EXHIBIT 20
[LETTERHEAD OF COLUMBIA/HCA APPEARS HERE]
NEWS
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FOR IMMEDIATE RELEASE
INVESTOR CONTACT MEDIA CONTACT
Mark Kimbrough: 615-344-2688 Jeff Prescott: 615-344-5708
COLUMBIA/HCA REPORTS 1998 RESULTS
EPS From Continuing Operations of $.91 in 1998 vs $.85 in 1997
Excluding Non-recurring Items
New $1 Billion Share Repurchase Program Announced
Nashville, Tenn., February 23, 1999 - Columbia/HCA Healthcare Corporation
(NYSE: COL) today announced operating results for the year and fourth quarter
ended December 31, 1998.
The Company also announced that its Board of Directors has authorized the
repurchase of up to an additional $1 billion of its common stock. Columbia/HCA
expects to repurchase its shares through open market purchases, privately
negotiated transactions or through a series of accelerated or forward purchase
contracts.
For the year ended December 31, 1998, revenues from continuing operations
totaled $18.68 billion compared with $18.82 billion for 1997. Net income from
continuing operations, excluding gains on sales of facilities, impairment of
long-lived assets and restructuring of operations and investigation related
costs totaled $590 million or $0.91 per diluted share in 1998 compared to $565
million or $0.85 per diluted share for 1997. Net income totaled $379 million or
$0.59 per diluted share for 1998 versus a net loss of ($305) million or ($0.46)
per diluted share for 1997.
1
In 1998, the Company's remaining core assets had proforma net income from
continuing operations, excluding gains on sales of facilities, impairment of
long-lived assets and restructuring of operations and investigation related
costs, of $1.06 per diluted share; assets sold during 1998 or being held for
sale experienced a net loss of ($0.15) per diluted share, while assets being
potentially spun to shareholders broke even for the year.
During 1998, the Company sold 36 hospitals, 36 surgery centers and certain
other non-core assets resulting in a pretax gain of $744 million ($365 net of
tax), or $0.56 per diluted share. The Company also recorded asset impairment
charges of approximately $542 million ($349 net of tax), or $0.54 per diluted
share during 1998. Cash proceeds from asset sales during 1998, including those
related to the sale of discontinued businesses, totaled approximately $2.9
billion.
For the fourth quarter ended December 31, 1998, revenues from continuing
operations totaled $4.42 billion compared to $4.37 billion in the fourth quarter
of 1997. Net income from continuing operations, excluding gains on sales of
facilities, impairment of long-lived assets and restructuring of operations and
investigation related costs, totaled $27 million or $0.04 per diluted share for
the fourth quarter of 1998 compared to a net loss of ($404) million or ($0.63)
per diluted share during the fourth quarter of 1997. The Company incurred a
net loss for the fourth quarter of 1998 of ($42) million or ($0.06) per diluted
share compared to a net loss of ($1.2) billion or ($1.92) per diluted share in
the fourth quarter of 1997.
During the fourth quarter of 1998, the Company sold 14 hospitals and
certain other non-core assets for approximately $615 million, resulting in a
pretax gain of $207 million ($123 million net of tax), or $0.19 per diluted
share. Asset impairment charges were recorded during the fourth quarter of
1998 on several facilities and related assets resulting in a charge of $208
million ($152 million net of tax), or $0.23 per diluted share.
2
Several factors affected the Company's financial results during the fourth
quarter and full year 1998. These factors include reduced Medicare
reimbursement mandated by the Balanced Budget Act of 1997 which reduced Medicare
payments to the Company's healthcare facilities by approximately $55 million
during the fourth quarter of 1998 and approximately $215 million for the year
1998; increased supply expense due to the increasing costs of new technology and
pharmaceuticals; increased bad debt expense; and declining patient volumes in
the fourth quarter.
For the year 1998, same facility admissions at the Company's hospitals
increased by 0.4 percent. Same facility equivalent admissions, which reflect
inpatient and outpatient volumes, increased 1.4 percent in 1998. During the
fourth quarter of 1998, same facility admissions declined by 1.0 percent while
same facility equivalent admissions were equal with the fourth quarter of 1997.
At December 31, 1998, the Company's balance sheet reflected total debt of
approximately $6.8 billion, stockholders equity of $7.6 billion and total assets
of $19.4 billion. Capital expenditures for 1998 totaled $1.25 billion. The
Company's total debt-to-capital ratio improved to 45 percent at year end 1998
compared to 54 percent at December 31, 1997.
The Company anticipates completing the previously announced tax-free spin-
offs of its LifePoint (22 rural hospitals) and Triad (39 secondary market
hospitals) hospital groups in the second quarter, subject to receipt of a
favorable ruling from the Internal Revenue Service, certain regulatory approvals
and financing.
The $1 billion repurchase program previously authorized in July 1998 has
been completed. Approximately 44 million shares have been purchased at an
average cost of approximately $22.65 per share. The majority of these shares
were purchased by certain financial organizations through a series of forward
purchase contracts. In accordance with the terms of the forward purchase
contracts, the shares purchased remain issued and outstanding until the forward
purchase contracts are settled by the Company.
3
In connection with the Company's share repurchase programs, the Company has
recently entered into a Letter of Credit Agreement (LOC Agreement) with the US
Department of Justice (DOJ) whereby the Company anticipates settlement of its
purchase of these 44 million shares at some time between March 1, 1999 and April
30, 1999. As a part of the LOC Agreement, the Company will provide the DOJ with
Letters of Credit totaling $1 billion. The LOC Agreement also provides that the
Company's second $1 billion share repurchase program announced today may be
made, at the Company's discretion, through open market purchases or privately
negotiated transactions. The Company and the DOJ acknowledge that the amount in
the LOC Agreement is not based upon the amount or expected amount of any
potential settlement. The LOC Agreement does not constitute an admission of
liability by the Company.
Columbia/HCA's annual shareholders meeting will be held on May 27, 1999 in
Nashville, Tennessee, for shareholders of record as of April 5, 1999.
* * *
This press release contains forward-looking statements based on current
management expectations. Numerous factors, including those detailed from time-
to-time in the Company's filings with the Securities and Exchange Commission,
may cause results to differ materially from those anticipated in the forward-
looking statements. Many of the factors that will determine the Company's
future results are beyond the ability of the Company to control or predict.
These statements are subject to risks and uncertainties and, therefore, actual
results may differ materially.
Readers should not place undue reliance on forward-looking statements, which
reflect management's views only as of the date hereof. The Company undertakes
no obligation to revise or update any forward-looking statements, or to make any
other forward-looking statements, whether as a result of new information, future
events or otherwise.
All references to "Company" and "Columbia/HCA" as used throughout this document
refer to Columbia/HCA Corporation and its affiliates.
4
Columbia/HCA Healthcare Corporation
Consolidated Operating Results Summary
(Dollars in millions, except per share amounts)
Fourth Quarter Year
Ended December Ended December
1998 1997 1998 1997
Revenues $ 4,420 $ 4,374 $ 18,681 $ 18,819
EBITDA (a) $ 489 ($175) $ 2,868 $ 2,851
Net income (loss):
Income (loss) from continuing oper-
ations, excluding gains on sales of
facilities, impairment on long-lived
assets and restructuring of operations
and investigation related costs $ 27 ($404) $ 590 $ 565
Gains on sales of facilities
(net of tax) 123 -- 365 --
Impairment of long-lived assets
(net of tax) (152) (290) (349) (290)
Restructuring of operations and
investigation related costs
(net of tax) (21) (55) (74) (93)
Discontinued operations:
Loss from operations of discontinued
businesses (net of tax) (19) (45) (80) 12
Loss on disposal of discontinued
(net of tax) -- (443) (73) (443)
Cumulative effect of accounting change
(net of tax) -- -- -- (56)
Net income (loss) ($42) ($1,237) $ 379 ($305)
Diluted earnings (loss) per share:
Income (loss) from continuing oper-
ations, excluding gains on sales of
facilities impairment on long-lived
assets and restructuring of operations
and investigation related costs $ 0.04 ($0.63) $ 0.91 $ 0.85
Gains on sales of facilities 0.19 -- 0.56 --
Impairment of long-lived assets (0.23) (0.45) (0.54) (0.44)
Restructuring of operations and
investigation related costs (0.04) (0.08) (0.11) (0.14)
Discontinued operations:
Loss from operations of discontinued
businesses (0.02) (0.07) (0.12) 0.02
Loss on disposal of discontinued
businesses -- (0.69) (0.11) (0.67)
Cumulative effect of accounting change -- -- -- (0.08)
Net income (loss) ($0.06) ($1.92) $ 0.59 ($0.46)
Shares used in computing diluted
earnings per share (000) 644,387 644,508 646,649 663,090
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(a) EBITDA is defined as income (loss) from continuing operations before
depreciation and amortization, interest expense, gains on sales of
facilities, impairment of long-lived assets, restructuring of operations and
investigation related costs, minority interests and income taxes.
Columbia/HCA Healthcare Corporation
Consolidated Statements of Operations
Years Ended December 31, 1998 and 1997
(Dollars in millions, except per share amounts)
1998 1997
Amount Ratio Amount Ratio
Revenues $ 18,681 100.0% $18,819 100.0%
Salaries and benefits 7,811 41.8 7,631 40.6
Supplies 2,901 15.5 2.722 14.5
Other operating expenses 3,771 20.2 4,263 22.6
Provisions for doubtful accounts 1,442 7.7 1,420 7.5
Equity in earnings of affiliates (112) (0.6) (68) (0.4)
15,813 84.6 15,968 84.8
EBITDA 2,868 15.4 2,851 15.2
Depreciation and amortization 1,247 6.7 1,238 6.6
Interest expense 561 3.0 493 2.6
Gains on sale of facilities (744) (4.0) -- --
Impairment of long-lived assets 542 2.9 442 2.4
Restructuring of operations and
investigation related costs 111 0.6 140 0.7
Income from continuing operations before
minority interests and income taxes 1,151 6.2 538 2.9
Minority interests in earnings of
consolidated entities 70 0.4 150 0.8
Income from continuing operations before
income taxes 1,081 5.8 388 2.1
Provisions for income taxes 549 3.0 206 1.1
Income from continuing operations 532 2.8 182 1.0
Discontinued operations:
Income (loss) from operations of
discontinued businesses (net of tax) (80) (0.4) 12 0.1
Loss on disposal of discontinued
businesses (net of tax) (73) (0.4) (443) (2.4)
Cumulative effect of accounting change
(net of tax) -- -- (56) (0.3)
Net income (loss) $ 379 2.0 ($305) (1.6)
Diluted earnings (loss) per share:
Income from continuing operations,
excluding gains on sales of facilities,
impairment of long-lived assets and
restructuring of operations and
investigation related costs $ 0.91 $ 0.85
Gains on sales of facilities 0.56 --
Impairment long-lived assets (0.54) (0.44)
Restructuring of operations and
investigation related costs (0.11) (0.14)
Discontinued operations:
Income (loss) from operations of
discontinued businesses (0.12) 0.02
Loss on disposal of discontinued
businesses (0.11) (0.67)
Cumulative effect of accounting change -- (0.08)
Net income (loss) $ 0.59 ($0.46)
Shares used in computing diluted earnings
per share (000) 646,649 663,090
Certain prior year amounts have been reclassified to conform to current year
presentation.
Columbia/HCA Healthcare Corporation
Consolidated Statements of Operations
Fourth Quarter ended December 31, 1998 and 1997
(Dollars in millions, except per share amounts)
1998 1997
Amount Ratio Amount Ratio
Revenues $ 4,420 100.0% $ 4,374 100.0%
Salaries and benefits 1,900 43.0 2,010 46.0
Supplies 706 16.0 712 16.3
Other operating expenses 956 21.6 1,335 30.4
Provisions for doubtful accounts 390 8.8 444 10.2
Equity in earnings of affiliates (21) (0.5) 48 1.1
3,931 88.9 4,549 104.0
EBITDA 489 11.1 (175) (4.0)
Depreciation and amortization 315 7.2 315 7.3
Interest expense 121 2.7 132 3.0
Gains on sale of facilities (207) (4.7) -- --
Impairment of long-lived assets 208 4.7 442 10.1
Restructuring of operations and
investigation related costs 21 0.5 76 1.7
Income (loss) from continuing operations before
minority interests and income taxes 31 0.7 (1,140) (26.1)
Minority interests in earnings of
consolidated entities 16 0.4 25 0.5
Income (loss) from continuing operations
before income taxes 15 0.3 (1,165) (26.6)
Provision for income taxes (benefits) 38 0.9 (416) (9.5)
Loss from continuing operations (23) (0.6) (749) (17.1)
Discontinued operations:
Loss from operations of discontinued
businesses (net of tax) (19) (0.4) (45) (1.0)
Loss on disposal of discontinued
businesses (net of tax) -- -- (443) (10.1)
Net loss ($42) (1.0) ($1,237) (28.2)
Diluted earnings (loss) per share:
Income (loss) from continuing operations,
excluding gains on sales of facilities,
impairment of long-lived assets and
restructuring of operations and
investigation related costs $ 0.04 ($0.63)
Gains on sales of facilities 0.19 --
Impairment of long-lived assets (0.23) (0.45)
Restructuring of operations and
investigation related costs (0.04) (0.08)
Discontinued operations:
Loss from operations of discontinued
businesses (0.02) (0.07)
Loss on disposal of discontinued
businesses -- (0.69)
Net loss ($0.06) ($1.92)
Shares used in computing diluted earnings
per share (000) 644,387 644,508
Certain prior year amounts have been reclassified to conform to current year
presentation.
Columbia/HCA Healthcare Corporation
Operating Statistics
For the Fourth Quarters and Years Ended December 31, 1998 and 1997
Fourth Quarter Year
Ended December 31 Ended December 31
1998 1997 1998 1997
Consolidated Hospitals
Number of Hospitals 281 309 281 309
Weighted Average Licensed
Beds 55,594 60,983 59,104 61,096
Licensed Beds at End of
Period 53,693 60,643 53,693 60,643
Admissions 448,000 479,000 1,888,800 1,915,100
Equivalent Admissions 679,400 728,600 2,870,900 2,901,400
Patient Days 2,200,600 2,337,800 9,371,400 9,492,300
Equivalent Patient Days 3,337,800 3,556,100 14,244,600 14,380,800
Emergency Room Visits 1,310,900 1,398,500 5,539,000 5,535,200
Outpatient Revenues as a
Percentage of Patient
Revenues 37.1% 37.3% 37.2% 37.0%
Average Length of Stay 4.9 4.9 5.0 5.0
Occupancy 43.0% 41.7% 43.4% 42.6%
Equivalent Occupancy 65.2% 63.5% 66.0% 64.5%
Number of Consolidated and
Non-Consolidated (50/50 Equity
Joint Ventures) Hospitals:
Consolidated 281 309
Non-Consolidated (50/50 Equity
Joint Ventures 24 27
Total Number of Hospitals 305 336
1998 Group Results
($ in millions)
Assets Sold
Core or Held
Assets Triad LifePoint for Sale
Revenues $ 14,909 $ 1,588 $ 479 $ 1,705
EBITDA 2,591 147 59 71
% Margin 17.4% 9.3% 12.4% 4.2%
Same-Facility Admissions 1.0% -1.9% -0.8% -4.1%
Certain prior year amounts have been reclassified to conform to current year
presentation.
Columbia/HCA Healthcare Corporation
Consolidated Balance Sheets
(Dollars in millions)
December 31 September 30, December 31,
1998 1998 1997
ASSETS
Current assets:
Cash and cash equivalents $ 297 $ 175 $ 110
Accounts receivable, net 2,096 2,357 2,522
Other 1,470 1,565 1,791
Total current assets 3,863 4,097 4,423
Property and equipment,
at cost 15,644 16,006 16,254
Accumulated depreciation (6,195) (6,280) (6,024)
9,449 9,726 10,230
Investments of insurance
subsidiary 1,614 1,559 1,422
Investments in and advances
to affiliates 1,275 1,155 1,329
Intangible assets, net of
accumulated amortization 2,910 3,044 3,521
Net assets of discontinued
operations -- 77 841
Other 318 350 236
$19,429 $20,008 $22,002
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 784 $ 745 $ 929
Other current liabilities 1,707 1,977 1,712
Long-term debt due within
one year 1,068 1,471 132
Total current
liabilities 3,559 4,193 2,773
Long-term debt 5,685 5,371 9,276
Professional liability risks,
deferred taxes and other
liabilities 1,839 1,910 1,867
Minority interests in equity
of consolidated entities 765 829 836
Stockholders' equity 7,581 7,705 7,250
$19,429 $20,008 $22,002
Current ratio 1.09 0.98 1.59
Ratio of debt to debt plus
common and minority equity 44.70% 44.50% 53.80%