HCA Holdings Inc. (NYSE: HCA) is the king of the public hospital system players in America. Its shares have also been weak of late, due to fears about what may be coming ahead after a serious boost from the Affordable Care Act. Now the company is out with earnings, but there is a serious question here when it comes to the greater good: should HCA, or other hospitals, be buying back stock?

HCA reported that revenues in the third quarter rose to $9.856 billion, from $9.22 billion in the third quarter of 2014. Net income was $449 million, or about $1.05 per share (EPS), compared to $518 million, or $1.16 EPS, in the same quarter a year ago. Thomson Reuters had a consensus estimate of $1.20 in EPS and $9.85 billion in revenue.

What may matter here is that the third-quarter results included a legal claim costs of $77 million, and that took off $0.12 per diluted share on earnings. The third-quarter 2014 results included losses on sales of facilities of $12 million, or $0.02 per diluted share. Adjusted EBITDA was down very slightly from a year ago, to $1.815 billion (versus $1.828 billion).

Salaries and benefits, supplies and other operating expenses totaled $8.059 billion, or 81.8% of revenues, compared to $7.438 billion, or 80.7% of revenues, in the third quarter of 2014.

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Additional data driving the earnings report trends were listed as follows:

• Same facility equivalent admissions increased 3.6% in the third quarter of 2015.
• Same facility admissions increased 2.9%.
• Same facility emergency room visits increased 5.8%.
• Same facility inpatient surgeries increased 1.6%.
• Same facility outpatient surgeries increased 1.2%.
• Same facility revenue per equivalent admission increased 1.9%.

The big issue is news of a share buyback authorization. HCA’s board of directors authorized an additional share repurchase program for up to $3 billion of its common stock. Including both this program and remaining amounts under the prior $1 billion share repurchase authorization, HCA had approximately $3.235 billion in total share repurchase authorization. HCA said:

Repurchases will be made in accordance with applicable securities laws and may be made at management’s discretion from time to time in the open market, through privately negotiated transactions, or otherwise. The repurchase program has no time limit and may be suspended for periods or discontinued at any time.

HCA shares were last seen up about 1% at $69.75, but its 52-week range is $43.91 to $95.49 and it has a consensus analyst target price of $96.48.

Again, hospitals have spent their turn in the soup in the health care mix. The question is how they will be treated in 2016 and in the immediate years beyond as the second and third waves of changes take place under the Affordable Care Act.

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