2020 ☒ Accelerated filer ☐ ☐ Smaller reporting company ☐ ☐ Voting common stock, $.01 par value 2019 Revenues before provision for doubtful accounts Provision for doubtful accounts Revenues Salaries and benefits Supplies Other operating expenses Equity in earnings of affiliates Depreciation and amortization Interest expense Gains on sales of facilities Losses on retirement of debt Legal claim costs Income before income taxes Provision for income taxes Net income Net income attributable to noncontrolling interests Net income attributable to HCA Healthcare, Inc. Per share data: Basic earnings per share Diluted earnings per share Shares used in earnings per share calculations (in millions): Basic Diluted notes are an integral part of the condensed consolidated financial statements. 2019 Net income Other comprehensive income (loss) before taxes: Foreign currency translation Unrealized gains (losses) onavailable-for-sale securities Defined benefit plans Pension costs included in salaries and benefits Change in fair value of derivative financial instruments Interest costs included in interest expense Other comprehensive income (loss) before taxes Income taxes (benefits) related to other comprehensive income items Other comprehensive income (loss) Comprehensive income Comprehensive income attributable to noncontrolling interests Comprehensive income attributable to HCA Healthcare, Inc. notes are an integral part of the condensed consolidated financial statements. Current assets: Cash and cash equivalents Accounts receivable, less allowance for doubtful accounts of $5,416 and $4,988 Inventories Other Property and equipment, at cost Accumulated depreciation Investments of insurance subsidiaries Investments in and advances to affiliates Goodwill and other intangible assets Other Current liabilities: Accounts payable Accrued salaries Other accrued expenses Long-term debt due within one year Long-term debt, less net debt issuance costs of $171 and $170 Professional liability risks Income taxes and other liabilities Stockholders’ deficit: Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding 356,979,800 shares in 2017 and 370,535,900 shares in 2016 Accumulated other comprehensive loss Retained deficit Stockholders’ deficit attributable to HCA Healthcare, Inc. Noncontrolling interests notes are an integral part of the condensed consolidated financial statements. 2019 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Increase (decrease) in cash from operating assets and liabilities: Accounts receivable Provision for doubtful accounts Accounts receivable, net Inventories and other assets Accounts payable and accrued expenses Depreciation and amortization Income taxes Gains on sales of facilities Losses on retirement of debt Legal claim costs Amortization of debt issuance costs Share-based compensation Other Net cash provided by operating activities Cash flows from investing activities: Purchase of property and equipment Acquisition of hospitals and health care entities Disposal of hospitals and health care entities Change in investments Other Net cash used in investing activities Cash flows from financing activities: Issuances of long-term debt Net change in revolving bank credit facilities Repayment of long-term debt Distributions to noncontrolling interests Payment of debt issuance costs Repurchases of common stock Other Net cash used in financing activities Change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Interest payments Income tax payments, net notes are an integral part of the condensed consolidated financial statements. 2019. Medicare Managed Medicare Medicaid Managed Medicaid Managed care and other insurers International (managed care and other insurers) Uninsured Other Revenues before provision for doubtful accounts Provision for doubtful accounts Revenues Medicare Managed Medicare Medicaid Managed Medicaid Managed care and other insurers International (managed care and other insurers) Uninsured Other Revenues before provision for doubtful accounts Provision for doubtful accounts Revenues 2019, respectively. 2020. We are also subject to examination by Net income attributable to HCA Healthcare, Inc. Weighted average common shares outstanding Effect of dilutive incremental shares Shares used for diluted earnings per share Earnings per share: Basic earnings per share Diluted earnings per share Debt securities: States and municipalities Money market funds Equity securities Amounts classified as current assets Investment carrying value Debt securities: States and municipalities Money market funds Equity securities Amounts classified as current assets Investment carrying value Due in one year or less Due after one year through five years Due after five years through ten years Due after ten years Pay-fixed interest rate swaps Pay-fixed interest rate swaps Derivatives in Cash Flow Hedging Relationships Interest rate swaps (continued) Assets: Investments of insurance subsidiaries: Debt securities: States and municipalities Money market funds Equity securities Investments of insurance subsidiaries Less amounts classified as current assets Interest rate swaps (Other) Liabilities: Interest rate swaps (Income taxes and other liabilities) Assets: Investments of insurance subsidiaries: Debt securities: States and municipalities Money market funds Equity securities Investments of insurance subsidiaries Less amounts classified as current assets Interest rate swaps (Other) Liabilities: Interest rate swaps (Income taxes and other liabilities) Senior secured asset-based revolving credit facility (effective interest rate of 2.7%) Senior secured revolving credit facility Senior secured term loan facilities (effective interest rate of 3.6%) Senior secured notes (effective interest rate of 5.4%) Other senior secured debt (effective interest rate of 5.8%) Senior secured debt Senior unsecured notes (effective interest rate of 6.4%) Net debt issuance costs Total debt (average life of 7.1 years, rates averaging 5.2%) Less amounts due within one year agreement will bear interest at either (i) the LIBOR rate plus 2.50% or (ii) an alternate base rate as defined in the credit agreement. As of June 30, 2020 there were no amounts outstanding nor draw notices pending under the facility. Balances at December 31, 2016 Comprehensive income Repurchase of common stock Distributions Share-based benefit plans Other Balances at September 30, 2017 January 2019 and 2020 authorizations. Balances at December 31, 2016 Unrealized gains onavailable-for-sale securities, net of $2 of income taxes Foreign currency translation adjustments, net of $34 of income taxes Change in fair value of derivative instruments, net of $3 income tax benefits Expense reclassified into operations from other comprehensive income, net of $5 and $6, respectively, income tax benefits Balances at September 30, 2017 equity in earnings of affiliates, adjusted segment EBITDA and depreciation and amortization for the quarters and Revenues: National Group American Group Corporate and other Equity in earnings of affiliates: National Group American Group Corporate and other Adjusted segment EBITDA: National Group American Group Corporate and other Depreciation and amortization: National Group American Group Corporate and other Adjusted segment EBITDA Depreciation and amortization Interest expense Gains on sales of facilities Losses on retirement of debt Legal claim costs Income before income taxes admission. Medicare Managed Medicare Medicaid Managed Medicaid Managed care and other insurers International (managed care and other insurers) Uninsured Other Revenues before provision for doubtful accounts Provision for doubtful accounts Revenues Medicare Managed Medicare Medicaid Managed Medicaid Managed care and other insurers International (managed care and other insurers) Uninsured Other Revenues before provision for doubtful accounts Provision for doubtful accounts Revenues (continued) (continued) Charity care Uninsured discounts Provision for doubtful accounts Totals quarter. Medicare Managed Medicare Medicaid Managed Medicaid Managed care and other insurers Uninsured (continued) (continued) Medicare Managed Medicare Medicaid Managed Medicaid Managed care and other insurers Uninsured 2020. Revenues before provision for doubtful accounts Provision for doubtful accounts Revenues Salaries and benefits Supplies Other operating expenses Equity in earnings of affiliates Depreciation and amortization Interest expense Gains on sales of facilities Losses on retirement of debt Legal claim costs Income before income taxes Provision for income taxes Net income Net income attributable to noncontrolling interests Net income attributable to HCA Healthcare, Inc. % changes from prior year: Revenues Income before income taxes Net income attributable to HCA Healthcare, Inc. Admissions(a) Equivalent admissions(b) Revenue per equivalent admission Same facility % changes from prior year(c): Revenues Admissions(a) Equivalent admissions(b) Revenue per equivalent admission (continued) Revenues before provision for doubtful accounts Provision for doubtful accounts Revenues Salaries and benefits Supplies Other operating expenses Equity in earnings of affiliates Depreciation and amortization Interest expense Gains on sales of facilities Losses on retirement of debt Legal claim costs Income before income taxes Provision for income taxes Net income Net income attributable to noncontrolling interests Net income attributable to HCA Healthcare, Inc. % changes from prior year: Revenues Income before income taxes Net income attributable to HCA Healthcare, Inc. Admissions(a) Equivalent admissions(b) Revenue per equivalent admission Same facility % changes from prior year(c): Revenues Admissions(a) Equivalent admissions(b) Revenue per equivalent admission (continued) 2019 2019. 2019. 2019. expenditures at our existing facilities. 2019. surgery center partnerships. 2019. The $2.264 billion decline in working capital is primarily related to the net effect of an increase in cash and cash equivalents of $4.017 billion, offset by a decline in accounts receivable of $1.241 billion and an increase in contract liabilities-deferred revenues of $4.999 billion. 2019. applied against the advance payment balance. Any unapplied advance payment amounts must be paid in full within one year from receipt of the advance payments for acute care hospitals and within 210 days for other health care providers. During funding. investments. income. 2020 and 2019, respectively. Number of hospitals in operation at: March 31 June 30 September 30 December 31 Number of freestanding outpatient surgical centers in operation at: March 31 June 30 September 30 December 31 Licensed hospital beds at(a): March 31 June 30 September 30 December 31 Weighted average licensed beds(b): Quarter: First Second Third Fourth Year Average daily census(c): Quarter: First Second Third Fourth Year Admissions(d): Quarter: First Second Third Fourth Year Equivalent admissions(e): Quarter: First Second Third Fourth Year Average length of stay (days)(f): Quarter: First Second Third Fourth Emergency room visits(g): Quarter: First Second Third Fourth Year Outpatient surgeries(h): Quarter: First Second Third Fourth Year Inpatient surgeries(i): Quarter: First Second Third Fourth Year Days revenues in accounts receivable(j): Quarter: First Second Third Fourth Outpatient revenues as a % of patient revenues(k): Quarter: First Second Third Fourth Year (continued) Accounts receivable aging at September 30, 2017(l): Medicare and Medicaid Managed care and other discounted Uninsured Total effective as of June 30, 2020. Subsidiary Guarantors (filed as Exhibit 22 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (File No. 001-11239), and incorporated herein by reference). Pursuant to ☒ SeptemberJune 30, 2017☐ Voting common stock, $.01 par value HCA New York Stock Exchange and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofand post such files). Yes ☒ No ☐ (Do not check if a smaller reporting company) October 31, 2017July 28, 2020 354,052,500 September20172020 Financial Statements (Unaudited): 2 3 4 5 6 Item 2. 7 2621 40 40 40 41 44 4.6. 44Part II.Other InformationItem 1.44Item 1A.44Item 2. 45 Item 6. 46 47NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172020 AND 2016 Quarter Nine months 2017 2016 2017 2016 $ 11,967 $ 11,110 $ 35,156 $ 33,241 1,271 840 3,104 2,392 10,696 10,270 32,052 30,849 5,081 4,740 14,878 14,133 1,777 1,699 5,369 5,131 2,075 1,896 5,970 5,617 (13 ) (22 ) (36 ) (44 ) 539 495 1,581 1,463 427 432 1,257 1,275 (7 ) (3 ) (10 ) (8 ) 39 4 39 4 — 11 — 33 9,918 9,252 29,048 27,604 778 1,018 3,004 3,245 248 273 902 898 530 745 2,102 2,347 104 127 360 377 $ 426 $ 618 $ 1,742 $ 1,970 $ 1.18 $ 1.63 $ 4.77 $ 5.09 $ 1.15 $ 1.59 $ 4.64 $ 4.93 360.170 378.199 365.398 386.968 369.834 389.592 375.013 399.577 See $ 12,602 $ 25,119 5,837 11,484 2,118 4,159 2,362 4,661 (8 ) (19 ) 636 1,255 477 938 (18 ) (17 ) — 11,404 22,461 1,198 2,658 271 550 927 2,108 144 286 $ 783 $ 1,822 $ 2.29 $ 5.32 $ 2.25 $ 5.22 342.170 342.513 348.373 349.334 notes.NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172020 AND 2016 Quarter Nine months 2017 2016 2017 2016 $ 530 $ 745 $ 2,102 $ 2,347 32 (40 ) 87 (169 ) — (2 ) 5 3 — — — — 5 4 14 13 5 4 14 13 (1 ) 13 (9 ) (57 ) 4 28 17 84 3 41 8 27 40 3 114 (126 ) 15 — 44 (50 ) 25 3 70 (76 ) 555 748 2,172 2,271 104 127 360 377 $ 451 $ 621 $ 1,812 $ 1,894 See $ 927 $ 2,108 (38 ) (18 ) 6 14 — — 4 7 4 7 (34 ) (52 ) (6 ) (11 ) (40 ) (63 ) (68 ) (60 ) (11 ) (10 ) (57 ) (50 ) 870 2,058 144 286 $ 726 $ 1,772 notes. September 30,
2017 December 31,
2016 ASSETS $ 718 $ 646 5,980 5,826 1,546 1,503 1,204 1,111 9,448 9,086 39,262 37,055 (21,933 ) (20,703 ) 17,329 16,352 368 336 201 206 7,357 6,704 1,028 1,074 $ 35,731 $ 33,758 LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 2,314 $ 2,318 1,312 1,265 1,783 2,035 202 216 5,611 5,834 32,751 31,160 1,179 1,148 1,256 1,249 4 4 (268 ) (338 ) (6,516 ) (6,968 ) (6,780 ) (7,302 ) 1,714 1,669 (5,066 ) (5,633 ) $ 35,731 $ 33,758 See
2020
2019 $ 621 7,380 1,849 1,346 11,196 47,235 (24,520 ) 22,715 315 249 8,269 1,834 480 $ 45,058 $ 2,905 1,775 2,932 — 145 7,757 33,577 1,370 1,499 1,420 3 — (460 ) (2,351 ) (2,808 ) 2,243 (565 ) $ 45,058 notes.
Attributable to
Noncontrolling
Interests
Excess of
Par
Value
Other
Comprehensive
Loss
Deficit
(in millions)
Value 342.895 $ 3 $ — $ (381 ) $ (4,572 ) $ 2,032 $ (2,918 ) 7 1,039 142 1,188 (2.106 ) 32 (310 ) (278 ) 2.242 (29 ) (29 ) (140 ) (140 ) (136 ) (136 ) (3 ) 61 58 343.031 3 — (374 ) (3,983 ) 2,099 (2,255 ) (57 ) 783 144 870 (1.928 ) (107 ) (135 ) (242 ) 0.414 118 118 (139 ) (139 ) (111 ) (111 ) (11 ) (11 ) 341.517 3 — (431 ) (3,474 ) 2,132 (1,770 ) (30 ) 612 152 734 (1.846 ) (132 ) (107 ) (239 ) 0.382 128 128 (138 ) (138 ) (157 ) (157 ) 4 (9 ) (5 ) 340.053 3 — (461 ) (3,107 ) 2,118 (1,447 ) 1 1,071 202 1,274 (2.069 ) (95 ) (177 ) (272 ) 0.462 96 96 (138 ) (138 ) (138 ) (138 ) (1 ) 61 60 338.446 3 — (460 ) (2,351 ) 2,243 (565 ) (111 ) 581 117 587 (3.287 ) 35 (476 ) (441 ) 2.449 (33 ) (33 ) (148 ) (148 ) (154 ) (154 ) (2 ) 53 51 337.608 3 — (571 ) (2,394 ) 2,259 (703 ) 337.960 NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172020 AND 2016 2017 2016 $ 2,102 $ 2,347 (3,174 ) (2,044 ) 3,104 2,392 (70 ) 348 (50 ) (161 ) (169 ) (341 ) 1,581 1,463 (9 ) 8 (10 ) (8 ) 39 4 — 33 23 26 195 196 60 39 3,692 3,954 (2,033 ) (1,884 ) (1,142 ) (468 ) 24 23 (15 ) 78 (6 ) 17 (3,172 ) (2,234 ) 1,502 5,400 650 (70 ) (700 ) (4,424 ) (363 ) (342 ) (25 ) (40 ) (1,475 ) (2,213 ) (37 ) (95 ) (448 ) (1,784 ) 72 (64 ) 646 741 $ 718 $ 677 $ 1,383 $ 1,339 $ 911 $ 890 See $ 2,108 (174 ) (231 ) (238 ) — 1,255 27 (17 ) — 16 158 67 2,971 (1,745 ) (1,504 ) 41 59 36 (3,113 ) 6,451 ) (3,040 ) (98 ) (247 ) (63 ) (278 ) (520 ) (135 ) 2,070 — 1,928 502 $ 2,430 $ 910 $ 523 notes.SeptemberJune 30, 2017,2020, these affiliates owned and operated 177186 hospitals, 119122 freestanding surgery centers and provided extensive outpatient and ancillary services. HCA Healthcare, Inc.’s facilities are located in 2021 states and England. The terms “Company,” “HCA,” “we,” “our” or “us,” as used herein and unless otherwise stated or indicated by context, refer to HCA Healthcare, Inc. and its affiliates. The terms “facilities” or “hospitals” refer to entities owned and operated by affiliates of HCA and the term “employees” refers to employees of affiliates of HCA.$91$76 million and $94 million for the quarters ended SeptemberJune 30, 20172020 and 2016, 2019,$273$172 million and $272$180 million for the ninesix months ended SeptemberJune 30, 20172020 and 2016,2019, respectively. Operating results for the quarter and ninesix months ended SeptemberJune 30, 20172020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.2020. For further information, refer to the consolidated financial statements and footnotes thereto included in our annual report on2016.theour obligations to provide healthprovided,satisfied. Our performance obligations for inpatient services are generally satisfied over periods that average approximately five days, and revenues are recognized based upon the estimated amounts due from theon charges incurred in relation to total expected charges. Our performance obligations for outpatient services are generally satisfied over a period of less than one day. The contractual relationships with patients, andin most cases, also involve a third-party payers. Third-party payers include federal and state agencies (under the Medicare andpayer (Medicare, Medicaid, programs), managed care health plans and commercial insurance companies, (includingincluding plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges. Medicare generally pays for inpatient and outpatient services at prospectively determined rates based on clinical, diagnostic and other factors. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discountedemployers.within 210 days for other health care providers. During the second quarter of 2020, we received approximately $4.4 billion from these accelerated Medicare payment requests, and these amounts are recorded under the caption “contract liabilities-deferred revenues” in our condensed consolidated balance sheet.allowancesadjustments under managed care healthand commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). We also record a provision for doubtful accountsestimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record netself-paythese revenues at the estimated amounts we expect to collect. Patients treated at our hospitals forfromby primary third-party payers, thepayer classification and other (including uninsured and otherpatients) for the quarters and ninesix months ended SeptemberJune 30, 20172020 and 20162019 are summarized in the following table (dollars in millions): Quarter 2017 Ratio 2016 Ratio $ 2,354 22.0 % $ 2,158 21.0 % 1,156 10.8 1,068 10.4 362 3.4 405 3.9 582 5.4 611 6.0 6,039 56.4 5,863 57.1 276 2.6 285 2.8 10,769 100.6 10,390 101.2 849 7.9 336 3.3 349 3.3 384 3.7 11,967 111.8 11,110 108.2 (1,271 ) (11.8 ) (840 ) (8.2 ) $ 10,696 100.0 % $ 10,270 100.0 % Nine Months 2017 Ratio 2016 Ratio $ 7,080 22.1 % $ 6,641 21.5 % 3,546 11.1 3,250 10.5 1,188 3.7 1,248 4.0 1,798 5.6 1,816 5.9 18,071 56.4 17,324 56.2 814 2.5 926 3.0 32,497 101.4 31,205 101.1 1,593 5.0 750 2.4 1,066 3.3 1,286 4.2 35,156 109.7 33,241 107.7 (3,104 ) (9.7 ) (2,392 ) (7.7 ) $ 32,052 100.0 % $ 30,849 100.0 % $ 2,635 20.9 % 1,595 12.7 416 3.3 554 4.4 6,425 50.9 284 2.3 693 5.5 $ 12,602 100.0 % $ 5,405 21.5 % 3,184 12.7 763 3.0 1,167 4.6 12,851 51.1 581 2.3 1,168 4.8 $ 25,119 100.0 % (Continued)Recent PronouncementsIn May 2014,(continued)Financial Accounting Standards Board (“FASB”) total impact of the trends related to uninsured patient accounts, we believe it is beneficial to view total uncompensated care, which is comprised of charity care, uninsured discounts and implicit price concessions. A summary of the estimated cost of total uncompensated care for the quarters and six months ended June 30, 2020 and 2019 follows (dollars in millions): $ 10,953 $ 21,559 12.2 % 12.0 % $ 7,695 $ 14,780 12.2 % 12.0 % $ 938 $ 1,774 International Accounting Standards Board issued a final, converged, principles-based standard on revenue recognition. Companies across all industries will use a five-step model to recognize revenue from customer contracts.related estimated costs of charity care were $387 million and $403 million, for the quarters ended June 30, 2020 and 2019, respectively. The new standard, which replaces nearly all existing revenue recognition guidance, will require significant management judgmentstotal uncompensated care amounts include charity care of $6.812 billion and change$6.216 billion,way many companies recognize revenue in their financial statements. In July 2015,related estimated costs of charity care were $831 million and $746 million, for the FASB decided to defer the effective date of the new revenue standard by one year to annualsix months ended June 30, 2020 and interim periods beginning after December 15, 2017 for public entities and permit entities to adopt one year earlier if they choose. The FASB decided, based on its outreach to various stakeholders and continuing amendments to the new revenue standard, that a deferral was necessary to provide adequate time to effectively implement the new standard. We are continuing to evaluate the effects the adoption of this standard will have on our financial statements and financial disclosures. We believe the most significant impact will be to the presentation of our income statement where the provision for doubtful accounts will be recorded as a direct reduction to revenues and will not be presented as a separate line item. We expect to adopt the new standard using the full retrospective application, and we do not currently believe the adoption will have a significant impact on our recognition of net revenues or related disclosures for any period.In February 2016, the FASB issued Accounting Standards Update2016-02,Leases (“ASU2016-02”), which requires lessees to recognize assets and liabilities for most leases. ASU2016-02 is effective for public business entities for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. ASU2016-02’s transition provisions will be applied using a modified retrospective approach at the beginning of the earliest comparative period presented in the financial statements. We are currently evaluating the provisions of ASU2016-02 to determine how our financial statements will be affected, and we believe the primary effect of adopting the new standard will be to recordright-of-use assets and obligations for our leases currently classified as operating leases.ninesix months ended SeptemberJune 30, 2017,2020, we paid $1.000$346 million to acquire a hospital in New Hampshire and other nonhospital health care entities. Purchase price amounts have been allocated to the related assets acquired and liabilities assumed based upon their respective fair values. The purchase price paid in excess of the fair value of identifiable net assets of these acquired entities aggregated $306 million for the six months ended June 30, 2020. During the six months ended June 30, 2019, we paid $1.397 billion to acquire seven hospital facilities (one of the acquired hospital facilities has an effective acquisition date of October 1, 2017)a7-hospital health system in North Carolina and $142$107 million to acquire other nonhospital health care entities. The consolidated financial statements include the accounts and operations of the acquired entities subsequent to the respective acquisition dates. The pro forma effects of these acquired entities on our results of operations for periods prior to the respective acquisition dates were not significant.ninesix months ended SeptemberJune 30, 2016, we paid $343 million to acquire three hospital facilities and $125 million to acquire other nonhospital health care entities.During the nine months ended September 30, 2017,2020, we received proceeds of $24$39 million and recognized a net pretax gain of $10$3 million related to sales of real estate and other investments.investments, and we also recognized a pretax loss of $23 million related to a hospital facility in Mississippi that we have executed a definitive agreement to sell in 2020. During the ninesix months ended SeptemberJune 30, 2016,2019, we received proceeds of $23$25 million and recognized a netpretax loss of $1 million related to a sale of a hospital facility in one of our Louisiana markets, and we also received proceeds of $16 million and recognized a pretax gain of $8$18 million related to sales of real estate and other investments.Our liability for unrecognized tax benefits was $429 million, including accrued interest of $40 million, as of September 30, 2017 ($418 million and $45 million, respectively, as of December 31, 2016). Unrecognized tax benefits of $136 million ($137 million as of December 31, 2016) would affect the effective rate, if recognized.SeptemberJune 30, 20172020 and 2016,2019 was $344 million and $271 million, respectively, and the effective tax rates were 24.2% and 25.7%, respectively. Our provision for income taxes for the six months ended June 30, 2020 and 2019 was $456 million and $550 million, respectively, and the effective tax rates were 21.6% and 23.2%, respectively. Our provision for income taxes included tax benefits of $4 million and $11 million, respectively, and for the nine months ended September 30, 2017 and 2016, included tax benefits of $80 million and $129 million, respectively, related to the settlement of employee equity awards. Our provision for income taxesawards of $54 million and $53 million for the quarter and ninesix months ended SeptemberJune 30, 2017 also included $42020 and 2019, respectively.$16$62 million, respectively, as of reductions in interest expense (netDecember 31, 2019). Unrecognized tax benefits of tax). We also reduced our provision for$164 million ($160 million as of December 31, 2019) would affect the effective rate, if recognized.taxes for the quarter and nine months ended Septembertax returns at June 30, 2016 by $51 million, including interest of $17 million (net of tax) primarily related to the completion of IRS examinations which resolved all outstanding federal tax issues for our 2011 and 2012 tax years. federal, state and foreign taxing authorities. Depending on the resolution of any federal, state and foreign tax disputes, the completion of examinations by federal, state or foreign taxing authorities, or the expiration of statutes of limitation for specific taxing jurisdictions, we believe it is reasonably possible that our liability for unrecognized tax benefits may significantly increase or decrease within the next 12 months. However, we are currently unable to estimate the range of any possible change.ninesix months ended SeptemberJune 30, 20172020 and 20162019 (dollars and shares in millions, except per share amounts): Quarter Nine months 2017 2016 2017 2016 $ 426 $ 618 $ 1,742 $ 1,970 360.170 378.199 365.398 386.968 9.664 11.393 9.615 12.609 369.834 389.592 375.013 399.577 $ 1.18 $ 1.63 $ 4.77 $ 5.09 $ 1.15 $ 1.59 $ 4.64 $ 4.93 $ 783 $ 1,822 342.170 342.513 6.203 6.821 348.373 349.334 $ 2.29 $ 5.32 $ 2.25 $ 5.22 SeptemberJune 30, 20172020 and December 31, 20162019 follows (dollars in millions): September 30, 2017 Amortized
Cost Unrealized
Amounts Fair
Value Gains Losses $ 352 $14 $— $ 366 52 — — 52 404 14 — 418 1 2 — 3 $ 405 $16 $— 421 (53 ) $ 368 December 31, 2016 Amortized
Cost Unrealized
Amounts Fair
Value Gains Losses $ 345 $9 $(1) $ 353 28 — — 28 373 9 (1) 381 1 3 — 4 $ 374 $12 $(1) 385 (49 ) $ 336
Cost
Amounts
Value
Cost
Amounts
Value $ 359 $ 18 $ — $ 377 85 — — 85 $ 444 $ 18 $ — 462 (147 ) $ 315 SeptemberJune 30, 20172020 and December 31, 2016,2019, the investments in debt securities of our insurance subsidiaries were classified as temporary unrealized gains and losses that are not credit-related are recorded as adjustments to other comprehensive income (loss).SeptemberJune 30, 20172020 were as follows (dollars in millions): Amortized
Cost Fair
Value $ 100 $ 100 76 80 178 187 50 51 $ 404 $ 418 HCA HEALTHCARE, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)NOTE 5 — INVESTMENTS OF INSURANCE SUBSIDIARIES (Continued)
Cost
Value $ 14 $ 14 114 122 180 197 72 77 $ 380 $ 410 SeptemberJune 30, 20172020 was 4.05.3 years, compared to the average scheduled maturity of 5.59.8 years. Expected and scheduled maturities may differ because the issuers of certain securities have the right to call, prepay or otherwise redeem such obligations prior to their scheduled maturity date.two partiesus and our counterparties based on common notional principal amounts and maturity dates. LIBOR indexed variable rate obligations to fixed interest rate obligations. The interest payments under these agreements are settled on a net basis. The net interest payments, based on the notional amounts in these agreements, generally match the timing of the related liabilities for the interest rate swap agreements which have been designated as cash flow hedges. The notional amounts of the swap agreements represent amounts used to calculate the exchange of cash flows and are not our assets or liabilities. Our credit risk related to these agreements is considered low because the swap agreements are with creditworthy financial institutions.SeptemberJune 30, 20172020 (dollars in millions): Notional
Amount Maturity Date Fair
Value $ 1,000 December 2017 $ (3 ) 2,000 December 2021 30
Amount
Value $ 2,000 December 2021 $ (40 ) 500 December 2022 (24 ) $3$36 million will be reclassified from other comprehensive income (“OCI”) toand will be included in interest expense.ninesix months ended SeptemberJune 30, 20172020 (dollars in millions): Amount of Loss
Recognized in OCI on
Derivatives, Net of Tax Location of Loss
Reclassified from
Accumulated OCI
into Operations Amount of Loss
Reclassified from
Accumulated OCI
into Operations $ 6 Interest expense $ 17
Recognized in OCI on
Derivatives, Net of Tax
Reclassified from
Accumulated OCI
into Operations
Reclassified from
Accumulated OCI
into Operations $ 51 Interest expense $ 6 Certain types of cash traded instruments are classified within Level 3 of the fair value hierarchy because they trade infrequently and therefore have little or no price transparency. The valuation of these securities involves the consideration of market factors and management’s judgment.Although we determined the majority(Continued)SeptemberJune 30, 20172020 and December 31, 2016,2019, aggregated by the level in the fair value hierarchy within which those measurements fall (dollars in millions): September 30, 2017 Fair Value Measurements Using Fair Value Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable Inputs
(Level 3) $ 366 $ — $ 366 $ — 52 52 — — 418 52 366 — 3 3 — — 421 55 366 — (53 ) (52 ) (1 ) — $ 368 $ 3 $ 365 $ — $ 30 $ — $ 30 $ — $ 3 $ — $ 3 $ — December 31, 2016 Fair Value Measurements Using Fair Value Quoted Prices in
Active Markets for
Identical Assets
and Liabilities
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable Inputs
(Level 3) $ 353 $ — $ 347 $ 6 28 28 — — 381 28 347 6 4 4 — — 385 32 347 6 (49 ) (28 ) (21 ) — $ 336 $ 4 $ 326 $ 6 $ 31 $ — $ 31 $ — $ 12 $ — $ 12 $ — HCA HEALTHCARE, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)NOTE 7 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (Continued)The $6 million reduction in the Level 3 investments of our insurance subsidiaries resulted from settlements.
Active Markets for
Identical Assets
and Liabilities
(Level 1)
Observable Inputs
(Level 2)
Unobservable Inputs
(Level 3)
Active Markets for
Identical Assets
and Liabilities
(Level 1)
Observable Inputs
(Level 2)
Unobservable Inputs
(Level 3) $ 377 $ — $ 377 $ — 85 85 — — 462 85 377 — (147 ) (83 ) (64 ) — $ 315 $ 2 $ 313 $ — $ 3 $ — $ 3 $ — $ 7 $ — $ 7 $ — $34.998$34.000 billion and $32.833$37.026 billion at SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively, compared to carrying amounts, excluding net debt issuance costs and discounts, aggregating $33.124$31.194 billion and $31.546$33.961 billion, respectively. The estimates of fair value are generally based upon the quoted market prices or quoted market prices for similar issues of long-term debt with the same maturities.SeptemberJune 30, 20172020 and December 31, 2016,2019, including related interest rates at SeptemberJune 30, 2017,2020, follows (dollars in millions): September 30,
2017 December 31,
2016 $ 3,570 $ 2,920 — — 3,915 3,981 15,300 13,800 587 593 23,372 21,294 9,752 10,252 (171 ) (170 ) 32,953 31,376 202 216 $ 32,751 $ 31,160 2017 Activity
2020
2019 $ 2,480 — — 3,725 13,850 654 20,709 13,252 (239 ) 33,722 145 $ 33,577 June 2017,February 2020, we issued $1.500$2.700 billion aggregate principal amount of 5.500%3.50% senior secured notes due 2047. We2030. During March 2020, we used the net proceeds for general corporate purposes, including funding the purchase of certain hospital acquisitions, and the redemption during July 2017, of all $500 million$1.000 billion outstanding aggregate principal amount of our existing 8.000%HCA Healthcare, Inc.’s 6.25% senior notes maturing in October 2018.due 2021 and, together with available funds, for the redemption of all $2.000 billion outstanding aggregate principal amount of HCA Inc.’s 7.50% senior notes due 2022. The pretax loss on retirement of debt was $39$295 million.During June 2017,amended our seniorentered into a credit agreement that provides for revolving credit facilities by (i) increasing the commitments under the senior secured asset-based revolving creditto $3.750 billion, (ii) extending the maturity date of the revolving credit commitments to June 28, 2022, (iii) amending the incremental facility provisions to permit the incurrence of additional incremental credit facilities infor an aggregate principal amount of $1.5 billion and (iv) providing that the commitment fee for unutilized commitmentsup to $2.000 billion. The facility will mature in March 2021. If drawn, amounts outstanding under the senior secured asset-based revolving credit facility shall be 0.250% per annum.HCA HEALTHCARE, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)CAPITAL STRUCTUREThe changes in stockholders’ deficit, including changes in stockholders’ deficit attributableSHARE REPURCHASE TRANSACTIONS AND OTHER COMPREHENSIVE LOSSHCA Healthcare, Inc.$4 billion ($2 billion for each authorization) of our outstanding common stock. In response to the risks thechanges in equity attributableexpect to noncontrolling interests, are as follows (dollars and shares in millions): Equity (Deficit) Attributable to HCA Healthcare, Inc. Equity
Attributable to
Noncontrolling
Interests Total Common Stock Capital in
Excess of
Par
Value Accumulated
Other
Comprehensive
Loss Retained
Deficit Shares Par Value 370.536 $ 4 $ — $ (338 ) $ (6,968 ) $ 1,669 $ (5,633 ) — — — 70 1,742 360 2,172 (17.847 ) — (185 ) — (1,290 ) — (1,475 ) — — — — — (363 ) (363 ) 4.291 — 188 — — — 188 — — (3 ) — — 48 45 356.980 $ 4 $ — $ (268 ) $ (6,516 ) $ 1,714 $ (5,066 ) Duringevaluate the nine monthsresumption of the programs at a future date. DuringSeptember 30, 2017,March 31, 2020, we repurchased 17.8473.287 million shares of our common stock at an average price of $82.62$134.18 per share through market purchases pursuant to the $2.0 billion share repurchase program authorized during November 2016.January 2019, and we made no repurchases during the quarter ended June 30, 2020. At SeptemberJune 30, 2017,2020, we had $379 million$2.800 billion of repurchase authorization available under the November 2016 authorization. During October 2017, our board of directors authorized a share repurchase program for up to $2 billion of our outstanding common stock.HCA HEALTHCARE, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)NOTE 10 — CAPITAL STRUCTURE (Continued) Unrealized
Gains on
Available-
for-Sale
Securities Foreign
Currency
Translation
Adjustments Defined
Benefit
Plans Change
in Fair
Value of
Derivative
Instruments Total $ 7 $ (211 ) $ (146 ) $ 12 $ (338 ) 3 — — — 3 — 53 — — 53 — — — (6 ) (6 ) — — 9 11 20 $ 10 $ (158 ) $ (137 ) $ 17 $ (268 )
Gains on
Available-
Securities
Currency
Translation
Adjustments
Benefit
Plans
in Fair
Value of
Derivative
Instruments $ 14 $ (283 ) $ (187 ) $ (4 ) $ (460 ) 9 9 (71 ) (71 ) (51 ) (51 ) 6 5 11 $ 23 $ (354 ) $ (181 ) $ (50 ) $ (562 ) two2 geographically organized groups: the National and American Groups. The National Group includes 8696 hospitals located in Alaska, California, Florida, southern Georgia, Idaho, Indiana, northern Kentucky, Nevada, New Hampshire, North Carolina, South Carolina, Utah and Virginia, and the American Group includes 8584 hospitals located in Colorado, northern Georgia, Kansas, southern Kentucky, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee and Texas. We also operate six6 hospitals in England, and these facilities are included in the Corporate and other group.gainslosses (gains) on sales of facilities, losses on retirement of debt, legal claim costs, income taxes and net income attributable to noncontrolling interests. We use adjusted segment EBITDA as an analytical indicator for purposes of allocating resources to geographic areas and assessing their performance. Adjusted segment EBITDA is commonly used as an analytical indicator within the health care industry, and also serves as a measure of leverage capacity and debt service ability. Adjusted segment EBITDA should not be considered as a measure of financial performance under generally accepted accounting principles, and the items excluded from adjusted segment EBITDA are significant components in understanding and assessing financial performance. Because adjusted segment EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, adjusted segment EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. The geographic distributions of our revenues,HCA HEALTHCARE, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)NOTE 11 — SEGMENT AND GEOGRAPHIC INFORMATION (Continued)ninesix months ended SeptemberJune 30, 20172020 and 20162019 are summarized in the following table (dollars in millions): Quarter Nine months 2017 2016 2017 2016 $ 5,036 $ 4,882 $ 15,344 $ 14,780 5,180 4,908 15,268 14,554 480 480 1,440 1,515 $ 10,696 $ 10,270 $ 32,052 $ 30,849 $ (8 ) $ (13 ) $ (17 ) $ (17 ) (9 ) (9 ) (27 ) (26 ) 4 — 8 (1 ) $ (13 ) $ (22 ) $ (36 ) $ (44 ) $ 975 $ 1,073 $ 3,268 $ 3,342 930 1,016 2,977 3,002 (129 ) (132 ) (374 ) (332 ) $ 1,776 $ 1,957 $ 5,871 $ 6,012 $ 219 $ 204 $ 650 $ 602 251 231 727 675 69 60 204 186 $ 539 $ 495 $ 1,581 $ 1,463 $ 1,776 $ 1,957 $ 5,871 $ 6,012 539 495 1,581 1,463 427 432 1,257 1,275 (7 ) (3 ) (10 ) (8 ) 39 4 39 4 — 11 — 33 $ 778 $ 1,018 $ 3,004 $ 3,245 NOTE 12 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATIONDuring December 2012, HCA Healthcare, Inc. issued $1.000 billion aggregate principal amount $ 6,444 $ 12,761 5,626 11,221 532 1,137 $ 12,602 $ 25,119 $ (3 ) $ (5 ) (11 ) (22 ) 6 8 $ (8 ) $ (19 ) $ 1,364 $ 2,818 1,117 2,258 (188 ) (242 ) $ 2,293 $ 4,834 $ 283 $ 548 270 551 83 156 $ 636 $ 1,255 $ 2,293 $ 4,834 636 1,255 477 938 (18 ) (17 ) — — $ 1,198 $ 2,658 statements.”statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include statements regarding expected share-based compensation expense, expected capital expenditures and expected net claim payments and all other statements that do not relate solely to historical or current facts, and can be identified by the use of words like “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “initiative” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond our control, which could significantly affect current plans and expectations and our future financial position and results of operations. These factors include, but are not limited to, (1) developments related to(2)as well as risks associated with disruptions in the financial markets and the business of financial institutions as the result of the“Health Reform Law”“Affordable Care Act”), including the effects of court challenges to, any repeal of, or changes to, the Health Reform LawAffordable Care Act or additional changes to its implementation, the possible enactment of additional federal or state health care reforms and possible changes to other federal, state or local laws or regulations affecting the health care industry, (3)including single-payer proposals (often referred to as “Medicare for All”), and also including any such laws or governmental regulations which are adopted in response to the(4)(5) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (5)(6) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services, (6)(7) possible changes in Medicare, Medicaid and other state programs, including Medicaid uppersupplemental payment limit programs or Waiver Programs,Medicaid waiver programs, that may impact reimbursements to health care providers and insurers (7)and the size of the uninsured or underinsured population, (8) the highly competitive nature of the health care business, (8)(9) changes in service mix, revenue mix and surgical volumes, including potential declines in the population covered under managed carethird-party payer agreements, the ability to enter into and renew managed carethird-party payer provider agreements on acceptable terms and the impact of consumer-driven health plans and physician utilization trends and practices, (9)(10) the efforts of health insurers, health care providers, large employer groups and others to contain health care costs, (10)(11) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures, (11)(12) increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel, (12)(13) the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities, (13)(14) changes in accounting practices, (14)(15) changes in general economic conditions nationally and regionally in our markets, (15)including economic and business conditions (and the impact thereof on the financial markets and banking industry) resulting from the(16)(17) future divestitures which may result in charges and possible impairments of long-lived assets, (17)(18) changes in business strategy or development plans, (18)(19) delays in receiving payments for services provided, (19)(20) the outcome of pending and any future tax audits, disputes and litigation associated with our tax positions, (20)(21) potential adverse impact of known and unknown government investigations, litigation and other claims that may be made against us, (21)(22) the impact of potential cybersecurity incidents or security breaches, (22)(23) our ongoing ability to demonstrate meaningful use of certified electronic health record (“EHR”) technology and (23)the impact of interoperability requirements, (24) the impact of natural disasters, such as hurricanes and floods, or similar events beyond our control, (25) changes in the U.S. federal, state, or foreign tax laws including interpretive guidance that may be issued by taxing authorities or other standard setting bodies, and (26) other risk factors described in our annual report on20162019, our quarterly report on FormThird20172020 Operations Summaryincreaseddeclined to $10.696$11.068 billion in the thirdsecond quarter of 20172020 from $10.270$12.602 billion in the thirdsecond quarter of 2016.2019. Net income attributable to HCA Healthcare, Inc. totaled $426 million,$1.079 billion, or $1.15$3.16 per diluted share, for the quarter ended SeptemberJune 30, 2017,2020, compared to $618$783 million, or $1.59$2.25 per diluted share, for the quarter ended SeptemberJune 30, 2016. Third2019. Second quarter 2017 results for 2020 include additional expenses and losses$822 million ($590 million net of revenues estimated at approximately $140 million,tax), or $0.24$1.73 per diluted share, associated with the impact of hurricanes Harvey and Irma on our Texas, Florida, Georgia and South Carolina facilities, and a negative impact to operating resultsgovernment stimulus income related to the Texas Medicaid Waiver program of approximately $50general distribution funds and $60 million, or $0.08$0.13 per diluted share, related to final settlement amountsof employee retention payroll tax credits, as provided for by the program year ended September 30, 2017. The amount associated with the hurricanes is prior to any insurance recoveries which we may receive. ThirdCARES Act. Second quarter 2017 results for 2020 also include netlosses on sales of facilities of $27 million, or $0.07 per diluted share, and second quarter results for 2019 include gains on sales of facilities of $7$18 million, or $0.01$0.04 per diluted share, and losses on retirement of debt of $39 million, or $0.07 per diluted share. Third quarter 2016 results include legal claim costs of $11 million, or $0.02 per diluted share, losses on retirement of debt of $4 million, or $0.01 per diluted share, and net gains on sales of facilities of $3 million, or $0.01 per diluted share. Our provisions for income taxes for the third quarters of 2017 and 2016 included tax benefits of $4 million, or $0.01 per diluted share, and $11 million, or $0.03 per diluted share, respectively, related to excess tax benefits from employee equity award settlements. Our provision for income taxes for the third quarter of 2016 also included tax benefits of $51 million, or $0.13 per diluted share, primarily related to the resolution of federal income tax issues for our 2011 and 2012 tax years. All “per diluted share” disclosures are based upon amounts net of the applicable income taxes. Shares used for diluted earnings per share were 369.834341.599 million shares for the quarter ended SeptemberJune 30, 20172020 and 389.592348.373 million shares for the quarter ended SeptemberJune 30, 2016.2019. During 20162019 and the first ninesix months of 2017,2020, we repurchased 36.3257.949 million shares and 17.8473.287 million shares of our common stock, respectively.increased 4.2%declined 12.2% on a consolidated basis and increased 2.3%declined 12.1% on a same facility basis for the quarter ended SeptemberJune 30, 2017,2020, compared to the quarter ended SeptemberJune 30, 2016.2019. The increasedecline in consolidated revenues can be primarily attributed to the combinednet impact of a 1.6%20.0% decline in equivalent admissions offset by a 9.7% increase in revenue per equivalent admission and a 2.5% increase in equivalent admissions.admission. The same facility revenues increasedecline primarily resulted from the combinednet impact of a 2.0%20.1% decline in same facility equivalent admissions offset by a 10.0% increase in same facility revenue per equivalent admission and a 0.3% increase in same facility equivalent admissions.quartersquarter ended SeptemberJune 30, 2017 and 2016,2020, consolidated admissions and same facility admissions increased 2.7%declined 12.6% and 0.6%12.8%, respectively.respectively, compared to the quarter ended June 30, 2019. Surgeries declined 0.7%26.5% on both a consolidated basis and declined 2.9% on a same facility basis during the quarter ended SeptemberJune 30, 2017,2020, compared to the quarter ended SeptemberJune 30, 2016.2019. Emergency department visits increased 2.5%declined 32.7% and 32.9% on a consolidated basis and increased 0.3% on a same facility basis, respectively, during the quarter ended SeptemberJune 30, 2017,2020, compared to the quarter ended SeptemberJune 30, 2016.For2019. Consolidated and same facility uninsured admissions declined 10.8% and 10.0%, respectively, for the quarter ended SeptemberJune 30, 2017, the provision for doubtful accounts increased $431 million,2020, compared to the quarter ended SeptemberJune 30, 2016. Theself-pay revenue deductions for charity care and uninsured discounts increased $189 million and $256 million, respectively, during the third quarter2019.depend upon inpatient occupancy levels, the ancillary services and therapy programs ordered by physicians and providedgenerally relate to patients, the volume of outpatient procedures and the charge and negotiated payment rates for such services. Gross charges typically do not reflect what our facilities are actually paid. Our facilities have entered into agreementscontracts with third-party payers, including government programs and managed care health plans, under which the facilities are paid based upon the cost of providing services, predetermined rates per diagnosis, fixed per diem rates or discounts from gross charges. We do not pursue collection of amounts related to patients who meet our guidelines to qualify for charity care; therefore, they are not reported in revenues. We provide discounts to uninsured patients who do not qualify for Medicaid or charity care. After the discounts are applied, we are still unable to collect a significant portion of uninsured patients’ accounts, and we record provisions for doubtful accounts (based upon our historical collection experience) related to uninsured patients in which our performance obligations are to provide health care services to the period the services are provided to record the netself-pay revenues at the estimated amounts we expect to collect.Revenues increased 4.2% from $10.270 billion in the third quarter of 2016 to $10.696 billion in the third quarter of 2017.patients. Revenues are recorded during the period theour obligations to provide health care services are provided,satisfied. Our performance obligations for inpatient services are generally satisfied over periods that average approximately five days, and revenues are recognized based upon the estimated amounts due from theon charges incurred in relation to total expected charges. Our performance obligations for outpatient services are generally satisfied over a period of less than one day. The contractual relationships with patients, andin most cases, also involve a third-party payers. Third-party payers include federal and state agencies (under the Medicare andpayer (Medicare, Medicaid, programs), managed care health plans and commercial insurance companies, (includingincluding plans offered through the health insurance exchanges), and employers.the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges. Medicare generally pays for inpatient and outpatient services at prospectively determined rates based on clinical, diagnostic and other factors. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discountedhealthand commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to recordfrom ourby primary third-party payers, the uninsuredpayer classification and other payers(including uninsured patients) for the quarters and ninesix months ended SeptemberJune 30, 20172020 and 20162019 are summarized in the following table (dollars in millions): Quarter 2017 Ratio 2016 Ratio $ 2,354 22.0 % $ 2,158 21.0 % 1,156 10.8 1,068 10.4 362 3.4 405 3.9 582 5.4 611 6.0 6,039 56.4 5,863 57.1 276 2.6 285 2.8 10,769 100.6 10,390 101.2 849 7.9 336 3.3 349 3.3 384 3.7 11,967 111.8 11,110 108.2 (1,271 ) (11.8 ) (840 ) (8.2 ) $ 10,696 100.0 % $ 10,270 100.0 % ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)Results of Operations (Continued)Revenue/Volume Trends (Continued) Nine Months 2017 Ratio 2016 Ratio $ 7,080 22.1 % $ 6,641 21.5 % 3,546 11.1 3,250 10.5 1,188 3.7 1,248 4.0 1,798 5.6 1,816 5.9 18,071 56.4 17,324 56.2 814 2.5 926 3.0 32,497 101.4 31,205 101.1 1,593 5.0 750 2.4 1,066 3.3 1,286 4.2 35,156 109.7 33,241 107.7 (3,104 ) (9.7 ) (2,392 ) (7.7 ) $ 32,052 100.0 % $ 30,849 100.0 % $ 2,635 20.9 % 1,595 12.7 416 3.3 554 4.4 6,425 50.9 284 2.3 693 5.5 $ 12,602 100.0 % $ 5,405 21.5 % 3,184 12.7 763 3.0 1,167 4.6 12,851 51.1 581 2.3 1,168 4.8 $ 25,119 100.0 % 1.6%9.7% and 2.0%10.0%, respectively, in the thirdsecond quarter of 2017,2020, compared to the thirdsecond quarter of 2016.2019. Consolidated and same facility equivalent admissions increased 2.5%declined 20.0% and 0.3%20.1%, respectively, in the thirdsecond quarter of 2017,2020, compared to the thirdsecond quarter of 2016.2019. Consolidated and same facility outpatient surgeries both declined 2.1% and 4.2%, respectively,32.6% in the thirdsecond quarter of 2017,2020, compared to the thirdsecond quarter of 2016.2019. Consolidated inpatient surgeries increased 1.6% and same facility inpatient surgeries declined 0.7%15.6% and 15.7%, respectively, in the thirdsecond quarter of 2017,2020, compared to the thirdsecond quarter of 2016.2019. Consolidated and same facility emergency department visits increased 2.5%declined 32.7% and 0.3%32.9%, respectively, in the thirdsecond quarter of 2017,2020, compared to the thirdsecond quarter of 2016.Our uninsured revenues increased $513 million and $843 million, respectively, for the quarter and nine months ended September 30, 2017 compared to the quarter and nine months ended September 30, 2016. The provision for doubtful accounts increased $431 million and $712 million, respectively, for the quarter and nine months ended September 30, 2017, which offset the majority2019.(Continued)(Continued)andthe trends related to uninsured patient accounts, we believe it is beneficial to view the directtotal uncompensated care, which is comprised of charity care, uninsured revenue deductions (charity carediscounts and uninsured discounts) and provision for doubtful accounts in combination, rather than each separately. At September 30, 2017, our allowance for doubtful accounts represented 99.1% of the $5.465 billion total patient due accounts receivable balance. The patient due accounts receivable balance represents the estimated uninsured portion of our accounts receivable.implicit price concessions. A summary of these adjustments to revenues amounts, related to uninsured accounts,the estimated cost of total uncompensated care for the quarters and ninesix months ended SeptemberJune 30, 20172020 and 20162019 follows (dollars in millions): Quarter Nine Months 2017 Ratio 2016 Ratio 2017 Ratio 2016 Ratio $ 1,235 20 % $ 1,046 20 % $ 3,494 20 % $ 3,100 21 % 3,583 59 3,327 64 10,539 62 9,539 63 1,271 21 840 16 3,104 18 2,392 16 $ 6,089 100 % $ 5,213 100 % $ 17,137 100 % $ 15,031 100 % $ 10,953 $ 21,559 12.2 % 12.0 % $ 7,695 $ 14,780 12.2 % 12.0 % $ 938 $ 1,774 increaseddeclined by 2,3544,264 admissions, or 6.4%, in the third quarter of 2017, compared to the third quarter of 2016. Same facility uninsured admissions increased by 4.9%10.0%, in the second quarter of 2017,2020 compared to the second quarter of 2016.2019. Same facility uninsured admissions increased by 3.2%7.1%, in the first quarter of 2017,2020 compared to the first quarter of 2016.2019. Same facility uninsured admissions in 2016,2019, compared to 2015, declined 0.3%2018, increased 6.8% in the fourth quarter, of 2016, increased 0.7%2.1% in the third quarter, of 2016, increased 5.7%5.1% in the second quarter, of 2016 and increased 10.6%were flat in the first quarter of 2016.other insurers and the uninsured for the quarters and ninesix months ended SeptemberJune 30, 20172020 and 20162019 are set forth in the following table. Quarter Nine Months 2017 2016 2017 2016 30 % 30 % 31 % 31 % 15 15 16 15 5 6 5 6 13 12 12 12 28 29 28 29 9 8 8 7 100 % 100 % 100 % 100 % 29 % 29 % 18 19 5 5 12 12 27 27 9 8 100 % 100 % (Continued)(Continued) before provision for doubtful accounts, related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and other insurers and the uninsured for the quarters and ninesix months ended SeptemberJune 30, 20172020 and 20162019 are set forth in the following table. Quarter Nine Months 2017 2016 2017 2016 27 % 27 % 27 % 28 % 12 12 12 12 4 6 5 6 5 6 6 6 47 49 47 48 5 — 3 — 100 % 100 % 100 % 100 % 28 % 29 % 15 14 5 4 5 5 47 48 100 % 100 % SeptemberJune 30, 2017,2020, we had 8991 hospitals in the states of Texas and Florida. During the thirdsecond quarter of 2017,2020, 56% of our admissions and 48%49% of our revenues were generated by these hospitals. Uninsured admissions in Texas and Florida represented 70%74% of our uninsured admissions during the thirdsecond quarter of 2017.2011,December 2017, the Centers for Medicare & Medicaid Services (“CMS”) approved a Medicaid waiverannounced that allows Texas to continue receiving supplemental Medicaid reimbursement while expanding its Medicaid managed care program.it will phase out federal matching funds for Designated State Health Programs under waivers granted under Section 1115 of the Social Security Act. Texas currently operates its Medicaid WaiverHealthcare Transformation and Quality Improvement Program pursuant to a Medicaid waiver. In December 2017, CMS approved an extension of this waiver which CMS has agreed to extend through December 2017. We cannot predict whether the Texas Medicaid Waiver ProgramSeptember 30, 2022, but indicated that it will be further extended, be revised or that revenues recognized from the program will not decline.The Texas Medicaid Waiver Program includes two primary components: an indigent care component and a Delivery System Reform Incentive Payment (“DSRIP”) component. Initiatives under the DSRIP program are designed to provide incentive payments to hospitals and other providers for their investments in delivery system reforms that increase access to health care, improve the quality of care and enhance the health of patients and families they serve. We provide indigent care services in several communities in the state of Texas, in affiliation with other hospitals. The state of Texas has been involved in efforts to increase the indigent care provided by private hospitals. As a result of additional indigent care being provided by private hospitals, public hospital districts or counties in Texas have available funds that were previously devoted to indigent care. The public hospital districts or counties are under no contractual or legal obligation to provide such indigent care. The public hospital districts or counties have elected to transferphase out some portion of these available funds to the state’s Medicaid program. Such action is at the sole discretion of the public hospital districts or counties. It is anticipated that these contributions to the state will be matched with federal Medicaid funds. The state then may make supplemental payments to hospitals in the state for Medicaid services rendered. Hospitals receiving Medicaid supplemental payments may include those that are providing additional indigent care services.funding. Our Texas Medicaid revenues included Medicaid supplemental payments of $60$186 million ($26and $106 million DSRIP related and $34 million indigent care related) and $109 million ($25 million DSRIP related and $84 million indigent care related) during the thirdsecond quarters of 20172020 and 2016,2019, respectively, and $261$301 million ($82and $214 million DSRIP related and $179 million indigent care related) and $293 million ($78 million DSRIP related and $215 million indigent care related) during the first ninesix months of 20172020 and 2016,2019, respectively.ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)Results of Operations (Continued)Revenue/Volume Trends (Continued)CMS, and some states have made waiver requests to CMS to replace their existing supplemental payment programs. It is possible these reviews and waiver requests will result in the restructuring of such supplemental payment programs and could result in the payment programs being reduced or eliminated. Because deliberations about these programs are ongoing, we are unable to estimate the financial impact the program structure modifications, if any, may have on our results of operations.ninesix months ended SeptemberJune 30, 20172020 and 20162019 (dollars in millions): Quarter 2017 2016 Amount Ratio Amount Ratio $ 11,967 $ 11,110 1,271 840 10,696 100.0 10,270 100.0 5,081 47.5 4,740 46.1 1,777 16.6 1,699 16.5 2,075 19.4 1,896 18.5 (13 ) (0.1 ) (22 ) (0.2 ) 539 5.0 495 4.9 427 4.0 432 4.2 (7 ) (0.1 ) (3 ) — 39 0.4 4 — — — 11 0.1 9,918 92.7 9,252 90.1 778 7.3 1,018 9.9 248 2.3 273 2.6 530 5.0 745 7.3 104 1.0 127 1.3 $ 426 4.0 $ 618 6.0 4.2 % 4.2 % (23.6 ) 20.6 (31.1 ) 37.7 2.7 0.7 2.5 1.5 1.6 2.7 2.3 4.0 0.6 0.7 0.3 1.3 2.0 2.7 $ 12,602 100.0 5,837 46.3 2,118 16.8 2,362 18.8 — — (8 ) (0.1 ) 636 5.0 477 3.8 (18 ) (0.1 ) 11,404 90.5 1,198 9.5 271 2.1 927 7.4 144 1.2 $ 783 6.2 9.3 % (3.2 ) (4.5 ) 4.8 6.2 3.0 ) 4.3 2.1 2.6 1.7 (Continued)(Continued) Nine Months 2017 2016 Amount Ratio Amount Ratio $ 35,156 $ 33,241 3,104 2,392 32,052 100.0 30,849 100.0 14,878 46.4 14,133 45.8 5,369 16.8 5,131 16.6 5,970 18.6 5,617 18.2 (36 ) (0.1 ) (44 ) (0.1 ) 1,581 4.9 1,463 4.8 1,257 3.9 1,275 4.1 (10 ) — (8 ) — 39 0.1 4 — — — 33 0.1 29,048 90.6 27,604 89.5 3,004 9.4 3,245 10.5 902 2.8 898 2.9 2,102 6.6 2,347 7.6 360 1.2 377 1.2 $ 1,742 5.4 $ 1,970 6.4 3.9 % 4.8 % (7.4 ) 11.7 (11.6 ) 27.3 1.8 1.1 2.1 2.3 1.7 2.4 3.0 4.4 1.0 1.0 1.2 2.0 1.8 2.3 $ 25,119 100.0 11,484 45.7 4,159 16.6 4,661 18.6 — — (19 ) (0.1 ) 1,255 5.0 938 3.7 (17 ) (0.1 ) — — 22,461 89.4 2,658 10.6 550 2.2 2,108 8.4 286 1.1 $ 1,822 7.3 9.4 % (4.3 ) (7.2 ) 3.9 5.5 3.8 5.4 1.6 2.3 3.0 (a) (b) (c) (Continued)SeptemberJune 30, 20172020 and 2016$426 million,$1.079 billion, or $1.15$3.16 per diluted share, for the third quarter of 2017,ended June 30, 2020, compared to $618$783 million, or $1.59$2.25 per diluted share, for the third quarter ended June 30, 2019. Second quarter results for 2020 include $822 million ($590 million net of 2016. Third quarter 2017 results include additional expenses and losses of revenues estimated at approximately $140 million,tax), or $0.24$1.73 per diluted share, associated with the impact of hurricanes Harvey and Irma on our Texas, Florida, Georgia and South Carolina facilities, and a negative impact to operating resultsgovernment stimulus income related to the Texas Medicaid Waiver program of approximately $50general distribution funds and $60 million, or $0.08$0.13 per diluted share, related to final settlement amountsof employee retention payroll tax credits, as provided for by the program year ended September 30, 2017. The amount associated with the hurricanes is prior to any insurance recoveries which we may receive. ThirdCARES Act. Second quarter 2017 results for 2020 also include netlosses on sales of facilities of $27 million, or $0.07 per diluted share, and second quarter results for 2019 include gains on sales of facilities of $7$18 million, or $0.01$0.04 per diluted share, and losses on retirement of debt of $39 million, or $0.07 per diluted share. Third quarter 2016 results include legal claim costs of $11 million, or $0.02 per diluted share, losses on retirement of debt of $4 million, or $0.01 per diluted share, and net gains on sales of facilities of $3 million, or $0.01 per diluted share. Our provision for income taxes for the third quarter of 2016 also included tax benefits of $51 million, or $0.13 per diluted share, primarily related to the resolution of federal income tax issues for our 2011 and 2012 tax years. All “per diluted share” disclosures are based upon amounts net of the applicable income taxes. Shares used for diluted earnings per share were 369.834341.599 million shares for the quarter ended SeptemberJune 30, 20172020 and 389.592348.373 million shares for the quarter ended SeptemberJune 30, 2016.2019. During 20162019 and the first ninesix months of 2017,2020, we repurchased 36.3257.949 million shares and 17.8473.287 million shares of our common stock, respectively.Revenues before provision for doubtful accounts increased 7.7% for the third quarter of 2017 compared third quarter2016. The provision for doubtful accounts increased $431 million, from $840 millionour services, particularly elective surgical procedures, were significantly impacted in April as variousthird quarterlatter part of 2016 to $1.271 billion inApril and continuing through the third quarter of 2017. The provision for doubtful accounts relates primarily to uninsured amounts due directly from patients, including copayment and deductible amounts for patients who have health care coverage. Theself-pay revenue deductions for charity care and uninsured discounts increased $189 million and $256 million, respectively, during the third quarter of 2017, compared to the third quarter of 2016. The sumend of the provisionquarter as the states began to doubtful accounts, uninsured discounts and charity care, as a percentage of the sum of revenues, the provision for doubtful accounts, uninsured discounts and charity care, was 36.3% for the third quarter of 2017, compared to 33.7% for the third quarter of 2016. At September 30, 2017, our allowance for doubtful accounts represented 99.1% of the $5.465 billion total patient due accounts receivable balance, including accounts, net of estimated contractual discounts, related to patients for which eligibility for Medicaid coverage or uninsured discounts was being evaluated.increased 4.2%declined 12.2%, primarily due to the combinednet impact of revenue per equivalent admission growth of 1.6%9.7% and a 2.5% increase20.0% decline in equivalent admissions for the thirdsecond quarter of 20172020 compared to the thirdsecond quarter of 2016. Same facility revenues increased 2.3% due to the combined impact of a 2.0% increase in same facility revenue per equivalent admission and a 0.3% increase in same facility equivalent admissions for the third quarter of 2017 compared to the third quarter of 2016.47.5%48.2% in the thirdsecond quarter of 20172020 and 46.1%46.3% in the thirdsecond quarter of 2016.2019. Salaries and benefits per equivalent admission increased 4.6%14.1% in the thirdsecond quarter of 20172020 compared to the thirdsecond quarter of 2016.2019. Same facility labor rate increases averaged 3.3%0.3% for the thirdsecond quarter of 20172020 compared to the thirdsecond quarter of 2016.16.6%15.8% in the thirdsecond quarter of 20172020 and 16.5%16.8% in the thirdsecond quarter of 2016.2019. Supply costs per equivalent admission increased 2.1%3.2% in the thirdsecond quarter of 20172020 compared to the thirdsecond quarter of 2016.2019. Supply costs per equivalent admission increased 2.9% for medical devices, 0.8%2.3% for pharmacy supplies and 1.8%5.6% for general medical and surgical items and declined 0.2% for medical devices in the thirdsecond quarter of 20172020 compared to the thirdsecond quarter of 2016.ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)Results of Operations (continued)Quarters Ended September 30, 2017 and 2016 (continued)19.4%19.3% in the thirdsecond quarter of 20172020 and 18.5%18.8% in the thirdsecond quarter of 2016. Other operating expenses is primarily comprised of contract services, professional fees, repairs and maintenance, rents and leases, utilities, insurance (including professional liability insurance) and nonincome taxes. The increase in other operating expenses, as a percentage of revenues, for the third quarter of 2017 compared to the third quarter of 2016 was due to small increases in many of the other operating expense components. Provisions for losses related to professional liability risks were $116 million and $106 million for the third quarters of 2017 and 2016, respectively.Equity in earnings of affiliates was $13 million and $22 million in the third quarters of 2017 and 2016, respectively.Depreciation and amortization increased $44 million, from $495 million in the third quarter of 2016 to $539 million in the third quarter of 2017. The increase in depreciation relates to both acquired facilities and increased routine capital expenditures.Interest expense was $427 million in the third quarter of 2017 and $432 million in the third quarter of 2016. Our average debt balance was $32.337 billion for the third quarter of 2017 compared to $31.358 billion for the third quarter of 2016. The average effective interest rate for our long-term debt declined to 5.2% from 5.5% for the quarters ended September 30, 2017 and 2016, respectively.During the third quarters of 2017 and 2016, we recorded net gains on sales of facilities of $7 million and $3 million, respectively.During June 2017, we issued $1.500 billion aggregate principal amount of 5.500% senior secured notes due 2047. We used the net proceeds for general corporate purposes, including funding the purchase of certain hospital acquisitions, and the redemption, during July 2017, of all $500 million aggregate principal amount of our existing 8.000% senior notes maturing in October 2018. The pretax loss on retirement of debt was $39 million. During August 2016, we issued $1.200 billion aggregate principal amount of 4.500% senior secured notes due 2027. We used the net proceeds for general corporate purposes and to retire a portion of one of our senior secured term loans. We also entered into a joinder agreement to retire the remaining portion of this senior secured term loan using proceeds from a new $1.200 billion senior secured term loan facility maturing in February 2024. The pretax loss on retirement of debt was $4 million.We recorded $11 million of legal claim costs during the third quarter of 2016 related to the Health Midwest litigation.The effective tax rates were 36.7% and 30.6% for the third quarters of 2017 and 2016, respectively. The effective tax rate computations exclude net income attributable to noncontrolling interests as it relates to consolidated partnerships. Our provisions for income taxes for the third quarters of 2017 and 2016 included tax benefits of $4 million and $11 million, respectively, related to excess tax benefits from employee equity award settlements. Our provision for income taxes for the third quarter of 2016 also included a tax benefit of $51 million primarily related to the resolution of federal income tax issues for our 2011 and 2012 tax years. Our provision for income taxes for the third quarter of 2017 also included $4 million of reductions in interest expense (net of tax). Excluding the effect of these adjustments, the effective tax rate for the third quarters of 2017 and 2016 would have been 37.8% and 37.6%, respectively.Net income attributable to noncontrolling interests declined from $127 million for the third quarter of 2016 to $104 million for the third quarter of 2017. The decline in net income attributable to noncontrolling interests related primarily to one of our Texas markets.ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)Results of Operations (continued)Nine months Ended September 30, 2017 and 2016Net income attributable to HCA Healthcare, Inc. totaled $1.742 billion, or $4.64 per diluted share, in the nine months ended September 30, 2017 compared to $1.970 billion, or $4.93 per diluted share, in the nine months ended September 30, 2016. The first nine months of 2017 results include additional expenses and losses of revenues estimated at approximately $140 million, or $0.24 per diluted share, associated with the impact of hurricanes Harvey and Irma on our Texas, Florida, Georgia and South Carolina facilities, and a negative impact to operating results related to the Texas Medicaid Waiver program of approximately $50 million, or $0.08 per diluted share, related to final settlement amounts for the program year ended September 30, 2017. The amount associated with the hurricanes is prior to any insurance recoveries which we may receive. The first nine months of 2017 results also include net gains on sales of facilities of $10 million, or $0.02 per diluted share, and losses on retirement of debt of $39 million, or $0.07 per diluted share. The first nine months of 2016 results include legal claim costs of $33 million, or $0.05 per diluted share, losses on retirement of debt of $4 million, or $0.01 per diluted share, and net gains on sales of facilities of $8 million, or $0.01 per diluted share. Our provision for income taxes for the first nine months of 2016 also included tax benefits of $51 million, or $0.13 per diluted share, primarily related to the resolution of federal income tax issues for our 2011 and 2012 tax years. All “per diluted share” disclosures are based upon amounts net of the applicable income taxes. Shares used for diluted earnings per share were 375.013 million shares and 399.577 million shares for the nine months ended September 30, 2017 and 2016, respectively. During 2016 and the first nine months of 2017, we repurchased 36.325 million and 17.847 million shares of our common stock, respectively.For the first nine months of 2017, consolidated and same facility admissions increased 1.8% and 1.0%, respectively, compared to the first nine months of 2016. Consolidated and same facility outpatient surgical volumes declined 0.8% and 2.0%, respectively, during the first nine months of 2017, compared to the first nine months of 2016. Consolidated and same facility inpatient surgeries increased 1.0% and 0.1%, respectively, in the first nine months of 2017, compared to the first nine months of 2016. Consolidated and same facility emergency department visits increased 1.7% and 0.7%, respectively, during the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016.Revenues before provision for doubtful accounts increased 5.8% for the first nine months of 2017 compared to the first nine months of 2016. Provision for doubtful accounts increased $712 million from $2.392 billion in the first nine months of 2016 to $3.104 billion in the first nine months of 2017. The provision for doubtful accounts relates primarily to uninsured amounts due directly from patients, including copayment and deductible amounts for patients who have health care coverage. Theself-pay revenue deductions for charity care and uninsured discounts increased $394 million and $1.000 billion, respectively, during the first nine months of 2017, compared to the first nine months of 2016. The sum of the provision for doubtful accounts, uninsured discounts and charity care, as a percentage of the sum of revenues, the provision for doubtful accounts, uninsured discounts and charity care, was 34.8% for the first nine months of 2017, compared to 32.8% for the first nine months of 2016. At September 30, 2017, our allowance for doubtful accounts represented approximately 99.1% of the $5.465 billion total patient due accounts receivable balance, including accounts, net of estimated contractual discounts, related to patients for which eligibility for Medicaid coverage or uninsured discounts was being evaluated.Revenues increased 3.9% primarily due to the combined impact of revenue per equivalent admission growth of 1.7% and an increase of 2.1% in equivalent admissions for the first nine months of 2017 compared to the first nine months of 2016. Same facility revenues increased 3.0% due to the combined impact of a 1.8% increase in same facility revenue per equivalent admission and a 1.2% increase in same facility equivalent admissions for the first nine months of 2017 compared to the first nine months of 2016.ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)Results of Operations (continued)Nine months Ended September 30, 2017 and 2016 (continued)Salaries and benefits, as a percentage of revenues, were 46.4% in the first nine months of 2017 and 45.8% in the first nine months of 2016. Salaries and benefits per equivalent admission increased 3.1% in the first nine months of 2017 compared to the first nine months of 2016. Same facility labor rate increases averaged 2.7% for the first nine months of 2017 compared to the first nine months of 2016.Supplies, as a percentage of revenues, were 16.8% in the first nine months of 2017 and 16.6% in the first nine months of 2016. Supply costs per equivalent admission increased 2.5% in the first nine months of 2017 compared to the first nine months of 2016. Supply costs per equivalent admission increased 5.1% for medical devices and 1.6% for general medical and surgical items, and were flat for pharmacy supplies in the first nine months of 2017 compared to the first nine months of 2016.Other operating expenses, as a percentage of revenues, increased to 18.6% in the first nine months of 2017 from 18.2% in the first nine months of 2016.2019. Other operating expenses is primarily comprised of contract services, professional fees, repairs and maintenance, rents and leases, utilities, insurance (including professional liability insurance) and nonincome taxes. Provisions for losses related to professional liability risks were $353$139 million and $329$133 million for the first nine monthssecond quarters of 20172020 and 2016,2019, respectively.$36$1 million and $44$8 million in the second quarters of 2020 and 2019, respectively.ninesix months of 20172020 and 2016,2019, respectively.$118$110 million, from $1.463$1.255 billion in the first ninesix months of 20162019 to $1.581$1.365 billion in the first ninesix months of 2017.2020. The increase in depreciation relates to both acquired facilities and increased routine capital expenditures.$1.257 billion for$816 million in the first ninesix months of 20172020 and $1.275 billion for$938 million in the first ninesix months of 2016.2019. Our average debt balance was $31.846$32.766 billion for the first ninesix months of 20172020 compared to $31.002$34.520 billion for the first ninesix months of 2016.2019. The average effective interest rate for our long-term debt declined to 5.0% for the six months ended June 30, 2020 from 5.5% for the ninesix months ended SeptemberJune 30, 2016 to 5.3% for the nine months ended September 30, 2017.ninesix months of 20172020 and 2016,2019, we recorded net losses on sales of facilities of $20 million and gains on sales of facilities of $10$17 million, and $8 million, respectively.June 2017,February 2020, we issued $1.500$2.700 billion aggregate principal amount of 5.500%3.50% senior securedunsecured notes due 2047. We2030. During March 2020, we used the net proceeds for general corporate purposes, including funding the purchase of certain hospital acquisitions, and the redemption during July 2017, of all $500 million$1.000 billion outstanding aggregate principal amount of our existing 8.000%HCA Healthcare, Inc.’s 6.25% senior notes maturing in October 2018.due 2021 and, together with available funds, for the redemption of all $2.000 billion outstanding aggregate principal amount of HCA Inc.’s 7.50% senior notes due 2022. The pretax loss on retirement of debt was $39$295 million. During August 2016, we issued $1.200 billion aggregate principal amount of 4.500% senior secured notes due 2027. We used the net proceeds for general corporate purposes and to retire a portion of one of our senior secured term loans. We also entered into a joinder agreement to retire the remaining portion of this senior secured term loan using proceeds from a new $1.200 billion senior secured term loan facility maturing in February 2024. The pretax loss on retirement of debt was $4 million.ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)Results of Operations (continued)Nine months Ended September 30, 2017 and 2016 (continued)We recorded $33 million of legal claim costs during the first nine months of 2016 related to the Health Midwest litigation.34.1%21.6% and 31.3%23.2% for the first ninesix months of 20172020 and 2016,2019, respectively. The effective tax rate computations exclude net income attributable to noncontrolling interests as it relates to consolidated partnerships. Our provisionprovisions for income taxes for the first ninesix months of 20172020 and 20162019 included tax benefits of $80$54 million and $129$53 million, respectively, related to excess tax benefits from employee equity award settlements. Our provision for income taxes for the first nine months of 2016 also included a tax benefit of $51 million primarily related to the resolution of federal income tax issues for our 2011 and 2012 tax years. Our provision for income taxes for the first nine months of 2017 also included $16 million of reductions in interest expense (net of tax). Excluding the effect of these adjustments, the effective tax rate for the first ninesix months of 20172020 and 20162019 would have been 37.7%24.1% and 37.6%25.4%, respectively.$377$286 million for the first ninesix months of 20162019 to $360$254 million for the first ninesix months of 2017.2020. The decline in net income attributable to noncontrolling interests related primarily to onethe operations of our Texas markets.$3.692$10.098 billion in the first ninesix months of 20172020 compared to $3.954$2.971 billion in the first ninesix months of 2016.2019. The $262 million decline$7.127 billion increase in cash provided by operating activities in the first ninesix months of 20172020 compared to the first ninesix months of 20162019, related primarily to the combined effect of the receipt of $4.999 billion related to the $245unapplied accelerated Medicare payments and unrecognized general and targeted distributions as provided for in the CARES Act, positive changes in working capital of $1.465 billion, primarily from the collection of patient accounts receivable, and an increase related to the deferral of income taxes of $445 million. The net combination of interest payments and net tax refunds in the first six months of 2020 was $838 million, decline in net income. Theand the combined interest payments and net tax payments in the first ninesix months of 20172019 was $1.433 billion. Interest payments decreased in 2020 due to lower average debt balances, and 2016net tax payments decreased as quarterly estimated income tax payments were $2.294 billion and $2.229 billion, respectively.deferred until July 2020 by the IRS in response to the$3.837$1.175 billion at SeptemberJune 30, 20172020 and $3.252$3.439 billion at December 31, 2016.$3.172$1.953 billion in the first ninesix months of 20172020 compared to $2.234$3.113 billion in the first ninesix months of 2016.2019. Acquisitions of hospitals and health care entities increaseddeclined from $468$1.504 billion in the first six months of 2019 (which included the acquisition of a seven-hospital health system in North Carolina) to $346 million in the first ninesix months of 2016 to $1.142 billion in the first nine months of 2017.2020. Excluding acquisitions, capital expenditures were $2.033$1.598 billion in the first ninesix months of 20172020 and $1.884$1.745 billion in the first ninesix months of 2016. Capital2019. Planned capital expenditures excluding acquisitions, are expected to approximate $2.8 billion to $3.0 billion in 2017.2020. At SeptemberJune 30, 2017,2020, there were projects under construction which had estimated additional costs to complete and equip over the next five years of approximately $3.5$3.0 billion. We expect to finance capital expenditures with internally generated and borrowed funds.$448 million in the first nine months of 2017 compared to $1.784$4.116 billion in the first ninesix months of 2016.2020 compared to cash provided by financing activities of $2.070 billion in the first six months of 2019. During the first ninesix months of 2017,2020, net cash flows used in financing activities included a net increasedecline of $1.452$3.144 billion in our indebtedness, payments of dividends of $153 million, repurchases of common stock of $1.475 billion,$441 million, distributions to noncontrolling interests of $363$199 million and payments of debt issuance costs of $25$35 million. During the first ninesix months of 2016,2019, net cash flows used inprovided by financing activities included a net increase of $906 million$3.313 billion in our indebtedness, payment of dividends of $278 million, repurchases of common stock of $2.213 billion,$520 million, distributions to noncontrolling interests of $342$247 million and payments of debt issuance costs of $40$63 million.$32.953$30.942 billion at SeptemberJune 30, 2017.2020. Our interest expense was $1.257 billion$816 million for the first ninesix months of 20172020 and $1.275 billion$938 million for the first ninesix months of 2016.ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)Liquidity and Capital Resources (continued)2.037 billion and $2.1547.718 billion available as of Septemberboth June 30, 20172020 and October 31, 2017,July 28, 2020, respectively) and anticipated access to public and private debt markets.June 2017,February 2020, we issued $1.500$2.700 billion aggregate principal amount of 5.500%3.50% senior secured notes due 2047. We2030. During March 2020, we used the net proceeds for general corporate purposes, including funding the purchase of certain hospital acquisitions, and the redemption during July 2017, of all $500 million$1.000 billion outstanding aggregate principal amount of our existing 8.000%HCA Healthcare, Inc.’s 6.25% senior notes maturing in October 2018. The pretax loss on retirementdue 2021 and, together with available funds, for the redemption of debt was $39 million.During June 2017,all $2.000 billion outstanding aggregate principal amount of HCA Inc.’s 7.50% senior notes due 2022.amended our seniorentered into a credit agreement that provides for revolving credit facilities by (i) increasing the commitments under the senior secured asset-based revolving creditto $3.750 billion, (ii) extending the maturity date of the revolving credit commitments to June 28, 2022, (iii) amending the incremental facility provisions to permit the incurrence of additional incremental credit facilities infor an aggregate principal amount of $1.5 billion and (iv) providing that the commitment fee for unutilized commitmentsup to $2.000 billion. The facility will mature in March 2021. If drawn, amounts outstanding under the senior secured asset-based revolving credit facility shallagreement will bear interest at either (i) the LIBOR rate plus 2.50% or (ii) an alternate base rate as defined in the credit agreement. As of June 30, 2020 and July 28, 2020, there were no amounts outstanding nor draw notices pending under the facility.0.250% per annum.August 2016,the second quarter of 2020, we issued $1.200also received approximately $1.4 billion aggregate principal amountin general and targeted distributions from the CARES Act Provider Relief Fund, and in July 2020 we received approximately $300 million in targeted distributions. These distributions from the Provider Relief Fund will not be subject to repayment, provided we are able to attest to and comply with the terms and conditions of 4.500% senior secured notes due 2027. We used the net proceeds for general corporate purposes and to retire a portion of one of our senior secured term loans. We also entered into a joinder agreement to retire the remaining portion of this senior secured term loan using proceeds from a new $1.200 billion senior secured term loan facility maturing in February 2024. The pretax loss on retirement of debt was $4 million.During March 2016, we issued $1.500 billion aggregate principal amount of 5.250% senior secured notes due 2026. We used the net proceeds for general corporate purposes and to retire a portion of one of our senior secured term loans. We also entered into a joinder agreement to retire the remaining portion of this senior secured term loan using proceeds from a new $1.500 billion senior secured term loan facility maturing in March 2023.professional liability insurance subsidiaries, held to maintain statutory equity levels and to provide liquidity to pay claims, totaled $421$469 million and $385$462 million at SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively. An insurance subsidiary maintained net reserves for professional liability risks of $202$181 million and $215$175 million at SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively. Our facilities are insured by a 100% owned insurance subsidiary for losses up to $50 million per occurrence; however, this coverage is generally subject, in most cases, to a $15 million per occurrence self-insured retention. Net reserves for the self-insured professional liability risks retained were $1.378$1.744 billion and $1.279$1.606 billion at SeptemberJune 30, 20172020 and December 31, 2016,2019, respectively. Claims payments, net of reinsurance recoveries, during the next 12 months are expected to approximate $419$477 million. We estimate that approximately $372$427 million of the expected net claim payments during the next 12 months will relate to claims subject to the self-insured retention.Management
June 30, 2020
December 31, 2019 $ 29,220 3,912 2,993 2,902
2020
2019 $ 6,090 13,418 5,743 19,977 26,067 4,504 33,227 (53 ) 879 34,398 (12,941 ) 106 debt and equity securities of our 100% owned insurance subsidiaries were $418$469 million and $3 million, respectively, atITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)Liquidity and Capital Resources (continued)Market Risk (continued)September June 30, 2017.2020. These investments are carried at fair value, with changes in unrealized gains and losses that are not credit-related being recorded as adjustments to other comprehensive income. At SeptemberJune 30, 2017,2020, we had a net unrealized gain of $16$30 million on the insurance subsidiaries’ investment securities.other-than-temporarycredit-related impairments on our investment securities in future periods should issuers default on interest payments or should the fair market valuations of the securities deteriorate due to ratings downgrades or other issue-specific factors.income, and changes in the fair value of derivatives which have not been designated as hedges are recorded in operations.$4.486$1.198 billion of long-term debt at SeptemberJune 30, 20172020 was subject to variable rates of interest, while the remaining balance in long-term debt of $28.467$29.744 billion at SeptemberJune 30, 20172020 was subject to fixed rates of interest. Both the general level of interest rates and, for the senior secured credit facilities, our leverage affect our variable interest rates. Our variable debt is comprised primarily of amounts outstanding under the senior secured credit facilities. Borrowings under the senior secured credit facilities bear interest at a rate equal to an applicable margin plus, at our option, either (a) a base rate determined by reference to the higher of (1) the federal funds rate plus 0.50% andor (2) the prime rate of Bank of America or (b) a LIBOR rate for the currency of such borrowing for the relevant interest period. The applicable margin for borrowings under the senior secured credit facilities may fluctuate according to a leverage ratio. The average effective interest rate for our long-term debt declined fromwas 5.0% and 5.5% for the ninesix months ended SeptemberJune 30, 2016 to 5.3% for the nine months ended September 30, 2017.$34.998$34.000 billion at SeptemberJune 30, 2017.2020. The estimates of fair value are based upon the quoted market prices for the same or similar issues of long-term debt with the same maturities. Based on a hypothetical 1% increase in variable interest rates, the potential annualized reduction to future pretax earnings would be approximately $45$12 million. To mitigate the impact of fluctuations in interest rates, we generally target a portion of our debt portfolio to be maintained at fixed rates.Our international operations represented 2.6% and 2.5%, respectively, of our consolidated revenues for the quarter and nine months ended September 30, 2017. The United Kingdom’s vote to exit the European Union in June 2016 contributed to a 16.8% decline in the Great British pound (GBP) to US dollar (USD) translation ratio during 2016. However, the GBP/USD translation ratio has stabilized (6.6% increase) during the first nine months of 2017. We currently do not consider the market risk related to GBP/USDforeign currency translation to be material to our consolidated financial statements or our liquidity. federal, state and foreign taxing authorities. Management believes HCA Healthcare, Inc. and its predecessors, subsidiaries and affiliates properly reported taxable income and paid taxes in accordance with applicable laws and agreements established with IRS, state and foreign taxing authorities and final resolution of any disputes will not have a material, adverse effect on our results of operations or financial position. However, if payments due upon final resolution of any issues exceed our recorded estimates, such resolutions could have a material, adverse effect on our results of operations or financial position. 2017 2016 171 168 172 169 177 169 170 118 116 119 116 119 117 118 44,374 43,817 44,727 44,127 46,250 44,226 44,290 44,362 43,780 44,605 44,064 45,887 44,188 44,274 44,077 26,699 26,325 25,353 25,199 25,653 24,748 25,096 25,340 485,761 479,568 473,174 467,218 482,557 469,764 475,281 1,891,831 812,192 798,001 809,367 792,599 818,887 799,120 801,799 3,191,519 185 184 184 184 124 125 125 123 48,455 48,483 48,588 49,035 48,036 48,429 48,535 48,911 48,480 28,966 27,808 27,502 28,274 28,134 523,196 518,253 527,284 540,194 2,108,927 (Continued) 2017 2016 4.9 5.0 4.9 4.9 4.9 4.8 4.9 2,163,138 2,133,289 2,116,123 2,093,039 2,130,460 2,077,938 2,074,074 8,378,340 225,915 226,486 234,215 234,578 224,252 229,054 242,095 932,213 133,341 131,840 134,553 134,068 137,187 135,013 136,385 537,306 48 52 49 50 51 49 50 37 % 38 % 38 % 38 % 38 % 39 % 39 % 38 % 889,956 903,419 918,964 933,996 3,646,335 5.0 4.9 4.8 4.8 4.9 2,287,440 2,253,337 2,269,364 2,350,988 9,161,129 240,846 253,441 249,177 266,483 1,009,947 137,363 140,473 143,215 145,584 566,635 53 52 52 50 38 % 39 % 39 % 39 % 39 % (Continued)BALANCE SHEET DATA % of Accounts Receivable Under 91 Days 91 – 180 Days Over 180 Days 11 % 1 % 1 % 29 5 5 21 6 21 61 % 12 % 27 % (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) the revenues for the quarter by the days in the quarter. Days revenues in accounts receivable is then calculated as accounts receivable net of allowance for doubtful accounts, at the end of the quarter divided by the revenues per day. “Revenues” used in this computation are net of the provision for doubtful accounts.(k) (l)Accounts receivable aging data is based upon consolidated gross accounts receivable of $11.396 billion (each 1% is equivalent to approximately $114 million of gross accounts receivable).have reviewed andhas evaluated the effectiveness of HCA’s disclosure controls and procedures (as defined inRules 13a-15(e) and15d-15(e) promulgated under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report.June 30, 2020. Based on that evaluation, theHCA’s chief executive officer and chief financial officer have concluded that HCA’s disclosure controls and procedures were effective.Further, underUnder the federal False Claims Act (“FCA”), private parties have the right to bring2016,2019, which are incorporated herein by reference. There have not been any material changes to the risk factors previously disclosed in our annual report on2016.2019 and our quarterly report on Formthe quarter ended September 30, 2017, we repurchased 6,321,873 sharesJanuary 2020 and 2019, our Board of Directors authorized share repurchase programs for up to $4 billion ($2 billion for each authorization) of our outstanding common stock. In response to the risks theat an average priceduring the second quarter of $80.44 per share through market purchases pursuant to the $2 billion share repurchase program authorized during November 2016.2020. At SeptemberJune 30, 2017,2020, we had $379 million$2.800 billion of repurchase authorization available under the November 2016 authorization. During October 2017, our boardJanuary 2019 and 2020 authorizations.directors authorized a share repurchasethe Company’s quarterly dividend program for upthe second quarter of 2020. The Company expects to $2 billionevaluate resumption of the program at a future date. Any other future declarations of quarterly dividends and the establishment of future record and payment dates are subject to the final determination of our outstanding common stock.The following table provides certain information with respectBoard of Directors. Our ability to declare future dividends may also from time to time be limited by the terms of our repurchasesdebt agreements.ITEM 6. EXHIBITS(a) 3.1 — 3.2 — 10.1 — 10.2 — 10.3 — 10.4 — 10.5 — 22 — Exhibits: 31.1— 31.1 — 31.2—Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32— 101—The following financial information from our quarterly report onForm 10-Q for the quarters and the nine months ended September 30, 2017 and 2016, filed with the SEC on November 7, 2017, formatted in Extensible Business Reporting Language: (i) the condensed consolidated balance sheets at September 30, 2017 and December 31, 2016, (ii) the condensed consolidated income statements for the quarters and nine months ended September 30, 2017 and 2016, (iii) the condensed consolidated comprehensive income statements for the quarters and nine months ended September 30, 2017 and 2016, (iv) the condensed consolidated statements of cash flows for the nine months ended September 30, 2017 and 2016 and (v) the notes to condensed consolidated financial statements.the requirementsSection 302 of the Securities ExchangeSarbanes-Oxley Act of 1934,2002. 31.2 — 32 — 101 — be signedcondensed consolidated financial statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 104 — its behalf byundersigned thereunto duly authorized.quarter ended June 30, 2020, formatted in Inline XBRL (included in Exhibit 101). HCA Healthcare, Inc.* William B. Rutherford By:/S/ WILLIAM B. RUTHERFORDWilliam B. RutherfordExecutive Vice President and Chief Financial OfficerDate: November 7, 201747