10-KPeriod: FY2016

HCA Healthcare, Inc. Annual Report, Year Ended Dec 31, 2016

Filed February 22, 2017For Securities:HCA

Summary

HCA Healthcare, Inc. (HCA) reported strong financial performance for the fiscal year ended December 31, 2016. The company generated revenues of $41.5 billion, a 4.6% increase from the prior year, driven by growth in both equivalent admissions and revenue per equivalent admission. Net income attributable to HCA Holdings, Inc. saw a substantial increase of 35.8% to $2.89 billion, or $7.30 per diluted share. This growth was boosted by favorable legal settlements and tax benefits, alongside operational improvements. The company continues to execute its growth agenda, focusing on expanding its presence in existing markets, enhancing clinical and satisfaction measures, recruiting physicians, leveraging its scale for profitability, and pursuing a disciplined development strategy. Despite a highly competitive healthcare landscape and evolving regulatory environment, HCA demonstrated solid operational execution, with increases in admissions, surgeries, and emergency room visits on both a consolidated and same-facility basis. The company also managed its provision for doubtful accounts effectively, although self-pay revenue deductions increased, reflecting ongoing challenges in collecting from uninsured patients.

Financial Highlights

45 data points
Beta

Revenue

$41.49B

Net Income

$2.89B

7.0% Net Margin

EPS (Diluted)

$7.30

Total Assets

$33.76B

Cash & Equivalents

$646.00M

Free Cash Flow

$2.89B

Financial Statements
Beta
Revenue$41.49B
Operating Expenses$36.68B
Interest Expense$1.71B
Net Income$2.89B
EPS (Basic)$7.53
EPS (Diluted)$7.30
Shares Outstanding (Basic)383.59M
Shares Outstanding (Diluted)395.85M

Key Highlights

  • 1Achieved $41.5 billion in revenue for fiscal year 2016, a 4.6% increase year-over-year.
  • 2Reported a 35.8% increase in net income attributable to HCA Holdings, Inc. to $2.89 billion, or $7.30 per diluted share.
  • 3Consolidated admissions increased by 1.2%, with same-facility admissions up 1.1%, indicating steady patient volume growth.
  • 4Successfully managed operating expenses, with salaries, benefits, and supplies as a percentage of revenue remaining stable.
  • 5Received significant benefits from a legal claim settlement ($246 million) and tax adjustments ($213 million) in 2016.
  • 6Continued share repurchase program, demonstrating commitment to returning capital to shareholders.
  • 7Maintains a strong position in key markets like Florida and Texas, contributing significantly to overall revenue.

Frequently Asked Questions

HCA Healthcare's revenue growth in 2016 was driven by a combination of increased patient volumes (measured by equivalent admissions) and higher revenue per equivalent admission. Specifically, consolidated equivalent admissions grew by 2.2%, and revenue per equivalent admission increased by 2.3% compared to 2015.

The provision for doubtful accounts decreased significantly in 2016 to $3.26 billion from $3.91 billion in 2015. However, self-pay revenue deductions for charity care and uninsured discounts increased, reflecting ongoing challenges in collecting from uninsured or underinsured patients. Despite this, the company's allowance for doubtful accounts represented approximately 97.5% of its patient due accounts receivable at year-end.

The filing notes that the Health Reform Law (ACA) had a net positive effect on the company to date, primarily by reducing the number of uninsured patients. However, it also mentions potential Medicare reductions and uncertainties surrounding future changes or repeal of the law, which could impact operations.

HCA Healthcare's growth strategy includes expanding its presence in existing markets through physician recruitment and developing outpatient facilities, achieving industry-leading clinical and satisfaction measures, leveraging its scale for profitability, and pursuing a disciplined acquisition and development strategy.