HCA Healthcare (HCA) 30 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

Mark Kimbrough	Vice President of Investor Relations
Samuel Hazen	Chief Executive Officer
William Rutherford	Executive Vice President and Chief Financial Officer
Gary Taylor	JP Morgan Chase & Co.
Pito Chickering	Deutsche Bank
A.J. Rice	Credit Suisse
Frank Morgan	RBC Capital Markets LLC
Peter Costa	Wells Fargo Securities
Michael Newshel	Evercore ISI
Ann Hynes	Mizuho Securities Co., Ltd.
Matthew Gillmor	Robert W. Baird & Co.
Whit Mayo	UBS
Ralph Giacobbe	Citigroup Global Markets, Inc.
Kevin Fischbeck	Bank of America Merrill Lynch
Josh Raskin	Nephron Research LLC
Scott Fidel	Stephens Inc.
Steven Valiquette	Barclays Capital
Steve Tanal	Goldman Sachs
Anagha Gupte	SVB Leerink LLC
Matthew Borsch	BMO Capital Markets
Jesse Klink	Piper Jaffray
Brian Tanquilut	Jefferies LLC

Call transcript

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Operator

Please standby, we’re about to begin. Welcome to the HCA Healthcare First Quarter 2019 Earnings Conference Call. Today’s conference is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations, Mr. Mark Kimbrough. sir. ahead, go Please

Mark Kimbrough

Rutherford, Cody. quarter. today’s and With call our results and morning you, comments will of the on me to you is company’s Bill Hazen Sam on and the CEO, CFO, Good Thank which welcome provide first morning, for all this our Okay. our webcast.

in and are that call control uncertainties listed inherent the contain not on the uncertainties any Before I light to factors over are Numerous today’s today’s call filings. beyond other management’s place Sam, significant let in expectations. will statements, expressed or factors actual SEC of should of reliance differ the they future based Many various cause turn the Several factors me on company current the are remind you that predict. results of press ability these of results statements, should everyone undue In statements. from to materially may forward-looking release determine and in our today. that the might risks, to be forward-looking any those these company’s

later the morning’s now With information over being on financial first is HCA morning’s today. measures Now on or as and today’s and statements of events. we providing new call I’ll a of gains EBITDA included supplemental sales to to excluding EBITDA revise This call undertakes information Healthcare, that, obligations non-GAAP turn net be replay such net reference will facilities, HCA recorded earnings call, as this A attributable update measures. to adjusted whether and any income result On adjusted may no attributable the release. or is which quarter Sam. Inc., losses available a company reconciling forward-looking to future on to table EBITDA adjusted and to are Inc. income Healthcare, in

Samuel Hazen

reported margin. today, revenue us to a the for were operating acquisitions. growth All strong billion, you, in driven everyone and new in XX% business, services you results complex thank $X.X and for Earlier improvements to grew This more Thank today. growth growth by quarter. commercial in XXXX. in right. volume The morning Revenue we joining volume almost was quarter by great by Mark. growth Good driven to and start close the

the our same-facilities On year. across a grew on diluted or by service was XX.X%. year X.X% growth at broad-based per X% and in same-facilities and our flu across this admission Volume Adjusted last from $XXX,XXX, XX% approximate basis, X.X%, $X.X the $X.XX. basis volume grew revenue the growth in Inpatient X.X%. solid margin had by and with respectively over categories We to EBITDA an impact adjusted growth on grew revenue equivalent of estimate EBITDA volumes unfavorable quarter. billion, earnings quarter, in earnings the with most balanced into share markets. translated admissions The

As guidance a and result will comments. details in quarter’s Bill are year. metrics guidance his the for we our on raising this more updated our of provide XXXX results,

an points recently data share an to clinical easier past six expand The quarters. the Commercial in XX most Also, strategic patient quarter quarters. of get in available momentum quarters. each inpatient our over grown capabilities same-facilities market inpatient We basis now these company. we business XX investments continued networks have have admissions positive XX.X%. showed of high-quality the patients The adjusted in for first high consecutive over our in making seen and to to The admissions HCA Healthcare grew it by growth the for good facility. grew all-time our we improve our convenient are care

outpatient These investments capacity capital come within We next remain inpatient have and online over the that our with believe in healthcare services. few create almost of for markets growing in expect demand we local to strong that spending healthcare our $X.X systems. years. We billion additional pipeline fundamentals the will

are overall systems We integrate we our for as positioning also local our execute the competitive improve hospitals. believe and growth, of our to acquired well-positioned healthcare initiatives, operational we continue

a quarter, in we the the the of During announced Nursing. acquisition College majority of interest Galen

are to investing best pending years, deal. investment With about markets. in possible the creates our successful HCA that, This our And the care. work our turn their to into nurses to patient call physicians We can Bill. past our provide expand so high-quality excited me new programs in over want for Healthcare this to opportunities over the be let Galen patients. and employees thank finally, more great of nursing been has I heavily delivering for few and care

William Rutherford

morning, and to additional you, good for Thank Sam, then information I open everyone. some the will will results, the call we cover first Great. quarter questions. relating

are the As Sam quarter mentioned, results. we pleased with first

EBITDA quarter, increased last adjusted to from XX% the For up year. $X.XXX $X.XXX billion, billion

XXXX as an increase include revenues $XX claims. results our As out-of-network million result related the past noted of quarter of a release, an to to our in finalizing arbitration first

So let some steps. me volume cover

and traditional Same quarter, increased admissions increased Medicaid facility X%, managed Medicare respectively. X.X% and X.X% and quarter. and equivalent X.X% first admissions the This Medicare. admissions the facility During in equivalent same admissions increased includes both

the increased admissions compared and admissions commercial Same the facility first declined quarter charity in Our unchanged X.X% the compared the weakened this XXX flu were increased on admissions year. in to to compared quarter about and a prior X.X% prior We points year. to facility the first basis X.X% prior season. pay emergency to self Same the in equivalent year’s basis same-facility attribute quarter year. visits first room

the Additionally, all one declined through when quarter level X%. by first our in changes level three declines of the are look which visits, acuity level, at we

grew level X.X% over five the higher visits acuity four year. Our prior and

room over revenue per settlement In addition, for of X.X% increased accounted increase. points XX quarter. the the equivalent prior The in admissions emergency to Same year. facility admission the X.X% this basis increased by arbitration

believe in mix, well good the as experienced trends XXXX the recent update. overall rates and Medicare we at incremental rate completed first our as We growth rate our acuity, continued have trends. commercial with are and as our saw pleased percentage quarter, visibility we as commercial of We payer we for with a terms in remains the XXXX solid, around significant contracts consistent

Now turn to me let expenses.

are XX EBITDA first points. expenses. and consolidated the margins management in pleased of as over We cost the total a were Adjusted to basis adjusted labor XXX and increased cost margins the with points, On facility basis improved EBITDA XX.X%, basis quarter basis expenses improved other basis, XX overall same points supply operating reported, prior points improved year. our XXX

to cash let about moment take So a and talk me per earnings share flow.

of comparisons included impacted negatively for our guidance. This that plan first that first quarter $XXX The losses on per earnings of was quarter of gains $XXX our in in and was was in and cash of our last from $XXX operations year-over-year $X.XX last primary line million, the match facilities funded $X.XXX for item quarter quarter cash was item the first XXXX. we in spending first $X.XX quarter XXXX, diluted first excluding year. with the the Capital million share in versus XXXX, flow flow for operations expectations. the quarter, XXXX the first reported, was In year. in the of sale As versus billion XXX(k) million from

billion paid XX, mentioned release as EBITDA our our XXXX, was declared of have facilities the quarter, of At remaining our ratio share. $X.XX cash repurchase Directors previous on Board and revolving first this in March X.X we million million dividend Also, available $X.X as to During debt-to-adjusted quarter, a $XXX the have of X.XX quarterly had authorization our $X.XXX morning, the of shares credit and billion per we our end times. under

our earnings to noted our $XX.XX between As Revenue capital per between share guidance expected $X.XX adjusted guidance remains range $X.XX release, in expected and and XXXX range EBITDA diluted we unchanged. to with and billion billion per $X.X share. increased and now

back to my concludes for that it to Mark up the remarks. Q&A. turn open I’ll So call

Mark Kimbrough

Thank Bill. you, right. All

a questions. yourself a an who ask many to opportunity the to ask please to As one possible instructions give give you in want can queue as may so to Cody, we question. question, today that as those reminder, might now limit

Operator

Today’s Absolutely. Thank take Instructions] question-and-answer question we’ll Taylor from will Gary [Operator be electronically. our first with session you. conducted And JPMorgan.

Gary Taylor

just but at Street one was dramatically I’ll few quarter, expecting. really least, the after such a I questions, strong the Hey, guess, quantitative good than had biggest stronger morning. a I ask

only of the You extent annual raised gain. arbitration the the guidance million or by than more slightly $XXX

gives So is of the forward have there in the bit you conservatism raising quarter point first is that further? an there abundance terms just or Street the in of in little of at this a year guidance, the really mis-modeled, anything guidance the else just caution does

Samuel Hazen

Gary. one. let this Bill Okay, take I’ll

William Rutherford

Bill. start and Hey, can I’ll Gary, is add this in. Sam

due you as guidance. which but quarter, we it address original raise look appropriate. is after the performance, our don’t And to said, in was guidance one typically believe payer we to one arbitration, So, the is given at it our way just wasn’t

continue to we We improving. and we core acquisitions as saw operations turned the calendar momentum in see when the

the I it, a our if in almost and of As a reflected at after insurance growth professional the the midpoint nine new remaining Harvey year X% that last at booked growth about year look we you guidance considering the about months and proceeds think X% high-point. at some has liability,

of the think as momentum year to we So it think I continue appropriate. do on. at business. point, that’s We’ll in evaluate we goes this continue But to the see operating the core

Mark Kimbrough

Gary. Thanks, right. All

Gary Taylor

Okay. Thank you.

Samuel Hazen

Okay.

Operator

Chickering Pito Deutsche We’ll Thank with take question Bank. from next now you. our

Pito Chickering

morning, Nice thanks taking guys. my Good quarter for question. and

First nice of as quarter same-store we strong, revenue expected. saw and SG&A some obviously leverage sort very was

leverage same-store if $XX us or this you Excluding do from that was with to revenue, any if just think revenues OpEx see should could the sort we I’m leverage of acquisitions the to And due you line? on the walk OpEx front? curious about how out-of-network million through look on

William Rutherford

we Well, expansion I We the a leverage. margin for there was operating guess, expense nice look had year. –

same-facility almost same-facility line even you we the If expansion points XXX basis, had look especially on at a basis item, basis. on margin any

side talked that we the we’ve our expect of past, the to top indeed, guidance. about and expansion the we’re quarter. margin do revenue We as in saw see for So, on

Samuel Hazen

mean, here, a $XXX Yes. million just growth… And me we at let add Bill. of did couple revenue same-stores things I

William Rutherford

Yes.

Samuel Hazen

XX% to …and we EBITDA of about line. the cleared it

So of clearance an really incremental jumped basis standpoint. points, almost is our same-stores EBITDA which revenue sort XXX expectation our margin above on

seeing that So seeing. Pito there, thing the same are we’re you not

our expense revenue again, Our unit. underneath basis, on overall per admission per same-stores was X.X% well operating up only a adjusted

so the And quite pleased pretty for actually and company. pleased the expense with were we metrics

Pito Chickering

Okay, Thanks, fair guys. enough.

Mark Kimbrough

All right. Pito. Thanks,

Operator

Credit you. Rice hear now We’ll A.J. Thank Suisse. from with

A.J. Rice

way. supply the – the expense, the pursue different is that ratios. to you’ve from I going on salary that you’re announced your Is going particularly was supply and But I you have. of be revenue don’t the side, relative they to there? in just And contract know would I specifically leverage I know way? pursuing and new highlighting PBM I needle strong Maybe Hi. there that announced I to you’ve got a initiatives that but a – any there’s look It look outperforming move benefits What if – like line, you terms actually think, that in worth any us for in significant it. you know that a think particular

Mark Kimbrough

A.J. Thanks,

Samuel Hazen

This for thank is A.J., you Sam, that.

I and Healthcare efficiencies gain general constant think, to is to pursuit a in of HCA in improve trying profitability. find ways

get I do wouldn’t as we’re as solutions as up the that value. say we come we in that we mean, we our and necessarily benchmarking so better technology can opportunities. mindset. better We anything finding believe constantly And new yield across believe with I is company analytics,

to in next to have do respect effect relationship and Optum past. about front our in ongoing of a We there so doing connected pursue that us in job day-to-day to categories. an renewal. activities. do growth to transition contracts teams good take our and costs year. announcement efforts job CBS disciplined the had to create process think and offer those But bottom supply just was that, of ways find chain really great we so opportunities very with and we by But in appropriately. managing fixed and as our up come they company expenses of revenue They approaches we’ve a inside the part had number that relationship, for in renewal a to do the is clear great will three a job relationship different a platform of initiatives a great variable are we’ll a I PBM and then transition that’s that put different a And to With the line to trying their of chose reduce allows evaluating of compelling XXXX,

been questions productivity we’ve would Obviously, call on So were to And able about able growth, of X%, in in resource what volume to labor, the and continue and which wages volume I there’s forth. face our sort that is ways we we expectations our quarter. slightly great find in that contract of not same been decent encouraging. all you. part then and just turnover nursing human so to and continue reduced growth improve under the We’ve are pathway what yielding would so around was and maintain on I tell performance initiatives, the reductions the to execute played a in wages

A.J. Rice

great. Okay, lot. Thanks a

Mark Kimbrough

A.J. Thanks,

Operator

Thank you. We’ll Frank from our next Morgan Markets. Capital RBC question take with

Frank Morgan

Good morning.

results. You of terms referenced contribution recent in acquisitions to your its

recent to you a billion there? talked Mission update Is into Anymore going be it last Houston. you a CapEx or just Savannah, billion any of around wins investment, that’s I be little think, couple allocated? I on $X.X also about up Just from give more where of quarter. us if acquisitions, those that curious that could higher-level color Thanks. noticed And a recent color $X.X now,

William Rutherford

is Yes. Hey, Frank, this Bill.

with Let performance with and acquisition we’re very me start pleased the of plan. acquisitions. on the They’re the performance

Mission First, very as is well. you mentioned, going

Mission the We’re it, months we’re just two HCA to Health obviously, network. join excited but for into

is from how is We’re going solid continue Savannah. a with plan, and Memorial performance very point. on on had integration operate plan at this their their Savannah so performance to pleased good on the quarter,

We’re very Houston. pleased of our our This our also is on performance plan. Cypress facility also in with North

anticipated overall, we we’re be. where So right to

anticipated in our and contribute X% the year-end they recall, that we the XXXX you roughly growth achieved as first If we in quarter. EBITDA to of level acquisitions had call,

seem So with very were. expectations performance on and what the our be track to pleased with

continue On the in trends related with online But some see we guided. the we what capital increased to then is increase, yes, capital opportunities there spend capital market. originally to as Mission our are and and

Samuel Hazen

significant that $X.X up, to Frank, services of improvements, network we acquisitions. related most think the we step of the that existing continuing is to we is for and opportunity that our of billion, positioning improve and are we in that billion, believe a have in projects along most capacity are differentiators to but The there technology this in areas certain increase to to related are our our lines time. existing where $X.X key particular sort Yes, Bill, at HCA that drive markets. few in investments But continue point invest to markets,

Mark Kimbrough

Frank. Thank you,

Frank Morgan

you. Thank

Operator

next now Peter question We’ll you. Thank Costa move with on Wells to Fargo. our from

Peter Costa

bit A quarter. Good couple competitors admissions. morning. growth little your medical to in admissions see a seem faster of Nice bit and slower a surgical little

have geographies? the or going to separate not because and the do other You are guys it’s market, seem didn’t share as taking in think with and Could just issue. that totally on much share the companies you’re and taking something there’s just side be, you that surgical

Samuel Hazen

This is Sam. for that Thank you question.

hospital-based C-section and of were quarter. up our surgery outpatient by Our were X inpatient inside outpatient some the A driven But which that %. were surgeries up flat our conversely surgeries was in especially of reductions. lot centers,

is, first day. surgical have in one thing one the we did we quarter So have less

calendar I so present a days. would And the what and not it call surgical calendar set favorable is of

surgery. some so yielded And that pressure on

if day you look how on which business per So we surgical standpoint, at surgery activity. strong it, a we at had look really is

journey that When a better so improvements inpatient way positive offerings result. suites. surgeons satisfaction, inside this choice you company’s suites our for around surgical productive think we efforts us. our you forth We’ve better a improve yield the has create been call our and to I to pretty since better efficiency, creating in the of of OR that of been appeal nursing, with on operations couple very the what and XXXX surgical technology

I built capabilities service you thing the other is building or line we deep some nature. surgically will that, of that The are in tell have are oriented

us lot example, at been productive line. even heavily of look across as this for the robotics heavily surgery-oriented, a in growth burn made quarter very is cardiovascular, that For and have we for trauma surgery-oriented, us surgical investments our cardiovascular, surgery we’ve

inpatient the lines, my service has different the As in We I watermark that’s broad-based include a across which high think company fairly mentioned market on achieved components. comments, surgery share. its

we’re market impact the very in patients our yielding and that broadly it’s making, initiatives with we’re we and with our us. the surgical with an So our solid pretty physicians it’s investments think growth pleased and having for

Peter Costa

have I Thank just follow-up. could if you. a And

Given X% the to the strength isn’t showing in surgeries and that the of it long-term you’re come rate target strength time acquisitions, to from growth your EBITDA X%? off

William Rutherford

to yet. ready that do not we’re Well,

this have other year that and above of factors as guided year it. the rest look we and and that did we’ll But bad guidance. hear and question through your we the perform and obviously, last of And our we’re any important by working question evaluate this that means so, way get some a long-term above to year your to we at through not are and we that point it’s

XXX% I we EBITDA can we’re think quarter, understand, many possibly we produce as this if it’s as fronts And like that. important did can. do we we’ll growth to XX% on pushing

so And performance trying is down I management think this the team company. to don’t beat of the

We’re will trying the at a and rest that the up we that, we to is find we understand it the of year. part guidance through lift move to can as wherever look we continue of but it,

Mark Kimbrough

Thank you, Peter.

Peter Costa

guys. I Thank appreciate you, Okay. it.

Mark Kimbrough

All right.

Operator

Michael And Newshel Thank take with we’ll you. now next our Evercore from question ISI.

Michael Newshel

impact? Thanks. more fourth the does in or reflect the XXXX what IPPS as guys the your then comment Can they for on XXXX you specific company lower calendar the typical average? proposal, assume favorable for And proposal guidance quarter a

Samuel Hazen

Hey, Mike.

William Rutherford

We’ll we no we specifics continue the it. through to is haven’t this we period, normal guidance on at back everybody our return fourth to quarter Relative anticipate there. take so this still to so of is as evaluate proposal common say, were Obviously, it. have I’ll else about on the we’re go that Mike, as that looking did will that that I update. We Bill. quantified kind year-end rate Yes, our we call. that in year will rate Medicare guidance, our talked in a incredible early,

rate. a presume guidance our go to did normal So back that we

we’ll So we get to we’ll once period. when the final have quantification see common rate to that that. And on IPPS the be closer, go we through what out of turns comment

Michael Newshel

you. right. All Thank

Samuel Hazen

Yes.

Mark Kimbrough

Thanks, Michael.

Operator

take our Mizuho you. Securities. Hynes with question We’ll from Thank Ann next

Ann Hynes

morning. good Hi,

Samuel Hazen

Hi, Ann.

Ann Hynes

think when is interesting? Thanks. you investment of Could you in over I income that investment we see more time, Galen give maybe expenses at us detail, the and the some do will think, How improve Nursing College that statement?

William Rutherford

Thanks, Ann.

So acquisition their the Nursing is with and College how a organization. We solutions to of think exciting HCA. impressive Their up lines and Galen very was discipline standardization around scale is very very This strategy a HCA they for great Healthcare. their impressive culture their us.

be students allows network and journey a investments hopefully we to our in early our front-end so on nursing see put a an opportunity that for nurse source the way education Healthcare to growth agenda, their this the so to us into an as us in allow our on integrate HCA of forth. them in with and component nursing interact to that talent will And

see As particular expanded Nursing cases far their has synergistic education we effort. our a some robust to underway opportunities we HCA complimentary as we very in as with that’s that broader as agenda in expenses, very clinical and being of some College education Galen use see and the initiatives. platform

of to that as put a yet. number haven’t We

think regulatory this into that hopefully their process through going We have we it. on But HCA we’re we have in the nurses fairly specifically deal company. model once enhance create we it’s through to year going our trying we’re different the by be through yet moving opportunities but can us any quick markets, this expense we get for synergies, end going pipeline close get currently. to a on expand numbers so that that, of But do to into to don’t to of

Mark Kimbrough

Thanks, Ann.

Operator

from Thank Robert next W. you. Baird. Matthew We’ll question with take our Gillmor

Matthew Gillmor

Hey, thanks.

impact can facility that have Michael on the Peter’s Panama volumes volumes? at then And on on did you the Hurricane all? the impacted quantify up calendar any Following impact lingering overall question,

Samuel Hazen

This that is Sam. Thank you question. for

short is the second part answer your question, no. of the On

an Gulf how Coast, in to they there Center in I the the through what since they people asked to of you that’s for incredible Medical and opportunity the group Panama thank everything rebounded, Our take them and down they’ve again done. question quickly went City, want

at fully hospitals. running and that up we’re So particular

So the and so our markets running, in volume. as other impact it local that corporate it on had up relates teams, teams, supported our no quarter, hospital to getting

all think the weekdays. done we especially at XX% way are I on outpatient side, the almost outpatient look of surgery, surgeries XX% to on

at doing nonetheless that, volumes day quarter what look in week you outpatient top day get on you not our rather were the sense sense the you of math I’ll the it. my put can less surgeries here when I’m and So business one of – give surgical day per calendar phone, some or on of you but then the

emergency On on the not We surgery weekends, do much. side, as the a it’s inpatient surgeries but patients, for it’s mainly small number.

I day surgeries kind So calendar, inpatient influenced in the cardiology the And as tremendous business, growth company had have quarter. outpatient. then much same are you the the nearly which cardiology not of by but business on as the think impact the also

volumes were cardiac procedures the up X% side. Our on

year, were And very face up we line solid that that somewhat growth electrophysiology think, that’s up X%, surgeries than cardiovascular the we overpowered I through Our the X%, particular by were well. again, the calendar previous service the went of calendar, little so our as in but quarter. was a a and impacted business in volumes softer that again, as

Mark Kimbrough

Matt. Thanks,

Matthew Gillmor

Sam. Thanks, it. Got

Samuel Hazen

Okay.

Operator

question take next We’ll Mayo you. Whit our UBS. with Thank from

Whit Mayo

some I that Hey, thanks. changes don’t around services. shark, Florida, mostly some does this for HCA? law CON What in jump but see Sam, tertiary assuming the want may to mean maybe we

Samuel Hazen

certain of requirements. as are fairly currently of any lot Florida do expansion on to need the seen CON rules. There changes certificate on facilities. There on relaxed no CON significance existing not of of their is is a regulation Florida restrictions rules have of We facilities yet. opportunities final the outpatient in without

programs, hospitals, mean that opportunity process would line example, rules the markets. So CON restrictive It relaxed. rehab be to And relaxed we could some restrictions new us other in if get it there’s gradually where available understand it is the changed are few would to opportunity would for that potentially as potentially be a there I new programs today, front. that on very our into years. also service mean, a us so over is certain the for then CON itself be are

we’ll So continues this the learn as more bill through process. legislative to progress

Operator

now Thank take next from… you. question We’ll our

Whit Mayo

Thank you.

Operator

question you. We’ll our Giacobbe next Thank now Ralph Citigroup. take from with

Samuel Hazen

Ralph. Hey,

Ralph Giacobbe

good larger broader there Hey, at arbitration outstanding? cases was bullish I it whether trying Are more just with of time, commercial they the know of there’s what more these And morning. specifically, and to to of time? Thanks. happen over sense related this from to out-of-network of time a get or exchanges period point? a

William Rutherford

Ralph, activity to is with insurance health have of a arbitration From relate can’t that Bill. in near-term. say did time bit we this discussions result that with now was periods reform, payers exchange one and Yes, of that time, health XXXX, see to little XXXX. a those, disputes the principally in I of This big this and we one early there’s XXXX,

Ralph Giacobbe

Thanks.

Mark Kimbrough

Ralph. right. All Thanks,

Operator

next on to Kevin from We’ll Bank with now move question Fischbeck of our America.

Kevin Fischbeck

Thanks. Great.

the this dig quarter. to that biggest you forward, are to that going good surprise, going pressure guess, a improving be I as maybe kind margin on particular. of that improvements, up the of I growth labor wages keeps more in guess the in where but cost and economy labor the will really and wanted that all assuming we’re because be seems Just into

tracking that how was about understand just through you and driving I want to year? that So the what think number

William Rutherford

revenue the We were were how as X.X%. I I the under inside Well, most a at we Again, same stores manage details wages, to on minute labor spoke for up of labor X%. company, ago if and viewed productivity to able said, some our and on of of you costs it. X.X% find growth our look that

a had cost we our aren’t we volume, reductions contract labor. Obviously, facilities. And marginal and in I managed really intensity of have using to overall, volume think when support we we have that. just by high commercial good ton So well

well in in We’re mentioned but the yield and if earlier sure, it using nature. our effectively. patient, and shows will, more it itself clears call expansion are in it’s of some marginal costs for revenue HCA itself that because got margin XX% I figure revenue cost that more more well roughly you turnover per in labor significantly as when labor And fixed as you in shows the

but so have mix saw as the categories, volume and volume pretty growth, different quarter. to as extent, the we clears good of really effectively first what the volume. growth in expense some And we through the that It that’s far itself

As respect labor it significantly anything not anticipating rest relates we’re of the year, the to with to different pressures.

execute We our continue to that our environment for improve the employees. multiple agendas we to have

better cost to it’s to work unusual So place and from a don’t any we more attractive pressures that. see coming and them,

Kevin Fischbeck

Thanks to hear them.

Mark Kimbrough

Thank you.

Operator

Thank from you. We’ll take Research. our next question Josh Raskin Nephron with

Josh Raskin

I to taking along little cetera, line? the curious expectations of taking if a et taking payers, I’m that we’ve from question. market your guess, guess attitudes been about be or and risk. more in while just in or since seeing changes even everything any I HCA payer terms appetite side in the of sort the you’re risk, talked it’s guys, call I appreciate, – Thanks. the And

Samuel Hazen

in Sam. XX that view is This question. materially our Thank for different across you has changed our markets. Nothing

We strategically continue instances. to interact with and I the many think, in payers, effectively very

our have so for to various time value-based that for That’s approach convenient the been and think effective price outpatient and very satisfying that patients. is building forth. provisions have We payers for do same the contracts facilities and points with I us. the at where on our they’re some efficient network different them we and productive take in

that, a that, inpatient a and we recognize patient admissions responsibilities its manage particular to payments or takes underneath efficiently a on HCA roughly a our to on fail people what think XX% XX% is rate payment get I risk. it’s case we of DRG that. to get former In

of taking risk. And forms we are so

risk price in not of or of walls any position to in that or we’re that even hospital necessarily. We’re because taking influence that the outside way, the control material don’t a feel we

can we readmissions be by been So their don’t of our payers outcomes facility stay high-quality that focus result for into really has needs or with lengths then risk that control some and such. approach don’t efficient very different meeting visibility partner longer productive the parameters or to with we infections in a in and have offerings that on result

been and generally the our is with And so payers. workable approach, that we think that’s

So really the any marketplace. we changes broadly significant are across seeing

Mark Kimbrough

Thank you, Josh.

Josh Raskin

thanks. Okay,

Operator

from question Thank you. with We’ll take our Stephens. next Fidel Scott

Scott Fidel

particularly Hi, update thanks. call DSOs some over on cash then as if operating and touch the in that of the remainder out to just cadence operating you flows, on relates the us anything year? of the maybe key interested factors just flow of drove cash change year-over-year around the I’m could the quarterly it to

Samuel Hazen

thanks. Scott, Hi,

William Rutherford

Yes, Bill. this Scott, is

as I flow was a that affected item first funded we receivables match in quarter, collected that comments, my out settlement in called cash into we in affected the our couple quarter The it. were So related XXX(k) in the payer There that XXXX. most to that year-over-year to went spoke April. the first significant other subsequently we’ve the items

some were AR were given that, into Mission $XX the in both million increased those the receivables we there months just With acquisition, two were of range.

track. on cash adjust flow right those from we So ops for or is when

range billion. between believe $X and continue from the cash We flow ops to $X.X for will billion full-year,

we about company is where on that. so feel And good positioned the

to growth continues that the well. operations think in cash see earnings, as company as I growth some see flow we’ll in

Samuel Hazen

$X our guidance was original to $X.X billion… So billion

William Rutherford

guidance believe HCA. for the $X continue to really proper we that’s billion, billion yes, and $X.X to

Samuel Hazen

Correct.

Scott, you. thank Okay.

Operator

Thank you.

Valiquette question Barclays. from next Steven Our come will with

Samuel Hazen

Steve?

Operator

function, sir, aren’t your hear aren’t Again, function. you. you. Please check mute please to able check able Valiquette, hear mute to your we Mr. we

Steven Valiquette

Hello.

William Rutherford

Hey, Steve.

Steven Valiquette

[indiscernible] you and I the me. cellphone. can turned hope, Hey, sorry I on hear

Samuel Hazen

ahead. go Yes,

Steven Valiquette

follow-up. to want just I

Okay.

your to full-year? go metric. well same-store there revs rest obviously guys the revs if around, the wondering results just into I’m able same-store investors that confidence to more per there your are again, that happening results admission as durability among So of just peers just for softer admission that this variables of reasons just for had the Thanks. metric adjusted a this earlier, on there’s discussion on been comment HCA for that the discussion metric from adjusted give quarter But you XXXX pretty separate you in XQ maybe for now of surgery and ton other XXXX per has good that

Samuel Hazen

Thanks, Steve.

our we of commercial admission benefit in strong said, our commercial segment from admission. I six that adjusted had Commercial and like I yielded growth volume quarters think, revenue consecutive growth, we’ve per volume and growth, obviously, adjusted

line more is, build deepen people pretty our drove would we’ve programs above expected. up had Those say across And organization, capability per that our out as thing the second that revenue yields patient service good two that. where we factors the The a broadly maybe and pattern with unit are per I revenue

as that and but our we case X% of XXXX, if a perfect acuity, mix, in for north again function when think good of a X%, proxy one look of remember two I at Also mix is trending you north is a I is those well. case which correctly, not variables. were trends, actually our

in So of we continue invest both to our components of business. those

initiatives We have the for numerous population. accessible that commercial geared more are being toward

have capabilities we across to We continue investments that service still those build outpatient line portfolio. in think again, out standpoint, And have more the things company’s towards geared Also, the think are that. see room XXXX. momentum and reasonably of that markets as continued And us course job well economies, strong to we grow. growth in for we over portends with the the

Steven Valiquette

appreciate Thanks. your I best Okay. color.

Mark Kimbrough

Thank Steve. you,

Operator

you. Thank

Goldman Tanal question comes Sachs. next Steve with from Our

Steve Tanal

Good was guys. one. good. very guess, wanted is to was bullish. the I quarter the morning, commentary follow-up on that – I quite Actually itself Clearly,

per would guess pretty Does it X to potentially that there so you be is question be, the X guidance the seem year? And like above? could admit anything tracking I the likely adjusted into range on to back that’s move for revenue

William Rutherford

obviously Well, there’s talk of the prospects about, company. a have. us growth lot we’ll in we have to as we momentum feel of you’ve heard trends But quarter-to-quarter see. the There’s

commercial really that. As drive helps good mentioned, growth Sam just

higher continue services. invest We in acuity to

revenue anticipate strength company. the we portfolio the in So, the and do continued composition of

So might see I future think for that, near-term, yield. quarters the the have to but we’ll be we just what above

Steve Tanal

the just maybe was pace? out Appreciate looking? helpful? you comments you. slowed would color that. opportunities the pipeline, M&A there on from still be there? just lastly, Thank any Any And there? that Have How anything Are

Mark Kimbrough

All Steve. right. Thanks,

William Rutherford

particular the there cycle say And where mentioned our time. I last I or call some company. that, It’s the report on on the nice we at be could Well, this call entering we judgment. maybe opportunities anything point are wouldn’t before that have a to I for think, in this,

Most not-for-profit have with their are their discussions different situation. exploring early think we they’re appeal. they their but discussions, at systems having future are are those look and systems We of independent that as that options some

conversations that period do seen say more we I that. time, where we will continue can’t say than entering we’ve had And in see are in more of so think to a could those we than there are past. the any we’ve past, But really the I

Steve Tanal

Great. Thank you.

Mark Kimbrough

you. Thank right. All

Operator

Anagha our you. next SVB take Leerink. We’ll from Thank Gupte question with

Anagha Gupte

Good thanks. Hey, morning.

impressive So quarter. very

impress of the growth the from hospital and You you decouple continue operators on and all the to rest metrics.

but anymore questions are to quick relative HCA much playbook? secular And would your my can how about many, the I mix has So, very be two been impressive. is commercial ones even of ask really this

acuity service, mix across better towards? points ability your better all inpatient unparalleled it You your also, So growth because everyone that growth, population then in you’re talked if because And shaking, and than on I rates mix the mean, physicians? pricing employment asset in much will, access I so you well XXXX-plus about the acuity, markets. also, the you it else. had that just but have of on an and and buildings that service sight comments assets, you’re or is once, year think, payer market your secondly, base your that? Is of the ago maybe probably sort a is in in have you’re by you payer specific any the optimize lines your And and to of a with anymore, investing

Samuel Hazen

you, Anagha. right. All Thank

William Rutherford

to And markets. I large particular them how very I to the players. or what in of these against metropolitan are only a typically, for of market, call is to us system which are what to we are market local results. competing not-for-profit in not few portfolio that companies would a most compete speak the What we I’m position other approach and it to in can market and speak takes their

results those we So the and nuances. we based. effective have to transporting our investing growth with adjust in local our very our are But have in approach And transporting agenda to been broad aggressively initiatives ideas, company. across deal

overall this share the than in market market our slightly share last commercial high. the grew We we’ve all-time our very on better is market actually that’s on that at so report an got, commercial the share Our in we book grew encouraging.

a for and We continue and the an creating and same patient. and satisfying be them them from to finding solution the a again, efficient believe things, doing right for time relating to the at experience payer ways standpoint to we’re

So in that is a invest commercial to of on make our outpatient for lot navigate. try to easy the revenue side. patients that. We programs We it create the

down think continue pathway, And it we’ll we so, because works. that

companies, I to so model really like see we’re seeing. competitors I other business me their understand markets. results against the ours get don’t for what I our It’s same compare hard our to degree, And understand that’s to their nor do across because I the as do

Mark Kimbrough

All right. Anagha. Thank you,

Anagha Gupte

Thank much. very you Okay. Thank you.

Operator

hear Thank now BMO from you. with We’ll Markets. Matt Borsch Capital

Matthew Borsch

Yes.

two in on and the services trend the your question Just demographics.

baby talking curious rate one birth how low the on Is vanguard the quarter And the cardiac As hand, early that the given that the services the you you boom the other? is weighting this fewer just I’m of that in very are and, the you towards aging on we population XXs. very, generation the the of had. other look that developing, at see on and hand – now C-sections

Samuel Hazen

question. to Sam. Thank question. are you the pieces. This two there’s There that is So two pieces for

quarter, cardiac X%. fourth have the trends were think, up side, in we about seen even we cardiology the strong I On volume

patient up those and us has all in physician And by X%. for that’s In quarter, teams program development, our so Nashville, was strategy, we cardiology. across of and think team attract this world, who again volume recruitment, our line things, navigation, physician that supports commercial about capacity that about interesting kind level, talent and add to really our in up service up same the and yielding board volume led which allowed a of here what’s is in program we’re field goes obstetrics gains deployment, the in to that us obstetrics technology,

Our Medicaid significantly. down volume was

flattening the drove and of our what metrics has the see and do reductions us to country. so made that most share. And look at, approach sites out yielded in of birth continue some so market rates so to And blend we that pick services overall across where transporting to forth markets, our we’ve the have and the create a that’s of sort We’ve where capability And facilities, in investments. markets, to go, in C-section. positive want really to that moms before. physicians And we’ll physician that destination We creates up because women been spoken can nursing broadly, capability, more for we very working idea those again, the environment. that’s the

in the flat, most I that recent is think and report, for our on equation share the of where lost the Medicaid we’ve much market actually side side. obstetrics in the so commercial it again but is not

Matthew Borsch

Thank you.

Mark Kimbrough

appreciate I it. Matt. Thanks,

Operator

take Sarah our with James Piper Jaffray. Thank next from you. We’ll question

Jesse Klink

is This question. for Thanks Sarah. on right. taking Jesse All for the

even, surgery outpatient So grew say, that year-over-year, on the you year-over-year. year-over-year, hospitals of grew XX% XX% of call, hospitals last highlighted XX% for admissions

XXXX in really all year. was So good

XXXX? just what is there comp so if for among X% that’s to guidance? do improvement for still at all, think it room X% facilities? improvement, there’s the Thanks. And far kind you If those Just and EBIT how X% makes difficult X% in to for then mean trending that wondering of volume a growth could room growth

William Rutherford

XXXX. Well, the We our performance year-over-year in a admission just had portfolio of you have we growth. hospitals to very had EBITDA that We the was first really had had XX% delineated. growth. metrics similar strong that XX% again quarter It of

by had last our business our Board. season across strategies less the with metric day because season than flu the flu. that year-over-year a calendar that’s the that execution pleased of previous in recorded given year of the year. impact performance day our we’re we a had we from – one all Board, was due portfolio little what the last had to business reported or less judgment powerful very so pretty flu the and the nonetheless, volume again, the I that’s softer my a teams room comparisons. year Now then Emergency and, think had on some flu impact management of is really But that the and we But in one strong all, pretty the across I much of

Samuel Hazen

two got you. Thank great. questions, time okay? more for Okay, Cody, Hey, we’ve

Operator

We’ll take from our Brian Jefferies. question Absolutely. next Tanquilut with

Brian Tanquilut

you. question Hey, guess I my a quarter. guys. morning, good good for Sam, Congratulations on

your M&A for I are new you then, or ownership? at appetite pipeline, any how as about relate pursuing of physician approaches about in-hospital As your again, we acquiring point? think physician that the practice in And does looking terms that at think practices to piloting strategy, to this in-hospital

Samuel Hazen

to our practices. physician continue we group physician add services Well, to

clinics – roughly X,XXX, growing I XX% to practices per X% in roughly company, that’s think, we’re X,XXX over X,XXX and it physicians the across year. or X,XXX physician

trend but our we ongoing works. that’s So of an for payers think patients same for that offering an success, our the creating is of part our and that time at part

physicians, we some the hospital-based exploring to deal marketplace. of the specifically, relates it in to with exist As approaches pressures are that

HCA. today have practices are that by We owned hospital-based physician

largest in second medicine, country. critical medicine have or practice care the may critical we For the largest the care

a pathology have also very that’s We large of growing. inside practice HCA

hospital exploring as room emergency are physicians. we’re We exploring

We synergistic what report to are as today really done in approach in don’t be be be. than anything at could on to to some margins impact have in it time, not futures? exploring we’ve there. the that’s we that It what a material do But that in have will going acquisitions acquisitions this future in How exactly ways point the will it’s don’t different I a the past. impact that if any acquisitions. on maybe We’re for anesthesia the think different material.

Brian Tanquilut

Thank you. right. All

Mark Kimbrough

one Thank you, Brian. more. We’ve got

Operator

from follow-up Deutsche Thank Pito our you. We’ll with Chickering take Bank.

Pito Chickering

over case increasing mix, in Did quarter? you our the And for the case mostly thanks mix? that past three follow-up due investments. question, taking first and same-store here. Quick guess, it’s also at to disclose years guys, X% the the CapEx Hey, increasing quantify I

think in process, the three it years? case two growth mix the slow amount shouldn’t the to spend to is fair CapEx With of in the next anytime

William Rutherford

Yes, Bill. is Peter, this

Our case was mix quarter index X.X%... for the first

Samuel Hazen

facility… Same

William Rutherford

from to talked I development, a capital on grow know variables not our call, high to as on don’t as acuity has Sam or of well throughout services. will line whether alluded lot service continue slow intensity a focus, it both program we’ve to basis and …on there. about high same our there, is the the facility as

been for X. this been X to to where of said X settle in I in settlement for X of some before, time we’ve long-term – might a we’ve north likely that a period. period So, period development But be a be us. on continue see our robust to high capital as focused acuity, we still invest high case the index we is acuity, mix in if program as the I wouldn’t surprised

Pito Chickering

Thank you very much.

William Rutherford

Cody? Okay.

Operator

Thank over you. back That conference for the does turn to Kimbrough like any session. conclude today’s I’d additional Mr. question-and-answer or to closing remarks.

Mark Kimbrough

for to Okay, everyone, around your if you participated in be I Thanks want today. great. and who Listen, thank, interest I’ll much. so additional need the HCA, Thank office any follow-up. you

Operator

participation. today’s all for Thank Thank you does you. your conclude That conference.

You may now disconnect.

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