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HCA Reports Fourth Quarter and Year End 2008 Results
Date:2/3/2009

NASHVILLE, Tenn., Feb. 3 /PRNewswire/ -- HCA today announced financial and operating results for its fourth quarter ended December 31, 2008.

    (Logo:http://www.newscom.com/cgi-bin/prnh/20050825/CLTH069LOGO )

    Fourth Quarter Summary:

     -- Revenues increased 5.6 percent to $7.265 billion.
     -- Net income totaled $276 million, compared to $278 million in the
        fourth quarter of 2007.
     -- Adjusted EBITDA totaled $1.237 billion, compared to $1.153 billion in
        the fourth quarter of 2007.
     -- Interest expense decreased to $500 million, from $541 million in the
        fourth quarter of 2007.
     -- Same facility admissions increased 0.5 percent, and same facility
        equivalent admissions increased 1.8 percent.
     -- Same facility revenue per equivalent admission increased 4.8 percent.
     -- Same facility total surgeries increased 0.4 percent.

Revenues during the fourth quarter of 2008 totaled $7.265 billion, compared to $6.883 billion in the fourth quarter of 2007. On a same facility basis, revenues in the fourth quarter of 2008 increased 6.8 percent compared to the fourth quarter of 2007. Adjusted EBITDA in the fourth quarter of 2008 totaled $1.237 billion, compared to $1.153 billion in the fourth quarter of 2007. Net income for the fourth quarter of 2008 totaled $276 million, compared to $278 million in the fourth quarter of 2007. Results for the fourth quarter of 2008 include gains on sales of facilities of $7 million compared to $139 million in the fourth quarter of 2007. Fourth quarter 2008 results also include an $11 million charge for impairment of long-lived assets.

The provision for doubtful accounts decreased to $889 million, or 12.2 percent of revenues, in the fourth quarter of 2008 from $912 million, or 13.2 percent of revenues, in the fourth quarter of 2007. Same facility uninsured admissions decreased 0.4 percent in the fourth quarter of 2008 compared to the fourth quarter of 2007.

Interest expense decreased to $500 million in the fourth quarter of 2008, compared to $541 million in the fourth quarter of 2007, due primarily to a reduction in the average effective interest rate on total debt.

The provision for income taxes resulted in low effective tax rates for the fourth quarters of both 2008 (11 percent effective tax rate) and 2007 (20 percent effective tax rate). The provision for income taxes for the fourth quarter of 2008 was reduced, primarily due to a favorable revision to the proposed disallowance of a portion of prior period expense and related interest. The provision for income taxes for the fourth quarter of 2007 was reduced, primarily due to the recognition of certain state tax benefits.

Same facility admissions increased 0.5 percent and same facility equivalent admissions increased 1.8 percent in the fourth quarter of 2008 compared to the fourth quarter of 2007. Same facility inpatient surgeries declined 0.7 percent, while outpatient surgeries increased 1.1 percent in the fourth quarter of 2008 compared to the fourth quarter of 2007. Same facility revenue per equivalent admission increased 4.8 percent in the fourth quarter of 2008 compared to the fourth quarter of 2007. Same facility charity and uninsured discounts totaled $985 million in the fourth quarter of 2008 compared to $781 million in the fourth quarter of 2007.

Revenues for the year ended December 31, 2008 increased 5.6 percent to $28.374 billion compared to $26.858 billion in 2007. Adjusted EBITDA totaled $4.574 billion for 2008 compared to $4.592 billion in 2007. Net income totaled $673 million for 2008 compared to $874 million in 2007. The operating results include gains on sales of facilities of $97 million in 2008 compared to $471 million in 2007 and impairments of long-lived assets of $64 million in 2008 compared to $24 million in 2007.

As of December 31, 2008, HCA's balance sheet reflected cash and cash equivalents of $465 million, total debt of $26.989 billion, and total assets of $24.280 billion. Capital expenditures totaled $485 million for the fourth quarter of 2008 and $1.600 billion for the year ended December 31, 2008.

As of December 31, 2008, HCA operated 166 hospitals and 105 freestanding surgery centers, including eight hospitals and eight freestanding surgery centers operated through equity method joint ventures.

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=55052 or through the Company's Investor Relations web page, 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 and are intended to comply with the safe harbor provided by the Private Securities Litigation Reform Act of 1995. 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 recapitalization; (3) increases in the amount and risk of collectibility of uninsured accounts, and deductibles and copayment amounts for insured accounts, particularly in the current economic downturn; (4) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services; (5) possible changes in the Medicare, Medicaid and other state programs, including Medicaid supplemental payments pursuant to upper payment limit 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 outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures; (10) changes in federal, state or local laws or regulations affecting the health care industry; (11) increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel; (12) the possible enactment of federal or state health care reform; (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; (16) future divestitures which may result in charges; (17) changes in business strategy or development plans; (18) the outcome of pending and any future tax audits, appeals and litigation associated with our tax positions; (19) delays in receiving payment for services provided; (20) potential liabilities and other claims that may be asserted against us; (21) other risk factors described in our Annual Report on Form 10-K and 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" as used throughout this release refer to HCA Inc. and its affiliates.



                                    HCA Inc.
                   Condensed Consolidated Income Statements
                                Fourth Quarter
                            (Dollars in millions)

                                    2008                      2007
                             Amount       Ratio       Amount        Ratio
    Revenues                 $7,265       100.0%      $6,883        100.0%

    Salaries and benefits     2,877        39.6        2,712         39.4
    Supplies                  1,157        15.9        1,111         16.2
    Other operating expenses  1,158        16.0        1,047         15.2
    Provision for doubtful
     accounts                  889         12.2          912         13.2
    Equity in earnings
     of affiliates             (53)        (0.7)         (50)        (0.7)
    Gains on investments        --           --           (2)          --
    Depreciation and
     amortization              354          4.9          354          5.0
    Interest expense           500          6.9          541          7.9
    Gains on sales
     of facilities              (7)        (0.1)        (139)        (2.0)
    Impairment of
     long-lived assets          11          0.1           --           --

                             6,886         94.8        6,486         94.2


    Income before minority
     interests and income
     taxes                     379          5.2          397          5.8

    Minority interests in
     earnings of consolidated
     entities                   68          0.9           48          0.7

    Income before income taxes 311          4.3          349          5.1

    Provision for income taxes  35          0.5           71          1.1

      Net income              $276          3.8         $278          4.0



                                    HCA Inc.
                   Condensed Consolidated Income Statements
                  For the Years Ended December 31, 2008 and 2007
                              (Dollars in millions)

                                   2008                      2007
                            Amount       Ratio        Amount       Ratio

    Revenues               $28,374        100.0%     $26,858        100.0%

    Salaries and benefits   11,440         40.3       10,714         39.9
    Supplies                 4,620         16.3        4,395         16.4
    Other operating expenses 4,554         16.1        4,241         15.7
    Provision for doubtful
     accounts                3,409         12.0        3,130         11.7
    Equity in earnings
     of affiliates            (223)        (0.8)        (206)        (0.8)
    Gains on investments        --           --          (8)           --
    Depreciation and
     amortization            1,416          5.0        1,426          5.4
    Interest expense         2,021          7.1        2,215          8.2
    Gains on sales
     of facilities             (97)        (0.3)        (471)        (1.8)
    Impairment of
     long-lived assets          64          0.2           24          0.1

                            27,204         95.9       25,460         94.8

    Income before minority
     interests and income
     taxes                   1,170          4.1        1,398          5.2

    Minority interests
     in earnings of
     consolidated entities     229          0.8          208          0.8

    Income before income
     taxes                     941          3.3        1,190          4.4

    Provision for income
     taxes                     268          0.9          316          1.1

      Net income              $673          2.4         $874          3.3



                                     HCA Inc.
                       Supplemental Operating Results Summary
                              (Dollars in millions)

                                                          For the Years
                                Fourth Quarter          Ended December 31,

                              2008         2007         2008         2007

    Revenues                $7,265       $6,883      $28,374      $26,858

    Net income                $276         $278         $673         $874
      Gains on sales of
       facilities
       (net of tax)             (5)         (88)         (58)        (291)
      Impairment of long-lived
       assets (net of tax)       7           --           41           15

    Net income, excluding
     gains on sales of
     facilities and impairment
     of long-lived assets      278          190          656          598
      Depreciation and
       amortization            354          354        1,416        1,426
      Interest expense         500          541        2,021        2,215
      Minority interests
       in earnings
       of consolidated entities 68           48          229          208
      Provision for income
       taxes                    37           20          252          145
      Adjusted EBITDA (a)   $1,237       $1,153       $4,574       $4,592

(a) Net income, excluding gains on sales of facilities and impairment of long-lived assets and adjusted EBITDA are non-GAAP financial measures. We believe that net income, excluding gains on sales of facilities and impairment of long-lived assets 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 and impairment of long-lived assets 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 and impairment of long- lived assets 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 and impairments of long-lived assets 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 and impairment of long- lived assets 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 and impairment of long-lived assets 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 and impairment of long-lived assets and adjusted EBITDA, as presented, may not be comparable to other similarly titled measures presented by other companies.



                                   HCA Inc.
                     Condensed Consolidated Balance Sheets
                             (Dollars in millions)

                                  December 31,    September 30,  December 31,
                                        2008             2008          2007
    ASSETS
    Current assets:
      Cash and cash equivalents          $465            $444          $393
      Accounts receivable, less
       allowance for doubtful accounts  3,780           3,699         3,895
      Inventories                         737             716           710
      Deferred income taxes               914             722           592
      Other                               405             517           615

        Total current assets            6,301           6,098         6,205

    Property and equipment, at cost    23,714          23,406        22,579
    Accumulated depreciation          (12,185)        (11,968)      (11,137)
                                       11,529          11,438        11,442

    Investments of insurance
     subsidiary                         1,422           1,483         1,669
    Investments in and advances
     to affiliates                        842             824           688
    Goodwill                            2,580           2,601         2,629
    Deferred loan costs                   458             478           539
    Other                               1,148             871           853

                                      $24,280         $23,793       $24,025


    LIABILITIES AND STOCKHOLDERS' DEFICIT
    Current liabilities:
      Accounts payable                 $1,370          $1,191        $1,370
      Accrued salaries                    854             849           780
      Other accrued expenses            1,282           1,235         1,391
      Long-term debt due within one year  404             368           308

        Total current liabilities       3,910           3,643         3,849

    Long-term debt                     26,585          26,673        27,000
    Professional liability risks        1,108           1,114         1,233
    Deferred taxes and other
     liabilities                        1,782           1,375         1,379
    Minority interests in equity
     of consolidated entities             995             969           938

    Equity securities with
     contingent redemption rights         155             163           164

    Stockholders' deficit             (10,255)        (10,144)      (10,538)

                                      $24,280         $23,793       $24,025



                                   HCA Inc.
                  Condensed Consolidated Statements of Cash Flows
                  For the Years Ended December 31, 2008 and 2007
                             (Dollars in millions)

                                                         2008           2007
    Cash flows from operating activities:
      Net income                                         $673           $874
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:
        Provision for doubtful accounts                 3,409          3,130
        Depreciation and amortization                   1,416          1,426
        Income taxes                                     (448)          (105)
        Gains on sales of facilities                      (97)          (471)
        Impairment of long-lived assets                    64             24
        Change in operating assets and liabilities     (3,367)        (3,615)
        Change in minority interests                       36             40
        Share-based compensation                           32             24
        Other                                              79             69

          Net cash provided by operating activities     1,797          1,396

    Cash flows from investing activities:
        Purchase of property and equipment             (1,600)        (1,444)

    Acquisition of hospitals and health care entities     (85)           (32)
        Disposition of hospitals and health care
         entities                                         193            767
        Change in investments                              21            207
        Other                                               4             23

          Net cash used in investing activities        (1,467)          (479)

    Cash flows from financing activities:
        Net change in revolving bank credit facility      700           (520)
        Repayment of long-term debt                      (960)          (750)

        Issuance of common stock                           --            100
        Other                                               2             12

          Net cash used in financing activities          (258)        (1,158)

    Change in cash and cash equivalents                    72           (241)
    Cash and cash equivalents at beginning of period      393            634

    Cash and cash equivalents at end of period           $465           $393

    Interest payments                                  $1,979         $2,163

    Income tax payments, net of refunds                  $716           $421



                                        HCA Inc.
                                 Operating Statistics

                                                             For the Years
                                    Fourth Quarter          Ended December 31,
                                  2008         2007         2008         2007
    Consolidating Hospitals:

      Number of Hospitals          158          161          158          161
      Weighted Average
       Licensed Beds            38,474       38,784       38,422       39,065
      Licensed Beds at End
       of Period                38,504       38,405       38,504       38,405

    Reported:
      Admissions               380,100      384,000    1,541,800    1,552,700
        % Change                  -1.0%                     -0.7%
      Equivalent Admissions    587,300      585,300    2,363,600    2,352,400
        % Change                   0.4%                      0.5%
      Revenue per Equivalent
       Admission               $12,370      $11,760      $12,005      $11,417
        % Change                   5.2%                      5.2%
      Inpatient Revenue per
       Admission               $11,742      $11,121      $11,336      $10,718
        % Change                   5.6%                      5.8%

      Patient Days           1,865,100    1,881,200    7,611,000    7,683,000
      Equivalent Patient
       Days                  2,882,100    2,867,400   11,667,700   11,639,700

      Inpatient Surgery Cases
                               121,300      126,500      493,100      516,500
        % Change                  -4.2%                     -4.5%
      Outpatient Surgery
       Cases                   201,900      200,100      797,400      804,900
        % Change                   0.9%                     -0.9%

      Emergency Room Visits  1,276,900    1,288,300    5,246,400    5,116,100
        % Change                  -0.9%                      2.5%

      Outpatient Revenues as a
        Percentage of Patient
         Revenues                 37.5%        36.9%        37.4%        36.9%

      Average Length of Stay       4.9          4.9          4.9          4.9

      Occupancy                   52.7%        52.7%        54.1%        53.9%
      Equivalent Occupancy        81.5%        80.3%        82.9%        81.7%

    Same Facility:
      Admissions               375,200      373,500    1,515,900    1,502,700
        % Change                   0.5%                      0.9%
      Equivalent Admissions    578,900      568,500    2,319,300    2,276,600
        % Change                   1.8%                      1.9%
      Revenue per Equivalent
       Admission               $12,338      $11,768      $11,990      $11,411
        % Change                   4.8%                      5.1%
      Inpatient Revenue per
       Admission               $11,761      $11,139      $11,361      $10,738
        % Change                   5.6%                      5.8%

      Inpatient Surgery Cases  120,400      121,300      485,800      488,400
        % Change                  -0.7%                     -0.5%
      Outpatient Surgery
       Cases                   198,200      196,100      783,800      785,200
        % Change                   1.1%                     -0.2%

      Emergency Room Visits  1,255,200    1,252,000    5,128,700    4,952,000
        % Change                   0.3%                      3.6%

    Number of Consolidating
     and Nonconsolidating
    (Equity Joint Ventures)
     Hospitals:

      Consolidating                158          161          158          161
      Nonconsolidating
       (Equity Joint Ventures)       8            8            8            8

      Total Number of Hospitals    166          169          166          169


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