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HCA Healthcare, Inc. Annual Report (Amendment), Year Ended Dec 31, 1993

Filing Date
Filed December 13, 1994
Period End
December 31, 1993
Security
HCA
In the record · 2016–202610-K1110-Q328-K144

HCA filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 144 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jun ’17Jun ’17
  2. Material agreement8-K · Oct ’19Oct ’19
  3. Leadership change8-K · Oct ’21Oct ’21
  4. Leadership change8-K · Jul ’25Jul ’25

01—Abstract

Summary

Summary of the 10-K/A filed December 13, 1994. Cited figures are marked; the original filing is the authoritative source.

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 billiona, 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 millionb 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%c. 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 billiond 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.

02—Key points

Key Highlights

  1. Combined 1993 revenues rose 3% to $10.25 billion; EBDITA was $2.00 billion (19.5% of revenue), versus $1.92 billion in 1992.
  2. Pre-tax income from continuing operations, excluding non-recurring items, rose 15% to $1.12 billion, and the pre-tax margin improved to 10.9% from 9.8%, mainly due to lower interest expense.
  3. Income from continuing operations was $673 million ($1.99 per share) in 1993, up 13% from $597 million ($1.82 per share) in 1992, excluding non-recurring items.
  4. Same-hospital admissions fell 1.1% in 1993, reflecting weakness at former HCA and Galen hospitals, while emergency room visits grew 3.6% and outpatient volumes increased.
  5. Discounted and managed care admissions rose to 35% of total admissions from 32%, and Medicare accounted for 34% of revenues, which pressures margins.
  6. Operating cash flow was about $1.3 billion, with 1993 capital expenditures of $836 million and planned 1994 capital spending of about $800 million.
  7. The company faces a $1.3 billion disputed IRS tax claim; management expects no material adverse effect, but a loss on most positions would be materially adverse.

03—Questions

Frequently Asked Questions

  1. Why is this filing called Columbia/HCA rather than HCA Healthcare?

    The HCA merger closed on February 10, 1994, after the 1993 fiscal year ended. The filer was still Columbia/HCA Healthcare Corporation when this amendment was filed on December 13, 1994. Its 1993 financials are restated on a pooling-of-interests basis to include Columbia, HCA, and Galen as if they had always been combined.

  2. How much of the 1993 earnings improvement came from operations versus financing?

    Most of the pre-tax improvement came from financing. Interest expense fell by $80 million, from $401 million to $321 million, after refinancings in 1992 and 1993. Operating results were mixed, with lower same-hospital admissions offset by price increases, acquisitions, and outpatient growth. Staffing efficiencies also helped, as salaries, wages and benefits fell to 41.1% of revenues from 41.4%.

  3. What are the largest risks to future earnings disclosed in the filing?

    The main risks are: (1) the $1.3 billion IRS tax dispute, which could be materially adverse if the IRS prevails on most positions; (2) continued declines in inpatient admissions and a shift toward discounted managed care business; (3) pressure from Medicare prospective payments, which are expected to rise only about 2% in 1994; and (4) the health care reform proposals, including President Clinton's bill, which could significantly reduce provider payments. In the first quarter of 1994, the company also expected about $80 million in refinancing losses and merger-related costs.

  4. Did the company's dividend and capital structure change?

    The company had initiated a quarterly dividend of $0.03 per common share in September 1993, and management said it expected to continue that policy after the HCA merger. Debt as a share of debt plus equity improved to 52% at year-end 1993 from 58% in 1992. This was partly due to the Spinoff from Humana, which reduced stockholders' equity by $802 million in 1993.

04—Continue

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