HCA Healthcare Reports Third Quarter 2022 Results

NASHVILLE, Tenn.--(BUSINESS WIRE)--HCA Healthcare, Inc. (NYSE: HCA) today announced financial and operating results for the third quarter ended September 30, 2022.

Key third quarter metrics (all percentage changes compare 3Q 2022 to 3Q 2021 unless otherwise noted):

• Revenues totaled $14.971 billion
• Net income attributable to HCA Healthcare, Inc. totaled $1.134 billion, or $3.91 per diluted share
• Adjusted EBITDA totaled $2.902 billion
• Cash flows from operating activities totaled $3.020 billion
• Same facility admissions declined 1.5 percent while same facility equivalent admissions increased 2.3 percent

“Despite a difficult comparison to the prior year due to the COVID-19 Delta variant, we are pleased with our results and the execution of our teams in a challenging operating environment, which included tremendous efforts from our courageous frontline caregivers and support teams who worked tirelessly to provide uninterrupted care during Hurricane Ian,” said Sam Hazen, Chief Executive Officer of HCA Healthcare.

Revenues in the third quarter of 2022 totaled $14.971 billion, compared to $15.276 billion in the third quarter of 2021. Net income attributable to HCA Healthcare, Inc. totaled $1.134 billion, or $3.91 per diluted share, compared to $2.269 billion, or $7.00 per diluted share, in the third quarter of 2021. Results for the third quarter of 2022 include losses on sales of facilities of $3 million, or $0.02 per diluted share. Results for the third quarter of 2021 include gains on sales of facilities of $1.047 billion, or $2.43 per diluted share, related to the sale of four hospitals in Georgia and other health care entity investments. In September 2022, the state of Florida received approval from the Centers for Medicare and Medicaid Services for its directed payment program for the program year that began October 1, 2021 and ended September 30, 2022. Revenues for the third quarter of 2022 include approximately $266 million for the full program year. Other operating expenses include approximately $125 million from provider tax assessments related to the same period.

For the third quarter of 2022, Adjusted EBITDA totaled $2.902 billion, compared to $3.224 billion in the third quarter of 2021. Adjusted EBITDA is a non-GAAP financial measure. A table providing supplemental information on Adjusted EBITDA and reconciling net income attributable to HCA Healthcare, Inc. to Adjusted EBITDA is included in this release.

Results for the third quarter 2022 include Hurricane Ian’s impact, primarily on our Florida facilities, causing additional expenses and lost revenues estimated at $35 million. This amount is prior to any potential insurance recoveries.

Same facility admissions declined 1.5 percent while same facility equivalent admissions increased 2.3 percent in the third quarter of 2022, compared to the prior year period. Same facility emergency room visits declined 1.3 percent in the third quarter of 2022, compared to the prior year period. Same facility inpatient surgeries increased 5.6 percent, and same facility outpatient surgeries increased 2.0 percent in the third quarter of 2022, compared to the same period of 2021. Same facility revenue per equivalent admission declined 3.5 percent in the third quarter of 2022, compared to the third quarter of 2021. Year over year comparisons were impacted by significantly higher COVID-19 volumes in the prior year, when COVID-19 represented 12.7 percent of same-facility admissions versus 5.2 percent in the current year quarter.

Nine Months Ended September 30, 2022

Revenues for the nine months ended September 30, 2022 totaled $44.736 billion, compared to $43.688 billion in the same period of 2021. Net income attributable to HCA Healthcare, Inc. was $3.562 billion, or $11.97 per diluted share, for the nine months ended September 30, 2022 compared to $5.142 billion, or $15.43 per diluted share, for the first nine months of 2021. Results for the nine months ended September 30, 2022 include losses on sales of facilities of $25 million, or $0.09 per diluted share, and losses on retirement of debt of $78 million, or $0.20 per diluted share. Results for the nine months ended September 30, 2021 include gains on sales of facilities of $1.057 billion, or $2.39 per diluted share, and losses on retirement of debt of $12 million, or $0.03 per diluted share.

Balance Sheet and Cash Flows from Operations

As of September 30, 2022, HCA Healthcare, Inc.’s balance sheet reflected cash and cash equivalents of $999 million, total debt of $37.710 billion, and total assets of $51.484 billion. During the third quarter of 2022, capital expenditures totaled $1.131 billion, excluding acquisitions. Cash flows provided by operating activities in the third quarter of 2022 totaled $3.020 billion, compared to $2.277 billion in the third quarter of 2021.

During the third quarter of 2022, the Company repurchased 3.361 million shares of its common stock at a cost of $698 million. The Company had $3.106 billion remaining under its repurchase authorization as of September 30, 2022. As of September 30, 2022, the Company had $3.885 billion of availability under its credit facilities.

Dividend

HCA today announced that its Board of Directors declared a quarterly cash dividend of $0.56 per share on the Company’s common stock. The dividend will be paid on December 28, 2022 to stockholders of record at the close of business on December 14, 2022.

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.

Earnings Conference Call

HCA Healthcare will host a conference call for investors at 8:00 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://investor.hcahealthcare.com/events-and-presentations.

About the Company

As of September 30, 2022, HCA Healthcare operated 182 hospitals and approximately 2,300 ambulatory sites of care, including surgery centers, freestanding emergency rooms, urgent care centers and physician clinics, in 20 states and the United Kingdom.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include statements that do not relate solely to historical or current facts. Forward-looking statements can be identified by the use of words like “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “initiative” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond our control, which could significantly affect current plans and expectations and our future financial position and results of operations. These factors include, but are not limited to, (1) developments related to COVID-19, including, without limitation, the length and severity of its impact and the spread of virus strains with new epidemiological characteristics; the volume of canceled or rescheduled procedures and the volume and acuity of COVID-19 patients cared for across our health systems; measures we are taking to respond to COVID-19; the impact and terms (including the termination or expiration) of government and administrative regulation and stimulus and relief measures (including the Families First Coronavirus Response Act, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the Paycheck Protection Program and Health Care Enhancement Act, the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021 (“ARPA”) and other enacted and potential future legislation) and whether various stimulus and relief programs continue or new similar programs are enacted in the future; changes in revenues due to declining patient volumes, changes in payer mix, deteriorating macroeconomic conditions (including increases in uninsured and underinsured patients) and capacity constraints; potential increased expenses related to inflation or labor, supply chain or other expenditures; supply shortages and disruptions; and the timing, availability and adoption of effective medical treatments and vaccines (including boosters), (2) the impact of our substantial indebtedness and the ability to refinance such indebtedness on acceptable terms, (3) the impact of current and future federal and state health reform initiatives and possible changes to other federal, state or local laws and regulations affecting the health care industry, including but not limited to, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”), and the effects of additional changes to the Affordable Care Act, its implementation, or interpretation (including through executive orders and court challenges), and proposals to expand coverage of federally-funded insurance programs as an alternative to private insurance or establish a single-payer system (such reforms often referred to as “Medicare for All”), and also including any such laws or governmental regulations which are adopted in response to COVID-19, (4) the effects related to the implementation of sequestration spending reductions required under the Budget Control Act of 2011, related legislation extending these reductions and those required under the Pay-As-You-Go Act of 2010 (“PAYGO Act”) as a result of the federal budget deficit impact of the ARPA, and the potential for future deficit reduction legislation that may alter these spending reductions, which include cuts to Medicare payments, or create additional spending reductions, (5) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (6) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services, (7) possible changes in Medicare, Medicaid and other state programs, including Medicaid supplemental payment programs or Medicaid waiver programs, that may impact reimbursements to health care providers and insurers and the size of the uninsured or underinsured population, (8) increases in wages and the ability to attract, utilize and retain qualified management and other personnel, including affiliated physicians, nurses and medical and technical support personnel, and workforce disruptions, (9) the highly competitive nature of the health care business, (10) changes in service mix, revenue mix and surgical volumes, including potential declines in the population covered under third-party payer agreements, the ability to enter into and renew third-party payer provider agreements on acceptable terms and the impact of consumer-driven health plans and physician utilization trends and practices, (11) the efforts of health insurers, health care providers, large employer groups and others to contain health care costs, (12) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures, (13) the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities, (14) changes in accounting practices, (15) changes in general economic conditions nationally and regionally in our markets, including inflation and economic and business conditions (and the impact thereof on the economy and financial markets) resulting from COVID-19 or other factors, (16) the emergence of and effects related to pandemics, epidemics and infectious diseases, (17) future divestitures which may result in charges and possible impairments of long-lived assets, (18) changes in business strategy or development plans, (19) delays in receiving payments for services provided, (20) the outcome of pending and any future tax audits, disputes and litigation associated with our tax positions, (21) potential adverse impact of known and unknown government investigations, litigation and other claims that may be made against us, (22) the impact of potential cybersecurity incidents or security breaches, (23) our ongoing ability to demonstrate meaningful use of certified electronic health record (“EHR”) technology and the impact of interoperability requirements, (24) the impact of natural disasters, such as hurricanes and floods, physical risks from climate change or similar events beyond our control, (25) changes in U.S. federal, state, or foreign tax laws including interpretive guidance that may be issued by taxing authorities or other standard setting bodies, and (26) other risk factors described in our annual report on Form 10-K for the year ended December 31, 2021 and our other filings with the Securities and Exchange Commission. 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. All references to “Company” and “HCA Healthcare” as used throughout this release refer to HCA Healthcare, Inc. and its affiliates.

HCA Healthcare, Inc.
Condensed Consolidated Comprehensive Income Statements
Third Quarter
Unaudited
(Dollars in millions, except per share amounts)
($ millions, except per share amounts)	2022					2021
	Amount		Ratio			Amount		Ratio
Revenues	$14,971		100.0		%	$15,276		100.0		%
Salaries and benefits	6,899		46.1			7,094		46.4
Supplies	2,320		15.5			2,463		16.1
Other operating expenses	2,860		19.1			2,530		16.6
Equity in earnings of affiliates	(10	)	(0.1	)		(35	)	(0.2	)
Depreciation and amortization	749		5.0			716		4.7
Interest expense	446		3.0			398		2.6
Losses (gains) on sales of facilities	3		-			(1,047	)	(6.9	)
	13,267		88.6			12,119		79.3
Income before income taxes	1,704		11.4			3,157		20.7
Provision for income taxes	360		2.4			685		4.5
Net income	1,344		9.0			2,472		16.2
Net income attributable to noncontrolling interests	210		1.4			203		1.3
Net income attributable to HCA Healthcare, Inc.	$1,134		7.6			$2,269		14.9
Diluted earnings per share	$3.91					$7.00
Shares used in computing diluted earnings per share (millions)	289.852					324.029
Comprehensive income attributable to HCA Healthcare, Inc.	$1,057					$2,252

HCA Healthcare, Inc.
Condensed Consolidated Comprehensive Income Statements
For the Nine Months Ended September 30, 2022 and 2021
Unaudited
(Dollars in millions, except per share amounts)
	2022					2021
	Amount		Ratio			Amount		Ratio
Revenues	$44,736		100.0		%	$43,688		100.0		%
Salaries and benefits	20,630		46.1			19,780		45.3
Supplies	6,942		15.5			7,067		16.2
Other operating expenses	8,305		18.6			7,424		17.0
Equity in earnings of affiliates	(29	)	(0.1	)		(78	)	(0.2	)
Depreciation and amortization	2,219		4.9			2,125		4.8
Interest expense	1,288		2.9			1,168		2.7
Losses (gains) on sales of facilities	25		0.1			(1,057	)	(2.4	)
Losses on retirement of debt	78		0.2			12		-
	39,458		88.2			36,441		83.4
Income before income taxes	5,278		11.8			7,247		16.6
Provision for income taxes	1,090		2.4			1,531		3.5
Net income	4,188		9.4			5,716		13.1
Net income attributable to noncontrolling interests	626		1.4			574		1.3
Net income attributable to HCA Healthcare, Inc.	$3,562		8.0			$5,142		11.8
Diluted earnings per share	$11.97					$15.43
Shares used in computing diluted earnings per share (millions)	297.702					333.248
Comprehensive income attributable to HCA Healthcare, Inc.	$3,374					$5,152

HCA Healthcare, Inc.
Condensed Consolidated Balance Sheets
Unaudited
(Dollars in millions)
	September 30,		June 30,		December 31,
	2022		2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$999		$858		$1,451
Accounts receivable	8,552		8,628		8,095
Inventories	2,009		2,043		1,986
Other	1,921		2,408		2,010
	13,481		13,937		13,542
Property and equipment, at cost	53,730		52,816		51,350
Accumulated depreciation	(28,752	)	(28,229	)	(27,287	)
	24,978		24,587		24,063
Investments of insurance subsidiaries	372		379		438
Investments in and advances to affiliates	444		435		448
Goodwill and other intangible assets	9,651		9,593		9,540
Right-of-use operating lease assets	2,097		2,139		2,113
Other	461		514		598
	$51,484		$51,584		$50,742
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$4,161		$3,742		$4,111
Accrued salaries	1,625		1,895		1,912
Other accrued expenses	3,780		3,116		3,322
Long-term debt due within one year	218		246		237
	9,784		8,999		9,582
Long-term debt, less debt issuance costs and discounts of $309, $316 and $248	37,492		38,657		34,342
Professional liability risks	1,510		1,533		1,514
Right-of-use operating lease obligations	1,762		1,796		1,755
Income taxes and other liabilities	1,714		1,741		2,060
Stockholders' (deficit) equity:
Stockholders' deficit attributable to HCA Healthcare, Inc.	(3,370	)	(3,680	)	(933	)
Noncontrolling interests	2,592		2,538		2,422
	(778	)	(1,142	)	1,489
	$51,484		$51,584		$50,742

HCA Healthcare, Inc.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2022 and 2021
Unaudited
(Dollars in millions)
				2022	2021
Cash flows from operating activities:
	Net income			$4,188	$5,716
	Adjustments to reconcile net income to net cash provided by operating activities:
		Increase (decrease) in cash from operating assets and liabilities:
			Accounts receivable	(487)	(1,312)
			Inventories and other assets	53	(333)
			Accounts payable and accrued expenses	(644)	731
		Depreciation and amortization		2,219	2,125
		Income taxes		159	185
		Losses (gains) on sales of facilities		25	(1,057)
		Losses on retirement of debt		78	12
		Amortization of debt issuance costs and discounts		22	21
		Share-based compensation		258	341
		Other		124	87
			Net cash provided by operating activities	5,995	6,516
Cash flows from investing activities:
	Purchase of property and equipment			(3,072)	(2,385)
	Acquisition of hospitals and health care entities			(176)	(488)
	Sales of hospitals and health care entities			652	1,980
	Change in investments			10	(38)
	Other			(10)	2
			Net cash used in investing activities	(2,596)	(929)
Cash flows from financing activities:
	Issuances of long-term debt			5,976	4,337
	Net change in revolving credit facilities			(230)	500
	Repayment of long-term debt			(2,774)	(3,787)
	Distributions to noncontrolling interests			(550)	(501)
	Payment of debt issuance costs			(53)	(38)
	Payment of dividends			(497)	(476)
	Repurchase of common stock			(5,481)	(6,143)
	Other			(209)	(241)
			Net cash used in financing activities	(3,818)	(6,349)
Effect of exchange rate changes on cash and cash equivalents				(33)	(4)
Change in cash and cash equivalents				(452)	(766)
Cash and cash equivalents at beginning of period				1,451	1,793
Cash and cash equivalents at end of period				$999	$1,027
Interest payments				$1,329	$1,127
Income tax payments, net				$931	$1,346

HCA Healthcare, Inc.
Operating Statistics
					For the Nine Months
	Third Quarter				Ended September 30,
	2022		2021		2022		2021
Operations:
Number of Hospitals		182		183		182		183
Number of Freestanding Outpatient Surgery Centers*		125		123		125		123
Licensed Beds at End of Period		49,179		48,950		49,179		48,950
Weighted Average Beds in Service		42,056		42,088		41,936		42,304
Reported:
Admissions		523,092		536,848		1,545,161		1,575,269
% Change		-2.6%				-1.9%
Equivalent Admissions		917,262		905,627		2,679,309		2,654,328
% Change		1.3%				0.9%
Revenue per Equivalent Admission	$	16,322	$	16,868	$	16,697	$	16,459
% Change		-3.2%				1.4%
Inpatient Revenue per Admission	$	17,387	$	18,102	$	17,268	$	17,115
% Change		-3.9%				0.9%
Patient Days		2,602,416		2,865,220		7,855,462		8,166,211
% Change		-9.2%				-3.8%
Equivalent Patient Days		4,565,120		4,833,197		13,621,371		13,760,066
% Change		-5.5%				-1.0%
Inpatient Surgery Cases		132,470		126,436		390,311		390,486
% Change		4.8%				0.0%
Outpatient Surgery Cases		252,026		249,192		757,629		742,527
% Change		1.1%				2.0%
Emergency Room Visits		2,278,782		2,338,180		6,559,170		6,308,386
% Change		-2.5%				4.0%
Outpatient Revenues as a
Percentage of Patient Revenues		36.6%		34.1%		37.6%		36.0%
Average Length of Stay (days)		4.975		5.337		5.084		5.184
Occupancy**		70.8%		77.6%		72.1%		74.5%
Same Facility:
Admissions		518,597		526,573		1,532,798		1,536,627
% Change		-1.5%				-0.2%
Equivalent Admissions		905,470		885,169		2,645,609		2,579,997
% Change		2.3%				2.5%
Revenue per Equivalent Admission	$	16,283	$	16,874	$	16,674	$	16,539
% Change		-3.5%				0.8%
Inpatient Revenue per Admission	$	17,428	$	18,081	$	17,306	$	17,168
% Change		-3.6%				0.8%
Inpatient Surgery Cases		131,289		124,381		387,339		382,570
% Change		5.6%				1.2%
Outpatient Surgery Cases		242,276		237,607		726,278		709,535
% Change		2.0%				2.4%
Emergency Room Visits		2,252,569		2,281,501		6,486,667		6,106,868
% Change		-1.3%				6.2%
* Excludes freestanding endoscopy centers (21 centers at both September 30, 2022 and September 30, 2021).
** Reflects the rate of occupancy (patient days and observations) based on weighted average beds in service.

HCA Healthcare, Inc.
Supplemental Non-GAAP Disclosures
Operating Results Summary
(Dollars in millions, except per share amounts)
						For the Nine Months
		Third Quarter				Ended September 30,
		2022		2021		2022		2021
Revenues		$14,971		$15,276		$44,736		$43,688
Net income attributable to HCA Healthcare, Inc.		$1,134		$2,269		$3,562		$5,142
	Losses (gains) on sales of facilities (net of tax)	4		(788	)	28		(795	)
	Losses on retirement of debt (net of tax)	-		-		60		9
Net income attributable to HCA Healthcare, Inc., excluding losses (gains) on sales of facilities and losses on retirement of debt (a)		1,138		1,481		3,650		4,356
	Depreciation and amortization	749		716		2,219		2,125
	Interest expense	446		398		1,288		1,168
	Provision for income taxes	359		426		1,105		1,272
	Net income attributable to noncontrolling interests	210		203		626		574
	Adjusted EBITDA (a)	$2,902		$3,224		$8,888		$9,495
	Adjusted EBITDA margin (a)	19.4	%	21.1	%	19.9	%	21.7	%
Diluted earnings per share:
	Net income attributable to HCA Healthcare, Inc.	$3.91		$7.00		$11.97		$15.43
	Losses (gains) on sales of facilities	0.02		(2.43	)	0.09		(2.39	)
	Losses on retirement of debt	-		-		0.20		0.03
	Net income attributable to HCA Healthcare, Inc., excluding losses (gains) on sales of facilities and losses on retirement of debt (a)	$3.93		$4.57		$12.26		$13.07
	Shares used in computing diluted earnings per share (millions)	289.852		324.029		297.702		333.248
(a)	Net income attributable to HCA Healthcare, Inc., excluding losses (gains) on sales of facilities and losses on retirement of debt, and Adjusted EBITDA should not be considered as measures of financial performance under generally accepted accounting principles ("GAAP"). We believe net income attributable to HCA Healthcare, Inc., excluding losses (gains) on sales of facilities and losses on retirement of debt, and Adjusted EBITDA are important measures that supplement discussions and analysis of our results of operations. We believe it is useful to investors to provide disclosures of our results of operations on the same basis used by management. Management relies upon net income attributable to HCA Healthcare, Inc., excluding losses (gains) on sales of facilities and losses on retirement of debt, and Adjusted EBITDA as the primary measures to review and assess operating performance of its health care facilities and their management teams.
	Management and investors review both the overall performance (including net income attributable to HCA Healthcare, Inc., excluding losses (gains) on sales of facilities and losses on retirement of debt, and GAAP net income attributable to HCA Healthcare, Inc.) 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 losses (gains) on sales of facilities and losses on retirement of debt will occur in future periods, but the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our health care facilities and complicate period comparisons of our results of operations and operations comparisons with other health care companies.
	Net income attributable to HCA Healthcare, Inc., excluding losses (gains) on sales of facilities and losses on retirement of debt, and Adjusted EBITDA are not measures of financial performance under GAAP, and should not be considered as alternatives to net income attributable to HCA Healthcare, Inc. as a measure of operating performance or cash flows from operating, investing and financing activities as a measure of liquidity. Because net income attributable to HCA Healthcare, Inc., excluding losses (gains) on sales of facilities and losses on retirement of debt, and Adjusted EBITDA are not measurements determined in accordance with GAAP and are susceptible to varying calculations, net income attributable to HCA Healthcare, Inc., excluding losses (gains) on sales of facilities and losses on retirement of debt, and Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures presented by other companies.