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 2005 THIRD QUARTER RESULTS
Nashville, Tenn., October 25, 2005 - HCA (NYSE: HCA) announced today that its
earnings for the third quarter ended September 30, 2005 were $0.62 per diluted
share compared to $0.47 per diluted share in the third quarter of 2004. The 2005
quarterly results include an estimated adverse financial impact from hurricanes
Katrina and Rita of $33 million pretax, or $0.05 per diluted share. Third
quarter 2005 results also include an estimated tax benefit of $22 million, or
$0.05 per diluted share, from the expected repatriation of foreign earnings.
THIRD QUARTER RESULTS
Net income in the third quarter of 2005 totaled $280 million, or $0.62 per
diluted share, compared to $227 million, or $0.47 per diluted share, in the
third quarter of 2004. The Company recorded estimated costs, net of estimated
recoveries, of $33 million, or $0.05 per diluted share, in the third quarter of
2005 as a result of property damage and business disruption associated with
hurricanes Katrina and Rita to certain HCA hospitals in Louisiana, Mississippi
and Texas. Also during the third quarter of 2005, the HCA Board of Directors
authorized the repatriation of approximately $190 million of accumulated
earnings from HCA's international subsidiaries. A provision of the American Jobs
Creation Act allows a one-year reduced tax rate of 5.25 percent on repatriated
foreign earnings. HCA recorded an estimated tax benefit of $22 million, or $0.05
per diluted share, in the third quarter of 2005, related to the expected
repatriation. Results for the third quarter of 2004 included an adverse
financial impact to certain HCA Florida hospitals from four hurricanes of $0.05
per diluted share and an asset impairment charge of $0.02 per diluted share.
For the third quarter of 2005, the Company's revenues totaled $6.0 billion
compared to $5.8 billion in the same period of 2004. Same facility revenues
increased 4.6 percent in the third quarter of 2005 compared to the previous
year's third quarter. For the third quarter, same facility revenue per
equivalent admission increased 3.4 percent, compared to the prior year's third
quarter. Adjusting for discounts provided to uninsured patients of $239 million,
same facility revenues increased 8.8 percent and same facility revenue per
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equivalent admission increased 7.6 percent in the third quarter of 2005 compared
to the same period of 2004.
Same facility admissions decreased 0.7 percent and same facility equivalent
admissions increased 1.1 percent in the third quarter of 2005, compared to the
third quarter of 2004. Admission and equivalent admission levels at certain of
the Company's hospitals were impacted by hurricanes in the third quarters of
both 2004 and 2005, making it somewhat difficult to compare volumes from year to
year.
The Company's provision for doubtful accounts for the third quarter of 2005 was
$618 million or 10.3 percent of revenues, compared to $688 million or 11.9
percent of revenues in the prior year's third quarter. Adjusting for the effect
of the uninsured discounts, the provision for doubtful accounts for the third
quarter of 2005 was 13.7 percent of revenues. On a same facility basis,
uninsured admissions in the third quarter of 2005 increased 15.0 percent and
uninsured emergency room visits increased 13.6 percent over the third quarter of
2004. During the third quarter of 2005, same facility uninsured admissions
represented 5.6 percent of total same facility admissions and same facility
uninsured emergency room visits represented 21.5 percent of total same facility
emergency room visits. HCA healthcare facilities provided $298 million of
charity care to the uninsured in the third quarter of 2005 compared to $228
million in the third quarter of 2004.
During the third quarter of 2005, same facility outpatient surgeries decreased
0.2 percent compared to the prior year's third quarter. Included in this
statistic are ambulatory surgery volumes, which increased 1.6 percent, and
hospital based outpatient surgeries, which decreased 1.1 percent. Same facility
emergency room visits increased 3.7 percent during the third quarter of 2005
compared to the same period of 2004.
The Company's cash flow from operations totaled $943 million for the third
quarter of 2005 compared to $1.056 billion in 2004. Capital expenditures,
excluding acquisitions, totaled $423 million in the third quarter of 2005 and
$1.048 billion for the nine months ended September 30, 2005.
Revenues for the nine months ended September 30, 2005 were $18.3 billion
compared to $17.6 billion in 2004. Net income totaled $1.1 billion, or $2.46 per
diluted share, for the nine months ended September 30, 2005 compared to $924
million, or $1.88 per diluted share, for the nine months ended September 30,
2004. For the nine months ended September 30, 2005, same facility admissions
were flat and same facility equivalent admissions increased 1.5 percent when
compared to the prior year period.
At September 30, 2005, the Company's balance sheet reflected total debt of $9.3
billion, stockholders equity (including common and minority equity) of $7.2
billion and total assets of $22.0 billion. HCA's ratio of debt-to-debt plus
common and minority equity was 56.4 percent at September 30, 2005 compared to
66.9 percent at December 31, 2004.
$2.5 BILLION SHARE REPURCHASE
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The Company announced on October 13, 2005, that its Board of Directors has
authorized a share repurchase of up to $2.5 billion in the form of a modified
"Dutch" auction tender offer to purchase up to 50 million shares of the
Company's common stock at a price not greater than $50.00 nor less than $43.00
per share and as specified in the offer to purchase relating to the tender offer
distributed to shareholders. The tender offer commenced on October 14, 2005 and
will expire, unless extended, at 5:00 p.m., New York City time, on November 14,
2005. As of September 30, 2005, the Company had 452.7 million shares of common
stock outstanding.
"The tender offer is consistent with the Company's commitment to enhancing
shareholder value and reflects our confidence in the long-term future of HCA,"
stated Jack O. Bovender, Jr., HCA Chairman and CEO. "The tender offer represents
an opportunity for the Company to deliver value to shareholders who elect to
tender their shares, while at the same time increasing the proportional
ownership of non-tendering shareholders in HCA. We believe the Company possesses
the financial strength to successfully complete the tender offer and the related
borrowings without jeopardizing future capital investments in our existing
hospitals and communities," concluded Bovender.
REVISED 2005 EARNINGS GUIDANCE
The Company believes that its full year 2005 reported earnings will range from
$3.10 to $3.20 per diluted share. This earnings range and the "per diluted
share" amount of the following items that are included in the Company's 2005
earnings guidance do not include any potential impact related to the completion
of the announced $2.5 billion share repurchase:
o Favorable tax settlement related to the Company's divestiture
of certain non-core business units in 1998 and 2001 of $48
million, or $0.11 per diluted share (recorded in the second
quarter).
o Recognition of a previously deferred gain on the Company's
sale of certain medical office buildings of $29 million
pretax, or $0.04 per diluted share (recorded in the second
quarter).
o Reduction in the Company's estimated professional liability
insurance reserves of $36 million pretax, or $0.05 per diluted
share (recorded in the second quarter).
o Additional depreciation expense of $30 million pretax, or
$0.04 per diluted share, to correct accumulated depreciation
and assure a consistent application of the Company's
accounting policy relative to certain short-lived medical
equipment (recorded in the second quarter).
o Adverse financial impact of $33 million pretax, or $0.05 per
diluted share, due to hurricanes Katrina and Rita (recorded in
the third quarter).
o Tax benefit of $22 million, or $0.05 per diluted share, from
the expected repatriation of foreign earnings (recorded in the
third quarter).
o Anticipated gain on the sale of 5 hospitals to Capella
Healthcare of approximately $55 million pretax, or $0.05 per
diluted share (anticipated in the fourth quarter).
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o Anticipated actuarial reduction in the Company's professional
liability insurance reserves of approximately $20 million
pretax, or $0.03 per diluted share (anticipated in the fourth
quarter).
There can be no assurances that the sale of the 5 hospitals will be completed by
December 31, 2005, or that the anticipated reduction in professional liability
insurance reserves will be realized in the fourth quarter of 2005.
2006 EARNINGS GUIDANCE
The Company's earnings guidance for 2006 is an anticipated range of $3.25 to
$3.45 per diluted share. The following items are included in the Company's 2006
earnings guidance:
o An estimated $0.17 to $0.22 per diluted share benefit from the
$2.5 billion share repurchase (fewer shares outstanding
partially offset by higher interest expense), which will vary
depending on the final results of the tender offer.
o Additional compensation costs of $35 million, or $0.05 per
diluted share, due to the implementation on January 1, 2006,
of FASB Statement No. 123(R), "Share-Based Payment".
o Anticipated completion of the sale of 5 hospitals to LifePoint
Hospitals, Inc. for a gain of approximately $105 million
pretax, or $0.13 per diluted share, during the first quarter
of 2006.
o Revenue increase of approximately 6 to 7 percent on a same
facility basis.
o Continuing increases in uninsured admissions, resulting in
increases in the Company's provision for doubtful accounts.
Numerous other factors, many of which are beyond the ability of the Company to
control or predict, will determine the Company's actual results in 2006.
Management believes the most significant of such factors are hospital inpatient
and outpatient volumes, levels of uninsured patients receiving services at the
Company's facilities, the ability to collect uninsured accounts and deductibles
and co-pay amounts for insured accounts, successful consummation of the
announced share repurchase and the potential adverse impact from future
hurricanes or other disasters.
EARNINGS CONFERENCE CALL AND WEBCAST
HCA will host a conference call for investors to discuss third quarter results
at 8:30 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 year. The webcast can be accessed via the following link:
http://phx.corporate-ir.net/phoenix.zhtml?p=iroleventDetails&c=63489&event
ID=1147013 or on the Investor Relations page at www.hcahealthcare.com.
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HCA operates 187 hospitals and 94 freestanding surgery centers (including seven
hospitals and eight freestanding surgery centers owned through equity joint
ventures) located in 23 states, London, England and Geneva, Switzerland.
This document is neither an offer to purchase nor a solicitation of an offer to
sell shares of HCA's common stock. The tender offer referred to herein is made
only through an Offer to Purchase, a Letter of Transmittal and other related
materials, as they may be amended or supplemented from time to time. Investors
and security holders are strongly advised to read the Offer to Purchase, the
Letter of Transmittal and other related materials because they contain important
information. Investors and security holders may obtain a free copy of the Offer
to Purchase, the Letter of Transmittal and other related materials on the SEC's
web site at: http://www.sec.gov. The Offer to Purchase, the Letter of
Transmittal and other related materials may also be obtained for free by
directing such requests to the Information Agent, Georgeson Shareholder, at
(212) 440-9800 or (888) 264-7052.
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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
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, including our
guidance for future periods, and the expected results of the tender. 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 number of shares tendered and the price
at which the Company determines to purchase shares in the tender offer, (ii) the
availability and cost of adequate financing on terms acceptable to the Company,
including the ability of the Company to successfully amend its existing credit
facility or to refinance it pursuant to the terms and conditions in the related
commitment letter and to obtain the necessary financing for the tender offer
pursuant to the terms contained in the commitment letter from JPMorgan and
Merrill Lynch, (iii) increases in the amount and risk of collectability of
uninsured accounts and deductibles and co-pay amounts for insured accounts, (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
highly competitive nature of the health care business, (vi) the continuing
impact of the hurricanes on the Company's affiliated Louisiana, Mississippi and
Texas facilities and the ability to obtain recoveries under the Company's
insurance policies, (vii) the efforts of insurers, health care providers and
others to contain health care costs, (viii) possible changes in the Medicare,
Medicaid and other state programs that may impact reimbursements to health care
providers and insurers, (ix) the outcome of governmental investigations by the
United States Attorney for the Southern District of New York and the SEC, (x)
the ability to attract and retain qualified management and personnel, including
affiliated physicians, nurses and medical support personnel, (xi) potential
liabilities and other claims that may be asserted against the Company, (xii)
fluctuations in the market value of the Company's common stock, (xiii) the
impact of the Company's
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charity care and uninsured discounting policy changes, (xiv) changes in
accounting practices, (xv) changes in general economic conditions, (xvi) future
divestitures which may result in charges, (xvii) changes in revenue mix and the
ability to enter into and renew managed care provider arrangements on acceptable
terms, (xviii) the availability and terms of capital to fund the expansion of
the Company's business, (xix) changes in business strategy or development plans,
(xxi) delays in receiving payments for services provided, (xx) the possible
enactment of Federal or state health care reform, (xxii) the outcome of pending
and any future tax audits, appeals and litigation associated with the Company's
tax positions, (xxiii) 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,
(xxiv) changes in Federal, state or local regulations affecting the health care
industry, (xxv) the ability of the Company to consummate successfully the
divestitures of ten hospitals on a timely basis and in accordance with the
definitive agreements entered into with LifePoint Hospitals, Inc. and Capella
Healthcare, (xxvi) the ability to develop and implement the payroll and human
resources information systems within the expected time and cost projections and,
upon implementation, to realize the expected benefits and efficiencies, and
(xxvii) 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.
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HCA INC.
CONSOLIDATED INCOME STATEMENTS
THIRD QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2005 2004
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AMOUNT RATIO AMOUNT RATIO
------ ----- ------ -----
Revenues.................................................. $ 6,025 100.0% $ 5,792 100.0%
Salaries and benefits..................................... 2,484 41.2 2,350 40.6
Supplies.................................................. 1,009 16.8 966 16.7
Other operating expenses.................................. 1,030 17.1 984 17.0
Provision for doubtful accounts........................... 618 10.3 688 11.9
Gains on investments...................................... (21) (0.4) (24) (0.4)
Equity in earnings of affiliates.......................... (44) (0.7) (49) (0.9)
Depreciation and amortization............................. 337 5.5 314 5.4
Interest expense.......................................... 160 2.7 138 2.4
Impairment of long-lived assets........................... -- -- 12 0.2
---------------------- ----------------------
5,573 92.5 5,379 92.9
---------------------- ----------------------
Income before minority interests and income taxes......... 452 7.5 413 7.1
Minority interests in earnings of consolidated entities... 43 0.7 46 0.8
---------------------- ----------------------
Income before income taxes................................ 409 6.8 367 6.3
Provision for income taxes................................ 129 2.1 140 2.4
---------------------- ----------------------
Net income........................................... $ 280 4.7 $ 227 3.9
====================== ======================
Diluted earnings per share................................ $ 0.62 $ 0.47
Shares used in computing diluted earnings per
share (000)............................................ 454,878 488,484
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HCA INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2005 2004
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AMOUNT RATIO AMOUNT RATIO
------ ----- ------ -----
Revenues.................................................. $ 18,277 100.0% $ 17,562 100.0%
Salaries and benefits..................................... 7,390 40.4 7,017 40.0
Supplies.................................................. 3,102 17.0 2,913 16.6
Other operating expenses.................................. 2,983 16.3 2,826 16.0
Provision for doubtful accounts........................... 1,733 9.5 2,043 11.6
Gains on investments...................................... (52) (0.3) (52) (0.3)
Equity in earnings of affiliates.......................... (150) (0.8) (148) (0.8)
Depreciation and amortization............................. 1,038 5.7 932 5.3
Interest expense.......................................... 489 2.7 409 2.3
Gains on sales of facilities.............................. (29) (0.2) -- --
Impairment of long-lived assets........................... -- -- 12 0.1
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16,504 90.3 15,952 90.8
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Income before minority interests and income taxes......... 1,773 9.7 1,610 9.2
Minority interests in earnings of consolidated entities... 132 0.7 119 0.7
---------------------- ----------------------
Income before income taxes................................ 1,641 9.0 1,491 8.5
Provision for income taxes................................ 542 3.0 567 3.2
---------------------- ----------------------
Net income........................................... $ 1,099 6.0 $ 924 5.3
====================== ======================
Diluted earnings per share................................ $ 2.46 $ 1.88
Shares used in computing diluted earnings per
share (000)............................................ 447,500 492,113
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HCA INC.
SUPPLEMENTAL OPERATING RESULTS SUMMARY
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
FOR THE NINE MONTHS
THIRD QUARTER ENDED SEPTEMBER 30,
----------------- -------------------
2005 2004 2005 2004
---- ---- ---- ----
Revenues.................................................. $ 6,025 $ 5,792 $ 18,277 $ 17,562
Net income................................................ $ 280 $ 227 $ 1,099 $ 924
Gains on sales of facilities (net of tax)............ -- -- (18) --
Impairment of long-lived assets (net of tax)......... -- 8 -- 8
Tax settlement and repatriation...................... (22) -- (70) --
--------- --------- --------- --------
Net income, excluding gains on sales of facilities,
impairment of long-lived assets and tax settlement
and repatriation ...................................... 258 235 1,011 932
Depreciation and amortization........................ 337 314 1,038 932
Interest expense..................................... 160 138 489 409
Minority interests in earnings of consolidated
entities........................................... 43 46 132 119
Provision for income taxes........................... 151 144 601 571
--------- --------- --------- --------
Adjusted EBITDA (a).................................. $ 949 $ 877 $ 3,271 $ 2,963
========= ========= ========= ========
Diluted earnings per share:
Net income........................................... $ 0.62 $ 0.47 $ 2.46 $ 1.88
Gains on sales of facilities......................... -- -- (0.04) --
Impairment of long-lived assets...................... -- 0.02 -- 0.02
Tax settlement and repatriation...................... (0.05) -- (0.16) --
--------- --------- --------- --------
Net income, excluding gains on sales of facilities,
impairment of long-lived assets and tax settlement
and repatriation (a)........................... $ 0.57 $ 0.49 $ 2.26 $ 1.90
========= ========= ========= ========
Shares used in computing diluted earnings per
share (000)........................................ 454,878 488,484 447,500 492,113
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(a) Net income, excluding gains on sales of facilities, impairment of
long-lived assets and tax settlement and repatriation and adjusted EBITDA
and non-GAAP financial measures. The Company believes that net income
excluding, gains on sales of facilities, impairment of long-lived assets
and tax settlement and repatriation and adjusted EBITDA are important
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
gains on sales of facilities, impairment of long-lived assets and tax
settlement and repatriation 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 gains on sales of facilities, impairment
of long-lived assets and tax settlement and repatriation, GAAP net income
and GAAP EPS) and 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 gains on sales of facilities during the nine months ended
September 30, 2005, asset impairment charges during the third quarter of
2004, a tax repatriation during the third quarter of 2005 and a tax
settlement during the nine months ended September 30, 2005. It is
reasonable to expect that gains on sales of facilities, impairments of
long-lived assets and tax settlements and repatriations 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.
Net income, excluding gains on sales of facilities, impairment of
long-lived assets and tax settlement and repatriation 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 cash
flows from operating activities as a measure of liquidity. Because net
income, excluding gains on sales of facilities, impairment of long-lived
assets and tax settlement and repatriation and adjusted EBITDA are not
measurements determined in accordance with generally accepted accounting
principles and are susceptible to varying calculations, net income,
excluding gains on sales of facilities, impairment of long-lived assets and
tax settlement and repatriation and adjusted EBITDA, as presented, may not
be comparable to other similarly titled measures presented by other
companies.
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HCA INC.
SUPPLEMENTAL NON-GAAP DISCLOSURES
OPERATING MEASURES ADJUSTED FOR THE IMPACT OF DISCOUNTS FOR THE UNINSURED
THIRD QUARTER 2005
(DOLLARS IN MILLIONS, EXCEPT REVENUE PER EQUIVALENT ADMISSION)
NON-GAAP %
REPORTED UNINSURED NON-GAAP GAAP % OF ADJUSTED
GAAP DISCOUNTS ADJUSTED REVENUES REVENUES
AMOUNTS ADJUSTMENT(a) AMOUNTS(b) 2005 2004 2005
------- ------------- ---------- ---- ---- ----
REPORTED:
Revenues.......................... $ 6,025 $ 241 $ 6,266 100.0% 100.0% 100.0%
Salaries and benefits............. 2,484 -- 2,484 41.2% 40.6% 39.6%
Supplies.......................... 1,009 -- 1,009 16.8% 16.7% 16.1%
Other operating expenses.......... 1,030 -- 1,030 17.1% 17.0% 16.5%
Provision for doubtful accounts... 618 241 859 10.3% 11.9% 13.7%
Admissions........................ 405,100 405,100
Equivalent admissions............. 615,500 615,500
Revenue per equivalent admission.. $ 9,788 $ 10,180
% change from prior year.......... 3.3% 7.5%
SAME FACILITY:
Revenues.......................... $ 5,895 $ 239 $ 6,134
Admissions........................ 401,500 401,500
Equivalent admissions............. 608,200 608,200
Revenue per equivalent admission.. $ 9,693 $ 10,085
% change from prior year.......... 3.4% 7.6%
(a) Represents the impact of the discounts for the uninsured for the
period. On January 1, 2005, HCA modified its policies to provide discounts
to uninsured patients who do not qualify for Medicaid or charity care.
These discounts are similar to those provided to many local managed care
plans. In implementing the discount policy HCA first attempts to qualify
uninsured patients for Medicaid, other federal or state assistance or
charity care. If an uninsured patient does not qualify for these programs,
the uninsured discount is applied.
(b) Revenues, the provision for doubtful accounts, certain operating expense
categories as a percentage of revenues and revenue per equivalent admission
have been adjusted to exclude the discounts under HCA's uninsured discount
policy (non-GAAP financial measures). The Company believes that these
non-GAAP financial measures are useful to investors to provide disclosures
of its results of operations on the same basis as that used by management.
Management uses this information to compare revenues, the provision for
doubtful accounts, certain operating expense categories as a percentage of
revenues and revenue per equivalent admission for periods prior and
subsequent to the January 1, 2005 implementation of the uninsured discount
policy. Management finds this information to be useful to enable the
evaluation of revenue and certain expense category trends that are
influenced by patient volumes and are generally analyzed as a percentage of
net revenues. These non-GAAP financial measures should not be considered an
alternative to GAAP financial measures. The Company believes this
supplemental information provides it and the users of its financial
statements with useful information for period-to-period comparisons.
Investors are encouraged to use GAAP measures when evaluating the Company's
overall financial performance.
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HCA INC.
SUPPLEMENTAL NON-GAAP DISCLOSURES
OPERATING MEASURES ADJUSTED FOR THE IMPACT OF DISCOUNTS FOR THE UNINSURED
NINE MONTHS ENDED SEPTEMBER 30, 2005
(DOLLARS IN MILLIONS, EXCEPT REVENUE PER EQUIVALENT ADMISSION)
NON-GAAP %
REPORTED UNINSURED NON-GAAP GAAP % OF ADJUSTED
GAAP DISCOUNTS ADJUSTED REVENUES REVENUES
AMOUNTS ADJUSTMENT(a) AMOUNTS(b) 2005 2004 2005
------- ------------- ---------- ---- ---- ----
REPORTED:
Revenues......................... $ 18,277 $ 534 $ 18,811 100.0% 100.0% 100.0%
Salaries and benefits............ 7,390 -- 7,390 40.4% 40.0% 39.3%
Supplies......................... 3,102 -- 3,102 17.0% 16.6% 16.5%
Other operating expenses......... 2,983 -- 2,983 16.3% 16.0% 15.8%
Provision for doubtful accounts.. 1,733 534 2,267 9.5% 11.6% 12.1%
Admissions....................... 1,245,300 1,245,300
Equivalent admissions............ 1,871,600 1,871,600
Revenue per equivalent admission. $ 9,765 $ 10,051
% change from prior year......... 2.7% 5.7%
SAME FACILITY:
Revenues......................... $ 17,872 $ 529 $ 18,401
Admissions....................... 1,230,700 1,230,700
Equivalent admissions............ 1,843,600 1,843,600
Revenue per equivalent admission. $ 9,694 $ 9,981
% change from prior year......... 3.0% 6.1%
(a) Represents the impact of the discounts for the uninsured for the
period. On January 1, 2005, HCA modified its policies to provide discounts
to uninsured patients who do not qualify for Medicaid or charity care.
These discounts are similar to those provided to many local managed care
plans. In implementing the discount policy HCA first attempts to qualify
uninsured patients for Medicaid, other federal or state assistance or
charity care. If an uninsured patient does not qualify for these programs,
the uninsured discount is applied.
(b) Revenues, the provision for doubtful accounts, certain operating expense
categories as a percentage of revenues and revenue per equivalent admission
have been adjusted to exclude the discounts under HCA's uninsured discount
policy (non-GAAP financial measures). The Company believes that these
non-GAAP financial measures are useful to investors to provide disclosures
of its results of operations on the same basis as that used by management.
Management uses this information to compare revenues, the provision for
doubtful accounts, certain operating expense categories as a percentage of
revenues and revenue per equivalent admission for periods prior and
subsequent to the January 1, 2005 implementation of the uninsured discount
policy. Management finds this information to be useful to enable the
evaluation of revenue and certain expense category trends that are
influenced by patient volumes and are generally analyzed as a percentage of
net revenues. These non-GAAP financial measures should not be considered an
alternative to GAAP financial measures. The Company believes this
supplemental information provides it and the users of its financial
statements with useful information for period-to-period comparisons.
Investors are encouraged to use GAAP measures when evaluating the Company's
overall financial performance.
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HCA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
SEPTEMBER 30, JUNE 30, DECEMBER 31,
ASSETS 2005 2005 2004
------------- --------- ------------
Current assets:
Cash and cash equivalents...................................... $ 721 $ 463 $ 129
Accounts receivable, net....................................... 3,136 3,214 3,083
Inventories.................................................... 584 580 577
Deferred income taxes.......................................... 466 464 467
Other.......................................................... 315 370 427
--------- --------- -----------
Total current assets....................................... 5,222 5,091 4,683
Property and equipment, at cost................................... 20,687 20,344 19,970
Accumulated depreciation.......................................... (9,413) (9,160) (8,574)
---------- ---------- -----------
11,274 11,184 11,396
Investments of insurance subsidiary............................... 2,081 1,997 2,047
Investments in and advances to affiliates......................... 560 556 486
Goodwill.......................................................... 2,645 2,622 2,540
Deferred loan costs............................................... 89 92 99
Other............................................................. 165 176 214
--------- --------- -----------
$ 22,036 $ 21,718 $ 21,465
========= ========= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................... $ 883 $ 832 $ 855
Accrued salaries............................................... 644 578 579
Other accrued expenses......................................... 1,304 1,255 1,254
Long-term debt due within one year............................. 576 560 486
--------- --------- -----------
Total current liabilities.................................. 3,407 3,225 3,174
Long-term debt.................................................... 8,702 8,800 10,044
Professional liability risks...................................... 1,321 1,303 1,283
Deferred taxes and other liabilities.............................. 1,434 1,472 1,748
Minority interests in equity of consolidated entities............. 813 801 809
Stockholders' equity.............................................. 6,359 6,117 4,407
--------- --------- -----------
$ 22,036 $ 21,718 $ 21,465
========= ========= ===========
Current ratio..................................................... 1.53 1.58 1.48
Ratio of debt to debt plus common and minority equity............. 56.4% 57.5% 66.9%
Shares outstanding (thousands).................................... 452,667 451,963 422,642
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HCA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(DOLLARS IN MILLIONS)
2005 2004
----------- -----------
Cash flows from operating activities:
Net income................................................................ $ 1,099 $ 924
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for doubtful accounts....................................... 1,733 2,043
Depreciation and amortization......................................... 1,038 932
Income taxes.......................................................... 158 362
Impairment of long-lived assets....................................... -- 12
Change in operating assets and liabilities............................ (1,621) (1,855)
Other................................................................. 122 92
----------- -----------
Net cash provided by operating activities......................... 2,529 2,510
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment........................................ (1,048) (1,125)
Acquisition of hospitals and health care entities......................... (100) (49)
Disposal of hospitals and health care entities............................ 57 31
Change in investments..................................................... (206) (155)
Other..................................................................... 23 1
----------- -----------
Net cash used in investing activities................................. (1,274) (1,297)
----------- -----------
Cash flows from financing activities:
Issuance of long-term debt................................................ -- 519
Net change in revolving bank credit facility.............................. (700) (510)
Repayment of long-term debt............................................... (560) (443)
Repurchase of common stock................................................ -- (600)
Issuance of common stock.................................................. 947 152
Payment of cash dividends................................................. (191) (134)
Other..................................................................... (159) (12)
----------- -----------
Net cash used in financing activities................................. (663) (1,028)
----------- -----------
Change in cash and cash equivalents.......................................... 592 185
Cash and cash equivalents at beginning of period............................. 129 115
----------- -----------
Cash and cash equivalents at end of period................................... $ 721 $ 300
=========== ===========
Interest payments............................................................ $ 454 $ 375
Income tax payments, net of refunds.......................................... $ 384 $ 205
-13-
HCA INC.
OPERATING STATISTICS
FOR THE NINE MONTHS
THIRD QUARTER ENDED SEPTEMBER 30,
--------------------- -------------------
2005 2004 2005 2004
---- ---- ---- ----
CONSOLIDATED HOSPITALS:
Number of Hospitals....................... 180 183 180 183
Weighted Average Licensed Beds............ 42,089 42,030 41,965 41,975
Licensed Beds at End of Period............ 42,119 42,044 42,119 42,044
REPORTED:
Admissions................................ 405,100 410,800 1,245,300 1,251,600
% Change.............................. -1.4% -0.5%
Equivalent Admissions..................... 615,500 611,400 1,871,600 1,847,400
% Change.............................. 0.7% 1.3%
Revenue per Equivalent Admission.......... $ 9,788 $ 9,474 $ 9,765 $ 9,507
% Change.............................. 3.3% 2.7%
Inpatient Revenue per Admission........... $ 9,310 $ 8,689 $ 9,178 $ 8,729
% Change.............................. 7.1% 5.1%
Patient Days.............................. 1,963,600 2,014,800 6,131,900 6,221,800
Equivalent Patient Days................... 2,984,600 2,999,100 9,216,200 9,183,400
Inpatient Surgery Cases................... 136,300 136,400 408,200 407,300
% Change.............................. 0.0% 0.2%
Outpatient Surgery Cases.................. 206,300 207,800 633,500 628,300
% Change.............................. -0.7% 0.8%
Emergency Room Visits..................... 1,357,700 1,320,900 4,095,100 3,927,400
% Change.............................. 2.8% 4.3%
Outpatient Revenues as a
Percentage of Patient Revenues........ 36.1% 37.4% 36.4% 36.8%
Average Length of Stay.................... 4.8 4.9 4.9 5.0
Occupancy................................. 50.7% 52.1% 53.5% 54.1%
Equivalent Occupancy...................... 77.2% 77.6% 80.4% 79.9%
SAME FACILITY:
Admissions................................ 401,500 404,200 1,230,700 1,231,200
% Change.............................. -0.7% 0.0%
Equivalent Admissions..................... 608,200 601,400 1,843,600 1,817,200
% Change.............................. 1.1% 1.5%
Revenue per Equivalent Admission.......... $ 9,693 $ 9,374 $ 9,694 $ 9,410
% Change.............................. 3.4% 3.0%
Inpatient Revenue per Admission........... $ 9,295 $ 8,626 $ 9,153 $ 8,663
% Change.............................. 7.8% 5.7%
Inpatient Surgery Cases................... 134,900 134,000 403,100 400,300
% Change.............................. 0.7% 0.7%
Outpatient Surgery Cases.................. 200,200 200,600 614,200 609,500
% Change.............................. -0.2% 0.8%
Emergency Room Visits..................... 1,346,600 1,298,400 4,054,500 3,860,700
% Change.............................. 3.7% 5.0%
NUMBER OF CONSOLIDATED AND NON-CONSOLIDATED
(50/50 EQUITY JOINT VENTURES) HOSPITALS:
Consolidated.............................. 180 183 180 183
Non-Consolidated (50/50 Equity Joint Ventures) 7 7 7 7
----------- ----------- --------- ---------
Total Number of Hospitals................. 187 190 187 190
=========== =========== ========= ===+=====
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