瑞信-美股-医疗保健行业-医疗管理展望：期待稳健的财务业绩，但政治噪音仍将持续-16-28页.pdf
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Hospital Management
2020 Outlook: Expecting Solid Financial
Results, but Political Noise will Continue
Healthcare Facilities | Sector Forecast
Utilization and Pricing. In 2020, we expect a modest deceleration in hospital vols
compared with the 3.2% 2019 YTD growth in adj admissions, but we do not expect to see
vols to soften in a significant way. Capital deployment (expansion projects) should continue
to benefit HCA and UHS, while rationalized portfolios, and the momentum behind
operational improvement initiatives should continue to benefit THC and CYH. An extra day
in 1Q19 due to leap year should also be helpful to hospital vols. On pricing, we expect the
hospital companies to see a normal level of growth in net revenue per adjusted admission in
the 2-3% range, though it could skew higher in the range than the 2.2% YTD in 2019. The
Medicare FFS rate updates for 2020 look better than 2019, and we see consistent trends
in the area of commercial reimbursement (including actual rate updates, terms, denials, etc.).
HCA Remains Our Top Pick Amongst Providers. As the highest quality hospital
company with consistent execution, a deep management bench, high market share in
growing urban markets, and continued investment in expansion activity, we expect HCA to
outperform the broad market in 2019. HCA shares advanced 18.8% during 2019, in-line
with the healthcare sector (HCX, +18.7%) but below the S&P 500 (+28.9%). The
company trades at a multiple of 8.3x 2020 EBITDA (in-line with the group average) and
12.8x 2020 EPS. Our current estimate for EBITDA growth is 6.0%. On HCA’s 3Q19
earnings call, management said it expects growth slightly above that level in 2020
(excluding any unannounced acquisitions), providing an opportunity for modest upside to
estimates. Our 12 month price target assumes the shares will trade at 8.5x 2021 EBITDA,
a 60 bps EV/EBITDA multiple point increase over current levels.
UHS and THC Also Rated Outperform. UHS’ Acute business is benefiting from recent
capital deployment and its concentration in fast-growing markets like Las Vegas and
Southern California. While UHS’ Behavioral business has seen modest low single digit
growth in recent years, the company has hired a new Division President who expects to
offer specific plans for operational improvement in mid-2020. UHS has very modest
leverage, creating an opportunity for sizeable capital deployment or incremental share
repurchases. Our current estimate for EBITDA growth is 4.5% (6.5% in Acute and 2.5% in
Behavioral), an acceleration over 2019 EBITDA growth of 1.8% (4.6% in Acute and 1.7%
in Behavioral). While our Acute segment est for 2020 is a meaningful acceleration over
2019, UHS should have relatively easy EBITDA comps in 1Q19 and 3Q19. Also, by way of
background, UHS is on track to post 7.8% rev growth in its Acute segment for 2019, but
struggled to maintain margin. For THC, the hospital business has posted steady operational
improvement over the past couple of years, and the Ambulatory business continues to be
the company’s crown jewel. We are modeling 2020 consolidated rev growth of 3.0% and
consolidated EBITDA growth of 4.3%, which could prove conservative.
Updating HCA and THC Target Price and Estimates. Our HCA target price is now
$169 (previously $165), while our THC target price is now $43 (previously $36). Risks to
our ratings and target prices for all hospital companies include volume and pricing trends.
6 January 2020
Equity Research
Americas | United States
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.
Research Analysts
A.J. Rice
212 325 8134
aj.rice@credit-suisse.com
Caleb Harris, CPA
212 325 7458
caleb.harris@credit-suisse.com
Eduardo Ron
212 325 7491
eduardo.ron@credit-suisse.com
Alexander Khan
212 325 7714
alexander.khan@credit-suisse.com
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