EXHIBIT 20
HCA
NEWS
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FOR IMMEDIATE RELEASE
INVESTOR CONTACT MEDIA CONTACT
Mark Kimbrough: 615-344-2688 Jeff Prescott: 615-344-5708
HCA REPORTS 2ND QUARTER 2002 RESULTS
EPS INCREASES 32% FOR THE QUARTER TO $0.71 COMPARED TO $0.54 IN 2001
EXCLUDING GOODWILL AMORTIZATION AND SETTLEMENT, IMPAIRMENT AND
INVESTIGATION RELATED CHARGES
Nashville, Tenn., July 24, 2002 - HCA (NYSE: HCA) today announced
operating results for the second quarter ended June 30, 2002. "We are pleased to
announce that the second quarter financial results demonstrate the continuation
of a period of excellent earnings growth for the Company," stated Jack O.
Bovender, Jr., Chairman and CEO. "EPS, excluding goodwill amortization and
settlement, impairment and investigation related charges, increased 32% for the
second quarter to $0.71 compared to $0.54 in 2001."
"Year to date, the Company has reinvested $829 million in its hospitals
and surgery centers to modernize its facilities and equipment and to expand
capacity and services to meet growing demand for quality healthcare services in
the communities we serve. Total capital investments should be approximately $1.7
billion in 2002 and $1.8 billion in 2003, excluding any potential acquisitions,"
Bovender stated.
"As part of the Company's strategy to make selective hospital
acquisitions in existing and high growth markets, the Company last month
acquired the 164-bed Northern Virginia Community Hospital in Arlington,
Virginia," Bovender added.
During the second quarter, revenues increased 9.5 percent to $4.9
billion compared to $4.5 billion during the second quarter of 2001. Net income
excluding goodwill amortization and settlement, impairment and investigation
related costs totaled $374 million or $0.71 per diluted share compared to $289
million or $0.54 per diluted share for the same period of 2001. Net income
totaled $350 million or
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$0.66 per diluted share versus $281 million or $0.52 per diluted share in the
second quarter of 2001.
Same facility revenues increased 11.7 percent during the second
quarter. Same facility equivalent admissions grew 3.0 percent, reflecting strong
outpatient volume during the quarter, in particular, emergency department visits
which increased 5.3 percent. Same facility admissions for the quarter increased
2.3 percent.
During the second quarter of 2002, the Company recorded an impairment
charge of $18 million, net of tax, or $0.03 per diluted share, related to the
decision to delay implementation of certain components of the Company's planned
replacement of portions of its financial systems.
For the six months ended June 30, 2002, revenues increased to $9.8
billion, up 8.9 percent, compared to $9.0 billion for 2001. Net income excluding
goodwill amortization and settlement, gains, impairment and investigation
related costs totaled $770 million or $1.47 per diluted share compared to $637
million or $1.15 per diluted share in 2001. Net income totaled $735 million or
$1.40 per diluted share versus $624 million or $1.13 per diluted share for the
six months ended June 30, 2001.
At June 30, 2002, the Company's balance sheet reflected total debt of
$7.2 billion; stockholders' equity (including common, temporary and minority
equity) of $6.3 billion; and total assets of $18.3 billion. The Company's ratio
of debt-to-debt plus stockholders' equity was 53.3 percent at June 30, 2002
compared to 56.2 percent at December 31, 2001. The Company's ratio of
debt-to-EBITDA improved to 1.99 times at June 30, 2002, down from 2.15 times at
December 30, 2001.
Cash flow from operations during the second quarter was $615 million,
compared to $546 million in the second quarter of 2001. Capital expenditures for
the quarter totaled $451 million, up 41.8% from the second quarter of 2001.
Return on stockholders' equity was 23.0 percent and return on invested capital
was 12.3 percent for the twelve months ended June 30, 2002.
Over the last five years, HCA has significantly increased its
investment in numerous quality initiatives, including patient and physician
satisfaction surveys, outcomes measurement and patient safety processes. HCA
believes that providers, government and private payors, employers, physicians
and patients should work collaboratively toward improving healthcare
satisfaction, quality and accountability. As a part of this collaboration, HCA
has recently joined the Leapfrog Group, a group of major employers who have come
together to address healthcare quality and patient safety, and the National
Quality Forum, a standards setting organization established in 1999 upon the
recommendation of a Presidential Commission to develop and implement national
standards for healthcare quality measurement and reporting. "As a leading
provider of healthcare services in the
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U.S., our goal is to contribute to a common approach to measurement and
reporting of healthcare quality," said Bovender.
Bovender noted that the Company would be participating in a FDA forum
later this week in Bethesda, MD, to encourage a federal regulatory initiative
that would require placement of barcodes on drugs and medical devices. "HCA has
begun the implementation of a bar coding system in all of its more than 180
hospitals. This system will allow nurses at the bedside to scan a patient's bar
coded armband to ensure that the medications are administered correctly and are
the right type, dosage, and time of day for that particular patient. This system
is obviously much safer for the patient and more efficient for our hospitals,"
Bovender concluded.
As of June 30, 2002, the Company operated 181 hospitals and 80
ambulatory surgery centers (including 6 hospitals and 5 ASCs owned through 50/50
equity joint ventures), compared to 194 hospitals and 78 ambulatory surgery
centers (including 9 hospitals and 3 ASCs owned through equity joint ventures)
as of June 30, 2001. HCA's 181 hospitals and 80 ambulatory surgery centers are
located in 23 states; London, England and Geneva, Switzerland; these facilities
provided approximately $1 billion in uncompensated healthcare services (charity
and bad debts) during the first six months of 2002.
HCA will host a conference call for investors at 8:30 a.m. Central
Daylight 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 webcast
can be accessed at HTTP://WWW.VIDEONEWSWIRE.COM/EVENT.ASP?ID=6682 or via the
Investor Relations site at WWW.HCAHEALTHCARE.COM.
***********
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS BASED ON MANAGEMENT'S
CURRENT EXPECTATIONS. NUMEROUS RISKS, UNCERTAINTIES AND OTHER FACTORS MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE FORWARD
LOOKING STATEMENTS, INCLUDING: (I) THE OUTCOME OF THE KNOWN AND UNKNOWN
GOVERNMENTAL INVESTIGATIONS AND LITIGATION INVOLVING THE COMPANY'S BUSINESS
PRACTICES INCLUDING THE ABILITY TO NEGOTIATE, EXECUTE AND TIMELY CONSUMMATE
DEFINITIVE SETTLEMENT AGREEMENTS IN THE GOVERNMENT'S REMAINING CIVIL CASES AND
TO OBTAIN COURT APPROVAL THEREOF, (II) THE ABILITY TO CONSUMMATE THE
UNDERSTANDING WITH THE CENTERS FOR MEDICARE AND MEDICAID SERVICES, (III) THE
HIGHLY COMPETITIVE NATURE OF THE HEALTH CARE BUSINESS, (IV) THE EFFORTS OF
INSURERS, HEALTH CARE PROVIDERS AND OTHERS TO CONTAIN HEALTH CARE COSTS, (V)
POSSIBLE CHANGES IN THE MEDICARE AND MEDICAID PROGRAMS THAT MAY LIMIT
REIMBURSEMENTS TO HEALTH CARE PROVIDERS AND INSURERS, (VI) CHANGES IN FEDERAL,
STATE OR LOCAL REGULATIONS AFFECTING THE HEALTH CARE INDUSTRY, (VII) THE
POSSIBLE ENACTMENT OF FEDERAL OR STATE HEALTH CARE REFORM, (VIII) THE ABILITY TO
ATTRACT AND RETAIN QUALIFIED MANAGEMENT AND PERSONNEL, INCLUDING AFFILIATED
PHYSICIANS, NURSES AND MEDICAL SUPPORT PERSONNEL, (IX) LIABILITIES AND OTHER
CLAIMS ASSERTED AGAINST THE COMPANY, (X) FLUCTUATIONS IN THE MARKET VALUE OF THE
COMPANY'S COMMON STOCK, (XI) CHANGES IN ACCOUNTING PRACTICES, (XII) CHANGES IN
GENERAL ECONOMIC CONDITIONS, (XIII) FUTURE DIVESTITURES WHICH MAY RESULT IN
ADDITIONAL CHARGES, (XIV) CHANGES IN REVENUE MIX AND THE ABILITY TO ENTER INTO
AND RENEW MANAGED CARE PROVIDER ARRANGEMENTS ON ACCEPTABLE TERMS, (XV) THE
AVAILABILITY, TERMS AND COST OF CAPITAL, (XVI) CHANGES IN BUSINESS STRATEGY OR
DEVELOPMENT PLANS, (XVII) SLOWNESS OF REIMBURSEMENT, (XVIII) THE ABILITY TO
IMPLEMENT THE COMPANY'S
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SHARED SERVICES AND OTHER INITIATIVES AND REALIZE DECREASES IN ADMINISTRATIVE,
SUPPLY AND INFRASTRUCTURE COSTS, (XIX) THE OUTCOME OF PENDING AND ANY FUTURE TAX
AUDITS, APPEALS AND LITIGATION ASSOCIATED WITH THE COMPANY'S TAX POSITIONS, (XX)
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, (XXI) INCREASED REVIEWS OF
THE COMPANY'S COST REPORTS, (XXII) THE ABILITY TO MAINTAIN AND INCREASE PATIENT
VOLUMES AND CONTROL THE COSTS OF PROVIDING SERVICES, AND (XXIII) 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.
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.
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HCA INC.
CONSOLIDATED OPERATING RESULTS SUMMARY
(Dollars in millions, except per share amounts)
FOR THE SIX MONTHS
SECOND QUARTER ENDED JUNE 30,
------------------------ -----------------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues .................................................................. $ 4,903 $ 4,476 $ 9,776 $ 8,977
EBITDA (a) ................................................................ $ 1,018 $ 876 $ 2,061 $ 1,848
Net income:
Reported net income, excluding settlement with Federal government,
gains on sales of facilities, impairment of long-lived assets and
investigation related costs ....................................... $ 374 $ 271 $ 770 $ 602
Goodwill amortization (net of tax) ................................... -- 18 -- 35
----------------------- -----------------------
Adjusted net income, excluding settlement with Federal government,
gains on sales of facilities, impairment of long-lived assets and
investigation related costs ....................................... 374 289 770 637
Settlement with Federal government (net of tax) ...................... -- (1) -- (1)
Gains on sales of facilities (net of tax) ............................ -- -- -- 4
Impairment of long-lived assets (net of tax) ......................... (18) -- (18) --
Investigation related costs (net of tax) ............................. (6) (7) (17) (16)
----------------------- -----------------------
Adjusted net income .................................................. $ 350 $ 281 $ 735 $ 624
======================= =======================
Diluted earnings per share:
Reported net income, excluding settlement with Federal government,
gains on sales of facilities, impairment of long-lived assets and
investigation related costs ....................................... $ 0.71 $ 0.50 $ 1.47 $ 1.09
Goodwill amortization ................................................ -- 0.04 -- 0.06
----------------------- -----------------------
Adjusted net income, excluding settlement with Federal government,
gains on sales of facilities, impairment of long-lived assets and
investigation related costs ....................................... 0.71 0.54 1.47 1.15
Gains on sales of facilities ......................................... -- -- -- 0.01
Impairment of long-lived assets ...................................... (0.03) -- (0.03) --
Investigation related costs .......................................... (0.02) (0.02) (0.04) (0.03)
----------------------- -----------------------
Adjusted net income .................................................. $ 0.66 $ 0.52 $ 1.40 $ 1.13
======================= =======================
Shares used in computing diluted earnings per share (000) ................. 528,068 545,815 524,841 550,290
- ---------------------------------
(a) EBITDA is defined as income before depreciation and amortization, interest
expense, settlement with Federal government, gains on sales of facilities,
impairment of long-lived assets, investigation related costs, minority
interests and income taxes.
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HCA INC.
CONSOLIDATED INCOME STATEMENTS
SECOND QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2002 2001
-------------------- --------------------
Amount Ratio Amount Ratio
------ ----- ------ -----
Revenues ................................................. $ 4,903 100.0% $ 4,476 100.0%
Salaries and benefits .................................... 1,960 40.0 1,822 40.7
Supplies ................................................. 778 15.9 713 15.9
Other operating expenses ................................. 832 16.8 809 18.1
Provision for doubtful accounts .......................... 371 7.6 301 6.7
Insurance subsidiary gains on sales of investments ....... (1) -- (9) (0.2)
Equity in earnings of affiliates ......................... (55) (1.1) (36) (0.8)
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3,885 79.2 3,600 80.4
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EBITDA ............................................... 1,018 20.8 876 19.6
Depreciation and amortization ............................ 255 5.2 262 5.9
Interest expense ......................................... 108 2.2 139 3.1
Settlement with Federal government ....................... -- -- 2 --
Impairment of long-lived assets .......................... 19 0.4 -- --
Investigation related costs .............................. 13 0.3 13 0.3
--------------------- ---------------------
Income before minority interests and income taxes ........ 623 12.7 460 10.3
Minority interests in earnings of consolidated entities .. 42 0.8 29 0.7
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Income before income taxes ............................... 581 11.9 431 9.6
Provision for income taxes ............................... 231 4.8 168 3.7
--------------------- ---------------------
Reported net income ...................................... 350 7.1 263 5.9
Goodwill amortization, net of taxes ...................... -- -- 18 0.4
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Adjusted net income ................................. $ 350 7.1 $ 281 6.3
===================== =====================
Diluted earnings per share:
Reported net income, excluding settlement with Federal
government, impairment of long-lived assets and
investigation related costs .................... $ 0.71 $ 0.50
Goodwill amortization ................................ -- 0.04
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Adjusted net income, excluding settlement with Federal
government, impairment of long-lived assets and
investigation related costs .................... 0.71 0.54
Impairment of long-lived assets ...................... (0.03) --
Investigation related costs .......................... (0.02) (0.02)
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Adjusted net income .................................. $ 0.66 $ 0.52
======= =======
Shares used in computing diluted earnings per share (000) 528,068 545,815
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HCA INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2002 2001
--------------------- --------------------
Amount Ratio Amount Ratio
------ ----- ------ -----
Revenues ..................................................... $ 9,776 100.0% $ 8,977 100.0%
Salaries and benefits ........................................ 3,890 39.8 3,604 40.1
Supplies ..................................................... 1,556 15.9 1,424 15.9
Other operating expenses ..................................... 1,632 16.7 1,596 17.7
Provision for doubtful accounts .............................. 739 7.6 626 7.0
Insurance subsidiary (gains) losses on sales of investments .. 4 -- (39) (0.4)
Equity in earnings of affiliates ............................. (106) (1.1) (82) (0.9)
--------------------- ---------------------
7,715 78.9 7,129 79.4
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EBITDA ................................................... 2,061 21.1 1,848 20.6
Depreciation and amortization ................................ 499 5.2 519 5.8
Interest expense ............................................. 229 2.3 281 3.1
Settlement with Federal government ........................... -- -- 2 --
Gains on sales of facilities ................................. -- -- (13) (0.1)
Impairment of long-lived assets .............................. 19 0.2 -- --
Investigation related costs .................................. 30 0.3 27 0.3
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Income before minority interests and income taxes ............ 1,284 13.1 1,032 11.5
Minority interests in earnings of consolidated entities ...... 77 0.7 59 0.7
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Income before income taxes ................................... 1,207 12.4 973 10.8
Provision for income taxes ................................... 472 4.9 384 4.2
--------------------- ---------------------
Reported net income .......................................... 735 7.5 589 6.6
Goodwill amortization, net of taxes .......................... -- -- 35 0.4
--------------------- ---------------------
Adjusted net income ..................................... $ 735 7.5 $ 624 7.0
===================== =====================
Diluted earnings per share:
Reported net income, excluding settlement with Federal
government, gains on sales of facilities, impairment
of long-lived assets and investigation related costs $ 1.47 $ 1.09
Goodwill amortization .................................... -- 0.06
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Adjusted net income, excluding settlement with Federal
government, gains on sales of facilities, impairment
of long-lived assets and investigation related costs 1.47 1.15
Gains on sales of facilities ............................. -- 0.01
Impairment of long-lived assets .......................... (0.03) --
Investigation related costs .............................. (0.04) (0.03)
------- -------
Adjusted net income ...................................... $ 1.40 $ 1.13
======= =======
Shares used in computing diluted earnings per share (000) .... 524,841 550,290
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HCA INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
JUNE 30, MARCH 31, DECEMBER 31,
2002 2002 2001
--------- --------- ------------
ASSETS
Current assets:
Cash and cash equivalents ........................................ $ 51 $ 62 $ 85
Accounts receivable, net ......................................... 2,639 2,658 2,420
Other ............................................................ 1,668 1,550 1,636
--------- --------- ---------
Total current assets ........................................ 4,358 4,270 4,141
Property and equipment, at cost ....................................... 16,056 15,527 15,222
Accumulated depreciation .............................................. (6,728) (6,488) (6,303)
--------- --------- ---------
9,328 9,039 8,919
Investments of insurance subsidiary ................................... 1,410 1,463 1,453
Investments in and advances to affiliates ............................. 669 673 680
Intangible assets, net ................................................ 2,069 2,056 2,051
Other ................................................................. 428 454 486
--------- --------- ---------
$ 18,262 $ 17,955 $ 17,730
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................. $ 721 $ 771 $ 755
Other current liabilities ........................................ 1,354 1,416 1,372
Government settlement accrual .................................... 250 250 250
Long-term debt due within one year ............................... 789 840 807
--------- --------- ---------
Total current liabilities ................................... 3,114 3,277 3,184
Long-term debt ........................................................ 6,445 6,172 6,553
Professional liability risks, deferred taxes and
other liabilities ................................................ 2,370 2,304 2,268
Minority interests in equity of consolidated entities ................. 578 576 563
Company-obligated mandatorily redeemable securities of
affiliate holding solely Company obligations ..................... -- 400 400
Stockholders' equity .................................................. 5,755 5,226 4,762
--------- --------- ---------
$ 18,262 $ 17,955 $ 17,730
========= ========= =========
Current ratio ......................................................... 1.40 1.30 1.30
Ratio of debt to debt plus common, temporary and minority equity ...... 53.3% 53.1% 56.2%
Shares outstanding (thousands) ........................................ 518,186 511,757 509,297
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HCA INC.
OPERATING STATISTICS
FOR THE SIX MONTHS
SECOND QUARTER ENDED JUNE 30,
-------------------------- --------------------------
2002 2001 2002 2001
---- ---- ---- ----
CONSOLIDATED HOSPITALS:
Number of Hospitals 175 185 175 185
Weighted Average Licensed Beds 39,844 40,852 39,961 40,901
Licensed Beds at End of Period 39,930 41,032 39,930 41,032
Admissions 391,400 388,500 798,700 800,500
Same Facility % Change 2.3% 1.6%
Equivalent Admissions 584,200 576,500 1,178,900 1,174,300
Same Facility % Change 3.0% 2.4%
Revenue per Equivalent Admission $ 8,394 $ 7,765 $ 8,293 $ 7,644
Same Facility % Change 8.4% 8.8%
Inpatient Revenue per Admission $ 7,687 $ 6,985 $ 7,578 $ 6,864
Same Facility % Change 9.5% 9.8%
Patient Days 1,927,800 1,922,300 3,988,500 3,978,000
Equivalent Patient Days 2,878,500 2,852,800 5,887,100 5,835,700
Emergency Department Visits 1,198,000 1,165,100 2,404,900 2,351,300
Same Facility % Change 5.3% 4.9%
Outpatient Revenues as a
Percentage of Patient Revenues 37.5% 37.5% 36.9% 36.9%
Average Length of Stay 4.9 4.9 5.0 5.0
Occupancy 53.2% 51.7% 55.1% 53.7%
Equivalent Occupancy 79.4% 76.7% 81.3% 78.8%
NUMBER OF CONSOLIDATED AND
NON-CONSOLIDATED (50/50 EQUITY
JOINT VENTURES) HOSPITALS:
Consolidated 175 185 175 185
Non-Consolidated (50/50 Equity
Joint Ventures) 6 9 6 9
---------- ---------- ---------- ----------
Total Number of Hospitals 181 194 181 194
========== ========== ========== ==========
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