HCA Reports Fourth Quarter 2016 Results
Provides 2017 Guidance
This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20170131005379/en/
Key fourth quarter metrics (all percentage changes compare 4Q 2016 to 4Q 2015 unless noted):
- Revenues totaled
$10.641 billion , an increase of 3.8 percent - Net income attributable to
HCA Holdings, Inc. totaled$920 million , or$2.39 per diluted share, compared to$582 million , or$1.40 per diluted share, in the fourth quarter of 2015 - Adjusted EBITDA totaled
$2.206 billion , an increase of 3.6 percent - Cash flows from operating activities totaled
$1.699 billion , compared to$1.558 billion in the prior year’s fourth quarter - Same facility equivalent admissions increased 1.5 percent, while same facility admissions increased 1.6 percent
- Same facility revenue per equivalent admission increased 1.9 percent
Revenues in the fourth quarter totaled
Net income attributable to
The Company reached a settlement agreement with the
Adjusted EBITDA for the fourth quarter of 2016 increased 3.6 percent to
Fourth quarter same facility revenue growth of 3.4 percent (reported revenues grew 3.8 percent) was driven by an increase of 1.5 percent in same facility equivalent admissions and an increase of 1.9 percent in same facility revenue per equivalent admission in the fourth quarter of 2016. Same facility admissions increased 1.6 percent in the fourth quarter of 2016 compared to the fourth quarter of 2015. Emergency room visits increased 1.6 percent in the fourth quarter of 2016, on a same facility basis, compared to the prior year period.
During the fourth quarter of 2016 same facility inpatient surgeries increased 1.4 percent while same facility outpatient surgeries declined 0.6 percent compared to the prior year period.
The Company’s same facility operating expense per equivalent admission increased 2.8 percent from the prior year’s fourth quarter. During the fourth quarter of 2016, salaries and benefits, supplies and other operating expenses totaled
Twelve Months Ended
Revenues for the year ended
Balance Sheet and Cash Flow
As of
As of
2017 Guidance
Today, HCA issued the following estimated guidance for 2017:
2017 |
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Revenues | |
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Adjusted EBITDA | |
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EPS (diluted) | |
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Capital Expenditures | Approximately |
The Company’s 2017 guidance contains a number of assumptions, including:
- 2017 guidance includes 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 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.
- 2017 guidance for EPS (diluted) includes an estimated
$150 million income tax benefit, or$0.40 per diluted share, related to the accounting standard adopted during 2016 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.
Adjusted EBITDA is a non-GAAP financial measure. A table reconciling net income attributable to
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.”
The Company’s 2017 annual stockholders’ meeting will be held in
Earnings Conference Call
HCA will host a conference call for investors at
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 information set forth under “2017 Guidance” as well as other 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 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, 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
All references to “Company” and “HCA” as used throughout this release refer to
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Condensed Consolidated Comprehensive Income Statements | ||||||||||||||||||||
Fourth Quarter | ||||||||||||||||||||
(Dollars in millions, except per share amounts) | ||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||
Amount |
Ratio |
Amount |
Ratio |
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Revenues before provision for doubtful accounts | $ | 11,506 | $ | 11,323 | ||||||||||||||||
Provision for doubtful accounts | 865 | 1,074 | ||||||||||||||||||
Revenues | 10,641 | 100.0 | % | 10,249 | 100.0 | % | ||||||||||||||
Salaries and benefits | 4,764 | 44.8 | 4,606 | 44.9 | ||||||||||||||||
Supplies | 1,802 | 16.9 | 1,686 | 16.4 | ||||||||||||||||
Other operating expenses | 1,881 | 17.7 | 1,835 | 18.0 | ||||||||||||||||
Electronic health record incentive income | (2 | ) | - | (1 | ) | - | ||||||||||||||
Equity in earnings of affiliates | (10 | ) | (0.1 | ) | (8 | ) | (0.1 | ) | ||||||||||||
Depreciation and amortization | 503 | 4.6 | 480 | 4.6 | ||||||||||||||||
Interest expense | 432 | 4.1 | 410 | 4.0 | ||||||||||||||||
Losses (gains) on sales of facilities | (15 | ) | (0.1 | ) | 7 | 0.1 | ||||||||||||||
Losses on retirement of debt | - | - | 10 | 0.1 | ||||||||||||||||
Legal claim costs (benefits) | (279 | ) | (2.6 | ) | 172 | 1.7 | ||||||||||||||
9,076 | 85.3 | 9,197 | 89.7 | |||||||||||||||||
Income before income taxes | 1,565 | 14.7 | 1,052 | 10.3 | ||||||||||||||||
Provision for income taxes | 480 | 4.5 | 314 | 3.1 | ||||||||||||||||
Net income | 1,085 | 10.2 | 738 | 7.2 | ||||||||||||||||
Net income attributable to noncontrolling interests | 165 | 1.6 | 156 | 1.5 | ||||||||||||||||
Net income attributable to |
$ | 920 | 8.6 | $ | 582 | 5.7 | ||||||||||||||
Diluted earnings per share | $ | 2.39 | $ | 1.40 | ||||||||||||||||
Shares used in computing diluted earnings per share (millions) | 384.747 | 415.918 | ||||||||||||||||||
Comprehensive income attributable to |
$ | 923 | $ | 626 |
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Condensed Consolidated Comprehensive Income Statements | ||||||||||||||||||||
For the Years Ended |
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(Dollars in millions, except per share amounts) | ||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||
Amount |
Ratio |
Amount |
Ratio |
|||||||||||||||||
Revenues before provision for doubtful accounts | $ | 44,747 | $ | 43,591 | ||||||||||||||||
Provision for doubtful accounts | 3,257 | 3,913 | ||||||||||||||||||
Revenues | 41,490 | 100.0 | % | 39,678 | 100.0 | % | ||||||||||||||
Salaries and benefits | 18,897 | 45.5 | 18,115 | 45.7 | ||||||||||||||||
Supplies | 6,933 | 16.7 | 6,638 | 16.7 | ||||||||||||||||
Other operating expenses | 7,508 | 18.1 | 7,103 | 17.9 | ||||||||||||||||
Electronic health record incentive income | (12 | ) | - | (47 | ) | (0.1 | ) | |||||||||||||
Equity in earnings of affiliates | (54 | ) | (0.1 | ) | (46 | ) | (0.1 | ) | ||||||||||||
Depreciation and amortization | 1,966 | 4.8 | 1,904 | 4.8 | ||||||||||||||||
Interest expense | 1,707 | 4.1 | 1,665 | 4.2 | ||||||||||||||||
Losses (gains) on sales of facilities | (23 | ) | (0.1 | ) | 5 | - | ||||||||||||||
Losses on retirement of debt | 4 | - | 135 | 0.3 | ||||||||||||||||
Legal claim costs (benefits) | (246 | ) | (0.6 | ) | 249 | 0.6 | ||||||||||||||
36,680 | 88.4 | 35,721 | 90.0 | |||||||||||||||||
Income before income taxes | 4,810 | 11.6 | 3,957 | 10.0 | ||||||||||||||||
Provision for income taxes | 1,378 | 3.3 | 1,261 | 3.2 | ||||||||||||||||
Net income | 3,432 | 8.3 | 2,696 | 6.8 | ||||||||||||||||
Net income attributable to noncontrolling interests | 542 | 1.3 | 567 | 1.4 | ||||||||||||||||
Net income attributable to |
$ | 2,890 | 7.0 | $ | 2,129 | 5.4 | ||||||||||||||
Diluted earnings per share | $ | 7.30 | $ | 4.99 | ||||||||||||||||
Shares used in computing diluted earnings per share (millions) | 395.851 | 426.721 | ||||||||||||||||||
Comprehensive income attributable to |
$ | 2,817 | $ | 2,187 |
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Condensed Consolidated Balance Sheets | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||
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2016 | 2016 | 2015 | ||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 646 | $ | 677 | $ | 741 | ||||||||||
Accounts receivable, less allowance for doubtful accounts of |
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5,826 | 5,503 | 5,889 | |||||||||||||
Inventories | 1,503 | 1,503 | 1,439 | |||||||||||||
Other | 1,111 | 1,160 | 1,163 | |||||||||||||
Total current assets | 9,086 | 8,843 | 9,232 | |||||||||||||
Property and equipment, at cost | 37,055 | 36,449 | 34,614 | |||||||||||||
Accumulated depreciation | (20,703 | ) | (20,574 | ) | (19,600 | ) | ||||||||||
16,352 | 15,875 | 15,014 | ||||||||||||||
Investments of insurance subsidiaries | 336 | 354 | 432 | |||||||||||||
Investments in and advances to affiliates | 206 | 216 | 178 | |||||||||||||
|
6,704 | 6,691 | 6,731 | |||||||||||||
Other | 1,074 | 1,148 | 1,157 | |||||||||||||
$ | 33,758 | $ | 33,127 | $ | 32,744 | |||||||||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 2,318 | $ | 1,950 | $ | 2,170 | ||||||||||
Accrued salaries | 1,265 | 1,241 | 1,233 | |||||||||||||
Other accrued expenses | 2,035 | 1,748 | 1,880 | |||||||||||||
Long-term debt due within one year | 216 | 216 | 233 | |||||||||||||
Total current liabilities | 5,834 | 5,155 | 5,516 | |||||||||||||
Long-term debt, less net debt issuance costs of |
31,160 | 31,225 | 30,255 | |||||||||||||
Professional liability risks | 1,148 | 1,164 | 1,115 | |||||||||||||
Income taxes and other liabilities | 1,249 | 1,746 | 1,904 | |||||||||||||
EQUITY (DEFICIT) | ||||||||||||||||
Stockholders' deficit attributable to |
(7,302 | ) | (7,763 | ) | (7,599 | ) | ||||||||||
Noncontrolling interests | 1,669 | 1,600 | 1,553 | |||||||||||||
Total deficit | (5,633 | ) | (6,163 | ) | (6,046 | ) | ||||||||||
$ | 33,758 | $ | 33,127 | $ | 32,744 |
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Consolidated Statements of Cash Flows | |||||||||||||||
For the Years Ended |
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(Dollars in millions) | |||||||||||||||
2016 | 2015 | ||||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income | $ | 3,432 | $ | 2,696 | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Increase (decrease) in cash from operating assets and liabilities: | |||||||||||||||
Accounts receivable | (3,247 | ) | (4,114 | ) | |||||||||||
Provision for doubtful accounts | 3,257 | 3,913 | |||||||||||||
Accounts receivable, net | 10 | (201 | ) | ||||||||||||
Inventories and other assets | (112 | ) | (314 | ) | |||||||||||
Accounts payable and accrued expenses | 144 | 192 | |||||||||||||
Depreciation and amortization | 1,966 | 1,904 | |||||||||||||
Income taxes | 123 | (160 | ) | ||||||||||||
Losses (gains) on sales of facilities | (23 | ) | 5 | ||||||||||||
Losses on retirement of debt | 4 | 135 | |||||||||||||
Legal claim costs (benefits) | (246 | ) | 149 | ||||||||||||
Amortization of debt issuance costs | 34 | 35 | |||||||||||||
Share-based compensation | 251 | 239 | |||||||||||||
Other | 70 | 54 | |||||||||||||
Net cash provided by operating activities | 5,653 | 4,734 | |||||||||||||
Cash flows from investing activities: | |||||||||||||||
Purchase of property and equipment | (2,760 | ) | (2,375 | ) | |||||||||||
Acquisition of hospitals and health care entities | (576 | ) | (351 | ) | |||||||||||
Disposition of hospitals and health care entities | 26 | 73 | |||||||||||||
Change in investments | 64 | 63 | |||||||||||||
Other | 6 | 7 | |||||||||||||
Net cash used in investing activities | (3,240 | ) | (2,583 | ) | |||||||||||
Cash flows from financing activities: | |||||||||||||||
Issuance of long-term debt | 5,400 | 5,548 | |||||||||||||
Net change in revolving credit facilities | (110 | ) | 150 | ||||||||||||
Repayment of long-term debt | (4,475 | ) | (4,920 | ) | |||||||||||
Distributions to noncontrolling interests | (434 | ) | (495 | ) | |||||||||||
Payment of debt issuance costs | (40 | ) | (50 | ) | |||||||||||
Repurchase of common stock | (2,751 | ) | (2,397 | ) | |||||||||||
Other | (98 | ) | 188 | ||||||||||||
Net cash used in financing activities | (2,508 | ) | (1,976 | ) | |||||||||||
Change in cash and cash equivalents | (95 | ) | 175 | ||||||||||||
Cash and cash equivalents at beginning of period | 741 | 566 | |||||||||||||
Cash and cash equivalents at end of period | $ | 646 | $ | 741 | |||||||||||
Interest payments | $ | 1,666 | $ | 1,650 | |||||||||||
Income tax payments, net | $ | 1,255 | $ | 1,186 |
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Operating Statistics | ||||||||||||||||||||||
For the Years | ||||||||||||||||||||||
Fourth Quarter | Ended |
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2016 |
2015 |
2016 |
2015 |
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Operations: | ||||||||||||||||||||||
Number of Hospitals | 170 | 168 | 170 | 168 | ||||||||||||||||||
Number of Freestanding Outpatient Surgery Centers | 118 | 116 | 118 | 116 | ||||||||||||||||||
Licensed Beds at End of Period | 44,290 | 43,771 | 44,290 | 43,771 | ||||||||||||||||||
Weighted Average Licensed Beds | 44,274 | 43,705 | 44,077 | 43,620 | ||||||||||||||||||
Reported: | ||||||||||||||||||||||
Admissions | 475,200 | 467,300 | 1,891,800 | 1,868,800 | ||||||||||||||||||
% Change |
1.7 | % | 1.2 | % | ||||||||||||||||||
Equivalent Admissions | 801,800 | 787,800 | 3,191,500 | 3,122,700 | ||||||||||||||||||
% Change |
1.8 | % | 2.2 | % | ||||||||||||||||||
Revenue per Equivalent Admission | $ | 13,272 | $ | 13,010 | $ | 13,000 | $ | 12,706 | ||||||||||||||
% Change |
2.0 | % | 2.3 | % | ||||||||||||||||||
Inpatient Revenue per Admission | $ | 13,094 | $ | 12,634 | $ | 12,839 | $ | 12,407 | ||||||||||||||
% Change |
3.6 | % | 3.5 | % | ||||||||||||||||||
|
2,308,900 | 2,283,800 | 9,274,400 | 9,155,700 | ||||||||||||||||||
% Change |
1.1 | % | 1.3 | % | ||||||||||||||||||
Equivalent |
3,895,100 | 3,850,500 | 15,645,900 | 15,299,100 | ||||||||||||||||||
% Change |
1.2 | % | 2.3 | % | ||||||||||||||||||
Inpatient Surgery Cases | 136,400 | 134,000 | 537,300 | 529,900 | ||||||||||||||||||
% Change |
1.8 | % | 1.4 | % | ||||||||||||||||||
Outpatient Surgery Cases | 242,100 | 240,200 | 932,200 | 909,400 | ||||||||||||||||||
% Change |
0.8 | % | 2.5 | % | ||||||||||||||||||
Emergency Room Visits | 2,074,000 | 2,037,700 | 8,378,300 | 8,050,200 | ||||||||||||||||||
% Change |
1.8 | % | 4.1 | % | ||||||||||||||||||
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Outpatient Revenues as a Percentage of Patient Revenues |
39.7 | % | 40.5 | % | 39.5 | % | 39.6 | % | ||||||||||||||
Average Length of Stay | 4.9 | 4.9 | 4.9 | 4.9 | ||||||||||||||||||
Occupancy | 56.7 | % | 56.8 | % | 57.5 | % | 57.5 | % | ||||||||||||||
Same Facility: | ||||||||||||||||||||||
Admissions | 472,100 | 464,700 | 1,880,500 | 1,859,500 | ||||||||||||||||||
% Change |
1.6 | % | 1.1 | % | ||||||||||||||||||
Equivalent Admissions | 793,100 | 781,700 | 3,161,200 | 3,103,500 | ||||||||||||||||||
% Change |
1.5 | % | 1.9 | % | ||||||||||||||||||
Revenue per Equivalent Admission | $ | 13,246 | $ | 13,000 | $ | 12,976 | $ | 12,695 | ||||||||||||||
% Change |
1.9 | % | 2.2 | % | ||||||||||||||||||
Inpatient Revenue per Admission | $ | 13,102 | $ | 12,636 | $ | 12,850 | $ | 12,410 | ||||||||||||||
% Change |
3.7 | % | 3.5 | % | ||||||||||||||||||
Inpatient Surgery Cases | 135,500 | 133,600 | 534,600 | 527,200 | ||||||||||||||||||
% Change |
1.4 | % | 1.4 | % | ||||||||||||||||||
Outpatient Surgery Cases | 235,700 | 237,100 | 912,200 | 901,000 | ||||||||||||||||||
% Change |
-0.6 | % | 1.2 | % | ||||||||||||||||||
Emergency Room Visits | 2,046,000 | 2,013,300 | 8,273,100 | 7,967,800 | ||||||||||||||||||
% Change |
1.6 | % | 3.8 | % |
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Supplemental Non-GAAP Disclosures | ||||||||||||||||||
Operating Results Summary | ||||||||||||||||||
(Dollars in millions, except per share amounts) | ||||||||||||||||||
For the Years | ||||||||||||||||||
Fourth Quarter | Ended |
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2016 |
2015 |
2016 |
2015 |
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Revenues | $ | 10,641 | $ | 10,249 | $ | 41,490 | $ | 39,678 | ||||||||||
Net income attributable to |
$ | 920 | $ | 582 | $ | 2,890 | $ | 2,129 | ||||||||||
Losses (gains) on sales of facilities (net of tax) | (15 | ) | 4 | (19 | ) | 3 | ||||||||||||
Losses on retirement of debt (net of tax) | - | 7 | 2 | 86 | ||||||||||||||
Legal claim costs (benefits) (net of tax) | (176 | ) | 108 | (155 | ) | 157 | ||||||||||||
Net income attributable to |
729 | 701 | 2,718 | 2,375 | ||||||||||||||
Depreciation and amortization | 503 | 480 | 1,966 | 1,904 | ||||||||||||||
Interest expense | 432 | 410 | 1,707 | 1,665 | ||||||||||||||
Provision for income taxes | 377 | 384 | 1,285 | 1,404 | ||||||||||||||
Net income attributable to noncontrolling interests | 165 | 156 | 542 | 567 | ||||||||||||||
Adjusted EBITDA (a) | $ | 2,206 | $ | 2,131 | $ | 8,218 | $ | 7,915 | ||||||||||
Diluted earnings per share: | ||||||||||||||||||
Net income attributable to |
$ | 2.39 | $ | 1.40 | $ | 7.30 | $ | 4.99 | ||||||||||
Losses (gains) on sales of facilities | (0.04 | ) | 0.01 | (0.05 | ) | - | ||||||||||||
Losses on retirement of debt | - | 0.02 | 0.01 | 0.20 | ||||||||||||||
Legal claim costs (benefits) | (0.46 | ) | 0.26 | (0.39 | ) | 0.37 | ||||||||||||
Net income attributable to |
$ | 1.89 | $ | 1.69 | $ | 6.87 | $ | 5.56 | ||||||||||
Shares used in computing diluted earnings per share (millions) | 384.747 | 415.918 | 395.851 | 426.721 | ||||||||||||||
(a) | Net income attributable to |
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Management and investors review both the overall performance (including net income attributable to |
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Net income attributable to |
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Supplemental Non-GAAP Disclosures | ||||||||
2017 Operating Results Forecast | ||||||||
(Dollars in millions, except per share amounts) | ||||||||
For the Year Ending | ||||||||
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Low |
High |
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Revenues | $ | 43,000 | $ | 44,000 | ||||
Net income attributable to |
$ | 2,710 | $ | 2,860 | ||||
Depreciation and amortization | 2,030 | 2,070 | ||||||
Interest expense | 1,690 | 1,730 | ||||||
Provision for income taxes | 1,430 | 1,490 | ||||||
Net income attributable to noncontrolling interests | 540 | 550 | ||||||
Adjusted EBITDA (a) (b) | $ | 8,400 | $ | 8,700 | ||||
Diluted earnings per share: | ||||||||
Net income attributable to |
$ | 7.20 | $ | 7.60 | ||||
Shares used in computing diluted earnings per share (millions) | 376.500 | 376.500 | ||||||
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 since these items are indeterminable at the time the 2017 forecast is provided. | |||||||
(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 |
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Adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered as an alternative to net income attributable to |
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