EXHIBIT 99
HCA NEWS
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FOR IMMEDIATE RELEASE
INVESTOR CONTACT: MEDIA CONTACT:
Mark Kimbrough Jeff Prescott
(615) 344-2688 (615) 344-5708
HCA REPORTS 2004 FIRST QUARTER RESULTS
NASHVILLE, TENN., APRIL 22, 2004 - HCA (NYSE: HCA) today announced revenues for
the quarter ended March 31, 2004 increased 12.6 percent to $5.9 billion from
$5.3 billion in 2003. Net income totaled $345 million, or $0.69 per diluted
share, compared to $469 million, or $0.90 per diluted share, in 2003. During the
first quarter of 2003, the company recognized gains on sales of facilities of
$42 million net of tax, or $0.08 per diluted share.
Consolidated admissions for the first quarter 2004, which include admissions for
the 11 Kansas City area hospitals acquired April 1, 2003, increased 6.4 percent
compared to the first quarter of 2003, while consolidated revenue per equivalent
admission increased 5.8 percent. Same facility revenues rose 8.7 percent in the
first quarter of 2004, same facility revenue per equivalent admission increased
6.0 percent and both same facility admissions and same facility equivalent
admissions increased 2.5 percent in the first quarter of 2004, compared to the
first quarter of 2003.
The Company experienced a significant increase in uninsured volumes during the
first quarter, and in particular, in March. As a result, the Company's provision
for doubtful accounts increased to $694 million (11.7 percent of net revenues)
compared to $428 million (8.1 percent of net revenues) in the first quarter of
2003. The 360 basis point deterioration, from last year's first quarter, in bad
debts as a percentage of net revenues represents a $213 million ($0.26 per
diluted share) increase in the provision for doubtful accounts.
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"Aside from the significant increases in uninsured patient volumes and bad
debts, results for the quarter were quite positive," said Jack O. Bovender, Jr.,
Chairman and CEO. "We were particularly pleased with the improved volume trends
in both our inpatient and outpatient services. Our recent capital investments
are producing good returns and our operating cost trends reflect excellent
management at the facility and market level. Long-term, we remain confident that
our existing assets, market locations and our reinvestment strategy will produce
solid returns for our shareholders," Bovender concluded.
The increase in the provision for doubtful accounts was based upon an increase
in the number of uninsured patients in the first quarter, coupled with
deterioration in the collectability of uninsured accounts. The estimated
collectability is based upon the results of the Company's quarterly "hindsight
analysis," in which historical write-offs and collections experience on accounts
receivable are analyzed. The historical "look back" results, along with
considerations of current economic and volume trends and other collection
indicators, are used as a basis for the Company's estimate of the allowance for
doubtful accounts for its accounts receivable. Approximately $30 million of the
first quarter increase in bad debts was the result of deterioration in the
collectability of uninsured accounts.
Uninsured emergency room visits rose 18 percent in the first quarter of 2004 and
26 percent in the month of March, while uninsured admissions rose 14 percent in
the first quarter of 2004 and 19 percent in March compared to the same periods
of 2003. In addition to the significant increase in first quarter 2004 bad
debts, the Company's health care facilities provided $218 million of charity
care and discounts to the uninsured, up from $182 million in the first quarter
of 2003.
Management now estimates the Company's provision for doubtful accounts will
approximate 11.5 percent of net revenues for the full year of 2004. The 11.5
percent estimate assumes that charity care levels for the balance of 2004 will
remain consistent with the first quarter trends. However, should charity care
levels increase at a faster rate, bad debts would be comparably reduced.
As announced last week, the Company's earnings guidance for 2004 has been
revised to a range of $2.60 to $2.70 from $2.85 to $2.95 per diluted share. The
Company's earnings guidance range for 2004 also reflects a decrease in expected
medical liability insurance premium expense of approximately $28 million, of
which $7 million was recognized in the first quarter of 2004. In addition,
management has noted current favorable claim and payment trends, the adoption of
tort reforms and limitations on losses in certain states, benefits resulting
from the Company's patient safety
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programs and continued low inflation rates. As a result, our revised earnings
guidance includes a positive $40 million to $70 million change in the estimated
professional liability insurance reserves. The amount of any change to the
estimated professional liability insurance reserves will be determined after the
annual, independent actuarial analyses are completed. The Company expects to
receive these updated actuarial reports over the next two to four months.
Recent Medicare regulatory changes, effective October 1, 2003, resulted in a $38
million ($0.05 per diluted share) reduction in the Company's Medicare operating
outlier payments (from $70 million in the first quarter of 2003 to $32 million
in the first quarter of 2004). The lower outlier payments resulted in a 60 basis
point reduction in the Company's net revenue per adjusted admission growth in
the quarter.
During the first quarter, same facility outpatient surgeries increased 1.8
percent. Included in this statistic are ambulatory surgery volumes, which
increased 3.5 percent, and hospital based outpatient surgeries, which increased
1.0 percent. Same facility emergency room visits increased 2.3 percent during
the first quarter compared to the same period of 2003.
The Company's cash flow from operations increased to $772 million for the first
quarter of 2004 compared to $755 million in 2003. Capital expenditures,
excluding acquisitions, totaled approximately $390 million in the first quarter
of 2004. The Company anticipates capital expenditures, excluding acquisitions,
will approximate $1.8 billion in 2004.
HCA's ratio of debt-to-debt plus common and minority equity was 55.8 percent at
March 31, 2004 and December 31, 2003. HCA plans to reduce its debt-to-debt plus
common and minority equity ratio level from the mid-50's to the low 50's by
mid-to-late 2005.
The Company repurchased 8.9 million shares of its common stock at a cost of $375
million (average cost of $42.39 per share) during the first quarter of 2004.
Approximately $225 million remains on the April 2003, $1.5 billion share
repurchase authorization. Since 1997, HCA has repurchased approximately 243
million shares at a cost of $7.3 billion (average cost of $29.98 per share). HCA
had 484 million shares outstanding at March 31, 2004.
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At March 31, 2004, the company operated 191 hospitals and 83 freestanding
surgery centers (including 7 hospitals and 4 freestanding surgery centers owned
through equity method joint ventures) located in 23 states, London, England and
Geneva, Switzerland compared to 179 hospitals and 78 freestanding surgery
centers (including 6 hospitals and 4 freestanding surgery centers owned through
equity method joint ventures) at March 31, 2003.
HCA will host a conference call for investors at 8:30 a.m. CDT (9:30 a.m. EDT)
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 for the next 30 days. The webcast can be accessed
at http://www.firstcallevents.com/service/ajwz399509065gf12.html.
The Company's annual shareholder meeting will be held in Nashville, Tennessee on
May 27, 2004 at 1:30 p.m. local time for shareholders of record as of April 1,
2004.
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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) increases in the amount and risk of
collectability of uninsured accounts and deductibles and co-pay amounts for
insured accounts, (ii) the ability to achieve operating and financial targets
and achieve expected levels of patient volumes and control the costs of
providing services, (iii) the highly competitive nature of the health care
business, (iv) the efforts of insurers, health care providers and others to
contain health care costs, (v) possible changes in the Medicare and Medicaid
programs that may impact reimbursements to health care providers and insurers,
(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
impact of the Company's charity care and self-pay discounting policy changes,
(x) changes in accounting practices, (xi) changes in general economic
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conditions, (xii) future divestitures which may result in 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) the possible enactment of Federal or state health care
reform, (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 ability to
successfully integrate the operations of Health Midwest, (xxii) the ability to
develop and implement the payroll and human resources information system within
the expected time and cost projections and, upon implementation, to realize the
expected benefits and efficiencies, and (xxiii) other risk factors detailed 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.
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HCA INC.
SUPPLEMENTAL OPERATING RESULTS INFORMATION
(Dollars in millions, except per share amounts)
FIRST QUARTER
-----------------------
2004 2003
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Revenues .......................................................................... $ 5,937 $ 5,273
Net income ........................................................................ $ 345 $ 469
Gains on sales of facilities (net of tax) ................................ -- (42)
Investigation related costs (net of tax) ................................. -- 3
--------- ---------
Net income, excluding gains on sales of facilities and investigation
related costs (a) ............................................................... 345 430
Depreciation and amortization ............................................ 303 261
Interest expense ......................................................... 135 114
Minority interests in earnings of consolidated entities .................. 38 39
Provision for income taxes ............................................... 214 265
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Adjusted EBITDA (a) ............................................................... $ 1,035 $ 1,109
========= =========
Diluted earnings per share:
Net income ............................................................... $ 0.69 $ 0.90
Gains on sales of facilities ............................................. -- (0.08)
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Net income, excluding gains on sales of facilities and investigation
related costs (a) ................................................ $ 0.69 $ 0.82
========= =========
Shares used in computing diluted earnings per share (000) ......................... 497,621 522,361
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(a) Net income, excluding gains on sales of facilities 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
recorded gains on sales of facilities and investigation related costs
during the first quarter ended March 31, 2003. 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 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
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 INCOME STATEMENTS
FIRST QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2004 2003
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AMOUNT RATIO Amount Ratio
--------- ----------- --------- -----------
Revenues ................................................. $ 5,937 100.0% $ 5,273 100.0%
Salaries and benefits .................................... 2,333 39.3 2,096 39.8
Supplies ................................................. 980 16.5 845 16.0
Other operating expenses ................................. 951 16.1 853 16.2
Provision for doubtful accounts .......................... 694 11.7 428 8.1
Gains on sales of investments ............................ (10) (0.2) -- --
Equity in earnings of affiliates ......................... (46) (0.8) (58) (1.1)
Depreciation and amortization ............................ 303 5.0 261 4.8
Interest expense ......................................... 135 2.3 114 2.2
Gains on sales of facilities ............................. -- -- (74) (1.4)
Investigation related costs .............................. -- -- 4 0.1
--------- ----------- --------- -----------
5,340 89.9 4,469 84.7
--------- ----------- --------- -----------
Income before minority interests and income taxes ........ 597 10.1 804 15.3
Minority interests in earnings of consolidated entities .. 38 0.7 39 0.8
--------- ----------- --------- -----------
Income before income taxes ............................... 559 9.4 765 14.5
Provision for income taxes ............................... 214 3.6 296 5.6
--------- ----------- --------- -----------
Net income .......................................... $ 345 5.8 $ 469 8.9
========= =========== ========= ===========
Diluted earnings per share ............................... $ 0.69 $ 0.90
Shares used in computing diluted earnings per share (000) 497,621 522,361
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HCA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
MARCH 31, DECEMBER 31,
2004 2003
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ASSETS
Current assets:
Cash and cash equivalents ................................. $ 148 $ 115
Accounts receivable, net .................................. 3,243 3,095
Inventories ............................................... 532 520
Deferred income taxes ..................................... 564 534
Other ..................................................... 342 558
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Total current assets ................................. 4,829 4,822
Property and equipment, at cost ................................ 18,969 18,685
Accumulated depreciation ....................................... (7,816) (7,620)
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11,153 11,065
Investments of insurance subsidiary ............................ 1,870 1,790
Investments in and advances to affiliates ...................... 520 527
Goodwill ....................................................... 2,499 2,481
Deferred loan costs ............................................ 80 75
Other .......................................................... 260 303
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$ 21,211 $ 21,063
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .......................................... $ 809 $ 877
Accrued salaries .......................................... 533 510
Other accrued expenses .................................... 1,169 1,116
Long-term debt due within one year ........................ 223 665
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Total current liabilities ............................ 2,734 3,168
Long-term debt ................................................. 8,530 8,042
Professional liability risks ................................... 1,306 1,314
Deferred income taxes and other liabilities .................... 1,718 1,650
Minority interests in equity of consolidated entities .......... 713 680
Stockholders' equity ........................................... 6,210 6,209
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$ 21,211 $ 21,063
========= =========
Current ratio .................................................. 1.77 1.52
Ratio of debt to debt plus common and minority equity .......... 55.8% 55.8%
Shares outstanding (thousands) ................................. 484,469 490,718
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HCA INC.
OPERATING STATISTICS
FIRST QUARTER
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2004 2003
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CONSOLIDATED HOSPITALS:
Number of Hospitals 184 173
Weighted Average Licensed Beds 41,934 39,957
Licensed Beds at End of Period 41,931 39,898
REPORTED:
Admissions 430,300 404,500
% Change 6.4%
Equivalent Admissions 625,200 587,300
% Change 6.5%
Revenue per Equivalent Admission $ 9,497 $ 8,978
% Change 5.8%
Inpatient Revenue per Admission $ 8,572 $ 8,233
% Change 4.1%
Patient Days 2,173,600 2,027,200
Equivalent Patient Days 3,158,200 2,943,400
Emergency Room Visits 1,296,900 1,222,600
% Change 6.1%
Outpatient Revenues as a
Percentage of Patient Revenues 36.9% 35.9%
Average Length of Stay 5.1 5.0
Occupancy 57.0% 56.4%
Equivalent Occupancy 82.8% 81.9%
SAME FACILITY:
Admissions 412,800 402,600
% Change 2.5%
Equivalent Admissions 599,000 584,200
% Change 2.5%
Revenue per Equivalent Admission $ 9,497 $ 8,957
% Change 6.0%
Inpatient Revenue per Admission $ 8,701 $ 8,249
% Change 5.5%
Emergency Room Visits 1,242,400 1,214,900
% Change 2.3%
NUMBER OF CONSOLIDATED AND
NON-CONSOLIDATED (50/50 EQUITY
JOINT VENTURES) HOSPITALS:
Consolidated 184 173
Non-Consolidated (50/50 Equity
Joint Ventures) 7 6
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Total Number of Hospitals 191 179
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