瑞信-美股-医疗保健行业-一季度医疗设施行业总结：尽管流感比较严重但总体结果仍喜忧参半-2019.5.10-26页.pdf

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:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.10 May 2019Americas/United StatesEquity ResearchHealthcare Facilities Healthcare Facilities QUARTERLYResearch AnalystsA.J.Rice212 325 8134aj.ricecredit-Caleb Harris,CPA212 325 7458caleb.harriscredit-Jailendra Singh212 325 8121jailendra.singhcredit-Eduardo Ron212 325 7491eduardo.roncredit-Q1 Hospital Recap:Solid Vols Despite Tough Flu Comp,Still Overall Results MixedOverall Results Mixed:Two of the four public hospital companies that we cover reported EBITDA ahead of consensus expectations.HCA beat the Street by a wide margin($262 mln ahead,including an$86 mln payor settlement award),while THC was ahead of the Street by$9 mln.UHS and CYH both missed consensus expectations modestly.Q1 Volumes Generally Strong Despite the Flu Comp:For the first quarter of 2019,the hospital group reported SS inpatient admissions growth of 1.5%,on average.This represents an increase in the Y/Y growth rate of 110 bps sequentially and an increase of 130 bps Y/Y.UHS had the strongest growth in SS admissions at 5.2%,followed by HCA at 0.9%.CYH and THC both SS admissions down just 0.1%,a significant improvement for both companies relative to the recent past.SS adjusted admissions grew 2%for the group,on average,a sequential improvement of 110 bps and a Y/Y improvement of 190 bps in the growth rate.UHS was strongest on this metric as well at 4.9%,followed by HCA at 1.8%,CYH at 0.8%,and THC at 0.6%.Each of the four companies said that a tough flu comp was a headwind to volume growth on a Y/Y basis.Q1 Pricing Metrics:On pricing,the group reported a Y/Y increase in net revenue per adjusted admission of 1.9%,on average,in the first quarter of 2019.This represents a decrease in the Y/Y growth rate of 60 bps sequentially and 200 bps relative to 1Q18.HCA had the strongest pricing growth at 4.4%(3.6%ex-the settlement award),while UHS had a pricing decline of 0.4%.UHS attributed the pricing weakness to a lower mix of surgical services and a higher mix of medical cases.Outlook for Remainder of Year:CYH,THC,and UHS maintained the key figures in their 2019 guidance.HCA modestly increased its EBITDA guidance to account for the$86 mln settlement award,which was not in original guidance.HCA is tracking well ahead of expectations after Q1,so we could see a positive guidance revision when the company reports Q2 results.For THC,operating trends are looking somewhat better.Conifer profitability has improved,but focus remains on the companys plan to conduct a strategic transaction with respect to Conifer.Well look for UHS SS pricing to bounce back in Q2,and focus will stay on potential improvement in the psych segment(which looked a bit better in 1Q19).While CYHs volumes have picked up,the main focus there continues to be on the capital structure challenges and the divestiture program.Updating Models:With this note,we are updating our CYH,THC,and UHS models.Our THC target price is now$25(prev$33),and our UHS target price is now$150(prev$152).Risks to our ratings and target prices for all hospital companies include volume and pricing trends.10 May 2019Healthcare Facilities2Table of contentsSummary of 1Q19 Results3Company-by-Company 1Q19 Recap4Community Health Systems.4HCA Holdings.5Tenet Healthcare.7Ambul7Universal Health Services.8Price Performance&Valuation10Industry Key Operating Statistics12Same Facility Admissions.12Same Facility Adjusted Admissions.12Same Facility Pricing.13Margin Analysis.13Expense Analysis.13Financial Strength/Leverage.14Community Health Systems(CYH)16Tenet Healthcare Corporation(THC)18Universal Health Services(UHS)2010 May 2019Healthcare Facilities3Summary of 1Q19 ResultsTwo of the four hospitals companies under our coverage posted EBITDA ahead of consensus expectations.The major hospital companies reported SS inpatient admissions growth of+1.5%Y/Y(110 bps better than 4Q18).This was driven primarily by UHS,who reported 5.2%SS admits growth.HCA and UHS(urban providers)continue to outperform their peers on this metric.The hospital group reported an increase of 2.0%Y/Y in SS adjusted admissions(110 bps better than 4Q18).UHS was strongest in this category as well at 4.9%growth.HCA reported 1.8%growth in SS adjusted admissions.Net revenue per adj admission(pricing)grew 1.9%Y/Y for the hospital group(60 bps lower than 4Q18).HCA led this category with 4.4%growth.Figure 1:1Q19 Results by CompanyCYHHCATHCUHSRevenuesActual$3,376$12,517$4,545$2,804Y/Y Change-8.5%9.6%-3.3%4.3%Consensus$3,299$12,340$4,500$2,816Variance from Consensus$77$177$45($12)CS Estimate$3,300$12,283$4,449$2,821Variance from CS Estimate$76$234$96($17)EBITDAActual$391$2,541$613$460Y/Y Change-11.1%20.0%-7.8%0.0%Consensus$410$2,279$604$478Variance from Consensus($19)$262$9($18)CS Estimate$416$2,257$600$473Variance from CS Estimate($25)$284$13($13)EPSActual($0.53)$2.97$0.54$2.45Y/Y ChangeNM27.5%NM0.0%Consensus($0.47)$2.32$0.29$2.62Variance from Consensus($0.06)$0.65$0.25($0.17)CS Estimate($0.47)$2.32$0.27$2.54Variance from CS Estimate($0.06)$0.65$0.27($0.09)SS Inpatient AdmissionsActual-0.1%0.9%-0.1%5.2%CS Estimate-1.5%2.0%-2.0%2.0%Variance from CSe(bps)140(110)190320SS Adjusted AdmissionsActual0.8%1.8%0.6%4.9%CS Estimate0.0%2.0%-0.5%2.5%Variance from CSe(bps)80(20)110240Source:Company data,Credit Suisse estimates,FactSetNote:EBITDA for UHS reflects total EBITDA including NCI;.The consensus estimate may be a combination of estimates showing total EBITDA and estimates showing EBITDA less NCI10 May 2019Healthcare Facilities4Company-by-Company 1Q19 RecapIn the text&figures that follow,we summarize Q1 earnings results for each company.Community Health SystemsSummary1Q19 EBITDA was$391 mln($25/19 mln below CSe/Cons).Q1 net revs were$3.376 bln($76/77 mln above CSe/Cons).EBITDA margin declined by 30 bps Y/Y to 11.6%(100/60 bps below CSe/Cons),in part due to higher labor cost.With respect to the FY2020 Medicare IPPS proposed rule,CYH views impact of the wage index update at+0.8%,which could mean a FY20 rate update of 3.5%.Operating Trends1Q19 SS admits were down 0.1%(vs down 0.5%in 4Q18),while SS adj admits were up 0.8%(vs up 0.1%in 4Q18).SS pricing increased 2.3%Y/Y(vs up 1.8%in 4Q18).SS surgeries were up 3.6%Y/Y(vs up 0.9%in 4Q18),while SS ER visits were down 1.9%Y/Y(vs down 3.2%Y/Y in 4Q18).OCF&CAPEX1Q19 OCF was$133 mln,vs$106 mln a yr ago.CAPEX was$121 mln vs$170 mln last year.Net Debt to TTM EBITDA remains a very high 8.5x at 3/31/19.Figure 2:CYH Debt Maturities as of 3/31/19Source:Company dataGuidance Reiterated&Q2 CommentaryCYH reiterated its 2019 rev outlook of$12.8-13.1 bln and EBITDA guidance of$1.625-1.725 bln.Guidance assumes SS adj admits grow 0-1%.CYH expects OCF of$600-700 mln.In a conversation with management,CYH said it experienced a step down in EBITDA heading into Q2 in 2018,the Knoxville divestiture run-off could improve and physician spending could improve.CYH expects initiatives tied to supply expense to benefit 2H19.CYH,as part of the HealthTrust Purchasing Group,will switch its PBM from CVS to OptumRx.10 May 2019Healthcare Facilities5Divestiture ProgramCYH still expects total proceeds of$1.3 bln on its hospital divestiture program($2.0 bln of revs).Thus far,the company has collected proceeds of$550 mln as part of this divestiture plan.CYHs remaining divestitures are expected to be higher margin hospitals.Figure 3:CYH Portfolio Rationalization ProgressSource:Company dataHCA HoldingsSummaryHCA posted 1Q19 adjusted EBITDA of$2.541 bln,$284/$262 mln ahead of CSe/Cons.1Q19 adjusted EPS was$2.97,$0.65 ahead of both CSe/Con.The EBITDA beat was across the board as both revenues and margins were better.1Q19 results included$86 mln of revenue and EBITDA($0.19 of EPS)following finalization of arbitration with a payer(presumably Aetna)related to out-of-network claims.Excluding that$86 mln settlement,HCA still beat consensus EBITDA by$176 mln and would have reported an EBITDA margin of 19.7%(120 bps ahead of consensus).Top-line Growth and Key Operating Statistics PositiveThe Q1 SS trends were consistent with the recent past,ex-the flu comp and the$86 mln settlement award.HCA reported 1Q19 revs of$12.52 bln,up 9.6%Y/Y and$234/$177 mln above CSe/cons.Same facility equiv admits increased 1.8%(4Q18:1.9%),while SS inpatient admits grew 0.9%(4Q18:1.9%).Vols were impacted roughly 100 bps negatively by one less business day.SS pricing increased 4.4%Y/Y(4Q18:4.4%).Excluding the settlement award,SS rev per equivalent admission increased 3.6%.This level of pricing growth exceeds the 2-3%guidance HCA provided,and HCA attributed that outperformance to intensity of service and good payor mix(increasing commercial mix).The Medicare rate update is strong in FY19,which helps as well.10 May 2019Healthcare Facilities6SS ER visits declined 2.3%Y/Y.SS inpatient surgeries declined 0.3%and SS outpatient surgeries were up 1.3%Y/Y.SS uninsured volumes were flat Y/Y,a deceleration from the mid to high-single digit level in the recent past.HCA attributed that to Medicaid expansion in Virginia,as well as improvement in Florida.On costs,HCA was pleased with its Q1 performance.HCA saw about 16-16.5%labor turnover,consistent with recent quarters,but improved on a Y/Y basis.HCA also provided the following statistics on a same-store basis:Births:down 1.7%NICU days:up 0.1%Behavioral health:up 1.8%Rehab:up 10.9%Trauma:up 10.8%Observation visits:up 9.9%Urgent care visits:down 10.1%Rehab and trauma included service line additions at some existing facilities,while urgent care was down due to the Y/Y flu comparison.Balance Sheet and Cash FlowHCA has net debt of$34.284 bln and total assets of$43.379 bln.CapEx totaled$781 mln in Q1.OCF was$974 mln,down$309 bln Y/Y.HCA repurchased 2.106 mln shares for$278 mln during Q1 and had$1.995 bln remaining authorization at 3/31/19.2019 EBITDA Outlook Revised Slightly HigherHCA continues to expect revenues of$50.5-51.5 bln.However,the company revised its EBITDA and EPS ranges higher by roughly the amount of the settlement award.HCA now expects EBITDA of$9.45-9.85 bln(prev$9.35-9.75 bln),and EPS of$9.80-10.40(prev$9.60-$10.20).HCA estimated Q1 core growth at around 11%(excluding recent acquisitions and the settlement award).Since guidance was changed only by the amount of the settlement award,we estimate that the midpoint of guidance implies roughly 2-3%core EBITDA growth for Q2-Q4,which seems particularly conservative.HCA didnt highlight any particular reasons for caution,but noted that it is still early in the year and management generally likes to see a couple of quarters before adjusting its outlook.Figure 4:HCA EBITDA Walk-forward to Full Year 2019Full YearReported 2018 EBITDA$8,949OK Hospitals Sale,2/1/18($15)EBITDA Drag Related to 2017/2018 M&A$83Malpractice-Favorable Adjustment(Q3)($70)Hurricane Florence Impact(Q3)$9Hurricane Michael Impact(Q4)$31Hurricane Harvey Insurance Recovery(Q4)($49)2018 Baseline EBITDA Estimate$8,938Growth on Baseline from 2017/2018 Acquisitions$100Mission Health Acquisition(closed 2/1/19)$89Settlement Award with Payor$86Core EBITDA Growth$4872019 EBITDA Estimate$9,700%Core EBITDA Growth5.5%Reported EBITDA Growth8.4%Source:Company data,Credit Suisse estimates10 May 2019Healthcare Facilities7Physician StrategyHCAs review of its third party physician relationships is ongoing.The physician strategy is key to the business model,and the company works with partners to make sure they have the right structure on staffing and costs(subsidies,etc.).In womens services,HCA is investing in its hospitals to appeal to younger women,which it sees as a key demographic for many of HCAs services.The company believes that almost all of its markets have opportunities in the womens health area.Tenet HealthcareSummaryTHC reported 1Q19 EBITDA of$613 mln,$9.5/13 mln above Cons/CSe.1Q19 revs were$4.545 bln,$45/96 mln above Cons/CSe.Adjusted EBITDA margin of 13.5%(10 bps ahead of consensus)was in-line with our estimate.Adjusted EPS was$0.54,above Cons/CSe by$0.25/0.27.The majority of the beat on EBITDA was driven by Conifer,which was$10 mln ahead of our estimate.Adj tax exp of$15 mln was$22 mln below our est and drove the EPS outperformance.Results by SegmentTHCs hospital EBITDA was$337 mln($1.6 mln above CSe).SS admits decreased 0.1%(vs down 2.7%in Q4),while SS adj admits increased 0.6%despite a 60 bps headwind Y/Y from a tough flu comp(vs down 0.8%in Q4 or flat ex-Chicago and service line closures).SS pricing was up 1.3%Y/Y(vs up 5.4%in Q4 adjusted for CA provider fee).SS adj admits were in the upper half of the companys 2019 guidance range,while pricing was below the companys full year guidance.In a conversation,THC said that not only did the 1Q18 comp have flu activity helping volumes,but it had higher acuity helping pricing.Ambulatory Care EBITDA was$177 mln($1.4 mln above CSe),while Conifer EBITDA was$99 mln($10 mln ahead of CSe).Conifers results were strong due to cost savings that enhanced margins.Ambulatory Segment ResultsSame-facility system-wide revs grew 4.2%in 1Q19.Cases grew 0.9%on a same-facility system-wide basis,and SS revenue per case increased 3.3%.In the surgical business,which represents the majority of the revenue in the segment,same-facility system-wide revenue grew 4.2%.Surgery cases were up 2.8%and SS revenue per case was up 1.4%.In the non-surgical business,same-facility system-wide revenue grew 4.3%.SS non-surgery revenue per visit increased 6.3%,while non-surgical visits were down 1.8%.Cash FlowCash flow was relatively weak during the quarter at$10 mln of OCF(down$103 mln Y/Y)and adjusted FCF of negative$148 mln.Management pointed out that Q1 tends to be a quarter of lower cash flow and that there were some timing issues,such as some California payment items having a negative$25 mln impact on cash flow in Q1.2019 and Q2 Outlook2Q19 guidance brackets consensus,though the EBITDA guidance midpoint is below consensus by$14 mln.Revenue is expected at$4.4-4.7 bln(Cons:$4.490 bln)and EBITDA at$625-675 mln(Cons:$664 mln).THC maintained its full year guidance,which includes revenue of$18.0-18.4 bln,EBITDA of$2.65-2.75 bln,and EPS of$2.08-2.59.Key assumptions included in 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.THC expects roughly$260 mln of revenue related to the California Provider Fee program.However,the company notes that the current program expires on June 30,2019,and if 10 May 2019Healthcare Facilities8the new program is not approved prior to the end of 2019,approximately$130