HCA Reports First Quarter 2013 Results

HCA Reports First Quarter 2013 Results

NASHVILLE, Tenn.--(BUSINESS WIRE)-- HCA Holdings, Inc. (NYS: HCA) today announced financial and operating results for the first quarter ended March 31, 2013.

Key first quarter metrics (all percentage changes compare 1Q 2013 to 1Q 2012 unless noted):

  • Revenues increased 0.4 percent to $8.440 billion

  • Net income attributable to HCA Holdings, Inc. totaled $344 million, or $0.74 per diluted share

  • Adjusted EBITDA declined 14.0 percent to $1.568 billion

  • Cash flows from operations declined 7.2 percent to $740 million

  • Same facility equivalent admissions declined 0.7 percent while same facility admissions increased 0.1 percent

  • Same facility revenue per equivalent admission increased 0.8 percent

  • Adjusting for "leap year's" extra business day in 2012, same facility admissions increased 1.3 percent and same facility equivalent admissions increased 0.4 percent


"This morning the Company reported earnings consistent with our preview of first quarter 2013 results on April 15th. Results for the first quarter reflect a moderation in the rate of growth in admissions and outpatient volumes distributed across our portfolio," said Richard M. Bracken, Chairman of the Board and Chief Executive Officer of HCA.

Revenues in the first quarter increased to $8.440 billion, compared to $8.405 billion in the first quarter of 2012. Net income attributable to HCA Holdings, Inc. totaled $344 million, or $0.74 per diluted share, compared to $540 million, or $1.18 per diluted share, in the first quarter of 2012. Adjusted EBITDA totaled $1.568 billion compared to $1.823 billion in the first quarter of 2012. Adjusted EBITDA is a non-GAAP financial measure. A table reconciling net income attributable to HCA Holdings, Inc. to Adjusted EBITDA is included in this release.

First quarter 2013 results include pretax losses on sales of facilities of $16 million, or $0.02 per diluted share, and a pretax loss on retirement of debt of $17 million, or $0.03 per diluted share. Results for the first quarter of 2012 include net favorable Medicare adjustments which increased revenues by $188 million, Adjusted EBITDA by $170 million and earnings per diluted share by $0.22.

Same facility revenue per equivalent admission increased 0.8 percent in the first quarter of 2013 compared to the first quarter of 2012. Excluding the net favorable Medicare adjustments in the first quarter of 2012, same facility revenue per equivalent admission increased 3.5 percent in the first quarter of 2013 compared to the adjusted first quarter of 2012.

Patient volume in the first quarter of 2013 reflected moderation in growth trends in our inpatient and outpatient volumes. Same facility equivalent admissions declined 0.7 percent in the first quarter of 2013 compared to the prior year period. Same facility admissions increased 0.1 percent compared to the prior year period. Same facility emergency room visits increased 3.8 percent in the first quarter of 2013, compared to the prior year period. Same facility inpatient surgeries declined 2.6 percent and same facility outpatient surgeries declined 4.3 percent in the first quarter of 2013 compared to the same period of 2012. Adjusted for the extra business day in 2012 due to "leap year", same facility admissions increased 1.3 percent, same facility equivalent admissions increased 0.4 percent, same facility emergency room visits increased 4.9 percent, same facility inpatient surgeries declined 1.5 percent and outpatient surgeries declined 3.2 percent in the first quarter of 2013 compared to the prior year period.

During the first quarter of 2013, salaries and benefits, supplies and other operating expenses totaled $6.919 billion, or 82.0 percent of revenues, compared to $6.648 billion, or 79.0 percent of revenues, in the first quarter of 2012.

As of March 31, 2013, HCA Holdings, Inc.'s balance sheet reflected cash and cash equivalents of $594 million, total debt of $28.608 billion, and total assets of $27.882 billion. During the first quarter of 2013, capital expenditures totaled $404 million, excluding acquisitions. Cash flows provided by operating activities in the quarter totaled $740 million compared to $797 million in the first quarter of 2012. The $57 million decline in cash flows from operating activities related primarily to the net impact of the $201 million decline in net income and the offsetting $50 million benefit from changes in working capital items and $50 million benefit from income taxes in the first quarter of 2013 compared to the first quarter of 2012.

As of March 31, 2013, HCA's leverage ratio as measured by Total Debt/Adjusted EBITDA was 4.56x, compared to 4.43x as of December 31, 2012. As of March 31, 2013, HCA operated 162 hospitals and 113 freestanding surgery centers.

The Company today is reaffirming its previously issued guidance ranges for 2013.

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=1016158 or through the Company's Investor Relations web page, www.hcahealthcare.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include statements that do not relate solely to historical facts. Forward-looking statements can be identified by the use of words like "may," "believe," "will," "expect," "project," "estimate," "anticipate," "plan," "initiative" or "continue." These forward-looking statements are based on our current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond our control, which could significantly affect current plans and expectations and our future financial position and results of operations. 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 ("BCA") and the outcome of negotiations and legislation related to BCA-mandated spending reductions, which include cuts to Medicare payments, (3) the effects related to the enactment and implementation of 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, (4) increases in the amount and risk of collectibility of uninsured accounts and deductibles and copayment amounts for insured accounts, (5) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services, (6) 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, (7) the highly competitive nature of the health care business, (8) 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, (9) the efforts of insurers, health care providers and others to contain health care costs, (10) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures, (11) increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel, (12) the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities, (13) changes in accounting practices, (14) changes in general economic conditions nationally and regionally in our markets, (15) future divestitures which may result in charges and possible impairments of long-lived assets, (16) changes in business strategy or development plans, (17) delays in receiving payments for services provided, (18) the outcome of pending and any future tax audits, appeals and litigation associated with our tax positions, (19) potential adverse impact of known and unknown government investigations, litigation and other claims that may be made against us, (20) 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 (21) other risk factors described in our annual report on Form 10-K for the year ended December 31, 2012 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.

HCA Holdings, Inc.

Condensed Consolidated Comprehensive Income Statements

First Quarter

(Dollars in millions, except per share amounts)

2013

2012

Amount

Ratio

Amount

Ratio

Revenues before provision for doubtful accounts

$9,194

$9,199

Provision for doubtful accounts

754

794

Revenues

8,440

100.0

%

8,405

100.0

Salaries and benefits

3,917

46.4

3,736

44.5

Supplies

1,479

17.5

1,419

16.9

Other operating expenses

1,523

18.1

1,493

17.6

Electronic health record incentive income

(39

)

(0.5

)

(55

)

(0.6

)

Equity in earnings of affiliates

(8

)

(0.1

)

(11

)

(0.1

)

Depreciation and amortization

424

5.0

417

4.9

Interest expense

472

5.6

442

5.3

Losses on sales of facilities

16

0.2

1

-

Loss on retirement of debt

17

0.2

-

-

7,801

92.4

7,442

88.5

Income before income taxes

639

7.6

963

11.5

Provision for income taxes

201

2.4

324

3.9

Net income

438

5.2

639

7.6

Net income attributable to noncontrolling interests

94

1.1

99

1.2

Net income attributable to HCA Holdings, Inc.

$344

4.1

$540

6.4

Diluted earnings per share

$0.74

$1.18

Shares used in computing diluted earnings per share (000)

462,368

458,312

Comprehensive income attributable to HCA Holdings, Inc.

$326

$569

HCA Holdings, Inc.

Supplemental Non-GAAP Disclosures

Operating Results Summary

(Dollars in millions, except per share amounts)

First Quarter

2013

2012

Revenues

$8,440

$8,405

Net income attributable to HCA Holdings, Inc.

$344

$540

Losses on sales of facilities (net of tax)

11

1

Loss on retirement of debt (net of tax)

11

-

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

366

541

Depreciation and amortization

424

417

Interest expense

472

442

Provision for income taxes

212

324

Net income attributable to noncontrolling interests

94

99

Adjusted EBITDA (a)

$1,568

$1,823

Diluted earnings per share:

Net income attributable to HCA Holdings, Inc.

$0.74

$1.18

Losses on sales of facilities

0.02

-

Loss on retirement of debt

0.03

-

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

$0.79

$1.18

Shares used in computing diluted earnings per share (000)

462,368

458,312

_______________________

(a)

Net income attributable to HCA Holdings, Inc., excluding losses on sales of facilities and loss on retirement of debt 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 and loss on retirement of debt 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 and loss on retirement of debt 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 and loss on retirement of debt 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 and loss on retirement of debt 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 and loss on retirement of debt 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 and loss on retirement of debt 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)

March 31,

December 31,

2013

2012

ASSETS

Current assets:

Cash and cash equivalents

$594

$705

Accounts receivable, net

4,877

4,672

Inventories

1,104

1,086

Deferred income taxes

385

385

Other

827

915

Total current assets

7,787

7,763

Property and equipment, at cost

29,764

29,527

Accumulated depreciation

(16,620

)

(16,342

)

13,144

13,185

Investments of insurance subsidiaries

423

515

Investments in and advances to affiliates

107

104

Goodwill and other intangible assets

5,541

5,539

Deferred loan costs

274

290

Other

606

679

$27,882

$28,075

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Accounts payable

$1,691

$1,768

Accrued salaries

969

1,120

Other accrued expenses

1,893

1,849

Long-term debt due within one year

1,438

1,435

Total current liabilities

5,991

6,172

Long-term debt

27,170

27,495

Professional liability risks

970

973

Income taxes and other liabilities

1,763

1,776

EQUITY (DEFICIT)