EXHIBIT 20
HCA
NEWS
- -------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
INVESTOR CONTACT MEDIA CONTACT
Mark Kimbrough: 615-344-2688 Jeff Prescott: 615-344-5708
HCA REPORTS 3RD QUARTER 2002 RESULTS
EPS INCREASES 40% FOR THE QUARTER TO $0.60 COMPARED TO $0.43 IN 2001
EXCLUDING GOODWILL AMORTIZATION, GAINS ON SALES OF FACILITIES,
IMPAIRMENTS AND INVESTIGATION RELATED COSTS
Nashville, Tenn., October 21, 2002 - HCA (NYSE: HCA) today announced
operating results for the third quarter ended September 30, 2002. "We are
pleased to announce excellent results for the Company's third quarter," stated
Jack O. Bovender, Jr., Chairman and CEO. "We experienced strong volume trends
in virtually all of our markets as evidenced by the 3.4 percent same-facility
volume growth in the quarter."
During the third quarter, revenues increased 11.1 percent to $4.9
billion compared to $4.4 billion during the third quarter of 2001. Net income
excluding goodwill amortization, gains on sales of facilities, impairments and
investigation related costs totaled $319 million or $0.60 per diluted share
compared to $226 million or $0.43 per diluted share for the same period of
2001. Net income adjusted for goodwill amortization totaled $200 million or
$0.38 per diluted share versus $273 million or $0.51 per diluted share in the
third quarter of 2001.
Same facility revenues increased 12.2 percent during the third
quarter. Same facility equivalent admissions grew 3.6 percent, reflecting
strong outpatient volume during the quarter, in particular, same facility
emergency room visits increased 5.4 percent. Same facility admissions for the
quarter increased 3.4 percent.
During the third quarter of 2002, the Company recorded an impairment
charge on investment securities of $107 million, net of tax, or $0.20 per
diluted share. The investment securities on which the impairment charge was
recorded were primarily equity securities held by HCA's insurance subsidiary
which has total investments of approximately $1.6 billion. These investment
securities are routinely marked to market on the balance sheet, with the
offsetting entry recorded to other comprehensive income
1
(loss) in the equity section of the balance sheet. Due to the continued overall
market decline and management's review and evaluation of the individual
investment securities, management deemed the market decline for certain
investment securities (predominantly in the technology and communications
industries) to be "other-than-temporary" and the related adjustment to fair
value for these securities was recognized in the income statement for the
quarter ended September 30, 2002. The effect of recognizing this impairment
charge has no current impact on cash flows.
For the nine months ended September 30, 2002, revenues increased to
$14.7 billion, up 9.6 percent, compared to $13.4 billion for 2001. Net income
excluding goodwill amortization, settlement charges, gains on sales of
facilities, impairments and investigation related costs totaled $1.089 billion
or $2.07 per diluted share compared to $863 million or $1.59 per diluted share
in 2001. Net income adjusted for goodwill amortization totaled $935 million or
$1.78 per diluted share versus $897 million or $1.66 per diluted share for the
nine months ended September 30, 2001.
At September 30, 2002, the Company's balance sheet reflected total
debt of $7.4 billion; stockholders' equity (including common, temporary and
minority equity) of $6.3 billion; and total assets of $18.5 billion. The
Company's ratio of debt-to-debt plus stockholders' equity was 53.7 percent at
September 30, 2002 compared to 56.2 percent at December 31, 2001. The Company's
ratio of debt-to-EBITDA improved to 1.95 times at September 30, 2002, down from
2.15 times at December 31, 2001.
Cash flows from operations during the third quarter were $740 million.
Capital expenditures for the quarter totaled $411 million, up 10.8% from the
third quarter of 2001. Return on stockholders' equity for the twelve months
ended September 30, 2002 was 24.1 percent, up from last year's 20.3 percent.
Return on invested capital was 12.7 percent for the twelve months ended
September 30, 2002 an increase from 11.8 percent in 2001.
During the quarter, the Company repurchased 6.2 million shares of its
common stock at a total cost of $282 million (average cost of $45.53). The
Company had 513 million shares outstanding as of September 30, 2002 compared to
515 million shares at September 30, 2001.
On October 16, 2002, HCA announced that the Board of Directors of
Health Midwest of Kansas City, Missouri voted to conduct exclusive negotiations
and enter into an agreement in principle for HCA to acquire the 14-hospital
Health Midwest system for $1.125 billion. HCA will also commit to make $450
million in capital investments in the Kansas City market during the next 5
years.
"Health Midwest has established a tradition of compassionate, quality
care in the greater Kansas City area, and HCA will support and continue that
tradition," said Jack O. Bovender, Jr., Chairman and CEO of HCA. "We look
forward to becoming an integral part of Kansas City, and to making significant,
lasting contributions there - not only through our capital investments, but in
the community at large."
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The Health Midwest acquisition is subject to due diligence, completion
of a definitive agreement, and receipt of customary regulatory approval.
As of September 30, 2002, the Company operated 181 hospitals and 78
ambulatory surgery centers (including 6 hospitals and 4 ASCs owned through
50/50 equity joint ventures), compared to 189 hospitals and 78 ambulatory
surgery centers (including 7 hospitals and 3 ASCs owned through equity joint
ventures) as of September 30, 2001. HCA's 181 hospitals and 78 ambulatory
surgery centers are located in 22 states; London, England and Geneva,
Switzerland; these facilities provided approximately $1.6 billion in
uncompensated health care services (charity and bad debts) during the first
nine 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.FIRSTCALLEVENTS.COM/SERVICE/AJWZ365906352GF12.HTML or via the
Investor Relations site at WWW.HCAHEALTHCARE.COM.
***********
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS BASED ON CURRENT
MANAGEMENT EXPECTATIONS. THOSE FORWARD LOOKING STATEMENTS INCLUDE 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 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 CIVIL CASES AND TO OBTAIN COURT
APPROVAL THEREOF, (II) THE HIGHLY COMPETITIVE NATURE OF THE HEALTH CARE
BUSINESS, (III) THE EFFORTS OF INSURERS, HEALTH CARE PROVIDERS AND OTHERS TO
CONTAIN HEALTH CARE COSTS, (IV) POSSIBLE CHANGES IN THE MEDICARE AND MEDICAID
PROGRAMS THAT MAY IMPACT REIMBURSEMENTS TO HEALTH CARE PROVIDERS AND INSURERS,
(V) CHANGES IN FEDERAL, STATE OR LOCAL REGULATION AFFECTING THE HEALTH CARE
INDUSTRY, (VI) THE POSSIBLE ENACTMENT OF FEDERAL OR STATE HEALTH CARE REFORM,
(VII) THE ABILITY TO ATTRACT AND RETAIN QUALIFIED MANAGEMENT AND PERSONNEL,
INCLUDING AFFILIATED PHYSICIANS, NURSES AND MEDICAL SUPPORT PERSONNEL, (VIII)
LIABILITIES AND OTHER CLAIMS ASSERTED AGAINST THE COMPANY, (IX) FLUCTUATIONS IN
THE MARKET VALUE OF THE COMPANY'S COMMON STOCK, (X) ABILITY TO COMPLETE THE
SHARE REPURCHASE PROGRAM AND TO SETTLE RELATED FORWARD PURCHASE CONTRACTS, (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 AND TERMS OF
CAPITAL TO FUND THE EXPANSION OF THE COMPANY'S BUSINESS, (XVI) CHANGES IN
BUSINESS STRATEGY OR DEVELOPMENT PLANS, (XVII) SLOWNESS OF REIMBURSEMENT,
(XVIII) THE ABILITY TO IMPLEMENT THE COMPANY'S SHARED SERVICES AND OTHER
INITIATIVES AND REALIZE A DECREASE IN ADMINISTRATIVE, SUPPLY AND INFRASTRUCTURE
COSTS, (XIX) THE OUTCOME OF PENDING AND ANY FUTURE TAX AUDITS 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, (XXIII) THE ABILITY TO NEGOTIATE A
DEFINITIVE AGREEMENT FOR THE ACQUISITION OF HEALTH MIDWEST AND SUCCESSFULLY
CONSUMMATE THE ACQUISITION AND INTEGRATE ITS OPERATIONS, AND (XXIV) 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 NINE MONTHS
THIRD QUARTER ENDED SEPTEMBER 30,
------------------------ ------------------------
2002 2001 2002 2001
--------- --------- --------- ---------
Revenues ................................................................ $ 4,929 $ 4,438 $ 14,705 $ 13,415
EBITDA (a) .............................................................. $ 917 $ 770 $ 2,978 $ 2,618
Net income:
Reported net income, excluding settlement with Federal government,
gains on sales of facilities, impairment of investment securities,
impairment of long-lived assets and investigation related costs ..... $ 319 $ 209 $ 1,089 $ 811
Goodwill amortization (net of tax) .................................... -- 17 -- 52
--------- --------- --------- ---------
Adjusted net income, excluding settlement with Federal government,
gains on sales of facilities, impairment of investment securities,
impairment of long-lived assets and investigation related costs ..... 319 226 1,089 863
Settlement with Federal government (net of tax) ....................... -- -- -- (1)
Gains on sales of facilities (net of tax) ............................. -- 68 -- 72
Impairment of investment securities (net of tax) ...................... (107) -- (107) --
Impairment of long-lived assets (net of tax) .......................... -- (10) (18) (10)
Investigation related costs (net of tax) .............................. (12) (11) (29) (27)
--------- --------- --------- ---------
Adjusted net income ................................................... $ 200 $ 273 $ 935 $ 897
========= ========= ========= =========
Diluted earnings per share:
Reported net income, excluding settlement with Federal government,
gains on sales of facilities, impairment of investment securities,
impairment of long-lived assets and investigation related costs ..... $ 0.60 $ 0.40 $ 2.07 $ 1.49
Goodwill amortization ................................................. -- 0.03 -- 0.10
--------- --------- --------- ---------
Adjusted net income, excluding settlement with Federal government,
gains on sales of facilities, impairment of investment securities,
impairment of long-lived assets and investigation related costs ..... 0.60 0.43 2.07 1.59
Gains on sales of facilities .......................................... -- 0.13 -- 0.13
Impairment of investment securities .................................. (0.20) -- (0.20) --
Impairment of long-lived assets ...................................... -- (0.02) (0.03) (0.02)
Investigation related costs .......................................... (0.02) (0.03) (0.06) (0.04)
--------- --------- --------- ---------
Adjusted net income .................................................. $ 0.38 $ 0.51 $ 1.78 $ 1.66
========= ========= ========= =========
Shares used in computing diluted earnings per share (000) ............... 527,260 529,491 525,659 543,274
- -------------------
(a) EBITDA is defined as income before depreciation and amortization, interest
expense, settlement with Federal government, gains on sales of facilities,
impairment of investment securities, impairment of long-lived assets,
investigation related costs, minority interests and income taxes.
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HCA INC.
CONSOLIDATED INCOME STATEMENTS
THIRD QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2002 2001
----------------------- -----------------------
AMOUNT RATIO Amount Ratio
--------- ----- ------- -------
Revenues ................................................................ $ 4,929 100.0% $ 4,438 100.0%
Salaries and benefits ................................................... 1,999 40.6 1,808 40.7
Supplies ................................................................ 795 16.1 712 16.0
Other operating expenses ................................................ 859 17.4 839 18.9
Provision for doubtful accounts ......................................... 411 8.3 364 8.2
Insurance subsidiary gains on sales of investments ...................... (2) -- (15) (0.3)
Equity in earnings of affiliates ........................................ (50) (1.0) (40) (0.9)
--------- ----- ------- -----
4,012 81.4 3,668 82.6
--------- ----- ------- -----
EBITDA .............................................................. 917 18.6 770 17.4
Depreciation and amortization ........................................... 253 5.1 255 5.7
Interest expense ........................................................ 111 2.3 137 3.1
Gains on sales of facilities ............................................ -- -- (112) (2.5)
Impairment of investment securities ..................................... 168 3.4 -- --
Impairment of long-lived assets ......................................... -- -- 17 0.4
Investigation related costs ............................................. 16 0.3 17 0.4
--------- ----- ------- -----
Income before minority interests and income taxes ....................... 369 7.5 456 10.3
Minority interests in earnings of consolidated entities ................. 34 0.7 33 0.8
--------- ----- ------- -----
Income before income taxes .............................................. 335 6.8 423 9.5
Provision for income taxes .............................................. 135 2.7 167 3.7
--------- ----- ------- -----
Reported net income ..................................................... 200 4.1 256 5.8
Goodwill amortization, net of taxes ..................................... -- -- 17 0.4
--------- ----- ------- -----
Adjusted net income ................................................ $ 200 4.1 $ 273 6.2
========= ===== ======= =====
Diluted earnings per share:
Reported net income, excluding gains on sales of
facilities, impairment of investment securities,
impairment of long-lived assets and investigation
related costs ................................................... $ 0.60 $ 0.40
Goodwill amortization ............................................... -- 0.03
--------- -------
Adjusted net income, excluding gains on sales of
facilities, impairment of investment securities,
impairment of long-lived assets and investigation
related costs ................................................... 0.60 0.43
Gains on sales of facilities ........................................ -- 0.13
Impairment of investment securities ................................. (0.20) --
Impairment of long-lived assets ..................................... -- (0.02)
Investigation related costs ......................................... (0.02) (0.03)
--------- -------
Adjusted net income ................................................. $ 0.38 $ 0.51
========= =======
Shares used in computing diluted earnings per share (000) ............... 527,260 529,491
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HCA INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2002 2001
--------------------- -----------------------
AMOUNT RATIO Amount Ratio
--------- ----- -------- -----
Revenues ........................................................... $ 14,705 100.0% $ 13,415 100.0%
Salaries and benefits .............................................. 5,889 40.0 5,412 40.3
Supplies ........................................................... 2,351 16.0 2,136 15.9
Other operating expenses ........................................... 2,491 17.0 2,435 18.2
Provision for doubtful accounts .................................... 1,150 7.8 990 7.4
Insurance subsidiary (gains) losses on sales of investments ........ 2 -- (54) (0.4)
Equity in earnings of affiliates ................................... (156) (1.1) (122) (0.9)
--------- ----- -------- -----
11,727 79.7 10,797 80.5
--------- ----- -------- -----
EBITDA ......................................................... 2,978 20.3 2,618 19.5
Depreciation and amortization ...................................... 752 5.3 774 5.8
Interest expense ................................................... 340 2.3 418 3.1
Settlement with Federal government ................................. -- -- 2 --
Gains on sales of facilities ....................................... -- -- (125) (0.9)
Impairment of investment securities ................................ 168 1.1 -- --
Impairment of long-lived assets .................................... 19 0.1 17 0.1
Investigation related costs ........................................ 46 0.3 44 0.3
--------- ----- -------- -----
Income before minority interests and income taxes .................. 1,653 11.2 1,488 11.1
Minority interests in earnings of consolidated entities ............ 111 0.7 92 0.7
--------- ----- -------- -----
Income before income taxes ......................................... 1,542 10.5 1,396 10.4
Provision for income taxes ......................................... 607 4.1 551 4.1
--------- ----- -------- -----
Reported net income ................................................ 935 6.4 845 6.3
Goodwill amortization, net of taxes ................................ -- -- 52 0.4
--------- ----- -------- -----
Adjusted net income ........................................... $ 935 6.4 $ 897 6.7
========= ===== ======== =====
Diluted earnings per share:
Reported net income, excluding settlement with Federal
government, gains on sales of facilities,
impairment of investment securities, impairment of long-lived
assets and investigation related costs ...................... $ 2.07 $ 1.49
Goodwill amortization .......................................... -- 0.10
-------- --------
Adjusted net income, excluding settlement with
Federal government, gains on sales of facilities,
impairment of investment securities, impairment of long-lived
assets and investigation related costs ...................... 2.07 1.59
Gains on sales of facilities ................................... -- 0.13
Impairment of investment securities ............................ (0.20) --
Impairment of long-lived assets ................................ (0.03) (0.02)
Investigation related costs .................................... (0.06) (0.04)
-------- --------
Adjusted net income ............................................ $ 1.78 $ 1.66
======== ========
Shares used in computing diluted earnings per share (000) .......... 525,659 543,274
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HCA INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
SEPTEMBER 30, JUNE 30, DECEMBER 31,
2002 2002 2001
------------- -------- ------------
ASSETS
Current assets:
Cash and cash equivalents .................................... $ 138 $ 51 $ 85
Accounts receivable, net ..................................... 2,685 2,639 2,420
Other ........................................................ 1,686 1,668 1,636
--------- --------- ---------
Total current assets ..................................... 4,509 4,358 4,141
Property and equipment, at cost ................................ 16,456 16,056 15,222
Accumulated depreciation ....................................... (6,930) (6,728) (6,303)
--------- --------- ---------
9,526 9,328 8,919
Investments of insurance subsidiary ............................ 1,384 1,410 1,453
Investments in and advances to affiliates ...................... 667 669 680
Intangible assets, net ......................................... 2,070 2,069 2,051
Other .......................................................... 371 428 486
--------- --------- ---------
$ 18,527 $ 18,262 $ 17,730
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................. $ 742 $ 721 $ 755
Other current liabilities .................................... 1,465 1,354 1,372
Government settlement accrual ................................ 250 250 250
Long-term debt due within one year ........................... 427 789 807
--------- --------- ---------
Total current liabilities ................................ 2,884 3,114 3,184
Long-term debt ................................................. 6,933 6,445 6,553
Professional liability risks, deferred taxes and
other liabilities ............................................ 2,375 2,370 2,268
Minority interests in equity of consolidated entities .......... 598 578 563
Company-obligated mandatorily redeemable securities of
affiliate holding solely Company obligations ................. -- -- 400
Stockholders' equity ........................................... 5,737 5,755 4,762
--------- --------- ---------
$ 18,527 $ 18,262 $ 17,730
========= ========= =========
Current ratio .................................................. 1.56 1.40 1.30
Ratio of debt to debt plus common, temporary and minority equity 53.7% 53.3% 56.2%
Shares outstanding (thousands) ................................. 512,526 518,186 509,297
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HCA INC.
OPERATING STATISTICS
FOR THE NINE MONTHS
THIRD QUARTER ENDED SEPTEMBER 30,
------------------------------------ ----------------------------------
2002 2001 2002 2001
----------- ----------- ---------- -----------
CONSOLIDATED HOSPITALS:
Number of Hospitals 175 182 175 182
Weighted Average Licensed Beds 39,998 40,458 39,973 40,752
Licensed Beds at End of Period 40,056 40,450 40,056 40,450
REPORTED:
Admissions 392,400 380,800 1,191,100 1,181,300
% Change 3.0% 0.8%
Equivalent Admissions 585,200 567,000 1,764,100 1,741,300
% Change 3.2% 1.3%
Revenue per Equivalent Admission $ 8,423 $ 7,827 $ 8,336 $ 7,704
% Change 7.6% 8.2%
Inpatient Revenue per Admission $ 7,735 $ 7,109 $ 7,630 $ 6,943
% Change 8.8% 9.9%
Patient Days 1,921,300 1,873,400 5,909,800 5,851,400
Equivalent Patient Days 2,865,300 2,789,300 8,752,400 8,625,000
Emergency Room Visits 1,211,900 1,160,000 3,616,800 3,511,300
% Change 4.5% 3.0%
Outpatient Revenues as a
Percentage of Patient Revenues 37.3% 37.3% 37.0% 37.0%
Average Length of Stay 4.9 4.9 5.0 5.0
Occupancy 52.2% 50.3% 54.2% 52.6%
Equivalent Occupancy 77.7% 74.9% 80.3% 77.5%
SAME FACILITY:
Admissions 387,700 374,900 1,177,400 1,152,300
% Change 3.4% 2.2%
Equivalent Admissions 576,900 556,700 1,741,400 1,695,100
% Change 3.6% 2.7%
Revenue per Equivalent Admission $ 8,426 $ 7,780 $ 8,331 $ 7,663
% Change 8.3% 8.7%
Inpatient Revenue per Admission $ 7,744 $ 7,133 $ 7,644 $ 6,986
% Change 8.6% 9.4%
Emergency Room Visits 1,189,000 1,128,000 3,552,200 3,378,300
% Change 5.4% 5.1%
NUMBER OF CONSOLIDATED AND
NON-CONSOLIDATED (50/50 EQUITY
JOINT VENTURES) HOSPITALS:
Consolidated 175 182 175 182
Non-Consolidated (50/50 Equity
Joint Ventures) 6 7 6 7
----------- ----------- ---------- ------------
Total Number of Hospitals 181 189 181 189
=========== =========== ========== ============
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