Raises 2015 Guidance
HCA Holdings, Inc. (NYSE: HCA) today announced preliminary financial and
operating results for the first quarter ended March 31, 2015. The
financial results are subject to finalization of the Company’s quarterly
financial and accounting procedures.
HCA anticipates revenues for the first quarter of 2015 will be
approximately $9.675 billion compared to $8.832 billion in the first
quarter of 2014. Income before income taxes for the first quarter is
expected to approximate $1.075 billion compared to $680 million in the
prior year period. Net income per diluted share for the first quarter of
2015 is expected to be approximately $1.35 per diluted share compared to
$0.76 for the first quarter of 2014. Adjusted EBITDA for the first
quarter is expected to be approximately $1.960 billion compared to
$1.644 billion in the previous year’s first 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.
“We are very pleased with the results of the first quarter. The majority
of the first quarter performance was driven by continued favorable
volume and payor trends in our core operations,” stated R. Milton
Johnson, Chairman and Chief Executive Officer.
Same facility admissions for the first quarter of 2015 increased 5.1
percent, while same facility equivalent admissions increased 6.8
percent. Same facility emergency room visits increased 11.5 percent from
the prior year’s first quarter.
Same facility revenue per equivalent admission is expected to increase
approximately 1.6 percent in the first quarter of 2015 compared to the
prior year’s first quarter.
2015 Guidance
Today, HCA is updating its guidance ranges for 2015:
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February 2015 Guidance
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Revised 2015 Guidance
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Revenues
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$38.5 - $39.5 billion
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$39.0 - $40.0 billion
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Adjusted EBITDA
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$7.35 - $7.65 billion
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$7.55 - $7.85 billion
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Adjusted EPS (diluted)
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$4.55 - $4.95
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$4.90 - $5.30
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Capital Expenditures
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Approximately $2.4 billion
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unchanged
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The Company’s revised 2015 guidance contains a number of assumptions
that remain unchanged from its February 2015 guidance, including:
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The Company estimates approximately 6 to 7 percent of Adjusted EBITDA
is attributable to the Patient Protection and Affordable Care Act
(Health Reform Law);
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EHR incentive income of $40-$50 million and EHR expenses in a range of
$30-$40 million, as compared to EHR incentive income of $125 million
and EHR expenses of $112 million in 2014;
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An increase in share-based compensation expense to approximately $224
million from $163 million in 2014;
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2015 guidance excludes the impact of items such as, but not limited
to, gains or losses on sales of facilities, losses on retirement of
debt, legal claim costs and impairments of long-lived assets; and
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2015 guidance does not include any anticipated contribution in 2015
from certain items which positively impacted 2014 Adjusted EBITDA,
including: (i) a $142 million increase to Medicaid revenues reflecting
payments in excess of our estimates for the indigent care component of
the Texas Medicaid Waiver Program for the program year ended September
30, 2013, and recorded in the 2nd quarter of 2014, (ii) $70
million less of Medicaid revenues related to the Texas Medicaid Waiver
Program and (iii) $90 million in Medicare revenues recorded in 3Q 2014
in settlement for certain claims denied by Recovery Audit Contractors
(“RAC”).
The Company’s guidance is based on current plans and expectations and is
subject to a number of known and unknown uncertainties and risks,
including those set forth below in the Company’s “Forward-Looking
Statements.”
HCA anticipates reporting its complete financial results for the first
quarter of 2015 on, or about, May 5, 2015.
The Company is scheduled to present Thursday, May 7, 2015, at 10:00 am
(EDT) at the Deutsche Bank Health Care Conference held at The
InterContinental Hotel in Boston, MA. A link to the live audio webcast
is available and copies of the related presentation materials will be
available at the Investor Relations section of the Company’s website, 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 or current facts and are subject to
finalization of the Company’s first 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, court
challenges, 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) the emergence and effects related to infectious diseases, including
Ebola; (16) future divestitures which may result in charges and possible
impairments of long-lived assets, (17) changes in business strategy or
development plans, (18) delays in receiving payments for services
provided, (19) the outcome of pending and any future tax audits,
disputes and litigation associated with our tax positions, (20)
potential adverse impact of known and unknown government investigations,
litigation and other claims that may be made against us, (21) 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 (22) other risk factors described in
our annual report on Form 10-K for the year ended December 31, 2014 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.
Supplemental Operating Results Summary
(Dollars in millions)
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First Quarter
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2015
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2014
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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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1,075
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$
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680
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Depreciation and amortization
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474
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447
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Interest expense
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420
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460
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Gains on sales of facilities
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(9
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(21
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Legal claim costs
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─
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78
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Adjusted EBITDA (a)
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$
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1,960
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$
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1,644
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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.
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
legal claim costs 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.
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.
HCA Holdings, Inc.
Investor Contact:
Mark Kimbrough, 615-344-2688
or
Media Contact:
Ed Fishbough, 615-344-2810