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8-K - FORM 8-K - HCA Healthcare, Inc.d391161d8k.htm
LOGO    Exhibit 99.1

 

    

    news

 

FOR IMMEDIATE RELEASE

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

HCA Reports Second Quarter 2012 Results

Cash Flows from Operations Increase to $1.460 Billion

Nashville, Tenn., August 6, 2012 – HCA Holdings, Inc. (NYSE: HCA) today announced financial and operating results for the second quarter ended June 30, 2012.

Key second quarter metrics (all percentage changes compare 2Q 2012 to 2Q 2011 unless noted):

 

   

Revenues increased 11.9 percent to $8.112 billion

 

   

Net income attributable to HCA Holdings, Inc. totaled $391 million, or $0.85 per diluted share

 

   

Adjusted EBITDA increased 10.5 percent to $1.569 billion

 

   

Cash flows from operations increased 95 percent to $1.460 billion

 

   

Same facility equivalent admissions increased 3.9 percent while same facility admissions increased 2.5 percent

 

   

Same facility revenue per equivalent admission declined 0.1 percent

Revenue growth in the second quarter was once again driven by increased patient volume and the consolidation of our HealthONE venture, which was accounted for using the equity method for periods prior to November 2011. Revenue in the second quarter of 2012 increased to $8.112 billion, from $7.249 billion in the second quarter of 2011. On a same facility basis, revenues in the second quarter of 2012 increased 3.8 percent to $7.442 billion.

Same facility equivalent admissions increased 3.9 percent in the second quarter of 2012 compared to the prior year period, while same facility admissions increased 2.5 percent. Emergency room visits increased 8.8 percent in the second quarter of 2012, on a same facility basis, compared to the prior year period.

Net income attributable to HCA Holdings, Inc. totaled $391 million, or $0.85 per diluted share, compared to $229 million, or $0.43 per diluted share, in the second quarter of 2011. Results for the second quarter of 2011 include losses on retirement of debt of $75 million, or $0.08 per diluted share.

Adjusted EBITDA increased to $1.569 billion compared to $1.420 billion in the second quarter of 2011. Adjusted EBITDA is a non-GAAP financial measure. Tables providing supplemental information on Adjusted EBITDA and reconciling net income attributable to HCA Holdings, Inc. to Adjusted EBITDA are included in this release.


During the second quarter of 2012, salaries and benefits, supplies and other operating expenses totaled $6.622 billion, or 81.7 percent of revenues, compared to $5.941 billion, or 81.9 percent of revenues, in the second quarter of 2011.

Six Months Ended June 30, 2012

Revenues for the six months ended June 30, 2012 totaled $16.517 billion compared to $14.655 billion in the same period of 2011. Net income attributable to HCA Holdings, Inc. was $931 million, or $2.03 per diluted share, compared to $469 million, or $0.94 per diluted share, for the first six months of 2011. Results for the six months ended June 30, 2012 include net favorable Medicare adjustments which increased revenues by $188 million, Adjusted EBITDA by $170 million and diluted earnings per share by $0.22. Results for the six months ended June 30, 2011 include losses on retirement of debt of $75 million, or $0.09 per diluted share, and a charge for the termination of a management agreement of $181 million, or $0.30 per diluted share.

Balance Sheet and Cash Flows from Operations

As of June 30, 2012, HCA Holdings, Inc.’s balance sheet reflected cash and cash equivalents of $518 million, total debt of $27.041 billion and total assets of $27.132 billion. Total debt outstanding decreased by $861 million from the first quarter of 2012. During the second quarter of 2012, capital expenditures totaled $449 million, excluding acquisitions. Net cash provided by operating activities in the second quarter of 2012 totaled $1.460 billion compared to $748 million in the prior year’s second quarter. The improvement in cash flows from operating activities was primarily due to increased net income and favorable changes in operating assets and liabilities during the quarter, including our receipt of payment on the first quarter 2012 rural floor Medicare settlement and a reduction of interest payments.

As of June 30, 2012, HCA operated 163 hospitals and 110 freestanding surgery centers.

Guidance

HCA also is affirming its previously issued guidance for the year ending December 31, 2012.

 

     2012 Guidance

Revenues (1)

   $32 to $33 billion

Adjusted EBITDA (2)

   $6.37 to $6.62 billion

Adjusted EPS (diluted) (2) (3)

   $3.57 to $3.77

 

(1) Revenues are net of the provision for doubtful accounts
(2) Adjusted EBITDA and Adjusted EPS (diluted) are non-GAAP measures.
(3) Adjusted EPS (diluted) excludes non-operational items, such as (but not limited to), gains or losses on sales of facilities, gain on acquisition of controlling interest in equity investments, impairments of long-lived assets, losses on retirement of debt and termination of management agreement

 

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Assumptions:

This guidance range excludes the impact of items, if applicable, that are non-operational in nature. The guidance includes estimated electronic health record (EHR) incentive income assumptions in a range of $325-$350 million and EHR expenses in a range of $90-$115 million (most recent expense range was $125-$150 million). It is also subject to certain conditions including those as set forth below in the Company’s “Cautionary Statement about Preliminary Results and Other Forward-Looking Information”.

Earnings Conference Call

HCA will host a conference call for investors at 8:00 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=1007615 or through the Company’s Investor Relations web page, 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 statements regarding estimated EHR incentive income and related EHR operating expenses and all other statements that do not relate solely to historical or current facts. 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)

 

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changes in business strategy or development plans, (16) delays in receiving payments for 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 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

Second Quarter

(Dollars in millions, except per share amounts)

 

     2012     2011  
     Amount     Ratio     Amount     Ratio  

Revenues before provision for doubtful accounts

   $ 9,153        $ 8,024     

Provision for doubtful accounts

     1,041          775     
  

 

 

     

 

 

   

Revenues

     8,112        100.0     7,249        100.0

Salaries and benefits

     3,707        45.7        3,320        45.8   

Supplies

     1,422        17.5        1,295        17.9   

Other operating expenses

     1,493        18.5        1,326        18.2   

Electronic health record incentive income

     (70     (0.9     (39     (0.5

Equity in earnings of affiliates

     (9     (0.1     (73     (1.0

Depreciation and amortization

     420        5.2        358        5.0   

Interest expense

     448        5.5        520        7.2   

Losses on sales of facilities

     2        —          —          —     

Losses on retirement of debt

     —          —          75        1.0   
  

 

 

   

 

 

   

 

 

   

 

 

 
     7,413        91.4        6,782        93.6   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     699        8.6        467        6.4   

Provision for income taxes

     214        2.6        147        2.0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     485        6.0        320        4.4   

Net income attributable to noncontrolling interests

     94        1.2        91        1.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to HCA Holdings, Inc.

   $ 391        4.8      $ 229        3.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 0.85        $ 0.43     

Shares used in computing diluted earnings per share (000)

     458,621          538,557     

Comprehensive income attributable to HCA Holdings, Inc.

   $ 353        $ 234     
  

 

 

     

 

 

   

 

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HCA Holdings, Inc.

Condensed Consolidated Comprehensive Income Statements

For the Six Months Ended June 30, 2012 and 2011

(Dollars in millions, except per share amounts)

 

     2012     2011  
     Amount     Ratio     Amount     Ratio  

Revenues before provision for doubtful accounts

   $ 18,352        $ 16,079     

Provision for doubtful accounts

     1,835          1,424     
  

 

 

     

 

 

   

Revenues

     16,517        100.0     14,655        100.0   

Salaries and benefits

     7,443        45.1        6,615        45.1   

Supplies

     2,841        17.2        2,570        17.5   

Other operating expenses

     2,986        18.1        2,648        18.2   

Electronic health record incentive income

     (125     (0.8     (39     (0.3

Equity in earnings of affiliates

     (20     (0.1     (149     (1.0

Depreciation and amortization

     837        5.0        716        4.9   

Interest expense

     890        5.4        1,053        7.2   

Losses on sales of facilities

     3        —          1        —     

Losses on retirement of debt

     —          —          75        0.5   

Termination of management agreement

     —          —          181        1.2   
  

 

 

   

 

 

   

 

 

   

 

 

 
     14,855        89.9        13,671        93.3   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     1,662        10.1        984        6.7   

Provision for income taxes

     538        3.3        330        2.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     1,124        6.8        654        4.5   

Net income attributable to noncontrolling interests

     193        1.2        185        1.3   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to HCA Holdings, Inc.

   $ 931        5.6      $ 469        3.2   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 2.03        $ 0.94     

Shares used in computing diluted earnings per share (000)

     458,467          500,463     

Comprehensive income attributable to HCA Holdings, Inc.

   $ 922        $ 558     
  

 

 

     

 

 

   

 

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HCA Holdings, Inc.

Supplemental Non-GAAP Disclosures

Operating Results Summary

(Dollars in millions, except per share amounts)

 

                   For the Six Months  
     Second Quarter      Ended June 30,  
     2012      2011      2012      2011  

Revenues

   $ 8,112       $ 7,249       $ 16,517       $ 14,655   

Net income attributable to HCA Holdings, Inc.

   $ 391       $ 229       $ 931       $ 469   

Losses on sales of facilities (net of tax)

     1         1         2         3   

Losses on retirement of debt (net of tax)

     —           47         —           47   

Termination of management agreement (net of tax)

     —           —           —           149   
  

 

 

    

 

 

    

 

 

    

 

 

 

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

     392         277         933         668   

Depreciation and amortization

     420         358         837         716   

Interest expense

     448         520         890         1,053   

Provision for income taxes

     215         174         539         388   

Net income attributable to noncontrolling interests

     94         91         193         185   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA (a)

   $ 1,569       $ 1,420       $ 3,392       $ 3,010   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share:

           

Net income attributable to HCA Holdings, Inc.

   $ 0.85       $ 0.43       $ 2.03       $ 0.94   

Losses on sales of facilities

     —           —           —           0.01   

Losses on retirement of debt

     —           0.08         —           0.09   

Termination of management agreement

     —           —           —           0.30   
  

 

 

    

 

 

    

 

 

    

 

 

 

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

   $ 0.85       $ 0.51       $ 2.03       $ 1.34   
  

 

 

    

 

 

    

 

 

    

 

 

 

Shares used in computing diluted earnings per share (000)

     458,621         538,557         458,467         500,463   

 

(a) Net income attributable to HCA Holdings, Inc., excluding losses 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 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 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 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 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 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 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 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)

 

     June 30,     March 31,     December 31  
     2012     2012     2011  

ASSETS

      

Current assets:

      

Cash and cash equivalents

   $ 518      $ 471      $ 373   

Accounts receivable, net

     4,485        4,878        4,533   

Inventories

     1,055        1,046        1,054   

Deferred income taxes

     323        226        594   

Other

     756        661        679   
  

 

 

   

 

 

   

 

 

 

Total current assets

     7,137        7,282        7,233   

Property and equipment, at cost

     28,742        28,354        28,075   

Accumulated depreciation

     (15,896     (15,567     (15,241
  

 

 

   

 

 

   

 

 

 
     12,846        12,787        12,834   

Investments of insurance subsidiaries

     495        536        548   

Investments in and advances to affiliates

     102        108        101   

Goodwill and other intangible assets

     5,431        5,398        5,251   

Deferred loan costs

     281        292        290   

Other

     840        736        641   
  

 

 

   

 

 

   

 

 

 
   $ 27,132      $ 27,139      $ 26,898   
  

 

 

   

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

      

Current liabilities:

      

Accounts payable

   $ 1,517      $ 1,412      $ 1,597   

Accrued salaries

     970        909        965   

Other accrued expenses

     1,651        1,453        1,585   

Long-term debt due within one year

     1,309        1,841        1,407   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     5,447        5,615        5,554   

Long-term debt

     25,732        26,061        25,645   

Professional liability risks

     1,039        1,030        993   

Income taxes and other liabilities

     1,857        1,757        1,720   

EQUITY (DEFICIT)

      

Stockholders’ deficit attributable to HCA Holdings, Inc.

     (8,243     (8,613     (8,258

Noncontrolling interests

     1,300        1,289        1,244   
  

 

 

   

 

 

   

 

 

 

Total deficit

     (6,943     (7,324     (7,014
  

 

 

   

 

 

   

 

 

 
   $ 27,132      $ 27,139      $ 26,898   
  

 

 

   

 

 

   

 

 

 

 

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HCA Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2012 and 2011

(Dollars in millions)

 

     2012     2011  

Cash flows from operating activities:

    

Net income

   $ 1,124      $ 654   

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

    

Changes in operating assets and liabilities

     (1,927     (1,576

Provision for doubtful accounts

     1,835        1,424   

Depreciation and amortization

     837        716   

Income taxes

     326        317   

Losses sales of facilities

     3        1   

Losses on retirement of debt

     —          75   

Amortization of deferred loan costs

     29        39   

Share-based compensation

     23        16   

Other

     7        —     
  

 

 

   

 

 

 

Net cash provided by operating activities

     2,257        1,666   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Purchase of property and equipment

     (784     (776

Acquisition of hospitals and health care entities

     (139     (168

Disposition of hospitals and health care entities

     6        54   

Change in investments

     35        76   

Other

     (4     2   
  

 

 

   

 

 

 

Net cash used in investing activities

     (886     (812
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Issuance of long-term debt

     1,350        —     

Net change in revolving credit facilities

     (820     (1,524

Repayment of long-term debt

     (608     (1,508

Distributions to noncontrolling interests

     (191     (185

Payment of debt issuance costs

     (19     (12

Issuance of common stock

     —          2,506   

Distributions to stockholders

     (982     (30

Income tax benefits

     71        49   

Other

     (27     (22
  

 

 

   

 

 

 

Net cash used in financing activities

     (1,226     (726
  

 

 

   

 

 

 

Change in cash and cash equivalents

     145        128   

Cash and cash equivalents at beginning of period

     373        411   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 518      $ 539   
  

 

 

   

 

 

 

Interest payments

   $ 854      $ 1,043   

Income tax payments (refunds), net

   $ 141      $ (36

 

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HCA Holdings, Inc.

Operating Statistics

 

                 For the Six Months  
     Second Quarter     Ended June 30,  
     2012     2011     2012     2011  

Operations:

        

Number of Hospitals

     163        157        163        157   

Number of Freestanding Outpatient Surgery Centers

     110        98        110        98   

Licensed Beds at End of Period

     41,817        39,472        41,817        39,472   

Weighted Average Licensed Beds

     41,789        39,356        41,765        39,209   

Reported:

        

Admissions

     428,200        397,500        871,500        804,400   

% Change

     7.7       8.3  

Equivalent Admissions

     700,800        638,900        1,411,900        1,277,300   

% Change

     9.7       10.5  

Revenue per Equivalent Admission

   $ 11,576      $ 11,346      $ 11,699      $ 11,473   

% Change

     2.0       2.0  

Inpatient Revenue per Admission

   $ 11,363      $ 11,252      $ 11,566      $ 11,360   

% Change

     1.0       1.8  

Patient Days

     2,012,300        1,889,600        4,131,200        3,869,800   

% Change

     6.5       6.8  

Equivalent Patient Days

     3,293,800        3,038,300        6,692,500        6,145,200   

% Change

     8.4       8.9  

Inpatient Surgery Cases

     126,700        120,200        255,000        239,900   

% Change

     5.5       6.3  

Outpatient Surgery Cases

     219,800        199,100        437,300        392,100   

% Change

     10.4       11.5  

Emergency Room Visits

     1,714,200        1,512,000        3,402,600        3,039,600   

% Change

     13.4       11.9  

Outpatient Revenues as a Percentage of Patient Revenues

     38.8     37.1     37.8     36.5

Average Length of Stay

     4.7        4.8        4.7        4.8   

Occupancy

     52.9     52.8     54.3     54.5

Equivalent Occupancy

     86.7     84.8     88.0     86.5

Same Facility:

        

Admissions

     403,700        393,900        822,600        799,800   

% Change

     2.5       2.9  

Equivalent Admissions

     656,500        631,800        1,322,700        1,267,600   

% Change

     3.9       4.4  

Revenue per Equivalent Admission

   $ 11,336      $ 11,343      $ 11,473      $ 11,459   

% Change

     -0.1       0.1  

Inpatient Revenue per Admission

   $ 11,221      $ 11,255      $ 11,413      $ 11,364   

% Change

     -0.3       0.4  

Inpatient Surgery Cases

     118,500        119,300        238,700        237,700   

% Change

     -0.6       0.4  

Outpatient Surgery Cases

     196,100        195,500        391,600        386,100   

% Change

     0.3       1.4  

Emergency Room Visits

     1,622,100        1,490,500        3,215,800        3,003,000   

% Change

     8.8       7.1  

 

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