HCA Holdings, Inc. (NYSE: HCA) today announced financial and operating results for the year and fourth quarter ended December 31, 2011. HCA also today announced that its Board of Directors approved a special cash dividend of $2.00 per share to be paid to shareholders of record as of February 16, 2012 with a payment date of February 29, 2012.
“We saw continued and favorable growth in patient volumes, advancement in our clinical quality agenda, the acquisition of complementary assets in key markets and efficient operation of our facilities. We believe we are well positioned as we enter 2012.”
Key fourth quarter metrics (all percentage changes compare 4Q 2011 to 4Q 2010 unless noted):
- Revenues increased 8.5 percent to $7.769 billion
- Net income attributable to HCA Holdings, Inc. totaled $1.935 billion, or $4.25 per diluted share, which includes a pretax gain on the acquisition of a controlling interest in an equity investment (HealthONE) of $1.522 billion, or $3.13 per diluted share, and pretax gains on sales of facilities of $145 million, or $0.18 per diluted share
- Adjusted EBITDA increased 13.2 percent to $1.639 billion
- Cash flow from operations increased to $1.387 billion
- Same facility equivalent admissions increased 3.2 percent while same facility admissions increased 2.5 percent
- Same facility revenue per equivalent admission declined 1.0 percent
"The Company had a strong performance in the quarter and for 2011, showing substantial growth in a number of key areas," said Richard M. Bracken, Chairman and Chief Executive Officer. "We saw continued and favorable growth in patient volumes, advancement in our clinical quality agenda, the acquisition of complementary assets in key markets and efficient operation of our facilities. We believe we are well positioned as we enter 2012."
Fourth quarter 2011 revenues increased to $7.769 billion compared to $7.161 billion in the prior year's fourth quarter. Revenue growth was primarily driven by increased patient utilization at the Company's facilities and the financial consolidation (effective November 1, 2011) of the previously announced acquisition of the remaining 40 percent ownership of our HealthONE joint venture. On a consolidated basis, equivalent admissions increased 8.2 percent while admissions increased 7.1 percent compared to the prior year period.
HCA's same facility revenue per equivalent admission declined by 1 percent in the fourth quarter of 2011 primarily due to an unfavorable shift in service mix and a decline of 10.4 percent in Medicaid rate per equivalent admission due to various state funding reductions.
Patient volume trends in the fourth quarter remained strong with same facility equivalent admissions increasing 3.2 percent. Same facility admissions increased 2.5 percent and same facility emergency room visits increased 4.4 percent in the fourth quarter compared to the prior year period. Excluding international facilities, patient volume in the fourth quarter of 2011 experienced continued growth in medical admissions of 4.8 percent, while surgical admissions declined by 1.8 percent on a same facility basis during the quarter.
Net income attributable to HCA Holdings, Inc. totaled $1.935 billion, or $4.25 per diluted share, compared to $283 million, or $0.65 per diluted share, in the fourth quarter of 2010. Results for the fourth quarter of 2011 include a pretax gain on the acquisition of a controlling interest in an equity investment of $1.522 billion, or $3.13 per diluted share, and pretax gains on sales of facilities of $145 million, or $0.18 per diluted share. The Company's effective tax rate in the fourth quarter was favorably impacted by the majority of the gain associated with the acquisition of the controlling interest in the equity investment being nontaxable.
For the fourth quarter of 2011, Adjusted EBITDA totaled $1.639 billion, an increase of 13.2 percent from the previous year's $1.447 billion. Adjusted EBITDA is a non-GAAP financial measure. A table providing supplemental information on Adjusted EBITDA and reconciling net income attributable to HCA Holdings, Inc. to Adjusted EBITDA is included in this release.
HealthONE Acquisition
The Company closed on the purchase of the Colorado Health Foundation's 40 percent ownership of the HealthONE joint venture on October 14, 2011 for $1.45 billion. HealthONE was accounted for using the equity method through October 2011 and on a consolidated basis beginning November 1, 2011.
The $1.522 billion gain recognized by HCA was due to the remeasurement of our previous equity investment in the HealthONE joint venture based upon our acquisition of the Colorado Health Foundation's ownership interest and the resulting consolidation of the entire enterprise at estimated fair value.
Accounting for HITECH Incentive Payments
During the fourth quarter of 2011, HCA recognized $120 million of electronic health record (EHR) incentive income related to the meaningful use of certified EHR technology and approximately $19 million of EHR related expenses. On November 8, 2011, HCA announced that in response to new accounting guidance, it revised its accounting for the recognition of income from EHR incentive payments. EHR incentive income is not included in revenues, but presented as a separate line item in our consolidated income statement. For the year ended December 31, 2011, HCA recorded $210 million in EHR incentive income and $77 million of EHR related expenses. During 2011, the Company received $306 million in EHR incentive cash payments.
Year Ended December 31, 2011
Revenues for the year ended December 31, 2011 totaled $29.682 billion compared to $28.035 billion in 2010. Net income attributable to HCA Holdings, Inc. in 2011 was $2.465 billion, or $4.97 per diluted share, compared to $1.207 billion, or $2.76 per diluted share, for 2010. Results for the year ended December 31, 2011 include a pretax gain on the acquisition of a controlling interest in an equity investment of $1.522 billion, or $2.87 per diluted share, pretax gains on sales of facilities of $142 million, or $0.16 per diluted share, pretax losses on the retirement of debt of $481 million, or $0.61 per diluted share, and a pretax charge for termination of management agreement of $181 million, or $0.30 per diluted share. Results for the year ended December 31, 2010 include pretax impairments of long-lived assets of $123 million, or $0.18 per diluted share, and pretax gains on sales of facilities of $4 million, or $0.01 per diluted share. Adjusted EBITDA for 2011 totaled $6.061 billion compared to $5.868 billion in 2010.
Balance Sheet and Cash Flow
As of December 31, 2011, HCA Holdings, Inc.'s balance sheet reflected cash and cash equivalents of $373 million, total debt of $27.052 billion, and total assets of $26.898 billion. During the fourth quarter, capital expenditures totaled $509 million, excluding acquisitions, compared to $465 million in the previous year's fourth quarter. HCA's debt-to-Adjusted EBITDA ratio at December 31, 2011 was 4.46x compared to 4.81x at December 31, 2010. Net cash provided by operating activities totaled $1.387 billion compared to $534 million in the fourth quarter of 2010. The increase in cash flows from operating activities was primarily due to improved cash flows of $467 million related to income taxes and $388 million related to working capital items.
Special Dividend
HCA also today announced that its Board of Directors has approved a special cash dividend of $2.00 per share to be paid to shareholders of record as of February 16, 2012 with a payment date of February 29, 2012. The dividend is expected to be funded through existing cash and borrowings under the Company's credit facilities.
"We believe that a special dividend provides liquidity to our shareholders while not affecting our ability to invest in our markets or impair our acquisition strategy. Also, the impact of this dividend on the Company's leverage will be modest," stated R. Milton Johnson, HCA President and Chief Financial Officer.