HCA second-quarter revenues increase 3.7% to $7.756 billion

HCA Inc. today announced financial and operating results for its second quarter ended June 30, 2010.

Second Quarter Summary:

• Revenues increased 3.7 percent to $7.756 billion, compared to $7.483 billion in the second quarter of 2009.  Charity care and uninsured discounts, which reduce our reported revenues, increased to $1.670 billion in the second quarter compared to $1.190 billion in the prior year's second quarter.
• Net income attributable to HCA Inc. increased 3.4 percent to $293 million, compared to $282 million in the prior year's second quarter.
• Adjusted EBITDA increased 6.5 percent to $1.490 billion, compared to $1.399 billion in the second quarter of 2009.
• Provision for doubtful accounts declined to $788 million, from $866 million in the prior year.
• Interest expense increased to $530 million, from $506 million in the second quarter of 2009.
• Same facility equivalent admissions increased 1.6 percent, and same facility admissions declined 0.3 percent in the second quarter compared to the second quarter of 2009.
• Same facility revenue per equivalent admission increased 2.2 percent and reflects the impact of the increased charity care and uninsured discounts.  Same facility cash revenue per equivalent admission increased 3.7 percent in the quarter compared to the prior year.
• Total surgeries, on a same facility basis, declined 1.4 percent from the previous year's second quarter.

Revenues in the second quarter of 2010 totaled $7.756 billion, compared to $7.483 billion in the second quarter of 2009.  Cash revenues increased 5.3 percent in the second quarter to $6.968 billion from $6.617 billion in the same period last year.  Cash revenues is a non-GAAP measure and reflects the Company's reported revenues less the provision for doubtful accounts (bad debt).   Net income attributable to HCA Inc. for the second quarter of 2010 totaled $293 million, compared to $282 million in the prior year's second quarter.  Adjusted EBITDA in the quarter increased by 6.5 percent to $1.490 billion, compared to $1.399 billion in the previous year's second quarter.  Tables describing Adjusted EBITDA and cash revenues and reconciling net income attributable to HCA Inc. to Adjusted EBITDA, and reported revenues to cash revenues, are included in this release.  Results for the second quarter of 2010 include impairments of long-lived assets of $91 million while results for the second quarter of 2009 include losses on sales of facilities of $3 million and impairments of long-lived assets of $4 million.

The Company's provision for doubtful accounts declined to $788 million, or 10.2 percent of revenues, in the second quarter of 2010 from $866 million, or 11.6 percent of revenues, in the second quarter of 2009, primarily due to a $480 million increase in charity care and uninsured discounts in the second quarter of 2010 compared to the prior year.

The sum of the provision for doubtful accounts, uninsured discounts and charity care, as a percentage of the sum of revenues, uninsured discounts and charity care was 26.1 percent for the second quarter of 2010 compared to 23.7 percent for the second quarter of 2009.  Same facility uninsured admissions increased 2.1 percent in the second quarter of 2010 compared to the prior year's second quarter.  Same facility uninsured admissions comprised 6.8 percent of total admissions in the second quarter of 2010 compared to 6.6 percent in the second quarter of 2009.

During the second quarter of 2010, salaries and benefits, supplies and other operating expenses totaled $5.553 billion, or 71.6 percent of revenues, compared to $5.279 billion, or 70.5 percent of revenues, in the second quarter of 2009.  

Interest expense increased to $530 million in the second quarter of 2010, compared to $506 million in the same period of 2009, due to small increases in both the average debt balance and the average effective interest rate on our outstanding debt.

Same facility admissions declined 0.3 percent and same facility equivalent admissions increased 1.6 percent in the second quarter of 2010 compared to the prior year's second quarter.  Same facility inpatient surgeries declined 2.1 percent and same facility outpatient surgeries declined 0.9 percent in the second quarter of 2010 compared to the second quarter of 2009.  Same facility revenue per equivalent admission increased 2.2 percent in the first quarter of 2010 compared to the second quarter of 2009 and reflects the impact of the increased uninsured discounts and charity care, which reduce our reported revenues.  Same facility cash revenue per equivalent admission increased 3.7 percent in the second quarter of 2010 compared to the second quarter of 2009.

Revenues for the six months ended June 30, 2010 totaled $15.300 billion compared to $14.914 billion for the same period of 2009.  Net income attributable to HCA Inc. was $681 million for the six months ended June 30, 2010 compared to $642 million in the prior year.  Adjusted EBITDA totaled $3.064 billion for the first half of 2010 compared to $2.856 billion for the same period of 2009.  Results for the six months ended June 30, 2010 include impairments of long-lived assets of $109 million, compared to losses on sales of facilities of $8 million and impairments of long-lived assets of $13 million in the first half of 2009.

As of June 30, 2010, HCA's balance sheet reflected cash and cash equivalents of $350 million, total debt of $26.798 billion, and total assets of $23.420 billion.  During the second quarter of 2010, capital expenditures totaled $322 million, and the Company paid a $500 million cash distribution to holders of its common stock and vested stock options.  Net cash provided by operating activities totaled $450 million in the second quarter of 2010 compared to $659 million in the prior year.

The $209 million decrease was due primarily to changes in operating assets and liabilities of $317 million, reflecting increases in accounts receivable, other receivables and marketable securities, and declines in accounts payable and accrued interest.

As of June 30, 2010 HCA operated 162 hospitals and 106 freestanding surgery centers (including eight hospitals and eight freestanding surgery centers operated through equity method joint ventures).