HCA - Earnings call transcript Q2 2021

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Operator

Hello, and welcome to the HCA Healthcare Second Quarter 2021 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I will like to turn the call over to Vice President of Investor Relations, Mr. Mark Kimbrough. Please go ahead, sir.

Mark Kimbrough

right. All Katherine. you, Thank welcome on and call. to morning today's everyone Good Sam is CFO, With morning CEO, Hazen; me this our and Bill Rutherford. Sam remarks, and provide some will will questions. and take then Bill we prepared

filings. these results Sam turn and might on and that call other This is to available will today's call cause actual any upon reconciling adjusted morning's are supplemental to our table is On contain statements, today's measures providing to call I Numerous are and being today. reference management's is be call forward-looking net turn Before HCA today. over current later call, call on should Bill, may me expectations. measure. in remind from such the let may With in everyone now they that adjusted Healthcare and based differ EBITDA forward-looking today's factors the A those be to in information income risks, EBITDA, replay information this expressed attributable I'll More the statements and as and press included a of factors morning's listed we materially release release. which a recorded SEC non-GAAP Sam. various that, financial over uncertainties,

Sam Hazen

thank and for morning you Good joining us.

admissions were grew to up was inpatient Emergency almost down emergency month Outpatient admissions of X.X%. overall cardiology X.X% to a most growing XX% a over only compared as admissions inpatient we total excluding visits into able first grew the increase Compared retirement significantly services. up volume. admissions of across X% categories XX%, grew driven with in improved basically EBITDA Acuity, grew XX%, in on COVID supported which moderate XX% And an in XX%. higher revenues payer year, growth was the margin the flat. With demand increased last and in revenue and visits sequentially were losses XX%, surgeries $XX.X second earnings were the on $X.XX. and rooms procedures Diluted rebound losses highlight our resulted XXXX. impressive to by grew were of billion. for outpatient to the Volumes government year. XXXX, notably, gains excluding areas. On and per facilities Adjusted with from quarter, share, by increased care stimulus were our to up most in grew urgent Outpatient the X% quarter. in XX%, effects pandemic moderating an all in and strong basis, few acute room room sales mix, the commercial the increased surgeries demand leverage we emergency in to admission categories. compared surgeries categories. experienced with of outpatient XX.X% June debt, XX% Outpatient revenues grew To income to increased across XX% in a comparison compared We quarter. margins. to The growth. X%. improved however, down the reflecting revenues Inpatient the of an to commercial year-over-year visits first resurgence growth last the approximately quarter

again, the benefit in quarter XXXX, work. benefit our agenda. to we provider delivered return from dedication EPS the I Act. quarter want funds release, a relief operating on hard for Once teams of included third stimulus of the reversed share our our their to thank CARES decision share entire made our them a government XXXX from in noted was $X.XX diluted and result As as of This per the second in of income.

the reflect of rest demand look the the the levels half first annual remainder the to prolong raised of current year. have should that the the company guidance of year, over belief we we our the and over year, the the of to performance As of

aggressively this operating our enterprise We deliver networks. to call turn for share produce differentiate model And invest developing our plan, while continue more believe for market shareholders. returns growth greater to building more We will serve to continue value communities, to and and now our create Bill to I'll resources strategic solid also you. support around caregivers in our comprehensive details. our for capabilities clinical the which local revolves patients, Thank over

Bill Rutherford

Sam, capital our Thank review updated flow morning, our and good everyone. cash you, guidance. I will XXXX the activity and then Great. allocation quarter, discuss during

quarter repurchases capital come now year, for second estimated prior pipeline that we tax Capital the end of billion completed quarter, online quarter and this the as billion approved to the the year, billion flow deferral approximately impacted under billion from had in more million XXXX. in scheduled the due million, receipts. In the the XXXX quarter XXX result XXXX. in prior year we operations of of X.X and income CARES XXX during the We than Act operations just is approximately of tax X.X a flow was cash X.X performance strong second our positively compared of the was quarter the due by spending And of to X.XX our quarter. cash from period, in to between billion X.X operating As have share payments. payments to was approximately the

on to authorization. this planning discussion, We the are have of completing And with majority year-end conditions. we subject our approximately XXXX, on X our in market consistent billion remaining

Our was the the adjusted leverage X.X to EBITDA and liquidity at of we X.XXx available had quarter. approximately debt billion end of

Hospital we Regional quarter, Vidalia, closed of Meadows Georgia. acquisition the in on During the

hospice on and X, Brookdale home We as XXXX. health also transaction of closed the July

number expand of development acquisitions. additions well and development transactions our as in pipeline a and regional over networks, novo XX as a care to other number delivery including of acquisitions through have our physician We de urgent center both surgery practice

quarter, later the capital and anticipate we for purposes. Georgia plan previously also allocation our from announced other proceeds this the in We to facility closing use this transaction of divestitures

release XX billion. XX our in as we to We are updating XXXX guidance our follows. and As range this now billion year morning, revenues expect full noted between

range full expect EBITDA billion. billion year to between and We XX.X adjusted XX.X

We expect per our $XX.XX billion. year range spending remains And capital approximately $XX.XX between full target to earnings X.X share share. per at diluted and

Mark the the I'll in up the guidance mentioned, As half and to the open revised Sam for call the continue in of strong of turn ability Q&A. first over considers belief for company's results our With it the year. this year, performance our the to and that, remainder

Mark Kimbrough

yourself much. so try that could the Please Thank to to you. as give Bill, many one we so All if right. you as Katherine, questions callers Sam, to get now question I can we're instructions the thank queue. limit for you ready think possible. on

Operator

Jefferies. And question Instructions]. your of first [Operator from Brian Tanquilut the line comes with

Brian Tanquilut

a Congratulations solid Bill, guys. I last quarter. morning, follow comment on Good I'll the guess, up part of Hi. the guidance. on on your

trends QX. continuation that expecting the we you're of saw in So

variants the are the was delta last up? in of how side elective about year? you just thinking of So, terms procedures that delayed in backlog that coming the And from on seeing terms you're

Bill Rutherford

overall, levels, We will of Yes. come strong. in as think that payer it’s our of Relative factors we will back some and system acuity think COVID though the serving mentioned indicated the mix throughout overall all the take as our we guidance and acuity perhaps above maintain Brian, remain that. We second lot I’ll moderately the balance levels year. results, Bill. of in seeing volume, we're that. to even lower we may can variables. XXXX the COVID, to return And quarter, our in that. overall, believe, Obviously, into I the anticipated the year, year-end of a indeed

of to X% cycles to admissions his As they were XX% the as through roughly different And quarter Sam think mentioned ability the present the I in proven second themselves. COVID we've manage first in our comments, quarter. in compared

a company deliver in And performance factored number variables so into and our to believe, we to guidance the be the of that. of again, able

Operator

of next with Deutsche comes Chickering Your from line Bank. the question Pito

Pito Chickering

Good bit. for too I begs little XXXX. a understand consensus new way job taking question. Great now the quarter but think brackets question about for Guidance that morning, it's to in early guys. XXXX. here in guidance Thanks the XXXX, my

think pay billion. COVID payments So and the XX.X to think if we way if XX.X about $XXX and government million midpoint of get of of guidance a [ph] XX.X back out to assume we EBITDA that year? to growth pad spending the other HR sequestration, X% the we XXXX billion next that launch right us to And right that is about for XXXX? billion Is for XXXX, from

Bill Rutherford

Well, Pito, start and let add me Sam.

some out have little to numbers. obviously a going through takes math it's puts We think I and to put XXXX early XXXX.

that full correctly approximate to We the to general the XXXX. anticipate XXX seeing. But the putting really to year. is government You numbers do in direction million early stimulus too company feel confident start for it's

XXXX for guidance comments And so, standpoint. specific we'll again, reserve this on at

Sam Hazen

And is comments Pito, to I Sam. add this Bill's there. to want

the for near a reasonable helps particular 'XX. term, healthcare that year. that you over we and the services differentiated growth HCA not period time demand post that We're support to solid. when think belief. this do I remain of believe of with of markets defining going have we're think as that defining We is about we term portfolio think near And a it Healthcare, over inside that as

we belief effectively will compete and is provider market strength, have us has share. unique second allow our The that to model for system

objectives. us we capital really more We support in initiatives are believe and services our comments, for that also sheet stakeholders. we provides opportunities balance us investment our our also for then his a think appropriate near-term alluded as Bill strategy, well. will as And to And of create number these better had creating for value in flexibility,

by beliefs, But And how think the the the have of so upcoming near-term operations our hopefully, some see we is company. are and of more this that past perspective, will quarter. have get we year. next we And our we these time the through as for on reasonable in

Mark Kimbrough

Thank you, Pito. All right. Katherine?

Operator

America. question the Fischbeck comes next Kevin of Bank of Your from with line

Kevin Fischbeck

Thanks. Great.

and on guess. margin you think So if we're And about more the margins [ph] could beat How for more we labor normalized should hearing guys? pressure. I about I

the impact you So about coming specifically are in labor how years? how might thinking margins

Sam Hazen

Sam. is this Well,

our agenda in Let general. labor me speak to

stepped our just shown over communities position. They’ve patients. experiencing, that we They've mission. I all, delivered have in they’ve initiatives you to overall difficult market. will our improve our as delivered and Obviously, are for delivered of their have incredible. XX tell other months labor for up. we a They've industries underway First up. on employees the their past been They numerous are

invested have of recruitment significant We functions. into resources amounts our

then will in each our by in with compensation improvement this encouraged of future. the in seen were respect is to are and respect labor metrics which some overall School sequential year, of put We month turnover, show with have numbers quarter this advanced our What have of recruitment. we in themselves some Galen we've to Nursing. our expansion And which adjustments, we of

tell are also some -- will we're And costs that first that stable, which by quarter you up to are encouraged this I quarter to respect so second efforts quarter to working. confidence from second our the us to efforts gives the the there's our our uncertainty Obviously, still with the labor point. essentially from inflation. rather

forward We evolve. move for And this will a be our employees we right in some of the think, these we doing can managing might as again, address have through on help that number initiatives thing focused that of we pressures period.

Mark Kimbrough

All Kevin. right. Thanks,

Operator

Your the next of Wolfe line Research. comes Lake Justin from with question

Justin Lake

to talking Good in They're I you on up XXXX. follow versus guided what to pre-COVID up XXXX Kevin's points XXX and specifically morning. basis on just question, margins. wanted originally

and the and then apologize as numbers, if better I cost acuity would sustainability break mix, just Bill, you program if well. run the there. be I missed I'm better but talk government dollars, some if that about cutting wondering maybe great between this, seen, down the up that just maybe And you acuity So Thanks. the done, payer could you've you've of could

Bill Rutherford

Yes.

the obviously, Justin, So, go into of a margins. factors lot

And You into raising being guidance, have levels, then initiatives by returns managing of the original expectations volume the went we're think a of favorable all reflective discussion And cost continue we XXXX see driven mix. our compared to as year. the variables. through. favorable that's Clearly margin acuity, as our I the that in number to to payer as well we is our margin we're the

the where XXXX. think growth was over the quarters. and over So, some still stand levels. experienced X% about we four about growth the our X% over we about past growth as that margins reflect saw of in acuity, XXXX XXXX, more we balance the It today The like year, average we've

to that's strength. continuing So show

margin original of I balance And calendar. overall, so falls that reflects see on the margin the have to expectations we'll guidance for turn where a our we the the expectations reasonably confident we where to But think we significant our in the year. compared out were pretty have. projections increase feel And as

Mark Kimbrough

so All right, Justin, thank you Katherine? much.

Operator

Yes, sir.

comes Credit Rice from of line question with the Suisse. A.J. next Your

A.J. Rice

Hi, down really. the are have that wise. some guess you look you of How the a responded you CapEx than to the the how delay, you the of impressive. with Do your volume of physicians. assessments party on expressing physicians but done and I'm have have I come I'll statistics would of -- you're quarter more little think I I the you’ve everybody. share have thought assuming on It's try much underlying rebound I know across of just volume to you even How lot market? third bit the of and you're is any be investments in the sort board do. a And Impressive seeing do the what certainly side? own drill you you COVID, to local is can half up confidence market levels? that your scheduling you back much picking 'XX the much guess telling what you stronger some ahead And way about procedures is of market at year.

having on So maybe just that sort why you're this to being that spike about sustainability as the opposed of a something volume moderates? then confident

Mark Kimbrough

All you. right, Bill? Sam, A.J. Thank

Sam Hazen

Thank Yes. for question. Sam, A.J. you This is that

where the difficulties were to and there, COVID had We a couple fits have in into we precisely we ability last judge market. over and with then went the couple of or four starts surges quarters our of had here, created months it in three a months

necessarily, So the I we if ability this over it the don't But with to you field. we've March, as the think the in seen I that speaks look we've it June, speaks been market our put months; resource think we in and markets you've to speaks able four confidence. we by data. and to of pattern time, model, don't progression I to mentioned, moved of market where that move essentially quarter solid May And what our had growth. the to again, have share level judge know at see April, teams last a here. And that some the is, because allocation the I forth execution we

had end XX%. we're we that. so At At the decade, that And XX% beginning proud XXXX, share. of really of the had we of market over

our recent see We most annual continued have to growth in data points.

the half system visibility on quarters. network we're going exists strategy, we're last that most that over continuing is that remaining year. development perspective need the we two reasonable physician it’s the months people So job a investments effectively the into showing the program making, quarter, more demand gives we the to and and more and that. why second Act, execution fully markets; that's to believe in us but reasonable happening time manage of endure think have Affordable And the our we possibly with on given capability four in itself judge still insured the to us what's Care But growth, these judging

have our four markets. our A.J., analysis believe their these than months, anything individual with suggest other we would that it. we don't But [Technical study of So Difficulty]

reason So the for that's guidance. the

Mark Kimbrough

A.J., Katherine? thank for you the question.

Operator

Your from Fidel line with next comes the Scott question Stephens. of

Mark Kimbrough

Scott. Hi,

Scott Fidel

as interested were Hi. mix Thanks. care morning. around inpatient interested and how out shifts you Thanks. XXXX. planned those of at call And may site investments relate as investments? if to look clearly post a follow-up that those of be talk in, in investments, specifically about wanted it playing historically Good of just of just seen outpatient they billion can some I versus to pandemic? that X the let’s tertiary of other mix through evolving we've capital ask you and the sort the investments north highlighted as question Just you

Mark Kimbrough

All right. Sam?

Sam Hazen

Yes. Sam. This is

XXX you of facilities. our have X,XXX Just roughly outpatient today, sense over have so And we X,XXX, networks a have we almost then hospitals.

So XX to think X, network our about as hospital. outpatient to almost

more than XXX the is hospitals outpatient capital intensity facility. in the clearly Now the

$XX Bill room center only capital amount $XX centers, order mentioned couple is in to ambulatory significant but million investment is a million is in million, of per freestanding surgery a a million we going to surgery done, or urgent get So comments, care unit investment. center a emergency $XX have as amatory an his

So ultimately capability and our are our to these dollar systems, that stay add we then one but closed services a create of so inside offer. they that hopefully hospitals where network investments, forth the loop support because unit small way and of in our a can patient a of

relates investment, capital our capital the equipment we have plenty support it mortar of and in will with brick and But in network heavy of our to of spending, intensity aggressively the that it us more facilities. have our just our As associated such. outpatient our always to hospitals invest to requires the allowing to because capacity clinical consume the

our So at occupancies. because we're running markets, in adding this many facilities to we're still very high

in our occupancy was XX%. think I second the quarter

beds a configuration. easier We capabilities, that again, we And in inside it to inpatient and will our HCA point building patients speak of facilities, access those XX,XXX outpatient north we overcome our more those that offering network of price we're patients have ambulatory as of investments creating many and in we day fits to so XX,XXX a amount then facilities. investing a the running operational, are for convenient, not our investments, make. better But within overall at out

in Additionally, and even and future technology. in continue for technology see what we our to opportunity a about delivering in an of that population, to company platforms the believe to patient in we ultimately way will see investments. future, We're more opportunity but be we than More then enable and today, are do as better advance to opportunities invest that the well. we care, on platform. those there do technology the our We efficiencies as excited significantly much come real we result it investing a a more in very engaging with achieve

Mark Kimbrough

your for you question question. please. next Katherine, thank Scott,

Operator

Yes, sir.

next question from Citi. Giacobbe comes with Your the of line Ralph

Mark Kimbrough

Ralph. Hi,

Ralph Giacobbe

Hi. morning. Thanks. Good

So for gauge just Texas payer Medicare sense that's and and you how at XXXX. maybe guys commercial a Medicaid? your aided maybe then think give mentioned up growth, Florida us Thanks. mix markets, and in any Can you trends X% over much population particularly the of point? volume to this And I way

Mark Kimbrough

you, All right. Ralph. Thank

Bill Rutherford

this is Yes. Ralph, Bill.

includes I class, think volume in and recovery we payer every saw Medicare. that

'XX to below X% under compares running to just X% was been below. volume Medicare levels, we XX% that and have Our where

Medicare as the Obviously, managed favorable well. So and more volume we’ve the in class recovering it's care. seen in commercial

in strong So that's mix a resulting overall payer area.

terms demand, overall in have that. We're arrears to I In don't on a information see of of couple that. generally quarters

to wait to So data see just have that when we're to out. going comes

that Our belief of to as see demand to as and what looking and markets opening terms we that the our we're seeing. see just markets yields we'll hearing the But of of starting markets. throughout are demand recover demand recovering we're belief our back up, percentage have see it's economy the actually in most

Mark Kimbrough

right, All much. so Ralph, thanks

Operator

comes Nephron from with of Raskin line the Your Research. Joshua next question

Mark Kimbrough

Josh. Hi, Good morning.

Joshua Raskin

morning. Good Hi.

ED the in know XXXX quarter. below Just are the running X.X% I visits

was then actual any think fully almost think by Are any segment? and June actually And Do admissions EDs of Is that to are you percentage I flat. payer are level? new you maybe the pre-pandemic said in levels? becoming that even seeing your those that recovered you those ED are admitted, differences visits back normal the changes getting stabilizing in view? have

Sam Hazen

Well, one suggest necessarily doesn't a month, pattern. June,

emergency yet of to in likely the ER more we is schools quarter second the would seen knew XX% activity recovery the some were effects be back than haven't either. down think We there the going we And in rooms. quarters of we when XX%. previous reflective Although

where quarter. comparison in is we've our XXXX significant even area seen still that So by to second shortfalls the activity an pediatric

get to provide So in some school their that as potential would kids activities. support and engage normal back

room As more XXXX see has our have That it emergency XXXX, in in rooms relates admission patient on to emergency first the to emergency acute in of acuity population continued half into rooms. populations. and growth of our fact yielded throughout our the we

acuity, throughout Our second result we the a 'XX anticipate remainder in that of and will the year. quarter that 'XX of also of the endure admissions that grew over as

Mark Kimbrough

Josh, for you right. thank All question. your so much

Operator

comes question Goldman with next Perse line the Your of from Jamie Sachs.

Jamie Perse

margin Hi. Good your go of half half implies for year. and the like back guidance the guidance year. the second the to margin of morning, wanted guys. a the looks lower EBITDA first rate I It the piece to than rest

rates, specific I see year. are you the relative any incremental to continued balance trends? for down to recent premium to and wanted get utilization pressures note On labor labor to the of a So come related those premium

Bill Rutherford

start me let with Yes, margins.

the is you'll our about anything like variables average as our kind of project there's have for calling balance little from As high running lot just more go the projecting in how We And out. variables don't margin see a of of original projection, that. out I pretty think quarters. year, And the looks we we're we're four significant that know before to to play into various We that we're the see that tried that. specific talk and I a first the margin increase our we'll half. have past a on

some of think quarter quarter year volume contributed our to average. our really our that. four of I for the But COVID past margins maybe reflective full are first

labor, On Sam? the premium

Sam Hazen

in many able a But actually, labor so recruitment, we've this we absorb that the premium for mentioned. at use in the labor premium the having that and over point. first quarter costs. instances particular item. to moderate we're with will that be continue to outpatient of put we than staff to we're volume volume that the that we having quarter, adjustments utilization retention, compensation were to some agenda instances of But obviously, Well, we labor the to mindful little start remainder more did forth anticipate, gotten, -- our pressure We the year. that labor did that in activity on again, and the and our second have pressure We

Mark Kimbrough

thank Jamie, right. All so you much.

Operator

Wilkes line your And with last Bernstein. the Lance question from of comes

Mark Kimbrough

Lance. Hi,

Lance Wilkes

are How quarter. Hi. Great doing? you

particular of impacts business, impacts Just in could volumes. care on the on value-based if ask I about

there maybe you're primary particular pressure those you're causing quick that seeing if interested up of any to in Medicaid And volume it's just you if that's a more in in rise you're taking share? of down? where that Just or the if helping question or risks seeing if cleanup on fact XXXX, care, relative markets some of any

Sam Hazen

nothing Thank really over our many you. with we past and programs a in respond the to years have changed We’ve estimation the year respect has spoken markets. value-based in to In year, over markets, those. the and to half dynamics those to

care probably South market most Florida's advanced the in the managed country.

XX% XX%, our share in investments underway have improve market We that particular region, with to overall. many position

navigating payers So We and the most respond the time. complex deepest of has think strategy been what to be they managed over market from I base. other, our care to to their responsive our ability some our proven need markets to feel customer one nuance to

many partnerships with great in to a XXXX payers. position relationship, with great have great it various instances as in to the looks our We We're respect contracting.

feel on think we're any And I nor demand influencing in a there, positioned significant allowing we payers’ that in to out like in us think position agenda nothing objectives forward standpoint, way, push from they putting appropriately whatever don't either is the material so appropriate. them where with

Bill Rutherford

Bill. on second Hi, were a up and quarter year-to-date just relatively first X% quarter. Medicaid under over flat Lance. question, This is about the basis. in up X% we're We XXXX we're your On

Mark Kimbrough

you for rest call. the and for we're feel everyone a the quarter. joining around week, want of to We additional right. thank questions Thank give me if to so excited much. the I’m this morning. about free Obviously, have you All us please any Okay.

Operator

thank Ladies and participation. concludes gentlemen, conference We this you for today's your call.

You now may disconnect.

HCA Healthcare (HCA) 20 Jul 212021 Q2 Earnings call transcript