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HCA Reports Third Quarter 2012 Results

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 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)
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  
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 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.
HCA Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions)
                     
 
 

September 30,

June 30, December 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 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  
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 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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