10-QPeriod: Q3 FY2013

HCA Healthcare, Inc. Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 6, 2013For Securities:HCA

Summary

HCA Healthcare, Inc. (HCA) reported financial results for the third quarter and first nine months of 2013. For the third quarter, revenues increased by 4.9% year-over-year to $8.456 billion, and net income attributable to HCA Holdings, Inc. was $365 million, or $0.79 per diluted share. This represents a slight increase from the prior year's third quarter net income of $360 million, or $0.78 per diluted share. For the first nine months of 2013, revenues grew by 3.1% to $25.346 billion, while net income attributable to HCA Holdings, Inc. declined to $1.132 billion, or $2.44 per diluted share, from $1.291 billion, or $2.81 per diluted share, in the same period of 2012. The company experienced growth in key volume metrics such as admissions and surgeries, alongside an increase in revenue per equivalent admission. However, the provision for doubtful accounts and self-pay revenue deductions saw a significant increase, impacting profitability. The company also noted a substantial decrease in electronic health record incentive income compared to the prior year. Despite these pressures, HCA Healthcare continues to invest in its facilities with capital expenditures and manages its substantial debt load.

Financial Highlights

43 data points
Beta

Revenue

$8.46B

Net Income

$365.00M

4.3% Net Margin

EPS (Diluted)

$0.79

Total Assets

$28.39B

Cash & Equivalents

$484.00M

Free Cash Flow

$449.00M

Financial Statements
Beta
Revenue$8.46B
Interest Expense$458.00M
Net Income$365.00M
EPS (Basic)$0.82
EPS (Diluted)$0.79
Shares Outstanding (Basic)447.33M
Shares Outstanding (Diluted)463.57M

Key Highlights

  • 1HCA Healthcare reported a 4.9% increase in third-quarter revenues to $8.456 billion, compared to $8.062 billion in the prior year's quarter.
  • 2Net income attributable to HCA Holdings, Inc. for the third quarter was $365 million, or $0.79 per diluted share, a modest increase from $360 million, or $0.78 per diluted share, in Q3 2012.
  • 3For the first nine months of 2013, net income attributable to HCA Holdings, Inc. decreased to $1.132 billion ($2.44/diluted share) from $1.291 billion ($2.81/diluted share) in the comparable 2012 period.
  • 4Total company admissions and same-facility admissions saw slight increases of 0.5% and 0.7% respectively in Q3 2013 compared to Q3 2012.
  • 5The provision for doubtful accounts increased by $124 million in Q3 2013 compared to Q3 2012, reflecting challenges with patient collections.
  • 6Electronic Health Record (EHR) incentive income decreased significantly, from $131 million in Q3 2012 to $75 million in Q3 2013.
  • 7Capital expenditures for the nine months ended September 30, 2013, were $1.347 billion (excluding acquisitions), indicating continued investment in facilities.

Frequently Asked Questions

Revenue growth in the third quarter of 2013 was driven by a combination of a 3.9% increase in revenue per equivalent admission and a 0.9% increase in equivalent admissions on a consolidated basis, compared to the third quarter of 2012.

The decrease in net income for the first nine months of 2013 was primarily due to a decline in net income of $137 million and a negative impact from changes in working capital items totaling $330 million. Additionally, the prior year's nine-month results were positively impacted by Medicare revenue adjustments amounting to $170 million.

HCA Healthcare is unable to predict the exact impact of the ACA due to its complexity, delayed implementation, potential amendments, and varying responses from individuals, states, and businesses. The company notes that key provisions affecting coverage were set to become effective in January 2014, but technical issues with the federal marketplace and delays in the employer mandate have introduced uncertainty.

HCA Healthcare is a highly leveraged company with significant debt service requirements. At September 30, 2013, its total debt was $28.377 billion. The company manages this through internally generated cash flows, amounts available under its senior secured credit facilities, and anticipated access to public and private debt markets. During March 2013, the company also redeemed a portion of its senior secured second lien notes.