HCA to push ahead on capital projects, M&A in 2023

HCA Healthcare is making capital spending a priority, even as tough economic conditions are putting pressure on its bottom line. 

The Nashville, Tennessee-based for-profit system estimates $4.3 billion in capital spending in 2023, excluding acquisitions—a slight decrease from the close to $4.4 billion it spent in 2022.  Last year’s spending came in higher than expected due to real estate and information technology investments, CFO Bill Rutherford said on Friday’s company earnings call.

CEO Sam Hazen told investors HCA will continue to invest in clinical equipment and service line expansion, and continue to pursue acquisitions in the outpatient space. It also plans to deploy capital for infrastructure projects, such as campus expansions and freestanding emergency departments. 

HCA is not as bullish on hospital facilities, with few acquisition opportunities there, Hazen said. Last October, LCMC Health agreed to buy three of HCA’s Louisiana hospitals for $150 million. 

The system reported $2.65 billion in fourth-quarter net income, a 32% year-over-year increase. Operating expenses, excluding any applicable changes to asset values, grew 3.2% to $12.33 billion, including a 0.8% increase in salaries and wages. Revenue rose 2.9% to $15.5 billion.

Fourth-quarter results included $1.33 billion in gains from selling facilities.

For the full year, net income dropped 11.5% to $6.83 billion. Revenue grew 2.5% to $60.23 billion. Operating expenses increased 4.3% to $48.21 billion. 

“As we push ahead into 2023 and beyond, we believe the strong demand for healthcare services present opportunity for HCA Healthcare in an otherwise challenging macro-environment. We believe the company is well-positioned culturally, competitively and financially to capitalize,” Hazen said on the call. 

High labor costs remain a top issue for the healthcare industry. Rutherford said contract labor made up roughly 8% of HCA’s salary and wages expense in the fourth quarter. However, those costs were down about 16% year-over-year in the quarter. He expects contract labor costs to keep trending downward throughout this year.

Hazen said HCA is working to hire more nurses as permanent staff members, drawing in new graduates through academic partnerships and bringing on former travel nurses. 

The company announced its board authorized up to $4.5 billion in share repurchases this year, including approximately $1.5 billion that had already been authorized. Shares were trading at $248 each when markets opened on Friday, down from HCA’s current 52-week high at $275.16 per share.



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