10-QPeriod: Q2 FY2013

HCA Healthcare, Inc. Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 7, 2013For Securities:HCA

Summary

HCA Healthcare, Inc. (HCA) reported solid revenue growth in the second quarter of 2013, with revenues increasing by 4.2% to $8.450 billion, driven by a 3.0% increase in revenue per equivalent admission and a 1.1% rise in equivalent admissions. Net income attributable to HCA Holdings, Inc. saw a notable increase of 8.1% to $423 million, translating to $0.91 per diluted share, up from $0.85 in the prior year's quarter. The company demonstrated operational improvements, with same-facility revenues growing by 4.0%. However, the six-month period presented a different picture, with net income attributable to HCA Holdings, Inc. declining by 17.7% to $767 million, or $1.66 per diluted share, compared to $931 million, or $2.03 per diluted share, in the same period of 2012. This decline was impacted by specific Medicare revenue adjustments in the prior year and the inclusion of debt retirement losses in the current period. Despite this, the company maintained a strong focus on managing its capital structure and liquidity, with significant operating cash flows and available credit facilities.

Financial Highlights

43 data points
Beta

Revenue

$8.45B

Net Income

$423.00M

5.0% Net Margin

EPS (Diluted)

$0.91

Total Assets

$27.93B

Cash & Equivalents

$462.00M

Free Cash Flow

$322.00M

Financial Statements
Beta
Revenue$8.45B
Interest Expense$462.00M
Net Income$423.00M
EPS (Basic)$0.95
EPS (Diluted)$0.91
Shares Outstanding (Basic)446.61M
Shares Outstanding (Diluted)463.18M

Key Highlights

  • 1Consolidated revenues increased by 4.2% to $8.450 billion for the quarter ended June 30, 2013, compared to $8.112 billion for the same period in 2012.
  • 2Net income attributable to HCA Holdings, Inc. for the quarter rose by 8.1% to $423 million ($0.91 per diluted share) from $391 million ($0.85 per diluted share) in the prior year's quarter.
  • 3Same-facility revenues grew by 4.0% for the quarter, indicating consistent performance across comparable operations.
  • 4Despite a quarter-over-quarter increase, net income attributable to HCA Holdings, Inc. for the six months ended June 30, 2013, decreased by 17.7% to $767 million, impacted by specific prior-year Medicare revenue adjustments and debt retirement costs.
  • 5The company's provision for doubtful accounts remained substantial, with a slight decrease in the quarter but a larger decrease year-over-year for the six-month period, while uninsured discounts and charity care costs increased.
  • 6Operating cash flows for the first six months of 2013 declined to $1.554 billion from $2.257 billion in the prior year, primarily due to lower net income and unfavorable working capital changes.
  • 7HCA Healthcare maintained a significant level of debt, totaling $28.200 billion at June 30, 2013, with ongoing efforts to manage its capital structure and debt service.

Frequently Asked Questions

Revenue growth in the second quarter of 2013 was primarily driven by a 3.0% increase in revenue per equivalent admission and a 1.1% increase in equivalent admissions. This indicates both better pricing or service mix and higher patient volumes (inpatient and outpatient combined) compared to the prior year's quarter.

The decrease in net income for the first six months of 2013 was significantly influenced by two main factors: Firstly, the prior year (2012) benefited from specific Medicare revenue adjustments (Rural Floor Provision Settlement and revised SSI ratios) that added approximately $188 million to revenues. Secondly, the first six months of 2013 included a $17 million loss on the retirement of debt, which did not occur in the comparable prior period. Excluding these items, the underlying operational performance might show a different trend.

HCA Healthcare notes that the full impact of the Patient Protection and Affordable Care Act (PPACA) remains uncertain due to its complexity, phased implementation, and potential for amendments or repeal. Key provisions, such as the employer mandate, are delayed. The company is unable to predict with certainty the precise effects on its business model, financial condition, or results of operations.

HCA Healthcare is a highly leveraged company with $28.200 billion in debt as of June 30, 2013. The company is managing this through a combination of cash flows from operations, available credit facilities (approximately $2.985 billion available under senior secured credit facilities), and anticipated access to debt markets. They also redeemed $201 million of senior secured second lien notes in March 2013. Interest expense remains a significant outflow, impacting profitability.