10-QPeriod: Q3 FY2020

HCA Healthcare, Inc. Quarterly Report for Q3 Ended Sep 30, 2020

Filed October 29, 2020For Securities:HCA

Summary

HCA Healthcare, Inc. (HCA) reported third-quarter 2020 results showing a revenue increase of 4.9% year-over-year to $13.311 billion, driven by a 15.3% increase in revenue per equivalent admission, despite a 9.1% decline in equivalent admissions. This performance indicates resilience and improved pricing power amidst the ongoing COVID-19 pandemic, which significantly impacted patient volumes, particularly elective procedures and emergency room visits. Net income attributable to HCA Healthcare, Inc. for the quarter was $668 million, or $1.95 per diluted share. This was impacted by a significant $822 million reversal of previously recognized government stimulus income related to the CARES Act Provider Relief Fund, which was recorded in the second quarter. Excluding this reversal, the company demonstrated strong operational performance. HCA also announced its decision to repay approximately $1.6 billion in Provider Relief Fund distributions and $4.4 billion in Medicare accelerated payments received under the CARES Act, which will be reflected in future cash flows.

Financial Highlights

47 data points
Beta

Revenue

$13.31B

Net Income

$668.00M

5.0% Net Margin

EPS (Diluted)

$1.95

Total Assets

$51.02B

Cash & Equivalents

$6.59B

Free Cash Flow

$2.23B

Financial Statements
Beta
Revenue$13.31B
Operating Expenses$12.32B
Interest Expense$385.00M
Net Income$668.00M
EPS (Basic)$1.97
EPS (Diluted)$1.95
Shares Outstanding (Basic)338.17M
Shares Outstanding (Diluted)343.35M

Key Highlights

  • 1Revenues increased by 4.9% to $13.311 billion in Q3 2020, driven by higher revenue per equivalent admission (+15.3%) despite a decline in equivalent admissions (-9.1%).
  • 2Net income attributable to HCA Healthcare was $668 million ($1.95/share), but this was impacted by an $822 million reversal of government stimulus income recognized in Q2 2020.
  • 3The company announced plans to repay approximately $6 billion in total COVID-19 related government financial assistance (Provider Relief Fund and Medicare accelerated payments).
  • 4Operating expenses saw shifts, with salaries and benefits as a percentage of revenue decreasing to 45.8% from 47.0% in Q3 2019, while supplies increased slightly as a percentage of revenue.
  • 5Consolidated and same facility admissions declined 3.9% and 3.8% respectively, with emergency department visits down 20.1% and outpatient surgeries down 6.7%.
  • 6Cash flow from operations increased significantly to $2.717 billion in Q3 2020 from $2.126 billion in Q3 2019, primarily due to operational improvements and working capital changes.
  • 7The company has substantial debt, totaling $30.964 billion as of September 30, 2020, though interest expense decreased due to lower average debt balances and reduced interest rates.

Frequently Asked Questions

The COVID-19 pandemic continued to significantly impact HCA Healthcare's operations in Q3 2020. While it led to a decline in overall patient volumes, including admissions, surgeries, and emergency department visits, it also contributed to an increase in patient acuity and average reimbursement per case. The company implemented various measures to manage costs and adapt to the evolving situation.

HCA Healthcare reversed $822 million of government stimulus income that was recognized in the second quarter of 2020. This reversal was due to updated reporting guidelines from the U.S. Department of Health and Human Services regarding the Provider Relief Fund, which changed the criteria for retaining these funds. This significantly impacted reported net income for the third quarter of 2020.

HCA Healthcare announced its decision to return approximately $1.6 billion of Provider Relief Fund distributions and $4.4 billion of Medicare accelerated payments received under the CARES Act. These funds are expected to be repaid using available cash and future operating cash flows. This repayment will affect reported cash flows from operations in future periods.

In Q3 2020, HCA Healthcare saw a notable increase in revenue per equivalent admission (up 15.3% year-over-year), which helped offset a 9.1% decline in equivalent admissions. This indicates that while fewer patients were treated overall, the company was able to charge more per patient, likely due to higher acuity cases or improved payer mix, leading to overall revenue growth.