Will Return Approximately $6 Billion in
CARES Act Funding
HCA Healthcare, Inc. (NYSE: HCA) today announced preliminary
financial and operating results for its third quarter ended
September 30, 2020. In addition, the Company will return, or repay
early, approximately $6 billion of government assistance funds
received as part of the Coronavirus Aid, Relief, and Economic
Security (“CARES”) Act. The Company’s preliminary financial and
operating results are based on current expectations and subject to
finalization of the Company’s third quarter financial and
accounting procedures.
Third Quarter Preview
HCA anticipates revenues for the third quarter of 2020 to
approximate $13.300 billion compared to $12.694 billion in the
third quarter of 2019. Income before income taxes is expected to
approximate $950 million in the third quarter of 2020 compared to
$979 million in the third quarter of 2019. Results for the third
quarter of 2020 include a reversal of $822 million in government
stimulus income recorded in the second quarter of 2020 related to
general distribution funds received from the Provider Relief Fund
established by the CARES Act. Results for the third quarter of 2019
included losses on retirement of debt of $211 million. Adjusted
EBITDA for the third quarter of 2020 is expected to approximate
$2.030 billion compared to $2.285 billion in the previous year’s
third quarter. Adjusted EBITDA is a non-GAAP financial measure. A
table providing supplemental information and reconciling expected
income before income taxes to expected Adjusted EBITDA is included
in this release.
Same facility admissions for the third quarter of 2020 are
expected to decline 4 percent, and same facility equivalent
admissions are expected to decline 9 percent, when compared to the
third quarter of 2019. Same facility emergency room visits for the
third quarter of 2020 are expected to decline 20 percent from the
prior year’s third quarter.
Same facility revenue per equivalent admission is expected to
increase approximately 15 percent in the third quarter of 2020
compared to the prior year’s third quarter due to increases in
acuity for patients treated and favorable payer mix during the
quarter.
HCA Healthcare anticipates reporting its complete financial and
operating results for the third quarter of 2020 on, or about,
October 26, 2020.
CARES Act
The CARES Act, enacted on March 27, 2020, was intended to
provide emergency financial assistance to healthcare providers for
the adverse impact the COVID-19 pandemic could have on their
operations. “We greatly appreciate the CARES Act funding and the
policymakers who fought hard to ensure hospitals would have the
essential resources during the pandemic,” said Sam Hazen, CEO of
HCA Healthcare.
During the early days of the pandemic, the Company took a
conservative approach which included a number of actions to meet
the operational and financial challenges this global health crisis
was expected to present. Many aspects of our approach were outlined
in our first quarter release.
As a result of these actions, and other factors, HCA Healthcare
is able to return, or repay early, all of its share of Provider
Relief Fund distributions of approximately $1.6 billion and
approximately $4.4 billion in Medicare accelerated payments. The
Company will work with the appropriate government agencies to
arrange the payment of these funds. The Company expects to fund the
entire amount of such payments from available cash and future cash
flows from operations.
“As the initial immediacy of the emergency has passed, and with
more information, and more experience managing our operations
during the pandemic, we believe returning these taxpayer dollars is
appropriate and the socially responsible thing to do,” said Hazen.
“Our focus will remain on supporting our patients, employees and
physicians and continuing the vital role we play in the communities
we serve.”
Investor Call
HCA Healthcare will host a conference call for investors at 8:00
a.m. Central Daylight Time tomorrow, October 9, 2020. All
interested investors are invited to access a live audio broadcast
of the call via webcast. The broadcast will also be available on a
replay basis beginning the afternoon of October 9th following the
call. The webcast can be accessed through the Company’s Investor
Relations web page at
https://investor.hcahealthcare.com/events-and-presentations.
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 the Company’s
capital allocation, as well as other 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) the finalization of the Company’s third quarter 2020
financial and accounting procedures, (2) developments related to
COVID-19, including, without limitation, related to the length and
severity of the pandemic; the volume of canceled or rescheduled
procedures and the volume of COVID-19 patients cared for across our
health systems; measures we are taking to respond to the COVID-19
pandemic; the impact and terms of government and administrative
regulation and stimulus (including the CARES Act, the Paycheck
Protection Program and Health Care Enhancement Act and other
enacted legislation); changes in revenues due to declining patient
volumes, changes in payor mix and deteriorating macroeconomic
conditions (including increases in uninsured and underinsured
patients); potential increased expenses related to labor, supply
chain or other expenditures; workforce disruptions and supply
shortages and disruptions; and the timing and availability of
effective medical treatments and vaccines, (3) the impact of our
substantial indebtedness and the ability to refinance such
indebtedness on acceptable terms, as well as risks associated with
disruptions in the financial markets and the business of financial
institutions as the result of the COVID-19 pandemic which could
impact us from a financial perspective, (4) the impact of the
Patient Protection and Affordable Care Act, as amended by the
Health Care and Education Reconciliation Act of 2010 (collectively,
the “Affordable Care Act”), including the effects of court
challenges to, any repeal of, or changes to, the Affordable Care
Act or additional changes to its implementation, the possible
enactment of additional federal or state health care reforms and
possible changes to other federal, state or local laws or
regulations affecting the health care industry, including
single-payer proposals (often referred to as “Medicare for All”),
and also including any such laws or governmental regulations which
are adopted in response to the COVID-19 pandemic, (5) the effects
related to the continued implementation of the sequestration
spending reductions required under the Budget Control Act of 2011,
and related legislation extending these reductions, 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, (6) increases in the
amount and risk of collectability of uninsured accounts and
deductibles and copayment amounts for insured accounts, (7) the
ability to achieve operating and financial targets, and attain
expected levels of patient volumes and control the costs of
providing services, (8) 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, (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) increases in wages and the ability to attract
and retain qualified management and personnel, including affiliated
physicians, nurses and medical and technical support personnel,
(14) the availability and terms of capital to fund the expansion of
our business and improvements to our existing facilities, (15)
changes in accounting practices, (16) changes in general economic
conditions nationally and regionally in our markets, including
economic and business conditions (and the impact thereof on the
financial markets and banking industry) resulting from the COVID-19
pandemic, (17) the emergence of and effects related to other
pandemics, epidemics and infectious diseases, (18) future
divestitures which may result in charges and possible impairments
of long-lived assets, (19) changes in business strategy or
development plans, (20) delays in receiving payments for services
provided, (21) the outcome of pending and any future tax audits,
disputes and litigation associated with our tax positions, (22)
potential adverse impact of known and unknown government
investigations, litigation and other claims that may be made
against us, (23) the impact of potential cybersecurity incidents or
security breaches, (24) our ongoing ability to demonstrate
meaningful use of certified electronic health record (“EHR”)
technology and the impact of interoperability requirements, (25)
the impact of natural disasters, such as hurricanes and floods, or
similar events beyond our control, (26) changes in the U.S.
federal, state, or foreign tax laws including interpretive guidance
that may be issued by taxing authorities or other standard setting
bodies, and (27) other risk factors described in our annual report
on Form 10-K for the year ended December 31, 2019, our quarterly
report on Form 10-Q for the quarter ended June 30, 2020 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” as used throughout this
release refer to HCA Healthcare, Inc. and its affiliates.
HCA Healthcare, Inc. Supplemental Non-GAAP
Disclosures Operating Results Summary (Dollars in
millions)
Third Quarter
2020 (Forecast)
2019
Income before income taxes
$950
$979
Gains on sales of facilities
(10)
-
Losses on retirement of debt
-
211
Income before income taxes,
excluding gains on sales of
facilities and losses on retirement of debt (a)
940
1,190
Depreciation and amortization
700
647
Interest expense
390
448
Adjusted EBITDA (a)
$2,030
$2,285
The Company's forecasted operating results are based on
current expectations and are subject to finalization of the
Company's third quarter 2020 financial and accounting procedures.
(a) Income before income taxes, excluding 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
income before income taxes, excluding 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 income before income taxes,
excluding gains on sales of facilities and losses on retirement of
debt, and Adjusted EBITDA as primary measures to review and assess
operating performance of its health care facilities and their
management teams. Certain items normally included in the
determination of net income attributable to HCA Healthcare, Inc.,
and in the reconciliation to Adjusted EBITDA, including the
provision for income taxes and net income attributable to
noncontrolling interests, are not included in the above
reconciliation of income before income taxes to forecasted Adjusted
EBITDA pending finalization of the Company’s third quarter 2020
financial and accounting procedures.
Management and investors review both the overall performance
(including income before income taxes, excluding gains on sales of
facilities and losses on retirement of debt, and GAAP income before
income taxes) 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 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.
Income before income taxes, excluding 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 income before income taxes or
net income attributable to HCA Healthcare, Inc., as measures of
operating performance, or cash flows from operating, investing and
financing activities, as measures of liquidity. Because income
before income taxes, excluding 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, income before income taxes, excluding
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20201008006016/en/
INVESTOR CONTACT: Mark Kimbrough 615-344-2688
MEDIA CONTACT: Harlow Sumerford 615-344-1851
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