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HCA Reports Second Quarter 2018 Results

Revenues in the second quarter increased to $11.529 billion, compared to $10.733 billion in the second quarter of 2017. Net income attributable to HCA Healthcare, Inc. totaled $820 million, or $2.31 per diluted share, compared to $657 million, or $1.75 per diluted share, in the second quarter of 2017. The second quarter 2018 results include gains on sales of facilities of $9 million, or $0.02 per diluted share.

The Company recognized a tax benefit of $121 million, or $0.34 per diluted share, on net income attributable to HCA Healthcare, Inc., excluding gains on sales of facilities, for the second quarter of 2018, due to a reduction in its effective tax rate related to the impact of the Tax Cuts and Jobs Act. Adjusted EBITDA totaled $2.227 billion compared to $2.090 billion in the second quarter of 2017. Adjusted EBITDA is a non-GAAP financial measure. 

Same facility admissions for the second quarter of 2018 increased 2.7 percent, while same facility equivalent admissions increased 2.8 percent compared to the prior year period. Same facility emergency room visits for the second quarter of 2018 declined 0.8 percent from the prior year’s second quarter. Same facility inpatient surgeries increased 1.7 percent, while same facility outpatient surgeries increased 2.6 percent compared to the second quarter of 2017.

During the second quarter of 2018, salaries and benefits, supplies and other operating expenses totaled $9.309 billion, or 80.8 percent of revenues, compared to $8.656 billion, or 80.6 percent of revenues, in the second quarter of 2017. On a same-facility basis, salaries and benefits, supplies and other operating expenses totaled $8.571 billion, or 77.8 percent of revenues, during for the second quarter of 2018, compared to $8.150 billion, or 78.7 percent of revenues, on a same-facility basis for the same period of 2017.

Six Months Ended June 30, 2018

Revenues for the six months ended June 30, 2018 totaled $22.952 billion compared to $21.356 billion in the same period of 2017. Net income attributable to HCA Healthcare, Inc. was $1.964 billion, or $5.50 per diluted share, compared to $1.316 billion, or $3.48 per diluted share, for the first six months of 2017. Results for the six months ended June 30, 2018 include gains on sales of facilities of $414 million, or $0.88 per diluted share. The Company also recognized a tax benefit of $192 million, or $0.54 per diluted share, on net income attributable to HCA Healthcare, Inc., excluding gains on sales of facilities, for the six months ended June 30, 2018, due to a reduction in its effective tax rate related to the impact of the Tax Cuts and Jobs Act. Results for the six months ended June 30, 2018 also include a $96 million tax benefit, or $0.27 per diluted share, compared to $76 million, or $0.20 per diluted share, for the same period of 2017, related to the recording of excess tax benefits for employee equity award settlements.

Balance Sheet and Cash Flows from Operations

As of June 30, 2018, HCA Healthcare, Inc.’s balance sheet reflected cash and cash equivalents of $868 million, total debt of $33.192 billion, and total assets of $37.742 billion. During the second quarter of 2018, capital expenditures totaled $880 million, excluding acquisitions. Cash flows provided by operating activities in the quarter totaled $1.582 billion compared to $1.404 billion in the second quarter of 2017.

As of June 30, 2018, HCA’s leverage ratio as measured by Total Debt/Adjusted EBITDA was 3.91x, compared to 4.02x as of December 31, 2017.

During the second quarter of 2018, the Company repurchased 4.670 million shares of its common stock at a cost of $470 million, and during the six months ended June 30, 2018, repurchased 9.040 million shares of its common stock at a cost of $893 million. The Company had $910 million remaining under its existing repurchase authorization as of June 30, 2018.

As of June 30, 2018, HCA operated 178 hospitals and approximately 1,800 sites of care, including surgery centers, freestanding emergency rooms, urgent care centers and physician clinics, in 20 states and the United Kingdom.

Dividend

HCA today announced that its Board of Directors declared a quarterly cash dividend of $0.35 per share on the Company’s common stock. The dividend will be paid on September 28, 2018 to stockholders of record at the close of business on September 4, 2018.

The declaration and payment of any future dividend will be subject to the discretion of the Board of Directors and will depend on a variety of factors, including the Company’s financial condition and results of operations and contractual restrictions. Future dividends are expected to be funded by cash balances and future cash flows from operations.

2018 Guidance

The 2018 guidance ranges for the year have been revised from our fourth quarter 2017 and first quarter 2018 releases and are as follows:

           
         

2018 Updated Guidance Range

Revenues         $45.5 to $46.5 billion
Adjusted EBITDA         $8.65 to $8.85 billion
EPS (diluted)         $9.00 to $9.40 per diluted share
Capital Expenditures         Approximately $3.5 billion
           

The Company’s 2018 guidance contains a number of assumptions, including:

  • 2018 guidance for EPS (diluted) includes an estimated $110 million income tax benefit, or $0.31 per diluted share, for excess tax benefits related to employee equity award settlements recorded as a component of the provision for income taxes. The timing and amounts related to employee equity award settlements are difficult to project and may vary from this estimate.
  • 2018 guidance reflects the sale of the Company’s Oklahoma facilities which closed February 1, 2018. These facilities had annual revenues of approximately $1 billion and Adjusted EBITDA of approximately $180 million in 2017.
  • 2018 guidance includes an estimated impact of $1.25 earnings per diluted share related to the Tax Cuts and Jobs Act.
  • 2018 guidance excludes any acquisitions that have not been completed as of June 30, 2018.
  • 2018 guidance excludes any hurricane insurance recoveries the Company may receive.
  • 2018 guidance excludes any changes in our estimates of the impact of the Tax Cuts and Jobs Act on our deferred tax assets and liabilities.
  • 2018 guidance excludes the impact of items such as, but not limited to, gains or losses on sales of facilities, losses on retirement of debt, legal claim costs and impairments of long-lived assets.

Earnings Conference Call

HCA will host a conference call for investors at 9:00 a.m. Central Daylight Time today. All interested investors are invited to access a live audio broadcast of the call via webcast. The broadcast also will be available on a replay basis beginning this afternoon. The webcast can be accessed at: https://event.webcasts.com/starthere.jsp?ei=1160373&tp_key=8102f3251b or through the Company’s Investor Relations web page, www.hcahealthcare.com.

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