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| HCA Reports Fourth Quarter and Year-End 2006 Results |
NASHVILLE, Tenn., Feb. 6 /PRNewswire/ -- HCA today announced financial and operating results for the fourth quarter and fiscal year ended December 31, 2006. Revenues for the fourth quarter totaled $6.5 billion compared to $6.2 billion in the fourth quarter of 2005. Adjusted EBITDA for the quarter totaled $1.3 billion, compared to $1.0 billion in the previous year's fourth quarter. A table describing adjusted EBITDA and reconciling net income to adjusted EBITDA is included in this release. Net income for the fourth quarter totaled $122 million, compared to $325 million in the prior year fourth quarter. Fourth quarter 2006 results include gains on investments of $103 million, gains on sales of facilities of $159 million, transaction costs related to the completed recapitalization of $433 million and an impairment of long-lived assets of $24 million. In the 2005 fourth quarter, HCA results included gains on investments of $1 million and gains on sales of facilities of $49 million. Due primarily to the recapitalization transactions, interest expense increased to $373 million in the fourth quarter of 2006 compared to $166 million in same period of 2005. Same facility admissions increased 0.3 percent and same facility equivalent admissions increased 0.2 percent in the fourth quarter of 2006 compared to the prior year fourth quarter. Same facility revenue per equivalent admission increased 7.5 percent (8.3 percent increase when adjusted for uninsured discounts) in the fourth quarter of 2006 compared to the fourth quarter of 2005. Same facility uninsured discounts, which reduce revenues and the provision for doubtful accounts by generally equal amounts, totaled $296 million in the fourth quarter of 2006 compared to $226 million in the same quarter of 2005. As of December 31, 2006, HCA's balance sheet reflected cash and cash equivalents of $634 million, total debt of $28.4 billion, stockholders' deficit (including common and minority equity) of $10.3 billion and total assets of $23.6 billion. Revenues for the year ended December 31, 2006 increased 4.2 percent to $25.5 billion, compared to $24.5 billion in 2005. Adjusted EBITDA for 2006 totaled $4.5 billion compared to $4.3 billion in the prior year. Net income totaled $1.0 billion in 2006 compared to $1.4 billion in 2005. Financial results for 2006 include gains on investments of $243 million, gains on sales of facilities of $205 million, transaction costs related to the recapitalization of $442 million, an impairment of long-lived assets of $24 million and a reduction in our professional liability reserves of $136 million. Financial results for 2005 include gains on sales of facilities of $78 million and a reduction in the Company's professional liability reserves of $83 million. On November 16, 2006, the Company's shareholders approved a merger with an acquiring consortium led by Bain Capital, Kohlberg Kravis Roberts & Co. and Merrill Lynch Global Private Equity, along with HCA founder, Dr. Thomas F. Frist, Jr. and certain members of his family and HCA management for $51.00 per share in cash for each share of HCA common stock held. The transaction closed on November 17, 2006. At December 31, 2006, HCA operated 173 hospitals and 107 freestanding surgery centers (including seven hospitals and nine freestanding surgery centers operated through equity method joint ventures) located in 20 states, London, England and Geneva, Switzerland. Earnings Conference Call HCA will host a conference call for investors at 9:00 a.m. Central Standard 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: http://www.videonewswire.com/event.asp?id=37414 or through the Company's Investor Relations web page, http://www.hcahealthcare.com. FORWARD LOOKING STATEMENTS This press release contains forward-looking statements based on current management expectations. Those forward-looking statements include all statements other than those made solely with respect to historical fact. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those expressed in any forward-looking statements. These factors include, but are not limited to, (1) the ability to recognize the benefits of the recapitalization; (2) the impact of the substantial indebtedness incurred to finance the consummation of the recapitalization; (3) increases in the amount and risk of collectability of uninsured accounts, and deductibles and copayment amounts for insured accounts; (4) the ability to achieve operating and financial targets, attain expected levels of patient volumes and control the costs of providing services; (5) possible changes in the Medicare, Medicaid and other state programs that may impact reimbursements to health care providers and insurers; (6) the highly competitive nature of the health care business; (7) changes in revenue mix and the ability to enter into and renew managed care provider agreements on acceptable terms; (8) the efforts of insurers, health care providers and others to contain health care costs; (9) the impact of our charity care and uninsured discounting policies; (10) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures and our corporate integrity agreement with the government; (11) changes in federal, state or local regulations affecting the health care industry; (12) delays in receiving payments for services provided; (13) the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical support personnel; (14) the outcome of governmental investigations by the United States Attorney for the Southern District of New York and the Securities and Exchange Commission (the "SEC"); (15) the outcome of certain class action and derivative litigation filed with respect to us; (16) the possible enactment of federal or state health care reform; (17) the availability and terms of capital to fund the expansion of our business; (18) the continuing impact of hurricanes on our facilities and the ability to obtain recoveries under our insurance policies; (19) changes in accounting practices; (20) changes in general economic conditions; (21) future divestitures which may result in charges; (22) changes in business strategy or development plans; (23) the outcome of pending and any future tax audits, appeals and litigation associated with our tax positions; (24) potential liabilities and other claims that may be asserted against us, (25) the ability to amend our credit agreement in order to reduce interest rates, and (26) other risk factors described in our Annual Report on Form 10-K and other filings with the SEC. Many of the factors that will determine our future results are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
HCA Inc.
Consolidated Income Statements
Fourth Quarter
(Dollars in millions)
2006 2005
Amount Ratio Amount Ratio
Revenues $6,489 100.0% $6,178 100.0%
Salaries and benefits 2,593 40.0 2,538 41.1
Supplies 1,071 16.5 1,024 16.6
Other operating expenses 988 15.2 1,056 17.1
Provision for doubtful
accounts 710 10.9 625 10.1
Gains on investments (103) (1.6) (1) --
Equity in earnings of
affiliates (46) (0.7) (71) (1.2)
Depreciation and
amortization 346 5.4 336 5.4
Interest expense 373 5.7 166 2.7
Gains on sales of
facilities (159) (2.5) (49) (0.8)
LBO transaction costs 433 6.7 -- --
Impairment of long-lived
assets 24 0.4 -- --
6,230 96.0 5,624 91.0
Income before minority
interests and income
taxes 259 4.0 554 9.0
Minority interests in
earnings of consolidated
entities 56 0.9 46 0.8
Income before income taxes 203 3.1 508 8.2
Provision for income taxes 81 1.2 183 2.9
Net income $122 1.9 $325 5.3
HCA Inc.
Consolidated Income Statements
For the Years Ended December 31, 2006 and 2005
(Dollars in millions)
2006 2005
Amount Ratio Amount Ratio
Revenues $25,477 100.0% $24,455 100.0%
Salaries and benefits 10,409 40.9 9,928 40.6
Supplies 4,322 17.0 4,126 16.9
Other operating expenses 4,057 16.0 4,039 16.5
Provision for doubtful
accounts 2,660 10.4 2,358 9.6
Gains on investments (243) (1.0) (53) (0.2)
Equity in earnings of
affiliates (197) (0.8) (221) (0.9)
Depreciation and
amortization 1,391 5.5 1,374 5.6
Interest expense 955 3.7 655 2.7
Gains on sales of
facilities (205) (0.8) (78) (0.3)
LBO transaction costs 442 1.7 -- --
Impairment of long-lived
assets 24 0.1 -- --
23,615 92.7 22,128 90.5
Income before minority
interests and income
taxes 1,862 7.3 2,327 9.5
Minority interests in
earnings of consolidated
entities 201 0.8 178 0.7
Income before income
taxes 1,661 6.5 2,149 8.8
Provision for income taxes 625 2.4 725 3.0
Net income $1,036 4.1 $1,424 5.8
HCA Inc.
Supplemental Operating Results Summary
(Dollars in millions)
For the Years
Fourth Quarter Ended December 31,
2006 2005 2006 2005
Revenues $6,489 $6,178 $25,477 $24,455
Net income $122 $325 $1,036 $1,424
Gains on sales of
facilities (net of tax) (74) (19) (103) (37)
LBO transaction costs
(net of tax) 303 -- 309 --
Impairment of long-lived
assets (net of tax) 15 -- 15 --
Tax settlement and
repatriation -- (2) -- (72)
Net income, excluding gains
on sales of facilities,
LBO transaction costs,
impairment of long-lived
assets and tax settlement
and repatriation 366 304 1,257 1,315
Depreciation and
amortization 346 336 1,391 1,374
Interest expense 373 166 955 655
Minority interests in
earnings of consolidated
entities 56 46 201 178
Provision for income
taxes 135 155 665 756
Adjusted EBITDA (a) $1,276 $ 1,007 $4,469 $4,278
(a) Net income, excluding gains on sales of facilities, LBO transaction
costs, impairment of long-lived assets and tax settlement and
repatriation and adjusted EBITDA are non-GAAP financial measures. We
believe that net income, excluding gains on sales of facilities, LBO
transaction costs, impairment of long-lived assets and tax settlement
and repatriation and adjusted EBITDA are important measures that
supplement discussions and analysis of our results of operations. We
believe that it is useful to investors to provide disclosures of our
results of operations on the same basis as that used by management.
Management relies upon net income, excluding gains on sales of
facilities, LBO transaction costs, impairment of long-lived assets
and tax settlement and repatriation and adjusted EBITDA as the
primary measures to review and assess operating performance of its
hospital facilities and their management teams.
Management and investors review both the overall performance
(including; net income, excluding gains on sales of facilities, LBO
transaction costs, impairment of long-lived assets and tax settlement
and repatriation and GAAP net income) and operating performance
(adjusted EBITDA) of our health care facilities. Adjusted EBITDA and
the adjusted EBITDA margin (adjusted EBITDA divided by revenues) are
utilized by management and investors to compare our current operating
results with the corresponding periods during the previous year and
to compare our operating results with other companies in the health
care industry. It is reasonable to expect that gains on sales of
facilities will occur in future periods, but the amounts recognized
can vary significantly from quarter to quarter, do not directly
relate to the ongoing operations of our health care facilities and
complicate quarterly comparisons of our results of operations and
operations comparisons with other health care companies.
Net income, excluding gains on sales of facilities, LBO transaction
costs, impairment of long-lived assets and tax settlement and
repatriation and adjusted EBITDA are not measures of financial
performance under accounting principles generally accepted in the
United States, and should not be considered as alternatives to net
income as a measure of operating performance or cash flows from
operating, investing and financing activities as a measure of
liquidity. Because net income, excluding gains on sales of
facilities, LBO transaction costs, impairment of long-lived assets
and tax settlement and repatriation and adjusted EBITDA are not
measurements determined in accordance with generally accepted
accounting principles and are susceptible to varying calculations,
net income, excluding gains on sales of facilities, LBO transaction
costs, impairment of long-lived assets and tax settlement and
repatriation and adjusted EBITDA, as presented, may not be comparable
to other similarly titled measures presented by other companies.
HCA Inc.
Supplemental Non-GAAP Disclosures
Operating Measures Adjusted for the Impact of Discounts for the Uninsured
Fourth Quarter 2006
(Dollars in millions, except revenue per equivalent admission)
Non-
Uninsured Non-GAAP GAAP % GAAP %
GAAP Discounts Adjusted of Adjusted
Amounts Adjustment(a) Amounts(b) Revenues Revenues
2006 2005 2006 2005
Consolidated:
Revenues $6,489 $304 $6,793 100.0% 100.0% 100.0% 100.0%
Salaries and
benefits 2,593 -- 2,593 40.0% 41.1% 38.2% 39.6%
Supplies 1,071 -- 1,071 16.5% 16.6% 15.8% 16.0%
Other operating
expenses 988 -- 988 15.2% 17.1% 14.5% 16.4%
Provision for
doubtful
accounts 710 304 1,014 10.9% 10.1% 14.9% 13.4%
Admissions 391,500 391,500
Equivalent
admissions 586,300 586,300
Revenue per
equivalent
admission $11,066 $11,584
% change
from prior
year 8.4% 9.3%
Same Facility:
Revenues $6,317 $296 $6,613
Admissions 385,400 385,400
Equivalent
admissions 573,500 573,500
Revenue per
equivalent
admission $11,016 $11,532
% change
from prior
year 7.5% 8.3%
(a) Represents the impact of the discounts for the uninsured for the
period. On January 1, 2005, we modified our policies to provide
discounts to uninsured patients who do not qualify for Medicaid or
charity care. These discounts are similar to those provided to many
local managed care plans. In implementing the discount policy, we
first attempt to qualify uninsured patients for Medicaid, other
federal or state assistance or charity care. If an uninsured patient
does not qualify for these programs, the uninsured discount is
applied. On a consolidated basis, we recorded $304 million and $235
million of uninsured discounts during the fourth quarters of 2006 and
2005, respectively.
(b) Revenues, the provision for doubtful accounts, certain operating
expense categories as a percentage of revenues and revenue per
equivalent admission have been adjusted to exclude the discounts
under our uninsured discount policy (non-GAAP financial measures).
We believe these non-GAAP financial measures are useful to investors
to provide disclosures of our results of operations on the same basis
as that used by management. Management uses this information to
compare revenues, the provision for doubtful accounts, certain
operating expense categories as a percentage of revenues and revenue
per equivalent admission, adjusted for the impact of the uninsured
discount policy. Management finds this information to be useful to
enable the evaluation of revenue and certain expense category trends
that are influenced by patient volumes and are generally analyzed as
a percentage of net revenues. These non-GAAP financial measures
should not be considered an alternative to GAAP financial measures.
We believe this supplemental information provides management and the
users of its financial statements with useful information for period-
to-period comparisons. Investors are encouraged to use GAAP measures
when evaluating our overall financial performance.
HCA Inc.
Supplemental Non-GAAP Disclosures
Operating Measures Adjusted for the Impact of Discounts for the Uninsured
Year Ended December 31, 2006
(Dollars in millions, except revenue per equivalent admission)
Uninsured Non-GAAP GAAP % GAAP %
GAAP Discounts Adjusted of Adjusted
Amounts Adjustment(a) Amounts(b) Revenues Revenues
2006 2005 2006 2005
Consolidated:
Revenues $25,477 $1,095 $26,572 100.0% 100.0% 100.0% 100.0%
Salaries and
benefits 10,409 -- 10,409 40.9% 40.6% 39.2% 39.4%
Supplies 4,322 -- 4,322 17.0% 16.9% 16.3% 16.4%
Other operating
expenses 4,057 -- 4,057 16.0% 16.5% 15.2% 15.9%
Provision for
doubtful
accounts 2,660 1,095 3,755 10.4% 9.6% 14.1% 12.4%
Admissions 1,610,100 1,610,100
Equivalent
admis-
sions 2,416,700 2,416,700
Revenue per
equivalent
admission $10,542 $10,995
% change
from prior
year 6.8% 8.0%
Same Facility:
Revenues $24,448 $1,063 $25,511
Admissions 1,557,700 1,557,700
Equivalent
admis-
sions 2,322,500 2,322,500
Revenue per
equivalent
admission $10,527 $10,984
% change
from prior
year 6.2% 7.3%
(a) Represents the impact of the discounts for the uninsured for the
period. On January 1, 2005, we modified our policies to provide
discounts to uninsured patients who do not qualify for Medicaid or
charity care. These discounts are similar to those provided to many
local managed care plans. In implementing the discount policy, we
first attempt to qualify uninsured patients for Medicaid, other
federal or state assistance or charity care. If an uninsured patient
does not qualify for these programs, the uninsured discount is
applied. On a consolidated basis, we recorded $1,095 million and
$769 million of uninsured discounts during the twelve months ended
December 31, 2006 and 2005, respectively.
(b) Revenues, the provision for doubtful accounts, certain operating
expense categories as a percentage of revenues and revenue per
equivalent admission have been adjusted to exclude the discounts
under our uninsured discount policy (non-GAAP financial measures).
We believe these non-GAAP financial measures are useful to investors
to provide disclosures of our results of operations on the same basis
as that used by management. Management uses this information to
compare revenues, the provision for doubtful accounts, certain
operating expense categories as a percentage of revenues and revenue
per equivalent admission, adjusted for the impact of the uninsured
discount policy. Management finds this information to be useful to
enable the evaluation of revenue and certain expense category trends
that are influenced by patient volumes and are generally analyzed as
a percentage of net revenues. These non-GAAP financial measures
should not be considered an alternative to GAAP financial measures.
We believe this supplemental information provides management and the
users of its financial statements with useful information for period-
to-period comparisons. Investors are encouraged to use GAAP measures
when evaluating our overall financial performance.
HCA Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions)
December 31, September 30, December 31,
ASSETS 2006 2006 2005
Current assets:
Cash and cash equivalents $634 $541 $336
Accounts receivable, net 3,705 3,567 3,332
Inventories 669 659 616
Deferred income taxes 476 588 372
Other 594 462 559
Total current assets 6,078 5,817 5,215
Property and equipment, at cost 21,907 21,957 20,818
Accumulated depreciation (10,238) (10,248) (9,439)
11,669 11,709 11,379
Investments of insurance
subsidiary 1,886 2,105 2,134
Investments in and advances to
affiliates 679 680 627
Goodwill 2,601 2,663 2,626
Deferred loan costs 614 72 85
Other 84 79 159
$23,611 $23,125 $22,225
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,415 $1,268 $1,484
Accrued salaries 675 638 561
Other accrued expenses 1,193 1,345 1,264
Long-term debt due within
one year 293 831 586
Total current liabilities 3,576 4,082 3,895
Long-term debt 28,115 10,512 9,889
Professional liability risks 1,309 1,351 1,336
Deferred taxes and other
liabilities 943 1,135 1,414
Minority interests in equity of
consolidated entities 907 919 828
Stockholders' (deficit) equity (11,239) 5,126 4,863
$23,611 $23,125 $22,225
HCA Inc.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2006 and 2005
(Dollars in millions)
2006 2005
Cash flows from operating activities:
Net income $1,036 $1,424
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for doubtful accounts 2,660 2,358
Depreciation and amortization 1,391 1,374
Income taxes (552) 162
Gains on sales of facilities (205) (78)
Impairment of long-lived assets 24 -.
Change in operating assets and liabilities (2,940) (2,278)
Change in minority interest 58 (13)
Share-based compensation 324 30
Other 49 (8)
Net cash provided by operating activities 1,845 2,971
Cash flows from investing activities:
Purchase of property and equipment (1,865) (1,592)
Acquisition of hospitals and health care entities (112) (126)
Disposal of hospitals and health care entities 651 320
Change in investments 26 (311)
Other (7) 28
Net cash used in investing activities (1,307) (1,681)
Cash flows from financing activities:
Issuance of long-term debt 21,758 858
Net change in revolving bank credit facility (435) (225)
Repayment of long-term debt (3,728) (739)
Repurchase of common stock (653) (1,856)
Recapitalization - repurchase of common stock (20,364) .-
Recapitalization - equity contributions 3,782 -.
Payment of debt issuance costs (586) -.
Issuance of common stock 108 1,009
Payment of cash dividends (201) (258)
Other 79 (1)
Net cash used in financing activities (240) (1,212)
Change in cash and cash equivalents 298 78
Cash and cash equivalents at beginning of period 336 258
Cash and cash equivalents at end of period $634 $336
Interest payments $856 $624
Income tax payments, net of refunds $1,087 $563
HCA Inc.
Operating Statistics
For the Years
Fourth Quarter Ended December 31,
2006 2005 2006 2005
Consolidated Hospitals:
Number of Hospitals 166 175 166 175
Weighted Average
Licensed Beds 39,762 41,713 40,653 41,902
Licensed Beds at
End of Period 39,354 41,265 39,354 41,265
Reported:
Admissions 391,500 402,500 1,610,100 1,647,800
% Change -2.8% -2.3%
Equivalent
Admissions 586,300 605,000 2,416,700 2,476,600
% Change -3.1% -2.4%
Revenue per
Equivalent
Admission $11,066 $10,212 $10,542 $9,874
% Change 8.4% 6.8%
Inpatient Revenue
per Admission $10,355 $9,572 $9,876 $9,274
% Change 8.2% 6.5%
Patient Days 1,921,200 1,980,300 7,916,100 8,112,200
Equivalent Patient
Days 2,877,800 2,976,400 11,882,100 12,192,600
Inpatient Surgery
Cases 130,000 133,200 533,100 541,400
% Change -2.4% -1.5%
Outpatient Surgery
Cases 200,600 203,100 820,900 836,600
% Change -1.2% -1.9%
Emergency Room
Visits 1,265,800 1,320,100 5,213,500 5,415,200
% Change -4.1% -3.7%
Outpatient Revenues
as a Percentage of
Patient Revenues 36.4% 36.3% 36.4% 36.4%
Average Length of Stay 4.9 4.9 4.9 4.9
Occupancy 52.5% 51.6% 53.3% 53.0%
Equivalent Occupancy 78.7% 77.5% 80.0% 79.7%
Same Facility:
Admissions 385,400 384,400 1,557,700 1,555,000
% Change 0.3% 0.2%
Equivalent
Admissions 573,500 572,300 2,322,500 2,321,700
% Change 0.2% 0.0%
Revenue per
Equivalent
Admission $11,016 $10,250 $10,527 $9,917
% Change 7.5% 6.2%
Inpatient Revenue
per Admission $10,346 $9,683 $9,910 $9,355
% Change 6.8% 5.9%
Inpatient Surgery
Cases 127,000 128,000 516,300 512,700
% Change -0.7% 0.7%
Outpatient Surgery
Cases 190,800 192,000 772,900 782,300
% Change -0.7% -1.2%
Emergency Room
Visits 1,242,300 1,248,500 5,023,400 5,061,600
% Change -0.5% -0.8%
Number of Consolidated and Non-Consolidated
(50/50 Equity Joint Ventures) Hospitals:
Consolidated 166 175 166 175
Non-Consolidated (50/50
Equity Joint Ventures) 7 7 7 7
Total Number of
Hospitals 173 182 173 182
SOURCE HCA |
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| "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding HCA's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year. |
