10-Q 1 hca-20240331.htm 10-Q 10-Q
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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, 2024

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 (§ 232.405 of this chapter) 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, 2024

Voting common stock, $.01 par value

261,914,100 shares

 

 

 


 

HCA HEALTHCARE, INC.

Form 10-Q

March 31, 2024

 

 

 

Page of
Form 10-Q

Part I.

Financial Information

Item 1.

Financial Statements (Unaudited):

Condensed Consolidated Income Statements — for the quarters ended March 31, 2024 and 2023

3

 

Condensed Consolidated Comprehensive Income Statements — for the quarters ended March 31, 2024 and 2023

4

 

Condensed Consolidated Balance Sheets — March 31, 2024 and December 31, 2023

5

 

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) — for the quarters ended March 31, 2024 and 2023

6

 

Condensed Consolidated Statements of Cash Flows — for the quarters ended March 31, 2024 and 2023

7

 

Notes to Condensed Consolidated Financial Statements

8

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

 

Item 4.

Controls and Procedures

27

Part II.

Other Information

Item 1.

Legal Proceedings

27

 

Item 1A.

Risk Factors

27

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

 

Item 5.

Other Information

28

 

 

 

Item 6.

Exhibits

29

 

Signatures

30

2


 

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS

FOR THE QUARTERS ENDED MARCH 31, 2024 AND 2023

Unaudited

(Dollars in millions, except per share amounts)

 

 

 

2024

 

 

2023

 

Revenues

 

$

17,339

 

 

$

15,591

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

7,707

 

 

 

7,084

 

Supplies

 

 

2,671

 

 

 

2,423

 

Other operating expenses

 

 

3,606

 

 

 

2,894

 

Equity in losses of affiliates

 

 

2

 

 

 

18

 

Depreciation and amortization

 

 

795

 

 

 

756

 

Interest expense

 

 

512

 

 

 

479

 

Losses (gains) on sales of facilities

 

 

(201

)

 

 

15

 

 

 

15,092

 

 

 

13,669

 

Income before income taxes

 

 

2,247

 

 

 

1,922

 

Provision for income taxes

 

 

445

 

 

 

379

 

Net income

 

 

1,802

 

 

 

1,543

 

Net income attributable to noncontrolling interests

 

 

211

 

 

 

180

 

Net income attributable to HCA Healthcare, Inc.

 

$

1,591

 

 

$

1,363

 

Per share data:

 

 

 

 

 

 

Basic earnings

 

$

6.01

 

 

$

4.92

 

Diluted earnings

 

$

5.93

 

 

$

4.85

 

Shares used in earnings per share calculations (in millions):

 

 

 

 

 

 

Basic

 

 

264.435

 

 

 

276.910

 

Diluted

 

 

268.016

 

 

 

280.961

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

3


 

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

FOR THE QUARTERS ENDED MARCH 31, 2024 AND 2023

Unaudited

(Dollars in millions)

 

 

2024

 

 

2023

 

Net income

 

$

1,802

 

 

$

1,543

 

Other comprehensive (loss) income before taxes:

 

 

 

 

 

 

Foreign currency translation

 

 

(8

)

 

 

18

 

Unrealized (losses) gains on available-for-sale securities

 

 

(2

)

 

 

7

 

Other comprehensive (loss) income before taxes

 

 

(10

)

 

 

25

 

Income taxes (benefits) related to other comprehensive income items

 

 

(2

)

 

 

5

 

Other comprehensive (loss) income

 

 

(8

)

 

 

20

 

Comprehensive income

 

 

1,794

 

 

 

1,563

 

Comprehensive income attributable to noncontrolling interests

 

 

211

 

 

 

180

 

Comprehensive income attributable to HCA Healthcare, Inc.

 

$

1,583

 

 

$

1,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

4


 

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(Dollars in millions)

 

 

March 31,
2024

 

 

December 31,
2023

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,284

 

 

$

935

 

Accounts receivable

 

 

10,044

 

 

 

9,958

 

Inventories

 

 

1,903

 

 

 

2,021

 

Other

 

 

2,051

 

 

 

2,013

 

 

 

15,282

 

 

 

14,927

 

 

 

 

 

 

 

 

Property and equipment, at cost

 

 

59,440

 

 

 

58,548

 

Accumulated depreciation

 

 

(31,344

)

 

 

(30,833

)

 

 

28,096

 

 

 

27,715

 

 

 

 

 

 

 

 

Investments of insurance subsidiaries

 

 

471

 

 

 

477

 

Investments in and advances to affiliates

 

 

736

 

 

 

756

 

Goodwill and other intangible assets

 

 

9,967

 

 

 

9,945

 

Right-of-use operating lease assets

 

 

2,211

 

 

 

2,207

 

Other

 

 

199

 

 

 

184

 

 

$

56,962

 

 

$

56,211

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,735

 

 

$

4,233

 

Accrued salaries

 

 

1,759

 

 

 

2,127

 

Other accrued expenses

 

 

3,619

 

 

 

3,871

 

Long-term debt due within one year

 

 

3,028

 

 

 

2,424

 

 

 

13,141

 

 

 

12,655

 

 

 

 

 

 

 

 

Long-term debt, less debt issuance costs and discounts of $381 and $333

 

 

37,163

 

 

 

37,169

 

Professional liability risks

 

 

1,571

 

 

 

1,557

 

Right-of-use operating lease obligations

 

 

1,912

 

 

 

1,903

 

Income taxes and other liabilities

 

 

1,905

 

 

 

1,867

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding 263,215,800 shares — 2024 and 265,537,300 shares — 2023

 

 

3

 

 

 

3

 

Accumulated other comprehensive loss

 

 

(433

)

 

 

(425

)

Retained deficit

 

 

(1,185

)

 

 

(1,352

)

Stockholders’ deficit attributable to HCA Healthcare, Inc.

 

 

(1,615

)

 

 

(1,774

)

Noncontrolling interests

 

 

2,885

 

 

 

2,834

 

 

 

1,270

 

 

 

1,060

 

 

$

56,962

 

 

$

56,211

 

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

5


 

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE QUARTERS ENDED MARCH 31, 2024 AND 2023

Unaudited

(Dollars in millions)

 

 

Equity (Deficit) Attributable to HCA Healthcare, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital

 

 

Accumulated

 

 

 

 

 

Equity

 

 

 

 

 

Common Stock

 

 

in Excess

 

 

Other

 

 

 

 

 

Attributable to

 

 

 

 

 

Shares

 

 

Par

 

 

of Par

 

 

Comprehensive

 

 

Retained

 

 

Noncontrolling

 

 

 

 

 

(in millions)

 

 

Value

 

 

Value

 

 

Loss

 

 

Deficit

 

 

Interests

 

 

Total

 

Balances, December 31, 2022

 

 

277.378

 

 

$

3

 

 

$

 

 

$

(490

)

 

$

(2,280

)

 

$

2,694

 

 

$

(73

)

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

20

 

 

 

1,363

 

 

 

180

 

 

 

1,563

 

Repurchase of common stock

 

 

(3.340

)

 

 

 

 

 

 

 

 

 

 

 

(849

)

 

 

 

 

 

(849

)

Share-based benefit plans

 

 

1.902

 

 

 

 

 

 

 

 

 

 

 

 

(87

)

 

 

 

 

 

(87

)

Cash dividends declared
   ($
0.60 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(168

)

 

 

 

 

 

(168

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(187

)

 

 

(187

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7

)

 

 

40

 

 

 

33

 

Balances, March 31, 2023

 

 

275.940

 

 

 

3

 

 

 

 

 

 

(470

)

 

 

(2,028

)

 

 

2,727

 

 

 

232

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

1,193

 

 

 

219

 

 

 

1,426

 

Repurchase of common stock

 

 

(3.311

)

 

 

 

 

 

 

 

 

 

 

 

(924

)

 

 

 

 

 

(924

)

Share-based benefit plans

 

 

0.303

 

 

 

 

 

 

 

 

 

 

 

 

72

 

 

 

 

 

 

72

 

Cash dividends declared
   ($
0.60 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(165

)

 

 

 

 

 

(165

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(155

)

 

 

(155

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

(27

)

 

 

(25

)

Balances, June 30, 2023

 

 

272.932

 

 

 

3

 

 

 

 

 

 

(456

)

 

 

(1,850

)

 

 

2,764

 

 

 

461

 

Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

(35

)

 

 

1,079

 

 

 

196

 

 

 

1,240

 

Repurchase of common stock

 

 

(4.167

)

 

 

 

 

 

(86

)

 

 

 

 

 

(1,065

)

 

 

 

 

 

(1,151

)

Share-based benefit plans

 

 

0.202

 

 

 

 

 

 

86

 

 

 

 

 

 

15

 

 

 

 

 

 

101

 

Cash dividends declared
   ($
0.60 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(164

)

 

 

 

 

 

(164

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(155

)

 

 

(155

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

29

 

 

 

25

 

Balances, September 30, 2023

 

 

268.967

 

 

 

3

 

 

 

 

 

 

(491

)

 

 

(1,989

)

 

 

2,834

 

 

 

357

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

66

 

 

 

1,607

 

 

 

254

 

 

 

1,927

 

Repurchase of common stock

 

 

(3.647

)

 

 

 

 

 

(86

)

 

 

 

 

 

(832

)

 

 

 

 

 

(918

)

Share-based benefit plans

 

 

0.217

 

 

 

 

 

 

86

 

 

 

 

 

 

 

 

 

 

 

 

86

 

Cash dividends declared
   ($
0.60 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(161

)

 

 

 

 

 

(161

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(143

)

 

 

(143

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

(111

)

 

 

(88

)

Balances, December 31, 2023

 

 

265.537

 

 

 

3

 

 

 

 

 

 

(425

)

 

 

(1,352

)

 

 

2,834

 

 

 

1,060

 

Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

(8

)

 

 

1,591

 

 

 

211

 

 

 

1,794

 

Repurchase of common stock

 

 

(3.894

)

 

 

 

 

 

 

 

 

 

 

 

(1,187

)

 

 

 

 

 

(1,187

)

Share-based benefit plans

 

 

1.573

 

 

 

 

 

 

 

 

 

 

 

 

(68

)

 

 

 

 

 

(68

)

Cash dividends declared
   ($
0.66 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(176

)

 

 

 

 

 

(176

)

Distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(152

)

 

 

(152

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

(8

)

 

 

(1

)

Balances, March 31, 2024

 

 

263.216

 

 

$

3

 

 

$

 

 

$

(433

)

 

$

(1,185

)

 

$

2,885

 

 

$

1,270

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

6


 

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE QUARTERS ENDED MARCH 31, 2024 AND 2023

Unaudited

(Dollars in millions)

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

1,802

 

 

$

1,543

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Increase (decrease) in cash from operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(90

)

 

 

238

 

Inventories and other assets

 

 

77

 

 

 

(214

)

Accounts payable and accrued expenses

 

 

(517

)

 

 

(1,066

)

Depreciation and amortization

 

 

795

 

 

 

756

 

Income taxes

 

 

444

 

 

 

372

 

Losses (gains) on sales of facilities

 

 

(201

)

 

 

15

 

Amortization of debt issuance costs and discounts

 

 

9

 

 

 

9

 

Share-based compensation

 

 

87

 

 

 

77

 

Other

 

 

63

 

 

 

73

 

Net cash provided by operating activities

 

 

2,469

 

 

 

1,803

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,118

)

 

 

(1,197

)

Acquisition of hospitals and health care entities

 

 

(96

)

 

 

(115

)

Sales of hospitals and health care entities

 

 

310

 

 

 

165

 

Change in investments

 

 

2

 

 

 

(13

)

Other

 

 

(1

)

 

 

9

 

Net cash used in investing activities

 

 

(903

)

 

 

(1,151

)

Cash flows from financing activities:

 

 

 

 

 

 

Issuance of long-term debt

 

 

4,483

 

 

 

 

Net change in revolving credit facilities

 

 

(1,880

)

 

 

1,240

 

Repayment of long-term debt

 

 

(2,066

)

 

 

(550

)

Distributions to noncontrolling interests

 

 

(152

)

 

 

(187

)

Payment of debt issuance costs

 

 

(40

)

 

 

(3

)

Payment of dividends

 

 

(185

)

 

 

(175

)

Repurchase of common stock

 

 

(1,180

)

 

 

(846

)

Other

 

 

(196

)

 

 

(204

)

Net cash used in financing activities

 

 

(1,216

)

 

 

(725

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(1

)

 

 

7

 

Change in cash and cash equivalents

 

 

349

 

 

 

(66

)

Cash and cash equivalents at beginning of period

 

 

935

 

 

 

908

 

Cash and cash equivalents at end of period

 

$

1,284

 

 

$

842

 

Interest payments

 

$

538

 

 

$

574

 

Income tax payments, net

 

$

1

 

 

$

7

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

7


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, 2024, these affiliates owned and operated 188 hospitals, 121 freestanding surgery centers, 24 freestanding endoscopy centers and provided extensive outpatient and ancillary services. HCA Healthcare, Inc.’s facilities are located in 20 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 $78 million and $74 million for the quarters ended March 31, 2024 and 2023, respectively. Operating results for the quarter are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. 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, 2023.

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. 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.

8

 


HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenues (continued)

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 and other 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 other (including uninsured patients) for the quarters ended March 31, 2024 and 2023 are summarized in the following table (dollars in millions):

 

2024

 

 

Ratio

 

 

2023

 

 

Ratio

 

Medicare

 

$

2,838

 

 

 

16.4

%

 

$

2,738

 

 

 

17.6

%

Managed Medicare

 

 

3,026

 

 

 

17.4

 

 

 

2,559

 

 

 

16.4

 

Medicaid

 

 

1,000

 

 

 

5.8

 

 

 

735

 

 

 

4.7

 

Managed Medicaid

 

 

978

 

 

 

5.6

 

 

 

913

 

 

 

5.9

 

Managed care and insurers

 

 

8,545

 

 

 

49.2

 

 

 

7,623

 

 

 

48.9

 

International (managed care and insurers)

 

 

412

 

 

 

2.4

 

 

 

375

 

 

 

2.4

 

Other

 

 

540

 

 

 

3.2

 

 

 

648

 

 

 

4.1

 

Revenues

 

$

17,339

 

 

 

100.0

%

 

$

15,591

 

 

 

100.0

%

Managed care and insurers revenues for the quarter ended March 31, 2023 include $145 million related to resolving certain disputed claims from prior years with a commercial payer.

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, 2024 and 2023 follows (dollars in millions):

 

2024

 

 

2023

 

Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation
   and amortization)

 

$

14,779

 

 

$

13,157

 

Cost-to-charges ratio (patient care costs as percentage of gross patient charges)

 

 

10.1

%

 

 

10.4

%

Total uncompensated care

 

$

10,002

 

 

$

7,991

 

Multiply by the cost-to-charges ratio

 

 

10.1

%

 

 

10.4

%

Estimated cost of total uncompensated care

 

$

1,010

 

 

$

831

 

 

The total uncompensated care amounts for the quarters ended March 31, 2024 and 2023 include charity care of $3.978 billion and $3.595 billion, respectively, and the related estimated costs of charity care were $402 million and $374 million, respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

 

9


HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

NOTE 2 — ACQUISITIONS AND DISPOSITIONS

During the quarter ended March 31, 2024, we paid $50 million to acquire two hospital facilities in Texas and $46 million to acquire nonhospital health care entities. During the quarter ended March 31, 2023, we paid $83 million to acquire a hospital facility in Texas and $32 million to acquire nonhospital health care entities. Purchase price amounts are allocated to the related assets acquired and liabilities assumed based upon their respective fair values.

During the quarter ended March 31, 2024, we received proceeds of $297 million and recognized a pretax gain of $193 million for the sale of a hospital facility in California. We also received proceeds of $13 million and recognized a pretax gain of $8 million related to sales of real estate and other health care entity investments. During the quarter ended March 31, 2023, we received proceeds of $163 million for the sale of two hospital facilities in Louisiana. We also received proceeds of $2 million related to sales of real estate and other health care entity investments. We recognized pretax losses of $15 million for these transactions.

NOTE 3 — INCOME TAXES

Our provisions for income taxes for the quarters ended March 31, 2024 and 2023 were $445 million and $379 million, respectively, and the effective tax rate was 21.8% for both periods. Our provisions for income taxes included tax benefits related to settlements of employee equity awards of $69 million and $74 million for the quarters ended March 31, 2024 and 2023, respectively.

Our gross unrecognized tax benefits were $650 million, excluding accrued interest of $189 million, as of March 31, 2024 ($639 million and $177 million, respectively, as of December 31, 2023). Unrecognized tax benefits of $331 million ($320 million as of December 31, 2023) would affect the effective rate, if recognized.

At March 31, 2024, the Internal Revenue Service (“IRS”) was conducting examinations of the Company’s 2016, 2017 and 2018 federal income tax returns and the 2019 returns for certain affiliates. We are also subject to examination by the IRS for tax years after 2019 as well as 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, 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, 2024 and 2023 (dollars and shares in millions, except per share amounts):

 

 

2024

 

 

2023

 

Net income attributable to HCA Healthcare, Inc.

 

$

1,591

 

 

$

1,363

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

264.435

 

 

 

276.910

 

Effect of dilutive incremental shares

 

 

3.581

 

 

 

4.051

 

Shares used for diluted earnings per share

 

 

268.016

 

 

 

280.961

 

Earnings per share:

 

 

 

 

 

 

Basic earnings

 

$

6.01

 

 

$

4.92

 

Diluted earnings

 

$

5.93

 

 

$

4.85

 

 

10


HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

 

NOTE 5 — INVESTMENTS OF INSURANCE SUBSIDIARIES

A summary of our insurance subsidiaries’ investments at March 31, 2024 and December 31, 2023 follows (dollars in millions):

 

 

March 31, 2024

 

 

 

 

 

Unrealized
Amounts

 

 

 

 

 

Amortized
Cost

 

 

Gains

 

 

Losses

 

 

Fair
Value

 

Debt securities

 

$

402

 

 

$

 

 

$

(30

)

 

$

372

 

Money market funds and other

 

 

194

 

 

 

 

 

 

 

 

 

194

 

 

$

596

 

 

$

 

 

$

(30

)

 

 

566

 

Amounts classified as current assets

 

 

 

 

 

 

 

 

 

 

 

(95

)

Investment carrying value

 

 

 

 

 

 

 

 

 

 

$

471

 

 

 

December 31, 2023

 

 

 

 

 

Unrealized
Amounts

 

 

 

 

 

Amortized
Cost

 

 

Gains

 

 

Losses

 

 

Fair
Value

 

Debt securities

 

$

404

 

 

$

1

 

 

$

(29

)

 

$

376

 

Money market funds and other

 

 

188

 

 

 

 

 

 

 

 

 

188

 

 

$

592

 

 

$

1

 

 

$

(29

)

 

 

564

 

Amounts classified as current assets

 

 

 

 

 

 

 

 

 

 

 

(87

)

Investment carrying value

 

 

 

 

 

 

 

 

 

 

$

477

 

 

At March 31, 2024 and December 31, 2023, the investments in debt securities of our insurance subsidiaries were classified as “available-for-sale.” Changes in unrealized gains and losses that are not credit-related are recorded as adjustments to other comprehensive income or loss.

 

Scheduled maturities of investments in debt securities at March 31, 2024 were as follows (dollars in millions):

 

 

Amortized
Cost

 

 

Fair
Value

 

Due in one year or less

 

$

14

 

 

$

14

 

Due after one year through five years

 

 

147

 

 

 

141

 

Due after five years through ten years

 

 

161

 

 

 

143

 

Due after ten years

 

 

80

 

 

 

74

 

 

$

402

 

 

$

372

 

 

The average expected maturity of the investments in debt securities at March 31, 2024 was 5.0 years, compared to the average scheduled maturity of 8.7 years. Expected and scheduled maturities may differ because the issuers of certain securities have the right to call, prepay or otherwise redeem such obligations prior to their scheduled maturity date.

 

11


HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

NOTE 6 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Accounting Standards Codification 820, Fair Value Measurements and Disclosures (“ASC 820”), emphasizes fair value is a market-based measurement, and fair value measurements should be determined based on the assumptions market participants would use in pricing assets or liabilities. ASC 820 utilizes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity.

The investments of our insurance subsidiaries are generally classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

The following tables summarize the investments of our insurance subsidiaries measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, aggregated by the level in the fair value hierarchy within which those measurements fall (dollars in millions):

 

 

March 31, 2024

 

 

 

 

 

Fair Value Measurements Using