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HCA Reports Fourth 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
Fourth Quarter
(Dollars in millions, except per share amounts)
         
 
 
2012 2011

Amount

Ratio

Amount

Ratio

 
Revenues before provision for doubtful accounts $ 9,538 $ 8,429
Provision for doubtful accounts   1,104     660  
Revenues 8,434 100.0 % 7,769 100.0 %
 
Salaries and benefits 3,865 45.8 3,492 44.9
Supplies 1,501 17.8 1,346 17.3
Other operating expenses 1,552 18.4 1,453 18.7
Electronic health record incentive income (80 ) (0.9 ) (120 ) (1.5 )
Equity in earnings of affiliates (10 ) (0.1 ) (41 ) (0.5 )
Depreciation and amortization 425 4.9 387 5.0
Interest expense 462 5.5 465 6.0
Gains on sales of facilities (11 ) (0.1 ) (145 ) (1.9 )
Legal claim costs 175 2.1 - -
Gain on acquisition of controlling interest in equity investment   -     -     (1,522 )   (19.6 )
 
  7,879     93.4     5,315     68.4  
 
Income before income taxes 555 6.6 2,454 31.6
 
Provision for income taxes   128     1.5     412     5.3  
 
Net income 427 5.1 2,042 26.3
 
Net income attributable to noncontrolling interests   113     1.4     107     1.4  
 
Net income attributable to HCA Holdings, Inc. $ 314     3.7   $ 1,935     24.9  
 
Diluted earnings per share $ 0.68 $ 4.25
 
Shares used in computing diluted earnings per share (000) 461,131 455,460
 
Comprehensive income attributable to HCA Holdings, Inc. $ 297   $ 1,919  
 
HCA Holdings, Inc.
Condensed Consolidated Comprehensive Income Statements
For the Years Ended December 31, 2012 and 2011
(Dollars in millions, except per share amounts)
         
 
 
2012 2011

Amount

Ratio

Amount

Ratio

 
Revenues before provision for doubtful accounts $ 36,783 $ 32,506
Provision for doubtful accounts   3,770     2,824  
Revenues 33,013 100.0 % 29,682 100.0 %
 
Salaries and benefits 15,089 45.7 13,440 45.3
Supplies 5,717 17.3 5,179 17.4
Other operating expenses 6,048 18.3 5,470 18.5
Electronic health record incentive income (336 ) (1.0 ) (210 ) (0.7 )
Equity in earnings of affiliates (36 ) (0.1 ) (258 ) (0.9 )
Depreciation and amortization 1,679 5.1 1,465 4.9
Interest expense 1,798 5.4 2,037 6.9
Gains on sales of facilities (15 ) - (142 ) (0.5 )
Legal claim costs 175 0.5 - -
Gain on acquisition of controlling interest in equity investment - - (1,522 ) (5.1 )
Losses on retirement of debt - - 481 1.6
Termination of management agreement   -     -     181     0.6  
 
  30,119     91.2     26,121     88.0  
 
Income before income taxes 2,894 8.8 3,561 12.0
 
Provision for income taxes   888     2.7     719     2.4  
 
Net income 2,006 6.1 2,842 9.6
 
Net income attributable to noncontrolling interests   401     1.2     377     1.3  
 
Net income attributable to HCA Holdings, Inc. $ 1,605     4.9   $ 2,465     8.3  
 
Diluted earnings per share $ 3.49 $ 4.97
 
Shares used in computing diluted earnings per share (000) 459,403 495,943
 
Comprehensive income attributable to HCA Holdings, Inc. $ 1,588   $ 2,453  
 
HCA Holdings, Inc.
Supplemental Non-GAAP Disclosures
Operating Results Summary
(Dollars in millions, except per share amounts)
         
 
For the Years
Fourth Quarter Ended December 31,

2012

2011

2012

2011

 
Revenues $ 8,434 $ 7,769 $ 33,013 $ 29,682
 
Net income attributable to HCA Holdings, Inc. $ 314 $ 1,935 $ 1,605 $ 2,465
Gains on sales of facilities (net of tax) (6 ) (84 ) (9 ) (80 )
Legal claim costs (net of tax) 110 - 110 -
Gain on acquisition of controlling interest in equity investment (net of tax) - (1,424 ) - (1,424 )
Losses on retirement of debt (net of tax) - - - 303
Termination of management agreement (net of tax)   -     -     -     149  

Net income attributable to HCA Holdings, Inc., excluding gains on sales of facilities, legal claim costs, gain on acquisition of controlling interest in equity investment, losses on retirement of debt and termination of management agreement (a)

418 427 1,706 1,413
Depreciation and amortization 425 387 1,679 1,465
Interest expense 462 465 1,798 2,037
Provision for income taxes 188 253 947 769
Net income attributable to noncontrolling interests   113     107     401     377  
 
Adjusted EBITDA (a) $ 1,606   $ 1,639   $ 6,531   $ 6,061  
 
Diluted earnings per share:
Net income attributable to HCA Holdings, Inc. $ 0.68 $ 4.25 $ 3.49 $ 4.97
Gains on sales of facilities (0.01 ) (0.18 ) (0.02 ) (0.16 )
Legal claim costs 0.24 - 0.24 -
Gain on acquisition of controlling interest in equity investment - (3.13 ) - (2.87 )
Losses on retirement of debt - - - 0.61
Termination of management agreement   -     -     -     0.30  
Net income attributable to HCA Holdings, Inc., excluding gains on sales of facilities, legal claim costs, gain on acquisition of controlling interest in equity investment, losses on retirement of debt and termination of management agreement (a)
 
$ 0.91   $ 0.94   $ 3.71   $ 2.85  
 
Shares used in computing diluted earnings per share (000) 461,131 455,460 459,403 495,943
 
   
 
(a) Net income attributable to HCA Holdings, Inc., excluding gains on sales of facilities, legal claim costs, gain on acquisition of controlling interest in equity investment, 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 gains on sales of facilities, legal claim costs, gain on acquisition of controlling interest in equity investment, 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 gains on sales of facilities, legal claim costs, gain on acquisition of controlling interest in equity investment, 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 gains on sales of facilities, legal claim costs, gain on acquisition of controlling interest in equity investment, 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 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 gains on sales of facilities, legal claim costs, gain on acquisition of controlling interest in equity investment, 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 gains on sales of facilities, legal claim costs, gain on acquisition of controlling interest in equity investment, 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 gains on sales of facilities, legal claim costs, gain on acquisition of controlling interest in equity investment, 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)
       
 
 
December 31, September 30, December 31,

2012

2012

2011

 
ASSETS
Current assets:
Cash and cash equivalents $ 705 $ 472 $ 373
Accounts receivable, net 4,672 4,598 4,533
Inventories 1,086 1,052 1,054
Deferred income taxes 385 322 594
Other   915     828     679  
Total current assets 7,763 7,272 7,233
 
Property and equipment, at cost 29,527 29,145 28,075
Accumulated depreciation   (16,342 )   (16,185 )   (15,241 )
13,185 12,960 12,834
 
Investments of insurance subsidiaries 515 473 548
Investments in and advances to affiliates 104 103 101
Goodwill and other intangible assets 5,539 5,460 5,251
Deferred loan costs 290 266 290
Other   679     768     641  
 
$ 28,075   $ 27,302   $ 26,898  
 
 
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 1,768 $ 1,585 $ 1,597
Accrued salaries 1,120 1,027 965
Other accrued expenses 1,849 1,498 1,585
Long-term debt due within one year   1,435     1,751     1,407  
Total current liabilities 6,172 5,861 5,554
 
Long-term debt 27,495 25,182 25,645
Professional liability risks 973 962 993
Income taxes and other liabilities 1,776 1,860 1,720
 
EQUITY (DEFICIT)
Stockholders' deficit attributable to HCA Holdings, Inc. (9,660 ) (7,859 ) (8,258 )
Noncontrolling interests   1,319     1,296     1,244  
Total deficit   (8,341 )   (6,563 )   (7,014 )

$

 

28,075

 

$

 

27,302

 

$

26,898

 
 
HCA Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
For the Years Ended December 31, 2012 and 2011
(Dollars in millions)
   
 
 

2012

2011

 
Cash flows from operating activities:
Net income $ 2,006 $ 2,842
Adjustments to reconcile net income to net cash provided by operating activities:
Changes in operating assets and liabilities (3,663 ) (2,953 )
Provision for doubtful accounts 3,770 2,824
Depreciation and amortization 1,679 1,465
Income taxes 96 912
Gains sales of facilities (15 ) (142 )
Legal claim costs 175 -
Gain on acquisition of controlling interest in equity investment - (1,522 )
Losses on retirement of debt - 481
Amortization of deferred loan costs 62 70
Share-based compensation 56 26
Pay-in-kind interest - (78 )
Other   9     8  
 
Net cash provided by operating activities   4,175     3,933  
 
 
Cash flows from investing activities:
Purchase of property and equipment (1,862 ) (1,679 )
Acquisition of hospitals and health care entities (258 ) (1,682 )
Disposition of hospitals and health care entities 30 281
Change in investments 16 80
Other   11     5  
 
Net cash used in investing activities   (2,063 )   (2,995 )
 
 
Cash flows from financing activities:
Issuance of long-term debt 4,850 5,500
Net change in revolving credit facilities (685 ) (449 )
Repayment of long-term debt (2,441 ) (6,640 )
Distributions to noncontrolling interests (401 ) (378 )
Payment of debt issuance costs (62 ) (92 )
Issuance of common stock - 2,506
Distributions to stockholders (3,148 ) (31 )
Repurchase of common stock - (1,503 )
Income tax benefits 174 63
Other   (67 )   48  
 
Net cash used in financing activities   (1,780 )   (976 )
 
 
Change in cash and cash equivalents 332 (38 )
Cash and cash equivalents at beginning of period   373     411  
 
 
Cash and cash equivalents at end of period $ 705   $ 373  
 
 
Interest payments $ 1,723 $ 1,987
Income tax payments (refunds), net $ 618 $ (256 )
       
HCA Holdings, Inc.
Operating Statistics
           
 
For the Years
Fourth Quarter Ended December 31,

2012

2011

2012

2011

 
Operations:
Number of Hospitals 162 163 162 163
Number of Freestanding Outpatient Surgery Centers 112 108 112 108
Licensed Beds at End of Period 41,804 41,594 41,804 41,594
Weighted Average Licensed Beds 41,777 40,994 41,795 39,735
 
Reported:
Admissions 438,700 413,700 1,740,700 1,620,400
% Change 6.0% 7.4%
Equivalent Admissions 715,000 667,700 2,832,100 2,595,900
% Change 7.1% 9.1%
Revenue per Equivalent Admission $ 11,795 $ 11,636 $ 11,657 $ 11,434
% Change 1.4% 2.0%
Inpatient Revenue per Admission $ 11,470 $ 11,508 $ 11,475 $ 11,330
% Change -0.3% 1.3%
 
Patient Days 2,076,200 1,951,600 8,242,600 7,709,900
% Change 6.4% 6.9%
Equivalent Patient Days 3,384,200 3,149,400 13,410,700 12,351,200
% Change 7.5% 8.6%
 
Inpatient Surgery Cases 126,800 123,500 506,500 484,500
% Change 2.6% 4.5%
Outpatient Surgery Cases 224,000 212,800 873,600 799,200

% Change

5.2% 9.3%
 
Emergency Room Visits 1,785,400 1,564,400 6,912,000 6,143,500
% Change 14.1% 12.5%
 
Outpatient Revenues as a Percentage of Patient Revenues
38.7% 37.5% 38.1% 37.0%
 
Average Length of Stay 4.7 4.7 4.7 4.8
 
Occupancy 54.0% 51.7% 53.9% 53.2%
Equivalent Occupancy 88.0% 83.5% 87.7% 85.2%
 
Same Facility:
Admissions 413,500 396,400 1,641,900 1,593,400
% Change 4.3% 3.0%
Equivalent Admissions 667,700 635,800 2,650,000 2,544,700
% Change 5.0% 4.1%
Revenue per Equivalent Admission $ 11,545 $ 11,485 $ 11,421 $ 11,385
% Change 0.5% 0.3%
Inpatient Revenue per Admission $ 11,309 $ 11,426 $ 11,321 $ 11,315
% Change -1.0% 0.1%
 
Inpatient Surgery Cases 118,400 117,400 473,200 473,800
% Change 0.9% -0.1%
Outpatient Surgery Cases 199,000 195,500 779,100 771,900
% Change 1.8% 0.9%
 
Emergency Room Visits 1,684,100 1,494,200 6,525,900 6,011,700
% Change 12.7% 8.6%




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