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Press release from Business Wire

HCA Reports Second Quarter 2012 Results

<p class='bwalignc'> <b>Cash Flows from Operations Increase to $1.460 Billion</b> </p>

Monday, August 06, 2012

HCA Reports Second Quarter 2012 Results07:03 EDT Monday, August 06, 2012 NASHVILLE, Tenn. (Business Wire) -- HCA Holdings, Inc. (NYSE: HCA) today announced financial and operating results for the second quarter ended June 30, 2012. Key second quarter metrics (all percentage changes compare 2Q 2012 to 2Q 2011 unless noted): Revenues increased 11.9 percent to $8.112 billion Net income attributable to HCA Holdings, Inc. totaled $391 million, or $0.85 per diluted share Adjusted EBITDA increased 10.5 percent to $1.569 billion Cash flows from operations increased 95 percent to $1.460 billion Same facility equivalent admissions increased 3.9 percent while same facility admissions increased 2.5 percent Same facility revenue per equivalent admission declined 0.1 percent Revenue growth in the second quarter was once again driven by increased patient volume and the consolidation of our HealthONE venture, which was accounted for using the equity method for periods prior to November 2011. Revenue in the second quarter of 2012 increased to $8.112 billion, from $7.249 billion in the second quarter of 2011. On a same facility basis, revenues in the second quarter of 2012 increased 3.8 percent to $7.442 billion. Same facility equivalent admissions increased 3.9 percent in the second quarter of 2012 compared to the prior year period, while same facility admissions increased 2.5 percent. Emergency room visits increased 8.8 percent in the second quarter of 2012, on a same facility basis, compared to the prior year period. Net income attributable to HCA Holdings, Inc. totaled $391 million, or $0.85 per diluted share, compared to $229 million, or $0.43 per diluted share, in the second quarter of 2011. Results for the second quarter of 2011 include losses on retirement of debt of $75 million, or $0.08 per diluted share. Adjusted EBITDA increased to $1.569 billion compared to $1.420 billion in the second quarter of 2011. Adjusted EBITDA is a non-GAAP financial measure. Tables providing supplemental information on Adjusted EBITDA and reconciling net income attributable to HCA Holdings, Inc. to Adjusted EBITDA are included in this release. During the second quarter of 2012, salaries and benefits, supplies and other operating expenses totaled $6.622 billion, or 81.7 percent of revenues, compared to $5.941 billion, or 81.9 percent of revenues, in the second quarter of 2011. Six Months Ended June 30, 2012 Revenues for the six months ended June 30, 2012 totaled $16.517 billion compared to $14.655 billion in the same period of 2011. Net income attributable to HCA Holdings, Inc. was $931 million, or $2.03 per diluted share, compared to $469 million, or $0.94 per diluted share, for the first six months of 2011. Results for the six months ended June 30, 2012 include net favorable Medicare adjustments which increased revenues by $188 million, Adjusted EBITDA by $170 million and diluted earnings per share by $0.22. Results for the six months ended June 30, 2011 include losses on retirement of debt of $75 million, or $0.09 per diluted share, and a charge for the termination of a management agreement of $181 million, or $0.30 per diluted share. Balance Sheet and Cash Flows from Operations As of June 30, 2012, HCA Holdings, Inc.'s balance sheet reflected cash and cash equivalents of $518 million, total debt of $27.041 billion and total assets of $27.132 billion. Total debt outstanding decreased by $861 million from the first quarter of 2012. During the second quarter of 2012, capital expenditures totaled $449 million, excluding acquisitions. Net cash provided by operating activities in the second quarter of 2012 totaled $1.460 billion compared to $748 million in the prior year's second quarter. The improvement in cash flows from operating activities was primarily due to increased net income and favorable changes in operating assets and liabilities during the quarter, including our receipt of payment on the first quarter 2012 rural floor Medicare settlement and a reduction of interest payments. As of June 30, 2012, HCA operated 163 hospitals and 110 freestanding surgery centers. Guidance HCA also is affirming its previously issued guidance for the year ending December 31, 2012.     2012 Guidance   Revenues (1) $32 to $33 billion Adjusted EBITDA (2) $6.37 to $6.62 billion Adjusted EPS (diluted) (2) (3) $3.57 to $3.77 (1)   Revenues are net of the provision for doubtful accounts (2) Adjusted EBITDA and Adjusted EPS (diluted) are non-GAAP measures. (3) Adjusted EPS (diluted) excludes non-operational items, such as (but not limited to), gains or losses on sales of facilities, gain on acquisition of controlling interest in equity investments, impairments of long-lived assets, losses on retirement of debt and termination of management agreement Assumptions: This guidance range excludes the impact of items, if applicable, that are non-operational in nature. The guidance includes estimated electronic health record (EHR) incentive income assumptions in a range of $325-$350 million and EHR expenses in a range of $90-$115 million (most recent expense range was $125-$150 million). It is also subject to certain conditions including those as set forth below in the Company's “Cautionary Statement about Preliminary Results and Other Forward-Looking Information”. Earnings Conference Call HCA will host a conference call for investors at 8:00 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=1007615 or through the Company's Investor Relations web page, www.hcahealthcare.com. Cautionary Statement about Preliminary Results and Other Forward-Looking Information This press release contains forward-looking statements based on current management expectations. Those forward-looking statements include statements regarding estimated EHR incentive income and related EHR operating expenses and all other statements that do not relate solely to historical or current facts. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those expressed in any forward-looking statements. 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 enactment and implementation of the Budget Control Act of 2011 and the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, 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) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (4) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services, (5) 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, (6) the highly competitive nature of the health care business, (7) 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, (8) the efforts of insurers, health care providers and others to contain health care costs, (9) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures, (10) increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel, (11) the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities, (12) changes in accounting practices, (13) changes in general economic conditions nationally and regionally in our markets, (14) future divestitures which may result in charges and possible impairments of long-lived assets, (15) changes in business strategy or development plans, (16) delays in receiving payments for services provided, (17) the outcome of pending and any future tax audits, appeals and litigation associated with our tax positions, (18) potential adverse impact of known and unknown government investigations, litigation and other claims that may be made against us, (19) 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 (20) other risk factors described in our annual report on Form 10-K for the year ended December 31, 2011 and 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.Condensed Consolidated Comprehensive Income StatementsSecond Quarter(Dollars in millions, except per share amounts)             2012   2011   AmountRatioAmountRatio   Revenues before provision for doubtful accounts $9,153 $8,024 Provision for doubtful accounts 1,041   775   Revenues 8,112100.0% 7,249 100.0 %   Salaries and benefits 3,70745.7 3,320 45.8 Supplies 1,42217.5 1,295 17.9 Other operating expenses 1,49318.5 1,326 18.2 Electronic health record incentive income (70)(0.9) (39 ) (0.5 ) Equity in earnings of affiliates (9)(0.1) (73 ) (1.0 ) Depreciation and amortization 4205.2 358 5.0 Interest expense 4485.5 520 7.2 Losses on sales of facilities 2- - - Losses on retirement of debt -     -   75     1.0     7,413     91.4   6,782     93.6     Income before income taxes 6998.6 467 6.4   Provision for income taxes 214     2.6   147     2.0     Net income 4856.0 320 4.4   Net income attributable to noncontrolling interests 94     1.2   91     1.2     Net income attributable to HCA Holdings, Inc. $391     4.8   $229     3.2     Diluted earnings per share $0.85 $0.43   Shares used in computing diluted earnings per share (000) 458,621 538,557   Comprehensive income attributable to HCA Holdings, Inc. $353   $234     HCA Holdings, Inc.Condensed Consolidated Comprehensive Income StatementsFor the Six Months Ended June 30, 2012 and 2011(Dollars in millions, except per share amounts)             2012 2011 AmountRatioAmountRatio   Revenues before provision for doubtful accounts $18,352 $16,079 Provision for doubtful accounts 1,835   1,424   Revenues 16,517100.0% 14,655 100.0 %   Salaries and benefits 7,44345.1 6,615 45.1 Supplies 2,84117.2 2,570 17.5 Other operating expenses 2,98618.1 2,648 18.2 Electronic health record incentive income (125)(0.8) (39 ) (0.3 ) Equity in earnings of affiliates (20)(0.1) (149 ) (1.0 ) Depreciation and amortization 8375.0 716 4.9 Interest expense 8905.4 1,053 7.2 Losses on sales of facilities 3- 1 - Losses on retirement of debt -- 75 0.5 Termination of management agreement -     -   181     1.2     14,855     89.9   13,671     93.3     Income before income taxes 1,66210.1 984 6.7   Provision for income taxes 538     3.3   330     2.2     Net income 1,1246.8 654 4.5   Net income attributable to noncontrolling interests 193     1.2   185     1.3     Net income attributable to HCA Holdings, Inc. $931     5.6   $469     3.2     Diluted earnings per share $2.03 $0.94   Shares used in computing diluted earnings per share (000) 458,467 500,463   Comprehensive income attributable to HCA Holdings, Inc. $922   $558     HCA Holdings, Inc.Supplemental Non-GAAP DisclosuresOperating Results Summary(Dollars in millions, except per share amounts)           For the Six MonthsSecond QuarterEnded June 30,2012201120122011   Revenues $8,112 $7,249 $16,517 $14,655   Net income attributable to HCA Holdings, Inc. $391 $229 $931 $469 Losses on sales of facilities (net of tax) 1 1 2 3 Losses on retirement of debt (net of tax) - 47 - 47 Termination of management agreement (net of tax) - - - 149 Net income attributable to HCA Holdings, Inc., excluding losses on sales of facilities, losses on retirement of debt and termination of management agreement (a) 392 277 933 668 Depreciation and amortization 420 358 837 716 Interest expense 448 520 890 1,053 Provision for income taxes 215 174 539 388 Net income attributable to noncontrolling interests 94 91 193 185   Adjusted EBITDA (a) $1,569 $1,420 $3,392 $3,010   Diluted earnings per share: Net income attributable to HCA Holdings, Inc. $0.85 $0.43 $2.03 $0.94 Losses on sales of facilities - - - 0.01 Losses on retirement of debt - 0.08 - 0.09 Termination of management agreement - - - 0.30 Net income attributable to HCA Holdings, Inc., excluding losses on sales of facilities, losses on retirement of debt and termination of management agreement (a) $0.85 $0.51 $2.03 $1.34   Shares used in computing diluted earnings per share (000) 458,621 538,557 458,467 500,463   ____________   (a) Net income attributable to HCA Holdings, Inc., excluding losses on sales of facilities, 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 losses on sales of facilities, 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 losses on sales of facilities, 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 losses on sales of facilities, 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 losses 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 losses on sales of facilities, 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 losses on sales of facilities, 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 losses on sales of facilities, 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)           June 30,March 31,December 31,201220122011   ASSETS Current assets: Cash and cash equivalents $518 $471 $373 Accounts receivable, net 4,485 4,878 4,533 Inventories 1,055 1,046 1,054 Deferred income taxes 323 226 594 Other 756   661   679   Total current assets 7,137 7,282 7,233   Property and equipment, at cost 28,742 28,354 28,075 Accumulated depreciation (15,896 ) (15,567 ) (15,241 ) 12,846 12,787 12,834   Investments of insurance subsidiaries 495 536 548 Investments in and advances to affiliates 102 108 101 Goodwill and other intangible assets 5,431 5,398 5,251 Deferred loan costs 281 292 290 Other 840   736   641     $27,132   $27,139   $26,898         LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $1,517 $1,412 $1,597 Accrued salaries 970 909 965 Other accrued expenses 1,651 1,453 1,585 Long-term debt due within one year 1,309   1,841   1,407   Total current liabilities 5,447 5,615 5,554   Long-term debt 25,732 26,061 25,645 Professional liability risks 1,039 1,030 993 Income taxes and other liabilities 1,857 1,757 1,720   EQUITY (DEFICIT) Stockholders' deficit attributable to HCA Holdings, Inc. (8,243 ) (8,613 ) (8,258 ) Noncontrolling interests 1,300   1,289   1,244   Total deficit (6,943 ) (7,324 ) (7,014 ) $27,132   $27,139   $26,898     HCA Holdings, Inc.Condensed Consolidated Statements of Cash FlowsFor the Six Months Ended June 30, 2012 and 2011(Dollars in millions)         2012 2011   Cash flows from operating activities: Net income $1,124 $654 Adjustments to reconcile net income to net cash provided by operating activities: Changes in operating assets and liabilities (1,927) (1,576 ) Provision for doubtful accounts 1,835 1,424 Depreciation and amortization 837 716 Income taxes 326 317 Losses sales of facilities 3 1 Losses on retirement of debt - 75 Amortization of deferred loan costs 29 39 Share-based compensation 23 16 Other 7   -     Net cash provided by operating activities 2,257   1,666       Cash flows from investing activities: Purchase of property and equipment (784) (776 ) Acquisition of hospitals and health care entities (139) (168 ) Disposition of hospitals and health care entities 6 54 Change in investments 35 76 Other (4) 2     Net cash used in investing activities (886) (812 )     Cash flows from financing activities: Issuance of long-term debt 1,350 - Net change in revolving credit facilities (820) (1,524 ) Repayment of long-term debt (608) (1,508 ) Distributions to noncontrolling interests (191) (185 ) Payment of debt issuance costs (19) (12 ) Issuance of common stock - 2,506 Distributions to stockholders (982) (30 ) Income tax benefits 71 49 Other (27) (22 )   Net cash used in financing activities (1,226) (726 )     Change in cash and cash equivalents 145 128 Cash and cash equivalents at beginning of period 373   411       Cash and cash equivalents at end of period $518   $539       Interest payments $854 $1,043 Income tax payments (refunds), net $141 $(36 )   HCA Holdings, Inc.Operating Statistics               For the Six MonthsSecond QuarterEnded June 30,2012201120122011   Operations: Number of Hospitals 163 157 163 157 Number of Freestanding Outpatient Surgery Centers 110 98 110 98 Licensed Beds at End of Period 41,817 39,472 41,817 39,472 Weighted Average Licensed Beds 41,789 39,356 41,765 39,209   Reported: Admissions 428,200 397,500 871,500 804,400     % Change 7.7%8.3% Equivalent Admissions 700,800 638,900 1,411,900 1,277,300     % Change 9.7%10.5% Revenue per Equivalent Admission $11,576 $ 11,346 $11,699 $ 11,473     % Change 2.0%2.0% Inpatient Revenue per Admission $11,363 $ 11,252 $11,566 $ 11,360     % Change 1.0%1.8%   Patient Days 2,012,300 1,889,600 4,131,200 3,869,800    % Change 6.5%6.8% Equivalent Patient Days 3,293,800 3,038,300 6,692,500 6,145,200     % Change 8.4%8.9%   Inpatient Surgery Cases 126,700 120,200 255,000 239,900     % Change 5.5%6.3% Outpatient Surgery Cases 219,800 199,100 437,300 392,100     % Change 10.4%11.5%   Emergency Room Visits 1,714,200 1,512,000 3,402,600 3,039,600     % Change 13.4%11.9%   Outpatient Revenues as a Percentage of Patient Revenues 38.8% 37.1% 37.8% 36.5%   Average Length of Stay 4.7 4.8 4.7 4.8   Occupancy 52.9% 52.8% 54.3% 54.5% Equivalent Occupancy 86.7% 84.8% 88.0% 86.5%   Same Facility: Admissions 403,700 393,900 822,600 799,800     % Change 2.5%2.9% Equivalent Admissions 656,500 631,800 1,322,700 1,267,600     % Change 3.9%4.4% Revenue per Equivalent Admission $11,336 $ 11,343 $11,473 $ 11,459     % Change -0.1%0.1% Inpatient Revenue per Admission $11,221 $ 11,255 $11,413 $ 11,364     % Change -0.3%0.4%   Inpatient Surgery Cases 118,500 119,300 238,700 237,700     % Change -0.6%0.4% Outpatient Surgery Cases 196,100 195,500 391,600 386,100     % Change 0.3%1.4%   Emergency Room Visits 1,622,100 1,490,500 3,215,800 3,003,000     % Change 8.8%7.1%   Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50367004&lang=en HCA Holdings, Inc.Investor Contact:Mark Kimbrough, 615-344-2688orMedia Contact:Ed Fishbough, 615-344-2810