Healthcare Q2 Earnings Slated On Jul 25: HCA, UHS & More

Earnings reports for the second-quarter are pouring in. Results from 97 of the 500 S&P companies out already paint a strong earnings picture, which is likely to look rosier over the course of this reporting cycle.

Per the latest Earnings Trends, total earnings for the S&P 500 members constituting 28.1% of the index’s total market capitalization — reported so far are up 8.4% year over year on a 5.1% rise in revenues. Going by the scorecard, 78.4% companies delivered an earnings beat, while 72.2% surpassed revenue estimates.

Healthcare falls within the Medical ambit, which is one of the seven sectors in the S&P 500 group. As of Jul 19, 3.6% of the total Medical sector reported second-quarter results. The beat ratio is strong with 100% companies surpassing bottom-line expectations.

The sector has been in the limelight since the change of power at the White House. President Donald Trump, who is eager to repeal and replace the Health Care Reform Act more popularly known as Obamacare, has injected a fresh dose of uncertainty. The stocks continue to be in focus as the “Repeal and Replace Obamacare” scenario plays out. A lot has been happening in this part of the medical sector with efforts to “Repeal and Replace Obamacare” failing to meet with much success and basically collapsing.

In the meantime, the healthcare corner continues to benefit from patients gained under Obamacare. Players in the industry are also actively engaged in mergers and acquisitions to achieve fast-paced growth. New product launch, improving service, expansion into ancillary businesses, and cost control measures will accrue to the top line.

Nevertheless, high bad debt, increasing investments in technological innovation, integration cost related to acquisitions and high interest expenses on debt-funded acquisitions will put pressure on the bottom line.

Let’s take a peek at these healthcare companies that are gearing up to report their second-quarter results on Jul 25.

HCA Healthcare, Inc. (NYSE:HCA) has an Earnings ESP of -2.78% as the Most Accurate estimate of $1.75 is below the Zacks Consensus Estimate of $1.80. Though the company has a Zacks Rank #3 (Hold), its negative ESP makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Last quarter, HCA Healthcare, met the Zacks Consensus Estimate. This time, however, the company is unlikely to come up with a beat.

With respect to the surprise trend, HCA Healthcare, surpassed expectations in three of the last four quarters, with an average positive surprise of 6.47%.

The company’s commercial volumes have been stressed over the past few quarters. Though efforts have been made to address the weakness, we don’t expect to see any major improvement in this business in the second quarter.

Last quarter, the company reported the 12th consecutive quarter of equivalent admission growth for HCA Healthcare and we expect the trend to continue in the second quarter (read more: HCA Healthcare Q2 Earnings: Will it Beat Estimates?).

Express Scripts Holding Company (NASDAQ:ESRX) has an Earnings ESP of -0.59% as the Most Accurate estimate of $1.70 is a penny below the Zacks Consensus Estimate. This makes surprise prediction difficult despite the company’s Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Last quarter, Express Scripts, beat the Zacks Consensus Estimate by 0.76%. This time, however, the company is unlikely to come up with a beat.

With respect to the surprise trend, Express Scripts, surpassed expectations in two of the last four quarters, with an average positive surprise of 0.32%.

We expect Express Scripts to continue to benefit from increased generic utilization, shift toward mail orders, strong specialty growth and an aging population in the U.S. On the flipside, Express Scripts faces intense competition in the PBM industry (read more: What's in Store for Express Scripts (ESRX) in Q2 Earnings?).

Quest Diagnostics Inc. (NYSE:DGX) has an Earnings ESP of 0.00% as the Most Accurate estimate of $1.41 is in line with the Zacks Consensus Estimate. This makes surprise prediction difficult despite the company’s Zacks Rank #3.

Last quarter, Quest Diagnostics, beat the Zacks Consensus Estimate by 13.68%. This time, however, the company is unlikely to come up with a beat.

With respect to the surprise trend, Quest Diagnostics, surpassed expectations in each of the last four quarters, with an average surprise of 5.15%.

In the recent past, Quest Diagnostics witnessed significant growth through infectious disease testing, prescription drug monitoring and industry-leading wellness business. We expect these growth drivers to remain active through the second quarter as well, driving the same metrics as they did in the preceding quarter (read more: Can Quest Diagnostics Pull a Surprise in Q2 Earnings?).

Universal Health Services, Inc. (NYSE:UHS) has an Earnings ESP of 0.00% as the Most Accurate estimate of $2.07 is in line with the Zacks Consensus Estimate. This makes surprise prediction difficult despite the company’s Zacks Rank #3.

Last quarter, Universal Health, beat the Zacks Consensus Estimate by 1.94%. This time, however, the company is unlikely to come up with a beat.

With respect to the surprise trend, Universal Health, surpassed expectations in two of the last four quarters but missed in one. The average is a negative earnings surprise of 0.42%.

Universal Health is likely to have witnessed a rise in revenue per adjusted patient day for its Behavioral Health division, continuing the previous quarter’s trend. The company’s Acute Care division is expected to deliver a decent performance on the back of adjusted admissions growth. Universal Health’s efforts to enhance shareholders’ value through share repurchase might boost its bottom line by limiting share count. (read more: Universal Health Q2 Earnings: What’s in the Cards?).