HCA Holdings, Inc. (NYSE: HCA) today announced preliminary financial and
operating results for the second quarter ended June 30, 2014. The
financial results are subject to finalization of the Company’s quarterly
financial and accounting procedures.
HCA anticipates revenues for the second quarter of 2014 will be
approximately $9.230 billion compared to $8.450 billion in the second
quarter of 2013. Income before income taxes for the second quarter is
expected to approximate $904 million compared to $806 million in the
prior year period. Net income per diluted share for the second quarter
of 2014 is expected to be approximately $1.07 per diluted share compared
to $0.91 for the second quarter of 2013. Adjusted EBITDA for the second
quarter is expected to be approximately $2.000 billion compared to
$1.689 billion in the previous year’s second quarter. Adjusted EBITDA is
a non-GAAP financial measure. A table reconciling expected income before
income taxes to Adjusted EBITDA is included in this release.
“Results for the second quarter of 2014 exceeded our internal
expectations, both in terms of our core operations and healthcare
reform,” said R. Milton Johnson, HCA President and CEO. “As a result, we
are raising our earnings guidance for the full year 2014.”
The Company recorded a $142 million adjustment to increase Medicaid
revenues during the second quarter of 2014 related to the receipt of
reimbursements in excess of our estimates for the indigent care
component of the Texas Medicaid Waiver Program for the program year
ended September 30, 2013. Second quarter 2014 results also include a
loss on retirement of debt of $226 million, or $0.32 per diluted share,
and gains on sales of facilities of $11 million, or $0.02 per diluted
share.
Same facility admissions for the second quarter of 2014 increased 1.2
percent while same facility equivalent admissions increased 2.2 percent.
Same facility revenue per equivalent admission is expected to increase
approximately 5.4 percent in the second quarter of 2014 compared to the
prior year’s second quarter and case mix, or acuity, increased 1.7
percent in the current quarter compared to the prior year.
2014 Guidance
Today, HCA is updating its guidance ranges for 2014:
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Original 2014 Guidance
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Revised 2014 Guidance
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Revenues
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$35.50 - $36.50 billion
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$36.00 - $36.50 billion
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Adjusted EBITDA
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$6.60 - $6.85 billion
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$7.00 - $7.15 billion
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Adjusted EPS (diluted)
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$3.45 - $3.75
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$4.00 - $4.25
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Capital Expenditures
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Approximately $2.2 billion
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no change
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The revised guidance assumes a benefit to Adjusted EBITDA from the
Patient Protection and Affordable Care Act (Health Reform Law) in 2014
of approximately 2 to 3 percent of Adjusted EBITDA (original guidance
was 1 to 2 percent), and the second quarter Medicaid revenues from the
indigent care component of the Texas Medicaid Waiver Program. Both the
original and revised guidance also include estimated electronic health
record incentive income assumptions in a range of $110-$130 million and
EHR expenses in a range of $110-$130 million. The guidance reflects
estimated increases in share-based compensation expense to approximately
$168 million (original 2014 guidance) and $160 million (revised 2014
guidance), from $113 million in 2013. Guidance excludes the impact of
items, if applicable, that are non-operational in nature including items
such as, but not limited to, gains or losses on sales of facilities and
businesses, gains or losses on early debt retirement and impairments of
long-lived assets. This guidance is also subject to certain risks
including those as set forth below in the Company’s “Forward-Looking
Statements.”
HCA anticipates reporting its complete financial results for the second
quarter of 2014 on, or about, July 29, 2014.
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 and are subject to finalization of the
Company’s second quarter financial and accounting procedures.
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
implementation of the Patient Protection and Affordable Care Act, as
amended by the Health Care and Education Reconciliation Act
(collectively, the “Health Reform Law”), possible delays in or
complications related to implementation of 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) the
effects related to the continued implementation of the sequestration
spending reductions required under the Budget Control Act of 2011 (the
“BCA”), and related legislation extending these reductions, and the
potential for future deficit reduction legislation that may alter these
spending reductions, which include cuts to Medicare payments, or create
additional spending reductions, (4) increases in the amount and risk of
collectability 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, 2013 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.
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HCA Holdings, Inc.
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Supplemental Operating Results Summary
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(Dollars in millions)
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Second Quarter
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2014
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2013
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(Preliminary
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Estimates)
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Income before income taxes
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$
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904
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$
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806
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Depreciation and amortization
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454
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425
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Interest expense
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427
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462
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Gains on sales of facilities
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(11
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(4
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Losses on retirement of debt
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226
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---
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Adjusted EBITDA (a)
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$
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2,000
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$
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1,689
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________________
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(a) Adjusted EBITDA should not be considered a measure of
financial performance under generally accepted accounting
principles (“GAAP”). We believe that Adjusted EBITDA is an
important measure that supplements discussions and analysis of our
results of operations. We believe that it is useful to investors
to provide disclosures of our results of operations on the same
basis as that used by management. Management relies upon Adjusted
EBITDA as a primary measure to review and assess operating
performance of its hospital facilities and their management teams.
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Management and investors review both the overall performance (GAAP
income before income taxes) 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 of 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 quarter to quarter, do not directly relate to
the ongoing operations of our health care facilities and
complicate quarterly comparisons of our results of operations and
operations comparisons with other health care companies.
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Adjusted EBITDA is not a measure of financial performance under
GAAP, and should not be considered as an alternative to income
before income taxes as a measure of operating performance or cash
flows from operating, investing and financing activities as a
measure of liquidity. Because Adjusted EBITDA is not a measurement
determined in accordance with GAAP and is susceptible to varying
calculations, Adjusted EBITDA, as presented, may not be comparable
to other similarly titled measures presented by other companies.
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HCA Holdings, Inc.
Investor Contact:
Mark Kimbrough, 615-344-2688
or
Media Contact:
Ed Fishbough, 615-344-2810