EXHIBIT 99
[HCA LOGO]
NEWS
- -------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
INVESTOR CONTACT: MEDIA CONTACT:
Mark Kimbrough Jeff Prescott
615-344-2688 615-344-5708
HCA REPORTS 3RD QUARTER 2003 RESULTS
ESTABLISHES LONG-TERM EPS GROWTH TARGET
NASHVILLE, TN, October 21, 2003 -- HCA (NYSE: HCA) today announced results for
its third quarter ended September 30, 2003. Consolidated revenues for the
quarter were $5.5 billion, up 11.0 percent from $4.9 billion for the comparable
period last year. Net income totaled $306 million or $0.61 per diluted share in
the third quarter compared to $200 million or $0.38 per diluted share in the
third quarter of 2002.
The operating results for the third quarter of 2003 include a $10 million pretax
gain, or $0.01 per diluted share, on the sale of a facility. The operating
results for the third quarter of 2002 included a $168 million pretax charge, or
($0.20) per diluted share, on the impairment of investment securities and
investigation related costs of $16 million pretax, or ($0.02) per diluted share.
Consolidated admissions increased 3.9 percent in the quarter. Same facility
admissions for the quarter increased 0.2 percent. Excluding skilled nursing beds
and obstetric units closed within the last twelve months, same facility
admissions increased 1.0 percent. Same facility revenues increased 6.9 percent
while same facility revenue per equivalent admission increased 7.1 percent.
1
The Company's provision for doubtful accounts increased to 10.3 percent of
consolidated revenues in the third quarter of 2003 compared to 8.3 percent in
the third quarter of 2002 due to a continuation of trends associated with growth
of uninsured and self-pay accounts and a deterioration of the collectibility of
these accounts.
Management recently completed its annual environmental review in an effort to
reassess the Company's long-term outlook and to address appropriate
modifications to the Company's strategic plan. The key findings and actions are
as follows:
- HCA's core business strategy is sound. The Company's focus
will continue to be on market-leading positions in large,
fast-growing urban communities. Management believes the
Company's primary earnings growth will be generated within
existing markets due to population growth, increased
utilization due to aging and continued capital investments
targeted at generating increasing returns.
- To compete more effectively in the outpatient area, the
Company will establish a senior level operational unit focused
on outpatient services. The Company expects to name a new
Group President for Outpatient Services by year-end. In
addition, HCA anticipates making strategic acquisitions in
outpatient services.
- The Company intends to reduce capital expenditures from
approximately $2 billion in 2003, to approximately $1.8
billion in 2004 and to approximately $1.6 billion annually
thereafter, excluding acquisitions. Management believes a
moderation of capital expenditures is prudent based upon
recent volume softness and the fact many of our markets have
been recapitalized in the past 5 years.
- HCA anticipates lowering its target ratio of debt-to-total
capitalization from 55 percent to the low-50s or high 40s by
mid-to-late 2005.
- The Company's current $1.5 billion share repurchase program is
expected to be completed in a judicious manner, as dictated by
market conditions. Share repurchases will remain an integral
component of the Company's ongoing financial policies.
- HCA's Senior Management and Board of Directors are evaluating
a change to the Company's existing dividend policy and expects
to announce any changes in the Company's existing dividend
policy in the first quarter of 2004.
- The Company has revised its long-term earnings per share
growth target after 2004 to low double digits from mid-teens.
- Due to the Medicare outlier rule change that became effective
October 1, 2003, (estimated to reduce Medicare payments by
approximately $12 million per month through September 2004, or
approximately $0.04 per share per quarter, beginning in the
2
fourth quarter of 2003), the implementation of the Company's
previously announced charity care policy (estimated to reduce
earnings per share in 2004 by approximately $0.03 to $0.04 per
share) and the impact of the Company's increase in its
provision for doubtful accounts, the Company expects to report
earnings per share for calendar 2003 of $2.56 to $2.60 per
diluted share. The Company's guidance for 2003 includes
previously recorded pretax gains on sales of facilities of
approximately $85 million, or $0.09 per diluted share; and
impairment of long-lived assets of ($130 million), or ($0.15)
per diluted share, but does not include any potential gains or
losses from sales of facilities or impairment charges that may
be recorded in the fourth quarter of 2003.
- The Company anticipates that the factors and trends that
affected results of operations in 2003 will continue in 2004
and estimates that it will report earnings per share for
calendar 2004 of $2.85 to $2.95. The Company's 2004 guidance
assumes that the Company will not realize any potential gains
or losses from sales of facilities or impairment charges.
Revenues for the nine months ended September 30, 2003 were $16.2 billion
compared to $14.7 billion in 2002. Net income totaled $1.015 billion, or $1.98
per diluted share, compared to $935 million, or $1.78 per diluted share, for the
nine months ended September 30, 2002.
The operating results for the nine months ended September 30, 2003 included $85
million of pretax gains, or $0.09 per diluted share, on sales of facilities and
a $130 million pretax charge, or ($0.15) per diluted share, on the impairment of
long-lived assets. The operating results for the nine months ended September 30,
2002 included a $168 million pretax charge, or ($0.20) per diluted share, on the
impairment of investment securities, a $19 million pretax charge, or ($0.03) per
diluted share, on the impairment of long-lived assets and $46 million pretax, or
($0.06) per diluted share, of investigation related costs.
At September 30, 2003, the Company's balance sheet reflected total debt of $8.8
billion; stockholders' equity (including common and minority equity) of $6.8
billion; and total assets of $20.6 billion. The Company's ratio of debt-to-debt
plus stockholders' equity was 56.4 percent at September 30, 2003 compared to
53.7 percent at September 30, 2002.
During the third quarter, the Company repurchased 6.0 million shares of its
common stock at a cost of $210 million (average cost of $34.75 per share) and
has approximately $1.0 billion remaining on the previously announced $1.5
billion share repurchase program. The Company had 497 million shares outstanding
as of September 30, 2003.
3
During the quarter, HCA reached a preliminary understanding with attorneys
representing shareholder groups to settle class action securities lawsuits
originally filed in 1997. Under the preliminary understanding, HCA will
establish a $49.5 million settlement fund to pay class members based on their
individual claims. The settlement is subject to execution of a definitive
settlement agreement and approval by the U.S. District Court in Nashville. The
Company has also reached a preliminary understanding with insurance carriers
under which the insurers will pay the majority of the settlement.
During the third quarter of 2003, the Company paid the U.S. Department of
Justice $641 million, which includes interest, to settle all remaining
investigation issues between the Company and DOJ with respect to cost reports
and physician relations. HCA recognized a charge for these settlement costs
during the fourth quarter of 2002.
At September 30, 2003, the Company operated 190 hospitals and 82 ambulatory
surgery centers (including 7 hospitals and 4 ASCs owned through 50/50 equity
joint ventures) located in 23 states, London, England and Geneva, Switzerland
compared to 181 hospitals and 78 ambulatory surgery centers (including 6
hospitals and 4 ASCs owned through equity joint ventures) at September 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 web cast can be
accessed at http://www.firstcallevents.com/service/ajwz389238490gf12.html or via
the Investor Relations site at www.hcahealthcare.com.
# # #
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This press release contains forward-looking statements based on current
management expectations. Those forward-looking statements include all statements
regarding our estimated results of operations in future periods and all
statements other than those made solely with respect to historical fact.
Numerous risks, uncertainties and other factors may cause actual results to
differ materially from those expressed in any forward-looking statements. These
factors include, but are not limited to (i) the highly competitive nature of the
health care business, (ii) the efforts of insurers, health care providers and
others to contain health care costs, (iii) possible changes in the Medicare and
Medicaid programs that may impact reimbursements to health care providers and
insurers, (iv) the ability to achieve operating and financial targets and
achieve expected levels of patient volumes and control the costs of providing
services, (v) 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)
potential liabilities and other claims that may be asserted against the Company,
(viii) fluctuations in the market value of the Company's common stock, (ix) the
Company's ability to complete the share repurchase program, (x) changes in
accounting practices, (xi) changes in general economic conditions, (xii) future
divestitures which may result in additional charges, (xiii) changes in revenue
mix and the ability to enter into and renew managed care provider arrangements
on acceptable terms, (xiv) the availability and terms of capital to fund the
expansion of the Company's business, (xv) changes in business strategy or
development plans, (xvi) delays in receiving payments for services provided,
(xvii) increases in the amount and risk of collectibility of uninsured accounts
and deductibles and co-pay amounts for insured accounts, (xviii) the outcome of
pending and any future tax audits and litigation associated with the Company's
tax positions, (xix) the outcome of the Company's continuing efforts to monitor,
maintain and comply with appropriate laws, regulations, policies and procedures
and the Company's corporate integrity agreement with the government, (xx)
changes in Federal, state or local regulations affecting the health care
industry, (xxi) the impact of charity and self-pay discounting care policy
changes, (xxii) the ability to successfully integrate the operations of Health
Midwest, (xxiii) the ability to develop and implement the financial enterprise
resource planning information system within the expected time and cost
projections and, upon implementation, to realize the expected benefits and
efficiencies, (xxiv) the ability to enter into definitive written agreements
with regard to the understanding with attorneys representing the class in the
class action litigation and insurance carriers, and obtain court approval
thereof; and
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(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. In light of
the significant uncertainties inherent in the forward-looking statements
contained herein, readers should not place undue reliance on forward-looking
statements, which reflect management's views only as of the date hereof. The
Company undertakes no obligation to revise or update any forward-looking
statements, or to make any other forward-looking statements, whether as a result
of new information, future events or otherwise.
All references to "Company" and "HCA" as used throughout this document refer to
HCA Inc. and its affiliates.
6
HCA INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
THIRD QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2003 2002
---------------------------- ----------------------------
AMOUNT RATIO Amount Ratio
--------- ----------- --------- -----------
Revenues ...................................................... $ 5,471 100.0% $ 4,929 100.0%
Salaries and benefits ......................................... 2,189 40.0 1,999 40.6
Supplies ...................................................... 882 16.1 795 16.1
Other operating expenses ...................................... 952 17.5 859 17.4
Provision for doubtful accounts ............................... 566 10.3 411 8.3
Insurance subsidiary gains on sales of investments ............ (1) -- (2) --
Equity in earnings of affiliates .............................. (52) (1.0) (50) (1.0)
Depreciation and amortization ................................. 283 5.3 253 5.1
Interest expense .............................................. 127 2.3 111 2.3
Gains on sales of facilities .................................. (10) (0.2) -- --
Impairment of investment securities ........................... -- -- 168 3.4
Investigation related costs ................................... 3 -- 16 0.3
--------- ----------- --------- -----------
4,939 90.3 4,560 92.5
--------- ----------- --------- -----------
Income before minority interests and income taxes ............. 532 9.7 369 7.5
Minority interests in earnings of consolidated entities ....... 34 0.6 34 0.7
--------- ----------- --------- -----------
Income before income taxes .................................... 498 9.1 335 6.8
Provision for income taxes .................................... 192 3.5 135 2.7
--------- ----------- --------- -----------
Net income ............................................... $ 306 5.6 $ 200 4.1
========= =========== ========= ===========
Diluted earnings per share .................................... $ 0.61 $ 0.38
Shares used in computing diluted earnings per share (000) .... 505,612 527,260
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HCA INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2003 2002
---------------------------- ----------------------------
AMOUNT RATIO Amount Ratio
--------- ----- --------- -----
Revenues ...................................................... $ 16,211 100.0% $ 14,705 100.0%
Salaries and benefits ......................................... 6,463 39.9 5,889 40.0
Supplies ...................................................... 2,597 16.0 2,351 16.0
Other operating expenses ...................................... 2,731 16.8 2,491 17.0
Provision for doubtful accounts ............................... 1,571 9.7 1,150 7.8
Insurance subsidiary losses on sales of investments ........... -- -- 2 --
Equity in earnings of affiliates .............................. (163) (1.0) (156) (1.1)
Depreciation and amortization ................................. 822 5.1 752 5.3
Interest expense .............................................. 364 2.2 340 2.3
Gains on sales of facilities .................................. (85) (0.5) -- --
Impairment of investment securities ........................... -- -- 168 1.1
Impairment of long-lived assets ............................... 130 0.8 19 0.1
Investigation related costs ................................... 8 0.1 46 0.3
--------- ----- --------- -----
14,438 89.1 13,052 88.8
--------- ----- --------- -----
Income before minority interests and income taxes ............. 1,773 10.9 1,653 11.2
Minority interests in earnings of consolidated entities ....... 120 0.7 111 0.7
--------- ----- --------- -----
Income before income taxes .................................... 1,653 10.2 1,542 10.5
Provision for income taxes .................................... 638 3.9 607 4.1
--------- ----- --------- -----
Net income ............................................... $ 1,015 6.3 $ 935 6.4
========= ===== ========= =====
Diluted earnings per share .................................... $ 1.98 $ 1.78
Shares used in computing diluted earnings per share (000) ..... 514,077 525,659
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HCA INC.
SUPPLEMENTAL OPERATING RESULTS INFORMATION
(Dollars in millions, except per share amounts)
FOR THE NINE MONTHS
THIRD QUARTER ENDED SEPTEMBER 30,
---------------------- ----------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net income .................................................................. $ 306 $ 200 $ 1,015 $ 935
Gains on sales of facilities (net of tax) ........................... (7) -- (49) --
Impairment of investment securities (net of tax) .................... -- 107 -- 107
Impairment of long-lived assets (net of tax) ........................ -- -- 79 18
Investigation related costs (net of tax) ............................ 3 12 6 29
--------- --------- --------- ---------
Net income, excluding gains on sales of facilities, impairment of
investment securities, impairment of long-lived assets and
investigation related costs (a) ........................................... 302 319 1,051 1,089
Depreciation and amortization ....................................... 283 253 822 752
Interest expense .................................................... 127 111 364 340
Minority interests in earnings of consolidated entities ............. 34 34 120 111
Provision for income taxes .......................................... 189 200 655 686
--------- --------- --------- ---------
Adjusted EBITDA (a) ......................................................... $ 935 $ 917 $ 3,012 $ 2,978
========= ========= ========= =========
Diluted earnings per share:
Net income .......................................................... $ 0.61 $ 0.38 $ 1.98 $ 1.78
Gains on sales of facilities (net of tax) ........................... (0.01) -- (0.09) --
Impairment of investment securities (net of tax) .................... -- 0.20 0.15 0.20
Impairment of long-lived assets (net of tax) ........................ -- -- -- 0.03
Investigation related costs (net of tax) ............................ -- 0.02 -- 0.06
--------- --------- --------- ---------
Net income, excluding gains on sales of facilities, impairment of
investment securities, impairment of long-lived assets and
investigation related costs (a) ................................. $ 0.60 $ 0.60 $ 2.04 $ 2.07
========= ========= ========= =========
Shares used in computing diluted earnings per share (000) ................... 505,612 527,260 514,077 525,659
- ---------------------------------------------------
(a) Net income, excluding gains on sales of facilities, impairment of
investment securities, impairment of long-lived assets and investigation
related costs, and adjusted EBITDA, are non-GAAP financial measures. The
Company believes that net income, excluding certain measures required to
be disclosed by GAAP, and adjusted EBITDA are important operating
measures that supplement discussions and analysis of the Company's
results of operations. The Company believes that it is useful to
investors to provide disclosures of its results of operations on the
same basis as that used by management. HCA's management relies upon net
income, excluding certain measures required to be disclosed by GAAP, and
adjusted EBITDA as the primary measures to review and assess operating
performance of its hospital facilities and their management teams.
Management and investors review both the Company's overall performance
(including net income, excluding certain measures required to be
disclosed by GAAP, GAAP net income and GAAP EPS) and the operating
performance of the Company's health care facilities (adjusted EBITDA).
Adjusted EBITDA and the adjusted EBITDA margin (adjusted EBITDA divided
by revenues) are utilized by management and investors to compare the
Company's current operating results with the corresponding periods
during the previous year and to compare the Company's operating results
with other companies in the health care industry. The Company has
incurred significant settlement charges, asset and investment
impairments, gains on sales of facilities and investigation related
costs during the nine months ended September 30, 2003 and the year ended
December 31, 2002 and it is reasonable to expect that asset impairment
charges and gains on sales of facilities will occur in future periods,
but the amounts recognized for these items can vary significantly from
quarter to quarter, do not directly relate to the ongoing operations of
the Company's health care facilities and complicate quarterly operations
comparisons of the Company's results of operations and operations
comparisons with other health care companies. In addition, the Company
does not currently expect to incur settlement charges and investigation
related costs in future periods and the nature and materiality of these
charges have significant effects on the ability of an investor to
compare the operating results of the Company's hospital facilities from
period to period and to compare the Company's operating results with
other companies in the industry.
Net income, excluding certain measures required to be disclosed by GAAP,
and adjusted EBITDA are not measures of financial performance under
accounting principles generally accepted in the United States, and
should not be considered as alternatives to net income as a measure of
operating performance or to cash flows from operating, investing and
financing activities as a measure of liquidity. Because net income,
excluding certain measures required to be disclosed by GAAP, and
adjusted EBITDA are not measurements determined in accordance with
generally accepted accounting principles and are susceptible to varying
calculations, net income, excluding certain measures required to be
disclosed by GAAP, and adjusted EBITDA, as presented, may not be
comparable to other similarly titled measures presented by other
companies.
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HCA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
SEPTEMBER 30, JUNE 30, DECEMBER 31,
2003 2003 2002
------------- -------- ------------
ASSETS
Current assets:
Cash and cash equivalents ............................. $ 182 $ 184 $ 161
Accounts receivable, net .............................. 2,924 2,873 2,788
Inventories ........................................... 491 493 462
Deferred income taxes ................................. 494 640 568
Other ................................................. 720 606 526
--------- --------- ---------
Total current assets ............................. 4,811 4,796 4,505
Property and equipment, at cost ............................ 18,167 17,893 16,800
Accumulated depreciation ................................... (7,561) (7,399) (7,079)
--------- --------- ---------
10,606 10,494 9,721
Investments of insurance subsidiary ........................ 1,668 1,549 1,355
Investments in and advances to affiliates .................. 666 661 679
Goodwill ................................................... 2,489 2,501 1,994
Deferred loan costs ........................................ 72 67 67
Other ...................................................... 334 402 420
--------- --------- ---------
$ 20,646 $ 20,470 $ 18,741
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ...................................... $ 749 $ 765 $ 809
Accrued salaries ...................................... 493 461 438
Other accrued expenses ................................ 1,120 1,134 1,113
Government settlement accrual ......................... -- 683 933
Long-term debt due within one year .................... 502 808 446
--------- --------- ---------
Total current liabilities ........................ 2,864 3,851 3,739
Long-term debt ............................................. 8,278 7,568 6,497
Professional liability risks ............................... 1,332 1,271 1,193
Deferred income taxes and other liabilities ................ 1,378 1,128 999
Minority interests in equity of consolidated entities ...... 678 672 611
Stockholders' equity ....................................... 6,116 5,980 5,702
--------- --------- ---------
$ 20,646 $ 20,470 $ 18,741
========= ========= =========
Current ratio .............................................. 1.68 1.25 1.20
Ratio of debt to debt plus common and minority equity ...... 56.4% 55.7% 52.4%
Shares outstanding (thousands) ............................. 496,643 501,053 514,176
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HCA INC.
OPERATING STATISTICS
FOR THE NINE MONTHS
FOR THE NINE MONTHS
THIRD QUARTER ENDED SEPTEMBER 30,
------------------------- -------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
CONSOLIDATED HOSPITALS:
Number of Hospitals 183 175 183 175
Weighted Average Licensed Beds 42,098 39,998 41,419 39,973
Licensed Beds at End of Period 41,997 40,056 41,997 40,056
REPORTED:
Admissions 407,700 392,400 1,221,200 1,191,100
% Change 3.9% 2.5%
Equivalent Admissions 606,200 585,200 1,798,800 1,764,100
% Change 3.6% 2.0%
Revenue per Equivalent Admission $ 9,025 $ 8,423 $ 9,012 $ 8,336
% Change 7.1% 8.1%
Inpatient Revenue per Admission $ 8,146 $ 7,735 $ 8,182 $ 7,630
% Change 5.3% 7.2%
Patient Days 2,001,800 1,921,300 6,049,200 5,909,800
Equivalent Patient Days 2,976,900 2,865,300 8,910,500 8,752,400
Emergency Room Visits 1,286,600 1,211,900 3,771,100 3,616,800
% Change 6.2% 4.3%
Outpatient Revenues as a
Percentage of Patient Revenues 38.1% 37.3% 37.2% 37.0%
Average Length of Stay 4.9 4.9 5.0 5.0
Occupancy 51.7% 52.2% 53.5% 54.2%
Equivalent Occupancy 76.8% 77.7% 78.8% 80.3%
SAME FACILITY:
Admissions 390,000 389,100 1,183,800 1,181,900
% Change 0.2% 0.2%
Equivalent Admissions 578,000 579,300 1,740,100 1,749,200
% Change -0.2% -0.5%
Revenue per Equivalent Admission $ 9,011 $ 8,412 $ 8,990 $ 8,311
% Change 7.1% 8.2%
Inpatient Revenue per Admission $ 8,279 $ 7,741 $ 8,261 $ 7,635
% Change 7.0% 8.2%
Emergency Department Visits 1,237,100 1,202,500 3,669,100 3,592,800
% Change 2.9% 2.1%
NUMBER OF CONSOLIDATED AND
NON-CONSOLIDATED (50/50 EQUITY
JOINT VENTURES) HOSPITALS:
Consolidated 183 175 183 175
Non-Consolidated (50/50 Equity
Joint Ventures) 7 6 7 6
---------- ---------- ---------- ----------
Total Number of Hospitals 190 181 190 181
========== ========== ========== ==========
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