MICRO NODETimestamp: October 24, 2023

HCA

HCA Healthcare

Earnings/Healthcare

UNJUSTIFIED PANIC

HealthcareHospitalsLabor CostsMargins

The Catalyst

“HCA Healthcare crashed 10% after its third-quarter earnings missed expectations due to higher labor costs and a less-profitable patient volume mix. Analysts feared that the surge in nurse staffing expenses would permanently impair hospital margins. **Macro Context:** 10Y Treasury Yield: 4.83% **Earnings Context:** Reported EPS $3.91 vs Est $3.97 (Surprise: -1.5113%)”

The Aftermath

“HCA successfully optimized its staffing model and benefited from a resilient recovery in elective surgeries. The company's massive scale and pricing power allowed it to grow earnings at a double-digit clip, leading to a 130%+ recovery.”

Company Profile

Fundamental Overview (Current)

About

HCA Healthcare is an American for-profit operator of health care facilities that was founded in 1968. It is based in Nashville, Tennessee, and, as of May 2020, owns and operates 186 hospitals and approximately 2,000 sites of care, including surgery centers, freestanding emergency rooms, urgent care centers and physician clinics in 21 states and the United Kingdom.

Sector

HEALTHCARE

Industry

MEDICAL CARE FACILITIES

Market Cap

$119.03B

P/E Ratio

18.80

Beta

1.36

Div Yield

0.54%

52W High

$552.9

52W Low

$292.8

Hindsight Engine

Normalization of Historical Volatility Clusters

Entry Delta

-9.9%

Recovery Alpha

+133.7%

Reference Peak

$255.4

Pre-Panic High

Panic Floor

$230.1

Moment of Capitulation

Drawdown Magnitude

-9.9%

Peak-to-Trough Delta

Alpha from Bottom

+133.729%

Total Return Delta

Macro Environment

Economic Indicators at Time of Event

Fed Funds Rate

5.33%

Inflation

4.12%

Unemployment

3.90%

10Y Treasury

4.83%

2Y Treasury

5.02%

30Y Treasury

4.96%

CPI

307.67%

Earnings Catalyst

Quarterly Report Data

Q3 2023Reported Oct 24, 2023

Reported EPS

$3.91

Estimated EPS

$3.97

Surprise

-0.06

Surprise %

-1.5%

Anatomy of the Crash

Sentiment Breakdown & Strategic Pivot Points

Stage 01: The Fear

At the lows, sentiment was capitulatory and flow was dominated by forced deleveraging, downgrades, and recession-style positioning. The market effectively priced a near-worst-case path, with drawdown conditions near -9.9% from the local pre-event level.

Stage 02: The Turnaround

HCA successfully optimized its staffing model and benefited from a resilient recovery in elective surgeries.

Stage 03: Opportunity

The selloff was an overreaction: panic pricing implied durable impairment, but realized outcomes were materially better than the trough consensus. From the panic low to the current level, the asset recovered roughly 131.3% after a drawdown of about -9.9%, illustrating how forced selling detached price from fundamentals.