HCA Healthcare, Inc. (NYSE: HCA) today announced preliminary financial
and operating results for its third quarter ended September 30, 2017.
The financial results are subject to finalization of the Company’s
quarterly financial and accounting procedures.
HCA anticipates revenues for the third quarter of 2017 to approximate
$10.696 billion compared to $10.270 billion in the third quarter of
2016. Net income attributable to HCA Healthcare, Inc. for the third
quarter is expected to approximate $426 million, or $1.15 per diluted
share, compared to $618 million, or $1.59 per diluted share, in the
third quarter of 2016. Results for the third quarter of 2017 include
losses on retirement of debt of $39 million, or $0.07 per diluted share.
Adjusted EBITDA for the third quarter of 2017 is expected to approximate
$1.776 billion compared to $1.957 billion in the previous year’s third
quarter. Adjusted EBITDA is a non-GAAP financial measure. A table
reconciling expected net income attributable to HCA Healthcare, Inc. to
expected Adjusted EBITDA is included in this release.
During the third quarter of 2017, the Company incurred additional
expenses and experienced losses of revenues estimated at approximately
$140 million, or $0.24 per diluted share, associated with hurricanes
Harvey and Irma’s impact on our Corpus Christi, Houston, Florida,
Georgia and South Carolina facilities. This amount is prior to any
insurance recoveries which the Company may receive.
Also, results for the third quarter of 2017 include a negative impact to
operating results related to the Texas Medicaid Waiver program of
approximately $50 million, or $0.08 per diluted share. This reflects
final settlement amounts related to the program year ended September 30,
2017.
Same facility admissions for the third quarter of 2017 increased 0.6
percent, while same facility equivalent admissions increased 0.3
percent, when compared to the third quarter of 2016. Same facility
emergency room visits for the third quarter of 2017 increased 0.3
percent from the prior year’s third quarter. The Company estimates that
hurricanes had unfavorable impacts of 30 basis points on same facility
admissions growth, 80 basis points on same facility equivalent
admissions growth and 30 basis points on same facility emergency visits
growth during the third quarter.
Same facility revenue per equivalent admission is expected to increase
approximately 2.0 percent in the third quarter of 2017 compared to the
prior year’s third quarter.
The financial impact of the hurricanes and the Texas Medicaid Waiver
program were not reflected in our previous guidance. The Company’s 2017
guidance ranges for the year have been updated from our July 25, 2017
second quarter release and are as follows:
|
|
|
|
|
|
|
2017 Updated Guidance Ranges
|
Revenues
|
|
|
|
|
|
|
$43.0 to $44.0 billion
|
Adjusted EBITDA
|
|
|
|
|
|
|
$8.00 to $8.15 billion
|
EPS (diluted)
|
|
|
|
|
|
|
$6.45 to $6.70 per diluted share
|
Capital Expenditures
|
|
|
|
|
|
|
Approximately $3.0 billion
|
|
|
|
|
|
|
|
|
The Company’s 2017 updated guidance contains a number of assumptions,
including:
-
2017 guidance for EPS (diluted) includes an estimated $90 million
income tax benefit, or $0.24 per diluted share, related to the
accounting standard which requires the recording of excess tax
benefits related to employee equity award settlements as a component
of the provision for income taxes. The timing and amounts related to
employee equity award settlements are difficult to project and may
vary from this estimate.
-
2017 guidance includes expected full-year earnings for the Company’s
Oklahoma facilities which are under agreement to be sold. The Company
cannot at this time estimate a closing date.
-
2017 guidance includes the impact of acquisitions completed as of
September 30, 2017.
-
2017 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.
Adjusted EBITDA is a non-GAAP financial measure. A table reconciling net
income attributable to HCA Healthcare, Inc. to Adjusted EBITDA is
included in this release.
The Company’s updated 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 and operating results
for the third quarter of 2017 on, or about, October 31, 2017.
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 the Company’s expected
results for the third quarter of 2017, the Company’s financial guidance
for the year ending December 31, 2017, as well as other statements that
do not relate solely to historical or current facts, and are subject to
finalization of the Company’s third 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 impact of the
Patient Protection and Affordable Care Act, as amended by the Health
Care and Education Reconciliation Act (collectively, the “Health Reform
Law”), including the effects of any repeal of, or changes to, the Health
Reform Law or changes to its implementation, the possible enactment of
additional federal or state health care reforms and possible changes to
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) the impact of potential cybersecurity
incidents or security breaches, (22) our ongoing ability to demonstrate
meaningful use of certified electronic health record technology, and
(23) other risk factors described in our annual report on Form 10-K for
the year ended December 31, 2016 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 Healthcare, Inc. and its affiliates.
|
HCA Healthcare, Inc.
|
Supplemental Non-GAAP Disclosures
|
Operating Results Summary
|
(Dollars in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Third Quarter
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
Revenues
|
|
|
$10,696
|
|
|
|
$10,270
|
|
|
|
|
|
|
|
|
Net income attributable to HCA Healthcare, Inc.
|
|
|
$426
|
|
|
|
$618
|
|
Gains on sales of facilities (net of tax)
|
|
|
(4
|
)
|
|
|
(2
|
)
|
Losses on retirement of debt (net of tax)
|
|
|
25
|
|
|
|
2
|
|
Legal claim costs (net of tax)
|
|
|
-
|
|
|
|
7
|
|
Net income attributable to HCA Healthcare, Inc., excluding gains
on sales of facilities, losses on retirement of debt and legal
claim costs (a)
|
|
|
447
|
|
|
|
625
|
|
Depreciation and amortization
|
|
|
539
|
|
|
|
495
|
|
Interest expense
|
|
|
427
|
|
|
|
432
|
|
Provision for income taxes
|
|
|
259
|
|
|
|
278
|
|
Net income attributable to noncontrolling interests
|
|
|
104
|
|
|
|
127
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (a)
|
|
|
$1,776
|
|
|
|
$1,957
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin (a)
|
|
|
16.6
|
%
|
|
|
19.1
|
%
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
Net income attributable to HCA Healthcare, Inc.
|
|
|
$1.15
|
|
|
|
$1.59
|
|
Gains on sales of facilities
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
Losses on retirement of debt
|
|
|
0.07
|
|
|
|
0.01
|
|
Legal claim costs
|
|
|
-
|
|
|
|
0.02
|
|
|
|
|
|
|
|
|
Net income attributable to HCA Healthcare, Inc., excluding gains
on sales of facilities, losses on retirement of debt and legal
claim costs(a)
|
|
|
$1.21
|
|
|
|
$1.61
|
|
|
|
|
|
|
|
|
Shares used in computing diluted earnings per share (millions)
|
|
|
369.834
|
|
|
|
389.592
|
|
|
|
|
|
|
|
|
The Company’s forecasted operating results are based on current
expectations and are subject to finalization of the Company’s
third quarter financial and accounting procedures.
|
|
|
|
|
|
|
____________________
|
|
|
|
|
|
|
(a)
|
|
Net income attributable to HCA Healthcare, Inc., excluding gains
on sales of facilities, losses on retirement of debt and legal
claim costs, 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 Healthcare, Inc., excluding gains on sales of facilities,
losses on retirement of debt and legal claim costs, 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 Healthcare, Inc., excluding gains on
sales of facilities, losses on retirement of debt and legal claim
costs, and Adjusted EBITDA as the primary measures to review and
assess operating performance of its health care facilities and
their management teams.
|
|
|
|
|
|
Management and investors review both the overall performance
(including net income attributable to HCA Healthcare, Inc.,
excluding gains on sales of facilities, losses on retirement of debt
and legal claim costs, and GAAP net income attributable to HCA
Healthcare, 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, losses on retirement of debt and legal claim costs 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 Healthcare, Inc., excluding gains on
sales of facilities, losses on retirement of debt and legal claim
costs, and Adjusted EBITDA are not measures of financial performance
under GAAP, and should not be considered as alternatives to net
income attributable to HCA Healthcare, 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 Healthcare, Inc., excluding gains on sales of
facilities, losses on retirement of debt and legal claim costs, and
Adjusted EBITDA are not measurements determined in accordance with
GAAP and are susceptible to varying calculations, net income
attributable to HCA Healthcare, Inc., excluding gains on sales of
facilities, losses on retirement of debt and legal claim costs, and
Adjusted EBITDA, as presented, may not be comparable to other
similarly titled measures presented by other companies.
|
|
|
|
|
HCA Healthcare, Inc.
|
Supplemental Non-GAAP Disclosures
|
2017 Operating Results Forecast
|
(Dollars in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
For the Year Ending
|
|
|
|
December 31, 2017
|
|
|
|
Low
|
|
|
High
|
|
|
|
|
|
|
|
Revenues
|
|
|
$43,000
|
|
|
$44,000
|
|
|
|
|
|
|
|
Net income attributable to HCA Healthcare, Inc. (a)
|
|
|
$2,400
|
|
|
$2,495
|
Depreciation and amortization
|
|
|
2,110
|
|
|
2,120
|
Interest expense
|
|
|
1,690
|
|
|
1,700
|
Provision for income taxes
|
|
|
1,290
|
|
|
1,325
|
Net income attributable to noncontrolling interests
|
|
|
510
|
|
|
510
|
|
|
|
|
|
|
|
Adjusted EBITDA (a) (b)
|
|
|
$8,000
|
|
|
$8,150
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
Net income attributable to HCA Healthcare, Inc.
|
|
|
$6.45
|
|
|
$6.70
|
|
|
|
|
|
|
|
Shares used in computing diluted earnings per share (millions)
|
|
|
372.400
|
|
|
372.400
|
|
|
|
|
|
|
|
The Company’s forecasted guidance range is based on current plans
and expectations and is subject to a number of known and unknown
uncertainties and risks.
|
____________________
|
(a)
|
|
The Company does not forecast the impact of items such as, but not
limited to, losses (gains) on sales of facilities, losses on
retirement of debt, legal claim costs (benefits) and impairments
of long-lived assets, because the Company does not believe that it
can forecast these items with sufficient accuracy.
|
|
|
|
(b)
|
|
Adjusted EBITDA should not be considered a measure of financial
performance under generally accepted accounting principles
(“GAAP”). We believe Adjusted EBITDA is an important measure that
supplements 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 Adjusted EBITDA as a primary measure to
review and assess operating performance of its health care
facilities and their management teams.
|
|
|
|
|
|
Management and investors review both the overall performance
(including net income attributable to HCA Healthcare, 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.
|
|
|
|
|
|
Adjusted EBITDA is not a measure of financial performance under GAAP
and should not be considered as an alternative to net income
attributable to HCA Healthcare, Inc. 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 Healthcare, Inc.
Investor Contact:
Mark Kimbrough, 615-344-2688
or
Media Contact:
Ed Fishbough, 615-344-2810