HCA(US:HCA)2024-07-29 20:30Part I. Financial Information Item 1. Financial Statements This section presents HCA Healthcare's unaudited condensed consolidated financial statements for periods ended June 30, 2024, detailing income, balance sheet, cash flows, and equity, with notes on accounting policies and key activities Condensed Consolidated Income Statements Revenues for Q2 2024 increased to $17.49 billion, a 10.3% rise from Q2 2023, with net income attributable to HCA growing to $1.46 billion, or $5.53 per diluted share Q2 Financial Performance (2024 vs. 2023) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $17,492 M | $15,861 M | +10.3% | | Net Income Attributable to HCA | $1,461 M | $1,193 M | +22.5% | | Diluted EPS | $5.53 | $4.29 | +28.9% | Six Months Financial Performance (2024 vs. 2023) | Metric | Six Months 2024 | Six Months 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues | $34,831 M | $31,452 M | +10.7% | | Net Income Attributable to HCA | $3,052 M | $2,556 M | +19.4% | | Diluted EPS | $11.47 | $9.14 | +25.5% | Condensed Consolidated Balance Sheets As of June 30, 2024, total assets were $57.38 billion, total debt stood at $40.88 billion, and stockholders' deficit improved to $1.60 billion Balance Sheet Summary (in millions) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $15,173 | $14,927 | | Total Assets | $57,379 | $56,211 | | Total Current Liabilities | $14,301 | $12,655 | | Long-term Debt | $36,306 | $37,169 | | Stockholders' Deficit (HCA) | ($1,600) | ($1,774) | Condensed Consolidated Statements of Cash Flows Net cash from operating activities for the first six months of 2024 was $4.44 billion, with significant cash used in investing and financing activities, including share repurchases and dividends Six-Month Cash Flow Summary (in millions) | Activity | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Net Cash from Operations | $4,440 | $4,278 | | Net Cash used in Investing | ($2,235) | ($2,408) | | Net Cash used in Financing | ($2,309) | ($1,923) | | Change in Cash | ($104) | ($46) | - Key financing activities in the first six months of 2024 included $2.55 billion in share repurchases and $356 million in dividend payments46 Notes to Condensed Consolidated Financial Statements The notes detail accounting policies and financial activities, including revenue recognition, acquisitions, debt, and segment performance, with the company operating 188 hospitals and other facilities - As of June 30, 2024, HCA and its affiliates owned and operated 188 hospitals, 123 freestanding surgery centers, and 23 freestanding endoscopy centers across 20 states and England49 Revenue by Payer - Six Months Ended June 30 (in millions) | Payer | 2024 | % of Total | 2023 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Managed care and insurers | $17,094 | 49.0% | $15,453 | 49.2% | | Managed Medicare | $5,939 | 17.0% | $5,100 | 16.2% | | Medicare | $5,459 | 15.7% | $5,305 | 16.9% | | Medicaid | $2,108 | 6.1% | $1,477 | 4.7% | | Managed Medicaid | $2,011 | 5.8% | $1,807 | 5.7% | | Other | $1,392 | 4.0% | $1,558 | 4.9% | | International | $828 | 2.4% | $752 | 2.4% | | Total Revenues | $34,831 | 100.0% | $31,452 | 100.0% | - The estimated cost of total uncompensated care for the first six months of 2024 was $2.08 billion, up from $1.73 billion in the same period of 20233054 - During the first six months of 2024, the company paid $50 million to acquire two hospitals in Texas and $81 million for nonhospital entities, while receiving $297 million from the sale of a California hospital3183 - In February 2024, HCA issued $4.5 billion in senior notes and in March 2024, repaid $2.0 billion of senior notes at maturity67 - The company repurchased 8.111 million shares of common stock in the first six months of 2024, with $4.228 billion remaining available under the January 2024 repurchase authorization97 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2024 financial results, highlighting a 10.3% Q2 revenue increase driven by admissions and revenue per admission, covering revenue, volume, expenses, liquidity, and market risks Results of Operations For Q2 2024, revenue grew 10.3% year-over-year, driven by increased admissions and revenue per admission, with net income rising 22.5% and improved salary and benefits as a percentage of revenue Key Performance Indicators - Q2 2024 vs Q2 2023 (% Change) | Metric | Consolidated Change | Same Facility Change | | :--- | :--- | :--- | | Revenues | +10.3% | +9.9% | | Admissions | +6.0% | +5.8% | | Equivalent Admissions | +6.0% | +5.2% | | Revenue per Equivalent Admission | +4.1% | +4.4% | - Salaries and benefits as a percentage of revenues improved to 43.9% in Q2 2024 from 45.9% in Q2 2023, primarily due to a 25.7% year-over-year decline in contract labor costs116 - Other operating expenses increased as a percentage of revenue to 20.7% in Q2 2024 from 19.2% in Q2 2023, mainly due to higher costs for professional fees and state provider fees117 - The effective tax rate for Q2 2024 was 27.4%, up from 24.9% in Q2 2023, primarily due to adjustments to the liability for unrecognized tax benefits169 Revenue/Volume Trends In Q2 2024, consolidated admissions grew by 6.0% and emergency department visits increased by 5.3%, with the estimated cost of total uncompensated care rising to $1.07 billion Volume Trends - Q2 2024 vs Q2 2023 (Consolidated % Change) | Metric | % Change | | :--- | :--- | | Admissions | +6.0% | | Emergency Department Visits | +5.3% | | Inpatient Surgeries | +2.6% | | Outpatient Surgeries | -1.8% | | Uninsured Admissions | +4.0% | - The estimated cost of total uncompensated care rose to $1.072 billion in Q2 2024 from $899 million in Q2 2023, and for the first six months, it was $2.082 billion in 2024 compared to $1.730 billion in 2023109133 - Hospitals in Texas and Florida generated 51% of the company's revenues and 59% of its admissions in Q2 2024111 Liquidity and Capital Resources The company generated $4.44 billion in cash from operations in H1 2024, with planned capital expenditures of $5.1 to $5.3 billion for the full year, confirming sufficient liquidity - Cash provided by operating activities for the first six months of 2024 was $4.440 billion, an increase of $162 million from the prior year period124 - Capital expenditures are planned to be between $5.1 billion and $5.3 billion for the full year 2024124 - As of June 30, 2024, HCA had $7.137 billion available under its senior secured credit facilities124 - Management confirms that cash flows from operations, available credit, and access to debt markets are expected to be sufficient to meet liquidity needs for the foreseeable future177 Item 3. Quantitative and Qualitative Disclosures About Market Risk HCA is exposed to market risks from interest rate changes on its variable-rate debt and market value fluctuations of securities held by its insurance subsidiaries, with a hypothetical 1% interest rate increase reducing pretax earnings by $21 million annually - The company is exposed to interest rate risk, with $2.125 billion of its debt subject to variable rates as of June 30, 2024178 - A hypothetical 1% increase in interest rates would result in an estimated potential annualized reduction to future pretax earnings of approximately $21 million178 - Investments held by insurance subsidiaries, valued at $587 million, are exposed to market value and illiquidity risks, with $31 million in unrealized losses as of June 30, 2024178 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control over financial reporting - The CEO and CFO concluded that HCA's disclosure controls and procedures were effective as of June 30, 2024184 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls185 Part II. Other Information Item 1. Legal Proceedings The company operates in a highly regulated and litigious industry, subject to various lawsuits, claims, and governmental investigations, including whistleblower suits, which could materially affect financial results - As a healthcare company, HCA is subject to numerous lawsuits, claims, and legal proceedings, including government investigations and whistleblower suits, which are inherent to the industry96160 Item 1A. Risk Factors No material changes were reported to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes were reported to the risk factors disclosed in the 2023 Annual Report on Form 10-K161 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2024, HCA repurchased 4.22 million shares for $1.37 billion, with $4.228 billion remaining under authorization, and declared a quarterly dividend of $0.66 per share Share Repurchases - Q2 2024 | Month | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | April 2024 | 1,306,069 | $321.58 | | May 2024 | 1,784,870 | $317.63 | | June 2024 | 1,125,922 | $337.51 | | Total Q2 | 4,216,861 | $324.16 | - As of June 30, 2024, $4.228 billion of repurchase authorization was available under the January 2024 program162 - On July 22, 2024, the Board of Directors declared a quarterly dividend of $0.66 per share, payable on September 30, 2024163 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial statements formatted in Inline XBRL - The exhibits include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and financial data formatted in Inline XBRL165192