Nobilis Health (HLTH) is under pressure today after reporting Q4 results last night. Since you're probably not familiar with Nobilis, some background information would help. The company operates hospitals and other healthcare facilities. It has 25 locations in seven states, including 4 hospitals, 10 ASCs (ambulatory surgical centers) and 11 clinics. In addition, Nobilis partners with an additional 38 facilities across the country and markets 8 independent brands.
Nobilis is known for marketing directly to consumers as it seeks to benefit from the trend of consumers being more directly involved with healthcare decisions. HLTH provides care across a variety of specialties, including orthopedic surgery, podiatric surgery, ENT, pain management, gastro- intestinal, gynecology, and general surgery. It also provides ancillary services, including surgical assist, anesthesia etc.
Turning to the Q4 results, EPS came in at just $0.12, which was much lower than market expectations. Revenue increased 13.2% YoY to $101.9 mln. Total case volume increased by 742 cases, or 14.1%, to 6,007 cases in Q4. Revenue per case was $16,966, which remained consistent with prior year's revenue per case of $17,097. Adjusted EBITDA declined 12% YoY to $20.8 mln.
Also, HLTH provided downside revenue guidance for FY17. The company sees 2017 revenue coming in at just $310-325 mln, which is quite a bit below market expectations. In terms of adjusted EBITDA, HLTH expects that to come in around $40-45 mln, up from the $34 mln result in 2016.
While revenue for all of 2016 grew 25% to $286 mln, HLTH says it was disappointed that it did not meet its profitability goals. Full year adjusted EBITDA was impacted by higher than expected marketing expenses and overall operating expenses. The company expects that the progress it has made integrating recently acquired facilities, coupled with the efforts to better target its marketing dollars and reduce certain operating expenses will support the strategic and financial goals for 2017.
Hospital stocks have been weak over the past year and many are down since the surprise election results in November on concerns that the ACA will get repealed. If the insured rates go down, that's bad for hospitals as they will need to absorb higher costs due to more ER visits and fewer people having insurance.