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HCA Reports Fourth Quarter and Year End 2009 Results

Thursday, February 18, 2010 General News J E 4
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NASHVILLE, Tenn., Feb. 18 /PRNewswire/ -- HCA Inc. today announced financial and operating results for its fourth quarter and fiscal year ended December 31, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050825/CLTH069LOGO )

Fourth Quarter Summary:

  • Revenues increased 4.7 percent to $7.605 billion from $7.265 billion in the fourth quarter of 2008.
  • Net income attributable to HCA Inc. totaled $216 million, compared to $276 million in the prior year's fourth quarter.
  • Adjusted EBITDA totaled $1.343 billion, compared to $1.237 billion in the fourth quarter of 2008.
  • Provision for doubtful accounts totaled $693 million, compared to $889 million in the prior year.
  • Charity care and uninsured discounts totaled $1.499 billion, compared to $1.007 billion in the fourth quarter of 2008.
  • Interest expense was flat at $500 million compared to the prior year's fourth quarter.
  • Same facility equivalent admissions and same facility admissions increased 2.6 percent and 1.2 percent, respectively, in the fourth quarter compared to the same period last year.
  • Same facility revenue per equivalent admission increased 1.9 percent. Revenue per equivalent patient day, on a same facility basis, increased 3.3 percent.
  • Total surgeries, on a same facility basis, declined 0.1 percent from the prior year's fourth quarter.
  • Same facility emergency department visits increased 9.1% compared to the fourth quarter of 2008.

Fourth quarter of 2009 performance was driven by solid inpatient, outpatient and emergency department volumes. HCA's revenues for the fourth quarter totaled $7.605 billion, compared to $7.265 billion in the fourth quarter of 2008.  Net income attributable to HCA Inc. for the fourth quarter of 2009 totaled $216 million, compared to $276 million in the prior year's fourth quarter. Income before income taxes for the fourth quarter of 2009 was $451 million, compared to $379 million in the fourth of 2008.  Adjusted EBITDA in the quarter totaled $1.343 billion, compared to $1.237 billion in the previous year's fourth quarter.  A table describing adjusted EBITDA and reconciling net income attributable to HCA Inc. to adjusted EBITDA is included in this release. Results for the fourth quarter of 2009 include impairments of long-lived assets of $27 million and losses on sales of facilities of $7 million. Fourth quarter 2008 results include impairments of long-lived assets of $11 million and gains on sales of facilities of $7 million.  The provision for income taxes was $112 million higher for the fourth quarter of 2009 ($147 million) than for the fourth quarter of 2008 ($35 million) due to the benefit recorded in the fourth quarter of 2008 related to the favorable revision to the proposed disallowance of certain prior period expenses and related interest.

The provision for doubtful accounts decreased to $693 million, or 9.1 percent of revenues, in the fourth quarter of 2009 from $889 million, or 12.2 percent of revenues, in the fourth quarter of 2008.  The reduction in our provision for doubtful accounts was primarily attributable to an increase in charity care and uninsured discounts which totaled $1.499 billion in the fourth quarter of 2009 compared to $1.007 billion in the fourth quarter of 2008.  The sum of the provision for doubtful accounts, uninsured discounts and charity care, as a percentage of the sum of net revenues, uninsured discounts and charity care was 24.1 percent for the fourth quarter of 2009 compared to 22.9 percent for the fourth quarter of 2008.  Same facility uninsured admissions increased 0.2 percent in the fourth quarter of 2009 compared to the prior year's fourth quarter.  Same facility uninsured admissions comprised 6.4 percent of total admissions in the fourth quarter of 2009 compared to 6.5 percent in the fourth quarter of 2008.

During the fourth quarter of 2009, salaries and benefits, supply expense and other operating expenses totaled $5.633 billion compared to $5.192 billion in the fourth quarter of 2008.  These expenses, as a percent of revenues, increased 2.5 percent in the fourth quarter of 2009 compared to the fourth quarter of 2008.   This increase was primarily due to the impact of the increased revenue reductions for uninsured discounts and charity care which reduced the Company's rate of net revenue growth in the quarter.

Same facility admissions increased 1.2 percent and same facility equivalent admissions increased 2.6 percent in the fourth quarter of 2009 compared to the prior year's fourth quarter.  Same facility inpatient surgeries declined 0.3 percent and same facility outpatient surgeries declined 0.1 percent in the fourth quarter.  Same facility revenue per equivalent admission increased 1.9 percent in the fourth quarter of 2009 compared to the fourth quarter of 2008.

Revenues for the twelve months ended December 31, 2009 totaled $30.052 billion compared to $28.374 billion in 2008.  Net income attributable to HCA Inc. was $1.054 billion for the year ended December 31, 2009 compared to $673 million in 2008. Adjusted EBITDA totaled $5.472 billion for 2009 compared to $4.574 billion for 2008.    Results for the year ended December 31, 2009 include losses on sales of facilities of $15 million and impairments of long-lived assets of $43 million compared to gains on sales of facilities of $97 million and impairments of long-lived assets of $64 million in 2008.

Cash flows from operating activities increased $757 million to $2.747 billion for the year ended December 31, 2009, from $1.990 billion for the year ended December 31, 2008.  The increase was due primarily to the $473 million increase in net income and $143 million improvement from changes in operating assets and liabilities and the provision for doubtful accounts.

As of December 31, 2009, HCA's balance sheet reflected cash and cash equivalents of $312 million, total debt of $25.670 billion, and total assets of $24.131 billion.  During the fourth quarter of 2009, capital expenditures totaled $402 million, excluding acquisitions.  For the year ended December 31, 2009, capital expenditures totaled $1.317 billion, excluding acquisitions.

During 2009, HCA issued $3.060 billion aggregate principal amount of first and second lien notes.  The net proceeds from the debt issuances were used to repay outstanding indebtedness under the Company's senior secured term loan facilities.

On January 27, 2010, our Board of Directors declared a distribution to the Company's stockholders and holders of vested stock options.  The distribution was $17.50 per share and vested stock option, or approximately $1.750 billion in the aggregate.  The distribution was paid on February 5, 2010 to holders of record on February 1, 2010.  The distribution was funded using funds available under our existing senior secured credit facilities and approximately $100 million of cash on hand.

As of December 31, 2009, HCA operated 163 hospitals and 105 freestanding surgery centers (including eight hospitals and eight freestanding surgery centers operated through equity method joint ventures).

Earnings Conference Call

HCA will host a conference call for investors at 9:00 a.m. Central Time today.  A live audio broadcast of the call via webcast will also be available to investors.  The broadcast will be available on a replay basis beginning this afternoon.  The webcast can be accessed at: http://www.videonewswire.com/event.asp?id=65983  or through the Company's Investor Relations web page, www.hcahealthcare.com.

Cautionary Statement about Results and Other Forward-Looking Information

This press release contains forward-looking statements based on current management expectations. Those forward-looking statements include all statements other than those made solely with respect to historical fact.  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 ability to recognize the benefits of the Recapitalization, (2) the impact of the substantial indebtedness incurred to finance the Recapitalization and the ability to refinance such indebtedness on acceptable terms, (3) the possible enactment of federal or state health care reform and changes in federal, state or local laws or regulations affecting the health care industry, (4) increases, particularly in the current economic downturn, in the amount and risk of collectibility 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 supplemental payments pursuant to upper payment limit ("UPL") programs, that may impact reimbursements to health care providers and insurers, (7) the highly competitive nature of the health care business, (8) changes in revenue mix, including potential declines in the population covered under managed care agreements due to the current economic downturn and the ability to enter into and renew managed care provider agreements on acceptable terms, (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) future divestitures which may result in charges, (16) changes in business strategy or development plans, (17) delays in receiving payments for services provided, (18) the outcome of pending and any future tax audits, appeals and litigation associated with our tax positions, (19) potential liabilities and other claims that may be asserted against us, and (20) other risk factors described in our annual report on Form 10-K 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.

    
    
                                     HCA Inc.
                     Condensed Consolidated Income Statements
                                  Fourth Quarter
                               (Dollars in millions)
    
                                     2009                     2008
                                     ----                     ----
                              Amount      Ratio         Amount     Ratio
                              ------      -----         ------     -----
    
    Revenues                  $7,605      100.0%        $7,265     100.0%
    
    Salaries and benefits      3,078       40.5          2,877      39.6
    Supplies                   1,241       16.3          1,157      15.9
    Other operating expenses   1,314       17.2          1,158      16.0
    Provision for doubtful 
     accounts                    693        9.1            889      12.2
    Equity in earnings of 
     affiliates                  (64)      (0.8)           (53)     (0.7)
    Depreciation and 
     amortization                358        4.7            354       4.9
    Interest expense             500        6.6            500       6.9
    Losses (gains) on sales 
     of facilities                 7        0.1             (7)     (0.1)
    Impairment of long-lived 
     assets                       27        0.4             11       0.1
                                 ---        ---            ---       ---
                               7,154       94.1          6,886      94.8
                               -----       ----          -----      ----
    
    Income before income taxes   451        5.9            379       5.2
    
    Provision for income taxes   147        1.9             35       0.5
                                 ---        ---            ---       ---
    
    Net income                   304        4.0            344       4.7
    
    Net income attributable to 
     noncontrolling interests     88        1.2             68       0.9
                                 ---        ---            ---       ---
      Net income attributable 
       to HCA Inc.              $216        2.8           $276       3.8
                                ====        ===           ====       ===
    
    
    
                                     HCA Inc.
                     Condensed Consolidated Income Statements
                  For the Years Ended December 31, 2009 and 2008
                               (Dollars in millions)
    
                                    2009                      2008
                                    ----                      ----
                              Amount      Ratio         Amount    Ratio
                              ------      -----         ------    -----
    
    Revenues                 $30,052      100.0%       $28,374   100.0%
    
    Salaries and benefits     11,958       39.8         11,440    40.3
    Supplies                   4,868       16.2          4,620    16.3
    Other operating expenses   4,724       15.7          4,554    16.1
    Provision for doubtful 
     accounts                  3,276       10.9          3,409    12.0
    Equity in earnings of 
     affiliates                 (246)      (0.8)          (223)   (0.8)
    Depreciation and 
     amortization              1,425        4.8          1,416     5.0
    Interest expense           1,987        6.6          2,021     7.1
    Losses (gains) on sales 
     of facilities                15          -            (97)   (0.3)
    Impairment of long-lived 
     assets                       43        0.1             64     0.2
    
    
                              28,050       93.3         27,204    95.9
                              ------       ----         ------    ----
    
    Income before income 
     taxes                     2,002        6.7          1,170     4.1
    
    Provision for income 
     taxes                       627        2.1            268     0.9
                                 ---        ---            ---     ---
    
    Net income                 1,375        4.6            902     3.2
    
    Net income attributable 
     to noncontrolling 
     interests                   321        1.1            229     0.8
                                 ---        ---            ---     ---
      Net income attributable 
       to HCA Inc.            $1,054        3.5           $673     2.4
                              ======        ===           ====     ===
    
    
    
                                     HCA Inc.
                      Supplemental Operating Results Summary
                               (Dollars in millions)
    
                                                   For the Years     
                                Fourth Quarter    Ended December 31,
                                --------------    ------------------
                                 2009     2008        2009    2008
                                 ----     ----        ----    ----
    Revenues                   $7,605   $7,265     $30,052 $28,374
    
    Net income attributable 
     to HCA Inc.                 $216     $276      $1,054    $673
      Losses (gains) on sales 
       of facilities (net of tax)   4       (5)          9     (58)
      Impairment of long-lived 
       assets (net of tax)         24        6          34      40
    
    Net income attributable 
     to HCA Inc., excluding 
     losses (gains) on sales 
     of facilities and 
     impairment of 
     long-lived assets (a)        244      277       1,097     655
      Depreciation and 
       amortization               358      354       1,425   1,416
      Interest expense            500      500       1,987   2,021
      Provision for income taxes  153       38         642     253
      Net income attributable 
       to noncontrolling 
       interests                   88       68         321     229
    
      Adjusted EBITDA (a)      $1,343   $1,237      $5,472  $4,574
                               ======   ======      ======  ======
    
    
    (a)  Net income attributable to HCA Inc., excluding losses (gains) on
         sales of facilities and impairment of long-lived assets and adjusted
         EBITDA are non-GAAP financial  measures.  We believe net income
         attributable to HCA Inc., excluding losses (gains) on sales of      
         facilities and impairment of long-lived assets 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 Inc., excluding losses (gains) on sales of facilities and 
         impairment of long-lived assets 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 Inc., excluding losses 
         (gains) on sales of facilities and impairment of long-lived assets 
         and GAAP net income attributable to HCA 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 (gains) on sales of facilities and impairment of 
         long-lived assets 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 Inc., excluding losses (gains) on 
         sales of facilities and impairment of long-lived assets and adjusted 
         EBITDA are not measures of financial performance under accounting 
         principles generally accepted in the United States, and should not be
         considered as alternatives to net income attributable to  HCA 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 Inc., excluding losses (gains)
         on sales of facilities and impairment of long-lived assets and 
         adjusted EBITDA are not measurements determined in accordance with 
         generally accepted accounting principles and are susceptible to 
         varying calculations, net income attributable to HCA Inc., excluding 
         losses (gains) on sales of facilities and impairment of long-lived 
         assets and adjusted EBITDA, as presented, may not be comparable to 
         other similarly titled measures presented by other companies.
    
    
    
                                     HCA Inc.
                      Condensed Consolidated Balance Sheets
                              (Dollars in millions)
    
                                 December 31,   September 30, December 31, 
                                     2009           2009          2008
                                     ----           ----          ----
    ASSETS
    Current assets:
         Cash and cash equivalents    $312          $443          $465
         Accounts receivable, net    3,692         3,499         3,780
         Inventories                   802           745           737
         Deferred income taxes       1,192         1,099           914
         Other                         579           515           405
                                       ---           ---           ---
              Total current assets   6,577         6,301         6,301
    
    Property and equipment, at cost 24,669        24,389        23,714
    Accumulated depreciation       (13,242)      (13,038)      (12,185)
                                   -------       -------       -------
                                    11,427        11,351        11,529
    
    Investments of insurance 
     subsidiary                      1,166         1,371         1,422
    Investments in and advances 
     to affiliates                     853           855           842
    Goodwill                         2,577         2,596         2,580
    Deferred loan costs                418           436           458
    Other                            1,113         1,210         1,148
                                     -----         -----         -----
    
                                   $24,131       $24,120       $24,280
                                   =======       =======       =======
    
    
    LIABILITIES AND STOCKHOLDERS' 
     DEFICIT
    Current liabilities:
         Accounts payable           $1,460        $1,199        $1,370
         Accrued salaries              849           954           854
         Other accrued expenses      1,158         1,316         1,282
         Long-term debt due 
          within one year              846           635           404
                                       ---           ---           ---
              Total current 
               liabilities           4,313         4,104         3,910
    
    Long-term debt                  24,824        25,279        26,585
    Professional liability risks     1,057         1,097         1,108
    Income taxes and other 
     liabilities                     1,768         1,782         1,782
                                     -----         -----         -----
              Total liabilities     31,962        32,262        33,385
    
    Equity securities with contingent 
      redemption rights                147           147           155
    
    EQUITY (DEFICIT)
    HCA Inc. stockholders' deficit  (8,986)       (9,279)      (10,255)
    Noncontrolling interests         1,008           990           995
                                     -----           ---           ---
              Total deficit         (7,978)       (8,289)       (9,260)
                                    ------        ------        ------
                                     24,131      $24,120       $24,280
                                    =======      =======       =======
    
    
    
    
                                      HCA Inc.
                  Condensed Consolidated Statements of Cash Flow
                  For the Years Ended December 31, 2009 and 2008
                              (Dollars in millions)
    
                                                  2009             2008
                                                  ----             ----
    Cash flows from operating activities:
      Net income                                $1,375             $902
      Adjustments to 
       reconcile net income 
       to net cash provided 
       by operating activities:
        Change in operating assets 
         and liabilities                        (3,091)          (3,367)
        Provision for doubtful accounts          3,276            3,409
        Depreciation and amortization            1,425            1,416
        Income taxes                              (520)            (448)
        Losses (gains) sales of facilities          15              (97)
        Impairment of long-lived assets             43               64
        Amortization of deferred loan costs         80               79
        Pay-in-kind interest                        58                -
        Share-based compensation                    40               32
        Other                                       46                -
                                                   ---              ---
          Net cash provided by operating 
           activities                            2,747            1,990
                                                 -----            -----
    Cash flows from investing activities:
      Purchase of property and equipment        (1,317)          (1,600)
      Acquisition of hospitals and health 
       care entities                               (61)             (85)
      Disposal of hospitals and health care 
       entities                                     41              193
      Change in investments                        303               21
      Other                                         (1)               4
                                                   ---              ---
    
        Net cash used in investing activities   (1,035)          (1,467)
                                                ------           ------
    Cash flows from financing activities:
      Issuance of long-term debt                 2,979                -
      Net change in revolving bank credit 
       facilities                               (1,335)             700
      Repayment of long-term debt               (3,103)            (960)
      Distributions to noncontrolling interests   (330)            (178)
      Payment of debt issuance costs               (70)               -
    
      Other                                         (6)             (13)
                                                   ---              ---
    
        Net cash used in financing activities   (1,865)            (451)
                                                ------             ----
    
    Change in cash and cash equivalents           (153)              72
    Cash and cash equivalents at beginning 
     of period                                     465              393
                                                   ---              ---
    
    
    Cash and cash equivalents at end of period    $312             $465
                                                  ====             ====
    
    Interest payments                           $1,751           $1,979
    Income tax payments, net of refunds         $1,147             $716
    
    
    
                                       HCA Inc.
                                 Operating Statistics
    
                                                            For the Years
                                Fourth Quarter             Ended December 31,
                                --------------            ------------------
                             2009            2008        2009           2008
                             ----            ----        ----           ----
    
    Consolidating Hospitals:
    ------------------------
    
        Number of Hospitals   155             158         155            158
    
        Weighted Average 
         Licensed Beds     38,843          38,474      38,825         38,422
    
        Licensed Beds at 
         End of Period     38,839          38,504      38,839         38,504
    
    
      Reported:
        Admissions        385,300         380,100   1,556,500      1,541,800
              % Change        1.4%                        1.0%
    
        Equivalent 
         Admissions       603,800         587,300   2,439,000      2,363,600
              % Change        2.8%                        3.2%
    
        Revenue per 
         Equivalent 
         Admission        $12,595         $12,370     $12,321        $12,005
              % Change        1.8%                        2.6%
    
        Inpatient Revenue 
         per Admission    $12,368         $11,742     $11,809        $11,336
              % Change        5.3%                        4.2%
    
    
        Patient Days    1,863,500       1,865,100   7,537,100      7,611,000
    
        Equivalent 
         Patient Days   2,920,200       2,882,100  11,810,700     11,667,700
    
        Inpatient 
         Surgery Cases    122,200         121,300     494,500        493,100
              % Change        0.7%                        0.3%
    
        Outpatient 
         Surgery Cases    200,900         201,900     794,600        797,400
              % Change       -0.5%                       -0.4%
    
        Emergency Room 
         Visits         1,394,600       1,276,900   5,593,500      5,246,400
              % Change        9.2%                        6.6%
    
        Outpatient 
         Revenues as a 
         Percentage 
         of Patient 
         Revenues            36.3%           37.5%       37.8%          37.4%
    
        Average Length 
         of Stay              4.8             4.9         4.8            4.9
    
        Occupancy            52.1%           52.7%       53.2%          54.1%
    
        Equivalent 
         Occupancy           81.6%           81.5%       83.4%          82.9%
    
      Same Facility:
        Admissions        378,400         374,000   1,528,500      1,510,600
              % Change        1.2%                        1.2%
    
        Equivalent 
         Admissions       591,800         577,100   2,390,600      2,312,700
              % Change        2.6%                        3.4%
    
        Revenue per 
         Equivalent 
         Admission        $12,599         $12,362     $12,325        $12,007
              % Change        1.9%                        2.6%
    
        Inpatient Revenue 
         per Admission    $12,401         $11,777     $11,849        $11,377
              % Change        5.3%                        4.1%
    
    
        Inpatient Surgery 
         Cases            120,200         120,500     487,400        485,000
              % Change       -0.3%                        0.5%
    
        Outpatient 
         Surgery Cases    197,900         198,100     783,600        784,400
              % Change       -0.1%                       -0.1%
    
        Emergency Room 
         Visits         1,361,400       1,247,800   5,455,100      5,096,200
              % Change        9.1%                        7.0%
    
    Number of Consolidating 
     and Nonconsolidating
     (Equity Joint Ventures) 
     Hospitals:
    
        Consolidating         155             158         155            158
    
        Nonconsolidating 
        (Equity Joint 
         Ventures)              8               8           8              8
                              ---             ---         ---            ---
    
        Total Number of 
         Hospitals            163             166         163            166
                              ===             ===         ===            ===
    
    
    

SOURCE HCA Inc.

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