HCA Reports Second Quarter 2000 EPS of $0.40 vs $0.31 Last Year, up 29%
Excluding Gains, Impairments, Restructuring, Investigation And
Settlement Related Costs
NASHVILLE, Tenn., July 24 /PRNewswire/ -- HCA (NYSE: HCA) today announced
operating results for the second quarter and six months ended June 30, 2000.
For the second quarter of 2000, revenues totaled $4.1 billion compared to
$4.2 billion in the second quarter of 1999. The decline in revenues reflects
the reduction from 204 consolidating hospitals at June 30, 1999, to 195
consolidating hospitals at June 30, 2000. Net income, excluding gains on
sales of facilities, impairment of long-lived assets and restructuring of
operations, investigation and settlement related costs, totaled $223 million
or $0.40 per diluted share for the second quarter of 2000, compared to $182
million or $0.31 per diluted share in the second quarter of 1999. Including
all such gains, impairments and charges for both quarters, the Company
reported a net loss of $272 million or $0.48 per diluted share in 2000,
compared to net income of $106 million or $0.18 per diluted share in the
second quarter of 1999.
"This quarter's results, highlighted by the 29% increase in earnings per
share over the same quarter last year, reaffirm that the strategy we adopted
three years ago is a success. Restructuring the assets of this Company,
reinvesting in our communities and dedicating ourselves to a patients-first
philosophy have taken hold, and today's results show clearly that these
initiatives are working very well," stated Thomas F. Frist Jr., M.D., Chairman
and CEO of HCA.
The Company and its affiliates announced in May 2000 that an understanding
had been reached with attorneys of the Civil Division of the Department of
Justice (DOJ) to recommend an agreement to settle, subject to certain
conditions, civil claims actions against the Company relating to DRG
(Diagnosis Related Group) coding; outpatient laboratory billing; and home
health issues. The understanding provides for the Company to compensate the
government $745 million with respect to the issues covered by the agreement.
The settlement is subject to approval by additional officials at the DOJ;
execution of the corporate integrity agreement; execution of definitive
settlement documents for the three issues included in the understanding;
execution of agreements to resolve all criminal investigations pending against
the Company and court approval. The terms of the understanding resulted in
the recording of an after-tax charge of approximately $498 million, or
$0.89 per diluted share, during the quarter ended June 30, 2000.
During the second quarter ended June 30, 2000, certain insurance
subsidiary funds were reallocated among investment managers resulting in the
recognition of previously unrealized gains that increased net income by
approximately $16 million. Also in the second quarter of 2000, the Company
incurred costs related to its shared services initiatives and internet
strategies, along with losses from the operations of assets sold or held for
sale, which reduced net income by approximately $34 million.
Excluding the amortization of goodwill, net income (excluding gains on
sales of facilities, impairment of long-lived assets, restructuring of
operations, investigation and settlement related costs) was $244 million or
$0.43 per diluted share in the second quarter of 2000 compared to $203 million
or $0.34 per diluted share for the second quarter of 1999.
Revenues for the six months ended June 30, 2000, totaled $8.4 billion
compared to $8.8 billion in the first six months of 1999. This decline
reflects the reduction in the number of hospitals operated by the Company
since last year. Net income, before gains on sales of facilities, impairment
of long-lived assets, restructuring, investigation and settlement related
costs, totaled $529 million or $0.93 per diluted share in the first half of
2000, compared to $453 million or $0.74 per diluted share for the six months
ended June 30, 1999. Including all such gains, impairments and charges for
both periods, the Company reported net income of $24 million or $0.04 per
diluted share in 2000, versus net income of $428 million or $0.70 per diluted
share in 1999.
For the quarter ended June 30, 2000, same facility revenues increased
5.2 percent compared to the prior year's quarter. Same facility admissions
for the Company's hospitals increased by 3.0 percent during the quarter and
same facility revenue per equivalent admission increased 2.4 percent. For the
six months ended June 30, 2000, same facility revenues increased 5.8 percent,
same facility admissions increased 2.6 percent and same facility revenue per
equivalent admission increased 3.1 percent.
As of June 30, 2000, the Company operated 204 hospitals and 83 ambulatory
surgery centers (including 9 hospitals and 3 ASCs owned through 50/50 equity
joint ventures), compared to 220 hospitals and 85 ambulatory surgery centers
(including 16 hospitals and 4 ASCs owned through equity joint ventures) at
June 30, 1999.
On May 11, 1999, the Company completed the spin-offs to HCA shareholders
of LifePoint Hospitals, Inc. (Nasdaq: LPNT) and Triad Hospitals, Inc.
(Nasdaq: TRIH). HCA received approximately $900 million, from the spin-offs
of 57 hospitals. The results of operations for LifePoint and Triad, for
periods prior to the spin-offs, are included in the Company's consolidated
financial results.
empactHealth.com, HCA's healthcare supply e-commerce subsidiary, has
agreed to merge with medibuy.com. Shareholders of empact, including HCA, will
receive approximately 23%. HCA's ownership interest in medibuy will be
approximately 16%. The transaction is subject to various regulatory
approvals.
During the second quarter, the Company settled forward purchase contracts
associated with its November 1999, $1 billion share repurchase program, for
approximately 1.8 million shares at a cost of approximately $53 million. In
accordance with the terms of the forward purchase contracts, shares remain
outstanding until the contracts are settled by the Company. Pursuant to the
November 1999 forward purchase contracts, approximately 24.1 million shares
and approximately $700 million remain outstanding.
In March 2000, the Company's Board of Directors authorized the repurchase
of up to an additional $1 billion of its common stock. As of June 30, 2000,
HCA has repurchased, under its March 2000 authorization, approximately 16.6
million shares of its common stock for approximately $441 million. These
shares were purchased by certain financial organizations under the terms of
forward purchase contracts and, in accordance with the terms of the contracts,
the shares remain outstanding until settled by the Company.
At June 30, 2000, the Company's balance sheet reflected total debt of
approximately $7.0 billion, stockholders' equity of approximately $5.4 billion
and total assets of approximately $17.7 billion. Capital expenditures for the
quarter totaled approximately $586 million, which included approximately
$233 million associated with hospital acquisitions in London, England. The
Company's total debt-to-capital ratio was 53 percent at June 30, 2000,
compared to 52 percent at June 30, 1999.
This press release contains forward-looking statements based on current
management expectations. Numerous risks, uncertainties and other factors
including: (i) the outcome of the known and unknown governmental
investigations and litigation involving the Company's business practices, (ii)
the ability to finalize definitive settlement agreements relating to DRG
coding, outpatient laboratory billing, home health issues and other matters,
(iii) the highly competitive nature of the health care business, (iv) the
efforts of insurers, health care providers and others to contain health care
costs, (v) possible changes in the Medicare program that may further limit
reimbursements to health care providers and insurers, (vi) changes in Federal,
state or local regulation affecting the health care industry, (vii) the
possible enactment of Federal or state health care reform, (viii) the ability
to attract and retain qualified management and personnel, including
physicians, (ix) liabilities and other claims asserted against the Company,
(x) fluctuations in the market value of the Company's common stock, (xi)
ability to complete the share repurchase program, (xii) changes in accounting
practices, (xiii) changes in general economic conditions, (xiiv) future
divestitures which may result in additional charges, (xv) the ability to enter
into managed care provider arrangements on acceptable terms, (xvi) the
availability and terms of capital to fund the expansion of the Company's
business, (xvii) changes in business strategy or development plans, (xviii)
slowness of reimbursement, (xix) the ability to implement its shared services
strategy, and (xx) other risk factors. Many of the factors that will determine
the Company's future results are beyond the ability of the Company to control
or predict. These statements are subject to risks and uncertainties and
therefore, actual results may differ materially. |
