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8-K - FORM 8-K - HCA Healthcare, Inc.d431840d8k.htm

Exhibit 99.1

 

LOGO

 

     FOR IMMEDIATE RELEASE
INVESTOR CONTACT:      MEDIA CONTACT:
Mark Kimbrough      Ed Fishbough
615-344-2688      615-344-2810

HCA Reports Third Quarter 2012 Results

Nashville, Tenn., November 1, 2012 – HCA Holdings, Inc. (NYSE: HCA) today announced financial and operating results for the third quarter ended September 30, 2012.

Key third quarter metrics (all percentage changes compare 3Q 2012 to 3Q 2011 unless noted):

 

   

Revenues increased 11.1 percent to $8.062 billion

 

   

Net income attributable to HCA Holdings, Inc. totaled $360 million, or $0.78 per diluted share

 

   

Adjusted EBITDA increased 8.6 percent to $1.533 billion

 

   

Cash flows from operations declined to $655 million due primarily to changes in working capital items and higher tax payments

 

   

Same facility equivalent admissions increased 2.6 percent while same facility admissions increased 2.1 percent

 

   

Same facility revenue per equivalent admission increased 0.7 percent

HCA Chairman and Chief Executive Officer, Richard M. Bracken, said, “We are pleased with the results of the third quarter. Although we remain in a challenging economic environment, we remain focused on clinical and operational initiatives that position the Company for future changes in the healthcare industry.”

Revenues in the third quarter totaled $8.062 billion, compared to $7.258 billion in the third quarter of 2011. Third quarter revenue growth was primarily driven by increased volume and the consolidation of our HealthONE venture, which was accounted for under the equity method for periods prior to November 2011. Equivalent admissions increased 8.3 percent, while admissions increased 7.0 percent.

Same facility equivalent admissions increased 2.6 percent in the third quarter of 2012 compared to the prior year period, while same facility admissions increased 2.1 percent. Same facility emergency room visits increased 7.4 percent in the third quarter of 2012 compared to the prior year period.

 

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Revenue per equivalent admission increased 2.5 percent in the third quarter of 2012, primarily reflecting a continuing shift in service and payer mix. The Company’s operating expense per equivalent admission increased 3.1 percent from the prior year’s third quarter (2.0 percent on a same facility basis). During the third quarter of 2012, salaries and benefits, supplies and other operating expenses totaled $6.666 billion, or 82.7 percent of revenues, compared to $5.965 billion, or 82.1 percent of revenues, in the third quarter of 2011.

Adjusted EBITDA for the third quarter of 2012 increased 8.6 percent to $1.533 billion compared to $1.412 billion in the prior year period. Adjusted EBITDA is a non-GAAP financial measure. A table providing supplemental information on Adjusted EBITDA and reconciling net income attributable to HCA Holdings, Inc. to Adjusted EBITDA is included in this release.

Net income attributable to HCA Holdings, Inc. totaled $360 million, or $0.78 per diluted share, compared to $61 million, or $0.11 per diluted share, in the third quarter of 2011. Results for the third quarter of 2011 include pretax losses on retirement of debt of $406 million, or $0.49 per diluted share. The effective tax rate for the third quarter of 2011 was favorably impacted by the finalization of settlements for the 1997 through 2001 tax years. These settlements resulted in a reduction to interest expense related to taxing authority examinations of $66 million pretax, or $0.08 per diluted share. (All “per diluted share” disclosures are based upon amounts net of the applicable income taxes.)

Nine Months Ended September 30, 2012

Revenues for the nine months ended September 30, 2012 totaled $24.579 billion compared to $21.913 billion in the same period of 2011. Net income attributable to HCA Holdings, Inc. was $1.291 billion, or $2.81 per diluted share, compared to $530 million, or $1.04 per diluted share, for the first nine months of 2011. Results for the nine months ended September 30, 2011 include pretax losses on retirement of debt of $481 million, or $0.60 per diluted share, and a pretax charge for the termination of a management agreement of $181 million, or $0.29 per diluted share.

Balance Sheet and Cash Flow

As of September 30, 2012, HCA Holdings, Inc.’s balance sheet reflected cash and cash equivalents of $472 million, total debt of $26.933 billion, and total assets of $27.302 billion. During the third quarter of 2012, capital expenditures totaled $484 million, excluding acquisitions. Net cash provided by operating activities in the third quarter of 2012 totaled $655 million compared to $880 million in the prior year’s third quarter. The reduction in cash flows from operating activities was primarily due to reductions of $145 million from changes in working capital items and $107 million from higher income taxes.

 

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Special Cash Dividend

On October 23, 2012, the Board of Directors approved a special cash dividend of $2.50 per share to be paid to stockholders of record as of November 2, 2012 with a payment date of November 16, 2012. The dividend is expected to be funded through borrowings under the Company’s credit facilities.

As of September 30, 2012, HCA operated 162 hospitals and 112 freestanding surgery centers.

Earnings Conference Call

HCA will host a conference call for investors at 9:00 a.m. Central Daylight Time today. All interested investors are invited to access a live audio broadcast of the call via webcast. The broadcast also will be available on a replay basis beginning this afternoon. The webcast can be accessed at: https://event.webcasts.com/starthere.jsp?ei=1009838 or through the Company’s Investor Relations web page at www.hcahealthcare.com.

Cautionary Statement about Preliminary Results and Other Forward-Looking Information

This press release contains forward-looking statements based on current management expectations. Those forward-looking statements include all statements other than those made solely with respect to historical fact. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those expressed in any forward-looking statements. These factors include, but are not limited to, (1) the impact of our substantial indebtedness and the ability to refinance such indebtedness on acceptable terms, (2) the effects related to the enactment and implementation of the Budget Control Act of 2011 and the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the “Health Reform Law”), the possible enactment of additional federal or state health care reforms and possible changes to the Health Reform Law and other federal, state or local laws or regulations affecting the health care industry, (3) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (4) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services, (5) possible changes in the Medicare, Medicaid and other state programs, including Medicaid upper payment limit programs or Waiver Programs, that may impact reimbursements to health care providers and insurers, (6) the highly competitive nature of the health care business, (7) changes in service mix, revenue mix and surgical volumes, including potential declines in the population covered under managed care agreements, the ability to enter into and renew managed care provider agreements on acceptable terms and the impact of consumer driven health plans and physician utilization trends and practices, (8) the efforts of insurers, health care providers and others to contain health care costs, (9) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures, (10) increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel, (11) the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities, (12) changes in accounting practices, (13) changes in general economic conditions nationally and regionally in our markets, (14) future divestitures which may result in charges and possible impairments of long-lived assets, (15) changes in business strategy or development plans, (16) delays in receiving payments for

 

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services provided, (17) the outcome of pending and any future tax audits, appeals and litigation associated with our tax positions, (18) potential adverse impact of known and unknown government investigations, litigation and other claims that may be made against us, (19) our ongoing ability to demonstrate meaningful use of certified electronic health record technology and recognize income for the related Medicare or Medicaid incentive payments, and (20) other risk factors described in our annual report on Form 10-K for the year ended December 31, 2011 and our other filings with the Securities and Exchange Commission. Many of the factors that will determine our future results are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

All references to “Company” and “HCA” as used throughout this release refer to HCA Holdings, Inc. and its affiliates.

 

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HCA Holdings, Inc.

Condensed Consolidated Comprehensive Income Statements

Third Quarter

(Dollars in millions, except per share amounts)

 

     2012     2011  
     Amount     Ratio     Amount     Ratio  

Revenues before provision for doubtful accounts

   $ 8,893        $ 7,998     

Provision for doubtful accounts

     831          740     
  

 

 

     

 

 

   

Revenues

     8,062        100.0     7,258        100.0

Salaries and benefits

     3,781        46.9        3,333        45.9   

Supplies

     1,375        17.1        1,263        17.4   

Other operating expenses

     1,510        18.7        1,369        18.8   

Electronic health record incentive income

     (131     (1.6     (51     (0.7

Equity in earnings of affiliates

     (6     (0.1     (68     (0.9

Depreciation and amortization

     417        5.2        362        5.0   

Interest expense

     446        5.5        519        7.2   

Losses (gains) on sales of facilities

     (7     (0.1     2        —     

Losses on retirement of debt

     —          —          406        5.6   
  

 

 

   

 

 

   

 

 

   

 

 

 
     7,385        91.6        7,135        98.3   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     677        8.4        123        1.7   

Provision (benefit) for income taxes

     222        2.8        (23     (0.3
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     455        5.6        146        2.0   

Net income attributable to noncontrolling interests

     95        1.1        85        1.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to HCA Holdings, Inc.

   $ 360        4.5      $ 61        0.8   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 0.78        $ 0.11     

Shares used in computing diluted earnings per share (000)

     459,515          527,515     

Comprehensive income (loss) attributable to HCA Holdings, Inc.

   $ 369        ($ 24  
  

 

 

     

 

 

   

 

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HCA Holdings, Inc.

Condensed Consolidated Comprehensive Income Statements

For the Nine Months Ended September 30, 2012 and 2011

(Dollars in millions, except per share amounts)

 

     2012     2011  
     Amount     Ratio     Amount     Ratio  

Revenues before provision for doubtful accounts

   $ 27,245        $ 24,077     

Provision for doubtful accounts

     2,666          2,164     
  

 

 

     

 

 

   

Revenues

     24,579        100.0     21,913        100.0

Salaries and benefits

     11,224        45.7        9,948        45.4   

Supplies

     4,216        17.2        3,833        17.5   

Other operating expenses

     4,496        18.2        4,017        18.3   

Electronic health record incentive income

     (256     (1.0     (90     (0.4

Equity in earnings of affiliates

     (26     (0.1     (217     (1.0

Depreciation and amortization

     1,254        5.1        1,078        4.9   

Interest expense

     1,336        5.4        1,572        7.2   

Losses (gains) on sales of facilities

     (4     —          3        —     

Losses on retirement of debt

     —          —          481        2.2   

Termination of management agreement

     —          —          181        0.8   
  

 

 

   

 

 

   

 

 

   

 

 

 
     22,240        90.5        20,806        94.9   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     2,339        9.5        1,107        5.1   

Provision for income taxes

     760        3.1        307        1.5   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     1,579        6.4        800        3.6   

Net income attributable to noncontrolling interests

     288        1.1        270        1.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to HCA Holdings, Inc.

   $ 1,291        5.3      $ 530        2.4   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 2.81        $ 1.04     

Shares used in computing diluted earnings per share (000)

     458,822          509,583     

Comprehensive income attributable to HCA Holdings, Inc.

   $ 1,291        $ 534     
  

 

 

     

 

 

   

 

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HCA Holdings, Inc.

Supplemental Non-GAAP Disclosures

Operating Results Summary

(Dollars in millions, except per share amounts)

 

     Third Quarter      For the Nine Months
Ended September 30,
 
     2012     2011      2012     2011  

Revenues

   $ 8,062      $ 7,258       $ 24,579      $ 21,913   

Net income attributable to HCA Holdings, Inc.

   $ 360      $ 61       $ 1,291      $ 530   

Losses (gains) on sales of facilities (net of tax)

     (5     1         (3     4   

Losses on retirement of debt (net of tax)

     —          256         —          303   

Termination of management agreement (net of tax)

     —          —           —          149   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income attributable to HCA Holdings, Inc. , excluding losses (gains) on sales of facilities, losses on retirement of debt and termination of management agreement (a)

     355        318         1,288        986   

Depreciation and amortization

     417        362         1,254        1,078   

Interest expense

     446        519         1,336        1,572   

Provision for income taxes

     220        128         759        516   

Net income attributable to noncontrolling interests

     95        85         288        270   
  

 

 

   

 

 

    

 

 

   

 

 

 

Adjusted EBITDA (a)

   $ 1,533      $ 1,412       $ 4,925      $ 4,422   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted earnings per share:

         

Net income attributable to HCA Holdings, Inc.

   $ 0.78      $ 0. 11       $ 2. 81      $ 1. 04   

Losses (gains) on sales of facilities

     (0.01     —           —          0. 01   

Losses on retirement of debt

     —          0. 49         —          0. 60   

Termination of management agreement

     —          —           —          0. 29   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income attributable to HCA Holdings, Inc. , excluding losses (gains) on sales of facilities, losses on retirement of debt and termination of management agreement (a)

   $ 0.77      $ 0. 60       $ 2. 81      $ 1. 94   
  

 

 

   

 

 

    

 

 

   

 

 

 

Shares used in computing diluted earnings per share (000)

     459,515        527,515         458,822        509,583   

 

(a) Net income attributable to HCA Holdings, Inc., excluding losses (gains) on sales of facilities, losses on retirement of debt and termination of management agreement and Adjusted EBITDA should not be considered as measures of financial performance under generally accepted accounting principles (“GAAP”). We believe net income attributable to HCA Holdings, Inc., excluding losses (gains) on sales of facilities, losses on retirement of debt and termination of management agreement and Adjusted EBITDA are important measures that supplement discussions and analysis of our results of operations. We believe it is useful to investors to provide disclosures of our results of operations on the same basis used by management. Management relies upon net income attributable to HCA Holdings, Inc., excluding losses (gains) on sales of facilities, losses on retirement of debt and termination of management agreement and Adjusted EBITDA as the primary measures to review and assess operating performance of its hospital facilities and their management teams.

Management and investors review both the overall performance (including; net income attributable to HCA Holdings, Inc., excluding losses (gains) on sales of facilities, losses on retirement of debt and termination of management agreement and GAAP net income attributable to HCA Holdings, Inc.) and operating performance (Adjusted EBITDA) of our health care facilities. Adjusted EBITDA and the Adjusted EBITDA margin (Adjusted EBITDA divided by revenues) are utilized by management and investors to compare our current operating results with the corresponding periods during the previous year and to compare our operating results with other companies in the health care industry. It is reasonable to expect that losses (gains) on sales of facilities and losses on retirement of debt will occur in future periods, but the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our health care facilities and complicate period comparisons of our results of operations and operations comparisons with other health care companies.

Net income attributable to HCA Holdings, Inc., excluding losses (gains) on sales of facilities, losses on retirement of debt and termination of management agreement and Adjusted EBITDA are not measures of financial performance under GAAP, and should not be considered as alternatives to net income attributable to HCA Holdings, Inc. as a measure of operating performance or cash flows from operating, investing and financing activities as a measure of liquidity. Because net income attributable to HCA Holdings, Inc., excluding losses (gains) on sales of facilities, losses on retirement of debt and termination of management agreement and Adjusted EBITDA are not measurements determined in accordance with GAAP and are susceptible to varying calculations, net income attributable to HCA Holdings, Inc., excluding losses (gains) on sales of facilities, losses on retirement of debt and termination of management agreement and Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures presented by other companies.

 

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HCA Holdings, Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)

 

     September 30,
2012
    June 30,
2012
    December 31,
2011
 

ASSETS

      

Current assets:

      

Cash and cash equivalents

   $ 472      $ 518      $ 373   

Accounts receivable, net

     4,598        4,485        4,533   

Inventories

     1,052        1,055        1,054   

Deferred income taxes

     322        323        594   

Other

     828        756        679   
  

 

 

   

 

 

   

 

 

 

Total current assets

     7,272        7,137        7,233   

Property and equipment, at cost

     29,145        28,742        28,075   

Accumulated depreciation

     (16,185     (15,896     (15,241
  

 

 

   

 

 

   

 

 

 
     12,960        12,846        12,834   

Investments of insurance subsidiaries

     473        495        548   

Investments in and advances to affiliates

     103        102        101   

Goodwill and other intangible assets

     5,460        5,431        5,251   

Deferred loan costs

     266        281        290   

Other

     768        840        641   
  

 

 

   

 

 

   

 

 

 
   $ 27,302      $ 27,132      $ 26,898   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

      

Current liabilities:

      

Accounts payable

   $ 1,585      $ 1,517      $ 1,597   

Accrued salaries

     1,027        970        965   

Other accrued expenses

     1,498        1,651        1,585   

Long-term debt due within one year

     1,751        1,309        1,407   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     5,861        5,447        5,554   

Long-term debt

     25,182        25,732        25,645   

Professional liability risks

     962        1,039        993   

Income taxes and other liabilities

     1,860        1,857        1,720   

EQUITY (DEFICIT)

      

Stockholders’ deficit attributable to HCA Holdings, Inc.

     (7,859     (8,243     (8,258

Noncontrolling interests

     1,296        1,300        1,244   
  

 

 

   

 

 

   

 

 

 

Total deficit

     (6,563     (6,943     (7,014
  

 

 

   

 

 

   

 

 

 
   $ 27,302      $ 27,132      $ 26,898   
  

 

 

   

 

 

   

 

 

 

 

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HCA Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2012 and 2011

(Dollars in millions)

 

     2012     2011  

Cash flows from operating activities:

    

Net income

   $ 1,579      $ 800   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Changes in operating assets and liabilities

     (2,923     (2,336

Provision for doubtful accounts

     2,666        2,164   

Depreciation and amortization

     1,254        1,078   

Income taxes

     250        348   

Losses (gains) sales of facilities

     (4     3   

Losses on retirement of debt

     —          481   

Amortization of deferred loan costs

     44        56   

Share-based compensation

     39        24   

Pay-in-kind interest

     —          (78

Other

     7        6   
  

 

 

   

 

 

 

Net cash provided by operating activities

     2,912        2,546   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchase of property and equipment

     (1,268     (1,170

Acquisition of hospitals and health care entities

     (167     (209

Disposition of hospitals and health care entities

     17        55   

Change in investments

     73        80   

Other

     5        4   
  

 

 

   

 

 

 

Net cash used in investing activities

     (1,340     (1,240
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Issuance of long-term debt

     1,350        5,000   

Net change in revolving credit facilities

     (875     (414

Repayment of long-term debt

     (689     (6,583

Distributions to noncontrolling interests

     (303     (281

Payment of debt issuance costs

     (20     (84

Issuance of common stock

     —          2,506   

Distributions to stockholders

     (983     (31

Repurchase of common stock

     —          (1,503

Income tax benefits

     82        54   

Other

     (35     (22
  

 

 

   

 

 

 

Net cash used in financing activities

     (1,473     (1,358
  

 

 

   

 

 

 

Change in cash and cash equivalents

     99        (52

Cash and cash equivalents at beginning of period

     373        411   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 472      $ 359   
  

 

 

   

 

 

 

Interest payments

   $ 1,404      $ 1,635   

Income tax payments (refunds), net

   $ 428      $ (95

 

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HCA Holdings, Inc.

Operating Statistics

 

     Third Quarter     For the Nine Months
Ended September 30,
 
     2012     2011     2012     2011  

Operations:

        

Number of Hospitals

     162        157        162        157   

Number of Freestanding Outpatient Surgery Centers

     112        98        112        98   

Licensed Beds at End of Period

     41,884        39,526        41,884        39,526   

Weighted Average Licensed Beds

     41,873        39,509        41,801        39,310   

Reported:

        

Admissions

     430,500        402,300        1,302,000        1,206,700   

% Change

     7.0       7.9  

Equivalent Admissions

     705,200        650,900        2,117,100        1,928,200   

% Change

     8.3       9.8  

Revenue per Equivalent Admission

   $ 11,432      $ 11,151      $ 11,610      $ 11,364   

% Change

     2.5       2.2  

Inpatient Revenue per Admission

   $ 11,296      $ 11,085      $ 11,477      $ 11,268   

% Change

     1.9       1.9  

Patient Days

     2,035,200        1,888,500        6,166,400        5,758,300   

% Change

     7.8       7.1  

Equivalent Patient Days

     3,334,000        3,056,600        10,026,500        9,201,800   

% Change

     9.1       9.0  

Inpatient Surgery Cases

     124,700        121,100        379,700        361,000   

% Change

     3.0       5.2  

Outpatient Surgery Cases

     212,300        194,300        649,600        586,400   

% Change

     9.3       10.8  

Emergency Room Visits

     1,724,000        1,539,500        5,126,600        4,579,100   

% Change

     12.0       12.0  

Outpatient Revenues as a Percentage of Patient Revenues

     38.4     37.4     38.0     36.8

Average Length of Stay

     4.7        4.7        4.7        4.8   

Occupancy

     52.8     52.0     53.8     53.7

Equivalent Occupancy

     86.4     84.1     87.5     85.8

Same Facility:

        

Admissions

     405,800        397,300        1,228,400        1,197,100   

% Change

     2.1       2.6  

Equivalent Admissions

     658,600        642,100        1,981,400        1,909,300   

% Change

     2.6       3.8  

Revenue per Equivalent Admission

   $ 11,210      $ 11,130      $ 11,385      $ 11,351   

% Change

     0.7       0.3  

Inpatient Revenue per Admission

   $ 11,148      $ 11,106      $ 11,325      $ 11,278   

% Change

     0.4       0.4  

Inpatient Surgery Cases

     117,000        119,600        355,100        356,400   

% Change

     -2.1       -0.4  

Outpatient Surgery Cases

     189,600        191,100        581,100        577,600   

% Change

     -0.8       0.6  

Emergency Room Visits

     1,626,100        1,514,500        4,841,800        4,517,500   

% Change

     7.4       7.2  

 

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