News Details

HCA Holdings, Inc. (NYSE: HCA) today announced financial and operating results for the second quarter ended June 30, 2016.

Key second quarter metrics (all percentage changes compare 2Q 2016 to 2Q 2015 unless noted):

• Revenues increased 4.3 percent to $10.319 billion
• Net income attributable to HCA Holdings, Inc. totaled $658 million, or $1.65 per diluted share
• Adjusted EBITDA totaled $2.052 billion
• Cash flows from operations totaled $1.349 billion
• Same facility equivalent admissions increased 1.6 percent while same facility admissions increased 0.6 percent
• Same facility revenue per equivalent admission increased 2.1 percent

Revenues in the second quarter increased to $10.319 billion, compared to $9.897 billion in the second quarter of 2015. Net income attributable to HCA Holdings, Inc. totaled $658 million, or $1.65 per diluted share, compared to $507 million, or $1.18 per diluted share, in the second quarter of 2015. The Company recognized a $44 million tax benefit, or $0.11 per diluted share, in the second quarter of 2016 related to the early adoption, during the first quarter of 2016, of a new accounting standard which requires the recording of excess tax benefits related to equity award settlements as a component of the provision for income taxes (for prospective periods). Adjusted EBITDA totaled $2.052 billion compared to $2.008 billion in the second quarter of 2015. 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.

The second quarter 2016 results include gains on sales of facilities of $6 million, or $0.01 per diluted share, and legal claim costs of $10 million, or $0.02 per diluted share. Second quarter 2015 results include losses on retirement of debt of $125 million, or $0.18 per diluted share, and losses on sales of facilities of $5 million, or $0.01 per diluted share.

Same facility admissions for the second quarter of 2016 increased 0.6 percent, while same facility equivalent admissions increased 1.6 percent. Same facility emergency room visits for the second quarter of 2016 increased 4.1 percent from the prior year’s second quarter. Same facility inpatient surgeries increased 1.8 percent while same facility outpatient surgeries increased 1.5 percent compared to the second quarter of 2015.

During the second quarter of 2016, salaries and benefits, supplies and other operating expenses totaled $8.282 billion, or 80.2 percent of revenues, compared to $7.917 billion, or 80.0 percent of revenues, in the second quarter of 2015.

Six Months Ended June 30, 2016

Revenues for the six months ended June 30, 2016 totaled $20.579 billion compared to $19.573 billion in the same period of 2015. Net income attributable to HCA Holdings, Inc. was $1.352 billion, or $3.34 per diluted share, compared to $1.098 billion, or $2.54 per diluted share, for the first six months of 2015. Results for the six months ended June 30, 2016 include a $118 million tax benefit, or $0.29 per diluted share, related to the early adoption of a new accounting standard which requires the recording of excess tax benefits related to equity award settlements as a component of the provision for income taxes (for prospective periods). Results for the six months ended June 30, 2016 also include gains on sales of facilities of $5 million and legal claim costs of $22 million, or $0.03 per diluted share. Results for the six months ended June 30, 2015 include gains on sales of facilities of $4 million and losses on retirement of debt of $125 million, or $0.18 per diluted share.

Balance Sheet and Cash Flows from Operations

As of June 30, 2016, HCA Holdings, Inc.’s balance sheet reflected cash and cash equivalents of $691 million, total debt of $31.452 billion, and total assets of $33.205 billion. During the second quarter of 2016, capital expenditures totaled $663 million, excluding acquisitions. Cash flows provided by operating activities in the quarter totaled $1.349 billion compared to $1.057 billion in the second quarter of 2015.

As of June 30, 2016, HCA’s leverage ratio as measured by Total Debt/Adjusted EBITDA was 3.93x, compared to 3.85x as of December 31, 2015.

During the second quarter of 2016, the Company repurchased $1.237 billion, or 15.506 million shares of its common stock and during the six months ended June 30, 2016, has repurchased $1.858 billion, or 24.427 million shares of its common stock. The Company had $746 million remaining under its existing repurchase authorization as of June 30, 2016.

As of June 30, 2016, HCA operated 169 hospitals and 116 freestanding surgery centers.

2016 Guidance

While the Company has experienced solid volume growth in the first half of the year, it is at the lower-end of our expectations for the first six months; therefore, the Company today adjusted its 2016 guidance ranges for the year as follows:

The Company’s 2016 guidance contains a number of assumptions, including:

• EHR incentive income of approximately $12 million compared to EHR incentive income of $47 million in 2015;
• 2016 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, impairments of long-lived assets; and
• Adjusted EPS guidance includes the recorded impact of early adoption of a new accounting standard which requires the recording of excess tax benefits related to equity award settlements as a component of the provision for income taxes for the first two quarters of 2016, but excludes any projection of this impact on the provision for income taxes for the third and fourth quarters of 2016.

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.”

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=1080634 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 or current 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 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 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; (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 (22) other risk factors described in our annual report on Form 10-K for the year ended December 31, 2015 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.

HCA Holdings, Inc.
Investor Contact:
Mark Kimbrough, 615-344-2688
or
Media Contact:
Ed Fishbough, 615-344-2810