EX-99 3 g86979exv99.txt EX-99 PRESS RELEASE EXHIBIT 99 HCA NEWS ------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE INVESTOR CONTACT: MEDIA CONTACT: Mark Kimbrough Jeff Prescott 615-344-2688 615-344-5708 HCA REPORTS 2003 RESULTS QUARTERLY DIVIDEND INCREASED FROM $0.02 PER SHARE TO $0.13 PER SHARE Nashville, Tenn., February 3, 2004 - HCA (NYSE: HCA) today announced a dividend increase and operating results for the fourth quarter and year ended December 31, 2003. DIVIDEND HCA's Board of Directors approved an increase in its quarterly dividend from $0.02 per share to $0.13 per share. The Board declared the initial $0.13 per share dividend payable on June 1, 2004 to shareholders of record at May 1, 2004. "The change in the tax law during the past year greatly enhanced the attractiveness of cash dividends as a means of providing increased and more predictable returns to our shareholders. The expected strength of the Company's cash flows should enable us to pay a significantly increased dividend, while continuing to reinvest capital in our markets, strengthen our balance sheet and maintain our historical commitment to share repurchase," stated Jack O. Bovender, Jr., HCA Chairman and CEO. RESULTS FOR 2003 Revenues for the year ended December 31, 2003 increased 10.5 percent to $21.8 billion from $19.7 billion in 2002. Net income for 2003 totaled $1.3 billion, or $2.61 per diluted share, compared to $833 million, or $1.59 per diluted share, in the previous year. Results for 2003 include gains on sales of facilities of $85 million, or $0.10 per diluted share, impairment of long-lived assets of ($130 million), or ($0.16) per diluted share, and investigation related costs of ($8 million), or ($0.01) per diluted share. Results for 2003 also include a favorable $41 million, or $0.05 per diluted share, change in estimate during the fourth quarter related to Medicaid cost report balances for cost report years ended December 31, 1997 and prior. The financial results for 2002 include gains on sales of facilities of $6 million, or $0.01 per diluted share, impairment of investment securities of ($168 million), or ($0.20) per diluted share, impairment of long-lived assets of ($19 million), or ($0.03) per diluted share and investigation related costs of ($58 million), or ($0.07) per diluted share. Results for 2002 also include a fourth quarter government settlement charge of ($603 million), or ($0.80) per diluted share. The Company's consolidated hospital admissions, which include 11 Kansas City area hospitals acquired April 1, 2003, increased 3.3 percent during 2003. Same-facility admissions increased 0.6 percent for the year. Excluding skilled nursing beds and obstetric units closed within the past twelve months, same-facility admissions increased 1.4 percent for the year. During 2003, same-facility revenues increased 7.6 percent, while same-facility revenue per equivalent admission increased 7.5 percent. Capital expenditures, excluding acquisitions, totaled approximately $1.8 billion in 2003. The Company anticipates capital expenditures will approximate $1.8 billion in 2004 and $1.6 billion annually thereafter, excluding acquisitions. 2 HCA's debt-to-total capitalization ratio was 55.8 percent at December 31, 2003, a decrease from the peak during the year of 57.3 percent at July 31, 2003. HCA plans to reduce its debt-to-total capitalization ratio level from the mid-50's to the low 50's or high 40's by mid-to-late 2005. The Company repurchased 31.1 million shares of its common stock at a cost of $1.1 billion (average cost of $35.76 per share) during 2003. Approximately $600 million remains on the April 2003, $1.5 billion share repurchase authorization. Since 1997, HCA has repurchased approximately 234.5 million shares at a cost of $6.9 billion (average cost of $29.51 per share). HCA had 491 million shares outstanding as of December 31, 2003. Share repurchases are expected to remain an integral component of the Company's financial policies. RESULTS FOR FOURTH QUARTER 2003 For the fourth quarter of 2003, revenues increased to $5.6 billion, up 11.4 percent from $5.0 billion in the comparable period of 2002. Net income totaled $317 million, or $0.63 per diluted share, versus a net loss of ($102 million), or ($0.20) per diluted share, for the fourth quarter of 2002. Results for the fourth quarters of 2003 and 2002 include the previously mentioned settlements with government agencies for the favorable change in Medicaid cost report estimates of $41 million, or $0.05 per diluted share, in 2003 and a charge of ($603 million), or ($0.82) per diluted share, in 2002. Fourth quarter 2002 results include gains on sales of facilities of $6 million, or $0.01 per diluted share, and investigation related costs of ($12 million), or ($0.02) per diluted share. The Company's consolidated admissions increased 5.7 percent in the fourth quarter of 2003. Same-facility admissions increased 2.1 percent for the fourth quarter of 2003. Excluding skilled nursing beds and obstetric units closed within the last twelve months, same-facility admissions increased 2.6 percent for the quarter. Same-facility revenues increased 7.4 percent, while same-facility revenue per equivalent admission increased 5.8 percent during the fourth quarter of 2003. 3 Pulmonary or flu-related admissions, which increased 15 percent during the fourth quarter compared to the prior year, represented approximately one-half of the Company's admission growth in the quarter, reflecting the earlier outbreak and increased severity of this year's flu season. The Company's provision for doubtful accounts increased to 11.4 percent of consolidated revenues in the fourth quarter of 2003 compared to 8.6 percent in the fourth quarter of 2002, primarily due to a continuation of trends associated with the growth of uninsured and self-pay accounts and a deterioration in the collectibility of these accounts. In response to the growing number of uninsured in the United States, during 2003 HCA implemented a charity care and financial discount policy to provide financial relief to more of its charity patients and needs-based discounts for uninsured patients who receive non-elective care at its hospitals. In the fourth quarter of 2003, charity care and related discounts totaled $201 million compared to $156 million in the same period of 2002. For the full year 2003, charity care and related discounts totaled $821 million compared to $579 million in 2002. Recent regulatory changes, effective October 1, 2003, resulted in a reduction in the Company's Medicare operating outlier payments which totaled $22 million in the fourth quarter of 2003 compared to $53 million in the fourth quarter of 2002. FACILITIES AT YEAR END At December 31, 2003, the Company operated 191 hospitals and 83 ambulatory surgery centers (including 7 hospitals and 4 ASCs owned through 50/50 equity joint ventures) located in 23 states, London, England and Geneva, Switzerland compared to 179 hospitals and 78 ambulatory surgery centers (including 6 hospitals and 4 ASCs owned through equity joint ventures) at December 31, 2002. 4 EARNINGS CONFERENCE CALL HCA will host a conference call for investors at 8:30 a.m. Central Standard Time today. All interested investors are invited to access a live audio broadcast of the call via webcast. The broadcast also will be available on a replay basis beginning this afternoon and through the next 30 days. The web cast can be accessed at http://www.firstcallevents.com/service/ajwz396776766gf12.html or via the Investor Relations site at www.hcahealthcare.com. ANNUAL SHAREHOLDER MEETING The Company's annual shareholder meeting will be held in Nashville, Tennessee on May 27, 2004 at 1:30 p.m. local time for shareholders of record as of April 1, 2004. # # # This press release contains forward-looking statements based on current management expectations. Those forward-looking statements include all statements regarding our estimated results of operations in future periods and all statements other than those made solely with respect to historical fact. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those expressed in any forward-looking statements. These factors include, but are not limited to (i) the highly competitive nature of the health care business, (ii) the efforts of insurers, health care providers and others to contain health care costs, (iii) possible changes in the Medicare and Medicaid programs that may impact reimbursements to health care providers and insurers, (iv) the ability to achieve operating and financial targets and achieve expected levels of patient volumes and control the costs of providing services, (v) increases in the amount and risk of collectibility of uninsured accounts and deductibles and co-pay amounts for insured accounts, (vi) the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical support personnel, (vii) potential liabilities and other claims that may be asserted against the Company, (viii) fluctuations in the market value of the Company's common stock, (ix) the Company's ability to complete the share 5 repurchase program, (x) changes in accounting practices, (xi) changes in general economic conditions, (xii) future divestitures which may result in additional charges, (xiii) changes in revenue mix and the ability to enter into and renew managed care provider arrangements on acceptable terms, (xiv) the availability and terms of capital to fund the expansion of the Company's business, (xv) changes in business strategy or development plans, (xvi) delays in receiving payments for services provided, (xvii) the possible enactment of Federal or state health care reform, (xviii) the outcome of pending and any future tax audits and litigation associated with the Company's tax positions, (xix) the outcome of the Company's continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures and the Company's corporate integrity agreement with the government, (xx) changes in Federal, state or local regulations affecting the health care industry, (xxi) the impact of charity care and self-pay discounting policy changes, (xxii) the ability to successfully integrate the operations of Health Midwest, (xxiii) the ability to develop and implement the financial enterprise resource planning information system within the expected time and cost projections and, upon implementation, to realize the expected benefits and efficiencies, (xxiv) the ability to obtain court approval of the settlement of the class action securities lawsuits originally filed against the Company in 1997; (xxv) the ability of the Company to continue to fund a cash dividend in the future at the current rate; and (xxvi) other risk factors detailed from time to time in the Company's filings with the SEC. Many of the factors that will determine the Company's future results are beyond the ability of the Company 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. The Company undertakes 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 document refer to HCA Inc. and its affiliates. 6 HCA INC. SUPPLEMENTAL OPERATING RESULTS INFORMATION (Dollars in millions, except per share amounts)
FOR THE YEARS FOURTH QUARTER ENDED DECEMBER 31, ----------------------- ----------------------- 2003 2002 2003 2002 --------- --------- --------- --------- Revenues ........................................................... $ 5,597 $ 5,024 $ 21,808 $ 19,729 Net income (loss) .................................................. $ 317 $ (102) $ 1,332 $ 833 Settlement with government agencies (net of tax) ............ (25) 418 (25) 418 Gains on sales of facilities (net of tax) ................... -- (4) (49) (4) Impairment of investment securities (net of tax) ............ -- -- -- 107 Impairment of long-lived assets (net of tax) ................ -- -- 79 18 Investigation related costs (net of tax) .................... -- 8 6 37 --------- --------- --------- --------- Net income, excluding settlement with government agencies, gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs (a) .................................. 292 320 1,343 1,409 Depreciation and amortization ............................... 290 258 1,112 1,010 Interest expense ............................................ 127 106 491 446 Minority interests in earnings of consolidated entities ..... 30 37 150 148 Provision for income taxes .................................. 170 202 825 888 --------- --------- --------- --------- Adjusted EBITDA (a) ................................................ $ 909 $ 923 $ 3,921 $ 3,901 ========= ========= ========= ========= Diluted earnings per share: Net income (loss) ........................................... $ 0.63 $ (0.20) $ 2.61 $ 1.59 Settlement with government agencies ......................... (0.05) 0.82 (0.05) 0.80 Gains on sales of facilities ................................ -- (0.01) (0.10) (0.01) Impairment of investment securities ......................... -- -- -- 0.20 Impairment of long-lived assets ............................. -- -- 0.16 0.03 Investigation related costs ................................. -- 0.02 0.01 0.07 --------- --------- --------- --------- Net income, excluding settlement with government agencies, gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs (a) ................ $ 0.58 $ 0.63 $ 2.63 $ 2.68 ========= ========= ========= ========= Shares used in computing diluted earnings per share (000) .......... 501,373 511,655 510,874 525,219
--------- (a) Net income, excluding settlement with government agencies, gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs, and adjusted EBITDA, are non-GAAP financial measures. The Company believes that net income, excluding certain measures required to be disclosed by GAAP, and adjusted EBITDA are important operating measures that supplement discussions and analysis of the Company's results of operations. The Company believes that it is useful to investors to provide disclosures of its results of operations on the same basis as that used by management. HCA's management relies upon net income, excluding certain measures required to be disclosed by GAAP, and adjusted EBITDA as the primary measures to review and assess operating performance of its hospital facilities and their management teams. Management and investors review both the Company's overall performance (including net income, excluding certain measures required to be disclosed by GAAP, GAAP net income and GAAP EPS) and the operating performance of the Company's health care facilities (adjusted EBITDA). Adjusted EBITDA and the adjusted EBITDA margin (adjusted EBITDA divided by revenues) are utilized by management and investors to compare the Company's current operating results with the corresponding periods during the previous year and to compare the Company's operating results with other companies in the health care industry. The Company has incurred significant settlement adjustments and charges, asset and investment impairments, gains on sales of facilities and investigation related costs during the twelve months ended December 31, 2003 and 2002 and it is reasonable to expect that asset impairment charges and gains on sales of facilities will occur in future periods, but the amounts recognized for these items can vary significantly from quarter to quarter, do not directly relate to the ongoing operations of the Company's health care facilities and complicate quarterly operations comparisons of the Company's results of operations and operations comparisons with other health care companies. The Company does not currently expect to incur settlement adjustments and charges and investigation related costs in future periods. The nature and materiality of these charges have significant effects on the ability of an investor to compare the operating results of the Company's hospital facilities from period to period and to compare the Company's operating results with other companies in the industry. Net income, excluding certain measures required to be disclosed by GAAP, and adjusted EBITDA are not measures of financial performance under accounting principles generally accepted in the United States, and should not be considered as alternatives to net income as a measure of operating performance or to cash flows from operating, investing and financing activities as a measure of liquidity. Because net income, excluding certain measures required to be disclosed by GAAP, and adjusted EBITDA are not measurements determined in accordance with generally accepted accounting principles and are susceptible to varying calculations, net income, excluding certain measures required to be disclosed by GAAP, and adjusted EBITDA, as presented, may not be comparable to other similarly titled measures presented by other companies. 7 HCA INC. CONDENSED CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2003 2002 --------------------- --------------------- AMOUNT RATIO Amount Ratio --------- ----- --------- ----- Revenues .................................................... $ 21,808 100.0% $ 19,729 100.0% Salaries and benefits ....................................... 8,682 39.8 7,952 40.3 Supplies .................................................... 3,522 16.2 3,158 16.0 Other operating expenses .................................... 3,676 16.8 3,341 16.9 Provision for doubtful accounts ............................. 2,207 10.1 1,581 8.0 Insurance subsidiary losses on sales of investments ......... (1) -- 2 -- Equity in earnings of affiliates ............................ (199) (0.9) (206) (1.0) Depreciation and amortization ............................... 1,112 5.1 1,010 5.0 Interest expense ............................................ 491 2.3 446 2.3 Settlement with government agencies ......................... (41) (0.2) 603 3.1 Gains on sales of facilities ................................ (85) (0.4) (6) -- Impairment of investment securities ......................... -- -- 168 0.9 Impairment of long-lived assets ............................. 130 0.6 19 0.1 Investigation related costs ................................. 8 -- 58 0.3 --------- ----- --------- ----- 19,502 89.4 18,126 91.9 --------- ----- --------- ----- Income before minority interests and income taxes ........... 2,306 10.6 1,603 8.1 Minority interests in earnings of consolidated entities ..... 150 0.7 148 0.7 --------- ----- --------- ----- Income before income taxes .................................. 2,156 9.9 1,455 7.4 Provision for income taxes .................................. 824 3.8 622 3.2 --------- ----- --------- ----- Net income ............................................. $ 1,332 6.1 $ 833 4.2 ========= ===== ========= ===== Diluted earnings per share .................................. $ 2.61 $ 1.59 Shares used in computing diluted earnings per share (000) ... 510,874 525,219
8 HCA INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOURTH QUARTER (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2003 2002 ---------------------- ---------------------- AMOUNT RATIO Amount Ratio -------- ----- -------- ----- Revenues .................................................... $ 5,597 100.0% $ 5,024 100.0% Salaries and benefits ....................................... 2,219 39.6 2,063 41.1 Supplies .................................................... 925 16.5 807 16.1 Other operating expenses .................................... 945 16.9 850 16.8 Provision for doubtful accounts ............................. 636 11.4 431 8.6 Insurance subsidiary gains on sales of investments .......... (1) -- -- -- Equity in earnings of affiliates ............................ (36) (0.6) (50) (1.0) Depreciation and amortization ............................... 290 5.1 258 5.2 Interest expense ............................................ 127 2.3 106 2.1 Settlement with government agencies ......................... (41) (0.7) 603 12.0 Gains on sales of facilities ................................ -- -- (6) (0.1) Investigation related costs ................................. -- -- 12 0.2 -------- ----- -------- ----- 5,064 90.5 5,074 101.0 -------- ----- -------- ----- Income (loss) before minority interests and income taxes .... 533 9.5 (50) (1.0) Minority interests in earnings of consolidated entities ..... 30 0.5 37 0.7 -------- ----- -------- ----- Income (loss) before income taxes ........................... 503 9.0 (87) (1.7) Provision for income taxes .................................. 186 3.3 15 0.3 -------- ----- -------- ----- Net income (loss) ...................................... $ 317 5.7 $ (102) (2.0) ======== ===== ======== ===== Diluted earnings (loss) per share ........................... $ 0.63 $ (0.20) Shares used in computing diluted earnings per share (000) ... 501,373 511,655
9 HCA INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN MILLIONS)
DECEMBER 31, SEPTEMBER 30, DECEMBER 31, 2003 2003 2002 ------------ ------------- ------------ ASSETS Current assets: Cash and cash equivalents ........................... $ 115 $ 182 $ 161 Accounts receivable, net ............................ 3,095 2,924 2,788 Inventories ......................................... 520 491 462 Deferred income taxes ............................... 534 494 568 Other ............................................... 558 720 526 --------- --------- --------- Total current assets ........................... 4,822 4,811 4,505 Property and equipment, at cost .......................... 18,685 18,167 16,800 Accumulated depreciation ................................. (7,620) (7,561) (7,079) --------- --------- --------- 11,065 10,606 9,721 Investments of insurance subsidiary ...................... 1,790 1,668 1,355 Investments in and advances to affiliates ................ 527 666 679 Goodwill ................................................. 2,481 2,489 1,994 Deferred loan costs ...................................... 75 72 67 Other .................................................... 303 334 420 --------- --------- --------- $ 21,063 $ 20,646 $ 18,741 ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable .................................... $ 877 $ 749 $ 809 Accrued salaries .................................... 510 493 438 Other accrued expenses .............................. 1,116 1,120 1,113 Government settlement accrual ....................... -- -- 933 Long-term debt due within one year .................. 665 502 446 --------- --------- --------- Total current liabilities ...................... 3,168 2,864 3,739 Long-term debt ........................................... 8,042 8,278 6,497 Professional liability risks ............................. 1,314 1,332 1,193 Deferred income taxes and other liabilities .............. 1,650 1,378 999 Minority interests in equity of consolidated entities .... 680 678 611 Stockholders' equity ..................................... 6,209 6,116 5,702 --------- --------- --------- $ 21,063 $ 20,646 $ 18,741 ========= ========= ========= Current ratio ............................................ 1.52 1.68 1.20 Ratio of debt to debt plus common and minority equity .... 55.8% 56.4% 52.4% Shares outstanding (thousands) ........................... 490,718 496,643 514,176
10 HCA INC. OPERATING STATISTICS
FOR THE YEARS FOURTH QUARTER ENDED DECEMBER 31, ------------------------------- ------------------------------- 2003 2002 2003 2002 ----------- ----------- ----------- ----------- CONSOLIDATED HOSPITALS: Number of Hospitals 184 173 184 173 Weighted Average Licensed Beds 42,011 40,020 41,568 39,985 Licensed Beds at End of Period 42,108 39,932 42,108 39,932 REPORTED: Admissions 414,000 391,700 1,635,200 1,582,800 % Change 5.7% 3.3% Equivalent Admissions 606,600 575,300 2,405,400 2,339,400 % Change 5.4% 2.8% Revenue per Equivalent Admission $ 9,228 $ 8,733 $ 9,066 $ 8,434 % Change 5.7% 7.5% Inpatient Revenue per Admission $ 8,348 $ 7,937 $ 8,224 $ 7,706 % Change 5.2% 6.7% Patient Days 2,066,200 1,941,100 8,115,400 7,850,900 Equivalent Patient Days 3,027,300 2,851,200 11,937,800 11,603,600 Emergency Room Visits 1,359,400 1,186,000 5,130,500 4,802,800 % Change 14.6% 6.8% Outpatient Revenues as a Percentage of Patient Revenues 37.1% 37.1% 37.2% 37.0% Average Length of Stay 5.0 5.0 5.0 5.0 Occupancy 53.5% 52.7% 53.5% 53.8% Equivalent Occupancy 78.5% 77.6% 78.7% 79.5% SAME FACILITY: Admissions 396,900 388,700 1,580,600 1,570,500 % Change 2.1% 0.6% Equivalent Admissions 580,200 571,700 2,320,400 2,319,700 % Change 1.5% 0.0% Revenue per Equivalent Admission $ 9,187 $ 8,685 $ 9,037 $ 8,405 % Change 5.8% 7.5% Inpatient Revenue per Admission $ 8,463 $ 7,949 $ 8,311 $ 7,712 % Change 6.5% 7.8% Emergency Room Visits 1,301,300 1,176,600 4,956,700 4,755,500 % Change 10.6% 4.2% NUMBER OF CONSOLIDATED AND NON-CONSOLIDATED (50/50 EQUITY JOINT VENTURES) HOSPITALS: Consolidated 184 173 184 173 Non-Consolidated (50/50 Equity Joint Ventures) 7 6 7 6 ----------- ----------- ----------- ----------- Total Number of Hospitals 191 179 191 179 =========== =========== =========== ===========
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