10-QPeriod: Q3 FY2012

HCA Healthcare, Inc. Quarterly Report for Q3 Ended Sep 30, 2012

Filed November 6, 2012For Securities:HCA

Summary

HCA Holdings, Inc. reported a significant increase in net income attributable to HCA Holdings, Inc. for the nine months ended September 30, 2012, reaching $1.291 billion, a substantial rise from $530 million in the same period of the prior year. This growth was driven by an 11.1% increase in quarterly revenues to $8.062 billion and a 12.2% increase in nine-month revenues to $24.579 billion, benefiting from the consolidation of the HCA-HealthONE LLC venture and favorable Medicare adjustments. While revenue growth was robust, the company also saw an increase in the provision for doubtful accounts and uninsured discounts. The company's balance sheet reflects substantial long-term debt of $25.182 billion as of September 30, 2012, but it also demonstrates healthy operating cash flows, with $2.912 billion generated in the first nine months of 2012. The company also highlighted its ongoing efforts in EHR adoption and has provided updated estimates for EHR incentive income and related expenses.

Financial Highlights

45 data points
Beta

Revenue

$8.06B

Net Income

$360.00M

4.5% Net Margin

EPS (Diluted)

$0.78

Total Assets

$27.30B

Cash & Equivalents

$472.00M

Free Cash Flow

$171.00M

Financial Statements
Beta
Revenue$8.06B
Interest Expense$446.00M
Net Income$360.00M
EPS (Basic)$0.82
EPS (Diluted)$0.78
Shares Outstanding (Basic)440.90M
Shares Outstanding (Diluted)459.51M

Key Highlights

  • 1Revenue growth was strong, with quarterly revenues up 11.1% to $8.062 billion and nine-month revenues up 12.2% to $24.579 billion, year-over-year.
  • 2Net income attributable to HCA Holdings, Inc. significantly increased to $1.291 billion for the nine months ended September 30, 2012, from $530 million in the prior year.
  • 3Operating cash flow remained robust, generating $2.912 billion for the nine months ended September 30, 2012.
  • 4The company experienced a substantial increase in the provision for doubtful accounts and uninsured discounts, impacting profitability.
  • 5Significant debt remains on the balance sheet, with long-term debt totaling $25.182 billion as of September 30, 2012.
  • 6HCA is actively implementing Electronic Health Records (EHR) technology and expects significant incentive income from these efforts.

Frequently Asked Questions

The significant increase in net income was primarily driven by strong revenue growth, a 12.2% increase in nine-month revenues to $24.579 billion, due to the financial consolidation of the HCA-HealthONE LLC venture and favorable adjustments related to Medicare revenues. Additionally, a large debt retirement loss in the prior year ($481 million) significantly impacted the prior year's comparable period, making the current year's net income appear substantially higher.

HCA maintains a significant debt load, totaling $25.182 billion as of September 30, 2012. The company is managing this through operational cash flows, refinancing activities to lower interest rates, and actively managing its debt maturity profile. For instance, they issued new notes in October 2012 and renewed their revolving credit facility to extend its maturity.

The provision for doubtful accounts and uninsured discounts are significant factors impacting HCA's financial performance. For the nine months ended September 30, 2012, the provision for doubtful accounts increased by $502 million year-over-year to $2.666 billion. This, along with increased uninsured discounts, reduces the net recognized revenue and directly impacts profitability. The company notes that these provisions are primarily related to uninsured patient balances.

HCA's revenues are influenced by inpatient occupancy, outpatient procedure volumes, and pricing. For the third quarter of 2012, consolidated revenues increased 11.1%, driven by a 2.5% increase in revenue per equivalent admission and an 8.3% increase in equivalent admissions. This volume growth is partly attributed to the consolidation of the HCA-HealthONE LLC venture. Same-facility admissions and outpatient surgical volumes also showed mixed trends.