10-QPeriod: Q1 FY2017

HCA Healthcare, Inc. Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 9, 2017For Securities:HCA

Summary

HCA Healthcare, Inc. (HCA) reported revenues of $10.623 billion for the first quarter ended March 31, 2017, an increase of 3.5% from $10.260 billion in the prior year period. Despite the revenue growth, net income attributable to HCA Healthcare, Inc. decreased to $659 million ($1.74 per diluted share) from $694 million ($1.69 per diluted share) in the first quarter of 2016. This decrease was influenced by an increase in salaries and benefits, supplies, and other operating expenses as a percentage of revenue, and a higher provision for doubtful accounts. The company continues to manage a significant debt load, with total debt at $31.514 billion as of March 31, 2017. Operational metrics showed modest growth, with equivalent admissions increasing by 1.8% and revenue per equivalent admission rising by 1.7%. Same-facility revenues saw a 3.3% increase. The company actively engaged in share repurchases, spending $424 million in the quarter, and maintained ample liquidity with $2.139 billion available under its credit facilities.

Financial Highlights

43 data points
Beta

Revenue

$10.62B

Net Income

$659.00M

6.2% Net Margin

EPS (Diluted)

$1.74

Total Assets

$33.80B

Cash & Equivalents

$753.00M

Free Cash Flow

$709.00M

Financial Statements
Beta
Revenue$10.62B
Interest Expense$419.00M
Net Income$659.00M
EPS (Basic)$1.78
EPS (Diluted)$1.74
Shares Outstanding (Basic)370.29M
Shares Outstanding (Diluted)379.98M

Key Highlights

  • 1Revenues increased by 3.5% year-over-year to $10.623 billion.
  • 2Net income attributable to HCA Healthcare, Inc. decreased by 5.0% to $659 million.
  • 3Diluted EPS was $1.74, up from $1.69 year-over-year.
  • 4Same-facility revenues grew by 3.3%, driven by increased equivalent admissions and revenue per equivalent admission.
  • 5The company repurchased $424 million of its common stock during the quarter.
  • 6Total debt remains substantial at $31.514 billion as of March 31, 2017.
  • 7Cash flows from operating activities decreased by $119 million compared to the prior year quarter.

Frequently Asked Questions

The decrease in net income was primarily due to an increase in operating expenses, including salaries and benefits, supplies, and other operating expenses, as a percentage of revenue. Additionally, there was a notable increase in the self-pay revenue deductions for charity care and uninsured discounts, which impacted the overall profitability.

HCA Healthcare is a highly leveraged company with $31.514 billion in total debt as of March 31, 2017. The company relies on cash flows from operations, its senior secured credit facilities (with $2.139 billion available at the end of the quarter), and anticipated access to debt markets to manage its debt and meet its obligations. They also actively manage interest rate risk through swap agreements.

Operational trends show modest growth. Equivalent admissions increased by 1.8%, and revenue per equivalent admission grew by 1.7% year-over-year. Same-facility revenues also saw a healthy increase of 3.3%. Emergency department visits increased, while inpatient and outpatient surgeries showed minimal changes. The company is also seeing an increase in uninsured admissions, particularly in Texas and Florida.

HCA Healthcare accounts for significant self-pay revenue deductions, including charity care, uninsured discounts, and a provision for doubtful accounts. For the first quarter of 2017, these combined deductions were $5.327 billion, an increase from $4.842 billion in the prior year. The allowance for doubtful accounts represented 99.0% of the patient due accounts receivable balance at March 31, 2017, indicating a conservative approach to recognizing collectable amounts.