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HCA · HCA Healthcare, Inc.

32 filings

10-K

HCA 10-K Annual Reports

HCA Healthcare, Inc. - 32 annual reports

Filing record · 2016–202610-K1110-Q328-K144

2025
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2025
HCA Healthcare reported a strong 2025, with revenues rising 7.1% to $75.6 billion and net income attributable to HCA of $6.784 billion, or $28.33 per diluted share, up from $22.00 in 2024. Growth was driven by a 2.9% increase in equivalent admissions and a 4.0% increase in revenue per equivalent admission. Operating cash flow rose to $12.6 billion, funding $4.9 billion of capital expenditures and $10.1 billion of share repurchases. Same-facility revenue grew 6.6%, and Medicaid state directed and supplemental payments contributed about $6.2 billion. Balance sheet leverage increased. Total debt rose to $46.5 billion from $43.0 billion, and interest expense climbed 9% to $2.25 billion. Stockholders' deficit widened to $(2.8) billion, a consequence of heavy buybacks and retained deficits rather than operating weakness. Working capital turned negative, partly because of $2.2 billion of commercial paper, and the company established a $4.0 billion commercial paper program. The outlook carries meaningful policy risk. Management expects SDP revenues to decline in 2026 absent new approvals, and it cites the expiration of enhanced ACA premium tax credits, the 2025 Federal Budget Act (FBA) Medicaid and provider-tax changes, and Medicare site-neutral and inpatient-only list phase-outs as headwinds. Florida and Texas account for 51% of revenues, and the company is implementing a new EHR platform. Planned 2026 capex is $5.0 to $5.5 billion, and the quarterly dividend was raised to $0.78.
Feb 10, 2026
2024
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2024
HCA Healthcare's 2024 10-K shows a company with strong top-line growth and cash generation, but a balance sheet that is heavily levered and a shareholder-return program funded largely by debt. Revenues rose 8.7% to $70.603 billion, driven by a 5.3% increase in equivalent admissions and a 3.2% increase in revenue per equivalent admission. Net income attributable to HCA was $5.760 billion, or $22.00 per diluted share, up from $18.97 in 2023. Operating cash flow reached $10.514 billion, up $1.083 billion, and capital expenditures were $4.875 billion. Management plans $5.0 to $5.2 billion of capex in 2025. The balance sheet is the main investor concern. Total debt rose to $43.031 billion from $39.593 billion, and interest expense climbed to $2.061 billion. Stockholders' equity attributable to HCA is negative at $(2.499) billion. Management repurchased $6.042 billion of stock in 2024 and paid $690 million in dividends, funded in part by $4.5 billion of new senior notes and $3.0 billion of further issuance. The board authorized a new $10 billion repurchase program in January 2025, and the quarterly dividend was raised to $0.72 from $0.66. Risk factors center on payer mix and government policy. Medicare and Medicaid together provided about 44.5% of 2024 revenues. Florida and Texas generated 52% of revenues, and the company is exposed to hurricanes, as Helene and Milton cost roughly $250 million in 2024. Other watch items include the expiration of enhanced ACA premium tax credits after 2025, a rising uninsured emergency room volume (up 13.8%), and Medicaid supplemental payment programs that reached about $4.9 billion in 2024 but face federal rule changes.
Feb 14, 2025
2023
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2023
HCA Healthcare's FY2023 10-K shows a company with strong top-line growth but lower bottom-line earnings. Revenue rose 7.9% to $64.968 billion, driven by a 4.9% increase in equivalent admissions and a 2.8% increase in revenue per equivalent admission. Net income attributable to HCA fell 7.1% to $5.242 billion, or $18.97 per diluted share, versus $19.15 in 2022. The decline reflects the absence of 2022's $1.301 billion in facility sale gains, along with higher salaries, other operating expenses (up to 19.8% of revenue from 18.5%), and interest expense ($1.938 billion, up from $1.741 billion). Operating cash flow improved to $9.431 billion, and the company returned capital through $3.811 billion in buybacks and $661 million in dividends. Balance sheet leverage remains the central investor consideration. Total debt was $39.593 billion at year-end 2023, with the average effective interest rate on long-term debt rising to 5.0% from 4.7%. Management plans capital expenditures of $5.1 to $5.3 billion in 2024, and a new $6 billion buyback authorization was approved in January 2024 alongside a raised quarterly dividend of $0.66. Key risks include heavy concentration in Florida and Texas (51% of revenue), reliance on Medicare and Medicaid (44.1% of revenue), exposure to a July 2023 cybersecurity incident affecting about 11 million patients, and ongoing staffing pressures and regulatory uncertainty around Medicaid supplemental payments. Overall, HCA combined solid volume growth and pricing with rising costs and interest burden. Investors are weighing sustained cash generation and shareholder returns against a large debt load, reimbursement exposure, and margin pressure from labor and operating expenses.
Feb 16, 2024
2022
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2022
HCA Healthcare's 2022 10-K shows a company that grew revenue modestly while absorbing margin pressure from labor and other costs. Revenues rose 2.5% to $60.233 billion, driven by a 2.1% increase in equivalent admissions and a 0.4% increase in revenue per equivalent admission. Same facility revenues rose 3.2%. Net income attributable to HCA fell 18.9% to $5.643 billion ($19.15 diluted EPS, versus $21.16 in 2021), largely because 2021 included larger gains on facility sales ($1.620 billion versus $1.301 billion in 2022). Operating pressure is visible in salaries and benefits rising to 46.0% of revenue from 45.6%, and other operating expenses rising to 18.5% from 17.0%. Same facility salary cost per full-time equivalent rose 3.3%, reflecting inflation and premium labor. The balance sheet is highly leveraged. Total debt reached $38.084 billion, up from $34.579 billion, and interest expense increased to $1.741 billion. Operating cash flow declined to $8.522 billion from $8.959 billion, and free cash flow after $4.395 billion of capital expenditures was roughly $4.1 billion. HCA returned substantial capital to shareholders, repurchasing $7.0 billion of stock and paying $653 million in dividends. Stockholders' equity moved to a deficit of $73 million, including noncontrolling interests. Management guided to roughly $4.3 billion in 2023 capital expenditures and recently raised the quarterly dividend to $0.60. Key risks for investors include concentration in Florida and Texas (about 50% of revenue), exposure to government payers (about 43.6% of revenue from Medicare and Medicaid), an expiring COVID-19 public health emergency and provider relief, deficit-driven Medicare sequestration, Medicaid supplemental payment reviews, and rising labor costs and union activity. Investors should weigh strong cash generation and capital returns against high leverage and reimbursement policy uncertainty.
Feb 17, 2023
2021
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2021
HCA Healthcare's 2021 10-K shows a company that rebounded strongly from the pandemic-hit 2020. Revenues rose 14.0% to $58.75 billion, driven by a 6.8% increase in revenue per equivalent admission and a 6.8% increase in equivalent admissions. Net income attributable to HCA reached $6.956 billion, or $21.16 per diluted share, up from $3.754 billion ($10.93) in 2020. Results were boosted by $1.620 billion in pretax gains on sales of facilities, chiefly the sale of five Georgia hospitals, so underlying earnings growth was smaller than the headline figure suggests. Outpatient surgeries rose 14.2% and emergency room visits rose 13.8%, while inpatient surgeries were roughly flat. Cash flow and capital allocation were central to the year. Operating cash flow was $8.959 billion, down slightly from $9.232 billion because of a $1.781 billion working capital drag, mainly higher accounts receivable. Capital expenditures were $3.577 billion, and planned 2022 capex is about $4.2 billion. HCA repurchased 37.8 million shares for $8.215 billion, and in January 2022 the board authorized an additional $8 billion buyback. The quarterly dividend was restored in 2021 at $0.48 per share and raised to $0.56 for 2022. The key risks for investors are leverage and regulation. Total debt was $34.6 billion at year-end, with interest expense of $1.566 billion. Florida and Texas account for 49% of revenues, and Medicare and Medicaid together account for 41.3% of revenues. Pending issues include the Texas Medicaid waiver extension, sequestration cuts to Medicare, a qui tam FCA lawsuit related to the Harris County Medicaid program, and nurse labor cost pressure. The Supreme Court's January 2022 decision reinstating the CMS vaccine mandate nationally also affects staffing.
Feb 18, 2022
2020
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2020
HCA Healthcare's 2020 10-K shows a company that absorbed a severe COVID-19 volume shock while still growing net income. Revenue rose 0.4% to $51.5 billion, but equivalent admissions fell 9.2% and same-facility revenue slipped 0.1%; the revenue stability came from a 10.5% increase in revenue per equivalent admission, driven by higher acuity and reimbursement mix. Net income attributable to HCA rose 7.1% to $3.754 billion, or $10.93 per diluted share, helped by a $60 million employee retention tax credit, lower interest expense ($1.584 billion versus $1.824 billion), and a $112 million reduction in professional liability provisions. Operating cash flow increased to $9.232 billion, driven partly by working capital gains and $688 million of deferred Social Security taxes. The balance sheet remains highly leveraged. Total debt was $31.0 billion at year-end, down from $33.7 billion, and stockholders' equity turned positive at $2.9 billion total (including noncontrolling interests) after a deficit in 2019. Management returned about $6.1 billion of CARES Act Provider Relief Fund and accelerated Medicare payments during Q4 2020, which signals confidence but also reflects that the funds were not retained as earnings. Capital allocation was defensive during the year: capex fell to $2.8 billion from $4.2 billion, buybacks were suspended and then resumed in February 2021 with $8.8 billion of total authorization, and the dividend was reinstated at $0.48 per quarter after a 2020 suspension. Key risks for investors include geographic concentration (Florida and Texas generate 49% of revenue and house 91 of 185 hospitals), reliance on government programs (42.7% of revenue from Medicare and Medicaid), the expiration of the Public Health Emergency and uncertain federal policy under the new administration, and the potential for a COVID-19 resurgence. The filing also notes uncertainty over the Affordable Care Act, site-neutral payment policy, and LIBOR transition, plus a pending qui tam lawsuit in Texas related to the Medicaid supplemental program.
Feb 19, 2021
2019
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2019
HCA Healthcare's 2019 10-K shows a company still growing revenue and volume at a strong clip, though earnings per share declined from 2018 because 2018 included a large one-time gain on the Oklahoma hospital sale and a tax benefit. Revenue rose 10.0% to $51.336 billion, driven by a 6.6% increase in equivalent admissions and a 3.2% increase in revenue per equivalent admission. Net income attributable to HCA fell 7.4% to $3.505 billion, or $10.07 per diluted share, versus $10.66 in 2018. Operating cash flow improved 12.4% to $7.602 billion, and capital spending rose to $4.158 billion. The balance sheet remains highly leveraged. Total debt was $33.722 billion, and stockholders' deficit improved to $(565) million from $(2.918) billion, mainly because of retained earnings growth and noncontrolling interests. Management plans 2020 capital expenditures of roughly $4.0 to $4.2 billion, and it returned capital through $1.031 billion of buybacks and $550 million of dividends, with a quarterly dividend raised to $0.43. The company also adopted the new lease standard (ASU 2016-02) in 2019, which added about $1.8 billion of operating lease assets and about $1.9 billion of operating lease liabilities. Key risks for investors are concentrated in Florida and Texas, which generated about 48% of revenue, and in ongoing uncertainty about the Affordable Care Act, Medicaid supplemental payments, site-neutral payment policy, and the 340B drug pricing litigation. A qui tam False Claims Act suit tied to the Texas Medicaid waiver program in Harris County is pending, though the company says it is vigorously defending it. Uncompensated care rose to an estimated $3.733 billion in 2019 from $3.318 billion in 2018, a sign of growing pressure from uninsured patients.
Feb 20, 2020
2018
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2018
HCA Healthcare's 2018 10-K shows a company with strong earnings momentum and a heavily leveraged balance sheet. Revenue rose 7.0% to $46.677 billion, driven by a 2.8% increase in revenue per equivalent admission and a 4.1% increase in equivalent admissions. Net income attributable to HCA was $3.787 billion, or $10.66 per diluted share, up from $5.95 in 2017. That comparison is flattered by a $428 million gain on the sale of two Oklahoma hospitals (about $0.91 per share) and a $551 million tax benefit tied to the Tax Act (about $1.55 per share), so underlying growth is more modest than the headline suggests. Cash generation was solid, with operating cash flow up 25% to $6.761 billion. Capital expenditures rose to $3.573 billion, and the company spent $1.253 billion on acquisitions. Total debt was $32.821 billion at year-end, and the company reported a stockholders' deficit of $2.918 billion. Management is returning cash to shareholders through a newly initiated quarterly dividend of $0.40 (declared January 2019), a $2 billion buyback authorization approved in January 2019, and $1.53 billion of share repurchases in 2018. Investors should weigh several risks. Uncompensated care rose to $26.757 billion, or 36.4% of revenue plus uncompensated care, and the Health Reform Law faces a court ruling that found the entire law unconstitutional, though it remains in place pending appeal. About 49% of revenue comes from Florida and Texas, and 40.9% comes from Medicare and Medicaid. A U.S. Department of Justice inquiry into Texas Medicaid supplemental programs is also pending. Against this, admissions grew 3.5%, same-facility revenue grew 6.5%, and the company's scale and payer contracting remain key strengths.
Feb 21, 2019
2017
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2017
HCA Healthcare's 2017 10-K shows a company that grew revenue while facing rising uninsured-patient costs and a heavy debt load. Revenues before provision for doubtful accounts rose 6.5% to $47.653 billion, but the provision for doubtful accounts increased $782 million to $4.039 billion, leaving net revenues of $43.614 billion (up 5.1%). Growth was driven mainly by a 3.0% increase in equivalent admissions and a 2.1% increase in revenue per equivalent admission. Same facility revenues rose 3.8%. Net income attributable to HCA fell 23.3% to $2.216 billion ($5.95 diluted EPS vs. $7.30 in 2016), though the decline was largely driven by a $301 million deferred tax remeasurement from the 2017 Tax Cuts and Jobs Act and a $246 million legal benefit recorded in 2016 that did not recur. Excluding these items, earnings were roughly stable. The key investor concern is the rising cost of uncompensated care. Charity care, uninsured discounts and the provision for doubtful accounts combined reached $23.420 billion (34.9% of the sum of revenues plus these items), up from 33.0% in 2016. Uninsured discounts rose to $14.520 billion. Management expects continued collection challenges, and the company noted that the elimination of the individual mandate penalty effective 2019 may reduce insured volumes. On the balance sheet, total debt was $33.058 billion, with an interest coverage that remains manageable given $1.690 billion of interest expense and $5.426 billion of operating cash flow. HCA returned capital through $2.051 billion of share repurchases and announced its first quarterly dividend of $0.35 per share, signaling a shift toward shareholder distributions. Florida and Texas account for about 48% of revenues, which concentrates regulatory and hurricane-related risk.
Feb 23, 2018
2016
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2016
HCA Holdings' FY2016 10-K shows a company that grew revenue and earnings while carrying heavy leverage and returning cash to shareholders. Revenues rose 4.6% to $41.49 billion, driven by a 2.3% increase in revenue per equivalent admission and a 2.2% increase in equivalent admissions. Net income attributable to HCA rose 35.8% to $2.89 billion, or $7.30 per diluted share, up from $4.99 in 2015. Results were flattered by one-time items: a $246 million net legal claim benefit from the Health Midwest settlement, $162 million of tax benefits from adopting ASU 2016-09, and $51 million from resolving 2011-2012 IRS issues. Operating cash flow was $5.65 billion, and capital expenditures were $2.76 billion. The balance sheet remains highly leveraged. Total debt was $31.4 billion at year-end, and stockholders' deficit was $(5.6) billion. Interest expense was $1.71 billion. HCA repurchased 36.3 million shares for $2.75 billion during 2016 and paid no dividends. Revenue quality is a watch item: the uninsured-related combination of uninsured discounts, charity care and bad-debt provision reached $20.5 billion (33.0% of that combined base, up from 31.5%). Florida and Texas account for roughly 47% of revenues. Regulatory exposure is significant. Medicare and Medicaid made up 41.7% of 2016 revenues. The Health Reform Law's future is uncertain after the 2016 elections, and it could affect Exchange enrollment, Medicaid expansion and the uninsured population that supports volume growth. Managed care payers contributed 56.5% of revenues, and rate increases of 4% to 5% were expected in 2016.
Feb 22, 2017
2015
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2015
HCA Holdings' fiscal 2015 10-K shows a large, highly leveraged hospital operator that grew revenue and earnings while returning significant capital to shareholders. Revenues rose 7.5% to $39.678 billion, driven by a 5.5% increase in equivalent admissions and a 1.8% gain in revenue per equivalent admission. Net income attributable to HCA was $2.129 billion, or $4.99 per diluted share, up from $4.16 in 2014. Operating cash flow reached $4.734 billion, and capital expenditures were $2.375 billion. The company repurchased 31.991 million shares for about $2.397 billion during 2015. The main investor concerns are leverage, uncompensated care, and legal exposure. Total debt was $30.488 billion at year-end, and interest expense of $1.665 billion consumed a meaningful share of operating cash flow. The sum of provision for doubtful accounts, uninsured discounts and charity care rose to 31.5% of that total from 30.2% in 2014, reflecting growing patient-responsibility and uninsured burdens. Medicare and Medicaid together made up 42.1% of revenues, and Florida and Texas generated about 47% of revenues, which concentrates regulatory and hurricane risk. Legal and regulatory matters weighed on 2015 results. HCA recorded $249 million of legal claim costs, including the $215 million Schuh securities settlement and a Health Midwest judgment that carries an accrued liability of $438 million and continues to accrue interest at 9%. The UK Competition and Markets Authority review of London hospitals also remains unresolved. Management expects 2016 planned capital expenditures of about $2.7 billion and continued share repurchases under the remaining $2.603 billion authorization.
Feb 26, 2016
2014
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2014
HCA Holdings' FY2014 10-K shows a company that grew revenue 8.0% to $36.9 billion and net income attributable to HCA to $1.875 billion ($4.16 diluted EPS, up from $3.37). Growth was driven by a 3.8% increase in revenue per equivalent admission and a 4.0% increase in equivalent admissions. Same-facility revenue rose 6.9%, and same-facility admissions rose 2.1%. Operating leverage improved as the provision for doubtful accounts fell $689 million, reflecting fewer uninsured patients after Health Reform Law coverage expansion. Uninsured admissions at same facilities fell 9.4%. Earnings were partly flattered by one-time items, including a $142 million Texas Medicaid waiver recognition and a $94 million RAC-related Medicare settlement, while losses on debt retirement ($335 million) and legal claim costs ($78 million) weighed on results. The balance sheet remains highly leveraged, with total debt of $29.6 billion against a stockholders' deficit of $6.5 billion. Operating cash flow rose to $4.45 billion and capital expenditures were $2.18 billion, leaving substantial free cash flow that funded $1.75 billion of share repurchases. Management guided to 2015 capital expenditures of about $2.4 billion. Key risks include dependence on Medicare and Medicaid (42.6% of 2014 revenue), exposure to Florida and Texas (about 46% of revenue), pending government investigations and a securities class action, and the phased reduction in Medicare and Medicaid DSH funding.
Feb 26, 2015
2013
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2013
HCA Holdings, Inc. ended 2013 with 165 hospitals and 115 freestanding surgery centers in 20 states and England, and reported revenues of $34.182 billion (up 3.5% from $33.013 billion in 2012). Net income attributable to HCA Holdings was $1.556 billion, or $3.37 per diluted share, down from $1.605 billion ($3.49) in 2012, as growth in revenue was offset by a rising provision for doubtful accounts, higher salaries and supplies costs, and a lower year-over-year EHR incentive income figure ($216 million versus $336 million). Revenue growth was driven primarily by a 3.1% increase in revenue per equivalent admission, with admissions roughly flat (up 0.2%). Same-facility revenue rose 3.1%, and same-facility admissions grew only 0.1%. The key credit and cash-flow concerns for investors are leverage and uncompensated care. Total debt was $28.376 billion at year-end, and interest expense was $1.848 billion. Operating cash flow fell to $3.680 billion from $4.175 billion, mainly because of a $521 million negative working-capital swing. Combined uncompensated care (charity care, uninsured discounts and the provision for doubtful accounts) rose to $15.565 billion, or 31.3% of the sum of revenues and those deductions, up from 29.5% in 2012. Uninsured discounts increased $1.232 billion year over year. Management expects the Affordable Care Act to reduce uninsured volume over time, but the filing states that the net effect remains highly uncertain. The filing also points to significant structural exposure. Medicare and Medicaid made up 42% of 2013 revenues, and Florida and Texas together generated about 46% of revenues from 78 hospitals. The company faces ongoing Medicare reimbursement pressure (the sequestration cuts, market basket reductions, value-based purchasing, and readmission penalties), a Missouri judgment of at least $162 million (Health Midwest litigation), DOJ reviews of implantable cardio-defibrillator and interventional cardiology billing, and securities class action litigation tied to the 2011 IPO. The company repurchased $500 million of stock in 2013 and reinstated no dividends during the year.
Feb 26, 2014
2012
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2012
HCA Holdings, Inc. closed 2012 with 162 hospitals, 112 freestanding surgery centers and 41,804 licensed beds across 20 states and England. Revenue grew 11.2% to $33.0 billion, driven by a 9.1% increase in equivalent admissions (largely from the October 2011 consolidation of the HealthONE joint venture in Denver) and a 2.0% gain in revenue per equivalent admission. Same-facility revenue rose a more modest 4.5%. Net income attributable to HCA Holdings fell 34.9% to $1.605 billion, or $3.49 per diluted share, versus $4.97 in 2011. The decline mainly reflects the absence of 2011's $1.522 billion non-cash gain on the HealthONE remeasurement and the $175 million legal claim charge recorded in 2012 related to the Health Midwest litigation, along with a higher tax rate. The most important investor concerns are credit quality and leverage. Total debt was $28.9 billion at year-end 2012, up from $27.1 billion, and the provision for doubtful accounts rose to $3.77 billion. Uninsured discounts and charity care also grew sharply, and the combined uncompensated-care measure reached 29.5% of revenue, up from 27.4% in 2011 and 25.6% in 2010. Operating cash flow improved to $4.18 billion, but the company paid $3.14 billion in distributions to stockholders during 2012, funded partly with new debt, and the stockholders' deficit widened to $(8.3) billion. Regulatory exposure is substantial. Medicare and Medicaid accounted for 43% of 2012 revenue, and the Health Reform Law introduces Medicare DSH cuts, productivity-adjusted market basket reductions, value-based purchasing and readmission penalties, along with Medicaid expansion decisions that remain uncertain in states such as Texas. Florida and Texas generated about 47% of revenue, and the company faces open items including a DOJ review of implantable cardio-defibrillator billing, a securities class action over the 2011 IPO, and an IRS audit.
Feb 27, 2013
2011
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2011
HCA Holdings, Inc. (NYSE: HCA) reported a strong fiscal 2011, with net income attributable to HCA Holdings of $2.465 billion, or $4.97 per diluted share, versus $1.207 billion ($2.76) in 2010. Results were inflated by several non-recurring items: a $1.522 billion pretax gain from remeasuring the company's prior equity stake in the HealthONE (Denver) joint venture after buying the remaining ~40% interest, $210 million of electronic health record incentive income, and $142 million of net gains on facility sales. These were partly offset by $481 million of losses on debt retirement and a $181 million termination fee paid to the Investors (the Bain/KKR/Frist sponsor group) when the management agreement ended with the March 2011 IPO. Revenues rose 5.9% to $29.682 billion, driven mainly by a 5.2% increase in equivalent admissions, while revenue per equivalent admission grew only 0.7% amid a shift toward less acute medical cases. Same-facility revenue growth was 3.3%. The balance sheet remains highly leveraged. Total debt was $27.052 billion at year-end 2011 versus $28.225 billion a year earlier, and the stockholders' deficit improved to $(7.014) billion from $(10.794) billion, reflecting the IPO proceeds, the repurchase of 80.8 million shares from Bank of America affiliates for $1.503 billion, and earnings. Operating cash flow rose to $3.933 billion, largely due to a $885 million improvement from lower income tax payments, so the headline cash generation is partly timing-related. Capital expenditures were $1.679 billion, with about $1.9 billion planned for 2012. The company also declared a $2.00 per share (about $975 million) distribution payable February 29, 2012. Investors should weigh the headwinds in the filing. Medicare and Medicaid together account for 44.5% of revenue, and the Health Reform Law implies large cuts to Medicare market-basket updates, DSH payments and managed Medicare premiums, with the outcome tied to a pending Supreme Court ruling. The uninsured provision, uninsured discounts and charity care together rose to 27.4% of revenue-related charges in 2011 from 23.8% in 2009. Florida and Texas generate about half of revenue, and a securities class action over the IPO disclosures has been filed. Roughly 80% of HCA's shares were held by sponsors and insiders after the IPO. The company's 2011 earnings quality therefore depends heavily on non-recurring gains, while its long-term value hinges on payer policy and its ability to manage uncompensated care.
Feb 24, 2012
2010
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2010
HCA Holdings, Inc. (the new parent of HCA Inc., formed in the November 22, 2010 Corporate Reorganization) reported a solid 2010 with revenue of $30.683 billion (up 2.1% from $30.052 billion) and net income attributable to HCA Holdings of $1.207 billion (up 14.5%). Growth was driven mainly by a 0.9% increase in revenue per equivalent admission and a 1.2% rise in equivalent admissions, while consolidated admissions were essentially flat (down 0.1%). Operating margins were pressured by a rising mix of uninsured patients: uninsured discounts jumped to $4.641 billion from $2.935 billion, which cut reported revenue but drove the provision for doubtful accounts down 19% to $2.648 billion (8.6% of revenue from 10.9%). Cash flow from operations rose to $3.085 billion, and cash revenues grew 4.7%, which management presents as the better gauge of underlying performance. The balance sheet is the central investor concern. Total debt stood at $28.225 billion, and the company paid $4.257 billion in cash distributions to stockholders and option holders during 2010, funded largely by new debt. Stockholders' deficit widened to $(10.794) billion. The Investors (Bain Capital, KKR, BAML Capital Partners, and affiliates) own about 96.8% of the stock, and the company is preparing an initial public offering, with proceeds intended to repay debt. Interest expense rose to $2.097 billion, and the company remains exposed to significant Health Reform Law changes affecting Medicare and Medicaid, which together account for roughly 41% of revenue, as well as heavy Florida and Texas concentration (about 52% of revenue). Key risks for investors include the uncertain financial impact of the Health Reform Law (subject to court challenges and possible repeal), scheduled Medicare DSH and market basket reductions, potential Medicaid DSH cuts beginning in 2014, the pending IRS disputes, a New Hampshire merger lawsuit, and a Department of Justice review of implantable cardio-defibrillator billing at 95 hospitals. Management expects 2011 EHR incentive payments of $275 million to $325 million.
Feb 17, 2011
2009
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2009
HCA Inc. reported a solid 2009 with net income attributable to HCA of $1.054 billion, up 56.7% from $673 million in 2008, and revenues of $30.052 billion, up 5.9%. Growth was driven by a 2.6% increase in revenue per equivalent admission and a 3.2% increase in equivalent admissions, with same-facility revenues up 6.1%. Cash flow from operations rose to $2.747 billion from $1.990 billion, and capital spending was $1.317 billion. Operating margins improved, with the provision for doubtful accounts falling to 10.9% of revenues from 12.0%, although this decline reflects a shift of self-pay balances into charity care and uninsured discounts, which together with the provision rose to 23.8% of adjusted revenues from 21.9%. The balance sheet remains highly leveraged. Total debt was $25.670 billion at year-end 2009, down from $26.989 billion, and stockholders' deficit was $(7.978) billion. Interest expense declined modestly to $1.987 billion. Following year-end, the company paid a $17.50 per share distribution totaling approximately $1.750 billion on February 5, 2010, funded by its senior secured credit facilities and about $100 million of cash, which adds to leverage. The company's stock is privately held by the investor group from the 2006 Recapitalization (about 97.1% indirect ownership), so there is no public market for the shares. Key risks include heavy concentration in Florida and Texas (about 51% of revenues), pending health care reform legislation, Medicare and Medicaid payment pressures, rising uninsured volumes, an IRS dispute over the allowance for doubtful accounts, and legal exposure such as the New Hampshire Portsmouth Regional Hospital litigation. Management expects liquidity to be sufficient for the next twelve months.
Mar 1, 2010
2008
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2008
HCA Inc. closed 2008 with 166 hospitals (plus 105 freestanding surgery centers) across 20 states and England, and reported revenues of $28.374 billion, up 5.6% year over year, driven by a 5.2% increase in revenue per equivalent admission. Net income fell 23% to $673 million from $874 million, reflecting lower gains on facility sales, higher provisions for doubtful accounts (12.0% of revenue versus 11.7%), and a higher effective tax rate of 28.5%. Interest expense declined to $2.021 billion from $2.215 billion as average debt and rates came down, but leverage remains extreme: total debt was $26.989 billion, and stockholders' deficit was $(10.255) billion following the 2006 leveraged recapitalization. The key credit and operating concerns are the rising uninsured patient burden, with same-facility uninsured ER visits up 4.5% and admissions up 1.7%, and a receivables book of $5.838 billion in patient-due accounts whose allowance covers about 93%. Management flagged weakening payer mix, Medicaid and Medicare reimbursement pressure (including the 1.5% cumulative documentation and coding adjustment and the TRICARE outpatient rule change), and the concentration of 51% of revenue in Florida and Texas. Cash from operations rose to $1.797 billion, but capital expenditures of $1.6 billion absorbed most of that, leaving limited free cash flow relative to debt service needs. For investors, this is a highly levered, cash-generative hospital operator whose equity is held almost entirely by private sponsors (97.3% via Hercules Holding), so there is no public equity market and limited disclosure beyond SEC reporting. Returns depend on continued pricing gains and cost control to offset volume softness and rising bad debt, and on refinancing maturities of senior secured term loans in 2012 to 2013 on acceptable terms.
Mar 4, 2009
2007
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2007
HCA Inc. (HCA) reported 2007 full-year results in its first 10-K following its November 2006 leveraged recapitalization by Bain Capital, KKR, Merrill Lynch Global Private Equity and Frist-family affiliates. Revenues grew 5.4% to $26.858 billion, driven by an 8.3% increase in revenue per equivalent admission that offset a 2.7% decline in equivalent admissions. Net income fell 15.7% to $874 million from $1.036 billion, though 2007 benefited from $471 million of gains on facility sales and a lower effective tax rate of 26.6%. Operating margin pressure was visible: the provision for doubtful accounts rose to 11.7% of revenues from 10.4%, driven by rising uninsured admissions (up 9.4% same-facility) and deteriorating collectibility. The central investor issue is leverage. Total debt was $27.308 billion at year-end, and interest expense more than doubled to $2.215 billion from $955 million, consuming a large share of operating cash flow. Operating cash flow fell to $1.396 billion from $1.845 billion, and free cash flow after $1.444 billion of capital expenditures was negative. Stockholders' deficit was $10.538 billion, and the company paid no dividends in 2007. Investors own 97.5% of the equity through Hercules Holding II, so public-market valuation references are not applicable, and the company is not publicly traded. Offsetting positives include a 7.4% same-facility revenue increase, improved professional liability trends (provision falling to $163 million from $217 million), and a 2007 EBITDA result that exceeded the maximum PEP performance target. Key risks flagged in the filing include Medicaid supplemental payment exposure in Texas, a pending IRS dispute, a $12.250 billion Kansas nurse-understaffing class action, $725 million of auction rate securities in the insurance subsidiary that have failed auctions since February 2008, and concentration of 51% of revenues in Florida and Texas.
Mar 28, 2008
2006
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2006
HCA Inc., now privately held after the November 17, 2006 $33.0 billion Recapitalization led by Bain Capital, KKR, Merrill Lynch Global Private Equity and Frist family affiliates, reported 2006 revenues of $25.477 billion (up 4.2%) and net income of $1.036 billion (down 27.2% from $1.424 billion). Results were flattered by one-time items, including $243 million of investment gains and $205 million of facility-sale gains, and were reduced by $442 million of Recapitalization transaction costs. Underlying volume was soft: equivalent admissions fell 2.4% and same-facility admissions rose only 0.2%, while revenue per equivalent admission rose 6.8% (8.0% excluding the uninsured discount). Growth in revenue depended largely on pricing and the uninsured discount policy, and the provision for doubtful accounts rose to 10.4% of revenues (14.1% adjusted). The balance sheet changed fundamentally. Total debt rose from $10.475 billion to $28.408 billion, and stockholders' equity swung from $4.863 billion to a deficit of $11.374 billion. Management expects 2007 interest expense of about $2.3 billion, versus $955 million in 2006, which will sharply compress pre-tax coverage. Operating cash flow fell to $1.845 billion from $2.971 billion, mainly on higher tax payments and receivables build. Investors should note that the filing is a voluntary annual report from a company whose common stock no longer trades, that 97.5% of equity is held by Hercules Holding, and that the company faces significant regulatory, reimbursement and litigation exposure, including a $678 million IRS dispute and Medicare/Medicaid program changes.
Mar 27, 2007
2005
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2005
HCA Inc. reported a solid 2005 for its 10-K filed March 14, 2006. Revenues rose 4.1% to $24.455 billion and net income grew 14.2% to $1.424 billion, or $3.19 per diluted share, versus $2.58 in 2004. Results were helped by several one-time items, including $83 million of professional liability reserve reductions, a $48 million favorable tax settlement, $78 million of facility sale gains, and a $24 million tax benefit from repatriated foreign earnings, partly offset by $60 million of hurricane-related costs. Underlying same-facility volume was nearly flat, with same-facility admissions up only 0.1%. Revenue per equivalent admission grew 3.2% on a reported basis, but this was flattered by the new uninsured discount policy. Adjusting for the $769 million in uninsured discounts, growth was 6.3% to 6.5%, and that adjustment is central to reading the quality of the top line. The key credit and cash-flow issues are the balance sheet and collections. Long-term debt was $10.475 billion at year-end, and the company became more leveraged after a $2.5 billion modified Dutch auction tender offer, in which it repurchased 36.7 million shares for $1.856 billion in 2005. Operating cash flow was $3.159 billion, and the company issued $1.0 billion of 6.5% notes due 2016 in February 2006. The provision for doubtful accounts fell to 9.6% of revenues from 11.4%, but only because of the discount accounting change; adjusted for that, the provision rose to 12.4%. Uninsured accounts remain a meaningful risk, and the filing shows the allowance covering about 85% of the $3.404 billion patient-due receivable balance. Investors also face material legal and regulatory overhang. The company is under a federal securities class action, shareholder derivative suits, an ERISA suit, an SEC formal investigation, and a U.S. Attorney subpoena, all tied to trading in HCA securities and the July 2005 preliminary results announcement. The IRS is also contesting about $776 million in claimed taxes, interest and penalties. Management says the company is cooperating, that the litigation is without merit, and that it does not expect a material adverse effect, but the outcome is uncertain. Future Medicare and Medicaid reimbursement pressure, including the DEFRA 2005 Medicaid cuts of about $4.8 billion over five years and the IRF 75-percent rule, adds further uncertainty to revenue growth.
Mar 14, 2006
2004
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2004
HCA Inc. closed 2004 with revenues of $23.502 billion, up 7.8% from $21.808 billion in 2003, driven by a 5.5% increase in revenue per equivalent admission and a 2.2% rise in equivalent admissions. Net income fell 6.5% to $1.246 billion, and diluted EPS declined 1.1% to $2.58 from $2.61. Results were flattered by favorable one-time items: a $59 million reduction in professional liability reserves and a $46 million favorable change in the doubtful accounts estimate, partly offset by hurricane costs of about $40 million and a $12 million impairment. Underlying margins came under pressure as the provision for doubtful accounts rose to 11.4% of revenues from 10.1%, reflecting growth in uninsured patients and weaker collectability. Cash from operations was strong at $3.049 billion. The balance sheet changed materially in 2004. HCA spent $3.109 billion repurchasing 77.4 million shares, including a $2.466 billion Dutch auction tender offer, which cut stockholders' equity to $4.407 billion from $6.209 billion. Long-term debt rose to $10.530 billion from $8.707 billion. Following the tender offer, S&P and Fitch cut HCA's senior debt to BB+, and Moody's cut it to Ba2, so the company moved below investment grade. Dividends were raised to $0.13 per quarter in 2004 and to $0.15 for 2005. Key risks for investors include heavy reliance on government programs (Medicare and Medicaid together accounted for about 53% of admissions), a concentration of 76 hospitals in Florida and Texas, pending IRS disputes covering about $404 million, the Corporate Integrity Agreement with the OIG, and a restrictive Medicare rehabilitation 75% rule. Pressure on uninsured collections and payer mix is likely to continue, and the new 2005 uninsured discount policy is expected to lower both revenues and the provision for doubtful accounts.
Mar 11, 2005
2003
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2003
HCA Inc. closed 2003 with a strong earnings rebound but continued pressure on volumes and collections. Revenues rose 10.5% to $21.8 billion, driven by a 7.6% same-facility revenue increase (rate-driven, with flat same-facility equivalent admissions) and the April 2003 acquisition of eleven Kansas City hospitals (Health Midwest), which contributed $698 million. Reported net income more than doubled to $1.332 billion, or $2.61 per diluted share, versus $833 million ($1.59) in 2002. However, 2002 results were depressed by a $603 million pretax government settlement charge, so the year-over-year comparison flatters the underlying trend. Operating cash flow fell to $2.166 billion from $2.750 billion, largely because of roughly $942 million in government settlement payments made during 2003. The main concern for investors is the deterioration in patient collections. The provision for doubtful accounts rose to 10.1% of revenues from 8.0% in 2002, an incremental cost of about $462 million, as uninsured and patient-due accounts grew. Management expects this to remain a significant challenge in 2004 and does not anticipate the provision declining as a share of revenue. Same-facility admissions grew only 0.6% and same-facility outpatient surgeries fell 3.0%, reflecting softer economic conditions and competition from physician-owned specialty hospitals. Charity discounts also rose $242 million, and Medicare outlier revenue is expected to fall by up to $12 million per month after the CMS rule changes. The company remains heavily leveraged, with long-term debt rising to $8.7 billion, and it is increasing its dividend from $0.02 to $0.13 per quarter. It has also completed the resolution of its major government investigations, which reduces a significant overhang. Capital spending is planned at about $1.8 billion in 2004, and the company faces ongoing IRS disputes totaling about $381 million plus an open examination of 2001–2002 returns.
Mar 12, 2004
2002
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2002
HCA Inc. (HCA) closed fiscal 2002 with revenues of $19.729 billion, up 9.9% from $17.953 billion in 2001, driven mainly by rate gains: revenue per equivalent admission rose 8.6% while equivalent admissions grew only 1.2%. Reported net income fell 6.0% to $833 million ($1.59 diluted EPS) from $886 million ($1.65 diluted EPS in 2001), and the year was dominated by a $603 million pretax ($418 million after-tax) charge to settle the Department of Justice physician-relations, cost-report and wound-care matters, plus a $168 million other-than-temporary impairment on insurance-subsidiary equity holdings. Excluding the government settlement charges taken in 2002 and 2001, management reports pretax income rose 18.3% to $2.058 billion. The balance sheet strengthened: stockholders' equity rose to $5.702 billion from $4.762 billion, long-term debt including current maturities fell to $6.943 billion from $7.360 billion, and operating cash flow more than doubled to $2.750 billion, aided by the absence of the $840 million 2001 government payment. Management is planning about $2.0 billion of capital expenditures in each of 2003 and 2004, and has agreed to acquire the 14-hospital Health Midwest system for $1.125 billion. The key investor risks are the unresolved government matters and pending reimbursement changes. The DOJ and CMS understandings still require court and regulatory approval, several qui tam cases remain outside the DOJ deal, and an SEC formal investigation continues. A proposed CMS outlier-payment rule could cut monthly outlier revenue by up to $12 million. HCA also announced charity-care changes expected to reduce 2002 net revenue by roughly $325 million to $375 million, offset by a similar drop in bad debt expense, and the provision for doubtful accounts rose to 8.0% of revenue.
Mar 28, 2003
2000
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2000
HCA - The Healthcare Company's 2000 annual report shows a company in transition after a multi-year restructuring and a major government investigation. Revenues were essentially flat at $16.67 billion (up 0.1%) as the company shrank to 187 hospitals from 195, but same-facility revenues grew 6.2% on a 2.8% rise in admissions, driven by renegotiated managed care contracts that lifted revenue per equivalent admission 5.5%. Operating efficiency improved, with salaries and supplies falling as a share of revenue. Earnings were heavily depressed by one-time items. Pretax income fell 58% to $516 million (3.1% margin, versus 7.4% in 1999), largely due to an $840 million pretax charge for the settlement with the Federal government, which includes a $745 million civil payment and a $95 million criminal payment. Net income dropped to $219 million, or $0.39 per diluted share, from $657 million ($1.11). The effective tax rate was 57.6%, though management estimates roughly 39% excluding the settlement, valuation allowance and non-deductible intangibles. For investors, the key issues are the resolution of the legal overhang and the balance sheet. The December 2000 plea and civil agreements, along with a Corporate Integrity Agreement running eight years, resolve most criminal exposure, but significant civil cost-report and physician-relations matters, numerous qui tam suits, and shareholder class actions remain unresolved and are not quantifiable. Total debt was $6.75 billion, stockholders' equity fell to $4.4 billion after $1.9 billion of buybacks in 1999 and $769 million of forward purchase contracts reclassified to temporary equity, and the company's cash flow from operations rose to $1.55 billion.
Mar 30, 2001
1997
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 1997
Columbia/HCA Healthcare Corporation's 1997 10-K describes a year of sharp deterioration. Revenues were essentially flat at $18.82 billion (up 0.2%), but pretax income from continuing operations fell 84% to $388 million, with pretax margins collapsing to 2.1% from 13.0% in 1996. Excluding $442 million in asset impairment charges and $140 million in restructuring and investigation costs, pretax income would have been $970 million, still down about 60%. The company reported a net loss of $305 million for 1997, driven by a $443 million estimated after-tax loss on discontinued operations (home health, Value Health pharmacy and behavioral health units) and a $56 million cumulative accounting change charge. Operating expense ratios rose across every category, with salaries and benefits at 40.6% of revenue versus 38.4% in 1996, and the provision for doubtful accounts at 7.5% versus 6.4%. The filing is dominated by legal and regulatory risk. The company disclosed federal search warrants, grand jury-related subpoenas, an SEC formal investigation, and its own admission that it believes it is a target of the investigations. It faces numerous qui tam False Claims Act suits, consolidated securities class actions, shareholder derivative suits in state and federal courts, and patient/payer class actions alleging billing fraud. Management states that it cannot predict the outcome, that adverse resolution could materially affect liquidity, financial position and results, and that the company is in compliance with its credit facility covenants. Credit ratings were cut during 1997 (senior debt to Baa2/BBB, then to Ba2 by Moody's in February 1998), and commercial paper access has been largely lost. Long-term debt rose to $9.4 billion from $7.0 billion, shifting toward bank borrowings, while stockholders' equity fell to $7.25 billion from $8.61 billion after a $1.0 billion share buyback. Management has begun a strategic overhaul: a change of CEO and COO, elimination of annual cash bonuses, divestiture of home health and most Value Health units (with Value Behavioral Health and Value Rx sales agreed for $230 million and $445 million), unwinding of physician hospital interests, and a review of restructuring alternatives that could include spin-offs and a smaller, more focused company. No restructuring plan had been approved as of the filing date. For investors, the central questions are the size of eventual government settlements and judgments, whether margins can recover from the 1997 level, and how the restructuring will reshape the capital structure.
Mar 31, 1998
1995
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 1995
Columbia/HCA Healthcare's 1995 10-K shows a company that grew revenue sharply through acquisitions, led by the Healthtrust merger, while absorbing large one-time charges. Revenues rose 21.7% to $17.7 billion, and net income climbed to $961 million ($2.14 per share) from $814 million. Excluding merger and facility consolidation costs of $387 million, income from continuing operations was $1.3 billion ($2.90 per share), up 26%. Pretax margin before those charges improved to 12.3% from 11.7%, helped by lower salaries and supply costs as a share of revenue, though other operating expenses rose to 19.4% of revenue. Operating cash flow reached $2.25 billion, but the company spent heavily on acquisitions and capital projects, pushing long-term debt to $7.4 billion and funding the gap with borrowings. The main risks for investors are regulatory and legal. Medicare and Medicaid make up 42% of patient revenue, and the company faces pending IRS claims of roughly $600 million, a False Claims Act qui tam suit, and reimbursement pressure from the Balanced Budget framework and PPS changes. The company also disclosed a $60 million tentative settlement in the MCA securities class action and ongoing ERISA exposure tied to the Healthtrust ESOP. Management says these matters should not have a material adverse effect, but it acknowledges that a broad adverse IRS outcome could materially hurt results. For investors, the filing reflects a company executing an aggressive consolidation strategy with strong top-line growth and improving underlying margins. The key questions are whether the company can keep integrating acquisitions and sustain margin gains while handling significant debt, tax disputes, and ongoing healthcare reform uncertainty.
Apr 1, 1996
1994-A
HCA Healthcare, Inc. Annual Report (Amendment), Year Ended Dec 31, 1994
This excerpt covers Items 10 through 13 of HCA's 1995 annual filing, which are governance and compensation disclosures rather than financial statements. It contains no revenue, earnings, cash flow, or balance sheet data, so it cannot support a valuation or financial-performance assessment. The filing describes a board of 17 seats divided into three classes, with five Class II nominees up for election at the annual meeting, and it reflects leadership changes tied to the combination of HCA's predecessor, Hospital Corporation of America, with Columbia Hospital Corporation and Galen Health Care. Chairman R. Clayton McWhorter and Vice Chairman Thomas F. Frist, Jr. both took their current roles in April 1995, and McWhorter came from Healthtrust, Inc. Compensation disclosures show Richard L. Scott, President and CEO, with 1994 salary of $599,000 and bonus of $520,000. David T. Vandewater, Chief Operating Officer, received stock awards recorded as compensation expense of about $2.4 million in 1994 and about $3.0 million in 1993. The filing also describes a severance arrangement with an unfunded bonus pool that started at about $6.3 million and moves with the stock price relative to the August 31, 1993 closing price of $27.625. Ownership disclosures show the Columbia/HCA Stock Bonus Plan holding 7.1% and FMR Corp. holding 6.6%, with all directors and officers as a group holding 7.2% of common stock. Related-party items include a 400,000-share warrant at $20.00 issued to The 1818 Fund, L.P., whose co-manager T. Michael Long sits on the board, and small purchases from Cardinal Health, Inc. of about $251,000 in 1994. For investors, the key points are the scale of insider ownership, the governance structure (staggered board, a mandatory retirement age of 70, and a nominating committee with exclusive nomination power until September 1, 1996), and the large executive equity awards and change-in-control-style severance protections. Confirming HCA's operating performance, leverage, or financial condition would require the financial sections of the full 10-K, which are not included here.
Nov 14, 1995
1994
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 1994
Columbia/HCA Healthcare Corporation's 1994 10-K shows a company at a peak of scale and earnings momentum, but one that is simultaneously absorbing large acquisitions and carrying significant unresolved tax exposure. Revenues rose 9% to $11.1 billion in 1994, and income from continuing operations before income taxes increased 27% to $1.23 billion, with pretax margin expanding to 11.1% from 9.4%. Excluding non-recurring charges of $159 million tied to the HCA Merger, pretax income rose 24% to $1.39 billion and margin reached 12.5%. Earnings per share from continuing operations were $2.13, or $2.42 excluding non-recurring items. Much of the improvement came from lower interest expense after refinancing about $2.2 billion of high-coupon debt, and from better staffing and supply-cost discipline. Same-hospital admissions grew only 1.5%, so the top-line gains depended heavily on acquisitions, the MCA Merger, and a 43.6% jump in same-hospital outpatient visits. Balance sheet and cash flow remain solid but leveraged. Long-term debt was $3.9 billion, operating cash flow was roughly $1.3 billion, and capital expenditures were $975 million. Total assets grew to $12.3 billion, largely from the purchase-accounted MCA Merger and related intangibles, which rose to $2.3 billion. The most significant risk flagged is the IRS dispute: the agency claims about $1.5 billion in additional taxes and interest for 1981 through 1990. Management believes it will not have a material adverse effect, but the filing states plainly that an adverse outcome would materially harm financial position, results and liquidity. Other overhangs include Medicare and Medicaid reimbursement pressure, a federal proposal to extend prospective payment to outpatient services, a pending Healthtrust merger expected to close in April 1995, and several shareholder and ERISA lawsuits. The pending Healthtrust Merger, approved by both shareholder groups on February 28, 1995, is the dominant near-term event. It is expected to be accounted for as a pooling of interests and projected to yield about $125 million in annual cost savings, though the filing warns integration risk is real. Management expects roughly $70 million of refinancing losses and merger-related charges to hit second-quarter 1995 earnings. For investors, the 1994 results show a strong operating and earnings trajectory, while the Healthtrust integration, the IRS outcome, and the government reimbursement environment are the key variables to monitor.
Mar 31, 1995
1993-A2
HCA Healthcare, Inc. Annual Report (Amendment), Year Ended Dec 31, 1993
This filing is Amendment No. 2 (Form 10-K/A-2) to the fiscal 1993 Annual Report of Columbia/HCA Healthcare Corporation, which later became HCA. It replaces Item 7 (Management's Discussion and Analysis) in its entirety. The filer is named Columbia/HCA in the document, not HCA Healthcare, because the HCA merger closed on February 10, 1994, after the fiscal year ended. The amendment covers the pooled results of Columbia, HCA, and Galen, so 1993 comparisons reflect the combined company. Combined 1993 revenues rose 3% to $10.25 billion, and EBDITA reached $2.00 billion, or 19.5% of revenue. Excluding non-recurring items, pre-tax income from continuing operations grew 15% to $1.12 billion, and the pre-tax margin widened to 10.9% from 9.8%. Income from continuing operations was $673 million, or $1.99 per share. Most of the improvement came from lower interest expense, which fell to $321 million from $401 million after refinancing, not from operating growth. The operating picture was weaker. Same-hospital admissions fell 1.1% for the combined company, driven by declines at former HCA and Galen facilities. Growth came from outpatient volumes and emergency room visits, which rose 3.6%. Discounted and managed care admissions grew to 35% of total admissions from 32%, and Medicare represented 34% of revenues. Management warned that hospital margins face continued pressure from payer mix shifts and from Medicare prospective payment increases averaging about 2% for 1994. Balance sheet and cash flow were stable. Operating cash flow was about $1.3 billion in each of the last three years, and capital expenditures were $836 million in 1993, with about $800 million planned for 1994. The debt-to-capitalization ratio improved to 52% from 58%. The main risk flagged is an IRS dispute over $1.3 billion in prior-year income taxes and interest. Management believes it will not have a material adverse effect, but it says a loss on most of the disputed positions would be materially adverse. Post-merger, the company expects about $80 million of refinancing losses and merger-related expenses in the first quarter of 1994.
Dec 13, 1994
1993-A
HCA Healthcare, Inc. Annual Report (Amendment), Year Ended Dec 31, 1993
Columbia/HCA Healthcare Corporation's amended 10-K/A-1 (fiscal year ended December 31, 1993) restates the company's historical financials following its February 10, 1994 merger with HCA-Hospital Corporation of America, accounted for as a pooling of interests. Because of this, the figures reflect the combined operations of Columbia, HCA, and Galen for all periods presented. Combined 1993 revenues were $10.25 billion (up 3% from $9.93 billion in 1992), and net income was $507 million, or $1.50 per share, compared with $165 million in 1992. The 1992 result was depressed by large non-recurring charges and a discontinued health plan business, so the year-over-year improvement is partly a comparison effect. Income from continuing operations rose sharply to $575 million from $239 million, though 1993 still carried $151 million of Galen Merger-related non-recurring charges and an $84 million after-tax extraordinary loss on debt refinancing. Balance sheet and cash flow metrics were steady. Total assets were $10.2 billion, long-term debt was $3.3 billion, and stockholders' equity was $3.5 billion. Cash flow from continuing operations was $1.30 billion, while capital expenditures were $836 million, leaving meaningful free cash flow. Management has been reducing interest costs, with interest expense falling to $321 million from $401 million in 1992 and $597 million in 1991, and the company established $3 billion in new revolving credit facilities in February 1994. Investors should weigh several risk factors. The IRS is contesting numerous tax deficiencies from HCA's pre-merger years, with the company estimating potential additional taxes and interest in the range of several hundred million dollars if the IRS prevails. Professional liability reserves stand at $817 million, and federal regulators are reviewing financial arrangements with physicians at two psychiatric hospitals. Note that this filing is an amendment limited to Item 8 (financial statements) and does not include the full business discussion, MD&A, or risk factors found in the original 10-K.
Jul 7, 1994
1993
HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 1993
Columbia/HCA Healthcare Corporation (the Company) is a hospital operator that, as of March 28, 1994, ran 196 hospitals in 26 states and two foreign countries. The filing covers the 1993 fiscal year, but the reported figures are those of Columbia Healthcare Corporation alone (pre-HCA Merger), with a separate supplemental presentation that combines Columbia and HCA as if the February 10, 1994 HCA Merger (a pooling of interests) had occurred earlier. On the pre-merger Columbia basis, 1993 revenues were $5.13 billion (up 7%), net income was $139 million ($0.92 per share), and income from continuing operations was $193 million, depressed by $151 million of non-recurring Galen Merger charges. On the combined basis, revenues were $10.25 billion, net income $507 million ($1.50 per share), and EBDITA $2.0 billion with a 19.5% margin. The key investor concerns are margin pressure and reimbursement risk. Medicare represented 34% of combined revenues in 1993 (up from 30% in 1992), and management expects Medicare prospective payment increases of only about 2% in 1994. Medicaid is about 4% of revenues. Admissions were roughly flat, and occupancy fell to 45% combined. Growth has come from outpatient services, which rose to 27% of patient revenues, and from price increases. President Clinton's health care reform proposal, introduced in November 1993, could significantly reduce future provider payments. Balance sheet leverage and contingent liabilities are also significant. Combined long-term debt was about $3.7 billion, and the combined debt-to-capital ratio was 52%. The Company faces roughly $1.3 billion in disputed IRS claims for prior years, which management believes will not be material but which would be materially adverse if upheld. The HCA Merger and refinancing are expected to reduce first-quarter 1994 net income by about $80 million. Pre-merger Columbia's cash flow from continuing operations was $493 million, down from $668 million in 1992.
Mar 31, 1994