EXHIBIT 99
(HCA LOGO)
NEWS
FOR IMMEDIATE RELEASE
INVESTOR CONTACT: MEDIA CONTACT:
Mark Kimbrough Jeff Prescott
615-344-2688 615-344-5708
HCA REPORTS 2ND QUARTER 2003 RESULTS
NASHVILLE, TN, July 22, 2003 -- HCA (NYSE: HCA) today announced results for its
second quarter ended June 30, 2003. Consolidated revenues for the quarter were
$5.5 billion, up 11.5 percent from $4.9 billion last year. Net income totaled
$240 million or $0.47 per diluted share compared to $350 million or $0.66 per
diluted share in 2002.
The EPS results for the quarter of $0.47 include the previously announced
increase in the estimated allowance for doubtful accounts ($0.13) and asset
impairment charge ($0.15), both of which are discussed below.
As previously announced on July 15, 2003, financial results for the quarter
ended June 30, 2003 include an increase to the estimated allowance for doubtful
accounts of $106 million pretax, or $0.13 per diluted share. This change in
estimate was based upon the results of the Company's customary "hindsight
analysis", in which the Company's accounts receivable during a previous
twelve-month period are analyzed. The historical "look back" results, along with
considerations of current economic trends and collection indicators, are used as
the basis for the Company's estimate of the appropriate amount of allowance for
doubtful accounts for its current accounts receivable.
Also, on May 22, 2003, HCA announced its intention to discontinue development of
a new patient accounting information system (millennium accounts receivable
system - MARS). As a
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result of the termination of the MARS initiative, the Company recorded an
impairment charge in the amount of $130 million pretax or $0.15 per diluted
share during the second quarter of 2003.
Revenue per equivalent admission increased 7.6 percent (7.5 percent on a same
facility basis) for the second quarter. Consolidated admissions increased 4.5
percent in the quarter. The consolidated results include eleven hospitals
acquired on April 1, 2003.
Same facility revenues increased 7.1 percent in the second quarter while same
facility admissions increased 0.6 percent. Adjusting for closed skilled nursing
(SNF) and obstetric units (OB) within the Company's same facility hospitals,
same facility admissions increased 1.5 percent. Same facility outpatient
surgical procedures during the second quarter declined 3.6 percent. Management
believes its overall hospital volumes and, in particular, outpatient volumes are
being impacted by several factors, including general economic softness, higher
unemployment levels in several key markets, increased co-pays and deductibles,
non-renewal of a managed care contract in Tennessee, and various competitive
pressures in certain markets.
During the second quarter, monthly same facility admissions were as follows:
April declined 0.9 percent (increased 0.1 percent, excluding SNF/OB); May
declined 0.5 percent (increased 0.3 percent, excluding SNF/OB); and June
increased 3.5 percent (increased 4.4 percent, excluding SNF/OB).
Revenues for the six months ended June 30, 2003 were $10.7 billion compared to
$9.8 billion in 2002. Net income totaled $709 million or $1.37 per diluted share
compared to $735 million or $1.40 per diluted share for the six months ended
June 30, 2002.
On April 1, 2003, HCA completed the acquisition of Health Midwest's 11 hospital
network in the greater Kansas City community. At closing, the Company paid $855
million in cash and assumed approximately $150 million of debt and leases.
At June 30, 2003 the Company's balance sheet reflected total debt of $8.4
billion; stockholders' equity (including common and minority equity) of $6.7
billion; and total assets of $20.5 billion. The Company's ratio of debt-to-debt
plus stockholders' equity was 55.7 percent at June 30, 2003 compared to 53.3
percent at June 30, 2002.
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During the quarter, the Company repurchased 12.3 million shares of its common
stock at a total cost of $394 million (average cost of $32.09 per share) and has
approximately $1.2 billion remaining on its $1.5 billion share repurchase
authorization. The Company had 501 million shares outstanding as of June 30,
2003.
During the second quarter, the Company paid the Centers for Medicare and
Medicaid Services (CMS) $250 million to resolve all Medicare cost report, home
office cost statement, and appeal issues between HCA and CMS for the cost report
periods ending before August 1, 2001.
Following the quarter, on July 7, 2003, HCA paid the U.S. Department of Justice
(DOJ) $641 million, which includes interest, to resolve all remaining
investigation issues between the Company and the DOJ.
As of June 30, 2003, the Company operated 190 hospitals and 80 ambulatory
surgery centers (including 6 hospitals and 4 ASCs owned through 50/50 equity
joint ventures) located in 23 states, London, England and Geneva, Switzerland
compared to 181 hospitals and 80 ambulatory surgery centers (including 6
hospitals and 5 ASCs owned through equity joint ventures) as of June 30, 2002.
HCA will host a conference call for investors at 9:00 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/ajwz383767371gf12.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 all statements
other than those made
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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 (including
currently proposed changes to Medicare outlier payments) that may impact
reimbursements to health care providers and insurers, (iv) the ability to
achieve expected levels of patient volumes and control the costs of providing
services, (v) the possible enactment of Federal or state health care reform,
(vi) the ability to attract and retain qualified management and personnel,
including affiliated physicians, nurses and medical support personnel, (vii)
liabilities and other claims asserted against the Company, (viii) fluctuations
in the market value of the Company's common stock, (ix) ability to complete the
share 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 payment, (xvii) the collectibility of uninsured accounts and
deductible and co-pay amounts, (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 regulation affecting the health care industry, (xxi) the impact
of charity and self-pay discounting care policy changes, (xxii) the ability to
successfully integrate the operations of Health Midwest and fund expected
capital improvements, (xxiii) the ability to develop and implement the financial
enterprise resource planning ("ERP") information system within the expected time
and cost projections and, upon implementation, to realize the expected benefits
and efficiencies, 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.
4
All references to "Company" and "HCA" as used throughout this document refer to
HCA Inc. and its affiliates.
5
HCA INC.
CONSOLIDATED OPERATING RESULTS SUMMARY
(Dollars in millions, except per share amounts)
For the Six Months
Second Quarter Ended June 30,
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues ................................................................ $ 5,467 $ 4,903 $ 10,740 $ 9,776
Adjusted EBITDA (a) ..................................................... $ 968 $ 1,018 $ 2,077 $ 2,061
Net income:
Net income, excluding gains on sales of facilities, impairment of
long-lived assets and investigation related costs ....... $ 319 $ 374 $ 749 $ 770
Gains on sales of facilities (net of tax) ....................... -- -- 42 --
Impairment of long-lived assets (net of tax) .................... (79) (18) (79) (18)
Investigation related costs (net of tax) ........................ -- (6) (3) (17)
--------- --------- --------- ---------
Net income ...................................................... $ 240 $ 350 $ 709 $ 735
========= ========= ========= =========
Diluted earnings per share:
Net income, excluding gains on sales of facilities, impairment of
long-lived assets and investigation related costs ....... $ 0.62 $ 0.71 $ 1.44 $ 1.47
Gains on sales of facilities .................................... -- -- 0.08 --
Impairment of long-lived assets ................................. (0.15) (0.03) (0.15) (0.03)
Investigation related costs ..................................... -- (0.02) -- (0.04)
--------- --------- --------- ---------
Net income ...................................................... $ 0.47 $ 0.66 $ 1.37 $ 1.40
========= ========= ========= =========
Shares used in computing diluted earnings per share (000) ............... 514,412 528,068 518,374 524,841
(a)Adjusted EBITDA for the second quarters of 2003 and 2002, respectively, is
defined as income before depreciation and amortization ($278 million and $255
million), interest expense ($123 million and $108 million), gains on sales of
facilities ($1 million in 2003), impairment of long-lived assets ($130
million and $19 million), investigation related costs ($1 million and $13
million), minority interests in earnings of consolidated entities ($47
million and $42 million) and income taxes ($150 million and $231 million).
Adjusted EBITDA for the six months ended June 30, 2003 and 2002,
respectively, is defined as income before depreciation and amortization ($539
million and $499 million), interest expense ($237 million and $229 million),
gains on sales of facilities ($75 million in 2003), impairment of long-lived
assets ($130 million and $19 million), investigation related costs ($5
million and $30 million), minority interests in earnings of consolidated
entities ($86 million and $77 million) and income taxes ($446 million and
$472 million). HCA uses Adjusted EBITDA as an analytical indicator for
purposes of allocating resources to geographic areas and assessing their
performance. Because Adjusted EBITDA is not a measurement determined in
accordance with generally accepted accounting principles and is thus
susceptible to varying calculations, Adjusted EBITDA as presented may not be
compable to other similarly titled measures of other companies.
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HCA INC.
CONSOLIDATED INCOME STATEMENTS
SECOND QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2003 2002
---------------------- ------------------------
Amount Ratio Amount Ratio
--------- ----- --------- -----
Revenues ................................................................. $ 5,467 100.0 % $ 4,903 100.0 %
Salaries and benefits .................................................... 2,178 39.8 1,960 40.0
Supplies ................................................................. 870 15.9 778 15.9
Other operating expenses ................................................. 926 17.0 832 16.8
Provision for doubtful accounts .......................................... 577 10.6 371 7.6
Insurance subsidiary (gains) losses on sales of investments .............. 1 -- (1) --
Equity in earnings of affiliates ......................................... (53) (1.0) (55) (1.1)
--------- ----- --------- -----
4,499 82.3 3,885 79.2
--------- ----- --------- -----
Adjusted EBITDA ...................................................... 968 17.7 1,018 20.8
Depreciation and amortization ............................................ 278 5.1 255 5.2
Interest expense ......................................................... 123 2.2 108 2.2
Gains on sales of facilities ............................................. (1) -- -- --
Impairment of long-lived assets .......................................... 130 2.4 19 0.4
Investigation related costs .............................................. 1 -- 13 0.3
--------- ----- --------- -----
Income before minority interests and income taxes ........................ 437 8.0 623 12.7
Minority interests in earnings of consolidated entities .................. 47 0.9 42 0.8
--------- ----- --------- -----
Income before income taxes ............................................... 390 7.1 581 11.9
Provision for income taxes ............................................... 150 2.7 231 4.8
--------- ----- --------- -----
Net income .......................................................... $ 240 4.4 $ 350 7.1
========= ===== ========= =====
Diluted earnings per share:
Net income excluding gains on sales of facilities,
impairment of long-lived assets and investigation
related costs ..................................................... $ 0.62 $ 0.71
Impairment of long-lived assets ...................................... (0.15) (0.03)
Investigation related costs .......................................... -- (0.02)
--------- -----------
Net income ........................................................... $ 0.47 $ 0.66
========= ===========
Shares used in computing diluted earnings per share (000) ................ 514,412 528,068
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HCA INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2003 2002
-------------------------- --------------------------
AMOUNT RATIO Amount Ratio
----------- ----------- ----------- -----------
Revenues ................................................ $ 10,740 100.0 % $ 9,776 100.0 %
Salaries and benefits ................................... 4,274 39.8 3,890 39.8
Supplies ................................................ 1,715 16.0 1,556 15.9
Other operating expenses ................................ 1,779 16.5 1,632 16.7
Provision for doubtful accounts ......................... 1,005 9.4 739 7.6
Insurance subsidiary losses on sales of investments ..... 1 -- 4 --
Equity in earnings of affiliates ........................ (111) (1.0) (106) (1.1)
----------- ----- ----------- -----
8,663 80.7 7,715 78.9
----------- ----- ----------- -----
Adjusted EBITDA ..................................... 2,077 19.3 2,061 21.1
Depreciation and amortization ........................... 539 4.9 499 5.2
Interest expense ........................................ 237 2.2 229 2.3
Gains on sales of facilities ............................ (75) (0.7) -- --
Impairment of long-lived assets ......................... 130 1.2 19 0.2
Investigation related costs ............................. 5 0.1 30 0.3
----------- ----- ----------- -----
Income before minority interests and income taxes ....... 1,241 11.6 1,284 13.1
Minority interests in earnings of consolidated entities . 86 0.8 77 0.7
----------- ----- ----------- -----
Income before income taxes .............................. 1,155 10.8 1,207 12.4
Provision for income taxes .............................. 446 4.2 472 4.9
----------- ----- ----------- -----
Net income ......................................... $ 709 6.6 $ 735 7.5
=========== ===== =========== =====
Diluted earnings per share:
Net income excluding gains on sales of facilities,
impairment of long-lived assets and investigation
related costs .................................... $ 1.44 $ 1.47
Gains on sales of facilities ........................ 0.08 --
Impairment of long-lived assets ..................... (0.15) (0.03)
Investigation related costs ......................... -- (0.04)
----------- -----------
Net income .......................................... $ 1.37 $ 1.40
=========== ===========
Shares used in computing diluted earnings per share (000) 518,374 524,841
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HCA INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
JUNE 30, MARCH 31, DECEMBER 31,
2003 2003 2002
--------- --------- ---------
ASSETS
Current assets:
Cash and cash equivalents ............................................... $ 184 $ 1,090 $ 161
Accounts receivable, net ................................................ 2,873 2,969 2,788
Inventories ............................................................. 493 462 462
Deferred income taxes ................................................... 640 577 568
Other ................................................................... 606 328 526
--------- --------- ---------
Total current assets ............................................... 4,796 5,426 4,505
Property and equipment, at cost .............................................. 17,893 17,211 16,800
Accumulated depreciation ..................................................... (7,399) (7,287) (7,079)
--------- --------- ---------
10,494 9,924 9,721
Investments of insurance subsidiary .......................................... 1,549 1,427 1,355
Investments in and advances to affiliates .................................... 661 659 679
Goodwill ..................................................................... 2,501 1,982 1,994
Deferred loan costs .......................................................... 67 70 67
Other ........................................................................ 402 397 420
--------- --------- ---------
$ 20,470 $ 19,885 $ 18,741
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................................ $ 765 $ 749 $ 809
Accrued salaries ........................................................ 461 413 438
Other accrued expenses .................................................. 1,134 1,120 1,113
Government settlement accrual ........................................... 683 933 933
Long-term debt due within one year ...................................... 808 623 446
--------- --------- ---------
Total current liabilities .......................................... 3,851 3,838 3,739
Long-term debt ............................................................... 7,568 7,092 6,497
Professional liability risks ................................................. 1,271 1,221 1,193
Deferred income taxes and other liabilities .................................. 1,128 1,046 999
Minority interests in equity of consolidated entities ........................ 672 647 611
Stockholders' equity ......................................................... 5,980 6,041 5,702
--------- --------- ---------
$ 20,470 $ 19,885 $ 18,741
========= ========= =========
Current ratio ................................................................ 1.25 1.41 1.20
Ratio of debt to debt plus common and minority equity ........................ 55.7% 53.6% 52.4%
Shares outstanding (thousands) ............................................... 501,053 512,033 514,176
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HCA INC.
OPERATING STATISTICS
FOR THE SIX MONTHS
SECOND QUARTER ENDED JUNE 30,
------------------------ ------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Consolidated Hospitals:
Number of Hospitals 184 175 184 175
Weighted Average Licensed Beds 42,178 39,844 41,074 39,961
Licensed Beds at End of Period 42,152 39,930 42,152 39,930
REPORTED:
Admissions 409,000 391,400 813,500 798,700
% Change 4.5% 1.9%
Equivalent Admissions 605,300 584,200 1,192,600 1,178,900
% Change 3.6% 1.2%
Revenue per Equivalent Admission $ 9,033 $ 8,394 $ 9,006 $ 8,293
% Change 7.6% 8.6%
Inpatient Revenue per Admission $ 8,167 $ 7,687 $ 8,200 $ 7,578
% Change 6.2% 8.2%
Patient Days 2,020,200 1,927,800 4,047,400 3,988,500
Equivalent Patient Days 2,990,200 2,878,500 5,933,600 5,887,100
Emergency Room Visits 1,268,300 1,198,000 2,484,500 2,404,900
% Change 5.9% 3.3%
Outpatient Revenues as a
Percentage of Patient Revenues 37.7% 37.5% 36.8% 36.9%
Average Length of Stay 4.9 4.9 5.0 5.0
Occupancy 52.6% 53.2% 54.4% 55.1%
Equivalent Occupancy 77.9% 79.4% 79.8% 81.3%
SAME FACILITY:
Admissions 391,900 389,500 795,200 794,400
% Change 0.6% 0.1%
Equivalent Admissions 578,900 581,100 1,164,200 1,171,700
% Change -0.4% -0.6%
Revenue per Equivalent Admission $ 8,998 $ 8,367 $ 8,977 $ 8,261
% Change 7.5% 8.7%
Inpatient Revenue per Admission $ 8,272 $ 7,684 $ 8,253 $ 7,581
% Change 7.7% 8.9%
Emergency Department Visits 1,217,500 1,193,600 2,432,500 2,390,200
% Change 2.0% 1.8%
NUMBER OF CONSOLIDATED AND
NON-CONSOLIDATED (50/50 EQUITY
JOINT VENTURES) HOSPITALS:
Consolidated 184 175 184 175
Non-Consolidated (50/50 Equity
Joint Ventures) 6 6 6 6
---------- ---------- ---------- ----------
Total Number of Hospitals 190 181 190 181
========== ========== ========== ==========
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