HCA - Earnings call transcript Q1 2018

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Operator

Good day and welcome to the HCA First Quarter 2018 Earnings Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to the Senior Vice President, Mr. Vic Campbell. Please go ahead, sir.

Victor L. Campbell

good and you, thank morning everyone. Lynette, webcast. our like to Kimbrough, those you to Chief call; Investor would I of our listening are and Officer, who welcome welcome Relations also Mark everyone today's on Johnson; With me here Financial Bill President morning, our Officer. and Chief Officer; our Sam CEO, Operating Chairman and Rutherford, Hazen, and this Milton Chief

included determine on the available future quarter Numerous any beyond let A these is in on This the Inc. today's net With that recorded. to to in to should on everyone the statements replay excluding forward-looking or losses, ability uncertainties, a these I such the forward-looking gains call supplemental statements. they on morning's Inc. uncertainties whether are and in company factors place company's of adjusted any actual of call of Before I'll are undertakes various statements, of is new remind turn EBITDA and should result to retirement and the obligation may losses any turn and in expectations. Many today. HCA on over EBITDA non-GAAP reliance release significant being or information that debt statements, Milton. costs, of listed will Healthcare, Several information adjusted the our call materially attributable as results me which update you over be management's to are light or other we financial and table may will revise to attributable future EBITDA Healthcare, first not to of morning's no HCA forward-looking this based income predict. call be that, On of expressed inherent legal earnings are measures today. company's In events. risks, from the control providing filings. to as results press call, later measures. reference net contain A claim that release. current SEC might Milt, the cause factors today's Company factors reconciling facility, those differ undue adjusted income to sales

R. Milton Johnson

and Right. call us able webcast. in our in EBITDA good the volume first pleased joining quarter. with the on and during in rate the were along resulted and morning with Vic, the XXXX and in are first by supported Health to the we XXXX. divestiture Revenue the you, This and of overall, Oklahoma the pleased our morning everyone We quarter the management that expense earnings from to release, we're growth solid Georgia, results Thank adjusted of quarter Savannah, close growth of good first Memorial acquisition quarter. we issued growth facilities

billion, of X.X% First which The of share attributable $XXX sale to quarter included sales related Healthcare, results income primarily million $X.XXX Oklahoma quarterly results on totaling diluted $X.XX or facilities revenues the $X.XX share, were per $XX.XXX gains share, to Inc. diluted the quarter of our from XXXX. solid HCA in diluted to previous facilities. or per quarter, up billion year's first of XXXX the first with $X.XX per million net or $XXX compares totaled and

facility X.X% $X.XX solid share from quarter. Volume over which our assets, admissions, the first reported year's in million prior quarter, and a tax per recognized compares billion, equity related impacted up in admissions or to and Adjusted billion. $X.XXX $XX facility sale to also year first the $XX million EBITDA equivalent unfavorably per increased the prior year. and $X.XX settlements, X.X% recent our increasing increased of basis XXX increased diluted were to the share X.X% trends EBITDA X.X%, We equivalent the diluted admissions each year's benefit compared approximately or Same to of to admissions growth with by employee our to in $X.XXX OU acquisitions. revision points, Adjusted award was period. same quarter related the the prior previous

first X.X% same XXXX facility While billion ER strong quarter remain from Cash compared the flows year. the at to increased visits $X.X the quarter. in operations prior

previously quarter continued million existing completing repurchased also invested of and repurchasing in cost million shares We're quarter. excited in in as mentioned, capital at dividend X.XX the first southern balanced a a our this We capital of during We shares and $XXX to Coast. we approach operations existing Also, the projects in the acquisition the along to $XXX and $XXX it a acquisitions. Memorial will while Georgia the new believe complement expenditures investing enter and select million completed markets during our quarter, of Health our first of million paid during Georgia. XXXX, Atlantic Savannah, market

$XXX also facilities million. XXXX for of completed of We X, divestiture the proceeds on Oklahoma February

purchase we non-binding hospitals other of Health based Asheville, to of is Carolina. in six several letter Mission of care reported, North Mission western Carolina. system a have with a signed intent As North sites combined in

diligence that, deliver We growing for over this we the to growth our organization. with to in capital growth to believe agenda, outstanding care execute I'll exclusive forward are invest and move with call high I excited And we markets, Bill. continue turn are quality for large as with and our due patients. well-positioned discussions our

William B. Rutherford

Great. morning, Thank you, everyone. good Milton, and

me give the the on performance more some results quarter. and Let you our for detail

quarter, XX.X% in the same X.X%. increased facility year prior first same As and facility we reported increased admissions the equivalent admissions over our

X.X% give by over Sam on the year more operations color class. provide you a moment, Our prior but admissions will X%. same volume drivers facility in of this admissions increased I'll by United results increased domestic for payer and adjusted the our some by States

X.X% prior prior in Intensity increased visits year. XX.X% first or compared of with compared Same per X.X% the case XXXX, same total facility for in Medicare in XX.X% facility During admissions a increasing X.X% and admission the facility quarter Medicare X.X%, admissions. facility increased both Same in visits first period. quarter. the admissions managed the and declined the and and and of Same admissions admissions traditional Medicare. while quarter, X.X% increased facility quarter same quarter, Same prior increasing to facility Same in quarter, charity the ER inpatient year. X.X% year, flat, year. total same service and surgeries continued self-pay a This XX.X% total equivalent services compared X.X% compared surgeries X.X% self-pay room increase equivalent increased same to equivalent the X.X% respectively. admissions Medicaid and compared facility basis and includes the other, Medicare Managed care, facility facility admissions visits on facility represent admissions. quarter, during primarily year prior increased and X.X% mix the declined the acuity the the quarter. increased revenue in in charity Florida basis facility X.X%. uninsured our Managed of prior reflecting increased of exchange admissions of X.X% X.X% equivalent the represented outpatient ER about increased the X.X% increased These total equivalent X%, year. the Texas on of quarter surgeries last emergency same our to our admissions the represent the intensity quarter admissions to and XX% admissions same to from XX.X% and declining in while in our represent first were in

Our per consistent admission the quarter, X.X% same with managed trends. exchange facility equivalent revenue recent and increased other, in care, relatively

longer adoption line as revenue separate standard, the provision accounts no a recognition or new With debts for item. the of we report doubtful a bad

referred now as debts are to bad Our previously reported price concessions. implicit

was discounts $X.XXX adoption total year. the no pricing and Our care, quarter, billion recent material amount new revenue acquisitions. growth billion our uncompensated compared as the revenue in implicit on price includes or which The uninsured as recognition. trends, timing from impact $X.XXX reported the of charity had recognition well prior uninsured concessions, volume, of in the as reflects our care, This as standard to

Now, expenses operating to turning margins. and

Our declined as year XX.X% in XX.X% basis basis. on reported to from EBITDA reported first as an last margin XX quarter the points

margins. Our points impact an recent EBITDA had basis acquisition on XX unfavorable

on XX.X% relatively quarter. facility points revenues. quarter to equivalent prior compared as a of a labor XX.X% benefits a other over revenue Other and first operating period. Same Overall, same basis, year, supply the XX.X% Our year's X.X% were quarter. same margins admission stable. in prior-year compared store facility year. last On year's approximately admission a first basis basis. percentage benefits same operating XX percent quarter basis, same a expense per salaries On prior Supply this from increased compared and basis, a per a increased salaries per the expense was as percentage increased XX.X% of percent for facility salaries quarter year's On versus the were in XX.X% increased remain consolidated facility costs to revenues EBITDA of a the as to of last to as Same and admission expense as first first quarter equivalent expenses points last first the last X.X% year. compared expenses flat XX XX.X% to revenue the operating to XX.X% facility consolidated our last increased quarter. year's basis of compared in equivalent revenue were X.X%

acquisitions Let impact discuss me just and of divestitures. the briefly the

EBITDA year. operations growth X.X% reported of of closed as on This We impacted points divestitures. OU on was in by the of Our rate by impacted and X approximately adjusted our basis the acquisitions negatively growth negatively this adjusted quarter. our EBITDA divestiture XXX February

acquisitions the our the EBITDA basis by adjusted points growth quarter. addition, negatively rate our In of in impact XXX impacted recent approximately

flow $X.XX non-controlling from distributions $XX capital QX. year's to Let of last flow, $X.X the of adjusted revolving shareholders quarter, $XXX to cash less in At billion the the me from cash interests billion at first to $X.XX billion XXXX. of to quarter end billion available our the XX, touch is of $X.X of flow. under million million, at on facilities XXXX Free $XXX to operations of the and times EBITDA Cash end to operations and had million of paid was million, debt briefly expenditures million, X.XX $XXX compared cash dividends totaled March flow XXXX. we quarter credit was in $XXX times compared compared X.XX the which

Our rate $XX XX.X%, award or first tax $X.XX was diluted resulting related as equity reform to from and in lower million tax from settlements. the quarter benefited tax rate effective we share employee per the

earnings of to compared per on for a $X.XX in recorded share Let of our XXXX. $X.XX speak we first the quarter quarter this per the moment share me

million, the First facilities. quarter XXXX or results gain on sale share $X.XX $XXX of per include

per $X.XX based the tax this prior to benefit year. to year year. earnings $X.XX $X.XX to compared reform gain, grew the as approximately equity this award benefit approximately and We in Excluding on $X.XX due attribute XX% share the incremental versus an prior

impact on our impact our in as of Lastly, we acquisitions, with year. approximately the of negative quarter estimate EPS prior the the divestiture operations, coupled $X.XX to recent had compared OU

me represent X.X% prior the visits. exchange. total and X.X% health exchange health briefly X.X% ER admissions about of admissions. same year facility exchange prior represent over ER facility total insurance X.X% our approximately talk of visits and Same our Let health In first our increased over year quarter, increased

remarks to comments. some So, that the concludes my and turn Sam for over additional I'll call

Samuel N. Hazen

same visits basis quarter in facilities morning. in San North divisions and the respectively. first and positive volumes Approximately Texas, outpatient XX flu was admissions freestanding Conversely, to across volumes Far down. our the West The and was quarter, divisions: Surgical XX% Rehab X XX% again, mostly visits. our Once Cardiology of in grew admissions, were lines, increased Mountain room emergency the to high-acuity East at approximately X.X%, in growth which be broad-based for in X.X%. years. growth HCA grew grew and a XX% All room related. Surgical of combined, flu Neonatal continue acuity in emergency X.X%, most adjusted flu were procedure X.X%, for had in also. last In with this and first consistent days right, in admissions. up seen impact growth volume provide our generally Central facility stronger cardiovascular of growth related were our the quarter of macro hospital-based inpatient admissions visits. and comments Florida, divisions up in North we was X.X%, an the comprehensive XX% visits has XX especially had back of and a on factors growth XX% units. of X growth room had were XX Behavioral Trauma X.X% both growth strong performance Vic. in were two across XX growth me of total. had call room up compared have our had emergency My Inpatient consistent result Tennessee visits growth Capital, in admission good both while flat room season these growth our Growth growth visits service grown on volumes, executed. various XX Health emergency total a of lower-acuity XX ambulatory Outpatient emergency had lines. neonatal of were is surgeries. prior divisions of service we in believe the Texas, had growth that, and our had hospital-based I'm divisions year. XX% operation. and inpatient were now X%. in detail focus however, markets we well-resourced admissions was Florida, same divisions let more in in XX emergency growth facilities and divisions. our Births indication a XX year. were Admissions the of six turn to surgery admissions agenda in strong divisions quarter on our same is surgeries pattern Antonio, we admissions EMS grew well the domestic in company and and of going patient will of higher emergency up X.X%. and visits, surgeries. quarter general, is as the X.X%. admissions X.X%. orthopedic and admissions XX surgeries centers, up down to by Freestanding but room both slightly were outpatient by of on divisions grew visits room consecutive that a see Urgent quarters. did the care level With positive X.X%. through We visits growth broad-based

Victor L. Campbell

we we're with here All to on would one right, like thank yourself probably that questions. that, Lynette, calls, All have or limit right, to ready questions. as please you, take Sam. take And ask to several

Operator

with go take Thank the Lake Justin ahead. Wolfe you. We'll Research. from first question Please

Stephen Baxter

company Hi, sort the Justin. drag. mentioned could explain time acquired you EBITDA facilities margins size given you how and the hoping progress being much that this getting whether the progression how for of fits there? kind for point some quickly revenue that is newly is will guess, Steve on I of and was bucket in of over realistic, us to I those that margins you average Baxter as could of starting an

Victor L. Campbell

Steve, All right, thank you. Bill.

William B. Rutherford

Yeah, I'll start and you can add in.

principally about contributed and is in million recent closed the as then, Memorial of mentioned Milt acquisitions new our $XXX comments, acquisitions So, on revenue in in acquisition of a our the and his comprised towards Savannah Houston year quarter X. February last

that knew was reasonable we longer that Savannah, to to expectations. margin up going to take bring to Going a term

year think, to optimistic the of long-term in the the I of acquisitions are growth on balance improvements they'll and it's chassis occurring in previous through of we our so the company. existing there's Houston, to be continued division, going the an contribute

Stephen Baxter

right. All

Victor L. Campbell

Steve. you, Thank

Operator

in the Borsch the We'll Capital caller queue, BMO Markets. Matt next from move to

Matthew Borsch

was could the talk Yes, thank might Good you get in probability Medicaid of morning. a you hoping impact and to see I you the think you. expansion that that Virginia. perhaps you

Victor L. Campbell

I'll ahead with go Virginia Vic. Touched take Matt, This and that. morning. our folks is this base

or so Medicaid have know expand or it's know won't they will May whether optimistic it, not that employment with in some But sometime does expand. we as the qualifications It until may probably are not. impact. full sure to likely it think, I reasonably to for hard

Matthew Borsch

enough. Thank Fair Okay, you. okay.

Operator

Raskin hear from Research. We'll Josh Nephron from next

Joshua Raskin

growth. follow up Thanks, XX% Hi. urgent to good care on Wanted morning.

that actually was I same-store think said basis. you

market this in some just or differently curious I'm if guys maybe around you that so, of approaches, the targeted there's flu cares, quarter? your urgent doing And something

Samuel N. Hazen

of in the Well, think activity both. have care our it's I urgent centers. were a that. on combination metric There clearly don't flu specific I

XX compared have component in or overall to of urgent urgent is We a important a think, bit centers. center of to care our very add development, so maybe XXX, year which a system this offerings. point continued to portfolio time, I our at provider roughly our in last of overall particular quite to so overall growth up care We're

is intentional urgent the very into point entry for adding with starts capital company care low-cost had to been and efficient them. payers patients and us allow certain price a relationship And it so, the that a which system markets. a very about our It's to centers, our in instances many patients, new HCA introduce

continue will we think, I growth. to see

order last development and but number again particular this we and XXXX we XXXX the pace over component. the in assimilate evolve added anticipate the to somewhat in of absorb months, in the XXXX that picking moderated centers to as XX have we've up continue We

addition we freestanding that. have which room to In our is emergency to development, complementary that, center

We then well. have inpatient to emergency that XX urgent roughly XX our Again, centers also complementing company, as care across our are with XX in development. another the and strategy center freestanding room offerings complementing

So, are development. combination of of our system the very provider important to both those

Joshua Raskin

Thank you.

Victor L. Campbell

you. thank Josh,

Operator

you A. your Thanks. J. is I you payer terms Credit just J. an seeing some know, Rice provisions some about LLC change business? any everybody. proposed on - ask are Rice also table on Suisse, has with Securities contracting I'll stand from A. open. that rule (USA) Credit a where to the And it. or dynamics. have managed the in line your in Suisse just Maybe, change Medicare you interesting on Hello, care and then update approach

Victor L. Campbell

think, about right, it Rutherford Medicare piece is take contracting. J., talk managed I and of this then Bill the All A. will Vic. I'll care

what we the it's years. did it rule. at On have proposed still Still it. recent looking and seen numbers looks in than week, last see saw IPPS you proposed, running we're As balance, better we

from looks in how years. to a We'll you think, does next for they've when plays to up to year. about see rates, the final maybe Medicare little we and recent talk managed X.X all it in or rule you inpatient Bill Sam, net-net, This look a But know it better see point as ranged want anywhere out better. I wait X.X little August. care?

Samuel N. Hazen

this been on have pricing changes how trends of side A. care structural equation we've equation. commercial of the on multiple there saying consistently and side the our contracted years, in the managed and we few J., very for on the are now

us very been side, to for how competitive, markets. payers their provider on value productive members add think, has relevant our building I how out I that's HCA. company think, on how Our domestic for in ultimately value to have, add across to systems XX with discussions allowed the and productive, their And to add value

those continue. largely We're XXXX. discussions So contracted for

relatively We have years. roughly our of accelerating of XXX the two that the anticipate days XX most the I part, XXXX and through configurations But going components contracted. our aren't and over next material terms, our network contracts conditions, our XX% both changes. are half of of the any past consistent for our XXXX those with portfolio those to value-based in and

Victor L. Campbell

A. Thanks, right. J. All Sam. Thank you,

Operator

next Tanal to Moving from Sachs. Steve Goldman

Stephen Tanal

increased bigger just in you're if increase or deductibles wondering year, maybe seeing sort consistent that I a softer a touch sort of an been just may may like a a guess broadly just be parsing metrics, of you a what maybe seasonality lot I'm have guys. And with to than through Thanks thing? there's on. lot obviously it different of going seems due part surgeries outpatient thought. in think lot, this But guys you

Victor L. Campbell

take to run want at that? Anybody a

Samuel N. Hazen

We for because reason surgeries I weeks A ambulatory very actually surgical unusual surgery any of point people it our outpatient quarter, This of hospital-based not is about, were seasonality driving and have start first the whatever and again, quarter's down can't very We heavy performance. our the activity. I've but the can't was that modestly, choosing had the center really compromised to moved season actually the any outpatient the overall through flu modestly people to in we activity think to soft grew talk that two don't that. week-and-a-half divisions. in in we very quarter. in I explanation our heard can as find Sam resulted of surgery. accelerated And soft, we're the that teams. that well, outpatient from or again. we first lot week-and-a-half point I

inpatients surgeons across We create within continue And at We're we're out to in trend combination unusual we're responsive for of different markets. constituents. very who time. ambulatory these company. those But surgery or offerings our centers. seasonality able adding surgery our overall is would seeing and environment outpatient any of any each as outpatient very And or to we the suggest think many to hospitals, market building to remain our We're our want of not continuing our very to capabilities investors that add particular changes a focused to efficient of portfolio operate of the within our offerings the on macro physicians on in same nature. competitive anything also that anything centers

Stephen Tanal

Got it.

Victor L. Campbell

right. All

Stephen Tanal

That's really helpful. Thank you.

Victor L. Campbell

to Milt, add? did want you

R. Milton Johnson

No. think just this add mean that, just I point. to I one I mean obviously

have the many several last more quarter. We fourth years, seeing in surgical years, in been the volume

don't quarter a us a think I I for see been surgical number a for the we quarter consistent so And first what been and years, to, a us. continue, fourth quarter referring we lower quarter surgical the that years, really that's several for last over think's trend accelerated and for changed. or typically think, It's that to strong of Sam has the being

changed that material any this trend in sense. hasn't So, year

Victor L. Campbell

Good, thank Thank you. Steve. you,

Stephen Tanal

you. Thank

Operator

Wells We'll Costa move Securities. Peter Fargo next to from

Peter Heinz Costa

a as for the help terms morning. number Can from in going think providers. of Florida about picking talk rebid up you to contracts? business you you Good in Medicaid, shifts Medicaid we to saw care? of results Do those managed the more move new You in Florida that's guys

Victor L. Campbell

Bill All right, Sam. or

Samuel N. Hazen

changes. Medicaid significant We not HCA's participation seen any across have markets

stable recapture Florida we've outpatient is was the of us process. for The environment. administrative inside of state reimbursement that that been issue the implemented So, on pretty inappropriately

standpoint, our we different pretty within feel not managed that has changes where the we reimbursement in and networks. hopeful good we about don't significant And gets issue have are been we we're the that any resolved overall care total. So, in a applied properly. participation recover from But

Peter Heinz Costa

talking forward. I'm about Yeah. going

R. Milton Johnson

Peter?

Peter Heinz Costa

happened, you've winners. in of of just one we've rebid the because contractors one Humana, XXXX, and they're is just seen for the results, you. know bigger seen particular, I In and the the bigger

so, curious that's result if business more XXXX. your way I'm in And in coming to going

R. Milton Johnson

Yeah.

Samuel N. Hazen

any trends state. at way our this significant I the volume have in changing in don't that particular time, any visibility point into in

Peter Heinz Costa

Thank you. Okay.

Victor L. Campbell

Pete. All right. Thanks,

Operator

Morgan RBC Frank Capital Markets, from ahead. go please

Frank George Morgan

Good pricing morning. around looks today, like look your go Obviously, from you're guidance, reaffirming from standpoint, guidance I and and some at the the through assumptions of back it a schedule side. but of underlying volume your as both you're clearly ahead pricing

curious, like do throughout up the just it be seems ramping I'm you will how well. you some the And back think have that certainly, things growth sustainable as year? there are volume level of side, So pricing seen the from

just guidance commentary finally, XXXX? your the those your just volumes on mentioned actually curious, into two did in guidance. Bill how uninsured the I Thanks. uninsured And So volumes think drivers for you main of here. then I'm build growth wanted growth to of much

Victor L. Campbell

Bill. you. Thank Frank. right. All

William B. Rutherford

Yeah.

guidance Let me kind with expectations broad-brush it. try and earnings were others. Yes, our make of our to reaffirming are we our what above slightly

quarter, think per in end was that. we push good And about the may I Earnings higher of strong us feel that I share the on pretty think obviously. that.

after second after continue guidance obviously comfortable major affirm, other the that first our quarter. to quarter, with of and feel we All we'll and revisit

quarter. broad-brush our expectations, X% guidance volume pricing the know, As first you to the X% expectations. and to We're X% X% volume for within was

favorable, the index see quarter. continued case-mix was started driven that pricing fourth mentioned, in we strong to by you As

to we that, but very the the our have displeased again, on keep we'll as continue the start eye through again, QX. performance off evaluate of we'll So our year, and to guidance with we go that

half did and yes, We Regarding I said are. anticipate what growth. volumes, complexion, seeing kind on built towards our and that's based market single XXXX had X% into digit the before, X% last high been we We've a of XX%. our uninsured expectations report of really

have this number As fluctuate growth. about, and eligible. time volume there timing going volume know, to our affect of when Texas you've some become can about so that uninsured us as uninsured applications time incremental kind of us. processes single Medicaid the you cost growing essence, the for impact digit everyone think is the we that of real these we our and expectations just high context is remind Medicaid on have built obviously, we uninsured reasonable into the they I and to And the built I'll what different Florida kind so in can just that contributed and from represent about that expectations, that core have operations. heard through may talk with absorb and uninsured you XX% of forth, with and That patients, treat XX% the are manage and of into they issues overall that as But of

Samuel N. Hazen

me Let Frank. is Sam, This that. to add

growth revenue per coming of equation And as volume. of in when one, coming in part is had pushing has revenue payer piece improving, type fourth we're patients number we've of and pricing. and far very that side growth. admission. I Part solid think as quarter of revenue growth been I the that of revenue good look at two. of our quarter, the our mix domestic the overall first both in mix the is them And are getting, X% obviously, that the the all that from pricing. is adjusted then A it number then Not on of from

So, past eight the seen we so, growth we had quarters. the and the or six growth they thought two than has positive are might better what significantly relate yielded where be, we combination side of those on revenue things and over of believe, revenue really those to we upper metrics,

a growth demand. start to we toward indicated move And last pretty so, would with on how think that's overall we're that's in more throughout year so rate facilities out. that basis, pleased we the as same played And itself a market normal

have yet. don't market fourth we the share Now, quarter data

starting that have see, rate believe, the demand, and third out. to some back playing we what's quarter, overall growth and that's to We were that we on normal expecting we're transition

I The the in other would thing, say, is revenue had inpatient that tremendous growth. quarter, we

but it's had growth of side. revenue X% roughly business confuses a the the side we some the statistics, reflection inpatient admissions flu the That on the the inpatient acuity was in about on of our that of of in Our face inside admission X.X% quarter. outpatient and adjusted

book. of to more we our So, really our again, so inpatient complex, in care significant acute create of inpatient needs. across acuity very patients trying can strategy when care need that's service that take our And part lines capabilities they deeper within

all the into quarter, plays we're of So, quarter, how really that this evaluating well. of and as sort fourth

Victor L. Campbell

thank Frank, you. Right.

Frank George Morgan

you. Thank

Operator

Sarah James line is from open. your Jaffray, Piper

Sarah E. James

sort Thank some are your get mix, that thoughts on you. term. trends the I of payer wanted impacting to more of intermediate the over

we're like talk for second, seeing their straight starting group employers Medicare-eligible are to coverage surgeries that books. because their commercial that lower. Medicare trend part to And all opposed you consumers at their insurers that to in over retirees in Is as wait age get are the to shifting XX is frequently being they if delay their until about continues? impactful the first, So of starting of order XX to then more cost pre-Medicare kind share to

those are you. going think payer how So, mix Thank your you into two Medicare factors about factoring forward? how

Victor L. Campbell

right. All

that? to wing Somebody a at take want

R. Milton Johnson

our deferrals if out markets that's and for I'm retirees by This would eligibility, there's I as any is an a it's benefits whether about don't that Medicare people for us. of America, up in be And not start new those there. I corporate Maybe drill know certainly, shifting any have the of surgery bubbled on issue Milt. to don't trend hearing aware data measurable not saying, I'll we of noise questions. think down for approaching

again, data. to with any that So think, sort credible I respond of can't, really

Victor L. Campbell

number, And was that just if look look our Yeah. – I of X%. X.X% think the the at you numbers managed was if which what at than and in in quarter, was on And to exchange substantially the you on when we've X.X% Medicare, really adjusted changed admission, care that my admission number you sort quarters. was growth again, the recent better to up materially seen mind X%

So and good those shifts volumes. are mix good

R. Milton Johnson

Yeah. And this is Milt.

in that's the favorable And going particular we've is quarter admission up the As mix probably and that Sam payer back growth care mentioned, had with managed the actually the in highest this quarter quite quarter of XXXX. X%. into first in – growth

for positive quarter trends us. mix Yeah. the So actually here pretty in again, the are payer

Victor L. Campbell

good. right. you. All Thank Very

Operator

from We'll Gupte hear from next Partners. Ana Leerink

Ana A. Gupte

the in Yeah, per it about will, peers services up growth? any of Was or much share to when acuity, and acuity and but you pretty don't shifting because mix well. beginning follow see other if your look I is want I to revenue if like kind positive the this a had you you higher were wanted wondering how And that you improvements earlier up thanks. payer couple pricing And assumptions, to percent any you floor, kind service? inpatient do Good if of this in is picking way specific sustainable making – of procedures think from and is those X-plus to things? And with at sites the of service utilization make high on points acuity – this, is are on from morning. X a competition mix look feels at trend as the correlated a admission. you capacity surprise of of you trend your of to and line

Victor L. Campbell

Ana. Sam right. All Thanks, or...

Samuel N. Hazen

had significant I fairly quarters now or wrong, help a straight mix. think we've but six case if Well, of – I'm five – me Bill,

William B. Rutherford

Yeah.

Samuel N. Hazen

X% Index so growth of mid across Xs of the above trending or HCA, up part and part then the in first half of latter the XXXX XXXX. XXXX, and first in more the in

think difficult had specifically, orthopedic. and them to I in indicated. It's for point service in growth cardiovascular higher acuity surgical just of lines me activity things, a you but surgical to combination a like it's we've as

units, our in both We've the seen part as On of our care acute equation, patient. That's well it. medical the more units, clearly we've medicine critical side as adult a of neonatal facilities a lines HCA, care much trauma, neurosciences more patient in offering requires acute type service. in of results across stroke it's that service our when whether that capabilities a burn, and added

from from X We So, yield of converge yield this those for of It's that. our spending. our It's being network this is the strategy all about service a a We've capital talking element from core not a yield this a X line of years. – a been or It's from anything and development. integration. some new. yield think last is

All and is slow-moving this these up. parts add pieces And of a business.

think taking that of metrics, we're each strategic central, it the I we time like positive from said, so, that and over our approach within standpoint, to markets. yields very is And

I inpatient transition strategic to integration toward our of from If the yielding So, pick to I in materially. outpatient approach, networks, – the pick, of our of more outpatient. outpatient really changing our say can't would had that to more service is slowdown development I lines, our growth than from transition inpatient

Victor L. Campbell

right. All

Ana A. Gupte

good you Thank a and have quarter.

Victor L. Campbell

you. thank Ana,

Operator

from Gillmor hear Matthew from next We'll Baird.

Matthew D. Gillmor

Far the discussion. Sam from being perspective. West about Florida and weaker as the an Hey, want mentioned ask thanks. I admissions East geographic to

markets you've before. those think I out called

a markets? just you sense dynamics for can in So, the us give those

Victor L. Campbell

Sam?

Samuel N. Hazen

the to down inpatient in that's mentioned their with continues driven is which issue statusing many past, observation of East the our the payers metric somewhat. Medicare volume Yes. and that advantage by Florida we've struggle

in West the division. down, and and down. Idaho, that were from divisions is we in that some growth Florida issue volume. growth Far was standpoint slower the was as Far the that XXXX, it of Utah it was continues a they And then much primarily their they also the a they Mountain a operations of first East with in than did brought is Vegas but in Idaho what one the and were struggled our the softness solid a Far metric decent, modestly division as in quarter Florida. which weren't California West, division, down, and our issue. but that's We were more but financial little in have be to West the Now, division had dynamic hospitals in California East down volume

be markets. opportunities I So, nothing back think any adjustments those dynamics to of to California strategic West our and in there, with platform think, there the what we're making significance. and hospitals, I on Far and some us put have some a some of deal growth hopefully division The appropriate

Matthew D. Gillmor

you. Thank

Victor L. Campbell

Matthew. Thanks,

Operator

We'll hear next from Brian Tanquilut from Jefferies.

Brian Gil Tanquilut

Hey. Good Sam, last answers follow-up to two questions. to morning. just your a the

think in that any terms you So And done for and last that about new the ramp all the spending you growth of inpatient beds you're quantification the the finally seeing you've adding? in thinking reaccelerate, are and the for three new we of of at be being outlook kind over should able gauge that? beds us terms to and been to be fill years capital that added adds bed what years the in as able how can about I two terms of to give for the productivity like has capacity us the just of growth kind looking last of those

Victor L. Campbell

you, Brian. Thank Sam?

Samuel N. Hazen

I projects anticipating understand, they some online. of those capital market we're patients come need recent have in it's very past. metrics more our Yeah, it's growth transition facilities centers in the but inpatient XXXX centers in capital It's positioning in strategy all long-lived so been of XXXX, strategy, the those to piece that, our our important outpatient XXXX, and said in in a growth to elements to of of have online able so we projects. very coming of of I years, we've front They're our – care. items a to in Having acute as these our those from mean to capital and being that's piece more don't important me, important acceleration do had are in long-term than when

a asset that. that. want We're to that we a to tend XX%, need ambulatory inpatient operating particular how said don't you average are our So, some don't as get high than lived much back inpatient occupancy, emergency in as more obviously, longer inpatient centers, rooms, get at Those on have we we of we we operating online. point. on hospitals timely growth that and to starts and the But freestanding get But on around surgery many imaging have before, or we're to care at centers, almost thinking have produce inpatient at we'll will. watermark utilization. particular me, – capacity to yield color centers capacity. instances, have just company much outpatient higher than this more about quickly urgent it guess capital is to Obviously, operating, I in metric I at that front

And benefit order network so, the to it's have full to important development. inpatient the our receive in capacity for us of

such. utilization On particular, of the productivity, and And in very room ample indicated capacity, our which our the services. past, rooms of running have overall room XX% in that in we outpatient metric almost a emergency need to as capacity important I've emergency strategy emergency available side, network patients we're good our again, is our very when bed

the so today's So, that some well we're those mentioned it we spending line money, physician of forth pushes and why service but development, are also have as complements on strategies, already on call.

Victor L. Campbell

Thanks, Okay. anybody? All right. Anything Brian. else,

Operator

from from Newshel Evercore next ISI. Michael hear We'll

Michael Newshel

inflation forward, relatively given going morning. competition you or retention, but stable, market or good tight Thanks, know the costs expect for do I you any to pressure nursing? are labor from see increased there labor said hiring for

Samuel N. Hazen

contract agenda, And point how responded. XX%. metric been that improvement, Sam along comprehensive guess and was agenda the results. I believe, with XX% our our XX%. resource we our it's in yielding, for positive with two That pleased ago in We're labor is nursing very dropped nurses human our that This somewhere nursing We've again. has, actually company around utilization, years to especially time, is particular struggles the combination or around we those turnover of almost that particular had areas. really have at facilities that some with our

allow point. with ongoing a for we yielded not to the nursing Our a adjustments drop in so quarter, development, has overall through at labor nursing a community that and have to programs, to the contract Clearly, workforce contract cost labor in company's to pressure with pretty believe we've metric or compensation I to of X.X% us the market other good but XX% and our have this the agenda, type on way one in we nursing connection putting these line labor and around HCA. and FTE the any think respond manage will and was other, seen That quarter, line which down expectations. almost the from dynamics in of in that, the associated marketplace on our company's the for dynamics programs that's with undue we is

Victor L. Campbell

All Michael. right. you, you, Thank Thank Sam.

Operator

your America, Fischbeck from Kevin line of open. is Bank

Kevin Mark Fischbeck

you quarter, you're business. expect. the well as driving Want your bringing up as that with the thanks. on a significantly, lines time about Great, payer what more commercial? to you point mix a rest the payer does I a pretty Is X%, I is that's about it get kind Do on at expanding how about that earnings up type to volume. to drag service it's of color to the could a It's then what more If with know uninsured uninsured the a increase a you then of as is it guess, in in? become, when come that it XX% of even view little are good really volume? volume. is it hard economy is doing that or And mix At up bad commercial this point guess,

William B. Rutherford

Kevin. Yeah.

Victor L. Campbell

Bill.

William B. Rutherford

This Bill. is

me a there. on try Let give

X%. earlier, report and you latter half think did So, that look we we I as if I X% XXXX, the to said XX%, towards were of in

give from So, slightly a I'm why. we can running. lot detail I sure up on it were of you not is whole where Honestly,

Not in a We room. quarter. slowdown sure. But this, potential, impacting any increased we in uninsured certain may states of traffic saw potentially continue the emergency applications to hear time from as time had to in volume on an has imagine Medicaid that processing have really one impact the flu

we we to cost. is for I be see go do I judge anything HCA, really know. we to don't structural variable The a this increase as the factor nor – material here, back incremental think impact

of context our the within that accommodate can guidance. we overall So,

So, a few for we'll wait have quarters. more to

said at high we we that. how trends And see single-digit out is think plays I levels, to those year-over-year that settle kind think have of the of can earlier, that and through anticipation our balance the I As year. we'll I in through manage

Victor L. Campbell

want Milt, add did to something? you

R. Milton Johnson

bit to had little add I'm going too just of was quarter uninsured XXXX. XX,XXX. looking consolidated the – year is we think first stores first low than this same of had quarter over in last same – but not this uninsured We watermark activity. a numbers, XX,XXX Yeah, stores, was the I I higher admissions a for at quarter, –

of But So about had at we when XX,XXX. the X,XXX fourth quarter increase you roughly. look XXXX, almost

So, of uninsured sequential quarter fourth quarter first down a actually, in terms on to admissions. we're basis

still pretty our volume single would this part around us. comp first we year, in were quarter good as be think, think to going a think throughout where So, the we is percentage attributable for of last I for go a here to low assumption assumption high I year increase digits the is And I uninsureds.

Victor L. Campbell

or here. We're All Kevin. thank out running right. one you, questions. more time Good, two of you. About Thank

Operator

Next Giacobbe is Citi. Ralph from

Ralph Giacobbe

Thanks, and good make the wanted to Oklahoma back the morning. I deal. I to got the sure first question of and go impact

that EBITDA. was like point basis on about XXX drag Sounds a

So, on even is And that the is the one we I to that? year? EBITDA more going was normalized margins you as so new sort then that right? is the contribution store to same way incremental of trying X.X%, Just same magnitude said get to deals because higher going there. than again, when and be X.X%, and a help pressure the ramp to if expect the And actually think is facility the with growth what of about about you basis remain, the up that, revenue of Oklahoma us growth could store sort sneak EBITDA closer to give think of balance in can expanded can is but more, Thanks. you same growth, EBITDA you'd

R. Milton Johnson

this. take me let Well,

would X.X% newly first Oklahoma assets. about over the the growth of it have right, you're EBITDA for sort all, of in impact acquired and of First absent the been quarter year, last

rest rest in model the acquisition have our about correct, we the of do XXX points got of first on is go show the from drag for to those. we Obviously, the that quarter drag that year. basis throughout we in improvement we've and as year, here the So expect EBITDA OU growth the

William B. Rutherford

by Obviously, this is run in of the the year. improved we plans rate it, to Bill. materially performance anticipate fully I'd the being close management our We year. acquisitions, on implemented, to what we of the add And and balance our believe have Houston be we'll Yeah. is for end

longer bit for going us Memorial throughout. I integrate we As that's little think Savannah, a ramp

the to remain least our we of company. long-term the confidence from continue any due business. can kind have these again, I of And hit in the shortfall continued the contribution for performance in acquisitions to offset think overall that acquisitions we We core our expectations. We confident at

Victor L. Campbell

All right. Thank you.

Just last time question. for one

Operator

will from from question last Taylor Gary Your JPMorgan. come

Victor L. Campbell

think Gary, out of minute, I so. a time. We Wait ran don't just

ahead. Go kidding. Just

Gary P. Taylor

want sure, closed Actually, it days the figured. drag? you're more. saying I surprised the better a I because the XQ or when like given guidance get previous I then after bigger was And Memorial if to in that of a touching you'd first And the maybe becomes before through of finally, before I makes you appreciate clarify sure make sense. guidance. net number? some-$XX-million-odd wanted a into Ralph about not. a was looked with was little just wasn't you something in it. little I couple just myself. Memorial? gets actually drag I prior on, Yeah, a touch that that a this Do just which full have neutral bit we acquisition XXXX we on year, of drag then quarter do Is it escape little drag, acquisition think it to quarter

William B. Rutherford

This Bill. Gary. Hey, is

Let guidance closed it our original some on going me in the so correct. We Savannah throughout – of Relative you're going the QX and not February first X, in was guidance QX, anticipate was transactional forward. I to original of won't part all, year. with that That think, reoccur continued and through, not in are we burdened improvement, number. we costs QX, QX

performance I see performance continued improvement. wait we're expecting we'll the and internally, looks And so, QX but what like, have to think

kind I when run rate. hope year, of terms by of neutral, think of net end we In they we're the on to get that the

Gary P. Taylor

you. Thank

Victor L. Campbell

All take to Thank right. on you the so need thank Mark him. you. be you and call everyone calls if you, here for thank all thank and will Gary, Bill, being much. day

Operator

That We for you today's does all teleconference. participation. thank conclude your

Victor L. Campbell	HCA Healthcare, Inc.
R. Milton Johnson	HCA Healthcare, Inc.
William B. Rutherford	HCA Healthcare, Inc.
Samuel N. Hazen	HCA Healthcare, Inc.
Stephen Baxter	Wolfe Research LLC
Matthew Borsch	BMO Capital Markets (United States)
Joshua Raskin	Nephron Research LLC
A. J. Rice	Credit Suisse Securities (NYSE:USA) LLC
Stephen Tanal	Goldman Sachs & Co. LLC
Peter Heinz Costa	Wells Fargo Securities LLC
Frank George Morgan	RBC Capital Markets LLC
Sarah E. James	Piper Jaffray & Co.
Ana A. Gupte	Leerink Partners LLC
Matthew D. Gillmor	Robert W. Baird & Co., Inc.
Brian Gil Tanquilut	Jefferies LLC
Michael Newshel	Evercore ISI
Kevin Mark Fischbeck	Bank of America Merrill Lynch
Ralph Giacobbe	Citigroup Global Markets, Inc.
Gary P. Taylor	JPMorgan Securities LLC

HCA Healthcare (HCA) 1 May 182018 Q1 Earnings call transcript