10-QPeriod: Q3 FY2015

HCA Healthcare, Inc. Quarterly Report for Q3 Ended Sep 30, 2015

Filed October 29, 2015For Securities:HCA

Summary

HCA Healthcare, Inc. (HCA) reported third quarter 2015 results showing revenue growth driven by increased patient volumes and slight price improvements. For the three months ended September 30, 2015, consolidated revenues increased by 6.9% to $9.856 billion compared to the prior year quarter, driven by a 4.8% increase in equivalent admissions. This growth was partially offset by a significant increase in the provision for doubtful accounts. Net income attributable to HCA Holdings, Inc. for the quarter was $449 million, or $1.05 per diluted share, down from $518 million, or $1.16 per diluted share, in the prior year quarter, largely due to $77 million in legal claim costs recognized in the current quarter. The nine-month period ended September 30, 2015, also showed revenue growth of 7.9% to $29.429 billion. Net income attributable to HCA Holdings, Inc. increased to $1.547 billion, or $3.60 per diluted share, compared to $1.348 billion, or $2.98 per diluted share, in the prior year. This improvement was despite significant expenses related to debt retirement and legal claims. The company continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

43 data points
Beta

Net Income

$449.00M

EPS (Diluted)

$1.05

Total Assets

$31.90B

Cash & Equivalents

$588.00M

Free Cash Flow

$534.00M

Financial Statements
Beta
Interest Expense$411.00M
Net Income$449.00M
EPS (Basic)$1.08
EPS (Diluted)$1.05
Shares Outstanding (Basic)414.94M
Shares Outstanding (Diluted)426.44M

Key Highlights

  • 1Revenues increased 6.9% to $9.856 billion for Q3 2015, driven by a 4.8% increase in equivalent admissions.
  • 2Net income attributable to HCA Holdings, Inc. decreased to $449 million ($1.05/share) in Q3 2015 from $518 million ($1.16/share) in Q3 2014, impacted by $77 million in legal claim costs.
  • 3For the nine months ended September 30, 2015, revenues grew 7.9% to $29.429 billion, and net income attributable to HCA Holdings, Inc. increased by 14.7% to $1.547 billion ($3.60/share).
  • 4The provision for doubtful accounts increased significantly by $400 million in Q3 2015 compared to Q3 2014, reflecting a higher ratio of uninsured patient receivables.
  • 5The company actively engaged in share repurchases, spending $1.386 billion in the first nine months of 2015 on stock buybacks.
  • 6Operating cash flow improved by $355 million for the first nine months of 2015 compared to the prior year, reaching $3.176 billion.
  • 7HCA continues to manage its debt structure, undertaking various debt issuances and redemptions throughout 2015 to optimize its capital structure.

Frequently Asked Questions

Revenue growth in the third quarter of 2015 was primarily driven by an increase in patient volumes, as indicated by a 4.8% rise in equivalent admissions. This was supported by a modest increase in revenue per equivalent admission.

The decrease in net income for the third quarter of 2015 was primarily due to a significant increase in legal claim costs, which amounted to $77 million in the current quarter. Additionally, the provision for doubtful accounts also saw a substantial increase.

HCA is actively managing its debt by refinancing existing debt, issuing new notes with lower interest rates, and redeeming older, higher-cost debt. The company also maintains access to credit facilities for liquidity.

The provision for doubtful accounts and related deductions for uninsured patients increased significantly in Q3 2015. This trend, a reversal from prior quarters, is attributed to the anniversary of benefits from health insurance exchanges and Medicaid expansion programs. The company continues to monitor these receivables closely.