EX-20 3 g78786exv20.txt PRESS RELEASE EXHIBIT 20 HCA NEWS ------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE INVESTOR CONTACT MEDIA CONTACT Mark Kimbrough: 615-344-2688 Jeff Prescott: 615-344-5708 HCA REPORTS 3RD QUARTER 2002 RESULTS EPS INCREASES 40% FOR THE QUARTER TO $0.60 COMPARED TO $0.43 IN 2001 EXCLUDING GOODWILL AMORTIZATION, GAINS ON SALES OF FACILITIES, IMPAIRMENTS AND INVESTIGATION RELATED COSTS Nashville, Tenn., October 21, 2002 - HCA (NYSE: HCA) today announced operating results for the third quarter ended September 30, 2002. "We are pleased to announce excellent results for the Company's third quarter," stated Jack O. Bovender, Jr., Chairman and CEO. "We experienced strong volume trends in virtually all of our markets as evidenced by the 3.4 percent same-facility volume growth in the quarter." During the third quarter, revenues increased 11.1 percent to $4.9 billion compared to $4.4 billion during the third quarter of 2001. Net income excluding goodwill amortization, gains on sales of facilities, impairments and investigation related costs totaled $319 million or $0.60 per diluted share compared to $226 million or $0.43 per diluted share for the same period of 2001. Net income adjusted for goodwill amortization totaled $200 million or $0.38 per diluted share versus $273 million or $0.51 per diluted share in the third quarter of 2001. Same facility revenues increased 12.2 percent during the third quarter. Same facility equivalent admissions grew 3.6 percent, reflecting strong outpatient volume during the quarter, in particular, same facility emergency room visits increased 5.4 percent. Same facility admissions for the quarter increased 3.4 percent. During the third quarter of 2002, the Company recorded an impairment charge on investment securities of $107 million, net of tax, or $0.20 per diluted share. The investment securities on which the impairment charge was recorded were primarily equity securities held by HCA's insurance subsidiary which has total investments of approximately $1.6 billion. These investment securities are routinely marked to market on the balance sheet, with the offsetting entry recorded to other comprehensive income 1 (loss) in the equity section of the balance sheet. Due to the continued overall market decline and management's review and evaluation of the individual investment securities, management deemed the market decline for certain investment securities (predominantly in the technology and communications industries) to be "other-than-temporary" and the related adjustment to fair value for these securities was recognized in the income statement for the quarter ended September 30, 2002. The effect of recognizing this impairment charge has no current impact on cash flows. For the nine months ended September 30, 2002, revenues increased to $14.7 billion, up 9.6 percent, compared to $13.4 billion for 2001. Net income excluding goodwill amortization, settlement charges, gains on sales of facilities, impairments and investigation related costs totaled $1.089 billion or $2.07 per diluted share compared to $863 million or $1.59 per diluted share in 2001. Net income adjusted for goodwill amortization totaled $935 million or $1.78 per diluted share versus $897 million or $1.66 per diluted share for the nine months ended September 30, 2001. At September 30, 2002, the Company's balance sheet reflected total debt of $7.4 billion; stockholders' equity (including common, temporary and minority equity) of $6.3 billion; and total assets of $18.5 billion. The Company's ratio of debt-to-debt plus stockholders' equity was 53.7 percent at September 30, 2002 compared to 56.2 percent at December 31, 2001. The Company's ratio of debt-to-EBITDA improved to 1.95 times at September 30, 2002, down from 2.15 times at December 31, 2001. Cash flows from operations during the third quarter were $740 million. Capital expenditures for the quarter totaled $411 million, up 10.8% from the third quarter of 2001. Return on stockholders' equity for the twelve months ended September 30, 2002 was 24.1 percent, up from last year's 20.3 percent. Return on invested capital was 12.7 percent for the twelve months ended September 30, 2002 an increase from 11.8 percent in 2001. During the quarter, the Company repurchased 6.2 million shares of its common stock at a total cost of $282 million (average cost of $45.53). The Company had 513 million shares outstanding as of September 30, 2002 compared to 515 million shares at September 30, 2001. On October 16, 2002, HCA announced that the Board of Directors of Health Midwest of Kansas City, Missouri voted to conduct exclusive negotiations and enter into an agreement in principle for HCA to acquire the 14-hospital Health Midwest system for $1.125 billion. HCA will also commit to make $450 million in capital investments in the Kansas City market during the next 5 years. "Health Midwest has established a tradition of compassionate, quality care in the greater Kansas City area, and HCA will support and continue that tradition," said Jack O. Bovender, Jr., Chairman and CEO of HCA. "We look forward to becoming an integral part of Kansas City, and to making significant, lasting contributions there - not only through our capital investments, but in the community at large." 2 The Health Midwest acquisition is subject to due diligence, completion of a definitive agreement, and receipt of customary regulatory approval. As of September 30, 2002, the Company operated 181 hospitals and 78 ambulatory surgery centers (including 6 hospitals and 4 ASCs owned through 50/50 equity joint ventures), compared to 189 hospitals and 78 ambulatory surgery centers (including 7 hospitals and 3 ASCs owned through equity joint ventures) as of September 30, 2001. HCA's 181 hospitals and 78 ambulatory surgery centers are located in 22 states; London, England and Geneva, Switzerland; these facilities provided approximately $1.6 billion in uncompensated health care services (charity and bad debts) during the first nine months of 2002. HCA will host a conference call for investors at 8:30 a.m. Central Daylight 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 webcast can be accessed at HTTP://WWW.FIRSTCALLEVENTS.COM/SERVICE/AJWZ365906352GF12.HTML or via the Investor Relations site at WWW.HCAHEALTHCARE.COM. *********** THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS BASED ON CURRENT MANAGEMENT EXPECTATIONS. THOSE FORWARD LOOKING STATEMENTS INCLUDE 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 OUTCOME OF THE KNOWN AND UNKNOWN GOVERNMENTAL INVESTIGATIONS AND LITIGATION INVOLVING THE COMPANY'S BUSINESS PRACTICES, INCLUDING THE ABILITY TO NEGOTIATE, EXECUTE AND TIMELY CONSUMMATE DEFINITIVE SETTLEMENT AGREEMENTS IN THE GOVERNMENT'S CIVIL CASES AND TO OBTAIN COURT APPROVAL THEREOF, (II) THE HIGHLY COMPETITIVE NATURE OF THE HEALTH CARE BUSINESS, (III) THE EFFORTS OF INSURERS, HEALTH CARE PROVIDERS AND OTHERS TO CONTAIN HEALTH CARE COSTS, (IV) POSSIBLE CHANGES IN THE MEDICARE AND MEDICAID PROGRAMS THAT MAY IMPACT REIMBURSEMENTS TO HEALTH CARE PROVIDERS AND INSURERS, (V) CHANGES IN FEDERAL, STATE OR LOCAL REGULATION AFFECTING THE HEALTH CARE INDUSTRY, (VI) THE POSSIBLE ENACTMENT OF FEDERAL OR STATE HEALTH CARE REFORM, (VII) THE ABILITY TO ATTRACT AND RETAIN QUALIFIED MANAGEMENT AND PERSONNEL, INCLUDING AFFILIATED PHYSICIANS, NURSES AND MEDICAL SUPPORT PERSONNEL, (VIII) LIABILITIES AND OTHER CLAIMS ASSERTED AGAINST THE COMPANY, (IX) FLUCTUATIONS IN THE MARKET VALUE OF THE COMPANY'S COMMON STOCK, (X) ABILITY TO COMPLETE THE SHARE REPURCHASE PROGRAM AND TO SETTLE RELATED FORWARD PURCHASE CONTRACTS, (XI) CHANGES IN ACCOUNTING PRACTICES, (XII) CHANGES IN GENERAL ECONOMIC CONDITIONS, (XIII) FUTURE DIVESTITURES WHICH MAY RESULT IN ADDITIONAL CHARGES, (XIV) CHANGES IN REVENUE MIX AND THE ABILITY TO ENTER INTO AND RENEW MANAGED CARE PROVIDER ARRANGEMENTS ON ACCEPTABLE TERMS, (XV) THE AVAILABILITY AND TERMS OF CAPITAL TO FUND THE EXPANSION OF THE COMPANY'S BUSINESS, (XVI) CHANGES IN BUSINESS STRATEGY OR DEVELOPMENT PLANS, (XVII) SLOWNESS OF REIMBURSEMENT, (XVIII) THE ABILITY TO IMPLEMENT THE COMPANY'S SHARED SERVICES AND OTHER INITIATIVES AND REALIZE A DECREASE IN ADMINISTRATIVE, SUPPLY AND INFRASTRUCTURE COSTS, (XIX) THE OUTCOME OF PENDING AND ANY FUTURE TAX AUDITS AND LITIGATION ASSOCIATED WITH THE COMPANY'S TAX POSITIONS, (XX) 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, (XXI) INCREASED REVIEWS OF THE COMPANY'S COST REPORTS, (XXII) THE ABILITY TO MAINTAIN AND INCREASE PATIENT VOLUMES AND CONTROL THE COSTS OF PROVIDING SERVICES, (XXIII) THE ABILITY TO NEGOTIATE A DEFINITIVE AGREEMENT FOR THE ACQUISITION OF HEALTH MIDWEST AND SUCCESSFULLY CONSUMMATE THE ACQUISITION AND INTEGRATE ITS OPERATIONS, AND (XXIV) 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. 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. 3 HCA INC. CONSOLIDATED OPERATING RESULTS SUMMARY (Dollars in millions, except per share amounts)
FOR THE NINE MONTHS THIRD QUARTER ENDED SEPTEMBER 30, ------------------------ ------------------------ 2002 2001 2002 2001 --------- --------- --------- --------- Revenues ................................................................ $ 4,929 $ 4,438 $ 14,705 $ 13,415 EBITDA (a) .............................................................. $ 917 $ 770 $ 2,978 $ 2,618 Net income: Reported net income, excluding settlement with Federal government, gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs ..... $ 319 $ 209 $ 1,089 $ 811 Goodwill amortization (net of tax) .................................... -- 17 -- 52 --------- --------- --------- --------- Adjusted net income, excluding settlement with Federal government, gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs ..... 319 226 1,089 863 Settlement with Federal government (net of tax) ....................... -- -- -- (1) Gains on sales of facilities (net of tax) ............................. -- 68 -- 72 Impairment of investment securities (net of tax) ...................... (107) -- (107) -- Impairment of long-lived assets (net of tax) .......................... -- (10) (18) (10) Investigation related costs (net of tax) .............................. (12) (11) (29) (27) --------- --------- --------- --------- Adjusted net income ................................................... $ 200 $ 273 $ 935 $ 897 ========= ========= ========= ========= Diluted earnings per share: Reported net income, excluding settlement with Federal government, gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs ..... $ 0.60 $ 0.40 $ 2.07 $ 1.49 Goodwill amortization ................................................. -- 0.03 -- 0.10 --------- --------- --------- --------- Adjusted net income, excluding settlement with Federal government, gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs ..... 0.60 0.43 2.07 1.59 Gains on sales of facilities .......................................... -- 0.13 -- 0.13 Impairment of investment securities .................................. (0.20) -- (0.20) -- Impairment of long-lived assets ...................................... -- (0.02) (0.03) (0.02) Investigation related costs .......................................... (0.02) (0.03) (0.06) (0.04) --------- --------- --------- --------- Adjusted net income .................................................. $ 0.38 $ 0.51 $ 1.78 $ 1.66 ========= ========= ========= ========= Shares used in computing diluted earnings per share (000) ............... 527,260 529,491 525,659 543,274
------------------- (a) EBITDA is defined as income before depreciation and amortization, interest expense, settlement with Federal government, gains on sales of facilities, impairment of investment securities, impairment of long-lived assets, investigation related costs, minority interests and income taxes. 4 HCA INC. CONSOLIDATED INCOME STATEMENTS THIRD QUARTER (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2002 2001 ----------------------- ----------------------- AMOUNT RATIO Amount Ratio --------- ----- ------- ------- Revenues ................................................................ $ 4,929 100.0% $ 4,438 100.0% Salaries and benefits ................................................... 1,999 40.6 1,808 40.7 Supplies ................................................................ 795 16.1 712 16.0 Other operating expenses ................................................ 859 17.4 839 18.9 Provision for doubtful accounts ......................................... 411 8.3 364 8.2 Insurance subsidiary gains on sales of investments ...................... (2) -- (15) (0.3) Equity in earnings of affiliates ........................................ (50) (1.0) (40) (0.9) --------- ----- ------- ----- 4,012 81.4 3,668 82.6 --------- ----- ------- ----- EBITDA .............................................................. 917 18.6 770 17.4 Depreciation and amortization ........................................... 253 5.1 255 5.7 Interest expense ........................................................ 111 2.3 137 3.1 Gains on sales of facilities ............................................ -- -- (112) (2.5) Impairment of investment securities ..................................... 168 3.4 -- -- Impairment of long-lived assets ......................................... -- -- 17 0.4 Investigation related costs ............................................. 16 0.3 17 0.4 --------- ----- ------- ----- Income before minority interests and income taxes ....................... 369 7.5 456 10.3 Minority interests in earnings of consolidated entities ................. 34 0.7 33 0.8 --------- ----- ------- ----- Income before income taxes .............................................. 335 6.8 423 9.5 Provision for income taxes .............................................. 135 2.7 167 3.7 --------- ----- ------- ----- Reported net income ..................................................... 200 4.1 256 5.8 Goodwill amortization, net of taxes ..................................... -- -- 17 0.4 --------- ----- ------- ----- Adjusted net income ................................................ $ 200 4.1 $ 273 6.2 ========= ===== ======= ===== Diluted earnings per share: Reported net income, excluding gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs ................................................... $ 0.60 $ 0.40 Goodwill amortization ............................................... -- 0.03 --------- ------- Adjusted net income, excluding gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs ................................................... 0.60 0.43 Gains on sales of facilities ........................................ -- 0.13 Impairment of investment securities ................................. (0.20) -- Impairment of long-lived assets ..................................... -- (0.02) Investigation related costs ......................................... (0.02) (0.03) --------- ------- Adjusted net income ................................................. $ 0.38 $ 0.51 ========= ======= Shares used in computing diluted earnings per share (000) ............... 527,260 529,491
5 HCA INC. CONSOLIDATED INCOME STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
2002 2001 --------------------- ----------------------- AMOUNT RATIO Amount Ratio --------- ----- -------- ----- Revenues ........................................................... $ 14,705 100.0% $ 13,415 100.0% Salaries and benefits .............................................. 5,889 40.0 5,412 40.3 Supplies ........................................................... 2,351 16.0 2,136 15.9 Other operating expenses ........................................... 2,491 17.0 2,435 18.2 Provision for doubtful accounts .................................... 1,150 7.8 990 7.4 Insurance subsidiary (gains) losses on sales of investments ........ 2 -- (54) (0.4) Equity in earnings of affiliates ................................... (156) (1.1) (122) (0.9) --------- ----- -------- ----- 11,727 79.7 10,797 80.5 --------- ----- -------- ----- EBITDA ......................................................... 2,978 20.3 2,618 19.5 Depreciation and amortization ...................................... 752 5.3 774 5.8 Interest expense ................................................... 340 2.3 418 3.1 Settlement with Federal government ................................. -- -- 2 -- Gains on sales of facilities ....................................... -- -- (125) (0.9) Impairment of investment securities ................................ 168 1.1 -- -- Impairment of long-lived assets .................................... 19 0.1 17 0.1 Investigation related costs ........................................ 46 0.3 44 0.3 --------- ----- -------- ----- Income before minority interests and income taxes .................. 1,653 11.2 1,488 11.1 Minority interests in earnings of consolidated entities ............ 111 0.7 92 0.7 --------- ----- -------- ----- Income before income taxes ......................................... 1,542 10.5 1,396 10.4 Provision for income taxes ......................................... 607 4.1 551 4.1 --------- ----- -------- ----- Reported net income ................................................ 935 6.4 845 6.3 Goodwill amortization, net of taxes ................................ -- -- 52 0.4 --------- ----- -------- ----- Adjusted net income ........................................... $ 935 6.4 $ 897 6.7 ========= ===== ======== ===== Diluted earnings per share: Reported net income, excluding settlement with Federal government, gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs ...................... $ 2.07 $ 1.49 Goodwill amortization .......................................... -- 0.10 -------- -------- Adjusted net income, excluding settlement with Federal government, gains on sales of facilities, impairment of investment securities, impairment of long-lived assets and investigation related costs ...................... 2.07 1.59 Gains on sales of facilities ................................... -- 0.13 Impairment of investment securities ............................ (0.20) -- Impairment of long-lived assets ................................ (0.03) (0.02) Investigation related costs .................................... (0.06) (0.04) -------- -------- Adjusted net income ............................................ $ 1.78 $ 1.66 ======== ======== Shares used in computing diluted earnings per share (000) .......... 525,659 543,274
6 HCA INC. CONSOLIDATED BALANCE SHEETS (DOLLARS IN MILLIONS)
SEPTEMBER 30, JUNE 30, DECEMBER 31, 2002 2002 2001 ------------- -------- ------------ ASSETS Current assets: Cash and cash equivalents .................................... $ 138 $ 51 $ 85 Accounts receivable, net ..................................... 2,685 2,639 2,420 Other ........................................................ 1,686 1,668 1,636 --------- --------- --------- Total current assets ..................................... 4,509 4,358 4,141 Property and equipment, at cost ................................ 16,456 16,056 15,222 Accumulated depreciation ....................................... (6,930) (6,728) (6,303) --------- --------- --------- 9,526 9,328 8,919 Investments of insurance subsidiary ............................ 1,384 1,410 1,453 Investments in and advances to affiliates ...................... 667 669 680 Intangible assets, net ......................................... 2,070 2,069 2,051 Other .......................................................... 371 428 486 --------- --------- --------- $ 18,527 $ 18,262 $ 17,730 ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ............................................. $ 742 $ 721 $ 755 Other current liabilities .................................... 1,465 1,354 1,372 Government settlement accrual ................................ 250 250 250 Long-term debt due within one year ........................... 427 789 807 --------- --------- --------- Total current liabilities ................................ 2,884 3,114 3,184 Long-term debt ................................................. 6,933 6,445 6,553 Professional liability risks, deferred taxes and other liabilities ............................................ 2,375 2,370 2,268 Minority interests in equity of consolidated entities .......... 598 578 563 Company-obligated mandatorily redeemable securities of affiliate holding solely Company obligations ................. -- -- 400 Stockholders' equity ........................................... 5,737 5,755 4,762 --------- --------- --------- $ 18,527 $ 18,262 $ 17,730 ========= ========= ========= Current ratio .................................................. 1.56 1.40 1.30 Ratio of debt to debt plus common, temporary and minority equity 53.7% 53.3% 56.2% Shares outstanding (thousands) ................................. 512,526 518,186 509,297
7 HCA INC. OPERATING STATISTICS
FOR THE NINE MONTHS THIRD QUARTER ENDED SEPTEMBER 30, ------------------------------------ ---------------------------------- 2002 2001 2002 2001 ----------- ----------- ---------- ----------- CONSOLIDATED HOSPITALS: Number of Hospitals 175 182 175 182 Weighted Average Licensed Beds 39,998 40,458 39,973 40,752 Licensed Beds at End of Period 40,056 40,450 40,056 40,450 REPORTED: Admissions 392,400 380,800 1,191,100 1,181,300 % Change 3.0% 0.8% Equivalent Admissions 585,200 567,000 1,764,100 1,741,300 % Change 3.2% 1.3% Revenue per Equivalent Admission $ 8,423 $ 7,827 $ 8,336 $ 7,704 % Change 7.6% 8.2% Inpatient Revenue per Admission $ 7,735 $ 7,109 $ 7,630 $ 6,943 % Change 8.8% 9.9% Patient Days 1,921,300 1,873,400 5,909,800 5,851,400 Equivalent Patient Days 2,865,300 2,789,300 8,752,400 8,625,000 Emergency Room Visits 1,211,900 1,160,000 3,616,800 3,511,300 % Change 4.5% 3.0% Outpatient Revenues as a Percentage of Patient Revenues 37.3% 37.3% 37.0% 37.0% Average Length of Stay 4.9 4.9 5.0 5.0 Occupancy 52.2% 50.3% 54.2% 52.6% Equivalent Occupancy 77.7% 74.9% 80.3% 77.5% SAME FACILITY: Admissions 387,700 374,900 1,177,400 1,152,300 % Change 3.4% 2.2% Equivalent Admissions 576,900 556,700 1,741,400 1,695,100 % Change 3.6% 2.7% Revenue per Equivalent Admission $ 8,426 $ 7,780 $ 8,331 $ 7,663 % Change 8.3% 8.7% Inpatient Revenue per Admission $ 7,744 $ 7,133 $ 7,644 $ 6,986 % Change 8.6% 9.4% Emergency Room Visits 1,189,000 1,128,000 3,552,200 3,378,300 % Change 5.4% 5.1% NUMBER OF CONSOLIDATED AND NON-CONSOLIDATED (50/50 EQUITY JOINT VENTURES) HOSPITALS: Consolidated 175 182 175 182 Non-Consolidated (50/50 Equity Joint Ventures) 6 7 6 7 ----------- ----------- ---------- ------------ Total Number of Hospitals 181 189 181 189 =========== =========== ========== ============
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