Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

2022

Or

☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number

1-11239

HCA Healthcare, Inc.

(Exact name of registrant as specified in its charter)

Delaware

27-3865930

Delaware

27-3865930

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

One Park Plaza

Nashville, Tennessee

37203

(Address of principal executive offices)

(Zip Code)

(615) 

(615) 344-9551

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Voting common stock, $.01 par value

HCA

HCA

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated
filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in
Rule 12b-2
of the Exchange Act.

Large accelerated filer

☒

☒

Accelerated filer

☐

Non-accelerated
filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in

Rule 12b-2
of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date

.
date.

Class of Common Stock

Outstanding at April 29, 2022

Voting common stock, $.01 par value

295,484,400 shares

HCA HEALTHCARE, INC.

Form 10-Q

March 31, 2022

Class of Common Stock

Outstanding at April 26, 2021

Page of
Form 10-Q

Voting common stock, $.01 par value

Part I.

Financial Information

330,655,500 shares
Table of Contents
HCA HEALTHCARE, INC.
Form 10-Q
March 31, 2021

Page of

Form 10-Q

Part I.
Financial Information

Item 1.

Financial Statements (Unaudited):

Condensed Consolidated Income Statements — for the quarters ended March 31, 20212022 and 20202021

2

3

Condensed Consolidated Comprehensive Income Statements — for the quarters ended March 31, 20212022 and 20202021

3

4

Condensed Consolidated Balance Sheets — March 31, 20212022 and December 31, 20202021

4

5

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) — for the quarters ended March 31, 20212022 and 20202021

5

6

Condensed Consolidated Statements of Cash Flows — for the quarters ended March 31, 20212022 and 20202021

6

7

Notes to Condensed Consolidated Financial Statements

7

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

30

Item 4.

Controls and Procedures

33

30

Part II.

Other Information

Item 1.

Legal Proceedings

33

30

Item 1A.

Risk Factors

33

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

33

31

Item 6.

Exhibits

Exhibits
35

32

Signatures

36

34

1

2

Table of Contents

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS

FOR THE QUARTERS ENDED MARCH 31, 20212022 AND 2020

2021

Unaudited

(Dollars in millions, except per share amounts)

   
2021
  
2020
 
Revenues
  
$
13,977
 
 $12,861 
   
Salaries and benefits
  
 
6,301
 
  6,118 
Supplies
  
 
2,224
 
  2,123 
Other operating expenses
  
 
2,421
 
  2,427 
Equity in earnings of affiliates
  
 
(21
) 
 
 
(7
) 
Depreciation and amortization
  
 
697
 
  674 
Interest expense
  
 
384
 
  428 
Gains on sales of facilities
  
 
(2
) 
  (7) 
Losses on retirement of debt
   0   295 
          
   
12,004
  12,051 
          
Income before income taxes
  
 
1,973
 
  810 
Provision for income taxes
  
 
393
 
  112 
          
Net income
  
 
1,580
 
  698 
Net income attributable to noncontrolling interests
  
 
157
 
  117 
          
Net income attributable to HCA Healthcare, Inc.
  
$
1,423
 
 $581 
          
Per share data:
         
Basic earnings
  
$
4.21
 
 $1.72 
Diluted earnings
  
$
4.14
 
 $1.69 
Shares used in earnings per share calculations (in millions):
         
Basic
  
 
338.123
 
  338.242 
Diluted
  
 
343.321
 
  344.096 

 

 

2022

 

 

2021

 

Revenues

 

$

14,945

 

 

$

13,977

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

6,939

 

 

 

6,301

 

Supplies

 

 

2,321

 

 

 

2,224

 

Other operating expenses

 

 

2,752

 

 

 

2,421

 

Equity in earnings of affiliates

 

 

(11

)

 

 

(21

)

Depreciation and amortization

 

 

732

 

 

 

697

 

Interest expense

 

 

408

 

 

 

384

 

Gains on sales of facilities

 

 

(10

)

 

 

(2

)

 

 

 

13,131

 

 

 

12,004

 

Income before income taxes

 

 

1,814

 

 

 

1,973

 

Provision for income taxes

 

 

349

 

 

 

393

 

Net income

 

 

1,465

 

 

 

1,580

 

Net income attributable to noncontrolling interests

 

 

192

 

 

 

157

 

Net income attributable to HCA Healthcare, Inc.

 

$

1,273

 

 

$

1,423

 

Per share data:

 

 

 

 

 

 

Basic earnings

 

$

4.21

 

 

$

4.21

 

Diluted earnings

 

$

4.14

 

 

$

4.14

 

Shares used in earnings per share calculations (in millions):

 

 

 

 

 

 

Basic

 

 

302.446

 

 

 

338.123

 

Diluted

 

 

307.374

 

 

 

343.321

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

2

3

Table of Contents

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

FOR THE QUARTERS ENDED MARCH 31, 20212022 AND 2020

2021

Unaudited

(Dollars in millions)

   
2021
  
2020
 
Net income
  
$
1,580
 
 $698 
Other comprehensive income (loss) before taxes:
         
Foreign currency translation
  
 
8
 
  (73) 
   
Unrealized losses on
available-for-sale
securities
  
 
(11
) 
  (5) 
   
Defined benefit plans
  
 
0
 
  0 
Pension costs included in salaries and benefits
  
 
7
 
  4 
          
   
7
  4 
  
 
 
     
Change in fair value of derivative financial instruments
  
 
1
 
  (60) 
Interest expense (benefits) included in interest expense
  
 
9
 
  (1) 
          
   
 
10
 
  (61) 
          
Other comprehensive income (loss) before taxes
  
 
14
 
  (135) 
Income taxes (benefits) related to other comprehensive income items
  
 
3
 
  (24) 
          
Other comprehensive income (loss)
  
 
11
 
  (111) 
          
Comprehensive income
  
 
1,591
 
  587 
Comprehensive income attributable to noncontrolling interests
  
 
157
 
  117 
          
Comprehensive income attributable to HCA Healthcare, Inc.
  
$
1,434
 
 $470 
          

 

 

2022

 

 

2021

 

Net income

 

$

1,465

 

 

$

1,580

 

Other comprehensive income (loss) before taxes:

 

 

 

 

 

 

Foreign currency translation

 

 

(34

)

 

 

8

 

 

 

 

 

 

 

 

Unrealized losses on available-for-sale securities

 

 

(26

)

 

 

(11

)

 

 

 

 

 

 

 

Defined benefit plans

 

 

0

 

 

 

0

 

Pension costs included in salaries and benefits

 

 

2

 

 

 

7

 

 

 

 

2

 

 

 

7

 

 

 

 

 

 

 

 

Change in fair value of derivative financial instruments

 

 

4

 

 

 

1

 

Interest costs included in interest expense

 

 

2

 

 

 

9

 

 

 

 

6

 

 

 

10

 

Other comprehensive income (loss) before taxes

 

 

(52

)

 

 

14

 

Income taxes (benefits) related to other comprehensive income ("OCI") items

 

 

(9

)

 

 

3

 

Other comprehensive income (loss)

 

 

(43

)

 

 

11

 

Comprehensive income

 

 

1,422

 

 

 

1,591

 

Comprehensive income attributable to noncontrolling interests

 

 

192

 

 

 

157

 

Comprehensive income attributable to HCA Healthcare, Inc.

 

$

1,230

 

 

$

1,434

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

4

Table of Contents

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(Dollars in millions)

   
March 31,

2021
  
December 31,

2020
 
ASSETS
         
Current assets:
         
Cash and cash equivalents
  
$
1,030
 
 $1,793 
Accounts receivable
  
 
7,424
 
  7,051 
Inventories
  
 
2,068
 
  2,025 
Other
  
 
1,514
 
  1,464 
          
   
 
12,036
 
  12,333 
   
Property and equipment, at cost
  
 
49,877
 
  49,317 
Accumulated depreciation
  
 
(26,689
) 
  (26,118) 
          
   
 
23,188
 
  23,199 
   
Investments of insurance subsidiaries
  
 
393
 
  388 
Investments in and advances to affiliates
  
 
427
 
  422 
Goodwill and other intangible assets
  
 
8,575
 
  8,578 
Right-of-use
operating lease assets
  
 
2,083
 
  2,024 
Other
  
 
575
 
  546 
          
   
$
47,277
 
 $47,490 
          
LIABILITIES AND STOCKHOLDERS’ EQUITY
         
Current liabilities:
         
Accounts payable
  
$
3,524
 
 $3,535 
Accrued salaries
  
 
1,767
 
  1,720 
Other accrued expenses
  
 
3,117
 
  3,240 
Long-term debt due within one year
  
 
234
 
  209 
          
   
 
8,642
 
  8,704 
   
Long-term debt, less debt issuance costs and discounts of $229 and $236
  
 
30,838
 
  30,795 
Professional liability risks
  
 
1,553
 
  1,486 
Right-of-use
operating lease obligations
  
 
1,730
 
  1,673 
Income taxes and other liabilities
  
 
2,032
 
  1,940 
   
Stockholders’ equity:
         
Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding 333,714,500
 shares — 2021 and 
339,425,600
 shares — 2020
  
 
3
 
  3 
Capital in excess of par value
  
 
0
 
  294 
Accumulated other comprehensive loss
  
 
(491
) 
  (502) 
Retained earnings
  
 
735
 
  777 
          
Stockholders’ equity attributable to HCA Healthcare, Inc.
  
 
247
 
  572 
Noncontrolling interests
  
 
2,235
 
  2,320 
          
  
 
2,482
 
  2,892 
          
   
$
47,277
 
 $47,490 
          

 

 

March 31,
2022

 

 

December 31,
2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,371

 

 

$

1,451

 

Accounts receivable

 

 

8,520

 

 

 

8,095

 

Inventories

 

 

2,003

 

 

 

1,986

 

Other

 

 

2,112

 

 

 

2,010

 

 

 

 

15,006

 

 

 

13,542

 

 

 

 

 

 

 

 

Property and equipment, at cost

 

 

52,042

 

 

 

51,350

 

Accumulated depreciation

 

 

(27,814

)

 

 

(27,287

)

 

 

 

24,228

 

 

 

24,063

 

 

 

 

 

 

 

 

Investments of insurance subsidiaries

 

 

408

 

 

 

438

 

Investments in and advances to affiliates

 

 

441

 

 

 

448

 

Goodwill and other intangible assets

 

 

9,525

 

 

 

9,540

 

Right-of-use operating lease assets

 

 

2,138

 

 

 

2,113

 

Other

 

 

462

 

 

 

598

 

 

 

$

52,208

 

 

$

50,742

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,010

 

 

$

4,111

 

Accrued salaries

 

 

1,865

 

 

 

1,912

 

Other accrued expenses

 

 

3,157

 

 

 

3,322

 

Long-term debt due within one year

 

 

1,486

 

 

 

237

 

 

 

 

10,518

 

 

 

9,582

 

 

 

 

 

 

 

 

Long-term debt, less debt issuance costs and discounts of $323 and $248

 

 

36,210

 

 

 

34,342

 

Professional liability risks

 

 

1,508

 

 

 

1,514

 

Right-of-use operating lease obligations

 

 

1,790

 

 

 

1,755

 

Income taxes and other liabilities

 

 

1,768

 

 

 

2,060

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding 298,980,900 shares — 2022 and 305,476,800 shares — 2021

 

 

3

 

 

 

3

 

Accumulated other comprehensive loss

 

 

(447

)

 

 

(404

)

Retained deficit

 

 

(1,589

)

 

 

(532

)

Stockholders’ deficit attributable to HCA Healthcare, Inc.

 

 

(2,033

)

 

 

(933

)

Noncontrolling interests

 

 

2,447

 

 

 

2,422

 

 

 

 

414

 

 

 

1,489

 

 

 

$

52,208

 

 

$

50,742

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

5

Table of Contents

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE QUARTERS ENDED MARCH 31, 20212022 AND 2020

2021

Unaudited

(Dollars 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

Earnings
(Deficit
)
 
 
  
Shares

(in millions)
 
 
 
Par

Value
 
Balances, December 31
, 2019
  
 
338.446
 
 
 
$
 3
 
  
$
—
 
 
$
(460
) 
 
$
(2,351
) 
 
$
2,243
 
$
(565
) 
Comprehensive income
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
(111
) 
 
 
581
 
 
 
117
 
 
587
 
Repurchase of common stock
  
 
(3.287
 
) 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
(441
) 
 
 
 
 
 
(441
) 
Share-based benefit plans
  
 
2.449
 
 
 
 
 
 
  
 
2
 
 
 
 
 
 
 
(35
) 
 
 
 
 
 
(33
) 
Cash dividends declared ($0.43 per share)
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
(148
) 
 
 
 
 
 
(148
) 
Distributions
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
(154
) 
 
(154
) 
Other
  
 
 
 
 
 
 
 
 
  
 
(2
) 
 
 
 
 
 
 
 
 
 
 
53
 
 
51
 
 
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, March 31, 2020
  
 
337.608
 
 
 
 
3
 
  
 
—
 
 
 
(571
) 
 
 
(2,394
) 
 
 
2,259
 
 
(703
) 
Comprehensive income
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
9
 
 
 
1,079
 
 
 
137
 
 
1,225
 
Share-based benefit plans
  
 
0.352
 
 
 
 
 
 
  
 
93
 
 
 
 
 
 
 
 
 
 
 
 
 
 
93
 
Distributions
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
(45
) 
 
(45
) 
Other
  
 
 
 
 
 
 
 
 
  
 
(5
) 
 
 
 
 
 
 
 
 
 
 
3
 
 
(2
) 
 
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, June 30, 2020
  
 
337.960
 
 
 
 
3
 
  
 
88
 
 
 
(562
) 
 
 
(1,315
) 
 
 
2,354
 
 
568
 
Comprehensive income
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
47
 
 
 
668
 
 
 
111
 
 
826
 
Share-based benefit plans
  
 
0.410
 
 
 
 
 
 
  
 
97
 
 
 
 
 
 
 
 
 
 
 
 
 
 
97
 
Distributions
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
(194
) 
 
(194
) 
Other
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
2
 
 
2
 
 
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, September 30, 2020
  
 
338.370
 
 
 
 
3
 
  
 
185
 
 
 
(515
) 
 
 
(647
) 
 
 
2,273
 
 
1,299
 
Comprehensive income
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
13
 
 
 
1,426
 
 
 
268
 
 
1,707
 
Share-based benefit plans
  
 
1.056
 
 
 
 
 
 
  
 
108
 
 
 
 
 
 
 
 
 
 
 
 
 
 
108
 
Cash dividends declared ($
0.43 per share)
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
(2
) 
 
 
 
 
 
(2
) 
Distributions
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
(233
) 
 
(233
) 
Other
  
 
 
 
 
 
 
 
 
  
 
1
 
 
 
 
 
 
 
 
 
 
 
12
 
 
13
 
 
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances, December 31, 2020
  
 
339.426
 
 
 
 
3
 
  
 
294
 
 
 
(502
) 
 
 
777
 
 
 
2,320
 
 
2,892
 
Comprehensive income
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
11
 
 
 
1,423
 
 
 
157
 
 
1,591
 
Repurchase of common stock
  
 
(8.477
 
) 
 
 
 
 
  
 
(225
) 
 
 
 
 
 
 
(1,302
) 
 
 
 
 
 
(1,527
) 
Share-based benefit plans
  
 
2.765
 
 
 
 
 
 
  
 
(75
) 
 
 
 
 
 
 
 
 
 
 
 
 
 
(75
) 
Cash dividends declared ($0.48 per share)
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
(163
) 
 
 
 
 
 
(163
) 
Distributions
  
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
(234
) 
 
(234
) 
Other
  
 
 
 
 
 
 
 
 
  
 
6
 
 
 
 
 
 
 
 
 
 
 
(8
) 
 
(2
) 
 
  
   
 
 
  
 
  
  
 
 
  
 
 
  
 
 
  
 
  
 
Balances, March 31
, 2021
  
 
333.714
 
 
 
$
3
 
  
$
—
 
 
$
(491
) 
 
$
735
 
 
$
2,235
 
$
2,482
 
 
  
   
 
 
  
 
  
  
 
 
  
 
 
  
 
 
  
 
  
 

 

 

Equity (Deficit) Attributable to HCA Healthcare, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital

 

 

Accumulated

 

 

 

 

 

Equity

 

 

 

 

 

 

Common Stock

 

 

in Excess

 

 

Other

 

 

Retained

 

 

Attributable to

 

 

 

 

 

 

Shares

 

 

Par

 

 

of Par

 

 

Comprehensive

 

 

Earnings

 

 

Noncontrolling

 

 

 

 

 

 

(in millions)

 

 

Value

 

 

Value

 

 

Loss

 

 

(Deficit)

 

 

Interests

 

 

Total

 

Balances, December 31, 2020

 

 

339.426

 

 

$

3

 

 

$

294

 

 

$

(502

)

 

$

777

 

 

$

2,320

 

 

$

2,892

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

1,423

 

 

 

157

 

 

 

1,591

 

Repurchase of common stock

 

 

(8.477

)

 

 

 

 

 

(225

)

 

 

 

 

 

(1,302

)

 

 

 

 

 

(1,527

)

Share-based benefit plans

 

 

2.765

 

 

 

 

 

 

(75

)

 

 

 

 

 

 

 

 

 

 

 

(75

)

Cash dividends declared
   ($0.48 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(163

)

 

 

 

 

 

(163

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(234

)

 

 

(234

)

Other

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

(8

)

 

 

(2

)

Balances, March 31, 2021

 

 

333.714

 

 

 

3

 

 

 

—

 

 

 

(491

)

 

 

735

 

 

 

2,235

 

 

 

2,482

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

1,450

 

 

 

214

 

 

 

1,680

 

Repurchase of common stock

 

 

(11.261

)

 

 

 

 

 

(142

)

 

 

 

 

 

(2,145

)

 

 

 

 

 

(2,287

)

Share-based benefit plans

 

 

0.372

 

 

 

 

 

 

140

 

 

 

 

 

 

 

 

 

 

 

 

140

 

Cash dividends declared
   ($0.48 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(161

)

 

 

 

 

 

(161

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(123

)

 

 

(123

)

Other

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

57

 

 

 

59

 

Balances, June 30, 2021

 

 

322.825

 

 

 

3

 

 

 

—

 

 

 

(475

)

 

 

(121

)

 

 

2,383

 

 

 

1,790

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

2,269

 

 

 

203

 

 

 

2,455

 

Repurchase of common stock

 

 

(9.605

)

 

 

 

 

 

(130

)

 

 

 

 

 

(2,199

)

 

 

 

 

 

(2,329

)

Share-based benefit plans

 

 

0.282

 

 

 

 

 

 

127

 

 

 

 

 

 

 

 

 

 

 

 

127

 

Cash dividends declared
   ($0.48 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(155

)

 

 

 

 

 

(155

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(144

)

 

 

(144

)

Other

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

78

 

 

 

81

 

Balances, September 30, 2021

 

 

313.502

 

 

 

3

 

 

 

—

 

 

 

(492

)

 

 

(206

)

 

 

2,520

 

 

 

1,825

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

88

 

 

 

1,814

 

 

 

191

 

 

 

2,093

 

Repurchase of common stock

 

 

(8.469

)

 

 

 

 

 

(81

)

 

 

 

 

 

(1,991

)

 

 

 

 

 

(2,072

)

Share-based benefit plans

 

 

0.444

 

 

 

 

 

 

88

 

 

 

 

 

 

 

 

 

 

 

 

88

 

Cash dividends declared
   ($0.48 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(149

)

 

 

 

 

 

(149

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(248

)

 

 

(248

)

Other

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

 

 

(41

)

 

 

(48

)

Balances, December 31, 2021

 

 

305.477

 

 

 

3

 

 

 

—

 

 

 

(404

)

 

 

(532

)

 

 

2,422

 

 

 

1,489

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(43

)

 

 

1,273

 

 

 

192

 

 

 

1,422

 

Repurchase of common stock

 

 

(8.375

)

 

 

 

 

 

 

 

 

 

 

 

(2,101

)

 

 

 

 

 

(2,101

)

Share-based benefit plans

 

 

1.879

 

 

 

 

 

 

 

 

 

 

 

 

(57

)

 

 

 

 

 

(57

)

Cash dividends declared
   ($0.56 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(171

)

 

 

 

 

 

(171

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(171

)

 

 

(171

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

4

 

 

 

3

 

Balances, March 31, 2022

 

 

298.981

 

 

$

3

 

 

$

—

 

 

$

(447

)

 

$

(1,589

)

 

$

2,447

 

 

$

414

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

6

Table of Contents

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE QUARTERS ENDED MARCH 31, 20212022 AND 2020

2021

Unaudited

(Dollars in millions)

   
2021
  
2020
 
Cash flows from operating activities:
         
Net income
  
$
1,580
 
 $698 
Adjustments to reconcile net income to net cash provided by operating activities:
         
Increase (decrease) in cash from operating assets and liabilities:
         
Accounts receivable
  
 
(371
) 
  464 
Inventories and other assets
  
 
(85
) 
  (196) 
Accounts payable and accrued expenses
  
 
(371
) 
  (784) 
Depreciation and amortization
  
 
697
 
  674 
Income taxes
  
 
406
 
  121 
Gains on sales of facilities
  
 
(2
) 
  (7) 
Losses on retirement of debt
  
 
0
 
  295 
Amortization of debt issuance costs and discounts
  
 
8
 
  7 
Share-based compensation
  
 
97
 
  82 
Other
  
 
29
 
  21 
          
Net cash provided by operating activities
  
 
1,988
 
  1,375 
          
Cash flows from investing activities:
         
Purchase of property and equipment
  
 
(654
) 
  (853) 
Acquisition of hospitals and health care entities
  
 
(22
) 
  (328) 
Sales of hospitals and health care entities
  
 
20
 
  35 
Change in investments
  
 
(2
) 
  (1) 
Other
  
 
9
 
  2 
          
Net cash used in investing activities
  
 
(649
) 
  (1,145) 
          
Cash flows from financing activities:
         
Issuances of long-term debt
  
 
0
 
  2,700 
Net change in revolving credit facilities
   80   1,440 
Repayment of long-term debt
  
 
(47
) 
  (3,327) 
Distributions to noncontrolling interests
  
 
(234
) 
  (154) 
Payment of debt issuance costs
  
 
0
 
  (34) 
Payment of dividends
  
 
(169
) 
  (152) 
Repurchase of common stock
  
 
(1,527
) 
  (441) 
Other
  
 
(207
) 
  (141) 
          
Net cash used in financing activities
  
 
(2,104
) 
  (109) 
          
Effect of exchange rate changes on cash and cash equivalents
  
 
2
 
  (11) 
          
Change in cash and cash equivalents
  
 
(763
) 
  110 
Cash and cash equivalents at beginning of period
  
 
1,793
 
  621 
          
Cash and cash equivalents at end of period
  
$
1,030
 
 $731 
          
Interest payments
  
$
375
 
 $468 
Income tax refunds, net
  
$
(13
) 
 $(9) 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

1,465

 

 

$

1,580

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Decrease in cash from operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(427

)

 

 

(371

)

Inventories and other assets

 

 

(121

)

 

 

(85

)

Accounts payable and accrued expenses

 

 

(771

)

 

 

(371

)

Depreciation and amortization

 

 

732

 

 

 

697

 

Income taxes

 

 

346

 

 

 

406

 

Gains on sales of facilities

 

 

(10

)

 

 

(2

)

Amortization of debt issuance costs and discounts

 

 

7

 

 

 

8

 

Share-based compensation

 

 

86

 

 

 

97

 

Other

 

 

38

 

 

 

29

 

Net cash provided by operating activities

 

 

1,345

 

 

 

1,988

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(861

)

 

 

(654

)

Acquisition of hospitals and health care entities

 

 

(2

)

 

 

(22

)

Sales of hospitals and health care entities

 

 

14

 

 

 

20

 

Change in investments

 

 

10

 

 

 

(2

)

Other

 

 

(6

)

 

 

9

 

Net cash used in investing activities

 

 

(845

)

 

 

(649

)

Cash flows from financing activities:

 

 

 

 

 

 

Issuance of long-term debt

 

 

5,966

 

 

 

0

 

Net change in revolving credit facilities

 

 

(2,780

)

 

 

80

 

Repayment of long-term debt

 

 

(66

)

 

 

(47

)

Distributions to noncontrolling interests

 

 

(171

)

 

 

(234

)

Payment of debt issuance costs

 

 

(49

)

 

 

0

 

Payment of dividends

 

 

(177

)

 

 

(169

)

Repurchase of common stock

 

 

(2,101

)

 

 

(1,527

)

Other

 

 

(197

)

 

 

(207

)

Net cash provided by (used in) financing activities

 

 

425

 

 

 

(2,104

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(5

)

 

 

2

 

Change in cash and cash equivalents

 

 

920

 

 

 

(763

)

Cash and cash equivalents at beginning of period

 

 

1,451

 

 

 

1,793

 

Cash and cash equivalents at end of period

 

$

2,371

 

 

$

1,030

 

Interest payments

 

$

408

 

 

$

375

 

Income tax payments (refunds), net

 

$

3

 

 

$

(13

)

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

7

Table of Contents

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

HCA Healthcare, Inc. is a holding company whose affiliates own and operate hospitals and related health care entities. The term “affiliates” includes direct and indirect subsidiaries of HCA Healthcare, Inc. and partnerships and joint ventures in which such subsidiaries are partners. At March 31, 2021,2022, these affiliates owned and operated 186182 hospitals, 121124 freestanding surgery centers, 21 freestanding endoscopy centers and provided extensive outpatient and ancillary services. HCA Healthcare, Inc.’s facilities are located in 20 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.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to

Form 10-Q
and Article 10 of
Regulation S-X.
Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal and recurring nature.

The majority of our expenses are “costs of revenues” items. Costs that could be classified as general and administrative would include our corporate office costs, which were $87$95 million and $96$87 million for the quarters ended March 31, 20212022 and 2020,2021, respectively. Operating results for the quarter ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.2022. For further information, refer to the consolidated financial statements and footnotes thereto included in our annual report on

Form 10-K
for the year ended December 31, 2020
.
2021.

COVID-19

Pandemic

On March 11, 2020, the World Health Organization designated

COVID-19
as a global pandemic. Patient volumes and the related revenues for most of our services were significantly impacted during the latter portion of the first quarter and the first half of the second quarter of 2020 and have continued to be impacted as various policies were implemented by federal, state and local governments in response to the
COVID-19
pandemic, and the public remains wary of real or perceived opportunities for exposure to the virus. We believe the extent of the
COVID-19
pandemic’sCOVID-19’s impact on our operating results and financial condition has been and will continue to be driven by many factors, most of which are beyond our control and ability to forecast. Because of these uncertainties, we cannot estimate how long or to what extent the pandemicCOVID-19 will impact our
operations.

Revenues

Our revenues generally relate to contracts with patients in which our performance obligations are to provide health care services to the patients. Revenues are recorded during the period our obligations to provide health care services are satisfied. Our performance obligations for inpatient services are generally satisfied over periods that average approximately five days, and revenues are recognized based on charges incurred in relation to total expected charges. charges. Our performance obligations for outpatient services are generally satisfied over a period of less than one day.day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered

7
Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenues (continued)
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 discounted
fee-for-service
rates. Our revenues for the quarter ended March 31, 2020 include
$
55
million related to the settlement of Medicare outlier calculations for prior periods. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.

8

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenues (continued)

Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual adjustments under managed care and 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 record these revenues at the estimated amounts we expect to collect. Patients treated at our hospitals for

non-elective
care, who have income at or below
400
%
of the federal poverty level, are eligible for charity care. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues.
Our revenues by primary third-party payer classification and other (including uninsured patients) for the quarters ended March 31, 20212022 and 20202021 are summarized in the following table (dollars in millions):

 

 

2022

 

 

Ratio

 

 

2021

 

 

Ratio

 

Medicare

 

$

2,726

 

 

 

18.2

%

 

$

2,559

 

 

 

18.3

%

Managed Medicare

 

 

2,324

 

 

 

15.6

 

 

 

2,053

 

 

 

14.7

 

Medicaid

 

 

579

 

 

 

3.9

 

 

 

527

 

 

 

3.8

 

Managed Medicaid

 

 

1,110

 

 

 

7.4

 

 

 

725

 

 

 

5.2

 

Managed care and insurers

 

 

7,152

 

 

 

47.9

 

 

 

6,885

 

 

 

49.1

 

International (managed care and insurers)

 

 

356

 

 

 

2.4

 

 

 

333

 

 

 

2.4

 

Other

 

 

698

 

 

 

4.6

 

 

 

895

 

 

 

6.5

 

Revenues

 

$

14,945

 

 

 

100.0

%

 

$

13,977

 

 

 

100.0

%

   
2021
   
Ratio
  
2020
   
Ratio
Medicare
  
$
2,559
 
  
 
18.3
% 
 $2,743    21.3% 
Managed Medicare
  
 
2,053
 
  
 
14.7
 
  1,826    14.2 
Medicaid
  
 
527
 
  
 
3.8
 
  414    3.2 
Managed Medicaid
  
 
725
 
  
 
5.2
 
  666    5.2 
Managed care and insurers
  
 
6,885
 
  
 
49.1
 
  6,645    51.6 
International (managed care and insurers)
  
 
333
 
  
 
2.4
 
  292    2.3 
Other
  
 
895
 
  
 
6.5
 
  275    2.2 
                    
Revenues
  
$
13,977
 
  
 
100.0
% 
 $12,861    100.0% 
                    
8
Table

Managed Medicaid revenues for the quarter ended March 31, 2022 include $244 million, for the period September through December 2021, related to the March 2022 Centers for Medicare & Medicaid Services ("CMS") approval of Contents

HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTEa Texas directed payment program for the current program year that began September 1, — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenues (continued)
2021.

To quantify the 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 ended March 31, 20212022 and 20202021 follows (dollars in millions):

 

 

2022

 

 

2021

 

Patient care costs (salaries and benefits, supplies, other operating expense and depreciation
   and amortization)

 

$

12,744

 

 

$

11,643

 

Cost-to-charges ratio (patient care costs as percentage of gross patient charges)

 

 

11.3

%

 

 

11.4

%

Total uncompensated care

 

$

7,005

 

 

$

6,821

 

Multiply by the cost-to-charges ratio

 

 

11.3

%

 

 

11.4

%

Estimated cost of total uncompensated care

 

$

792

 

 

$

778

 

 
  
2021
 
 
2020
 
Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation and amortization)
  
$
11,643
 
 
$
11,342
 
         
Cost-to-charges
ratio (patient care costs as percentage of gross patient charges)
  
 
11.4
% 
 
 
11.9
% 
Total uncompensated care
  
$
6,821
 
 
$
7,873
 
Multiply by the
cost-to-charges
ratio
  
 
11.4
% 
 
 
11.9
% 
Estimated cost of total uncompensated care
  
$
778
 
 
$
937
 
 
  
  
 
 
   

The total uncompensated care amounts for the quarters ended March 31, 2022 and 2021 include charity care of $2.942$3.458 billion and $3.735$2.942 billion, respectively, and the related estimated costs of charity care were $335$391 million and $444$335 million, respectively.

respectively,
for the quarters ended March 31, 2021 and 2020
.

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 2 — ACQUISITIONS AND DISPOSITIONS

During the quarterquarters ended March 31, 2022and 2021, we paid $22$2 million

and $22 million, respectively, to acquire nonhospital health care entities. Purchase price amounts have been allocated to the related assets acquired and liabilities assumed based upon their respective fair values.

9

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2 — ACQUISITIONS AND DISPOSITIONS (continued)

During the quarterquarters ended March 31, 2020, we paid 

$328 million
to acquire a hospital in New Hampshire 2022and 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. 
During the quarter ended March 31, 2021, we received proceeds of $20$14 million and $20 million, respectively, and recognized a pretax gaingains of $2$10 million and $2 million, respectively, related to sales of real estate and other health care entity investments. During the quarter ended March 31, 2020, we received proceeds of $35 million and recognized a pretax gain of $7 million related to sales of real estate and other investments.

NOTE 3 — INCOME TAXES

Our provisions for income taxes for the quarters ended March 31, 2022and 2021 and 2020 were

$393349 million and $112$393 million, respectively, and the effective tax rates were 21.7%21.5% and 16.2%21.7%, respectively.
Our provisionprovisions for income taxes included tax benefits related to settlements of employee equity awards of
$7464 million and $53$74 million for the quarters ended March 31, 2022and 2021, and 2020, respectively.

Our liability for unrecognized tax benefits was $596$654 million, including accrued interest of $88$104 million, as of March 31, 20212022 ($508642 million and $73$99 million, respectively, as of December 31, 2020)2021). Unrecognized tax benefits of $179$230 million ($157217 million as of December 31, 2020)2021) would affect the effective rate, if recognized.

9
Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 — INCOME TAXES (continued)
The

At March 31, 2022, the Internal Revenue Service was conducting an examinationexaminations of the Company’s 2016, 2017 and 2018 federal income tax returns at March 31, 2021.and the 2019 return for one affiliated partnership. We are also subject to examination by 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.

NOTE 4 — EARNINGS PER SHARE

We compute basic earnings per share using the weighted average number of common shares outstanding. We compute diluted earnings per share using the weighted average number of common shares outstanding, plus the dilutive effect of outstanding equity awards, computed using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share for the quarters ended March 31, 2021 2022and 20202021 (dollars and shares in millions, except per share amounts):

 

 

2022

 

 

2021

 

Net income attributable to HCA Healthcare, Inc.

 

$

1,273

 

 

$

1,423

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

302.446

 

 

 

338.123

 

Effect of dilutive incremental shares

 

 

4.928

 

 

 

5.198

 

Shares used for diluted earnings per share

 

 

307.374

 

 

 

343.321

 

Earnings per share:

 

 

 

 

 

 

Basic earnings

 

$

4.21

 

 

$

4.21

 

Diluted earnings

 

$

4.14

 

 

$

4.14

 

10

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 
  
2021
 
  
2020
 
Net income attributable to HCA Healthcare, Inc.
  
$
1,423
 
  
$
581
 
   
Weighted average common shares outstanding
  
 
338.123
 
  
 
338.242
 
Effect of dilutive incremental shares
  
 
5.198
 
  
 
5.854
 
Shares used for diluted earnings per share
  
 
343.321
 
  
 
344.096
 
         
Earnings per share:
  
   
  
   
Basic earnings
  
$
4.21
 
  
$
1.72
 
Diluted earnings
  
$
4.14
 
  
$
1.69
 

NOTE 5 — INVESTMENTS OF INSURANCE SUBSIDIARIES

A summary of our insurance subsidiaries’ investments at March 31, 20212022 and December 31, 20202021 follows (dollars in millions):

 

 

March 31, 2022

 

 

 

 

 

 

Unrealized
Amounts

 

 

 

 

 

 

Amortized
Cost

 

 

Gains

 

 

Losses

 

 

Fair
Value

 

Debt securities

 

$

411

 

 

$

4

 

 

$

(14

)

 

$

401

 

Money market funds and other

 

 

112

 

 

 

—

 

 

 

—

 

 

 

112

 

 

 

$

523

 

 

$

4

 

 

$

(14

)

 

 

513

 

Amounts classified as current assets

 

 

 

 

 

 

 

 

 

 

 

(105

)

Investment carrying value

 

 

 

 

 

 

 

 

 

 

$

408

 

 

 

December 31, 2021

 

 

 

 

 

 

Unrealized
Amounts

 

 

 

 

 

 

Amortized
Cost

 

 

Gains

 

 

Losses

 

 

Fair
Value

 

Debt securities

 

$

400

 

 

$

18

 

 

$

(2

)

 

$

416

 

Money market funds and other

 

 

125

 

 

 

—

 

 

 

—

 

 

 

125

 

 

 

$

525

 

 

$

18

 

 

$

(2

)

 

 

541

 

Amounts classified as current assets

 

 

 

 

 

 

 

 

 

 

 

(103

)

Investment carrying value

 

 

 

 

 

 

 

 

 

 

$

438

 

 
  
March 31, 2021
 
 
  
Amortized

Cost
 
  
Unrealized

Amounts
 
  
Fair

Value
 
 
  
Gains
 
  
Losses
 
Debt securities
  
$
376
 
  
$
22
 
  
$
(1
) 
  
$
397
 
Money market funds and other
  
 
104
 
  
 
—
 
  
 
—
 
  
 
104
 
 
  
$
480
 
  
$
22
 
  
$
(1
) 
  
 
501
 
                    
 
Amounts classified as current assets
  
   
  
   
  
   
  
 
(108
) 
Investment carrying value
  
   
  
   
  
   
  
$
393
 
                     
10
Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 5 — INVESTMENTS OF INSURANCE SUBSIDIARIES (continued)
   
December 31, 2020
 
   
Amortized

Cost
   
Unrealized

Amounts
   
Fair

Value
 
   
Gains
   
Losses
 
Debt securities
  
$
384
 
  
$
32
 
  
$
—
 
  
$
416
 
Money market funds and other
  
 
88
 
  
 
—
 
  
 
—
 
  
 
88
 
   
$
472
 
  
$
32
 
  
$
—
 
  
 
504
 
                     
Amounts classified as current assets
                 
 
(116
) 
Investment carrying value
                 
$
388
 
                     

At March 31, 20212022 and December 31, 2020,2021, the investments in debt securities of our insurance subsidiaries were classified as

“available-for-sale. “available-for-sale.”
Changes in unrealized gains and losses that are not credit-related are recorded as adjustments to other comprehensive income (loss).

Scheduled maturities of investments in debt securities at March 31, 20212022 were as follows (dollars in millions):

 

 

Amortized
Cost

 

 

Fair
Value

 

Due in one year or less

 

$

8

 

 

$

8

 

Due after one year through five years

 

 

139

 

 

 

140

 

Due after five years through ten years

 

 

173

 

 

 

166

 

Due after ten years

 

 

91

 

 

 

87

 

 

 

$

411

 

 

$

401

 

   
Amortized

Cost
   
Fair

Value
 
Due in one year or less
  
$
4
 
  
$
4
 
Due after one year through five years
  
 
144
 
  
 
152
 
Due after five years through ten years
  
 
157
 
  
 
167
 
Due after ten years
  
 
71
 
  
 
74
 
   
$
376
 
  
$
397
 
           

The average expected maturity of the investments in debt securities at March 31, 20212022 was 5.06.0 years, compared to the average scheduled maturity of 9.29.0 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.

NOTE 6 — FINANCIAL INSTRUMENTS
Interest Rate Swap Agreements
We have entered into interest rate swap agreements to manage our exposure to fluctuations in interest rates. These swap agreements involve the exchange of fixed and variable rate interest payments between us and our counterparties based on common notional principal amounts and maturity dates.
Pay-fixed
interest rate swaps effectively convert 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.

11

Table of Contents

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6 — FINANCIAL INSTRUMENTS (continued)

Interest Rate Swap Agreements (continued)

The following table sets forth our interest rate swap agreements,agreement, which havehas been designated as a cash flow hedges,hedge, at March 31, 20212022 (dollars in millions):

 

 

Notional
Amount

 

 

Maturity Date

 

Fair
Value

 

Pay-fixed interest rate swap

 

$

500

 

 

December 2022

 

$

(2

)

   
Notional

Amount
   
Maturity Date
   
Fair

Value
 
Pay-fixed
interest rate swaps
  
$
2,000
 
  
 
December 2021
 
  
$
(20
) 
Pay-fixed
interest rate swaps
  
 
500
 
  
 
December 2022
 
  
 
(16
) 
During the next 12 months, we estimate $30 million will be reclassified from other comprehensive income (“OCI”) and will be included in interest expense.
Derivatives — Results of Operations

The following table presents the effect of our interest rate swapsswap on our results of operations for the quarter ended March 31, 20212022 (dollars in millions):

Derivatives in Cash Flow Hedging Relationships

 

Amount of Gain
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

Interest rate swap

 

$3

 

Interest expense

 

$2

Derivatives in Cash Flow Hedging Relationships
  
Amount of Gain

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
 
Interest rate swaps
  
$
1
 
  
 
Interest expense
 
  
$
9
 
Credit-risk-related Contingent Features
We have agreements with each of our derivative counterparties that contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. As of March 31, 2021, we have not been required to post any collateral related to these agreements. If we had breached these provisions at March 31, 2021, we would have been required to settle our obligations under the agreements at their aggregate, estimated termination value of $37 million.

NOTE 7 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Accounting Standards Codification 820,

Fair Value Measurements and Disclosures
(“ASC 820”), emphasizes fair value is a market-based measurement, and fair value measurements should be determined based on the assumptions market participants would use in pricing assets or liabilities. ASC 820 utilizes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related marke

t
12
Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (continued)
market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment.

Cash Traded Investments
Our cash traded

Investment Securities

The investments of our insurance subsidiaries are generally classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

Derivative Financial Instruments

Instrument

We have entered into an interest rate swap agreementsagreement to manage our exposure to fluctuations in interest rates. The valuation of these instrumentsthis instrument is determined using widely accepted valuation techniques, including a discounted expected cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. We incorporate credit valuation adjustments to reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements of these instruments.analysis.

12

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 7 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (continued)

The following tables summarize our assets and liabilities measured at fair value on a recurring basis as of March 31, 20212022 and December 31, 2020,2021, aggregated by the level in the fair value hierarchy within which those measurements fall (dollars in millions):

 

 

March 31, 2022

 

 

 

 

 

 

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)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Investments of insurance subsidiaries:

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities

 

$

401

 

 

$

—

 

 

$

401

 

 

$

—

 

Money market funds and other

 

 

112

 

 

 

112

 

 

 

—

 

 

 

—

 

Investments of insurance subsidiaries

 

 

513

 

 

 

112

 

 

 

401

 

 

 

—

 

Less amounts classified as current assets

 

 

(105

)

 

 

(105

)

 

 

—

 

 

 

—

 

 

 

$

408

 

 

$

7

 

 

$

401

 

 

$

—

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap (Other accrued expenses)

 

$

2

 

 

$

—

 

 

$

2

 

 

$

—

 

 

 

December 31, 2021

 

 

 

 

 

 

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)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Investments of insurance subsidiaries:

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities

 

$

416

 

 

$

—

 

 

$

416

 

 

$

—

 

Money market funds and other

 

 

125

 

 

 

125

 

 

 

—

 

 

 

—

 

Investments of insurance subsidiaries

 

 

541

 

 

 

125

 

 

 

416

 

 

 

—

 

Less amounts classified as current assets

 

 

(103

)

 

 

(103

)

 

 

—

 

 

 

—

 

 

 

$

438

 

 

$

22

 

 

$

416

 

 

$

—

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap (Other accrued expenses)

 

$

8

 

 

$

—

 

 

$

8

 

 

$

—

 

 
  
March 31, 2021
 
 
  
 
 
 
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)
 
Assets:
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments of insurance subsidiaries:
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities
  
$
397
 
 
$
—
 
 
$
397
 
 
$
—
 
Money market funds and other
  
 
104
 
 
 
104
 
 
 
—
 
 
 
—
 
Investments of insurance subsidiaries
  
 
501
 
 
 
104
 
 
 
397
 
 
 
—
 
Less amounts classified as current assets
  
 
(108
) 
 
 
(101
) 
 
 
(7
) 
 
 
—
 
 
  
  
 
 
  
 
 
  
 
 
  
 
 
  
$
393
 
 
$
3
 
 
$
390
 
 
$
—
 
 
  
  
 
 
  
 
 
  
 
 
  
 
Liabilities:
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swaps (Income taxes and other liabilities)
  
$
36
 
 
$
—
 
 
$
36
 
 
$
—
 
13
Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (continued)
Derivative Financial Instruments (continued)
    
 
  
December 31, 2020
 
 
  
 
 
 
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)
 
Assets:
  
   
 
   
 
   
 
   
Investments of insurance subsidiaries:
  
   
 
   
 
   
 
   
Debt securities
  
$
416
 
 
$
—
 
 
$
416
 
 
$
—
 
Money market funds and other
  
 
88
 
 
 
88
 
 
 
—
 
 
 
—
 
Investments of insurance subsidiaries
  
 
504
 
 
 
88
 
 
 
416
 
 
 
—
 
Less amounts classified as current assets
  
 
(116
) 
 
 
(87
) 
 
 
(29
) 
 
 
—
 
 
  
$
388
 
 
$
1
 
 
$
387
 
 
$
—
 
                  
Liabilities:
  
   
 
   
 
   
 
   
Interest rate swaps (Income taxes and other liabilities)
  
$
46
 
 
$
—
 
 
$
46
 
 
$
—
 

The estimated fair value of our long-term debt was $34.872$39.038 billion and $35.814$38.541 billion at March 31, 20212022 and December 31, 2020,2021, respectively, compared to carrying amounts, excluding debt issuance costs and discounts, aggregating $31.301$38.019 billion and $31.240$34.827 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.

13

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 — LONG-TERM DEBT

A summary of long-term debt at March 31, 20212022 and December 31, 2020,2021, including related interest rates at March 31, 2021,2022 follows (dollars in millions):

 

March 31,
2022

 

 

December 31,
2021

 

Senior secured asset-based revolving credit facility

$

0

 

 

$

2,780

 

Senior secured revolving credit facility

 

0

 

 

 

0

 

Senior secured term loan facilities (effective interest rate of 2.3%)

 

1,940

 

 

 

1,960

 

Senior secured notes (effective interest rate of 4.6%)

 

22,200

 

 

 

16,200

 

Other senior secured debt (effective interest rate of 4.0%)

 

927

 

 

 

935

 

Senior secured debt

 

25,067

 

 

 

21,875

 

Senior unsecured notes (effective interest rate of 5.5%)

 

12,952

 

 

 

12,952

 

Debt issuance costs and discounts

 

(323

)

 

 

(248

)

Total debt (average life of 10.2 years, rates averaging 4.8%)

 

37,696

 

 

 

34,579

 

Less amounts due within one year

 

1,486

 

 

 

237

 

 

$

36,210

 

 

$

34,342

 

 
 
March 31,

2021
 
 
December 31,

2020
 
Senior secured asset-based revolving credit facility (effective interest rate of 1.4%)
 
$
80
 
 
$
0
 
Senior secured revolving credit facility
 
 
0
 
 
 
0
 
Senior secured term loan facilities (effective interest rate of 2.8%)
 
 
3,657
 
 
 
3,671
 
Senior secured notes (effective interest rate of 5.1%)
 
 
13,850
 
 
 
13,850
 
Other senior secured debt (effective interest rate of 4.6%)
 
 
762
 
 
 
767
 
Senior secured debt
 
 
18,349
 
 
 
18,288
 
Senior unsecured notes (effective interest rate of 5.5%)
 
 
12,952
 
 
 
12,952
 
Debt issuance costs and discounts
 
 
(229
) 
 
 
(236
) 
Total debt (average life of 8.6 years, rates averaging 5.0%)
 
 
31,072
 
 
 
31,004
 
Less amounts due within one year
 
 
234
 
 
 
209
 
 
 
$
30,838
 
 
$
30,795
 
 
 
  
 
 
  
 
14
Table

During March 2022, we issued $6.000 billion aggregate principal amount of Contents

senior secured notes comprised of (i) $1.000 billion aggregate principal amount of 3 1/8% senior secured notes due 2027, (ii) $500 million aggregate principal amount of 3 3/8% senior secured notes due 2029, (iii) $2.000 billion aggregate principal amount of 3 5/8% senior secured notes due 2032, (iv) $500 million aggregate principal amount of 4 3/8% senior secured notes due 2042 and (v) $2.000 billion aggregate principal amount of 4 5/8% senior secured notes due 2052. During March 2022, we used a portion of the net proceeds to pay down our revolving credit facilities. During April 2022, we redeemed all $1.250 billion outstanding aggregate principal amount of our 4.75% senior secured notes due 2023 and provided a notice of our election to redeem all $1.250 billion outstanding aggregate principal amount of our 5.875% senior notes due 2023. We expect to record aggregate pretax losses on retirement of debt for these two redemptions of approximately $80 million during the second quarter of 2022.

HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9 — CONTINGENCIES

We operate in a highly regulated and litigious industry. As a result, various lawsuits, claims and legal and regulatory proceedings have been and can be expected to be instituted or asserted against us. We are also subject to claims and suits arising in the ordinary course of business, including claims for personal injuries or wrongful restriction of, or interference with, physicians’ staff privileges. In certain of these actions the claimants may seek punitive damages against us which may not be covered by insurance. We are also subject to claims by various taxing authorities for additional taxes and related interest and penalties. The resolution of any such lawsuits, claims or legal and regulatory proceedings could have a material, adverse effect on our results of operations, financial position or liquidity.

Health care companies are routinely subject to investigations

by various governmental agencies. Under the federal False Claims Act (“FCA”), private parties have the right to bring
qui tam
, or “whistleblower,” suits against companies that submit false claims for payments to, or improperly retain overpayments from, the government. Some states have adopted similar state whistleblower and false claims provisions. Certain of our individual facilities have received, and from time to time, other facilities may receive, government inquiries from, and may be subject to investigation by, federal and state agencies. Depending on whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a material, adverse effect on our results of operations, financial position or liquidity.

14

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9 — CONTINGENCIES (continued)

Texas operates a state Medicaid program pursuant to a waiver from the Centers for Medicare & Medicaid ServicesCMS under Section 1115 of the Social Security Act (“Program”). The Program includes uncompensated-care pools; payments from these pools are intended to defray the uncompensated costs of services provided by our and other hospitals to Medicaid eligible or uninsured individuals. Separately, we and other hospitals provide charity care services in several communities in the state. In 2018, the Civil Division of the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of Texas requested information about whether the Program, as operated in Harris County, complied with the laws and regulations applicable to provider related donations, and the Company cooperated with that request. On May 21, 2019, a

qui tam
lawsuit asserting violations of the FCA and the Texas Medicaid Fraud Prevention Act related to the Program, as operated in Harris County, was unsealed by the U.S. District Court for the Southern District of Texas. Both the federal and state governments declined to intervene in the
qui tam
lawsuit. The Company believes that our participation is and has been consistent with the requirements of the Program and is vigorously defending against the lawsuit being pursued by the relator. We cannot predict what effect, if any, the
qui tam
lawsuit could have on the Company.

NOTE 10 — SHARE REPURCHASE TRANSACTIONS AND OTHER COMPREHENSIVE LOSS

During January 20202022 and 2019,February 2021, our Board of Directors authorized share repurchase programs for up to $4$8 billion ($2and $6 billion, for each authorization) of our outstanding common stock. During February 2021, our Board of Directors authorized an additional $6 billion for repurchasesrespectively, of our outstanding common stock. During the quarter ended March 31, 2021,2022, we repurchased 8.4778.375 million shares of our common stock at an average price of $180.11$250.89 per share through market purchases pursuant to the $2.0 billion share repurchase program authorized during January 2019February 2021 authorization (which was completed during the first quarter of 2021)2022) and the January 20202022 authorization. At March 31, 2021,2022, we had $7.274$6.485 billion of repurchase authorization available under the January 2020 and February 20212022 authorization.

authorizations
.
15
Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10 — SHARE REPURCHASE TRANSACTIONS AND OTHER COMPREHENSIVE LOSS (continued)

The components of accumulated other comprehensive loss are as follows (dollars in millions):

 

 

Unrealized
Gains (Losses) on
Available-
for-Sale
Securities

 

 

Foreign
Currency
Translation
Adjustments

 

 

Defined
Benefit
Plans

 

 

Change
in Fair
Value of
Derivative
Instruments

 

 

Total

 

Balances at December 31, 2021

 

$

12

 

 

$

(278

)

 

$

(132

)

 

$

(6

)

 

$

(404

)

Unrealized losses on available-for-sale
   securities, net of $6 income tax benefit

 

 

(20

)

 

 

 

 

 

 

 

 

 

 

 

(20

)

Foreign currency translation adjustments, net
   of $4 income tax benefit

 

 

 

 

 

(30

)

 

 

 

 

 

 

 

 

(30

)

Change in fair value of derivative instruments,
   net of $1 of income taxes

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

3

 

Expense reclassified into operations from other
  comprehensive income

 

 

 

 

 

 

 

 

2

 

 

 

2

 

 

 

4

 

Balances at March 31, 2022

 

$

(8

)

 

$

(308

)

 

$

(130

)

 

$

(1

)

 

$

(447

)

 
 
Unrealized

Gains on

Available-

for-Sale

Securities
 
 
Foreign

Currency

Translation

Adjustments
 
 
Defined

Benefit

Plans
 
 
Change

in Fair

Value of

Derivative

Instruments
 
 
Total
 
Balances at December 31, 2020
 
$
25
 
 
$
(271
) 
 
$
(220
) 
 
$
(36
) 
 
$
(502
) 
Unrealized losses on
available-for-sale
securities, net of $2 income tax benefit
 
 
(9
) 
 
   
 
   
 
   
 
 
(9
) 
Foreign currency translation adjustments, net of $1 of income tax
 
   
 
 
7
 
 
   
 
   
 
 
7
 
Change in fair value of derivative instruments
 
   
 
   
 
   
 
 
1
 
 
 
1
 
Expense reclassified into operations from other comprehensive income, net of $2 and $2 income tax benefits, respectively
 
   
 
   
 
 
5
 
 
 
7
 
 
 
12
 
                     
Balances at March 31, 2021
 
$
16
 
 
$
(264
) 
 
$
(215
) 
 
$
(28
) 
 
$
(491
) 
           ��         

NOTE 11 — SEGMENT AND GEOGRAPHIC INFORMATION

We operate in one line of business, which is operating hospitals and related health care entities. We operate in 2 geographically organized groups: the National and American Groups. The National Group includes 9796 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 8279 hospitals located in Colorado, northern Georgia, Kansas, southern Kentucky, Louisiana, Missouri, Tennessee and Texas. We also operate 7 hospitals in England, and these facilities are included in the Corporate and other group.

15

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 11 — SEGMENT AND GEOGRAPHIC INFORMATION (continued)

Adjusted segment EBITDA is defined as income before depreciation and amortization, interest expense, gains on sales of facilities, losses on retirement of debt, 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, equity in earnings of affiliates, adjusted segment EBITDA and depreciation and amortization for the quarters ended March 31, 2021 2022and 20202021 are summarized in the following table (dollars in millions):

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

National Group

 

$

7,506

 

 

$

7,056

 

American Group

 

 

6,616

 

 

 

6,291

 

Corporate and other

 

 

823

 

 

 

630

 

 

 

$

14,945

 

 

$

13,977

 

Equity in earnings of affiliates:

 

 

 

 

 

 

National Group

 

$

(1

)

 

$

(7

)

American Group

 

 

(9

)

 

 

(12

)

Corporate and other

 

 

(1

)

 

 

(2

)

 

 

$

(11

)

 

$

(21

)

Adjusted segment EBITDA:

 

 

 

 

 

 

National Group

 

$

1,566

 

 

$

1,705

 

American Group

 

 

1,486

 

 

 

1,501

 

Corporate and other

 

 

(108

)

 

 

(154

)

 

 

$

2,944

 

 

$

3,052

 

Depreciation and amortization:

 

 

 

 

 

 

National Group

 

$

355

 

 

$

323

 

American Group

 

 

301

 

 

 

293

 

Corporate and other

 

 

76

 

 

 

81

 

 

 

$

732

 

 

$

697

 

 

 

 

 

 

 

 

Adjusted segment EBITDA

 

$

2,944

 

 

$

3,052

 

Depreciation and amortization

 

 

732

 

 

 

697

 

Interest expense

 

 

408

 

 

 

384

 

Gains on sales of facilities

 

 

(10

)

 

 

(2

)

Income before income taxes

 

$

1,814

 

 

$

1,973

 

   
202
1
   
2020
 
Revenues:
          
National Group
  
$
7,056
 
  $6,474 
American Group
  
 
6,291
 
   5,744 
Corporate and other
  
 
630
 
   643 
           
   
$
13,977
 
  $12,861 
           

16

Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 11 — SEGMENT AND GEOGRAPHIC INFORMATION (continued)
         
   
2021
   
2020
 
Equity in earnings of affiliates:
  
 
 
 
  
 
 
 
National Group
  
$
(7
) 
  
$
1
 
American Group
  
 
(12
) 
  
 
(9
) 
Corporate and other
  
 
(2
) 
  
 
1
 
 
  
$
(21
) 
  
$
(7
) 
 
  
  
 
  
  
 
Adjusted segment EBITDA:
  
 
 
 
  
 
 
 
National Group
  
$
1,705
 
  
$
1,215
 
American Group
  
 
1,501
 
  
 
1,115
 
Corporate and other
  
 
(154
) 
  
 
(130
) 
 
  
$
3,052
 
  
$
2,200
 
 
  
  
 
  
  
 
Depreciation and amortization:
  
 
 
 
  
 
 
 
National Group
  
$
323
 
  
$
306
 
American Group
  
 
293
 
  
 
287
 
Corporate and other
  
 
81
 
  
 
81
 
 
  
$
697
 
  
$
674
 
 
  
  
 
  
  
 
Adjusted segment EBITDA
  
$
3,052
 
  
$
2,200
 
Depreciation and amortization
  
 
697
 
  
 
674
 
Interest expense
  
 
384
 
  
 
428
 
Gains on sales of facilities
  
 
(2
) 
  
 
(7
) 
Losses on retirement of debt
  
 
0
 
  
 
295
 
Income before income taxes
  
$
1,973
 
  
$
810
 
 
  
  
 
  
  
 
17
Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This quarterly report on

Form 10-Q
includes certain disclosures which contain “forward-looking 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
COVID-19,
including, without limitation, the length and severity of the pandemicits impact and the spread of virus strains with new epidemiological characteristics; the volume of canceled or rescheduled procedures and the volume of
COVID-19
patients cared for across our health systems; measures we are taking to respond to the
COVID-19
pandemic;COVID-19; the impact and terms of government and administrative regulation and stimulus and relief measures (including the Families First Coronavirus Response Act, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the Paycheck Protection Program and Health Care Enhancement Act, the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021 (“ARPA”) and other enacted and potential future legislation); and whether various stimulus and relief programs continue or new similar programs are enacted in the future; changes in revenues due to declining patient volumes, changes in payer mix and deteriorating macroeconomic conditions (including increases in uninsured and underinsured patients); potential increased expenses related to labor, supply chain or other expenditures; workforce disruptions;disruptions, including the impact of any current or future vaccine mandates; supply shortages and disruptions; and the timing, availability and adoption of effective medical treatments and vaccines (including boosters), (2) the impact of our substantial indebtedness and the ability to refinance such indebtedness on acceptable terms, as well as risks associated with disruptions in the financial markets and the business of financial institutions as the result of the
COVID-19,
pandemic which could impact us from a financial perspective, (3) the impact of current and future federal and state health reform initiatives and possible changes to other federal, state or local laws and regulations affecting the health care industry, including but not limited to, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”), includingand the effects of court challenges to, any repeal of, oradditional changes to the Affordable Care Act, or additional changes to its implementation, the possible enactment of additional federal or state health care reformsinterpretation (including through executive orders and possible changes to other federal, state or local laws or regulations affecting the health care industry, includingcourt challenges), and proposals to expand coverage of federally-funded insurance programs as an alternative to private insurance or establish a single-payer system (such reforms often referred to as “Medicare for All”), and also including any such laws or governmental regulations which are adopted in response to the
COVID-19,
pandemic, (4) the effects related to the implementation of sequestration spending reductions required under the Budget Control Act of 2011, related legislation extending these reductions and those required under the Pay-As-You-Go Act of 2010 (“PAYGO Act”) as a result of the federal budget deficit impact of the American Rescue Plan Act of 2021,ARPA, and the potential for future deficit reduction legislation that may alter these spending reductions, which include cuts to Medicare payments, or create additional spending reductions, (5) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (6) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services, (7) possible changes in Medicare, Medicaid and other state programs, including Medicaid supplemental payment programs or Medicaid waiver programs, that may impact reimbursements to health care providers and insurers and the size of the uninsured or underinsured population, (8) increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel, (9) the highly competitive nature of the health care business, (9)(10) changes in service mix, revenue mix and surgical volumes, including potential declines in the population covered under third-party payer agreements, the ability to enter into and renew third-party payer provider agreements on acceptable terms and the impact of consumer-driven health plans and physician utilization trends and practices, (10)(11) the efforts of health insurers, health care providers, large employer groups and others to contain health care costs, (11)(12) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures, (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, (13) the availability and terms of capital to fund the expansion of our business and improvements to our existing
18
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Forward-Looking Statements (continued)
facilities, (14) changes in accounting practices, (15) changes in general economic conditions nationally and regionally in our markets, including inflation and economic and business conditions (and the impact thereof on the economy, financial markets and banking industry) resulting from the
COVID-19,
pandemic, (16) the emergence of and effects related to other pandemics, epidemics and infectious diseases, (17) future divestitures which may result in charges and possible impairments of long-lived assets, (18) changes in business strategy or development plans, (19) delays in receiving payments for services provided, (20) the outcome of pending and any future tax audits, disputes and litigation associated with our tax positions, (21) potential adverse impact of known and unknown government investigations, litigation and other claims that may be made against us, (22) the impact of potential cybersecurity incidents or security breaches, (23) our ongoing ability to demonstrate meaningful use of certified electronic health record (“EHR”) technology and the impact of interoperability requirements, (24) the impact of natural disasters, such as hurricanes and floods, physical risks from climate change 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 on
Form 10-K
for the year ended December 31, 20202021 and our other filings with the Securities and Exchange Commission. As a consequence, current plans, anticipated actions and future financial position and results of operations may differ from those expressed in any forward-looking statements made by or on behalf of HCA. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this report, which forward-looking statements reflect management’s views only as of the date of this report. We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.

17

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

COVID-19

Pandemic

On March 11, 2020, the World Health Organization designated

COVID-19
as a global pandemic. Patient volumes and the related revenues for most of our services were significantly impacted during the latter portion of the first quarter and the first half of the second quarter of 2020 and have continued to be impacted as various policies were implemented by federal, state and local governments in response to the
COVID-19
pandemic, and the public remains wary of real or perceived opportunities for exposure to the virus. We believe the extent of the
COVID-19
pandemic’sCOVID-19’s impact on our operating results and financial condition has been and will continue to be driven by many factors, most of which are beyond our control and ability to forecast. Because of these uncertainties, we cannot estimate how long or to what extent the pandemicCOVID-19 will impact our operations.

First Quarter 20212022 Operations Summary

Revenues increased to $14.945 billion in the first quarter of 2022 from $13.977 billion in the first quarter of 2021 from $12.861 billion in the first quarter of 2020.2021. Net income attributable to HCA Healthcare, Inc. totaled $1.273 billion, or $4.14 per diluted share, for the quarter ended March 31, 2022, compared to $1.423 billion, or $4.14 per diluted share, for the quarter ended March 31, 2021, compared to $581 million, or $1.69 per diluted share, for the quarter ended March 31, 2020.2021. First quarter results for 20202022 include losses on retirement of debt of $295 million, or $0.66 per diluted share, and gains on sales of facilities of $7$10 million, or $0.02 per diluted share. Our revenuesIn March 2022, the state of Texas received approval from the Centers for Medicare & Medicaid Services ("CMS") to implement a proposed directed payment program effective for the current program year that began September 1, 2021. During the first quarter ended March 31, 2020of 2022, revenues include $55$244 million or $0.12 per diluted share,and other operating expenses include $90 million from provider tax assessments related to the settlement of Medicare outlier calculations for prior periods. Our provisions for income taxesthis program for the first quarters of 2021 and 2020 included tax benefits of $74 million, or $0.22 per diluted share, and $53 million, or $0.15 per diluted share, respectively, related to employee equity award settlements.period September through December 2021. All “per diluted share” disclosures are based upon amounts net of the applicable income taxes.

Shares used for diluted earnings per share were 307.374 million shares for the quarter ended March 31, 2022 and 343.321 million shares for the quarter ended March 31, 2021. During 2021 and the first quarter of 2022, we repurchased 37.812 million shares and 8.375 million shares, respectively, of our common stock.

Revenues increased 8.7%6.9% on a consolidated basis and 9.0%7.8% on a same facility basis for the quarter ended March 31, 2021,2022, compared to the quarter ended March 31, 2020.2021. The increase in consolidated revenues can be primarily attributed to the netcombined impact of a 16.1%3.6% increase in revenue per equivalent admission offset byand a 6.4% decline3.2% increase in equivalent admissions. The same facility revenues increase primarily resulted from the netcombined impact of a

19
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
First Quarter 2021 Operations Summary (continued)
16.6% 2.7% increase in same facility revenue per equivalent admission offset byand a 6.5% decline5.0% increase in same facility equivalent admissions.
The consolidated and same facility increases in revenue per equivalent admission were negatively impacted by declines in acuity of COVID-19 patients.

During the quarter ended March 31, 2021,2022, consolidated admissions increased 0.1% and same facility admissions declined 4.1% and 4.2%, respectively,increased 2.1% compared to the quarter ended March 31, 2020.2021. Surgeries declined 0.7%increased 4.3% on a consolidated basis and declined 0.6%4.6% on a same facility basis during the quarter ended March 31, 2021,2022, compared to the quarter ended March 31, 2020.2021. Emergency department visits declined 18.7% and 18.4%increased 11.7% on a consolidated basis and 14.6% on a same facility basis respectively, during the quarter ended March 31, 2021,2022, compared to the quarter ended March 31, 2020.2021. Consolidated and same facility uninsured admissions declined 15.8%4.9% and 15.7%3.0%, respectively, for the quarter ended March 31, 2021,2022, compared to the quarter ended March 31, 2020.

2021.

Cash flows from operating activities increased $613declined $643 million, from $1.375 billion for the first quarter of 2020 to $1.988 billion for the first quarter of 2021.2021 to $1.345 billion for the first quarter of 2022. The increasedecline in cash provided by operating activities was primarily related to the net effectcombined impact of an increasenegative changes in working capital items of $492 million, primarily related to a payment of $344 million for deferred payroll taxes from 2020, and a $121 million decline in net income, excluding gains on sales of facilities and losses on retirement of debt, of $659 million and an increase related to income taxes of $218 million, offset by negative changes in working capital of $311 million, primarily related to an increase in accounts receivable.

facilities.

Results of Operations

Revenue/Volume Trends

Our revenues generally relate to contracts with patients in which our performance obligations are to provide health care services to the patients. Revenues are recorded during the period our obligations to provide health care services are satisfied. Our performance obligations for inpatient services are generally satisfied over periods that average approximately five days, and revenues are recognized based on 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, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including 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 discounted

fee-for-service
rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.

18

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Revenue/Volume Trends (continued)

Revenues increased 8.7%6.9% from $12.861$13.977 billion in the first quarter of 20202021 to $13.977$14.945 billion in the first quarter of 2022. Managed Medicaid revenues for the quarter ended March 31, 2022 include $244 million, for the period from September through December 2021, related to the March 2022 CMS approval of a Texas directed payment program for the current program year that began September 1, 2021. Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual adjustments under managed care and 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 record

self-pay
revenues at the estimated amounts we expect to collect. Patients treated at our hospitals for
non-elective
care, who have income at or below 400% of the federal poverty level, are eligible for charity care.
20
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Revenue/Volume Trends (continued)
Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues. Our revenues by primary third-party payer classification and other (including uninsured patients) for the quarters ended March 31, 20212022 and 20202021 are summarized in the following table (dollars in millions):
   
2021
   
Ratio
  
2020
   
Ratio
 
Medicare
  
$
2,559
 
  
 
18.3
% 
 $2,743    21.3% 
Managed Medicare
  
 
2,053
 
  
 
14.7
 
  1,826    14.2 
Medicaid
  
 
527
 
  
 
3.8
 
  414    3.2 
Managed Medicaid
  
 
725
 
  
 
5.2
 
  666    5.2 
Managed care and insurers
  
 
6,885
 
  
 
49.1
 
  6,645    51.6 
International (managed care and insurers)
  
 
333
 
  
 
2.4
 
  292    2.3 
Other
  
 
895
 
  
 
6.5
 
  275    2.2 
                    
Revenues
  
$
13,977
 
  
 
100.0
% 
 $12,861    100.0% 
                    

 

 

2022

 

 

Ratio

 

 

2021

 

 

Ratio

 

Medicare

 

$

2,726

 

 

 

18.2

%

 

$

2,559

 

 

 

18.3

%

Managed Medicare

 

 

2,324

 

 

 

15.6

 

 

 

2,053

 

 

 

14.7

 

Medicaid

 

 

579

 

 

 

3.9

 

 

 

527

 

 

 

3.8

 

Managed Medicaid

 

 

1,110

 

 

 

7.4

 

 

 

725

 

 

 

5.2

 

Managed care and insurers

 

 

7,152

 

 

 

47.9

 

 

 

6,885

 

 

 

49.1

 

International (managed care and insurers)

 

 

356

 

 

 

2.4

 

 

 

333

 

 

 

2.4

 

Other

 

 

698

 

 

 

4.6

 

 

 

895

 

 

 

6.5

 

Revenues

 

$

14,945

 

 

 

100.0

%

 

$

13,977

 

 

 

100.0

%

Consolidated and same facility revenue per equivalent admission increased 16.1%3.6% and 16.6%2.7%, respectively, in the first quarter of 2021,2022, compared to the first quarter of 2020.2021. Consolidated and same facility equivalent admissions declined 6.4%increased 3.2% and 6.5%5.0%, respectively, in the first quarter of 2021,2022, compared to the first quarter of 2020.2021. Consolidated and same facility outpatient surgeries increased 2.2%7.0% and 2.3%6.8%, respectively, in the first quarter of 2021,2022, compared to the first quarter of 2020.2021. Consolidated and same facility inpatient surgeries declined 5.6%0.6% and 5.4%increased 0.8%, respectively, in the first quarter of 2021,2022, compared to the first quarter of 2020.2021. Consolidated and same facility emergency department visits declined 18.7%increased 11.7% and 18.4%14.6%, respectively, in the first quarter of 2021,2022, compared to the first quarter of 2020. Our revenues increased, although our patient volumes declined, during the first quarter of 2021 compared to the first quarter of 2020 due to favorable changes in payer mix and higher acuity levels for patients treated during the first quarter of 2021, which resulted in an increase in revenue per equivalent admission. We believe these trends have been impacted by the effect of the pandemic on our operations, including the patients diagnosed with COVID-19.

2021.

To quantify the 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 ended March 31, 20212022 and 20202021 follows (dollars in millions):

   
2021
  
2020
 
Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation and amortization)
  
$
11,643
 
 $11,342 
          
   
Cost-to-charges
ratio (patient care costs as percentage of gross patient charges)
  
 
11.4
% 
  11.9% 
          
Total uncompensated care
  
$
6,821
 
 $7,873 
Multiply by the
cost-to-charges
ratio
  
 
11.4
% 
  11.9% 
          
Estimated cost of total uncompensated care
  
$
778
 
 $937 
          

 

 

2022

 

 

2021

 

Patient care costs (salaries and benefits, supplies, other operating expense and depreciation
   and amortization)

 

$

12,744

 

 

$

11,643

 

Cost-to-charges ratio (patient care costs as percentage of gross patient charges)

 

 

11.3

%

 

 

11.4

%

Total uncompensated care

 

$

7,005

 

 

$

6,821

 

Multiply by the cost-to-charges ratio

 

 

11.3

%

 

 

11.4

%

Estimated cost of total uncompensated care

 

$

792

 

 

$

778

 

Same facility uninsured admissions declined by 6,5641,030 admissions, or 15.7%3.0%, in the first quarter of 20212022 compared to the first quarter of 2020.2021. Same facility uninsured admissions in 2020,2021, compared to 2019,2020, declined 9.1%6.3% in the fourth quarter, declined 14.2%increased 1.2% in the third quarter, declined 10.0%increased 6.6% in the second quarter of 2021, and increased 7.1%declined 15.7% in the first quarter. The declinesfluctuations in the first quarter of 2021, compared to the first quarter of 2020, and the last three quarters of 2020, compared to the last three quarters of 2019,quarterly same facility admissions were primarily due to the reimbursementreimbursements received, as

21
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Revenue/Volume Trends (continued)
provided for under the Families First Coronavirus Response Act and subsequent legislation, for uninsured patients diagnosed with
COVID-19
and the resulting classification of those patients as an insured admission,admissions, as well as general declinesfluctuations in patient volumes resulting from the pandemic’sCOVID-19's impact on our operations.
The government program to reimburse for testing and treatment of uninsured COVID-19 patients stopped accepting claims in March 2022.

19

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Revenue/Volume Trends (continued)

The approximate percentages of our admissions related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers and the uninsured for the quarters ended March 31, 20212022 and 20202021 are set forth in the following table.

   
2021
  
2020
 
Medicare
  
 
24
% 
  27% 
Managed Medicare
  
 
22
 
  20 
Medicaid
  
 
5
 
  5 
Managed Medicaid
  
 
12
 
  12 
Managed care and insurers
  
 
30
 
  28 
Uninsured
  
 
7
 
  8 
          
   
 
100
% 
  100% 
          

 

 

2022

 

 

2021

 

Medicare

 

 

23

%

 

 

24

%

Managed Medicare

 

 

23

 

 

 

22

 

Medicaid

 

 

5

 

 

 

5

 

Managed Medicaid

 

 

13

 

 

 

12

 

Managed care and insurers

 

 

30

 

 

 

30

 

Uninsured

 

 

6

 

 

 

7

 

 

 

 

100

%

 

 

100

%

The approximate percentages of our inpatient revenues related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers for the quarters ended March 31, 20212022 and 20202021 are set forth in the following table.

   
2021
  
2020
 
Medicare
  
 
24
% 
  29% 
Managed Medicare
  
 
17
 
  16 
Medicaid
  
 
5
 
  4 
Managed Medicaid
  
 
6
 
  5 
Managed care and insurers
  
 
48
 
  46 
          
   
 
100
% 
  100% 
          

 

 

2022

 

 

2021

 

Medicare

 

 

24

%

 

 

24

%

Managed Medicare

 

 

18

 

 

 

17

 

Medicaid

 

 

6

 

 

 

5

 

Managed Medicaid

 

 

9

 

 

 

6

 

Managed care and insurers

 

 

43

 

 

 

48

 

 

 

 

100

%

 

 

100

%

At March 31, 2021,2022, we had 9291 hospitals in the states of Texas and Florida. During the quarter ended March 31, 2021, 56%2022, 58% of our admissions and 49%50% of our revenues were generated by these hospitals. Uninsured admissions in Texas and Florida represented 73%75% of our uninsured admissions during the quarter ended March 31, 2021.

2022.

We receive a significant portion of our revenues from government health programs, principally Medicare and Medicaid, which are highly regulated and subject to frequent and substantial changes. In December 2017, the Centers for Medicare & Medicaid Services (“CMS”) announced that it will phase out federal matching funds for Designated State Health Programs under waivers granted under Section 1115 of the Social Security Act.The Texas currently operates its Healthcare Transformation and Quality Improvement Program (“Texas Waiver Program”) currently operates pursuant to a Medicaid waiver. In December 2017,During April 2022, CMS approved anwithdrew its previous letter that challenged the approval and extension of this waiverthe Texas Waiver Program, and the program is now approved and extended through September 30, 2022, but indicated that it will phase out some of the federal funding.2030. Our Texas Medicaid revenues included MedicaidTexas Waiver Program supplemental paymentsrevenues of $138$103 million and $115$138 million during the first quarters of 2022 and 2021, and 2020, respectively.

In addition, weMarch 2022, the state of Texas received approval from CMS to implement a proposed directed payment program effective for the current program year that began September 1, 2021. During the first quarter of 2022, revenues include $385 million related to this program for the period September 2021 through March 2022. We receive supplemental payments in several other states. We are aware these supplemental payment programs are currently being reviewed by certain state agencies and some states have made requests to CMS to replace their existing supplemental payment programs. It is possible these reviews and requests will result in the restructuring of such supplemental payment programs and could result in the payment programs
22
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Revenue/Volume Trends (continued)
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.

Key Performance Indicators

We present certain metrics and statistical information that management uses when assessing our results of operations. We believe this information is useful to investors as it provides insight to how management evaluates operational performance and trends between reporting periods. Information on how these metrics and statistical information are defined is provided in the following tables summarizing operating results and operating data.

20

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Operating Results Summary

The following is a comparative summary of results of operations for the quarters ended March 31, 20212022 and 20202021 (dollars in millions):

 

 

2022

 

 

2021

 

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

Revenues

 

$

14,945

 

 

 

100.0

 

 

$

13,977

 

 

 

100.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

6,939

 

 

 

46.4

 

 

 

6,301

 

 

 

45.1

 

Supplies

 

 

2,321

 

 

 

15.5

 

 

 

2,224

 

 

 

15.9

 

Other operating expenses

 

 

2,752

 

 

 

18.5

 

 

 

2,421

 

 

 

17.4

 

Equity in earnings of affiliates

 

 

(11

)

 

 

(0.1

)

 

 

(21

)

 

 

(0.2

)

Depreciation and amortization

 

 

732

 

 

 

5.0

 

 

 

697

 

 

 

5.0

 

Interest expense

 

 

408

 

 

 

2.7

 

 

 

384

 

 

 

2.7

 

Gains on sales of facilities

 

 

(10

)

 

 

(0.1

)

 

 

(2

)

 

 

—

 

 

 

 

13,131

 

 

 

87.9

 

 

 

12,004

 

 

 

85.9

 

Income before income taxes

 

 

1,814

 

 

 

12.1

 

 

 

1,973

 

 

 

14.1

 

Provision for income taxes

 

 

349

 

 

 

2.3

 

 

 

393

 

 

 

2.8

 

Net income

 

 

1,465

 

 

 

9.8

 

 

 

1,580

 

 

 

11.3

 

Net income attributable to noncontrolling interests

 

 

192

 

 

 

1.3

 

 

 

157

 

 

 

1.1

 

Net income attributable to HCA Healthcare, Inc.

 

$

1,273

 

 

 

8.5

 

 

$

1,423

 

 

 

10.2

 

% changes from prior year:

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

6.9

%

 

 

 

 

 

8.7

%

 

 

 

Income before income taxes

 

 

(8.1

)

 

 

 

 

 

143.6

 

 

 

 

Net income attributable to HCA Healthcare, Inc.

 

 

(10.6

)

 

 

 

 

 

145.0

 

 

 

 

Admissions(a)

 

 

0.1

 

 

 

 

 

 

(4.1

)

 

 

 

Equivalent admissions(b)

 

 

3.2

 

 

 

 

 

 

(6.4

)

 

 

 

Revenue per equivalent admission

 

 

3.6

 

 

 

 

 

 

16.1

 

 

 

 

Same facility % changes from prior year(c):

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

7.8

 

 

 

 

 

 

9.0

 

 

 

 

Admissions(a)

 

 

2.1

 

 

 

 

 

 

(4.2

)

 

 

 

Equivalent admissions(b)

 

 

5.0

 

 

 

 

 

 

(6.5

)

 

 

 

Revenue per equivalent admission

 

 

2.7

 

 

 

 

 

 

16.6

 

 

 

 

(a)
Represents the total number of patients admitted to our hospitals and is used by management and certain investors as a general measure of inpatient volume.
(b)
   
2021
  
2020
 
   
Amount
  
Ratio
  
Amount
  
Ratio
 
Revenues
  
$
13,977
 
 
 
100.0
 
 $12,861   100.0 
Salaries and benefits
  
 
6,301
 
 
 
45.1
 
  6,118   47.6 
Supplies
  
 
2,224
 
 
 
15.9
 
  2,123   16.5 
Other operating expenses
  
 
2,421
 
 
 
17.4
 
  2,427   18.9 
Equity in earnings of affiliates
  
 
(21
) 
 
 
(0.2
) 
  (7)   (0.1) 
Depreciation and amortization
  
 
697
 
 
 
5.0
 
  674   5.3 
Interest expense
  
 
384
 
 
 
2.7
 
  428   3.3 
Gains on sales of facilities
  
 
(2
) 
 
 
—
 
  (7)   (0.1) 
Losses on retirement of debt
  
 
—
 
 
 
—
 
  295   2.3 
                 
  
 
12,004
 
 
 
85.9
 
  12,051   93.7 
                 
Income before income taxes
  
 
1,973
 
 
 
14.1
 
  810   6.3 
Provision for income taxes
  
 
393
 
 
 
2.8
 
  112   0.9 
                 
Net income
  
 
1,580
 
 
 
11.3
 
  698   5.4 
Net income attributable to noncontrolling interests
  
 
157
 
 
 
1.1
 
  117   0.9 
                 
Net income attributable to HCA Healthcare, Inc.
  
$
1,423
 
 
 
10.2
 
 $581   4.5 
                 
% changes from prior year:
     
Revenues
  
 
8.7
% 
   2.7%  
Income before income taxes
  
 
143.6
 
   (44.5)  
Net income attributable to HCA Healthcare, Inc.
  
 
145.0
 
   (44.1)  
Admissions(a)
  
 
(4.1
) 
   1.0  
Equivalent admissions(b)
  
 
(6.4
) 
   (0.1)  
Revenue per equivalent admission
  
 
16.1
 
   2.9  
Same facility % changes from prior year(c):
     
Revenues
  
 
9.0
 
   1.2  
Admissions(a)
  
 
(4.2
) 
   0.6  
Equivalent admissions(b)
  
 
(6.5
) 
   (0.4)  
Revenue per equivalent admission
  
 
16.6
 
   1.6  
(a)
Represents the total number of patients admitted to our hospitals and isEquivalent admissions are used by management and certain investors as a general measure of combined inpatient and outpatient volume. Equivalent admissions are computed by multiplying admissions (inpatient volume) by the sum of gross inpatient revenues and gross outpatient revenues and then dividing the resulting amount by gross inpatient revenues. The equivalent admissions computation “equates” outpatient revenues to the volume measure (admissions) used to measure inpatient volume, resulting in a general measure of combined inpatient and outpatient volume.
(c)
23Same facility information excludes the operations of hospitals and their related facilities which were either acquired or divested during the current and prior period.

21

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Operating Results Summary (continued)
(b)
Equivalent admissions are used by management and certain investors as a general measure of combined inpatient and outpatient volume. Equivalent admissions are computed by multiplying admissions (inpatient volume) by the sum of gross inpatient revenues and gross outpatient revenues and then dividing the resulting amount by gross inpatient revenues. The equivalent admissions computation “equates” outpatient revenues to the volume measure (admissions) used to measure inpatient volume, resulting in a general measure of combined inpatient and outpatient volume.
(c)
Same facility information excludes the operations of hospitals and their related facilities which were either acquired or divested during the current and prior period.

Quarters Ended March 31, 20212022 and 2020

2021

Revenues increased to $14.945 billion in the first quarter of 2022 from $13.977 billion in the first quarter of 2021 from $12.861 billion in the first quarter of 2020.2021. Net income attributable to HCA Healthcare, Inc. totaled $1.273 billion, or $4.14 per diluted share, for the quarter ended March 31, 2022, compared to $1.423 billion, or $4.14 per diluted share, for the quarter ended March 31, 2021, compared to $581 million, or $1.69 per diluted share, for the quarter ended March 31, 2020.2021. First quarter results for 20202022 include losses on retirement of debt of $295 million, or $0.66 per diluted share, and gains on sales of facilities of $7$10 million, or $0.02 per diluted share. Our revenuesIn March 2022, the state of Texas received approval from CMS to implement a proposed directed payment program effective for the current program year that began September 1, 2021. During the first quarter ended March 31, 2020of 2022, revenues include $55$244 million or $0.12 per diluted share,and other operating expenses include $90 million from provider tax assessments related to the settlement of Medicare outlier calculations for prior periods. Our provisions for income taxesthis program for the first quarters of 2021 and 2020 included tax benefits of $74 million, or $0.22 per diluted share, and $53 million, or $0.15 per diluted share, respectively, related to employee equity award settlements.period September through December 2021. All “per diluted share” disclosures are based upon amounts net of the applicable income taxes.

Shares used for diluted earnings per share were 307.374 million shares for the quarter ended March 31, 2022 and 343.321 million shares for the quarter ended March 31, 2021. During 2021 and the first quarter of 2022, we repurchased 37.812 million shares and 8.375 million shares, respectively, of our common stock.

Revenues increased 8.7%6.9% on a consolidated basis and 9.0%7.8% on a same facility basis for the quarter ended March 31, 2021,2022, compared to the quarter ended March 31, 2020.2021. The increase in consolidated revenues can be primarily attributed to the netcombined impact of a 16.1%3.6% increase in revenue per equivalent admission offset byand a 6.4% decline3.2% increase in equivalent admissions. The same facility revenues increase primarily resulted from the netcombined impact of a 16.6%2.7% increase in same facility revenue per equivalent admission offset byand a 6.5% decline5.0% increase in same facility equivalent admissions.

The consolidated and same facility increases in revenue per equivalent admission were negatively impacted by declines in acuity of COVID-19 patients.

Salaries and benefits, as a percentage of revenues, were 46.4% in the first quarter of 2022 and 45.1% in the first quarter of 2021 and 47.6% in the first quarter of 2020.2021. Salaries and benefits per equivalent admission increased 10.0%6.7% in the first quarter of 20212022 compared to the first quarter of 2020.2021. Same facility labor rate increases averaged 6.1%salaries and benefits per full time equivalent increased 7.7% for the first quarter of 20212022 compared to the first quarter of 2020.

2021 as we continue to utilize certain contract, overtime and other premium rate labor costs to support our clinical staff and patients. We intend to reduce our utilization of and rates paid for premium rate labor, but the pace and amount of any expected future declines may be affected by labor market conditions and other factors.

Supplies, as a percentage of revenues, were 15.5% in the first quarter of 2022 and 15.9% in the first quarter of 2021 and 16.5% in the first quarter of 2020.2021. Supply costs per equivalent admission increased 11.9%1.1% in the first quarter of 20212022 compared to the first quarter of 2020.2021. Supply costs per equivalent admission increased 7.0%5.9% for medical devices 21.0% for pharmacy supplies and 12.0%2.5% for general medical and surgical items and declined 10.7% for pharmacy supplies in the first quarter of 20212022 compared to the first quarter of 2020.

2021. The decline in pharmacy supplies is primarily related to certain COVID-19 therapies used in the surge of COVID-19 cases during the first quarter of 2021.

Other operating expenses, as a percentage of revenues, were 18.5% in the first quarter of 2022 and 17.4% in the first quarter of 2021 and 18.9% in the first quarter of 2020.2021. 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. We have seen inflation have a negative impact on certain of these expenses and expect inflationary pressures will continue to impact operating expenses in the future. Provisions for losses related to professional liability risks were $134$143 million and $140$134 million for the first quarters of 2022 and 2021, and 2020, respectively.

For the quarter ended March 31, 2022, other operating expenses included $90 million of Texas provider tax assessments for September through December 2021 related to CMS' March 2022 approval of a Texas directed payment program (effective for the current program year that began September 1, 2021).

Equity in earnings of affiliates was $21$11 million and $7$21 million in the first quarters of 2022 and 2021, and 2020, respectively.

24
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Quarters Ended March 31, 2021 and 2020 (continued)

Depreciation and amortization increased $23$35 million, from $674 million in the first quarter of 2020 to $697 million in the first quarter of 2021.2021 to $732 million in the first quarter of 2022. The increase in depreciation relates primarily to capital expenditures at our existing facilities.

Interest expense was $408 million in the first quarter of 2022 and $384 million in the first quarter of 2021 and $428 million in2021. Our average debt balance was $35.798 billion for the first quarter of 2020. Our average debt balance was2022 compared to $31.019 billion for the first quarter of 2021 compared to $34.136 billion for the first quarter of 2020.2021. The average effective interest rate for our long-term debt was 4.6% and 5.0%, respectively, for both of the quarters ended March 31, 20212022 and 2020.

2021.

During the first quarters of 20212022 and 2020,2021, we recorded gains on sales of facilities of $10 million and $2 million, respectively.

22

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Quarters Ended March 31, 2022 and $7 million, respectively.

During February 2020, we issued $2.700 billion aggregate principal amount of 3.50% senior unsecured notes due 2030. During March 2020, we used the net proceeds for the redemption of all $1.000 billion outstanding aggregate principal amount of HCA Healthcare, Inc.’s 6.25% senior notes 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 $295 million.
(continued)

The effective tax rates were 21.7%21.5% and 16.2%21.7% for the first quarters of 20212022 and 2020,2021, 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 first quarters of 20212022 and 20202021 included tax benefits of $74$64 million and $53$74 million, respectively, related to employee equity award settlements. Excluding the effect of these adjustments, the effective tax rate for the first quarters of 20212022 and 20202021 would have been 25.7%25.5% and 23.8%25.7%, respectively.

Net income attributable to noncontrolling interests increased from $117 million for the first quarter of 2020 to $157 million for the first quarter of 2021.2021 to $192 million for the first quarter of 2022. The increase in net income attributable to noncontrolling interests related primarily to the operations of two of our Texas markets.

markets and our surgery centers.

Liquidity and Capital Resources

Cash provided by operating activities totaled $1.345 billion in the first quarter of 2022 compared to $1.988 billion in the first quarter of 2021 compared to $1.375 billion in the first quarter of 2020.2021. The $613$643 million increasedecline in cash provided by operating activities, in the first quarter of 20212022 compared to the first quarter of 2020,2021, related primarily to the net effectcombined impact of an increasenegative changes in working capital items of $492 million, primarily related to a payment of $344 million for deferred payroll taxes from 2020, and a $121 million decline in net income, excluding gains on sales of facilities and losses on retirement of debt, of $659 million and an increase related to income taxes of $218 million, offset by negative changes in working capital of $311 million, primarily related to an increase in accounts receivable.facilities. The net combination of interest payments and net income tax payments in the first quarter of 2022 totaled $411 million, compared to the net combination of interest payments and income tax refunds in the first quartersquarter of 2021 and 2020 totaledof $362 million and $459 million, respectively.million. Working capital totaled $3.394$4.488 billion at March 31, 20212022 and $3.629$3.960 billion at December 31, 2020.

2021.

Cash used in investing activities was $649$845 million in the first quarter of 20212022 compared to $1.145 billion in the first quarter of 2020. Acquisitions of hospitals and health care entities declined from $328 million in the first quarter of 2020 to $22$649 million in the first quarter of 2021. Excluding acquisitions, capital expenditures were $861 million in the first quarter of 2022 and $654 million in the first quarter of 2021 and $853 million in the first quarter of 2020.2021. Planned capital expenditures are expected to approximate $3.7$4.2 billion in 2021.2022. At March 31, 2021,2022, there were projects under construction which had estimated additional costs to complete and equip over the next five years of approximately $3.0$4.5 billion. We expect to finance capital expenditures with internally generated and borrowed funds.

25
Table

Cash provided by financing activities totaled $425 million in the first quarter of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
Cash2022, compared to cash used in financing activities totaledof $2.104 billion in the first quarter of 2021 compared to $109 million in2021. During the first quarter of 2020.2022, net cash flows provided by financing activities included a net increase of $3.120 billion in our indebtedness, payment of dividends of $177 million, repurchase of common stock of $2.101 billion and distributions to noncontrolling interests of $171 million. During the first quarter of 2021, net cash flows used in financing activities included a net increase of $33 million in our indebtedness, payment of dividends of $169 million, repurchase of common stock of $1.527 billion and distributions to noncontrolling interests of $234 million. During the first quarter of 2020, net cash flows used in financing activities included an increase of $813 million from net borrowings on our revolving credit facilities and refinancing activity, payment of dividends of $152 million, repurchase of common stock of $441 million, distributions to noncontrolling interests of $154 million and payment of debt issuance costs of $34 million.

We are a highly leveraged company with significant debt service requirements. Our debt totaled $31.072$37.696 billion at March 31, 2021.2022. Our interest expense was $408 million for the first quarter of 2022 and $384 million for the first quarter of 2021 and $428 million for the first quarter of 2020.

2021.

In addition to cash flows from operations, available sources of capital include amounts available under our senior secured credit facilities ($5.5906.435 billion an

d $5.140 b
illionand $5.075 billion available as of March 31, 20212022 and April 29, 2021,30, 2022, respectively) and anticipated access to public and private debt markets.

Investments of our insurance subsidiaries, held to maintain statutory equity levels and to provide liquidity to pay claims, totaled $501$513 million and $504$541 million at March 31, 20212022 and December 31, 2020,2021, respectively. An insurance subsidiary maintained net reserves for professional liability risks of $148$134 million and $188$154 million at March 31, 20212022 and December 31, 2020,2021, respectively. Our facilities are insured by a 100% ownedour insurance subsidiary for losses up to $75 million per occurrence; however, this coverage is generally subject, in most cases, to a $15 million per occurrence self-insured retention. Additionally, the insurance subsidiary has entered into reinsurance contracts providing reimbursement for a certain portion of losses in excess of self-insured retentions. Net reserves for the self-insured professional liability risks retained were $1.816$1.809 billion and $1.736$1.813 billion at March 31, 20212022 and December 31, 2020,2021, respectively. Claims payments, net of reinsurance recoveries, during the next 12 months are expected to approximate $463$482 million. We estimate that approximately $422$439 million of the expected net claim payments during the next 12 months will relate to claims subject to the self-insured retention.

23

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (continued)

During March 2022, we issued $6.000 billion aggregate principal amount of senior secured notes comprised of (i) $1.000 billion aggregate principal amount of 3 1/8% senior secured notes due 2027, (ii) $500 million aggregate principal amount of 3 3/8% senior secured notes due 2029, (iii) $2.000 billion aggregate principal amount of 3 5/8% senior secured notes due 2032, (iv) $500 million aggregate principal amount of 4 3/8% senior secured notes due 2042 and (v) $2.000 billion aggregate principal amount of 4 5/8% senior secured notes due 2052. During March 2022, we used a portion of the net proceeds to pay down our revolving credit facilities. During April 2022, we redeemed all $1.250 billion outstanding aggregate principal amount of our 4.75% senior secured notes due 2023 and provided a notice of our election to redeem all $1.250 billion outstanding aggregate principal amount of our 5.875% senior notes due 2023.

Management believes that cash flows from operations, amounts available under our senior secured credit facilities and our anticipated access to public and private debt markets will be sufficient to meet expected liquidity needs during the next 12 months.

Summarized Financial Information

HCA Inc., a direct wholly-owned subsidiary of HCA Healthcare, Inc., is the primary obligor under a substantial portion of our indebtedness, including our senior secured credit facilities, senior secured notes and senior unsecured notes. The senior secured notes and senior unsecured notes issued by HCA Inc. are fully and unconditionally guarantee

dguaranteed on an unsecured basis b
yby HCA Healthcare, Inc. The senior secured credit facilities and senior secured notes are fully and unconditionally guaranteed on a senior secured basis by substantially all existing and future, direct and indirect, 100% owned material domestic subsidiaries that are “Unrestricted Subsidiaries” under our Indenture dated December 16, 1993 (except for certain special purpose subsidiaries that only guarantee and pledge their assets under our senior secured asset-based revolving credit facility). For a list of subsidiary guarantors, see Exhibit 22 to this quarterly report on Form 10-Q.

The subsidiary guarantees rank senior in right of payment to all subordinated indebtedness of each subsidiary guarantor, equally in right of payment with all senior indebtedness of the subsidiary guarantors and are structurally subordinated in right of payment to all indebtedness and other liabilities of any nonguarantor subsidiaries of the subsidiary guarantors (other than indebtedness and liabilities owed to one of the subsidiary guarantors). The subsidiary guarantees are secured by first-priority liens on the subsidiary guarantors’ assets,

26
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
Summarized Financial Information (continued)
subject to certain exceptions, that secure our senior secured cash flow credit facility on a first-priority basis. The subsidiary guarantees are secured by second-priority liens on the subsidiary guarantors’ assets that secure our senior secured asset-based revolving credit facility on a first-priority basis and our senior secured cash flow credit facility on a second-priority basis.

The subsidiary guarantees may be automatically and unconditionally released and discharged upon certain customary events, including in the event such guarantee is released under our senior secured credit facilities. The indentures governing the senior secured notes include a “savings clause” intended to limit each subsidiary guarantor’s obligations as necessary to prevent the guarantee from constituting a fraudulent conveyance under applicable law, which could reduce a subsidiary guarantor’s liability on its guarantee to zero. For further information regarding the guarantees, refer to the applicable indentures that are filed as exhibits to this quarterly report on Form 10-Q and our annual report on Form 10-K for the year ended December 31, 2020.

2021.

24

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (continued)

Summarized Financial Information (continued)

Summarized financial information is presented on a combined basis and transactions between the combining entities have been eliminated. Financial information for nonguarantor entities has been excluded. The summarized operating results information for the quarter ended March 31, 20212022 and year ended December 31, 20202021 and the summarized balance sheet information at March 31, 20212022 and December 31, 2020,2021, for HCA Healthcare, Inc., HCA Inc. and the subsidiary guarantors (the Parent, Subsidiary Issuer and Subsidiary Guarantors) follow (dollars in millions):

Quarter Ended March 31, 2021 and Year Ended December 31, 2020:
   
Quarter
March 31, 2021
  
Year
December 31, 2020
 
Revenues
  
$
8,401
 
 $31,040 
Income before income taxes
  
 
1,479
 
  4,016 
Net income
  
 
1,168
 
  3,172 
Net income attributable to Parent, Subsidiary Issuer and Subsidiary Guarantors
  
 
1,148
 
  3,091 
At March 31, 2021 and December 31, 2020:
   
   
March 31, 2021
  
December 31, 2020
 
Current assets
  
$
7,198
 
 $7,442 
Property and equipment, net
  
 
14,934
 
  14,939 
Goodwill and other intangible assets
  
 
5,762
 
  5,763 
Total noncurrent assets
  
 
21,801
 
  21,771 
Total assets
  
 
28,999
 
  29,213 
Current liabilities
  
 
5,178
 
  5,316 
Long-term debt, net
  
 
30,488
 
  30,444 
Intercompany balances
  
 
2,324
 
  2,090 
Income taxes and other liabilities
  
 
1,230
 
  1,004 
Total noncurrent liabilities
  
 
34,559
 
  34,035 
Stockholders’ deficit attributable to Parent, Subsidiary Issuer and Subsidiary Guarantors
  
 
(10,845
) 
  (10,247) 
Noncontrolling interests
  
 
107
 
  109 
27
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
Summarized Financial Information (continued)

Quarter Ended March 31, 2022 and Year Ended December 31, 2021:

 

 

 

 

 

 

 

 

Quarter

 

 

Year

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Revenues

 

$

8,728

 

 

$

34,889

 

Income before income taxes

 

 

1,155

 

 

 

6,061

 

Net income

 

 

920

 

 

 

4,666

 

Net income attributable to Parent, Subsidiary Issuer and Subsidiary Guarantors

 

 

896

 

 

 

4,564

 

 

 

 

 

 

 

 

At March 31, 2022 and December 31, 2021:

 

 

 

 

 

 

 

 

March 31, 2022

 

 

December 31, 2021

 

Current assets

 

$

9,415

 

 

$

8,268

 

Property and equipment, net

 

 

16,040

 

 

 

15,559

 

Goodwill and other intangible assets

 

 

5,695

 

 

 

5,694

 

Total noncurrent assets

 

 

22,719

 

 

 

22,370

 

Total assets

 

 

32,134

 

 

 

30,638

 

Current liabilities

 

 

6,807

 

 

 

5,697

 

Long-term debt, net

 

 

35,769

 

 

 

33,904

 

Intercompany balances

 

 

3,668

 

 

 

3,423

 

Income taxes and other liabilities

 

 

744

 

 

 

1,053

 

Total noncurrent liabilities

 

 

40,722

 

 

 

38,912

 

Stockholders’ deficit attributable to Parent, Subsidiary Issuer and Subsidiary
   Guarantors

 

 

(15,551

)

 

 

(14,124

)

Noncontrolling interests

 

 

156

 

 

 

153

 

The first-priority liens securing the subsidiary guarantees discussed above include liens on (i) substantially all of the capital stock of substantially all wholly owned first-tier subsidiaries of HCA Inc. or of the subsidiary guarantors (but limited to 65% of the stock of any such wholly owned first-tier subsidiary that is a foreign subsidiary), subject to certain limited exceptions, and (ii) substantially all indebtedness owing to HCA Inc. or to the subsidiary guarantors, including any and all intercompany indebtedness owed by HCA Healthcare, Inc. or any subsidiary thereof to HCA Inc., or any subsidiary guarantor. For a list of affiliates whose securities are pledged as collateral for the senior secured notes, see Exhibit 22 to this quarterly report on Form 10-Q.

Under the first lien intercreditor agreement, the administrative agent for the lenders under the cash flow credit facility, subject to the occurrence of certain events, has the exclusive right to direct foreclosures and take other actions with respect to these liens, and the trustee for the senior secured notes has no right to take any such actions. In certain circumstances, including upon certain events of default under the senior secured credit facilities and the senior secured notes, the collateral agent in respect of the cash flow credit facility and the senior secured notes could proceed against the collateral granted to it to secure such indebtedness, including the aforementioned pledged capital stock and pledged indebtedness, and require such collateral to be delivered to the collateral agent to the extent not already in its possession for purposes of perfecting the lien on such assets. For further information regarding the collateral, including events or circumstances that may require delivery of the collateral, refer to the applicable indentures, the first lien intercreditor agreement, the cash flow credit agreement and the pledge agreement that are filed as exhibits to this quarterly report on Form 10-Q and our annual report on Form 10-K for the year ended December 31, 2020.

2021.

25

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (continued)

Summarized Financial Information (continued)

There is no trading market for any of HCA Healthcare, Inc.’s affiliates whose securities are pledged as collateral for the senior secured notes.

Rule 13-02 of Regulation S-X requires the presentation of summarized financial information of the combined affiliates whose securities are pledged as collateral for the senior secured notes unless such information is not material. The rule provides that such information is not material if the assets, liabilities and results of operations of the combined affiliates whose securities are pledged as collateral are not materially different than the corresponding amounts presented in the consolidated financial statements of the Registrant. Healthtrust, Inc. — The Hospital Company (“Healthtrust”) is the first-tier subsidiary of HCA Inc., and the common stock of Healthtrust is pledged as collateral for the senior secured notes. Due to the corporate structure relationship of HCA Healthcare, Inc. and Healthtrust, all of HCA Healthcare, Inc.’s operating subsidiaries, including all other affiliates whose securities are pledged as collateral for the senior secured notes, are also subsidiaries of Healthtrust. The corporate structure relationship, combined with the application of push-down accounting in Healthtrust’s consolidated financial statements related to HCA Healthcare Inc.’s debt and financial instruments, mean that the assets, liabilities and results of operations of Healthtrust (and, therefore, of the combined affiliates whose securities are pledged as collateral for the senior secured notes) are not materially different than the corresponding amounts presented in the financial statements of HCA Healthcare, Inc. As a result, summarized financial information of affiliates whose securities are pledged as collateral for the senior secured notes is not required to be presented under Rule 13-02.

Market Risk

We are exposed to market risk related to changes in market values of securities. The investment securities held by our insurance subsidiaries were recorded at $501$513 million at March 31, 2021.2022. 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 March 31, 2021,2022, we had a net unrealized gainlosses of $21$10 million on the insurance subsidiaries’ investments.

28
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
Market Risk (continued)

We are exposed to market risk related to market illiquidity. Investment securities held by our insurance subsidiaries could be impaired by the inability to access the capital markets. Should the insurance subsidiaries require significant amounts of cash in excess of normal cash requirements to pay claims and other expenses on short notice, we may have difficulty selling these investments in a timely manner or be forced to sell them at a price less than what we might otherwise have been able to in a normal market environment. We may be required to recognize credit-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.

We are also exposed to market risk related to changes in interest rates, and we periodically enter into interest rate swap agreements to manage our exposure to these fluctuations. Our interest rate swap agreements involve the exchange of fixed and variable rate interest payments between two parties, based on common notional principal amounts and maturity dates. The notional amounts of the swap agreements represent balances 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. The interest payments under these agreements are settled on a net basis. These derivatives have been recognized in the financial statements at their respective fair values. Changes in the fair value of these derivatives, which are designated as cash flow hedges, are included in other comprehensive income.

With respect to our interest-bearing liabilities, approximately $1.238$1.440 billion of long-term debt at March 31, 20212022 was subject to variable rates of interest, while the remaining balance inof long-term debt of $29.834$36.256 billion at March 31, 20212022 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% or (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 was 4.6% and 5.0% for both of the quarters ended March 31, 2022 and 2021, respectively.

26

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and 2020.

Capital Resources (continued)

Market Risk (continued)

The estimated fair value of our total long-term debt was $34.872$39.038 billion at March 31, 2021.2022. 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 $12$14 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.

We are exposed to currency translation risk related to our foreign operations. We currently do not consider the market risk related to foreign currency translation to be material to our consolidated financial statements or our liquidity.

Tax Examinations

The

At March 31, 2022, the Internal Revenue Service was conducting an examinationexaminations of the Company’s 2016, 2017 and 2018 federal income tax returns at March 31, 2021.and the 2019 return for one affiliated partnership. We are also subject to examination by 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,


29
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Tax Examinations (continued)
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.
Operating Data
   
2021
   
2020
 
Number of hospitals in operation at:
    
March 31
  
 
186
 
   186 
June 30
     186 
September 30
     187 
December 31
     185 
Number of freestanding outpatient surgical centers in operation at:
    
March 31
  
 
121
 
   123 
June 30
     122 
September 30
     121 
December 31
     121 
Licensed hospital beds at(a):
    
March 31
  
 
49,561
 
   49,357 
June 30
     49,403 
September 30
     49,473 
December 31
     49,265 
Weighted average licensed beds in service(b):
    
Quarter:
    
First
  
 
42,363
 
   42,177 
Second
     42,309 
Third
     42,426 
Fourth
     42,072 
Year
     42,246 
Average daily census(c):
    
Quarter:
    
First
  
 
29,678
 
   28,822 
Second
     24,844 
Third
     28,186 
Fourth
     29,065 
Year
     27,734 
Admissions(d):
    
Quarter:
    
First
  
 
506,380
 
   528,244 
Second
     452,992 
Third
     506,756 
Fourth
     521,917 
Year
     2,009,909 
Equivalent admissions(e):
    
Quarter:
    
First
  
 
832,489
 
   889,035 
Second
     723,136 
Third
     835,576 
Fourth
     864,583 
Year
     3,312,330 
30

27

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Operating Data (continued)

   
2021
  
2020
 
Average length of stay (days)(f):
   
Quarter:
   
First
  
 
5.3
 
  5.0 
Second
    5.0 
Third
    5.1 
Fourth
    5.1 
Year
    5.1 
Emergency room visits(g):
   
Quarter:
   
First
  
 
1,841,778
 
  2,264,707 
Second
    1,516,116 
Third
    1,813,661 
Fourth
    1,855,823 
Year
    7,450,307 
Outpatient surgeries(h):
   
Quarter:
   
First
  
 
231,228
 
  226,319 
Second
    170,911 
Third
    232,493 
Fourth
    252,760 
Year
    882,483 
Inpatient surgeries(i):
   
Quarter:
   
First
  
 
127,590
 
  135,145 
Second
    118,591 
Third
    133,492 
Fourth
    135,157 
Year
    522,385 
Days revenues in accounts receivable(j):
   
Quarter:
   
First
  
 
48
 
  49 
Second
    50 
Third
    44 
Fourth
    45 
Outpatient revenues as a % of patient revenues(k):
   
Quarter:
   
First
  
 
36
% 
  37% 
Second
    32% 
Third
    36% 
Fourth
    35% 
Year
    35% 
(a)
Licensed beds are those beds for which a facility has been granted approval to operate from the applicable state licensing agency.
(b)
Represents the average number of licensed beds in service, weighted based on periods owned.
(c)
Represents the average number of patients in our hospital beds each day.
(d)
Represents the total number of patients admitted to our hospitals and is used by management and certain investors as a general measure of inpatient volume.
31

 

 

2022

 

 

2021

 

Number of hospitals in operation at:

 

 

 

 

 

 

March 31

 

 

182

 

 

 

186

 

June 30

 

 

 

 

 

187

 

September 30

 

 

 

 

 

183

 

December 31

 

 

 

 

 

182

 

Number of freestanding outpatient surgical centers in operation at:

 

 

 

 

 

 

March 31

 

 

124

 

 

 

121

 

June 30

 

 

 

 

 

122

 

September 30

 

 

 

 

 

123

 

December 31

 

 

 

 

 

125

 

Licensed hospital beds at(a):

 

 

 

 

 

 

March 31

 

 

48,892

 

 

 

49,561

 

June 30

 

 

 

 

 

49,693

 

September 30

 

 

 

 

 

48,950

 

December 31

 

 

 

 

 

48,803

 

Weighted average beds in service(b):

 

 

 

 

 

 

Quarter:

 

 

 

 

 

 

First

 

 

41,818

 

 

 

42,363

 

Second

 

 

 

 

 

42,464

 

Third

 

 

 

 

 

42,088

 

Fourth

 

 

 

 

 

41,685

 

Year

 

 

 

 

 

42,148

 

Average daily census(c):

 

 

 

 

 

 

Quarter:

 

 

 

 

 

 

First

 

 

29,797

 

 

 

29,678

 

Second

 

 

 

 

 

28,901

 

Third

 

 

 

 

 

31,144

 

Fourth

 

 

 

 

 

29,273

 

Year

 

 

 

 

 

29,752

 

Admissions(d):

 

 

 

 

 

 

Quarter:

 

 

 

 

 

 

First

 

 

506,956

 

 

 

506,380

 

Second

 

 

 

 

 

532,041

 

Third

 

 

 

 

 

536,848

 

Fourth

 

 

 

 

 

514,706

 

Year

 

 

 

 

 

2,089,975

 

Equivalent admissions(e):

 

 

 

 

 

 

Quarter:

 

 

 

 

 

 

First

 

 

859,290

 

 

 

832,489

 

Second

 

 

 

 

 

916,212

 

Third

 

 

 

 

 

905,627

 

Fourth

 

 

 

 

 

881,910

 

Year

 

 

 

 

 

3,536,238

 

Average length of stay (days)(f):

 

 

 

 

 

 

Quarter:

 

 

 

 

 

 

First

 

 

5.3

 

 

 

5.3

 

Second

 

 

 

 

 

4.9

 

Third

 

 

 

 

 

5.3

 

Fourth

 

 

 

 

 

5.2

 

Year

 

 

 

 

 

5.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

 

 

 

 

 

 

 

 

2022

 

 

2021

 

Emergency room visits(g):

 

 

 

 

 

 

Quarter:

 

 

 

 

 

 

First

 

 

2,056,389

 

 

 

1,841,778

 

Second

 

 

 

 

 

2,128,428

 

Third

 

 

 

 

 

2,338,180

 

Fourth

 

 

 

 

 

2,166,959

 

Year

 

 

 

 

 

8,475,345

 

Outpatient surgeries(h):

 

 

 

 

 

 

Quarter:

 

 

 

 

 

 

First

 

 

247,421

 

 

 

231,228

 

Second

 

 

 

 

 

262,107

 

Third

 

 

 

 

 

249,192

 

Fourth

 

 

 

 

 

265,709

 

Year

 

 

 

 

 

1,008,236

 

Inpatient surgeries(i):

 

 

 

 

 

 

Quarter:

 

 

 

 

 

 

First

 

 

126,880

 

 

 

127,590

 

Second

 

 

 

 

 

136,460

 

Third

 

 

 

 

 

126,436

 

Fourth

 

 

 

 

 

131,583

 

Year

 

 

 

 

 

522,069

 

Days revenues in accounts receivable(j):

 

 

 

 

 

 

Quarter:

 

 

 

 

 

 

First

 

 

51

 

 

 

48

 

Second

 

 

 

 

 

48

 

Third

 

 

 

 

 

51

 

Fourth

 

 

 

 

 

49

 

Outpatient revenues as a % of patient revenues(k):

 

 

 

 

 

 

Quarter:

 

 

 

 

 

 

First

 

 

37

%

 

 

36

%

Second

 

 

 

 

 

38

%

Third

 

 

 

 

 

34

%

Fourth

 

 

 

 

 

38

%

Year

 

 

 

 

 

37

%

(a)
Licensed beds are those beds for which a facility has been granted approval to operate from the applicable state licensing agency.
(b)
Operating Data (continued)
Represents the average number of beds in service, weighted based on periods owned.
(c)
(e)
Equivalent admissions are used by management and certain investors as a general measure of combined inpatient and outpatient volume. Equivalent admissions are computed by multiplying admissions (inpatient volume) by the sum of gross inpatient revenues and gross outpatient revenues and then dividing the resulting amount by gross inpatient revenues. The equivalent admissions computation “equates” outpatient revenues to the volume measure (admissions) used to measure inpatient volume resulting in a general measure of combined inpatient and outpatient volume.
(f)
Represents the average number of days admitted patients stay in our hospitals.
(g)
Represents the number of patients treated in our emergency rooms.
(h)
Represents the number of surgeries performed on patients who were not admitted to our hospitals. Pain management and endoscopy procedures are not included in outpatient surgeries.
(i)
Represents the number of surgeries performed on patients who have been admitted to our hospitals. Pain management and endoscopy procedures are not included in inpatient surgeries.
(j)
Revenues per day is calculated by dividing revenues for the quarter by the days in the quarter. Days revenues in accounts receivable is then calculated as accounts receivable at the end of the quarter divided by revenues perRepresents the average number of patients in our hospital beds each day.
(k)
Represents the percentage of patient revenues related to patients who are not admitted to our hospitals.
(d)
Represents the total number of patients admitted to our hospitals and is used by management and certain investors as a general measure of inpatient volume.
(e)
32
Equivalent admissions are used by management and certain investors as a general measure of combined inpatient and outpatient volume. Equivalent admissions are computed by multiplying admissions (inpatient volume) by the sum of gross inpatient revenues and gross outpatient revenues and then dividing the resulting amount by gross inpatient revenues. The equivalent admissions computation “equates” outpatient revenues to the volume measure (admissions) used to measure inpatient volume resulting in a general measure of combined inpatient and outpatient volume.
(f)
TableRepresents the average number of Contentsdays admitted patients stay in our hospitals.
(g)
Represents the number of patients treated in our emergency rooms.
(h)
Represents the number of surgeries performed on patients who were not admitted to our hospitals. Pain management and endoscopy procedures are not included in outpatient surgeries.
(i)
Represents the number of surgeries performed on patients who have been admitted to our hospitals. Pain management and endoscopy procedures are not included in inpatient surgeries.
(j)
Revenues per day is calculated by dividing revenues for the quarter by the days in the quarter. Days revenues in accounts receivable is then calculated as accounts receivable at the end of the quarter divided by revenues per day.
(k)
Represents the percentage of patient revenues related to patients who are not admitted to our hospitals.

29

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by this item is provided under the caption “Market Risk” under Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

HCA’s management, with the participation of HCA’s chief executive officer and chief financial officer, has evaluated the effectiveness of HCA’s disclosure controls and procedures as of March 31, 2021.2022. Based on that evaluation, HCA’s chief executive officer and chief financial officer concluded that HCA’s disclosure controls and procedures were effective as of March 31, 2021.

2022.

Changes in Internal Control Over Financial Reporting

During the period covered by this report, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 9 – Contingencies in the notes to the condensed consolidated financial statements is incorporated herein by reference.

ITEM 1A. RISK FACTORS

Reference is made to the factors set forth under the caption “Forward-Looking Statements” in Part I, Item 2 of this quarterly report on

Form 10-Q
and other risk factors described in our annual report on
Form 10-K
for the year ended December 31, 2020,2021, which are incorporated herein by reference. There have not been any material changes to the risk factors previously disclosed in our annual report on
Form 10-K
for the year ended December 31, 2020.
ITEM 2.    
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
2021.

30

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During January 20202022 and 2019,February 2021, our Board of Directors authorized share repurchase programs for up to $4$8 billion ($2 billion for each authorization) of our outstanding common stock. During February 2021, our Board of Directors authorized an additionaland $6 billion, for repurchasesrespectively, of our outstanding common stock. During the quarter ended March 31, 2021,2022, we repurchased 8,476,7368,374,934 shares of our common stock at an average price of $180.11$250.89 per share through market purchases pursuant to the $2.0 billion share repurchase program authorized during January 2019February 2021 authorization (which was completed during the first quarter of 2021)2022) and the January 20202022 authorization. At March 31, 2021,2022, we had $7.274$6.485 billion of repurchase authorization available under the January 2020 and February 2021 authorizations.

33
Table of Contents
2022 authorization.

The following table provides certain information with respect to our repurchases of common stock from January 1, 20212022 through March 31, 20212022 (dollars in millions, except per share amounts).

Period
  
Total Number

of Shares

Purchased
   
Average Price

Paid per Share
   
Total Number

of Shares

Purchased as

Part of

Publicly

Announced

Plans or

Programs
   
Approximate

Dollar Value of

Shares That

May Yet Be

Purchased

Under Publicly

Announced

Plans or

Programs
 
January 1, 2021 through January 31, 2021
   —   $—    —   $2,800 
February 1, 2021 through February 28, 2021
   4,057,692   $175.39    4,057,692   $8,089 
March 1, 2021 through March 31, 2021
   4,419,044   $184.44    4,419,044   $7,274 
              
Total for first quarter 2021
   8,476,736   $180.11    8,476,736   $7,274 
              

Period

 

Total Number
of Shares
Purchased

 

 

Average Price
Paid per Share

 

 

Total Number
of Shares
Purchased as
Part of
Publicly
Announced
Plans or
Programs

 

 

Approximate
Dollar Value of
Shares That
May Yet Be
Purchased
Under Publicly
Announced
Plans or
Programs

 

January 1, 2022 through January 31, 2022

 

 

2,347,430

 

 

$

249.68

 

 

 

2,347,430

 

 

$

8,000

 

February 1, 2022 through February 28, 2022

 

 

2,948,912

 

 

$

240.77

 

 

 

2,948,912

 

 

$

7,290

 

March 1, 2022 through March 31, 2022

 

 

3,078,592

 

 

$

261.49

 

 

 

3,078,592

 

 

$

6,485

 

Total for first quarter 2022

 

 

8,374,934

 

 

$

250.89

 

 

 

8,374,934

 

 

$

6,485

 

On April 21, 2021,2022, our Board of Directors declared a quarterly dividend of $0.48$0.56 per share on our common stock payable on June 30, 20212022 to stockholders of record at the close of business on June 16, 2021.2022. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors. Our ability to declare future dividends may also from time to time be limited by the terms of our debt agreements.

34

31

Table of Contents

ITEM 6. EXHIBITS

(a) List of Exhibits:

      10.1—
HCA Healthcare, Inc. 2021 Senior Officer Performance Excellence Program (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 9, 2021 (File No. 001-11239), and incorporated herein by reference).*
      22—
List of Subsidiary Guarantors and Pledged Securities.
Exhibits:

4.1

—

Supplemental Indenture No. 29, dated as of March 9, 2022, among HCA Inc., HCA Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on March 10, 2022, and incorporated herein by reference).

4.2

—

Supplemental Indenture No. 30, dated as of March 9, 2022, among HCA Inc., HCA Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on March 10, 2022, and incorporated herein by reference).

4.3

—

Supplemental Indenture No. 31, dated as of March 9, 2022, among HCA Inc., HCA Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on March 10, 2022, and incorporated herein by reference).

     4.4

—

Supplemental Indenture No. 32, dated as of March 9, 2022, among HCA Inc., HCA Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.5 to the Company’s Current Report on Form 8-K filed on March 10, 2022, and incorporated herein by reference).

      4.5

—

Supplemental Indenture No. 33, dated as of March 9, 2022, among HCA Inc., HCA Healthcare, Inc., the subsidiary guarantors named therein, Delaware Trust Company, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, registrar and transfer agent (filed as Exhibit 4.6 to the Company’s Current Report on Form 8-K filed on March 10, 2022, and incorporated herein by reference).

     4.6

—

Form of Global Notes representing the 2027 Notes (included in Exhibit 4.1)

     4.7

—

Form of Global Notes representing the 2029 Notes (included in Exhibit 4.2)

     4.8

—

Form of Global Notes representing the 2032 Notes (included in Exhibit 4.3)

     4.9

—

Form of Global Notes representing the 2042 Notes (included in Exhibit 4.4)

   4.10

—

Form of Global Notes representing the 2052 Notes (included in Exhibit 4.5)

   4.11

—

Additional Receivables Intercreditor Agreement, dated as of March 9, 2022, by and between Bank of America, N.A., as ABL Collateral Agent, and Bank of America, N.A., as First Lien Collateral Agent (filed as Exhibit 4.15 to the Company’s Current Report on Form 8-K filed on March 10, 2022, and incorporated herein by reference).

   4.12

—

Registration Rights Agreement, dated as of March 9, 2022, among HCA Inc., HCA Healthcare, Inc., the subsidiary guarantors named therein and Citigroup Global Markets Inc., BofA Securities, Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC as representatives of the other several initial purchasers named therein (filed as Exhibit 4.16 to the Company’s Current Report on Form 8-K filed on March 10, 2022, and incorporated herein by reference).

   10.1

—

HCA Healthcare, Inc. 2022 Senior Officer Performance Excellence Program (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 11, 2022, and incorporated herein by reference).*

   22

—

List of Subsidiary Guarantors and Pledged Securities.

32

   31.1

—

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

   31.2

—

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

   32

—

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

   101

—

The following financial information from our quarterly report on Form 10-Q for the quarter ended March 31, 2022 filed with the SEC on May 3, 2022, formatted in Inline Extensible Business Reporting Language: (i) the condensed consolidated balance sheets at March 31, 2022 and December 31, 2021, (ii) the condensed consolidated income statements for the quarters ended March 31, 2022 and 2021, (iii) the condensed consolidated comprehensive income statements for the quarters ended March 31, 2022 and 2021, (iv) the condensed consolidated statements of stockholders’ equity for the quarters ended March 31, 2022 and 2021, (v) the condensed consolidated statements of cash flows for the quarters ended March 31, 2022 and 2021 and (vi) the notes to condensed 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

—

The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (included in Exhibit 101).

      31.1—
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
      31.2—
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
      32—
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
      101—
The following financial information from our quarterly report on
Form 10-Q
for the quarter ended March 31, 2021 filed with the SEC on April 30, 2021, formatted in Inline Extensible Business Reporting Language: (i) the condensed consolidated balance sheets at March 31, 2021 and December 31, 2020, (ii) the condensed consolidated income statements for the quarters ended March 31, 2021 and 2020, (iii) the condensed consolidated comprehensive income statements for the quarters ended March 31, 2021 and 2020, (iv) the condensed consolidated statements of stockholders’ equity (deficit) for the quarters ended March 31, 2021 and 2020, (v) the condensed consolidated statements of cash flows for the quarters ended March 31, 2021 and 2020 and (vi) the notes to condensed 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—
The cover page from the Company’s Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2021, formatted in Inline XBRL (included in Exhibit 101).

*

Management compensatory plan or arrangement.

33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

35
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HCA Healthcare, Inc.

By:

/S/ WILLIAM B. RUTHERFORD

William B. Rutherford

Executive Vice President and Chief Financial Officer

HCA Healthcare, Inc.
By:
/S/ WILLIAM B. RUTHERFORD
William B. Rutherford
Executive Vice President and Chief Financial Officer
Date: April 30, 2021
36

Date: May 3, 2022

34