EXHIBIT 20
[HCA LOGO]
NEWS
FOR IMMEDIATE RELEASE
INVESTOR CONTACT MEDIA CONTACT
Mark Kimbrough: 615-344-2688 Jeff Prescott: 615-344-5708
HCA REPORTS FOURTH QUARTER AND FULL YEAR 2002 RESULTS
EPS OF $2.68 FOR THE YEAR VS. $2.07 IN 2001
FOURTH QUARTER EPS OF $0.63 VS. $0.47 LAST YEAR
EXCLUDING GAINS, IMPAIRMENTS, AND INVESTIGATION,
SETTLEMENT RELATED AND DEBT RETIREMENT CHARGES
Nashville, Tenn., February 4, 2003 - HCA (NYSE: HCA) today announced operating
results for the fourth quarter and year ended December 31, 2002.
"I'm extremely pleased with the results of the fourth quarter and the year,"
stated Jack O. Bovender, Jr., Chairman and CEO. "All of HCA's 178,000 employees
have contributed to the success achieved. Recent reviews indicate satisfaction
and retention levels are higher than ever among our employees. Equally important
is the expression of satisfaction among our physicians, which reached a new
five-year high. Operationally, we continue to be focused on the delivery of
quality patient care, as demonstrated by our involvement with various
organizations addressing healthcare quality and patient safety concerns. As a
leader in our field, our goal is to contribute to the common approach to
measurement and reporting of healthcare quality."
Fourth Quarter Results:
- Revenues increased 10.7 percent in the quarter to $5.0 billion
from $4.5 billion last year.
- EBITDA margin improved to 18.4 percent from 17.7 percent.
- Same-facility admissions increased 3.0 percent; same-facility
equivalent admissions increased 2.0 percent; same-facility net
revenue increased 11.3 percent.
- EPS increased 34 percent to $0.63 per share vs. $0.47 in last
year's fourth quarter, excluding gains, impairments, and
investigation, settlement related and debt retirement charges.
- Net days in accounts receivable improved to 63 days compared
to 64 days at December 31, 2001.
- Cash flow from operations in the fourth quarter totaled $786
million, up 32.8 percent from $592 million in the previous
year.
1
During the fourth quarter the Company reached an understanding with
attorneys of the Civil Division of the Department of Justice (DOJ) to recommend
an agreement to settle, subject to certain conditions, the litigation brought by
the DOJ against the Company. The understanding provides that in exchange for
releases by the DOJ, the Company will pay the DOJ $631 million. The Company has
also reached an agreement in principle with representatives of states that may
have similar claims against the Company to pay $17.5 million to state Medicaid
agencies to resolve any such claims. In addition, the Company has accrued $35
million as an estimation of its legal obligation to pay reasonable legal fees of
the whistleblowers.
As a result of the settlement, HCA recorded an after-tax charge of $418
million in the fourth quarter. The net after-tax cash effect on HCA is estimated
to be approximately $468 million after considering the resolution of certain
Medicare receivables and allowances and the related deferred taxes.
The Company incurred a net loss during the quarter, including gains,
impairments, and investigation, settlement related and debt retirement charges,
of $102 million or $0.20 per diluted share, compared to net income of $59
million or $0.11 per diluted share in the fourth quarter last year.
Due to the reported net loss in the fourth quarter which resulted from
the settlement charge, accounting principles require that potentially diluted
increments (shares associated with options) be excluded from the earnings per
share calculation. The effect of excluding these potentially dilutive shares was
an increase in operating earnings, (excluding the gains, investigation and
settlement related charges) of $0.02 per share in the fourth quarter. This
situation did not impact the full year EPS calculation.
HCA announced today that the Company has reached an agreement in
principle to settle the McCall derivative lawsuit subject to court approval of
the settlement terms. Under the proposed settlement agreement, the Company is
expected to receive from insurance carriers $14 million and will implement an
enhanced corporate governance plan. The Company expects the settlement to be
considered by the court before the end of the first quarter of 2003. Mr.
Bovender commented "We are pleased with this settlement which will conclude
another matter related to the recently settled DOJ litigation. We believe the
governance plan is consistent with our current governance structure, our desire
to implement best governance practices and our commitment to remain an industry
leader in integrity and compliance."
For the year ended December 31, 2002, revenues increased to $19.7
billion, up 9.9 percent, compared to $18.0 billion for 2001. Net income,
excluding gains, impairments, and investigation, settlement related and debt
retirement charges, totaled $1.4 billion or $2.68 per diluted share for the
year, compared to $1.1 billion or $2.07 per diluted share for 2001. Net income,
including gains, impairments, and investigation, settlement related and debt
retirement charges, totaled $833 million or $1.59 per diluted share versus $956
million or $1.78 per diluted share last year.
For the year, same-facility admissions increased 2.5 percent while
same-facility equivalent admissions increased 2.6 percent. Same-facility net
revenues increased 11.7 percent.
2
During 2002, the Company recognized gains on sales of facilities of $4
million net of tax, or $0.01 per diluted share; impairments of investment
securities of $107 million net of tax, or $0.20 per diluted share; impairments
of long-lived assets of $18 million net of tax, or $0.03 per diluted share;
investigation related costs of $37 million net of tax, or $0.07 per diluted
share; and a charge related to settlement with the Federal government of $418
million net of tax, or $0.80 per diluted share.
At December 31, 2002, the Company's balance sheet reflected total debt
of $6.9 billion; stockholders' equity (including common, temporary and minority
equity) of $6.3 billion; and total assets of $18.7 billion. The Company's ratio
of debt-to-debt plus stockholders' equity was 52.4 percent at December 31, 2002
compared to 56.2 percent at year-end 2001. Ratio of debt-to-EBITDA improved to
1.78 compared with 2.15 at December 31, 2001.
For 2002, cash flow from operations was $2.8 billion, compared to $1.4
billion in 2001. Excluding government settlements, cash flow from operations in
2001 would have been $2.0 billion.
"We are extremely pleased with the quality of the reported results for
the Company," said Richard M. Bracken, President and COO. "The results are
significant given that they have been achieved while investing heavily, from
both a financial and management resources perspective, in our infrastructure.
Shared Services, Information Technology and Patient Safety Initiatives remain
important and productive parts of our operating strategy which we believe will
favorably position us in the future and distinguish us within the healthcare
industry."
During 2002, HCA made significant investments in its hospitals and
communities. HCA's capital investments totaled $1.7 billion in 2002, up from
$1.4 billion in the prior year. Additionally, the Company's acquisition
expenditures in 2002 totaled $124 million.
The Company repurchased 6.2 million shares of its common stock during
2002 at a total cost of $282 million (average cost of $45.53 per share); 5.8
million shares remain under the previous 12 million share repurchase
authorization. Total shares outstanding at December 31, 2002 were 514 million
compared to 509 million at December 31, 2001.
Return on stockholders' equity (ROE) increased to 25.2 percent for 2002
compared to 21.3 for 2001. Return on invested capital (ROIC) improved to 13.2
percent for 2002 vs. 11.8 percent for 2001.
As of December 31, 2002, the Company operated 179 hospitals and 78
ambulatory surgery centers (including 6 hospitals and 4 ASCs operated by 50/50
equity joint ventures), compared to 184 hospitals and 79 ambulatory surgery
centers (including 6 hospitals and 3 ASCs operated by 50/50 equity joint
ventures) at December 31, 2001.
The Company's annual shareholder meeting will be held in Nashville,
Tennessee on May 22, 2003 at 1:30 p.m. local time for shareholders of record as
of April 1, 2003.
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HCA will host a conference call for investors at 8:30 a.m. CST 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 throughout the next 30 days.
The Webcast can be accessed at
http://www.firstcallevents.com/service/ajwz371240530gf12.html or via the
Investor Relations page 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 ability to enter into definitive written
agreements with regard to, and to consummate, the understanding with attorneys
of the Civil Division of the DOJ, CMS and 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
,(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 successfully consummate
the acquisition of Health Midwest and integrate its operations, (xxiv) the
ability to obtain court approval of the McCall settlement, and (xxv) 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.
4
HCA INC.
CONSOLIDATED OPERATING RESULTS SUMMARY
(Dollars in millions, except per share amounts)
FOR THE TWELVE MONTHS
FOURTH QUARTER ENDED DECEMBER 31,
---------------------- -----------------------
2002 2001 2002 2001
-------- --------- --------- ---------
Revenues ............................................................... $ 5,024 $ 4,538 $ 19,729 $ 17,953
EBITDA (a) ............................................................. $ 923 $ 803 $ 3,901 $ 3,421
Net income (loss):
Reported net income, excluding loss on retirement of debt, settlement
with Federal government, gains on sales of facilities, impairment of
investment securities, impairment of long-lived assets and
investigation related costs ...................................... $ 320 $ 232 $ 1,409 $ 1,043
Goodwill amortization (net of tax) ................................. -- 18 -- 70
------ --------- --------- ---------
Adjusted net income, excluding loss on retirement of debt, settlement
with Federal government, gains on sales of facilities, impairment of
investment securities, impairment of long-lived assets and
investigation related costs ...................................... 320 250 1,409 1,113
Loss on retirement of debt (net of tax) ............................ -- (17) -- (17)
Settlement with Federal government (net of tax) .................... (418) (165) (418) (166)
Gains on sales of facilities (net of tax) .......................... 4 4 4 76
Impairment of investment securities (net of tax) ................... -- -- (107) --
Impairment of long-lived assets (net of tax) ....................... -- -- (18) (10)
Investigation related costs (net of tax) ........................... (8) (13) (37) (40)
------ --------- --------- ---------
Adjusted net income (loss) ......................................... $ (102) $ 59 $ 833 $ 956
======= ======= ======= =======
Diluted earnings (loss) per share:
Reported net income, excluding loss on retirement of debt,
settlement with Federal government, gains on sales of
facilities, impairment of investment securities, impairment
of long-lived assets and investigation related costs ............. $ 0.63 $ 0.44 $ 2.68 $ 1.94
Goodwill amortization .............................................. -- 0.03 -- 0.13
------ --------- --------- ---------
Adjusted net income, excluding loss on retirement of debt,
settlement with Federal government, gains on sales of
facilities, impairment of investment securities, impairment
of long-lived assets and investigation related costs ............. 0.63 0.47 2.68 2.07
Loss on retirement of debt ......................................... -- (0.03) -- (0.03)
Settlement with Federal government ................................. (0.82) (0.31) (0.80) (0.30)
Gains on sales of facilities ....................................... 0.01 0.01 0.01 0.14
Impairment of investment securities ................................ -- -- (0.20) --
Impairment of long-lived assets .................................... -- -- (0.03) (0.02)
Investigation related costs ........................................ (0.02) (0.03) (0.07) (0.08)
------ --------- --------- ---------
Adjusted net income (loss) ......................................... $ (0.20) $ 0.11 $ 1.59 $ 1.78
======= ======= ======= =======
Shares used in computing diluted earnings per share (000) .............. 511,655 523,042 525,219 538,177
- ----------------
(a) EBITDA is defined as income before depreciation and amortization, interest
expense, loss on retirement of debt, 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.
HCA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOURTH QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2002 2001
--------------------- ---------------------
AMOUNT RATIO Amount Ratio
------- ----- --------- -----
Revenues ............................................................... $ 5,024 100.0 % $ 4,538 100.0%
Salaries and benefits .................................................. 2,063 41.1 1,867 41.1
Supplies ............................................................... 807 16.1 724 16.0
Other operating expenses ............................................... 850 16.8 803 17.7
Provision for doubtful accounts ........................................ 431 8.6 386 8.5
Insurance subsidiary gains on sales of investments ..................... -- -- (9) (0.2)
Equity in earnings of affiliates ....................................... (50) (1.0) (36) (0.8)
-------- ----- ------- -----
4,101 81.6 3,735 82.3
-------- ----- ------- -----
EBITDA ............................................................. 923 18.4 803 17.7
Depreciation and amortization .......................................... 258 5.2 274 6.0
Interest expense ....................................................... 106 2.1 118 2.6
Loss on retirement of debt ............................................. -- -- 28 0.6
Settlement with Federal government ..................................... 603 12.0 260 5.7
Gains on sales of facilities ........................................... (6) (0.1) (6) (0.1)
Investigation related costs ............................................ 12 0.2 21 0.5
-------- ----- ------- -----
Income (loss) before minority interests and income taxes ............... (50) (1.0) 108 2.4
Minority interests in earnings of consolidated entities ................ 37 0.7 27 0.6
-------- ----- ------- -----
Income (loss) before income taxes ...................................... (87) (1.7) 81 1.8
Provision for income taxes ............................................. 15 0.3 40 0.9
-------- ----- ------- -----
Reported net income (loss) ............................................. (102) (2.0) 41 0.9
Goodwill amortization, net of taxes .................................... -- -- 18 0.4
-------- ----- ------- -----
Adjusted net income (loss) ........................................ $ (102) (2.0) $ 59 1.3
======== ======= ======= =========
Diluted earnings per share:
Reported net income, excluding loss on retirement of
debt, settlement with Federal government, gains on
sales of facilities and investigation related costs .......... $ 0.63 $ 0.44
Goodwill amortization .............................................. -- 0.03
-------- -------
Adjusted net income, excluding loss on retirement of
debt, settlement with Federal government, gains on
sales of facilities and investigation related costs .......... 0.63 0.47
Loss on retirement of debt ......................................... -- (0.03)
Settlement with Federal government ................................. (0.82) (0.31)
Gains on sales of facilities ....................................... 0.01 0.01
Investigation related costs ........................................ (0.02) (0.03)
-------- -------
Adjusted net income (loss) ......................................... $ (0.20) $ 0.11
======== =======
Shares used in computing diluted earnings per share (000) .............. 511,655 523,042
HCA INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2002 AND 2001
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2002 2001
------------------------ --------------------
AMOUNT RATIO Amount Ratio
---------- ----- -------- ------
Revenues ..................................................................... $ 19,729 100.0% $ 17,953 100.0%
Salaries and benefits ........................................................ 7,952 40.3 7,279 40.5
Supplies ..................................................................... 3,158 16.0 2,860 15.9
Other operating expenses ..................................................... 3,341 16.9 3,238 18.1
Provision for doubtful accounts .............................................. 1,581 8.0 1,376 7.7
Insurance subsidiary (gains) losses on sales of investments .................. 2 -- (63) (0.4)
Equity in earnings of affiliates ............................................. (206) (1.0) (158) (0.9)
--------- ------ -------- ------
15,828 80.2 14,532 80.9
--------- ------ -------- ------
EBITDA ................................................................... 3,901 19.8 3,421 19.1
Depreciation and amortization ................................................ 1,010 5.0 1,048 5.7
Interest expense ............................................................. 446 2.3 536 3.0
Loss on retirement of debt ................................................... -- -- 28 0.2
Settlement with Federal government ........................................... 603 3.1 262 1.5
Gains on sales of facilities ................................................. (6) -- (131) (0.7)
Impairment of investment securities .......................................... 168 0.9 -- --
Impairment of long-lived assets .............................................. 19 0.1 17 0.1
Investigation related costs .................................................. 58 0.3 65 0.4
--------- ------ -------- ------
Income before minority interests and income taxes ............................ 1,603 8.1 1,596 8.9
Minority interests in earnings of consolidated entities ...................... 148 0.7 119 0.7
--------- ------ -------- ------
Income before income taxes ................................................... 1,455 7.4 1,477 8.2
Provision for income taxes ................................................... 622 3.2 591 3.3
--------- ------ -------- ------
Reported net income .......................................................... 833 4.2 886 4.9
Goodwill amortization, net of taxes .......................................... -- -- 70 0.4
--------- ------ -------- ------
Adjusted net income ..................................................... $ 833 4.2 $ 956 5.3
========= ====== ======== =====
Diluted earnings per share:
Reported net income, excluding loss on retirement of debt, settlement with
Federal government, gains on sales of facilities, impairment of
investment securities, impairment of long-lived assets and
investigation related costs ........................................ $ 2.68 $ 1.94
Goodwill amortization .................................................... -- 0.13
--------- --------
Adjusted net income, excluding loss on retirement of debt, settlement with
Federal government, gains on sales of facilities, impairment of
investment securities, impairment of long-lived assets and
investigation related costs ........................................ 2.68 2.07
Loss on retirement of debt ............................................... -- (0.03)
Settlement with Federal government ....................................... (0.80) (0.30)
Gains on sales of facilities ............................................. 0.01 0.14
Impairment of investment securities ...................................... (0.20) --
Impairment of long-lived assets .......................................... (0.03) (0.02)
Investigation related costs .............................................. (0.07) (0.08)
-------- --------
Adjusted net income ...................................................... $ 1.59 $ 1.78
======== ========
Shares used in computing diluted earnings per share (000) .................... 525,219 538,177
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HCA INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
DECEMBER 31, SEPTEMBER 30, DECEMBER 31,
2002 2002 2001
--------- --------- ---------
ASSETS
Current assets:
Cash and cash equivalents .................................................$ 161 $ 138 $ 85
Accounts receivable, net .................................................. 2,788 2,685 2,420
Other ..................................................................... 1,556 1,686 1,636
--------- --------- ---------
Total current assets ................................................. 4,505 4,509 4,141
Property and equipment, at cost ................................................ 16,800 16,456 15,222
Accumulated depreciation ....................................................... (7,079) (6,930) (6,303)
--------- --------- ---------
9,721 9,526 8,919
Investments of insurance subsidiary ............................................ 1,355 1,384 1,453
Investments in and advances to affiliates ...................................... 679 667 680
Intangible assets, net ......................................................... 2,080 2,070 2,051
Other .......................................................................... 401 371 486
--------- --------- ---------
$ 18,741 $ 18,527 $ 17,730
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ..........................................................$ 809 $ 742 $ 755
Other current liabilities ................................................. 1,551 1,465 1,372
Government settlement accrual ............................................. 933 250 250
Long-term debt due within one year ........................................ 446 427 807
--------- --------- ---------
Total current liabilities ............................................ 3,739 2,884 3,184
Long-term debt ................................................................. 6,497 6,933 6,553
Professional liability risks, deferred taxes and
other liabilities ......................................................... 2,192 2,375 2,268
Minority interests in equity of consolidated entities .......................... 611 598 563
Company-obligated mandatorily redeemable securities of
affiliate holding solely Company obligations .............................. -- -- 400
Stockholders' equity ........................................................... 5,702 5,737 4,762
--------- --------- ---------
$ 18,741 $ 18,527 $ 17,730
========= ========= =========
Current ratio .................................................................. 1.20 1.56 1.30
Ratio of debt to debt plus common, temporary and minority equity ............... 52.4% 53.7% 56.2%
Shares outstanding (thousands) ................................................. 514,176 512,526 509,297
8
HCA INC.
OPERATING STATISTICS
FOR THE TWELVE MONTHS
FOURTH QUARTER ENDED DECEMBER 31,
----------------------------- -------------------------------
2002 2001 2002 2001
------------ ------------ ------------ -------------
CONSOLIDATED HOSPITALS:
Number of Hospitals .......................... 173 178 173 178
Weighted Average Licensed Beds ............... 40,020 40,329 39,985 40,645
Licensed Beds at End of Period ............... 39,932 40,112 39,932 40,112
REPORTED:
Admissions ................................... 391,700 382,800 1,582,800 1,564,100
% Change ............................... 2.3% 1.2%
Equivalent Admissions ........................ 575,300 570,400 2,339,400 2,311,700
% Change ............................... 0.8% 1.2%
Revenue per Equivalent Admission ............. $ 8,733 $ 7,956 $ 8,434 $ 7,766
% Change ............................... 9.8% 8.6%
Inpatient Revenue per Admission .............. $ 7,937 $ 7,270 $ 7,706 $ 7,023
% Change ............................... 9.2% 9.7%
Patient Days ................................. 1,941,100 1,871,900 7,850,900 7,723,300
Equivalent Patient Days ...................... 2,851,200 2,790,000 11,603,600 11,415,000
Emergency Room Visits ........................ 1,186,000 1,165,500 4,802,800 4,676,800
% Change ............................... 1.8% 2.7%
Outpatient Revenues as a
Percentage of Patient Revenues ........... 37.1% 37.3% 37.0% 37.1%
Average Length of Stay ....................... 5.0 4.9 5.0 4.9
Occupancy .................................... 52.7% 50.5% 53.8% 52.1%
Equivalent Occupancy ......................... 77.6% 75.1% 79.5% 77.0%
SAME FACILITY:
Admissions ................................... 388,100 376,900 1,567,600 1,529,500
% Change ............................... 3.0% 2.5%
Equivalent Admissions ........................ 570,400 559,300 2,313,800 2,254,500
% Change ............................... 2.0% 2.6%
Revenue per Equivalent Admission ............. $ 8,701 $ 7,977 $ 8,421 $ 7,740
% Change ............................... 9.1% 8.8%
Inpatient Revenue per Admission .............. $ 7,962 $ 7,314 $ 7,720 $ 7,063
% Change ............................... 8.9% 9.3%
Emergency Room Visits ........................ 1,172,600 1,136,100 4,740,500 4,520,400
% Change ............................... 3.2% 4.9%
NUMBER OF CONSOLIDATED AND
NON-CONSOLIDATED (50/50 EQUITY
JOINT VENTURES) HOSPITALS:
Consolidated ................................. 173 178 173 178
Non-Consolidated (50/50 Equity
Joint Ventures) .......................... 6 6 6 6
---------- ---------- ----------- -----------
Total Number of Hospitals .................... 179 184 179 184
========== ========== =========== ===========
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