10-QPeriod: Q1 FY2019

HCA Healthcare, Inc. Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 3, 2019For Securities:HCA

Summary

HCA Healthcare, Inc. (HCA) reported a solid first quarter for 2019, demonstrating revenue growth despite a year-over-year decrease in net income attributable to HCA Healthcare, Inc. Revenues increased by 9.6% to $12.517 billion, driven by an increase in both revenue per equivalent admission and equivalent admissions. However, net income attributable to HCA Healthcare, Inc. decreased to $1.039 billion ($2.97 per diluted share) from $1.144 billion ($3.18 per diluted share) in the prior year's first quarter. This decline was largely due to the absence of significant gains on sales of facilities that boosted the prior year's results, and a notable increase in cash used for investing activities, primarily driven by a significant acquisition. The company highlighted strong operational performance with increases in consolidated and same-facility admissions and surgeries. Investments in capital expenditures, including a substantial acquisition of a seven-hospital system in North Carolina, underscore HCA's commitment to growth and expanding its market presence. While cash flow from operations saw a decline, primarily due to working capital changes including a company 401(k) match payment, HCA maintains a strong liquidity position supported by available credit facilities and access to debt markets. The company continues to manage its significant debt load and focus on operational efficiencies.

Financial Highlights

47 data points
Beta

Revenue

$12.52B

Net Income

$1.04B

8.3% Net Margin

EPS (Diluted)

$2.97

Total Assets

$43.38B

Cash & Equivalents

$531.00M

Free Cash Flow

$193.00M

Financial Statements
Beta
Revenue$12.52B
Operating Expenses$11.06B
Interest Expense$461.00M
Net Income$1.04B
EPS (Basic)$3.03
EPS (Diluted)$2.97
Shares Outstanding (Basic)342.88M
Shares Outstanding (Diluted)350.32M

Key Highlights

  • 1HCA Healthcare reported a 9.6% increase in consolidated revenues to $12.517 billion for Q1 2019 compared to Q1 2018.
  • 2Net income attributable to HCA Healthcare, Inc. decreased by 9.2% to $1.039 billion ($2.97 per diluted share) in Q1 2019, compared to $1.144 billion ($3.18 per diluted share) in Q1 2018, primarily due to the absence of significant gains on facility sales from the prior year.
  • 3Consolidated equivalent admissions increased by 4.8% and revenue per equivalent admission increased by 4.6% in Q1 2019, indicating strong patient volume and pricing power.
  • 4Cash provided by operating activities decreased by $309 million to $974 million in Q1 2019, mainly due to negative changes in working capital, including a significant payment for the 2018 401(k) company match.
  • 5Investing activities saw a substantial increase, with acquisitions rising to $1.474 billion in Q1 2019, largely due to the acquisition of a seven-hospital system in North Carolina.
  • 6Capital expenditures, excluding acquisitions, were $781 million in Q1 2019, with approximately $3.7 billion expected for the full year 2019, reflecting continued investment in facilities.
  • 7HCA repurchased $278 million of its common stock in Q1 2019, signaling a commitment to returning capital to shareholders.

Frequently Asked Questions

The revenue increase of 9.6% to $12.517 billion in the first quarter of 2019 was primarily driven by the combined impact of a 4.6% increase in revenue per equivalent admission and a 4.8% increase in equivalent admissions.

The decrease in net income attributable to HCA Healthcare, Inc. from $1.144 billion in Q1 2018 to $1.039 billion in Q1 2019 was largely due to the prior year's first quarter including significant net gains of $405 million from the sale of facilities, which were not present in the current quarter's results. Additionally, the current quarter's revenue included a one-time benefit of $86 million related to the resolution of out-of-network service billing differences.

HCA Healthcare plans to invest approximately $3.7 billion in capital expenditures, excluding acquisitions, for 2019. The first quarter of 2019 saw significant acquisition activity, with $1.474 billion spent, primarily for the acquisition of a seven-hospital system in North Carolina. The company expects to finance these capital expenditures through internally generated funds and borrowed funds.

While cash flow from operations decreased by $309 million in Q1 2019 primarily due to working capital changes, HCA maintains significant liquidity. The company has $2.233 billion available under its senior secured credit facilities. Total debt stood at $34.815 billion as of March 31, 2019. In January 2019, HCA issued $1.5 billion in senior unsecured notes to fund the North Carolina acquisition, indicating continued access to debt markets to support strategic initiatives.