EXHIBIT 99
HCA
NEWS
- -------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
INVESTOR CONTACT: MEDIA CONTACT:
Mark Kimbrough Jeff Prescott
615-344-2688 615-344-5708
HCA REPORTS 2003 RESULTS
QUARTERLY DIVIDEND INCREASED FROM $0.02 PER SHARE TO $0.13 PER SHARE
Nashville, Tenn., February 3, 2004 - HCA (NYSE: HCA) today announced a dividend
increase and operating results for the fourth quarter and year ended December
31, 2003.
DIVIDEND
HCA's Board of Directors approved an increase in its quarterly dividend from
$0.02 per share to $0.13 per share. The Board declared the initial $0.13 per
share dividend payable on June 1, 2004 to shareholders of record at May 1,
2004.
"The change in the tax law during the past year greatly enhanced the
attractiveness of cash dividends as a means of providing increased and more
predictable returns to our shareholders. The expected strength of the Company's
cash flows should enable us to pay a significantly increased dividend, while
continuing to reinvest capital in our markets, strengthen our balance sheet and
maintain our historical commitment to share repurchase," stated Jack O.
Bovender, Jr., HCA Chairman and CEO.
RESULTS FOR 2003
Revenues for the year ended December 31, 2003 increased 10.5 percent to $21.8
billion from $19.7 billion in 2002. Net income for 2003 totaled $1.3 billion,
or $2.61 per diluted share, compared to $833 million, or $1.59 per diluted
share, in the previous year.
Results for 2003 include gains on sales of facilities of $85 million, or $0.10
per diluted share, impairment of long-lived assets of ($130 million), or
($0.16) per diluted share, and investigation related costs of ($8 million), or
($0.01) per diluted share. Results for 2003 also include a favorable $41
million, or $0.05 per diluted share, change in estimate during the fourth
quarter related to Medicaid cost report balances for cost report years ended
December 31, 1997 and prior.
The financial results for 2002 include gains on sales of facilities of $6
million, or $0.01 per diluted share, impairment of investment securities of
($168 million), or ($0.20) per diluted share, impairment of long-lived assets
of ($19 million), or ($0.03) per diluted share and investigation related costs
of ($58 million), or ($0.07) per diluted share. Results for 2002 also include a
fourth quarter government settlement charge of ($603 million), or ($0.80) per
diluted share.
The Company's consolidated hospital admissions, which include 11 Kansas City
area hospitals acquired April 1, 2003, increased 3.3 percent during 2003.
Same-facility admissions increased 0.6 percent for the year. Excluding skilled
nursing beds and obstetric units closed within the past twelve months,
same-facility admissions increased 1.4 percent for the year. During 2003,
same-facility revenues increased 7.6 percent, while same-facility revenue per
equivalent admission increased 7.5 percent.
Capital expenditures, excluding acquisitions, totaled approximately $1.8
billion in 2003. The Company anticipates capital expenditures will approximate
$1.8 billion in 2004 and $1.6 billion annually thereafter, excluding
acquisitions.
2
HCA's debt-to-total capitalization ratio was 55.8 percent at December 31, 2003,
a decrease from the peak during the year of 57.3 percent at July 31, 2003. HCA
plans to reduce its debt-to-total capitalization ratio level from the mid-50's
to the low 50's or high 40's by mid-to-late 2005.
The Company repurchased 31.1 million shares of its common stock at a cost of
$1.1 billion (average cost of $35.76 per share) during 2003. Approximately $600
million remains on the April 2003, $1.5 billion share repurchase authorization.
Since 1997, HCA has repurchased approximately 234.5 million shares at a cost of
$6.9 billion (average cost of $29.51 per share). HCA had 491 million shares
outstanding as of December 31, 2003. Share repurchases are expected to remain
an integral component of the Company's financial policies.
RESULTS FOR FOURTH QUARTER 2003
For the fourth quarter of 2003, revenues increased to $5.6 billion, up 11.4
percent from $5.0 billion in the comparable period of 2002. Net income totaled
$317 million, or $0.63 per diluted share, versus a net loss of ($102 million),
or ($0.20) per diluted share, for the fourth quarter of 2002.
Results for the fourth quarters of 2003 and 2002 include the previously
mentioned settlements with government agencies for the favorable change in
Medicaid cost report estimates of $41 million, or $0.05 per diluted share, in
2003 and a charge of ($603 million), or ($0.82) per diluted share, in 2002.
Fourth quarter 2002 results include gains on sales of facilities of $6 million,
or $0.01 per diluted share, and investigation related costs of ($12 million),
or ($0.02) per diluted share.
The Company's consolidated admissions increased 5.7 percent in the fourth
quarter of 2003. Same-facility admissions increased 2.1 percent for the fourth
quarter of 2003. Excluding skilled nursing beds and obstetric units closed
within the last twelve months, same-facility admissions increased 2.6 percent
for the quarter. Same-facility revenues increased 7.4 percent, while
same-facility revenue per equivalent admission increased 5.8 percent during the
fourth quarter of 2003.
3
Pulmonary or flu-related admissions, which increased 15 percent during the
fourth quarter compared to the prior year, represented approximately one-half
of the Company's admission growth in the quarter, reflecting the earlier
outbreak and increased severity of this year's flu season.
The Company's provision for doubtful accounts increased to 11.4 percent of
consolidated revenues in the fourth quarter of 2003 compared to 8.6 percent in
the fourth quarter of 2002, primarily due to a continuation of trends
associated with the growth of uninsured and self-pay accounts and a
deterioration in the collectibility of these accounts.
In response to the growing number of uninsured in the United States, during
2003 HCA implemented a charity care and financial discount policy to provide
financial relief to more of its charity patients and needs-based discounts for
uninsured patients who receive non-elective care at its hospitals. In the
fourth quarter of 2003, charity care and related discounts totaled $201 million
compared to $156 million in the same period of 2002. For the full year 2003,
charity care and related discounts totaled $821 million compared to $579
million in 2002.
Recent regulatory changes, effective October 1, 2003, resulted in a reduction
in the Company's Medicare operating outlier payments which totaled $22 million
in the fourth quarter of 2003 compared to $53 million in the fourth quarter of
2002.
FACILITIES AT YEAR END
At December 31, 2003, the Company operated 191 hospitals and 83 ambulatory
surgery centers (including 7 hospitals and 4 ASCs owned through 50/50 equity
joint ventures) located in 23 states, London, England and Geneva, Switzerland
compared to 179 hospitals and 78 ambulatory surgery centers (including 6
hospitals and 4 ASCs owned through equity joint ventures) at December 31, 2002.
4
EARNINGS CONFERENCE CALL
HCA will host a conference call for investors at 8:30 a.m. Central Standard
Time today. All interested investors are invited to access a live audio
broadcast of the call via webcast. The broadcast also will be available on a
replay basis beginning this afternoon and through the next 30 days. The web
cast can be accessed at
http://www.firstcallevents.com/service/ajwz396776766gf12.html or via the
Investor Relations site at www.hcahealthcare.com.
ANNUAL SHAREHOLDER MEETING
The Company's annual shareholder meeting will be held in Nashville, Tennessee
on May 27, 2004 at 1:30 p.m. local time for shareholders of record as of April
1, 2004.
# # #
This press release contains forward-looking statements based on current
management expectations. Those forward-looking statements include all
statements regarding our estimated results of operations in future periods and
all statements other than those made solely with respect to historical fact.
Numerous risks, uncertainties and other factors may cause actual results to
differ materially from those expressed in any forward-looking statements. These
factors include, but are not limited to (i) the highly competitive nature of
the health care business, (ii) the efforts of insurers, health care providers
and others to contain health care costs, (iii) possible changes in the Medicare
and Medicaid programs that may impact reimbursements to health care providers
and insurers, (iv) the ability to achieve operating and financial targets and
achieve expected levels of patient volumes and control the costs of providing
services, (v) increases in the amount and risk of collectibility of uninsured
accounts and deductibles and co-pay amounts for insured accounts, (vi) the
ability to attract and retain qualified management and personnel, including
affiliated physicians, nurses and medical support personnel, (vii) potential
liabilities and other claims that may be asserted against the Company, (viii)
fluctuations in the market value of the Company's common stock, (ix) the
Company's ability to complete the share
5
repurchase program, (x) changes in accounting practices, (xi) changes in
general economic conditions, (xii) future divestitures which may result in
additional charges, (xiii) changes in revenue mix and the ability to enter into
and renew managed care provider arrangements on acceptable terms, (xiv) the
availability and terms of capital to fund the expansion of the Company's
business, (xv) changes in business strategy or development plans, (xvi) delays
in receiving payments for services provided, (xvii) the possible enactment of
Federal or state health care reform, (xviii) the outcome of pending and any
future tax audits and litigation associated with the Company's tax positions,
(xix) the outcome of the Company's continuing efforts to monitor, maintain and
comply with appropriate laws, regulations, policies and procedures and the
Company's corporate integrity agreement with the government, (xx) changes in
Federal, state or local regulations affecting the health care industry, (xxi)
the impact of charity care and self-pay discounting policy changes, (xxii) the
ability to successfully integrate the operations of Health Midwest, (xxiii) the
ability to develop and implement the financial enterprise resource planning
information system within the expected time and cost projections and, upon
implementation, to realize the expected benefits and efficiencies, (xxiv) the
ability to obtain court approval of the settlement of the class action
securities lawsuits originally filed against the Company in 1997; (xxv) the
ability of the Company to continue to fund a cash dividend in the future at the
current rate; and (xxvi) other risk factors detailed from time to time in the
Company's filings with the SEC. Many of the factors that will determine the
Company's future results are beyond the ability of the Company to control or
predict. In light of the significant uncertainties inherent in the
forward-looking statements contained herein, 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 "HCA" as used throughout this document refer to
HCA Inc. and its affiliates.
6
HCA INC.
SUPPLEMENTAL OPERATING RESULTS INFORMATION
(Dollars in millions, except per share amounts)
FOR THE YEARS
FOURTH QUARTER ENDED DECEMBER 31,
----------------------- -----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues ........................................................... $ 5,597 $ 5,024 $ 21,808 $ 19,729
Net income (loss) .................................................. $ 317 $ (102) $ 1,332 $ 833
Settlement with government agencies (net of tax) ............ (25) 418 (25) 418
Gains on sales of facilities (net of tax) ................... -- (4) (49) (4)
Impairment of investment securities (net of tax) ............ -- -- -- 107
Impairment of long-lived assets (net of tax) ................ -- -- 79 18
Investigation related costs (net of tax) .................... -- 8 6 37
--------- --------- --------- ---------
Net income, excluding settlement with government agencies,
gains on sales of facilities, impairment of investment
securities, impairment of long-lived assets and
investigation related costs (a) .................................. 292 320 1,343 1,409
Depreciation and amortization ............................... 290 258 1,112 1,010
Interest expense ............................................ 127 106 491 446
Minority interests in earnings of consolidated entities ..... 30 37 150 148
Provision for income taxes .................................. 170 202 825 888
--------- --------- --------- ---------
Adjusted EBITDA (a) ................................................ $ 909 $ 923 $ 3,921 $ 3,901
========= ========= ========= =========
Diluted earnings per share:
Net income (loss) ........................................... $ 0.63 $ (0.20) $ 2.61 $ 1.59
Settlement with government agencies ......................... (0.05) 0.82 (0.05) 0.80
Gains on sales of facilities ................................ -- (0.01) (0.10) (0.01)
Impairment of investment securities ......................... -- -- -- 0.20
Impairment of long-lived assets ............................. -- -- 0.16 0.03
Investigation related costs ................................. -- 0.02 0.01 0.07
--------- --------- --------- ---------
Net income, excluding settlement with government
agencies, gains on sales of facilities, impairment
of investment securities, impairment of long-lived
assets and investigation related costs (a) ................ $ 0.58 $ 0.63 $ 2.63 $ 2.68
========= ========= ========= =========
Shares used in computing diluted earnings per share (000) .......... 501,373 511,655 510,874 525,219
- ---------
(a) Net income, excluding settlement with government agencies, gains on
sales of facilities, impairment of investment securities, impairment
of long-lived assets and investigation related costs, and adjusted
EBITDA, are non-GAAP financial measures. The Company believes that net
income, excluding certain measures required to be disclosed by GAAP,
and adjusted EBITDA are important operating measures that supplement
discussions and analysis of the Company's results of operations. The
Company believes that it is useful to investors to provide disclosures
of its results of operations on the same basis as that used by
management. HCA's management relies upon net income, excluding certain
measures required to be disclosed by GAAP, and adjusted EBITDA as the
primary measures to review and assess operating performance of its
hospital facilities and their management teams.
Management and investors review both the Company's overall performance
(including net income, excluding certain measures required to be
disclosed by GAAP, GAAP net income and GAAP EPS) and the operating
performance of the Company's health care facilities (adjusted EBITDA).
Adjusted EBITDA and the adjusted EBITDA margin (adjusted EBITDA
divided by revenues) are utilized by management and investors to
compare the Company's current operating results with the corresponding
periods during the previous year and to compare the Company's
operating results with other companies in the health care industry.
The Company has incurred significant settlement adjustments and
charges, asset and investment impairments, gains on sales of
facilities and investigation related costs during the twelve months
ended December 31, 2003 and 2002 and it is reasonable to expect that
asset impairment charges and gains on sales of facilities will occur
in future periods, but the amounts recognized for these items can vary
significantly from quarter to quarter, do not directly relate to the
ongoing operations of the Company's health care facilities and
complicate quarterly operations comparisons of the Company's results
of operations and operations comparisons with other health care
companies. The Company does not currently expect to incur settlement
adjustments and charges and investigation related costs in future
periods. The nature and materiality of these charges have significant
effects on the ability of an investor to compare the operating results
of the Company's hospital facilities from period to period and to
compare the Company's operating results with other companies in the
industry.
Net income, excluding certain measures required to be disclosed by
GAAP, and adjusted EBITDA are not measures of financial performance
under accounting principles generally accepted in the United States,
and should not be considered as alternatives to net income as a
measure of operating performance or to cash flows from operating,
investing and financing activities as a measure of liquidity. Because
net income, excluding certain measures required to be disclosed by
GAAP, and adjusted EBITDA are not measurements determined in
accordance with generally accepted accounting principles and are
susceptible to varying calculations, net income, excluding certain
measures required to be disclosed by GAAP, and adjusted EBITDA, as
presented, may not be comparable to other similarly titled measures
presented by other companies.
7
HCA INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2003 2002
--------------------- ---------------------
AMOUNT RATIO Amount Ratio
--------- ----- --------- -----
Revenues .................................................... $ 21,808 100.0% $ 19,729 100.0%
Salaries and benefits ....................................... 8,682 39.8 7,952 40.3
Supplies .................................................... 3,522 16.2 3,158 16.0
Other operating expenses .................................... 3,676 16.8 3,341 16.9
Provision for doubtful accounts ............................. 2,207 10.1 1,581 8.0
Insurance subsidiary losses on sales of investments ......... (1) -- 2 --
Equity in earnings of affiliates ............................ (199) (0.9) (206) (1.0)
Depreciation and amortization ............................... 1,112 5.1 1,010 5.0
Interest expense ............................................ 491 2.3 446 2.3
Settlement with government agencies ......................... (41) (0.2) 603 3.1
Gains on sales of facilities ................................ (85) (0.4) (6) --
Impairment of investment securities ......................... -- -- 168 0.9
Impairment of long-lived assets ............................. 130 0.6 19 0.1
Investigation related costs ................................. 8 -- 58 0.3
--------- ----- --------- -----
19,502 89.4 18,126 91.9
--------- ----- --------- -----
Income before minority interests and income taxes ........... 2,306 10.6 1,603 8.1
Minority interests in earnings of consolidated entities ..... 150 0.7 148 0.7
--------- ----- --------- -----
Income before income taxes .................................. 2,156 9.9 1,455 7.4
Provision for income taxes .................................. 824 3.8 622 3.2
--------- ----- --------- -----
Net income ............................................. $ 1,332 6.1 $ 833 4.2
========= ===== ========= =====
Diluted earnings per share .................................. $ 2.61 $ 1.59
Shares used in computing diluted earnings per share (000) ... 510,874 525,219
8
HCA INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOURTH QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2003 2002
---------------------- ----------------------
AMOUNT RATIO Amount Ratio
-------- ----- -------- -----
Revenues .................................................... $ 5,597 100.0% $ 5,024 100.0%
Salaries and benefits ....................................... 2,219 39.6 2,063 41.1
Supplies .................................................... 925 16.5 807 16.1
Other operating expenses .................................... 945 16.9 850 16.8
Provision for doubtful accounts ............................. 636 11.4 431 8.6
Insurance subsidiary gains on sales of investments .......... (1) -- -- --
Equity in earnings of affiliates ............................ (36) (0.6) (50) (1.0)
Depreciation and amortization ............................... 290 5.1 258 5.2
Interest expense ............................................ 127 2.3 106 2.1
Settlement with government agencies ......................... (41) (0.7) 603 12.0
Gains on sales of facilities ................................ -- -- (6) (0.1)
Investigation related costs ................................. -- -- 12 0.2
-------- ----- -------- -----
5,064 90.5 5,074 101.0
-------- ----- -------- -----
Income (loss) before minority interests and income taxes .... 533 9.5 (50) (1.0)
Minority interests in earnings of consolidated entities ..... 30 0.5 37 0.7
-------- ----- -------- -----
Income (loss) before income taxes ........................... 503 9.0 (87) (1.7)
Provision for income taxes .................................. 186 3.3 15 0.3
-------- ----- -------- -----
Net income (loss) ...................................... $ 317 5.7 $ (102) (2.0)
======== ===== ======== =====
Diluted earnings (loss) per share ........................... $ 0.63 $ (0.20)
Shares used in computing diluted earnings per share (000) ... 501,373 511,655
9
HCA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
2003 2003 2002
------------ ------------- ------------
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 115 $ 182 $ 161
Accounts receivable, net ............................ 3,095 2,924 2,788
Inventories ......................................... 520 491 462
Deferred income taxes ............................... 534 494 568
Other ............................................... 558 720 526
--------- --------- ---------
Total current assets ........................... 4,822 4,811 4,505
Property and equipment, at cost .......................... 18,685 18,167 16,800
Accumulated depreciation ................................. (7,620) (7,561) (7,079)
--------- --------- ---------
11,065 10,606 9,721
Investments of insurance subsidiary ...................... 1,790 1,668 1,355
Investments in and advances to affiliates ................ 527 666 679
Goodwill ................................................. 2,481 2,489 1,994
Deferred loan costs ...................................... 75 72 67
Other .................................................... 303 334 420
--------- --------- ---------
$ 21,063 $ 20,646 $ 18,741
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................... $ 877 $ 749 $ 809
Accrued salaries .................................... 510 493 438
Other accrued expenses .............................. 1,116 1,120 1,113
Government settlement accrual ....................... -- -- 933
Long-term debt due within one year .................. 665 502 446
--------- --------- ---------
Total current liabilities ...................... 3,168 2,864 3,739
Long-term debt ........................................... 8,042 8,278 6,497
Professional liability risks ............................. 1,314 1,332 1,193
Deferred income taxes and other liabilities .............. 1,650 1,378 999
Minority interests in equity of consolidated entities .... 680 678 611
Stockholders' equity ..................................... 6,209 6,116 5,702
--------- --------- ---------
$ 21,063 $ 20,646 $ 18,741
========= ========= =========
Current ratio ............................................ 1.52 1.68 1.20
Ratio of debt to debt plus common and minority equity .... 55.8% 56.4% 52.4%
Shares outstanding (thousands) ........................... 490,718 496,643 514,176
10
HCA INC.
OPERATING STATISTICS
FOR THE YEARS
FOURTH QUARTER ENDED DECEMBER 31,
------------------------------- -------------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
CONSOLIDATED HOSPITALS:
Number of Hospitals 184 173 184 173
Weighted Average Licensed Beds 42,011 40,020 41,568 39,985
Licensed Beds at End of Period 42,108 39,932 42,108 39,932
REPORTED:
Admissions 414,000 391,700 1,635,200 1,582,800
% Change 5.7% 3.3%
Equivalent Admissions 606,600 575,300 2,405,400 2,339,400
% Change 5.4% 2.8%
Revenue per Equivalent Admission $ 9,228 $ 8,733 $ 9,066 $ 8,434
% Change 5.7% 7.5%
Inpatient Revenue per Admission $ 8,348 $ 7,937 $ 8,224 $ 7,706
% Change 5.2% 6.7%
Patient Days 2,066,200 1,941,100 8,115,400 7,850,900
Equivalent Patient Days 3,027,300 2,851,200 11,937,800 11,603,600
Emergency Room Visits 1,359,400 1,186,000 5,130,500 4,802,800
% Change 14.6% 6.8%
Outpatient Revenues as a
Percentage of Patient Revenues 37.1% 37.1% 37.2% 37.0%
Average Length of Stay 5.0 5.0 5.0 5.0
Occupancy 53.5% 52.7% 53.5% 53.8%
Equivalent Occupancy 78.5% 77.6% 78.7% 79.5%
SAME FACILITY:
Admissions 396,900 388,700 1,580,600 1,570,500
% Change 2.1% 0.6%
Equivalent Admissions 580,200 571,700 2,320,400 2,319,700
% Change 1.5% 0.0%
Revenue per Equivalent Admission $ 9,187 $ 8,685 $ 9,037 $ 8,405
% Change 5.8% 7.5%
Inpatient Revenue per Admission $ 8,463 $ 7,949 $ 8,311 $ 7,712
% Change 6.5% 7.8%
Emergency Room Visits 1,301,300 1,176,600 4,956,700 4,755,500
% Change 10.6% 4.2%
NUMBER OF CONSOLIDATED AND
NON-CONSOLIDATED (50/50 EQUITY
JOINT VENTURES) HOSPITALS:
Consolidated 184 173 184 173
Non-Consolidated (50/50 Equity
Joint Ventures) 7 6 7 6
----------- ----------- ----------- -----------
Total Number of Hospitals 191 179 191 179
=========== =========== =========== ===========
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