EXHIBIT 99.1
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 SECOND QUARTER RESULTS
NASHVILLE, TENN., JULY 26, 2004 - HCA (NYSE: HCA) today announced revenues for
the quarter ended June 30, 2004 increased 6.7 percent to $5.8 billion from $5.5
billion in the second quarter of 2003. Net income totaled $352 million, or $0.72
per diluted share, compared to $240 million, or $0.47 per diluted share, in
2003. Results for the second quarter of 2004 include a positive $59 million, or
$0.07 per diluted share, change in the Company's estimated professional
liability insurance reserves. Net income for the second quarter of 2003 includes
an increase in the Company's estimated allowance for doubtful accounts of $106
million, or $0.13 per diluted share, and an asset impairment charge of $130
million, or $0.15 per diluted share.
The amount of the change to the estimated professional liability insurance
reserves was determined based upon the annual, independent actuarial analyses,
which noted favorable claim and payment trends, the adoption of tort reform and
limitations on losses in certain states, benefits resulting from the Company's
patient safety programs and low inflation rates. The adjustment reduces other
operating expenses.
Same facility revenues rose 6.8 percent in the second quarter of 2004, same
facility revenue per equivalent admission increased 5.7 percent, same facility
admissions increased 0.4 percent and same facility equivalent admissions
increased 1.0 percent, compared to the second quarter of 2003. Same facility
surgical volume increased 1.1 percent in the second quarter of 2004.
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The Company's provision for doubtful accounts in the second quarter totaled $661
million, or 11.3 percent of revenues, compared to $694 million, or 11.7 percent
of revenues, in the first quarter of 2004 and $577 million, or 10.6 percent of
revenues, in the second quarter of 2003.
"The sequential improvement in bad debt expense, while positive, represents just
one data point of improvement in the bad debt equation, and many macroeconomic
issues remain for the health care industry. However, we have identified many
improvements in our internal processes that we feel can help mitigate these
costs. We also remain confident that the capital deployed in our facilities and
the commitment of our employees to deliver quality health care services continue
to enhance our position for the future," stated Jack O. Bovender, Jr., Chairman
and Chief Executive Officer of HCA.
Revenues for the six months ended June 30, 2004 were $11.8 billion compared to
$10.7 billion in 2003. Net income totaled $697 million, or $1.41 per diluted
share, compared to $709 million, or $1.37 per diluted share, for the six months
ended June 30, 2003.
Same facility uninsured emergency room visits rose 16.9 percent in the second
quarter of 2004, while same facility uninsured admissions rose 15.2 percent in
the second quarter of 2004 compared to the second quarter of 2003. Same facility
uninsured emergency room visits accounted for 20.5 percent of total emergency
room visits and same facility uninsured admissions accounted for 4.8 percent of
total admissions in the second quarter of 2004. The Company's health care
facilities provided $232 million of charity care and discounts to the uninsured
during the second quarter of 2004, up from $209 million in the second quarter of
2003.
Medicare regulatory changes, effective October 1, 2003, resulted in a $35
million ($0.04 per diluted share) reduction in the Company's Medicare operating
outlier payments (from $64 million in the second quarter of 2003 to $29 million
in the second quarter of 2004). The lower outlier payments resulted in a 60
basis point reduction in the Company's revenue per equivalent admission growth
in the quarter.
During the second quarter of 2004, same facility outpatient surgeries increased
0.9 percent. Included in this statistic are ambulatory surgery volumes, which
increased 4.1 percent, and hospital based outpatient surgeries, which decreased
0.4 percent. Same facility emergency room visits increased 2.4 percent during
the second quarter compared to the same period of 2003.
2
The Company's cash flow from operations increased to $682 million for the second
quarter of 2004 from $320 million in 2003. During the second quarter of 2004,
the Company benefited from lower estimated tax payments, while cash flow for the
second quarter of 2003 was reduced by a $250 million settlement payment to the
Federal government. Capital expenditures, excluding acquisitions, totaled $397
million in the second quarter of 2004. The Company anticipates capital
expenditures, excluding acquisitions, will approximate $1.65 billion in 2004.
HCA's ratio of debt-to-debt plus common and minority equity was 55.1 percent at
June 30, 2004 compared to 55.8 percent at December 31, 2003.
The Company repurchased 5.4 million shares of its common stock at a cost of $217
million (average cost of $39.93 per share) during the second quarter of 2004.
The Company repurchased 0.2 million shares at a cost of $8 million in July 2004,
completing the Company's $1.5 billion share repurchase authorization. Since
1997, HCA has repurchased approximately 249 million shares at a cost of $7.5
billion (average cost of $30.20 per share). HCA had 482 million shares
outstanding at June 30, 2004.
At June 30, 2004, the Company operated 190 hospitals and 91 freestanding surgery
centers (including 7 hospitals and 9 freestanding surgery centers owned through
equity method joint ventures) located in 23 states, London, England and Geneva,
Switzerland compared to 190 hospitals and 80 freestanding surgery centers
(including 6 hospitals and 4 freestanding surgery centers owned through equity
method joint ventures) at June 30, 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.
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This press release contains forward-looking statements based on current
management expectations. Those forward-looking statements include 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
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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 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.
CONDENSED CONSOLIDATED INCOME STATEMENTS
SECOND QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2004 2003
------------------- -------------------
AMOUNT RATIO Amount Ratio
--------- ----- --------- -----
Revenues ................................................. $ 5,833 100.0% $ 5,467 100.0%
Salaries and benefits .................................... 2,334 40.0 2,178 39.8
Supplies ................................................. 967 16.6 870 15.9
Other operating expenses ................................. 891 15.3 926 17.0
Provision for doubtful accounts .......................... 661 11.3 577 10.6
(Gains) losses on investments ............................ (18) (0.3) 1 --
Equity in earnings of affiliates ......................... (53) (0.9) (53) (1.0)
Depreciation and amortization ............................ 315 5.4 278 5.1
Interest expense ......................................... 136 2.3 123 2.2
Gains on sales of facilities ............................. -- -- (1) --
Impairment of long-lived assets .......................... -- -- 130 2.4
Investigation related costs .............................. -- -- 1 --
--------- ----- --------- -----
5,233 89.7 5,030 92.0
--------- ----- --------- -----
Income before minority interests and income taxes ........ 600 10.3 437 8.0
Minority interests in earnings of consolidated entities .. 35 0.6 47 0.9
--------- ----- --------- -----
Income before income taxes ............................... 565 9.7 390 7.1
Provision for income taxes ............................... 213 3.7 150 2.7
--------- ----- --------- -----
Net income .......................................... $ 352 6.0 $ 240 4.4
========= ===== ========= =====
Diluted earnings per share ............................... $ 0.72 $ 0.47
Shares used in computing diluted earnings per share (000) 490,261 514,412
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HCA INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2004 2003
------------------- --------------------
AMOUNT RATIO Amount Ratio
--------- ----- --------- -----
Revenues ................................................. $ 11,770 100.0% $ 10,740 100.0%
Salaries and benefits .................................... 4,667 39.7 4,274 39.8
Supplies ................................................. 1,947 16.5 1,715 16.0
Other operating expenses ................................. 1,842 15.6 1,779 16.5
Provision for doubtful accounts .......................... 1,355 11.5 1,005 9.4
(Gains) losses on investments ............................ (28) (0.2) 1 --
Equity in earnings of affiliates ......................... (99) (0.8) (111) (1.0)
Depreciation and amortization ............................ 618 5.2 539 4.9
Interest expense ......................................... 271 2.3 237 2.2
Gains on sales of facilities ............................. -- -- (75) (0.7)
Impairment of long-lived assets .......................... -- -- 130 1.2
Investigation related costs .............................. -- -- 5 0.1
--------- ----- --------- -----
10,573 89.8 9,499 88.4
--------- ----- --------- -----
Income before minority interests and income taxes ........ 1,197 10.2 1,241 11.6
Minority interests in earnings of consolidated entities .. 73 0.7 86 0.8
--------- ----- --------- -----
Income before income taxes ............................... 1,124 9.5 1,155 10.8
Provision for income taxes ............................... 427 3.6 446 4.2
--------- ----- --------- -----
Net income .......................................... $ 697 5.9 $ 709 6.6
========= ===== ========= =====
Diluted earnings per share ............................... $ 1.41 $ 1.37
Shares used in computing diluted earnings per share (000) 493,941 518,374
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HCA INC.
SUPPLEMENTAL OPERATING RESULTS INFORMATION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
SECOND QUARTER YEAR TO DATE
---------------------- ----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Revenues ................................................................... $ 5,833 $ 5,467 $ 11,770 $ 10,740
Net income ................................................................. $ 352 $ 240 $ 697 $ 709
Gains on sales of facilities (net of tax) ............................. -- -- -- (42)
Impairment of long-lived assets (net of tax) .......................... -- 79 -- 79
Investigation related costs (net of tax) .............................. -- -- -- 3
--------- --------- --------- ---------
Net income, excluding gains on sales of facilities, impairment of long-lived
assets and investigation related costs (a) ............................... 352 319 697 749
Depreciation and amortization ......................................... 315 278 618 539
Interest expense ...................................................... 136 123 271 237
Minority interests in earnings of consolidated entities ............... 35 47 73 86
Provision for income taxes ............................................ 213 201 427 466
--------- --------- --------- ---------
Adjusted EBITDA (a) ........................................................ $ 1,051 $ 968 $ 2,086 $ 2,077
========= ========= ========= =========
Diluted earnings per share:
Net income ............................................................ $ 0.72 $ 0.47 $ 1.41 $ 1.37
Gains on sales of facilities .......................................... -- -- -- (0.08)
Impairment of long-lived assets ....................................... -- 0.15 -- 0.15
--------- --------- --------- ---------
Net income, excluding gains on sales of facilities, impairment of
long-lived assets and investigation related costs (a) ............ $ 0.72 $ 0.62 $ 1.41 $ 1.44
========= ========= ========= =========
Shares used in computing diluted earnings per share (000) .................. 490,261 514,412 493,941 518,374
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(a) Net income, excluding gains on sales of facilities, 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 perfomance 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 recorded asset impairment charges during the
second quarter and gains on sales of facilities and investigation related
costs during the six months ended June 30, 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 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 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)
JUNE 30, MARCH 31, DECEMBER 31,
2004 2004 2003
--------- --------- -----------
ASSETS
Current assets:
Cash and cash equivalents ............................... $ 120 $ 148 $ 115
Accounts receivable, net ................................ 3,113 3,243 3,095
Inventories ............................................. 541 532 520
Deferred income taxes ................................... 573 564 534
Other ................................................... 385 342 558
--------- --------- ---------
Total current assets ............................... 4,732 4,829 4,822
Property and equipment, at cost .............................. 19,346 18,969 18,685
Accumulated depreciation ..................................... (8,081) (7,816) (7,620)
--------- --------- ---------
11,265 11,153 11,065
Investments of insurance subsidiary .......................... 1,866 1,870 1,790
Investments in and advances to affiliates .................... 508 520 527
Goodwill ..................................................... 2,496 2,499 2,481
Deferred loan costs .......................................... 76 80 75
Other ........................................................ 236 260 303
--------- --------- ---------
$ 21,179 $ 21,211 $ 21,063
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................ $ 746 $ 809 $ 877
Accrued salaries ........................................ 537 533 510
Other accrued expenses .................................. 1,140 1,169 1,116
Long-term debt due within one year ...................... 710 223 665
--------- --------- ---------
Total current liabilities .......................... 3,133 2,734 3,168
Long-term debt ............................................... 7,961 8,530 8,042
Professional liability risks ................................. 1,270 1,306 1,314
Deferred income taxes and other liabilities .................. 1,746 1,718 1,650
Minority interests in equity of consolidated entities ........ 726 713 680
Stockholders' equity ......................................... 6,343 6,210 6,209
--------- --------- ---------
$ 21,179 $ 21,211 $ 21,063
========= ========= =========
Current ratio ................................................ 1.51 1.77 1.52
Ratio of debt to debt plus common and minority equity ........ 55.1% 55.8% 55.8%
Shares outstanding (thousands) ............................... 482,095 484,469 490,718
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HCA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(DOLLARS IN MILLIONS)
2004 2003
------- -------
Cash flows from operating activities:
Net income .......................................................... $ 697 $ 709
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for doubtful accounts .................................. 1,355 1,005
Depreciation and amortization .................................... 618 539
Income taxes ..................................................... 254 (17)
Settlement with Federal government ............................... -- (250)
Gains on sales of facilities ..................................... -- (75)
Impairment of long-lived assets .................................. -- 130
Change in operating assets and liabilities ....................... (1,533) (1,052)
Other ............................................................ 63 86
------- -------
Net cash provided by operating activities ...................... 1,454 1,075
------- -------
Cash flows from investing activities:
Purchase of property and equipment .................................. (787) (920)
Acquisition of hospitals and health care entities ................... (30) (884)
Disposition of hospitals and health care entities ................... 28 121
Change in investments ............................................... (71) (110)
Other ............................................................... 1 (4)
------- -------
Net cash used in investing activities .......................... (859) (1,797)
------- -------
Cash flows from financing activities:
Issuance of long-term debt .......................................... 501 509
Net change in revolving bank credit facility ........................ (160) 805
Repayment of long-term debt ......................................... (383) (52)
Payment of cash dividends ........................................... (72) (20)
Repurchases of common stock ......................................... (592) (542)
Issuances of common stock ........................................... 127 51
Other ............................................................... (11) (6)
------- -------
Net cash (used in) provided by financing activities ............ (590) 745
------- -------
Change in cash and cash equivalents ..................................... 5 23
Cash and cash equivalents at beginning of period ........................ 115 161
------- -------
Cash and cash equivalents at end of period .............................. $ 120 $ 184
======= =======
Interest payments ....................................................... $ 258 $ 211
Income tax payments, net of refunds ..................................... $ 173 $ 463
9
HCA INC.
OPERATING STATISTICS
FOR THE SIX MONTHS
SECOND QUARTER ENDED JUNE 30,
------------------------- -------------------------
2004 2003 2004 2003
--------- --------- --------- ---------
CONSOLIDATED HOSPITALS:
Number of Hospitals 183 184 183 184
Weighted Average Licensed Beds 41,962 42,178 41,948 41,074
Licensed Beds at End of Period 41,930 42,152 41,930 42,152
REPORTED:
Admissions 410,500 409,000 840,800 813,500
% Change 0.4% 3.4%
Equivalent Admissions 611,600 605,300 1,236,800 1,192,600
% Change 1.0% 3.7%
Revenue per Equivalent Admission $ 9,536 $ 9,033 $ 9,516 $ 9,006
% Change 5.6% 5.7%
Inpatient Revenue per Admission $ 8,667 $ 8,167 $ 8,618 $ 8,200
% Change 6.1% 5.1%
Patient Days 2,033,400 2,020,200 4,207,000 4,047,400
Equivalent Patient Days 3,030,300 2,990,200 6,188,500 5,933,600
Emergency Room Visits 1,309,600 1,274,500 2,606,500 2,497,100
% Change 2.8% 4.4%
Outpatient Revenues as a
Percentage of Patient Revenues 38.1% 37.7% 37.5% 36.8%
Average Length of Stay 5.0 4.9 5.0 5.0
Occupancy 53.3% 52.6% 55.1% 54.4%
Equivalent Occupancy 79.4% 77.9% 81.1% 79.8%
SAME FACILITY:
Admissions 408,500 406,800 804,100 792,300
% Change 0.4% 1.5%
Equivalent Admissions 608,300 602,100 1,180,500 1,159,900
% Change 1.0% 1.8%
Revenue per Equivalent Admission $ 9,519 $ 9,008 $ 9,530 $ 8,979
% Change 5.7% 6.1%
Inpatient Revenue per Admission $ 8,675 $ 8,173 $ 8,763 $ 8,267
% Change 6.1% 6.0%
Emergency Room Visits 1,293,900 1,263,400 2,483,300 2,425,900
% Change 2.4% 2.4%
NUMBER OF CONSOLIDATED AND
NON-CONSOLIDATED (50/50 EQUITY
JOINT VENTURES) HOSPITALS:
Consolidated 183 184 183 184
Non-Consolidated (50/50 Equity
Joint Ventures) 7 6 7 6
--------- --------- --------- ---------
Total Number of Hospitals 190 190 190 190
========= ========= ========= =========
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