18.Volumes Fairly Stable as HCA Continues to Outperform; Pricing Remains Solid: For the fourth quart

4、er of 2018, the hospital group reported SS inpatient admissions growth of 0.4%, on average. This represents an increase in the Y/Y growth rate of 50 bps sequentially and a decrease of 70 bps Y/Y. The flu had some neg impact on 4Q18 relative to 4Q17 (since the prior year flu season was much stronger)

5、. UHSs growth rate improved the most sequentially (increase of 200 bps to 2.9%). CYHs growth rate improved by 180 bps sequentially, but was still negative (-0.5%). The hospital group reported a Y/Y increase in net revenue per adjusted admission of 2.5%, on average, in the fourth quarter of 2018. Thi

6、s represents a decrease in the Y/Y growth rate of 180 bps sequentially and an increase of 40 bps relative to 4Q17. Excluding THC, all hospital operators within our coverage saw increases in Y/Y pricing growth vs. 4Q17. However, THCs Y/Y pricing growth was up 5.4% Y/Y after adjusting for the CA provi

7、der fee revenues (vs. -0.6%reported).2019 Expectations/Commentary Vary by Company: The hospital companies generally expect low-single-digit pricing growth in 2019 (similar to slightly lower relative to 2018). On volumes, THC and CYH generally expect flat SS adjusted admissions, while UHS and HCA exp

8、ect low-single- digit growth in SS adjusted admissions. HCA offered a strong EBITDA outlook of $9.35-9.75 bln, which implies 4.5-9.0% growth Y/Y. This includes 2-3% SS volume growth and 2-3% SS pricing growth. UHS provided EBITDA guidance of $1.826-$1.909 bln (3.6-8.4% growth). This outlook assumes

9、that the acute business performs well (6-7% core EBITDA growth at the midpoint), but that behavioral health core EBITDA is relatively flat (up 3-3.5% on an all-in basis). THCs EBITDA outlook of $2.65-2.75 bln was ahead of expectations and assumes continued strong performance from Conifer and the Amb

10、ulatory segment. Finally, CYHs EBITDA guidance was a positive surprise at $1.625-1.725 bln. CYHs operations have improved, and CYH believes it will complete its divestiture program in2H19.Updating UHS Model: Our UHS TP is now $152 (prev $150). Our 2019 EBITDA estimate is $1.869 bln (previously $1.83

11、1 bln). Risks to our rating and PT include any slowdown in volumes and pricingtrends.DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Creditto do in its As a be the a of of

12、 as a in Table of contents HYPERLINK l _bookmark0 Summary of4Q18Results3 HYPERLINK l _bookmark1 Company-by-Company4Q18Recap4 HYPERLINK l _bookmark2 CommunityHealthSystems4 HYPERLINK l _bookmark3 HCAHoldings4 HYPERLINK l _bookmark4 TenetHealthcare5 HYPERLINK l _bookmark5 UniversalHealthServices7 HYPE

13、RLINK l _bookmark6 Price Performance&Valuation9 HYPERLINK l _bookmark7 Industry KeyOperatingStatistics HYPERLINK l _bookmark8 SameFacility Admissions HYPERLINK l _bookmark9 Same FacilityAdjustedAdmissions HYPERLINK l _bookmark10 SameFacilityPricing HYPERLINK l _bookmark11 MarginAnalysis HYPERLINK l

14、_bookmark12 ExpenseAnalysis HYPERLINK l _bookmark13 LaborExpenses HYPERLINK l _bookmark14 SupplyExpenses HYPERLINK l _bookmark15 Other Operating Expenses HYPERLINK l _bookmark16 FinancialStrength/Leverage HYPERLINK l _bookmark17 Universal HealthServices(UHS)Summary of 4Q18 ResultsAll four public hos

15、pital companies within our coverage posted EBITDA results ahead of consensus expectations for 4Q18.The major hospital companies reported SS inpatient admissions growth of +0.4% Y/Y (a decrease of 70 bps Y/Y and an increase of 50 bps sequentially). However, the dispersion of admissions growth across

16、the various companies was fairly wide. UHS reported an increase in SS admissions of 2.9%, and HCA reported an increase of 1.9%. THC reported a decrease of 2.7%, while CYH reported a decrease of 0.5%. HCA and UHS (the most urban-concentrated providers) continue to outperform their peers on this metri

17、c.The hospital group reported an increase of 0.9% Y/Y in SS adjusted admissions in 4Q18, a decrease of 110 bps Y/Y and a decrease of 10 bps sequentially. UHS was strongest in this category as well, with 2.2% growth in SS adjusted admissions. HCA was next strongest with 1.9% growth. CYH was slightly

18、positive at 0.1%, while THCs SS adjusted admissions declined0.8%.Net revenue per adjusted admission grew 2.5% Y/Y for the hospital group, an increase of 40 bps Y/Y and a decrease of 180 bps sequentially.Figure 1: 4Q18 Results byCompanyCYHHCATHCUHSRevenuesActualY/Y Change Consensus$3,453-5.4%$3,384$1

19、2,274 6.2%$12,110$4,619-7.2%$4,5084.2%$2,740Variance from Consensus$70$164$111$14CS Estimate$3,430$12,049$4,579$2,645Variance from CS Estimate$23$225$40$109EBITDAActualY/Y Change Consensus2.4%6.2%$2,410$684-18.6%$6661.5%Variance from Consensus$20$98$18$11CS Estimate$407$2,359$665$438Variance from CS

20、 Estimate$12$149$19$21EPSActualY/Y Change Consensus50.0% $2.99 40.4%$2.55$0.51NM$0.28$2.37 20.3%$2.34Variance from Consensus$0.18$0.44$0.23$0.03CS Estimate($0.69)$2.48$0.25$2.35Variance from CS Estimate$0.27$0.51$0.26$0.02SS Inpatient AdmissionsActual-0.5%1.9%-2.7%2.9%Source: Company data, Credit Su

21、isse estimates, FactSetNote: UHS EBITDA shown in this table is consolidated EBITDA, which is different from the “EBITDA less NCI” figure that UHS reportsCompany-by-Company 4Q18 RecapIn the text and figures that follow, we summarize Q4 earnings results for each company.Community Health SystemsSummary

22、: 4Q18 EBITDA was $419 mln ($12/20 mln above CSe/Cons). Q4 net revs. were $3.45 bln ($23/70 mln above CSe/Cons). EBITDA margin improved by 90 bps Y/Y to 12.1% (30/40 bps ahead of CSe/Cons), in part due to labor costmanagement.SS Adj Admits Turn Positive: 4Q18 SS admits were down 0.5% (vs. down 2.3%

23、in 3Q18), while SS adj admits were up 0.1% (vs. down 0.8% in 3Q18). This is the first positive quarterly adj admits in three years. SS pricing increased 1.8% Y/Y vs. up 4.0% in 3Q18. An investment value drop in the def comp plan resulted in lower revs. and exps (neutral to EBITDA), impacting SS pric

24、ing negatively by 110 bps. SS surgeries were up 0.9% Y/Y (vs. up 0.3% in 3Q18), while SS ER visits were down 3.2% Y/Y (down 1.7% Y/Y in3Q18).OCF & CAPEX: 4Q18 OCF was negative $165 mln, vs. +$156 mln a yr ago. Excluding special items (such as $266 mln CVR settlement payment), OCF was $112 mln, vs. $

25、177 mln in 2017. CAPEX was $114 mln vs. $136 mln last year. Net Debt to TTM EBITDA remains a very high 8.2x at the end of 2018, while CYHs first lien net debt to EBITDA leverage ratio was 4.84x.2019 Guidance: CYH expects 2019 revs. of $12.8-13.1 bln (Cons: $13.06 bln) and EBITDA of $1.625-1.725 bln

26、(Cons: $1.562 bln). Guidance assumes SS adj admits grow 0-1% and ave shares of 114.0-114.5 mln. CYH expects op cash flow of $475-575 mln. The outlook includes divestitures with definitive agreements expected to close in 2019. The difference in EBITDA guidance and consensus ests is due partly to high

27、er expected 2019 contribution from divestitures.Portfolio and Operational Improvements: CYH still expects proceeds of $1.3 bln on hospital divestitures ($2.0 bln of revs). Remaining revs. to divest and proceeds expected are $900 mln each. In a conversation, mgmt. said the four hospitals under defini

28、tive agreement should close in the next couple of months, with the rest in 2H19. Some 80% of remaining CYH hospitals are in statistical areas with more than 50K residents. Excluding future divestitures and smaller markets supporting regional networks, 95% of CYH hospitals are in markets with greater

29、 than 50K residents. Management now characterizes the company as more suburban and urban rather than rural. During 2018, EBITDA margin grew by 90 bps to 11.6%, and CYHs 2019 guidance calls for a further 130 bps of EBITDA margin improvement at the midpoint (driven by divestitures, cost savings, and c

30、ore top-line growth). Volume trends have improved as well, with adjusted admissions turning slightly positive in Q4 (despite a roughly 50 bps Y/Y headwind from the flu).Expansion Projects: In 2019, CYH plans to spend CapEx of 4% of revenue (vs. 3.7% in 2018), which is more in-line with historical le

31、vels. Examples of expansion projects include acute care bed expansions in Birmingham and Alaska, surgery expansions in Knoxville and Las Cruces, and cardiac expansions in Naples and Fort Wayne. CYH has a couple of new openings planned for 2020 and 2021. Expansion projects are focused on areas where

32、the company currently hits capacity constraints. CYH also plans to increase outpatient access points (urgent care, walk-in clinics, etc.) during2019.HCA HoldingsSummary: HCA posted 4Q18 adjusted EBITDA of $2.508 bln, $149/$98 mln ahead of CSe/Cons. 4Q18 adjusted EPS was $2.99, $0.51/$0.44 ahead of C

33、Se/Cons EPS ests. The EBITDA beat was across the board as both revenues and margins were better. The lower than expected tax rate (roughly $0.25 relative to CSe) further aided the EPS beat in the quarter. 4Q18 results included a drag of $31 million ($0.07 in EPS) related toHurricane Michaels impact

34、on HCAs Florida panhandle facilities, more than offset by a benefit of $49 million ($0.11 in EPS), from an insurance recovery related to 2017s Hurricane Harvey.SS Volume Trends: HCA reported 4Q18 revs. of $12.274 bln, up 6.2% Y/Y and$225/$164 mln above CSe/cons. Same facility equivalent admits incre

35、ased 1.9% (3Q18: 3.4%), while SS inpatient admits grew 1.9% (3Q18: 3.1%). SS pricing increased 4.4% Y/Y. SS ER visits declined 2.1% Y/Y. SS inpatient surgeries were up 0.1% and SS outpatient surgeries were up 0.8% Y/Y. HCAs SS commercial admits increased 1.1% and adj admits increased 1.6% Y/Y in 4Q1

36、8. SS self-pay admits in the quarter increased 7.4% Y/Y in 4Q18. Births and NICU visits were flat Y/Y. Urgent care visits were down 5% on SS basis, but were up 5.5% including the contribution of new units. Behavioral visits were up 3.2%, while Rehab visits were up 15.9% Y/Y in 4Q18.EBITDA Margin Tre

37、nds: Consolidated EBITDA margin was 20.4% in Q4, 80/50 bps above CSe/Cons but flat Y/Y. Cash flow from operating activities in 4Q18 totaled $2.175 bln, representing a 25.4% increase from $1.734 bln last year. HCA increased its dividend to an annualized $1.60/share (implied dividend yield of roughly1

38、.2%).Balance Sheet and Cash Flow: As of December 31, 2018, HCAs balance sheet reflected cash and equivalents of $502 mln, total debt of $32.821 bln, and total assets of$39.207 bln. During the fourth quarter of 2018, capital expenditures totaled $1.153 bln, excluding acquisitions. Cash flow from oper

39、ating activities in 4Q18 totaled $2.175 bln, representing a 25.4% increase from $1.734 bln last year.Share Repurchases: During 4Q18, HCA repurchased 2.512 million shares of its common stock at a cost of $335 million. The Company had $272 million remaining under its existing repurchase authorization

40、as of December 31, 2018.2019 Outlook Strong: HCA offered its initial 2019 EBITDA outlook of $9.35-9.75 bln, versus CSe/cons of $9.42/$9.46 bln. HCA expects revs. to be $50.5-51.5 bln (vs. cons$49.31 bln) and EPS to be $9.60-$10.20 (vs. cons: $10.16). HCAs 2019 outlook includes Mission Health acquisi

41、tion (closed on 1/31/19). HCAs 2019 outlook assumes SS vol of 2- 3% and SS pricing of 2-3%. CAPEX is expected to be approx. $3.7 bln (vs. $3.57 bln in 2018).Guidance Assumptions on Core vs. Recent Acquisitions: We estimate the guidance assumes $50-$100 mln of EBITDA contribution from Mission, which

42、is likely not captured in consensus. We estimate that the EBITDA guidance midpoint assumes 2% EBITDA growth related to 2017/2018 acquired hospitals, 1% growth related to the contribution from Mission Health, and 5% core EBITDA growth. The hospitals acquired in 2017/2018 were profitable in 4Q but wer

43、e still a drag of $80 mln or so for the full year of 2018. A 2% EBITDA growth contribution in 2018 implies the guidance assumes a very modest pick-up in margins in 2019 relative to 4Q run-rate. The 2019 assumptions around Mission Healths contribution and improvement at the 2017/2018 acquired hospita

44、ls provide high visibility into another 7%+ EBITDA growth year in2020.Tenet HealthcareSummary: THC reported 4Q18 EBITDA of $684 mln, $18/19 mln above Cons/CSe. 4Q18 revs. were $4.62 bln, $111/40 mln above Cons/CSe. Adjusted EBITDA margin of 14.8% (in-line with consensus) came in 30 bps stronger than

45、 our estimate of 14.5%. Adjusted EPS was $0.51, above Cons/CSe by $0.23/0.28. Better than expected SS pricing trends drove the majority of beat in the quarter.Broad Results by Segment: THCs hospital EBITDA was $352 mln ($17 mln above CSe). SS admits decreased 2.7% (vs. down 2.1% in Q3), while SS adj

46、 admits decreased 0.8% (vs. up 0.3% in Q3). Excluding Chicago and service line closures, adj admits were flat in 4Q18. Adj for CA provider fee, SS pricing was up 5.4% Y/Y (vs. up 3.6% in Q3).Amb Care EBITDA was $245 mln ($1 mln below CSe), while Conifer EBITDA was $87 mln ($3 mln ahead of CSe).Speci

47、fics on Ambulatory Segment Results: Same-facility system-wide revs. grew 3.8% in 4Q18. Cases grew 0.9% on a same-facility system-wide basis, and SS revenue per case increased 2.8%. In the surgical business, which represents the majority of the revenue in the Ambulatory segment, same-facility system-

48、wide revenue grew 3.7%. Surgery cases were up 1.1% and SS revenue per case was up 2.6%. In the non-surgical business, same-facility system-wide revenue grew 5.2%. SS non-surgery revenue per visit was up 4.4%, while non-surgical visits were up0.7%.Conifer Process: THC said on its 3Q18 earnings call t

49、hat it was considering numerous options with respect to Conifer. Options on the table have included an outright sale, a tax efficient spin-off, and a merger/spin-off combination. Tenet announced on its Q4 call that it is now pursuing one option exclusively, but refused to comment as to what form a t

50、ransaction might take. While there is focus on an outright sale, Tenets public debt has limited covenants but substantial make whole provisions that limit debt retirement opportunities. These factors may make a tax free spin-off a viable alternative to an outright sale of the business. With respect

51、to its 2019 outlook for Conifer, management says the$30 mln of Y/Y EBITDA growth was partially attributable to contracts with customers that have price/rate escalators (certain contracts are based on CPI or another metric) and any price increases drop to the bottom line. Business mix shifts is also

52、helping the bottom line. Additionally, as THCs provider businesses grow, Conifer stands to pick up more revenues.Cost Reduction Program: THC completed its $250 mln cost reduction pgm by the end of 2018, which will produce incremental Y/Y benefit of $55 mln in 2019. Additionally, THC announced a new

53、$200 mln cost reduction program that will reach the full run rate by the end of 2019 (& provide an incremental $50 mln of benefit in 2019, primarily back end loaded).Update on USPI Pipeline: THC says its USPI pipeline is robust and that its $150-175 mln de novo and acquisition target (vs. $240 mln c

54、ompleted in 2018) is a base-level expectation with the opportunity for upside.Hospital Pricing: THCs SS pricing growth in Q4 was more than 5% (ex-CA provider fee) and was 3.6% for the full year. THC expects 2.5-3.5% pricing growth in 2019. Tenet is 90% contracted with MCOs for 2019 and nearly 50% co

55、ntracted for 2020. Commercial mix increase and acuity havehelped.2019 Guidance Ahead of Expectations: THC expects 2019 EBITDA of $2.65-2.75 bln (Cons: $2.617 bln). THC had previously implied $2.63-2.68 bln EBITDA in 2019 without giving explicit guidance. By segment, Hospital EBITDA is expected to be

56、 $1.43-1.49 bln (CSe: $1.42 bln), Ambulatory EBITDA is expected to be $850-880 mln (CSe: $856 mln), & Conifer EBITDA at $370-380 mln (CSe: $347 mln). THC expects rev of $18.0-18.4 bln (Cons: $18.047 bln). THC expects SS Hospital rev to increase 1.5-4.5% in 2019 (SS Adj Admit Outlook: Down 1% to Up 1

57、%; SS Pricing Outlook: Up 2.5-3.5%). Additional key assumptions included in THCs 2019 guidance include same-site system wide revenue growth of 4-6% at USPI and $150-175 mln of spending on acquisitions and de novos.Other 2019 Guidance Considerations: THC expects roughly $260 mln of revenue related to

58、 the California Provider Fee program. However, the company notes that the current program expires on June 30, 2019, and if the new program is not approved prior to the end of 2019, approximately $130 mln of revenue would shift to calendar year 2020. Guidance includes the companys new $200 mln cost r

59、eduction initiative, with $50 mln realized in 2019. The company expects to reach the full $200 mln run rate of savings by the end of 2019. This is in addition to the existing $250 mln cost reduction initiative, which resulted in $250 mln of run rate savings by the end of 2018. The full cost savings

60、the company expects in 2019 (over and above the impact in 2018) from these two programsis$105 mln. Hospitals divested to date (including three Chicago-area hospitals divested at the end of January) are expected to impact 2019 EBITDA positively by $32 mln relative to 2018. The Aspen divestiture is ex