10-QPeriod: Q2 FY2017

HCA Healthcare, Inc. Quarterly Report for Q2 Ended Jun 30, 2017

Filed August 4, 2017For Securities:HCA

Summary

HCA Healthcare, Inc. (HCA) reported solid financial results for the second quarter and first half of 2017. For the quarter ended June 30, 2017, revenues grew 4.0% year-over-year to $10.733 billion, while net income attributable to HCA remained stable at $657 million, translating to $1.75 in diluted earnings per share. This performance reflects steady growth in patient volumes and revenue per admission, demonstrating the company's operational resilience and ability to manage costs effectively. The company continues to execute its growth strategy through targeted acquisitions and capital investments, as evidenced by $1.304 billion in capital expenditures (excluding acquisitions) during the first half of 2017. HCA also maintained a strong liquidity position, with significant cash flows from operations and available credit facilities, supporting its ongoing financial commitments and strategic initiatives, including share repurchases.

Financial Highlights

46 data points
Beta

Revenue

$10.73B

Net Income

$657.00M

6.1% Net Margin

EPS (Diluted)

$1.75

Total Assets

$34.57B

Cash & Equivalents

$705.00M

Free Cash Flow

$671.00M

Financial Statements
Beta
Revenue$10.73B
Operating Expenses$9.57B
Interest Expense$411.00M
Net Income$657.00M
EPS (Basic)$1.79
EPS (Diluted)$1.75
Shares Outstanding (Basic)365.85M
Shares Outstanding (Diluted)375.34M

Key Highlights

  • 1Total revenues increased by 4.0% to $10.733 billion for the quarter ended June 30, 2017, compared to $10.319 billion in the prior year period.
  • 2Net income attributable to HCA Healthcare, Inc. was $657 million for the quarter, largely in line with $658 million in the prior year, with diluted EPS of $1.75 compared to $1.65.
  • 3The company repurchased $966 million of its common stock during the first six months of 2017, indicating a commitment to returning capital to shareholders.
  • 4Cash flows from operating activities remained robust, totaling $2.684 billion for the first six months of 2017, underscoring strong operational cash generation.
  • 5Capital expenditures, excluding acquisitions, were $1.304 billion for the first six months of 2017, signaling continued investment in facilities and infrastructure.
  • 6The provision for doubtful accounts significantly increased by $311 million in the second quarter of 2017, primarily due to higher uninsured discounts and charity care, impacting reported revenue before doubtful accounts.
  • 7HCA amended its senior secured revolving credit facilities in June 2017, increasing commitments and extending maturity dates, enhancing financial flexibility.

Frequently Asked Questions

HCA's revenue growth in the second quarter of 2017 was driven by a 4.0% increase in consolidated revenues, primarily due to a 1.9% rise in revenue per equivalent admission and a 2.1% increase in equivalent admissions. Same facility revenues also grew by 3.4%, reflecting similar trends in volume and pricing power.

HCA saw a significant increase in its provision for doubtful accounts, up by $311 million in Q2 2017 compared to Q2 2016. This was largely attributed to higher uninsured discounts and charity care, which combined with the provision for doubtful accounts, represented 34.8% of relevant revenues in Q2 2017, up from 32.5% in Q2 2016. This indicates an increasing trend in revenue deductions related to uninsured patients.

HCA reported strong operating cash flows ($2.684 billion for the first six months of 2017) and maintains substantial liquidity through its senior secured credit facilities. The company actively manages its debt, including issuing new notes and amending existing credit facilities to enhance financial flexibility. Despite a significant debt load ($31.661 billion at June 30, 2017), management believes its resources are sufficient to meet its liquidity needs.

For the second quarter of 2017, net income attributable to HCA Healthcare, Inc. was largely stable. The report notes that second quarter 2016 results included $10 million in legal claim costs, while second quarter 2017 results included $2 million in net gains on sales of facilities. Additionally, tax benefits related to employee equity awards impacted the provision for income taxes in both periods.