HCA Reports Third Quarter 2012 Results

  HCA Reports Third Quarter 2012 Results

Business Wire

NASHVILLE, Tenn. -- November 01, 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.

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.

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 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.

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       $8,893            $7,998
accounts
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    95      1.1       85      1.2
interests
                                                                             
Net income attributable to HCA Holdings,     $360    4.5       $61     0.8
Inc.
                                                                             
Diluted earnings per share                   $0.78             $0.11
                                                                             
Shares used in computing diluted earnings    459,515           527,515
per share (000)
                                                                             
Comprehensive income (loss) attributable     $369              ($24)
to HCA Holdings, Inc.

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      $ 27,245              $ 24,077
doubtful accounts
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             (256    ) (1.0  )     (90     ) (0.4  )
incentive income
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           (4      ) -           3         -
facilities
Losses on retirement of debt         -         -           481       2.2
Termination of management           -        -         181      0.8   
agreement
                                                                             
                                    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          288      1.1       270      1.2   
noncontrolling interests
                                                                             
Net income attributable to HCA     $ 1,291    5.3      $ 530      2.4   
Holdings, Inc.
                                                                             
Diluted earnings per share         $ 2.81                $ 1.04
                                                                             
Shares used in computing diluted     458,822               509,583
earnings per share (000)
                                                                             
Comprehensive income
attributable to HCA Holdings,      $ 1,291              $ 534     
Inc.

HCA Holdings, Inc.
Supplemental Non-GAAP Disclosures
Operating Results Summary
(Dollars in millions, except per share amounts)
                                                                
                                                                     
                                                     For the Nine Months
                     Third Quarter                   Ended September 30,
                       2012           2011          2012         2011
                                                                     
Revenues             $  8,062         $  7,258          24,579       $ 21,913
                                                                     
Net income
attributable to      $  360           $  61          $  1,291        $ 530
HCA Holdings,
Inc.
Losses (gains)
on sales of             (5      )        1              (3      )      4
facilities (net
of tax)
Losses on
retirement of           -                256            -              303
debt (net of
tax)
Termination of
management             -              -             -            149
agreement (net
of tax)
Net income
attributable to
HCA Holdings,
Inc., excluding
losses (gains)
on sales of
facilities,             355              318            1,288          986
losses on
retirement of
debt and
termination of
management
agreement (a)
Depreciation and        417              362            1,254          1,078
amortization
Interest expense        446              519            1,336          1,572
Provision for           220              128            759            516
income taxes
Net income
attributable to        95             85            288          270
noncontrolling
interests
                                                                     
Adjusted EBITDA      $  1,533        $  1,412       $  4,925       $ 4,422
(a)
                                                                     
Diluted earnings
per share:
Net income
attributable to      $  0.78          $  0.11        $  2.81         $ 1.04
HCA Holdings,
Inc.
Losses (gains)
on sales of             (0.01   )        -              -              0.01
facilities
Losses on
retirement of           -                0.49           -              0.60
debt
Termination of
management             -              -             -            0.29
agreement
Net income
attributable to
HCA Holdings,
Inc., excluding
losses (gains)
on sales of
facilities,          $  0.77         $  0.60        $  2.81        $ 1.94
losses on
retirement of
debt and
termination of
management
agreement (a)
                                                                     
Shares used in
computing               459,515          527,515        458,822        509,583
diluted earnings
per share (000)
                                                                     
                                                                     
                                                                     
(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.

HCA Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions)
                                                       
                                                                   
                                                                   
                                      September      June 30,      December
                                      30,                          31,
                                        2012        2012        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               29,145        28,742        28,075
cost
Accumulated depreciation                (16,185 )    (15,896 )    (15,241 )
                                         12,960        12,846        12,834
                                                                   
Investments of insurance                 473           495           548
subsidiaries
Investments in and advances              103           102           101
to affiliates
Goodwill and other intangible            5,460         5,431         5,251
assets
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           1,751       1,309       1,407   
year
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                   1,860         1,857         1,720
liabilities
                                                                   
EQUITY
(DEFICIT)
Stockholders' deficit
attributable to HCA Holdings,            (7,859  )     (8,243  )     (8,258  )
Inc.
Noncontrolling interests                1,296       1,300       1,244   
Total deficit                           (6,563  )    (6,943  )    (7,014  )
                                      $  27,302     $ 27,132     $ 26,898  

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    )

HCA Holdings, Inc.
Operating Statistics
                                                            
                                                                 
                                                For the Nine Months
                Third Quarter                   Ended September 30,
                 2012          2011          2012           2011      
                                                                 
Operations:
Number of         162             157             162              157
Hospitals
Number of
Freestanding
Outpatient        112             98              112              98
Surgery
Centers
Licensed Beds
at End of         41,884          39,526          41,884           39,526
Period
Weighted
Average           41,873          39,509          41,801           39,310
Licensed Beds
                                                                 
Reported:
Admissions        430,500         402,300         1,302,000        1,206,700
%           7.0       %                     7.9        %
Change
Equivalent        705,200         650,900         2,117,100        1,928,200
Admissions
%           8.3       %                     9.8        %
Change
Revenue per
Equivalent      $ 11,432        $ 11,151        $ 11,610         $ 11,364
Admission
%           2.5       %                     2.2        %
Change
Inpatient
Revenue per     $ 11,296        $ 11,085        $ 11,477         $ 11,268
Admission
%           1.9       %                     1.9        %
Change
                                                                 
Patient Days      2,035,200       1,888,500       6,166,400        5,758,300
%           7.8       %                     7.1        %
Change
Equivalent        3,334,000       3,056,600       10,026,500       9,201,800
Patient Days
%           9.1       %                     9.0        %
Change
                                                                 
Inpatient         124,700         121,100         379,700          361,000
Surgery Cases
%           3.0       %                     5.2        %
Change
Outpatient        212,300         194,300         649,600          586,400
Surgery Cases
%           9.3       %                     10.8       %
Change
                                                                 
Emergency         1,724,000       1,539,500       5,126,600        4,579,100
Room Visits
%           12.0      %                     12.0       %
Change
                                                                 
Outpatient
Revenues as a
Percentage of     38.4      %     37.4      %     38.0       %     36.8      %
Patient
Revenues
                                                                 
Average
Length of         4.7             4.7             4.7              4.8
Stay
                                                                 
Occupancy         52.8      %     52.0      %     53.8       %     53.7      %
Equivalent        86.4      %     84.1      %     87.5       %     85.8      %
Occupancy
                                                                 
Same
Facility:
Admissions        405,800         397,300         1,228,400        1,197,100
%           2.1       %                     2.6        %
Change
Equivalent        658,600         642,100         1,981,400        1,909,300
Admissions
%           2.6       %                     3.8        %
Change
Revenue per
Equivalent      $ 11,210        $ 11,130        $ 11,385         $ 11,351
Admission
%           0.7       %                     0.3        %
Change
Inpatient
Revenue per     $ 11,148        $ 11,106        $ 11,325         $ 11,278
Admission
%           0.4       %                     0.4        %
Change
                                                                 
Inpatient         117,000         119,600         355,100          356,400
Surgery Cases
%           -2.1      %                     -0.4       %
Change
Outpatient        189,600         191,100         581,100          577,600
Surgery Cases
%           -0.8      %                     0.6        %
Change
                                                                 
Emergency         1,626,100       1,514,500       4,841,800        4,517,500
Room Visits
%           7.4       %                     7.2        %
Change

Contact:

HCA Holdings, Inc.
Investor Contact:
Mark Kimbrough, 615-344-2688
or
Media Contact:
Ed Fishbough, 615-344-2810
 
Press spacebar to pause and continue. Press esc to stop.