10-QPeriod: Q3 FY2017

HCA Healthcare, Inc. Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 7, 2017For Securities:HCA

Summary

HCA Healthcare, Inc. (HCA) reported its third-quarter and nine-month results for the period ending September 30, 2017. For the third quarter, revenues increased by 4.2% year-over-year to $10.696 billion, while net income attributable to HCA Healthcare, Inc. decreased by 31.1% to $426 million, or $1.15 per diluted share, compared to $618 million, or $1.59 per diluted share, in the prior year period. This decline in net income was primarily influenced by approximately $140 million in expenses and lost revenue due to Hurricanes Harvey and Irma, and a $50 million negative impact from the Texas Medicaid Waiver program. For the first nine months of 2017, revenues grew by 3.9% to $32.052 billion. Net income attributable to HCA Healthcare, Inc. decreased by 11.6% to $1.742 billion, or $4.64 per diluted share, compared to $1.970 billion, or $4.93 per diluted share, in the same period last year. The company also continued its share repurchase program, buying back approximately $1.475 billion of stock in the first nine months of 2017. Despite the quarterly net income decline, operational metrics such as revenue per equivalent admission and equivalent admissions showed growth, indicating underlying demand for services.

Financial Highlights

45 data points
Beta

Revenue

$10.70B

Net Income

$426.00M

4.0% Net Margin

EPS (Diluted)

$1.15

Total Assets

$35.73B

Cash & Equivalents

$718.00M

Free Cash Flow

$279.00M

Financial Statements
Beta
Revenue$10.70B
Operating Expenses$9.92B
Interest Expense$427.00M
Net Income$426.00M
EPS (Basic)$1.18
EPS (Diluted)$1.15
Shares Outstanding (Basic)360.17M
Shares Outstanding (Diluted)369.83M

Key Highlights

  • 1Third-quarter revenues grew 4.2% year-over-year to $10.696 billion, while nine-month revenues increased by 3.9% to $32.052 billion.
  • 2Net income attributable to HCA Healthcare, Inc. declined significantly in Q3 2017 ($426 million) compared to Q3 2016 ($618 million) and for the nine-month period ($1.742 billion vs $1.970 billion).
  • 3Q3 2017 results were negatively impacted by an estimated $140 million due to Hurricanes Harvey and Irma and $50 million from the Texas Medicaid Waiver program.
  • 4The provision for doubtful accounts increased substantially in Q3 2017 ($1.271 billion) compared to Q3 2016 ($840 million), reflecting higher uninsured revenue deductions.
  • 5Same-facility revenue per equivalent admission increased by 2.0% in Q3 2017, indicating growth in revenue generated from existing operations.
  • 6HCA Healthcare repurchased approximately $1.475 billion of its common stock in the first nine months of 2017.
  • 7Total debt stood at $32.953 billion as of September 30, 2017, with a slight decrease in the average effective interest rate on long-term debt to 5.2% from 5.5% in the prior year period.

Frequently Asked Questions

The decrease in net income for the third quarter of 2017 was primarily due to estimated expenses and revenue losses of approximately $140 million related to Hurricanes Harvey and Irma, and a negative impact of approximately $50 million from the Texas Medicaid Waiver program. Additionally, the provision for doubtful accounts increased significantly.

Revenue performance was positive, with consolidated revenues increasing by 4.2% to $10.696 billion in the third quarter of 2017 compared to the prior year. For the first nine months of 2017, revenues grew by 3.9% to $32.052 billion. Same-facility revenues also showed growth.

HCA Healthcare actively manages uninsured patient accounts by providing uninsured discounts and charity care. The company records a provision for doubtful accounts based on historical collection experience to reflect net self-pay revenues at their estimated collectible amounts. The provision for doubtful accounts and uninsured revenue deductions (charity care and uninsured discounts) increased significantly in the reported periods.

The company's total debt was $32.953 billion as of September 30, 2017. During the nine months ended September 30, 2017, HCA issued $1.5 billion in senior secured notes and used proceeds partly to redeem $500 million of existing senior notes. The company also amended its revolving credit facilities to increase commitments and extend maturity. Financing activities also included significant share repurchases.