HCA Healthcare is prioritizing capital spending, even as tough economic conditions are weighing on the company’s bottom line.
The Nashville, Tennessee-based for-profit system estimates $4.3 billion in capital expenditures in 2023, excluding acquisitions—slightly down from the nearly $4.4 billion that the system estimates. This system spent in 2022. Spending last year was higher than expected due to real estate and technology investment news, CFO Bill Rutherford said during the company’s earnings call on Friday.
CEO Sam Hazen told investors HCA will continue to invest in clinical equipment and service line expansion, while continuing to pursue acquisitions in the outpatient sector. It also plans to deploy funds for infrastructure projects, such as campus expansions and independent emergency departments.
Hazen said HCA is not optimistic about hospital facilities, with little chance of acquisition there. Last October, LCMC Health agreed to buy three HCA hospitals in Louisiana for $150 million.
The system reported $2.65 billion in net income for the fourth quarter, up 32% year over year. Operating expenses, excluding any applicable changes to asset values, rose 3.2% to $12.33 billion, including a 0.8% increase in wages and salaries. Revenue rose 2.9% to $15.5 billion.
Fourth-quarter results include $1.33 billion in profits from the sale of facilities.
For the full year, net income fell 11.5% to $6.83 billion. Revenue rose 2.5% to $60.23 billion. Operating expenses rose 4.3% to $48.21 billion.
“As we move into 2023 and beyond, we believe strong demand for healthcare services will present opportunities for HCA Healthcare in a challenging macro environment. We believes the company is culturally, competitively and financially well-positioned to invest,” Hazen said on the call.
High labor costs remain a leading issue for the healthcare industry. Rutherford said contract labor accounted for about 8% of HCA’s wage and salary costs in the fourth quarter. However, those costs fell about 16% year-over-year during the quarter. He expects contract labor costs to continue to trend downward throughout this year.
Hazen said HCA is working to hire more nurses as permanent staff, attract new graduates through academic partnerships and attract former travel nurses.
The company announced its board has authorized up to $4.5 billion in share buybacks this year, including about $1.5 billion already authorized. Shares traded at $248 per share when the market opened Friday, down from HCA’s current 52-week high of $275.16 per share.
