Company Quick10K Filing
HCA Healthcare
Price119.10 EPS12
Shares349 P/E10
MCap41,532 P/FCF8
Net Debt36,603 EBIT6,510
TEV78,135 TEV/EBIT12
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-06
10-K 2019-12-31 Filed 2020-02-20
10-Q 2019-09-30 Filed 2019-11-01
10-Q 2019-06-30 Filed 2019-08-02
10-Q 2019-03-31 Filed 2019-05-03
10-K 2018-12-31 Filed 2019-02-21
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-03
10-Q 2018-03-31 Filed 2018-05-08
10-K 2017-12-31 Filed 2018-02-23
10-Q 2017-09-30 Filed 2017-11-07
10-Q 2017-06-30 Filed 2017-08-04
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-02-22
10-Q 2016-09-30 Filed 2016-11-03
10-Q 2016-06-30 Filed 2016-08-04
10-Q 2016-03-31 Filed 2016-05-06
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-10-29
10-Q 2015-06-30 Filed 2015-08-05
10-Q 2015-03-31 Filed 2015-05-05
10-K 2014-12-31 Filed 2015-02-26
10-Q 2014-09-30 Filed 2014-11-04
10-Q 2014-06-30 Filed 2014-08-05
10-Q 2014-03-31 Filed 2014-05-06
10-K 2013-12-31 Filed 2014-02-26
10-Q 2013-09-30 Filed 2013-11-06
10-Q 2013-06-30 Filed 2013-08-07
10-Q 2013-03-31 Filed 2013-05-07
10-K 2012-12-31 Filed 2013-02-27
10-Q 2012-09-30 Filed 2012-11-06
10-Q 2012-05-30 Filed 2012-08-06
10-Q 2012-03-31 Filed 2012-05-09
10-K 2011-12-31 Filed 2012-02-24
10-Q 2011-09-30 Filed 2011-11-09
10-Q 2011-06-30 Filed 2011-08-05
10-Q 2011-03-31 Filed 2011-05-11
10-K 2010-12-31 Filed 2011-02-17
10-Q 2010-09-30 Filed 2010-11-09
10-Q 2010-06-30 Filed 2010-08-11
10-Q 2010-03-31 Filed 2010-05-07
10-K 2009-12-31 Filed 2010-03-01
8-K 2020-04-30
8-K 2020-04-21
8-K 2020-03-27
8-K 2020-03-19
8-K 2020-02-26
8-K 2020-02-11
8-K 2020-02-11
8-K 2020-01-28
8-K 2019-11-20
8-K 2019-10-29
8-K 2019-10-08
8-K 2019-07-30
8-K 2019-07-16
8-K 2019-06-12
8-K 2019-06-05
8-K 2019-04-30
8-K 2019-04-26
8-K 2019-03-28
8-K 2019-02-21
8-K 2019-01-30
8-K 2019-01-29
8-K 2019-01-17
8-K 2019-01-17
8-K 2018-12-20
8-K 2018-10-30
8-K 2018-09-07
8-K 2018-08-23
8-K 2018-08-09
8-K 2018-07-25
8-K 2018-05-01
8-K 2018-04-26
8-K 2018-03-30
8-K 2018-03-13
8-K 2018-01-30
8-K 2018-01-17

HCA 10Q Quarterly Report

Note 1 - Basis of Presentation and Significant Accounting Policies
Note 2 - Acquisitions and Dispositions
Note 3 - Income Taxes
Note 4 - Earnings per Share
Note 5 - Investments of Insurance Subsidiaries
Note 6 - Financial Instruments
Note 7 - Assets and Liabilities Measured At Fair Value
Note 8 - Long - Term Debt
Note 9 - Contingencies
Note 10 - Share Repurchase Transactions and Other Comprehensive Loss
Note 11 - Segment and Geographic Information
Note 12 - Subsequent Event
Item 2. Management's Discussion and Analysis Of
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-4.7 d900877dex47.htm
EX-4.8 d900877dex48.htm
EX-4.9 d900877dex49.htm
EX-4.10 d900877dex410.htm
EX-4.11 d900877dex411.htm
EX-4.12 d900877dex412.htm
EX-4.13(A) d900877dex413a.htm
EX-4.13(B) d900877dex413b.htm
EX-10.2 d900877dex102.htm
EX-22 d900877dex22.htm
EX-31.1 d900877dex311.htm
EX-31.2 d900877dex312.htm
EX-32 d900877dex32.htm

HCA Healthcare Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
503826142-102012201420172020
Assets, Equity
25201510502012201420172020
Rev, G Profit, Net Income
3.52.00.5-1.0-2.5-4.02012201420172020
Ops, Inv, Fin

Form 10-Q
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Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form
 10-Q
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the quarterly period ended March 31, 2020
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the transition period from                to                 
Commission file number
1-11239
 
HCA Healthcare, Inc.
(Exact name of registrant as specified in its charter)
 
     
Delaware
 
27-3865930
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
     
One Park Plaza
Nashville, Tennessee
 
37203
(Address of principal executive offices)
 
(Zip Code)
 
 
 
(615)
 344-9551
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act:
         
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Voting common stock, $.01 par value
 
HCA
 
New York Stock Exchange
 
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  
    No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
 S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  
    No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule
 12b-2
of the Exchange Act.
             
Large accelerated filer
 
 
Accelerated filer
 
Non-accelerated
filer
 
 
Smaller reporting company
 
Emerging growth company
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule
 12b-2
of the Exchange Act).    Yes  
    No  
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
     
Class of Common Stock
 
Outstanding at April 30, 2020
Voting common stock, $.01 par value
 
337,618,900 shares
 
 
 
 
 

Table of Contents
HCA HEALTHCARE, INC.
Form
 10-Q
March 31, 2020
             
 
 
Page of
Form
 10-Q
 
Part I.
 
Financial Information
 
 
 
 
 
 
 
 
 
 
Item 1.
 
Financial Statements (Unaudited):
 
 
 
 
 
 
 
 
 
 
 
 
 
2
 
 
 
 
 
 
 
 
 
 
 
3
 
 
 
 
 
 
 
 
 
 
 
4
 
 
 
 
 
 
 
 
 
 
 
5
 
 
 
 
 
 
 
 
 
 
 
6
 
 
 
 
 
 
 
 
 
 
 
7
 
 
 
 
 
 
 
 
Item 2.
 
 
 
20
 
 
 
 
 
 
 
 
Item 3.
 
 
 
35
 
 
 
 
 
 
 
 
Item 4.
 
 
 
35
 
 
 
 
 
 
 
 
Part II.
 
Other Information
 
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
35
 
 
 
 
 
 
 
 
Item 1A.
 
 
 
36
 
 
 
 
 
 
 
 
Item 2.
 
 
 
38
 
 
 
 
 
 
 
 
Item 6.
 
 
 
40
 
 
 
 
 
 
 
 
42
 
 
1

Table of Contents
HCA HEALTHCARE, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE QUARTERS ENDED MARCH 31, 2020 AND 2019
Unaudited
(Dollars in millions, except per share amounts)
                 
 
2020
 
 
2019
 
Revenues
 
$
12,861
 
  $
12,517
 
                 
Salaries and benefits
 
 
6,118
 
   
5,647
 
Supplies
 
 
2,123
 
   
2,041
 
Other operating expenses
 
 
2,427
 
   
2,299
 
Equity in earnings of affiliates
 
 
(7
)
   
(11
)
Depreciation and amortization
 
 
674
 
   
619
 
Interest expense
 
 
428
 
   
461
 
Losses (gains) on sales of facilities
 
 
(7
)
   
1
 
Losses on retirement of debt
 
 
295
 
   
 
                 
 
 
12,051
 
   
11,057
 
                 
Income before income taxes
 
 
810
 
   
1,460
 
Provision for income taxes
 
 
112
 
   
279
 
                 
Net income
 
 
698
 
   
1,181
 
Net income attributable to noncontrolling interests
 
 
117
 
   
142
 
                 
Net income attributable to HCA Healthcare, Inc.
 
$
581
 
  $
1,039
 
                 
Per share data:
 
 
 
   
 
Basic earnings
 
$
1.72
 
  $
3.03
 
Diluted earnings
 
$
1.69
 
  $
2.97
 
Shares used in earnings per share calculations (in millions):
 
 
 
   
 
Basic
 
 
338.242
 
   
342.876
 
Diluted
 
 
344.096
 
   
350.316
 
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
2

Table of Contents
HCA HEALTHCARE, INC.
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS
FOR THE QUARTERS ENDED MARCH 31, 2020 AND 2019
Unaudited
(Dollars in millions)
                 
 
2020
 
 
2019
 
Net income
 
$
698
 
  $
1,181
 
Other comprehensive income (loss) before taxes:
 
 
 
   
 
Foreign currency translation
 
 
(73
)
   
20
 
                 
Unrealized gains (losses) on
available-for-sale
securities
 
 
(5
)
   
8
 
                 
Defined benefit plans
 
 
 
   
 
Pension costs included in salaries and benefits
 
 
4
 
   
3
 
                 
 
 
4
 
   
3
 
                 
Change in fair value of derivative financial instruments
 
 
(60
)
   
(18
)
Interest benefits included in interest expense
 
 
(1
)
   
(5
)
                 
 
 
(61
)
   
(23
)
                 
Other comprehensive income (loss) before taxes
 
 
(135
)
   
8
 
Income taxes (benefits) related to other comprehensive income items
 
 
(24
)
   
1
 
                 
Other comprehensive income (loss)
 
 
(111
)
   
7
 
                 
Comprehensive income
 
 
587
 
   
1,188
 
Comprehensive income attributable to noncontrolling interests
 
 
117
 
   
142
 
                 
Comprehensive income attributable to HCA Healthcare, Inc.
 
$
470
 
  $
1,046
 
                 
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
3

Table of Contents
HCA HEALTHCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(Dollars in millions)
 
March 31,
2020
 
 
December 31,
2019
 
ASSETS
 
 
 
 
 
 
Current assets:
   
     
 
Cash and cash equivalents
 
$
731
 
  $
621
 
Accounts receivable
 
 
6,890
 
   
7,380
 
Inventories
 
 
1,953
 
   
1,849
 
Other
 
 
1,442
 
   
1,346
 
                 
 
 
11,016
 
   
11,196
 
                 
Property and equipment, at cost
 
 
47,861
 
   
47,235
 
Accumulated depreciation
 
 
(24,876
)
   
(24,520
)
                 
 
 
22,985
 
   
22,715
 
                 
Investments of insurance subsidiaries
 
 
325
 
   
315
 
Investments in and advances to affiliates
 
 
238
 
   
249
 
Goodwill and other intangible assets
 
 
8,587
 
   
8,269
 
Right-of-use
operating lease assets
 
 
1,828
 
   
1,834
 
Other
 
 
442
 
   
480
 
                 
 
$
45,421
 
  $
45,058
 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
 
 
 
 
 
 
Current liabilities:
 
 
 
   
 
Accounts payable
 
$
2,750
 
  $
2,905
 
Accrued salaries
 
 
1,560
 
   
1,775
 
Other accrued expenses
 
 
2,547
 
   
2,932
 
Long-term debt due within one year
 
 
162
 
   
145
 
                 
 
 
7,019
 
   
7,757
 
                 
Long-term debt, less debt issuance costs and discounts of $258 and $239
 
 
34,699
 
   
33,577
 
Professional liability risks
 
 
1,432
 
   
1,370
 
Right-of-use
operating lease obligations
 
 
1,497
 
   
1,499
 
Income taxes and other liabilities
 
 
1,477
 
   
1,420
 
                 
Stockholders’ deficit:
 
 
 
   
 
Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding 337,607,500 shares in 2020 and 338,445,600 shares in 2019
 
 
3
 
   
3
 
Accumulated other comprehensive loss
 
 
(571
)
   
(460
)
Retained deficit
 
 
(2,394
)
   
(2,351
)
                 
Stockholders’ deficit attributable to HCA Healthcare, Inc.
 
 
(2,962
)
   
(2,808
)
Noncontrolling interests
 
 
2,259
 
   
2,243
 
                 
 
 
(703
)
   
(565
)
                 
 
$
45,421
 
  $
45,058
 
                 
The accompanying notes are an integral part of the condensed consolidated financial statements.
4

Table of Contents
HCA HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE QUARTERS ENDED MARCH 31, 2020 AND 2019
Unaudited
(Dollars in millions)
 
Equity (Deficit) Attributable to HCA Healthcare, Inc.
   
Equity
Attributable to
Noncontrolling
Interests
 
 
Total
 
 
Common Stock
   
Capital in
Excess of
Par
Value
 
 
Accumulated
Other
Comprehensive
Loss
 
 
Retained
Deficit
 
 
Shares
(in millions)
 
 
Par
Value
 
Balances, December 31, 2018
   
342.895
    $
  3
    $
    $
(381
)   $
(4,572
)   $
2,032
    $
(2,918
)
Comprehensive income
   
     
     
     
7
     
1,039
     
142
     
1,188
 
Repurchase of common stock
   
(2.106
)    
     
32
     
     
(310
)    
     
(278
)
Share-based benefit plans
   
2.242
     
     
(29
)    
     
     
     
(29
)
Cash dividends declared ($0.40 per share)
   
     
     
     
     
(140
)    
     
(140
)
Distributions
   
     
     
     
     
     
(136
)    
(136
)
Other
   
     
     
(3
)    
     
     
61
     
58
 
                                                         
Balances, March 31, 2019
   
343.031
     
3
     
     
(374
)    
(3,983
)    
2,099
     
(2,255
)
Comprehensive income
   
     
     
     
(57
)    
783
     
144
     
870
 
Repurchase of common stock
   
(1.928
)    
     
(107
)    
     
(135
)    
     
(242
)
Share-based benefit plans
   
0.414
     
     
118
     
     
     
     
118
 
Cash dividends declared ($0.40 per share)
   
     
     
     
     
(139
)    
     
(139
)
Distributions
   
     
     
     
     
     
(111
)    
(111
)
Other
   
     
     
(11
)    
     
     
     
(11
)
                                                         
Balances, June 30, 2019
   
341.517
     
3
     
     
(431
)    
(3,474
)    
2,132
     
(1,770
)
Comprehensive income
   
     
     
     
(30
)    
612
     
152
     
734
 
Repurchase of common stock
   
(1.846
)    
     
(132
)    
     
(107
)    
     
(239
)
Share-based benefit plans
   
0.382
     
     
128
     
     
     
     
128
 
Cash dividends declared ($0.40 per share)
   
     
     
     
     
(138
)    
     
(138
)
Distributions
   
     
     
     
     
     
(157
)    
(157
)
Other
   
     
     
4
     
     
     
(9
)    
(5
)
                                                         
Balances, September 30, 2019
   
340.053
     
3
     
     
(461
)    
(3,107
)    
2,118
     
(1,447
)
Comprehensive income
   
     
     
     
1
     
1,071
     
202
     
1,274
 
Repurchase of common stock
   
(2.069
)    
     
(95
)    
     
(177
)    
     
(272
)
Share-based benefit plans
   
0.462
     
     
96
     
     
     
     
96
 
Cash dividends declared ($0.40 per share)
   
     
     
     
     
(138
)    
     
(138
)
Distributions
   
     
     
     
     
     
(138
)    
(138
)
Other
   
     
     
(1
)    
     
     
61
     
60
 
                                                         
Balances, December 31, 2019
   
338.446
     
3
     
     
(460
)    
(2,351
)    
2,243
     
(565
)
Comprehensive income
 
 
 
 
 
 
 
 
 
 
 
(111
)
 
 
581
 
 
 
117
 
 
 
587
 
Repurchase of common stock
 
 
(3.287
)
 
 
 
 
 
35
 
 
 
 
 
 
(476
)
 
 
 
 
 
(441
)
Share-based benefit plans
 
 
2.449
 
 
 
 
 
 
(33
)
 
 
 
 
 
 
 
 
 
 
 
(33
)
Cash dividends declared ($0.43 per share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(148
)
 
 
 
 
 
(148
)
Distributions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(154
)
 
 
(154
)
Other
 
 
 
 
 
 
 
 
(2
)
 
 
 
 
 
 
 
 
53
 
 
 
51
 
                                                         
Balances, March 31, 2020
 
 
337.608
 
 
$
3
 
 
$
 
 
$
(571
)
 
$
(2,394
)
 
$
2,259
 
 
$
(703
)
                                                         
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
5

Table of Contents
HCA HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED MARCH 31, 2020 AND 2019
Unaudited
(Dollars in millions)
                 
 
2020
 
 
2019
 
Cash flows from operating activities:
 
 
 
 
 
 
Net income
 
$
698
 
  $
1,181
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
   
 
Increase (decrease) in cash from operating assets and liabilities:
 
 
 
   
 
Accounts receivable
 
 
464
 
   
(369
)
Inventories and other assets
 
 
(196
)
   
(174
)
Accounts payable and accrued expenses
 
 
(784
)
   
(651
)
Depreciation and amortization
 
 
674
 
   
619
 
Income taxes
 
 
121
 
   
269
 
Losses (gains) on sales of facilities
 
 
(7
)
   
1
 
Losses on retirement of debt
 
 
295
 
   
 
Amortization of debt issuance costs and discounts
 
 
7
 
   
8
 
Share-based compensation
 
 
82
 
   
62
 
Other
 
 
21
 
   
28
 
                 
Net cash provided by operating activities
 
 
1,375
 
   
974
 
                 
Cash flows from investing activities:
 
 
 
 
 
 
Purchase of property and equipment
 
 
(853
)
   
(781
)
Acquisition of hospitals and health care entities
 
 
(328
)
   
(1,474
)
Sales of hospitals and health care entities
 
 
35
 
   
30
 
Change in investments
 
 
(1
)
   
36
 
Other
 
 
2
 
   
24
 
                 
Net cash used in investing activities
 
 
(1,145
)
   
(2,165
)
                 
Cash flows from financing activities:
 
 
 
 
 
 
Issuances of long-term debt
 
 
2,700
 
   
1,500
 
Net change in revolving bank credit facilities
 
 
1,440
 
   
460
 
Repayment of long-term debt
 
 
(3,327
)
   
(49
)
Distributions to noncontrolling interests
 
 
(154
)
   
(136
)
Payment of debt issuance costs
 
 
(34
)
   
(22
)
Payment of dividends
 
 
(152
)
   
(141
)
Repurchases of common stock
 
 
(441
)
   
(278
)
Other
 
 
(141
)
   
(118
)
                 
Net cash (used in) provided by financing activities
 
 
(109
)
   
1,216
 
                 
Effect of exchange rate changes on cash and cash equivalents
 
 
(11
)
   
4
 
                 
Change in cash and cash equivalents
 
 
110
 
   
29
 
Cash and cash equivalents at beginning of period
 
 
621
 
   
502
 
                 
Cash and cash equivalents at end of period
 
$
731
 
  $
531
 
                 
Interest payments
 
$
468
 
  $
580
 
Income tax (refunds) payments, net
 
$
(9
)
  $
10
 
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
6

Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Reporting Entity
HCA Healthcare, Inc. is a holding company whose affiliates own and operate hospitals and related health care entities. The term “affiliates” includes direct and indirect subsidiaries of HCA Healthcare, Inc. and partnerships and joint ventures in which such subsidiaries are partners. At March 31, 2020, these affiliates owned and operated 186 hospitals, 123 freestanding surgery centers and provided extensive outpatient and ancillary services. HCA Healthcare, Inc.’s facilities are located in 21 states and England. The terms “Company,” “HCA,” “we,” “our” or “us,” as used herein and unless otherwise stated or indicated by context, refer to HCA Healthcare, Inc. and its affiliates. The terms “facilities” or “hospitals” refer to entities owned and operated by affiliates of HCA and the term “employees” refers to employees of affiliates of HCA.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form
 10-Q
and Article 10 of Regulation
 S-X.
Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal and recurring nature.
The majority of our expenses are “costs of revenues” items. Costs that could be classified as general and administrative would include our corporate office costs, which were $96 million and $86 million for the quarters ended March 31, 2020 and 2019, respectively. Operating results for the quarter ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. For further information, refer to the consolidated financial statements and footnotes thereto included in our annual report on Form
 10-K
for the year ended December 31, 2019.
COVID-19 Pandemic
On March 11, 2020, the World Health Organization designated
COVID-19
as a global pandemic. Patient volumes and the related revenues for most of our services were significantly impacted in the last two weeks of the first quarter of 2020 as various policies were implemented by federal, state and local governments in response to the
COVID-19
pandemic that have caused many people to remain at home and forced the closure of certain businesses, as well as suspended elective surgical procedures by health care facilities. We expect consolidated patient volumes and revenues to be negatively impacted until the effects of the pandemic begin to subside and the economy begins to stabilize.
Our response plan has multiple facets and continues to evolve as the pandemic unfolds. As a precautionary measure, we have taken steps to enhance our operational and financial flexibility, and react to the risks the
COVID-19
pandemic presents to our business, including the following:
 
Implemented certain cost reduction initiatives;
 
 
 
 
Suspended our authorized share repurchase program;
 
 
 
 
Suspended our quarterly dividend program;
 
 
 
 
Reduced certain planned projects and capital expenditures;
 
 
 
 
  Executed a new $2 billion 364-day term loan facility (which was undrawn at March 31, 2020) to supplement our existing credit facilities;
 and
 
 
 
 
  Subsequent to March 31, 2020, requested accelerated Medicare payments as provided for in the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act
.
 
7

Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
COVID-19 Pandemic (continued)
We believe the extent of the
COVID-19
pandemic’s adverse impact on our operating results and financial condition will be driven by many factors, most of which are beyond our control and ability to forecast. Such factors include, but are not limited to, the scope and duration of
stay-at-home
policies and business closures, continued decreases in patient volumes for an indeterminable length of time, increases in the number of uninsured and underinsured patients as a result of accelerated rates of unemployment, incremental expenses required for supplies and personal protective equipment, and changes in professional and general liability exposure. Because of these and other uncertainties, we cannot estimate the length or severity of the impact of the pandemic on our business. Decreases in cash flows and results of operations may have an impact on the inputs and assumptions used in significant accounting estimates, including estimated implicit price concessions related to uninsured patient accounts, professional and general liability reserves, and potential impairments of goodwill and long-lived assets.
Revenues
Our revenues generally relate to contracts with patients in which our performance obligations are to provide health care services to the patients. Revenues are recorded during the period our obligations to provide health care services are satisfied. Our performance obligations for inpatient services are generally satisfied over periods that average approximately five days, and revenues are recognized based on charges incurred in relation to total expected charges. Our performance obligations for outpatient services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges. Medicare generally pays for inpatient and outpatient services at prospectively determined rates based on clinical, diagnostic and other factors. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discounted
fee-for-service
rates. Our revenues for the quarters ended March 31, 2020 and 2019, respectively, include $55 million related to the settlement of Medicare outlier calculations for prior periods and $86 million related to the resolution of transaction price differences regarding certain
out-of-network
services performed in prior periods. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.
Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual adjustments under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record these revenues at the estimated amounts we expect to collect. Patients treated at our hospitals for non-elective care, who have income at or below 400% of the federal poverty level, are eligible for charity care. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues. Our revenues by primary third-party payer classification and
8

Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenues (continued)
other (including uninsured patients) for the quarters ended March 31, 2020 and 2019 are summarized in the following table (dollars in millions):
                                 
 
2020
 
 
Ratio
 
 
2019
 
 
Ratio
 
Medicare
 
$
2,743
 
 
 
21.3
%
  $
2,770
     
22.1
%
Managed Medicare
 
 
1,826
 
 
 
14.2
 
   
1,589
     
12.7
 
Medicaid
 
 
414
 
 
 
3.2
 
   
347
     
2.8
 
Managed Medicaid
 
 
666
 
 
 
5.2
 
   
613
     
4.9
 
Managed care and insurers
 
 
6,645
 
 
 
51.6
 
   
6,426
     
51.4
 
International (managed care and insurers)
 
 
292
 
 
 
2.3
 
   
297
     
2.4
 
Other
 
 
275
 
 
 
2.2
 
   
475
     
3.7
 
                                 
Revenues
 
$
12,861
 
 
 
100.0
%
  $
12,517
     
100.0
%
                                 
 
 
To quantify the total impact of the trends related to uninsured patient accounts, we believe it is beneficial to view total uncompensated care, which is comprised of charity care, uninsured discounts and implicit price concessions. A summary of the estimated cost of total uncompensated care for the quarters ended March 31, 2020 and 2019 follows (dollars in millions):
                 
 
2020
 
 
2019
 
Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation and amortization)
 
$
11,342
 
  $
10,606
 
Cost-to-charges
ratio (patient care costs as percentage of gross patient charges)
 
 
11.9
%
   
11.8
%
Total uncompensated care
 
$
7,873
 
  $
7,085
 
Multiply by the
cost-to-charges
ratio
 
 
11.9
%
   
11.8
%
                 
Estimated cost of total uncompensated care
 
$
937
 
  $
836
 
                 
 
 
 
 
The total uncompensated care amounts include charity care of $3.735 billion and $2.905 billion, and the related estimated costs of charity care were $444 million and $343 million, for the quarters ended March 31, 2020 and 2019, respectively.
Recent Pronouncements
During March 2020, the Securities and Exchange Commission adopted final rules that amend the financial disclosure requirements in Regulation S-X for subsidiary issuers and guarantors of registered debt securities and for affiliates whose securities are pledged as collateral for registered securities. The new rules are effective January 2021, but earlier compliance is permitted, and we have elected to adopt the new rules effective for the quarter ended March 31, 2020. The new rules permit alternative disclosures of summarized financial information, rather than our previous footnote presentation of condensed consolidating financial statements. The summarized financial information for subsidiary issuers and guarantors may be presented on a combined basis and the periods for which the summarized financial information must be provided has been reduced from all periods presented in the Company’s condensed consolidated financial statements to the most recent fiscal year and applicable
year-to-date
interim period. The new rules permit the summarized financial information and related disclosures to be presented outside of the Company’s condensed consolidated financial statements and accompanying notes.
9

Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Pronouncements (continued)
We are providing the summarized financial information and related disclosures in management’s discussion and analysis included in Item 2 of this Form 10-Q.
The new rules also amend the requirement that a registrant file financial statements of an affiliate whose securities constitute a substantial portion of the collateral for a class of registered securities, and replace it with a requirement to present summarized financial information for the applicable affiliate to the extent material. The new rules provide for the continued application of Rule 3-16 of Regulation S-X for registered securities issued prior to January 4, 2021 where financial statements have not previously been filed under Rule 3-16 for affiliates whose securities are pledged as collateral for such registered securities, including in situations such as ours where the indentures governing such securities include Rule 3-16 collateral release provisions. We are therefore not providing summarized financial information with respect to affiliates whose securities are pledged as collateral for our outstanding senior secured notes.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
NOTE 2 — ACQUISITIONS AND DISPOSITIONS
During the quarter ended March 31, 2020, we paid $328 
million to acquire a hospital in New Hampshire and other nonhospital health care entities. Purchase price amounts have been allocated to the related assets acquired and liabilities assumed based upon their respective fair values. The purchase price paid, including the value of the noncontrolling interests, in excess of the fair value of identifiable net assets of these acquired entities aggregated
 
$
296
 
million for the quarter ended March 31, 2020.
During the quarter ended March 
31
,
2019
, we paid $
1.398
 billion to acquire a
seven
-hospital health system in North Carolina and $
76
 
million to acquire other nonhospital health care entities. The consolidated financial statements include the accounts and operations of the acquired entities subsequent to the respective acquisition dates. The pro forma effects of these acquired entities on our results of operations for periods prior to the respective acquisition dates were not significant.
During the quarter ended March 31, 2020, we received proceeds of $35 million and recognized a pretax gain of $7 million related to sales of real estate and other investments. During the quarter ended March 31, 2019, we received proceeds of $25 million and recognized a pretax loss of $1 million related to a sale of a hospital facility in one of our Louisiana markets. During the quarter ended March 31, 2019, we also received proceeds of $5 million related to sales of real estate and other investments.
NOTE 3 — INCOME TAXES
Our provision for income taxes for the quarters ended March 31, 2020 and 2019 was $112 million and $279 million, respectively, and the effective tax rates were 16.2% and 21.2%, respectively. Our provision for income taxes included tax benefits related to the settlement of employee equity awards of $53 million and $49 million for the quarters ended March 31, 2020 and 2019, respectively.
Our liability for unrecognized tax benefits was $525 million, including accrued interest of $65 million, as of March 31, 2020 ($550 million and $62 million, respectively, as of December 31, 2019). Unrecognized tax benefits of $158 million ($160 million as of December 31, 2019) would affect the effective rate, if recognized.
10

Table of Contents
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 — INCOME TAXES (continued)
The Internal Revenue Service was conducting an examination of the Company’s 2016, 2017 and 2018 federal income tax returns at March 31, 2020. We are also subject to examination by state and foreign taxing authorities. Depending on the resolution of any federal, state and foreign tax disputes, the completion of examinations by federal, state or foreign taxing authorities, or the expiration of statutes of limitation for specific taxing jurisdictions, we believe it is reasonably possible that our liability for unrecognized tax benefits may significantly increase or decrease within the next 12 months. However, we are currently unable to estimate the range of any possible change.
NOTE 4 — EARNINGS PER SHARE
We compute basic earnings per share using the weighted average number of common shares outstanding. We compute diluted earnings per share using the weighted average number of common shares outstanding, plus the dilutive effect of outstanding equity awards and potential shares, computed using the treasury stock method.
The following table sets forth the computation of basic and diluted earnings per share for the quarters ended March 31, 2020 and 2019 (dollars and shares in millions, except per share amounts):
                 
 
2020
 
 
2019
 
Net income attributable to HCA Healthcare, Inc.
 
$
581
 
  $
1,039
 
Weighted average common shares outstanding
 
 
338.242
 
   
342.876
 
Effect of dilutive incremental shares
 
 
5.854
 
   
7.440
 
                 
Shares used for diluted earnings per share
 
 
344.096
 
   
350.316
 
                 
Earnings per share: