10-QPeriod: Q3 FY2019

HCA Healthcare, Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 1, 2019For Securities:HCA

Summary

HCA Healthcare, Inc. reported a 10.9% increase in consolidated revenues for the third quarter of 2019, reaching $12.694 billion, up from $11.451 billion in the prior year's third quarter. This growth was driven by a 7.5% increase in equivalent admissions and a 3.1% rise in revenue per equivalent admission. However, net income attributable to HCA Healthcare, Inc. declined to $612 million ($1.76 per diluted share) from $759 million ($2.15 per diluted share) in the same period last year. This decrease was largely due to a significant $211 million loss on the retirement of debt in the current quarter, compared to a much smaller $9 million loss in the prior year. Despite the earnings dip, operational performance showed strength with increases in admissions, surgeries, and emergency department visits on both a consolidated and same-facility basis, indicating robust patient demand. For the first nine months of 2019, consolidated revenues grew by 9.9% to $37.813 billion, while net income attributable to HCA Healthcare, Inc. decreased to $2.434 billion ($6.98 per diluted share) from $2.723 billion ($7.65 per diluted share) in the comparable period of 2018. This decline was influenced by a large loss on debt retirement and lower gains on facility sales in the current year. The company continues to invest in its facilities, with capital expenditures (excluding acquisitions) increasing year-over-year, demonstrating a commitment to long-term growth and operational improvement. Management expresses confidence in the company's liquidity, citing sufficient cash flows from operations and available credit facilities.

Financial Highlights

47 data points
Beta

Revenue

$12.69B

Net Income

$612.00M

4.8% Net Margin

EPS (Diluted)

$1.76

Total Assets

$43.91B

Cash & Equivalents

$559.00M

Free Cash Flow

$987.00M

Financial Statements
Beta
Revenue$12.69B
Operating Expenses$11.71B
Interest Expense$448.00M
Net Income$612.00M
EPS (Basic)$1.80
EPS (Diluted)$1.76
Shares Outstanding (Basic)340.79M
Shares Outstanding (Diluted)347.49M

Key Highlights

  • 1Consolidated revenues increased by 10.9% to $12.694 billion in Q3 2019.
  • 2Net income attributable to HCA Healthcare, Inc. decreased by 19.3% to $612 million in Q3 2019, primarily due to a $211 million loss on debt retirement.
  • 3Total admissions increased by 5.9% on a consolidated basis and 3.2% on a same-facility basis in Q3 2019.
  • 4Revenue per equivalent admission saw a 3.1% increase on a consolidated basis and a 2.0% increase on a same-facility basis in Q3 2019.
  • 5Cash flow from operating activities increased by $405 million to $2.126 billion in Q3 2019.
  • 6Capital expenditures (excluding acquisitions) increased to $2.884 billion for the first nine months of 2019, indicating investment in facilities.
  • 7The company repurchased $1.845 million shares of common stock in Q3 2019, reflecting a commitment to returning capital to shareholders.

Frequently Asked Questions

The decrease in net income was primarily due to a significant $211 million loss incurred from the retirement of debt in the third quarter of 2019. This was a notable increase compared to the $9 million loss on debt retirement in the same period of the prior year. Excluding this debt retirement charge, the operational performance would show a more favorable comparison.

Revenue growth is being driven by a combination of increased patient volumes and higher revenue per patient. In the third quarter of 2019, consolidated revenues grew 10.9% due to a 7.5% increase in equivalent admissions and a 3.1% increase in revenue per equivalent admission. This indicates both higher patient utilization and improved pricing/reimbursement per service.

HCA Healthcare is a highly leveraged company with significant debt. During the first nine months of 2019, the company issued $5 billion in senior secured notes and refinanced a term loan. It also redeemed $600 million, $3 billion, and $1.35 billion of existing senior secured notes, incurring a substantial loss on this early redemption. The company generated $5.097 billion in cash from operations in the first nine months of 2019 and has access to credit facilities, which management believes are sufficient for liquidity needs.

Operational metrics demonstrate strength. In the third quarter of 2019, admissions increased by 5.9% on a consolidated basis and 3.2% on a same-facility basis. Surgeries saw a 4.9% consolidated increase and a 2.5% same-facility increase. Emergency department visits also rose by 6.1% consolidated and 4.1% on a same-facility basis, indicating strong demand for services across various areas.