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Columbia/HCA beats Street
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April 29, 1998: 12:15 p.m. ET
Embattled hospital chain's operating earnings are way ahead of estimates
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NEW YORK (CNNfn) - Columbia/HCA Healthcare Corp., the hospital chain under investigation for alleged Medicare fraud and violation of securities laws, turned out much better-than-expected operating earnings Wednesday for the quarter ended March 31.
The Nashville, Tenn.-based firm -- the nation's largest for-profit hospital chain -- reported income from continuing operations before restructuring and investigation-related costs of $241 million, or 37 cents per share, compared with $455 million, or 66 cents per share, in 1997.
Analysts polled by First Call had expected earnings of 30 cents per share in the latest quarter.
Investors reacted positively, with Columbia/HCA's shares (COL) gaining 9/16 to 32-15/16 in midday trading.
Net income for the quarter totaled $197 million, or 31 cents per diluted share, compared with $423 million, or 62 cents per share, in the year-ago quarter.
Revenues slipped slightly to $4.9 billion, compared with $5 billion a year ago.
"I am encouraged by the results of our first full quarter after reorganizing the company," said Columbia/HCA Chairman and Chief Executive Thomas F. Frist, Jr. "The business plan we announced last year is being implemented and today's announcement is an indication that we're on the right track."
Columbia/HCA also announced plans to file a ruling request with the Internal Revenue Service for two, rather than three, tax-free spin-off companies. The ruling request for the America and Pacific Groups is expected to be filed later this year.
During the quarter, Columbia/HCA sold three hospitals for about $40 million and signed agreements to sell four additional hospitals.
In the last three months, the company has agreed to sell assets totaling $1.4 billion.
In recent months, Columbia/HCA has been plagued with allegations of wrongdoing. Federal investigators last year launched a full-scale probe into the company's Medicare billing practices.
A Federal Bureau of Investigation report suggested the company illegaly diverted funds to keep auditors at bay and to artificially inflate Medicare reimbursement costs.
And earlier this year, the Securities and Exchange Commission began its investigation into the company's alleged violations of federal securities laws. 
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Columbia/HCA
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