HCA Reports Second Quarter 2008 Results

NASHVILLE, Tenn., July 31 /PRNewswire/ -- HCA today announced financial
and operating results for its second quarter ended June 30, 2008.
Second Quarter Summary:

-- Revenues increased 3.7 percent to $6.980 billion.
-- Net income totaled $141 million, compared to $116 million in the prior
year's second quarter.
-- Adjusted EBITDA totaled $1.104 billion, compared to $1.180 billion in
the second quarter of 2007.
-- Salaries and benefits increased to $2.841 billion, from $2.654 billion
in the second quarter of 2007.
-- Provision for doubtful accounts increased to $813 million, from $753
million in the prior year.
-- Interest expense decreased to $494 million, from $557 million in the
prior year's second quarter.
-- Same facility admissions increased 1.3 percent, and same facility
equivalent admissions increased 2.0 percent.
-- Same facility revenue per equivalent admission increased 3.0 percent.
-- Surgeries on a same facility basis declined 0.6 percent.

Revenues for the second quarter totaled $6.980 billion, compared to $6.729
billion in the second quarter of 2007. Adjusted EBITDA in the quarter totaled
$1.104 billion, compared to $1.180 billion in the previous year's second
quarter. A table describing adjusted EBITDA and reconciling net income to
adjusted EBITDA for these periods is included in this release. Net income for
the second quarter of 2008 totaled $141 million, compared to $116 million in
the prior year's second quarter. Results for the second quarter of 2008
include losses on sales of facilities of $11 million compared to gains of $11
million in the second quarter of 2007. Also, second quarter 2008 results
include an impairment of long-lived assets of $9 million compared to a $24
million asset impairment in the same period of 2007.
Salaries and benefits increased to $2.841 billion, or 40.7 percent of
revenues, in the second quarter of 2008 from $2.654 billion, or 39.4 percent
of revenues, in the second quarter of 2007. Salaries and benefits per
equivalent admission increased 6.1 percent while revenue per equivalent
admission increased 2.8 percent for the second quarter of 2008 compared to the
second quarter of 2007.
The provision for doubtful accounts increased to $813 million, or 11.7
percent of revenues, in the second quarter of 2008 from $753 million, or 11.2
percent of revenues, in the second quarter of 2007. Same facility uninsured
admissions increased 1.0 percent in the second quarter of 2008 compared to the
prior year's second quarter.
We reached a settlement with the IRS Appeals Division regarding certain
2001 and 2002 issues during the second quarter of 2008 and the settlement
resulted in a $38 million reduction to our provision for income taxes for the
second quarter of 2008.
Interest expense decreased to $494 million in the second quarter of 2008,
compared to $557 million in the same period of 2007, due to reductions in both
our average debt balance and the average interest rate on our debt.
Same facility admissions increased 1.3 percent and same facility
equivalent admissions increased 2.0 percent in the second quarter of 2008
compared to the prior year's second quarter. Same facility inpatient
surgeries declined 0.5 percent and outpatient surgeries declined 0.7 percent
in the second quarter. Same facility revenue per equivalent admission
increased 3.0 percent in the second quarter of 2008 compared to the second
quarter of 2007 due primarily to changes in service and payor mix.
Same facility charity and uninsured discounts totaled $869 million in the
second quarter of 2008 compared to $707 million in the second quarter of 2007.
As of June 30, 2008, HCA's balance sheet reflected cash and cash
equivalents of $368 million, total debt of $27.615 billion, and total assets
of $24.070 billion. During the second quarter, capital expenditures totaled
$409 million. HCA expects capital expenditures to approximate $1.65 billion
in 2008.
Revenues for the six months ended June 30, 2008 totaled $14.107 billion
compared to $13.406 billion for the same period of 2007. Adjusted EBITDA
totaled $2.284 billion for the first half of 2008 compared to $2.456 billion
for the same period of 2007. HCA's net income was $311 million for the six
months ended June 30, 2008 compared to $296 million in the prior year.
Results for the six months ended June 30, 2008 include gains on sales of
facilities of $40 million compared to $16 million of gains on sales of
facilities for the same period of 2007 and an impairment of long-lived assets
of $9 million in the current year compared to a $24 million asset impairment
in the first half of 2007.
As of June 30, 2008, HCA operated 169 hospitals and 107 freestanding
surgery centers, including eight hospitals and eight freestanding surgery
centers operated through equity method joint ventures.
Earnings Conference Call
HCA will host a conference call for investors at 9:00 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. The webcast can be accessed at:
http://www.videonewswire.com/event.asp?id=49883 or through the Company's
Investor Relations web page, www.hcahealthcare.com .
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements based on current
management expectations. Those forward-looking statements include 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, (1) the ability to recognize
the benefits of the recapitalization; (2) the impact of the substantial
indebtedness incurred to finance the recapitalization; (3) increases in the
amount and risk of collectibility of uninsured accounts, and deductibles and
copayment amounts for insured accounts; (4) the ability to achieve operating
and financial targets, and attain expected levels of patient volumes and
control the costs of providing services; (5) possible changes in the Medicare,
Medicaid and other state programs, including Medicaid supplemental payments
pursuant to upper payment limit programs, that may impact reimbursements to
health care providers and insurers; (6) the highly competitive nature of the
health care business; (7) changes in revenue mix and the ability to enter into
and renew managed care provider agreements on acceptable terms; (8) the
efforts of insurers, health care providers and others to contain health care
costs; (9) the outcome of our continuing efforts to monitor, maintain and
comply with appropriate laws, regulations, policies and procedures and our
corporate integrity agreement with the government; (10) changes in federal,
state or local laws or regulations affecting the health care industry; (11)
increases in wages and the ability to attract and retain qualified management
and personnel, including affiliated physicians, nurses and medical and
technical support personnel; (12) the possible enactment of federal or state
health care reform; (13) the availability and terms of capital to fund the
expansion of our business and improvements to our existing facilities; (14)
changes in accounting practices; (15) changes in general economic conditions
nationally and regionally in our markets; (16) future divestitures which may
result in charges; (17) changes in business strategy or development plans;
(18) the outcome of pending and any future tax audits, appeals and litigation
associated with our tax positions; (19) delays in receiving payment for
services provided; (20) potential liabilities and other claims that may be
asserted against us; (21) other risk factors described in our Annual Report on
Form 10-K and other filings with the Securities and Exchange Commission. Many
of the factors that will determine our future results are beyond our ability
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. We undertake 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.

HCA Inc.
Consolidated Income Statements
Second Quarter
(Dollars in millions)

2008 2007
Amount Ratio Amount Ratio

Revenues $6,980 100.0% $6,729 100.0%

Salaries and benefits 2,841 40.7 2,654 39.4
Supplies 1,149 16.5 1,096 16.3
Other operating expenses 1,136 16.2 1,101 16.4
Provision for doubtful
accounts 813 11.7 753 11.2
Gains on investments (1) - (7) (0.1)
Equity in earnings of
affiliates (62) (0.9) (48) (0.7)
Depreciation and amortization 355 5.0 361 5.3
Interest expense 494 7.1 557 8.3
Losses (gains) on sales of
facilities 11 0.2 (11) (0.2)
Impairment of long-lived
assets 9 0.1 24 0.4

6,745 96.6 6,480 96.3

Income before minority
interests and income taxes 235 3.4 249 3.7

Minority interests in earnings
of consolidated entities 56 0.8 55 0.8

Income before income taxes 179 2.6 194 2.9

Provision for income taxes 38 0.6 78 1.2

Net income $141 2.0 $116 1.7

HCA Inc.
Consolidated Income Statements
For the Six Months Ended June 30, 2008 and 2007
(Dollars in millions)

2008 2007
Amount Ratio Amount Ratio

Revenues $14,107 100.0% $13,406 100.0%

Salaries and benefits 5,680 40.3 5,301 39.5
Supplies 2,322 16.5 2,199 16.4
Other operating expenses 2,250 15.8 2,118 15.8
Provision for doubtful
accounts 1,701 12.1 1,444 10.8
Gains on investments (1) - (7) -
Equity in earnings of
affiliates (129) (0.9) (105) (0.8)
Depreciation and amortization 712 5.0 716 5.3
Interest expense 1,024 7.3 1,114 8.3
Gains on sales of facilities (40) (0.3) (16) (0.1)
Impairment of long-lived
assets 9 0.1 24 0.2

13,528 95.9 12,788 95.4

Income before minority
interests and income taxes 579 4.1 618 4.6

Minority interests in earnings
of consolidated entities 112 0.8 116 0.9

Income before income taxes 467 3.3 502 3.7

Provision for income taxes 156 1.1 206 1.5

Net income $311 2.2 $296 2.2

HCA Inc.
Supplemental Operating Results Summary
(Dollars in millions)

For the Six Months
Second Quarter Ended June 30,
2008 2007 2008 2007

Revenues $6,980 $6,729 $14,107 $13,406

Net income $141 $116 $311 $296

Losses (gains) on
sales of facilities
(net of tax) 6 (8) (24) (10)
Impairment of long-
lived assets
(net of tax) 6 15 6 15

Net income, excluding
losses (gains) on sales
of facilities and
impairment of long-lived
assets 153 123 293 301
Depreciation and
amortization 355 361 712 716
Interest expense 494 557 1,024 1,114
Minority interests in
earnings of
consolidated
entities 56 55 112 116
Provision for income
taxes 46 84 143 209

Adjusted EBITDA(a) $1,104 $1,180 $2,284 $2,456

(a) Net income, excluding losses (gains) on sales of facilities and
impairment of long-lived assets and adjusted EBITDA are non-GAAP financial
measures. We believe that net income, excluding losses (gains) on sales of
facilities and impairment of long-lived assets and adjusted EBITDA are
important measures that supplement discussions and analysis of our results of
operations. We believe that it is useful to investors to provide disclosures
of our results of operations on the same basis as that used by management.
Management relies upon net income, excluding losses (gains) on sales of
facilities and impairment of long-lived assets 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 overall performance (including;
net income, excluding losses (gains) on sales of facilities and impairment of
long-lived assets and GAAP net income) and operating performance (adjusted
EBITDA) of our health care facilities. Adjusted EBITDA and the adjusted
EBITDA margin (adjusted EBITDA divided by revenues) are utilized by management
and investors to compare our current operating results with the corresponding
periods during the previous year and to compare our operating results with
other companies in the health care industry. It is reasonable to expect that
losses (gains) on sales of facilities and impairments of long-lived assets
will occur in future periods, but the amounts recognized can vary
significantly from quarter to quarter, do not directly relate to the ongoing
operations of our health care facilities and complicate quarterly comparisons
of our results of operations and operations comparisons with other health care
companies.
Net income, excluding losses (gains) on sales of facilities and impairment
of long-lived assets 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 cash flows from operating, investing and
financing activities as a measure of liquidity. Because net income, excluding
losses (gains) on sales of facilities and impairment of long-lived assets and
adjusted EBITDA are not measurements determined in accordance with generally
accepted accounting principles and are susceptible to varying calculations,
net income, excluding losses (gains) on sales of facilities and impairment of
long-lived assets and adjusted EBITDA, as presented, may not be comparable to
other similarly titled measures presented by other companies.

HCA Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions)

June 30, March 31, December 31,
2008 2008 2007
ASSETS
Current assets:
Cash and cash equivalents $368 $471 $393
Accounts receivable, less
allowance for doubtful
accounts 3,922 4,134 3,895
Inventories 715 705 710
Deferred income taxes 727 693 592
Other 557 498 615

Total current assets 6,289 6,501 6,205

Property and equipment, at cost 23,145 22,783 22,579
Accumulated depreciation (11,709) (11,402) (11,137)
11,436 11,381 11,442

Investments of insurance
subsidiary 1,526 1,634 1,669
Investments in and advances to
affiliates 833 738 688
Goodwill 2,630 2,633 2,629
Deferred loan costs 498 517 539
Other 858 1,088 853

$24,070 $24,492 $24,025

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $1,214 $1,272 $1,370
Accrued salaries 785 732 780
Other accrued expenses 1,064 1,422 1,391
Long-term debt due within
one year 341 330 308

Total current liabilities 3,404 3,756 3,849

Long-term debt 27,274 27,159 27,000
Professional liability risks 1,160 1,242 1,233
Deferred taxes and other
liabilities 1,295 1,745 1,379
Minority interests in equity of
consolidated entities 959 953 938

Equity securities with contingent
redemption rights 163 163 164

Stockholders' deficit (10,185) (10,526) (10,538)

$24,070 $24,492 $24,025

HCA Inc.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2008 and 2007
(Dollars in millions)

2008 2007

Cash flows from operating activities:
Net income $311 $296
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for doubtful accounts 1,701 1,444
Depreciation and amortization 712 716
Income taxes (376) (21)
Gains on sales of facilities (40) (16)
Impairment of long-lived assets 9 24
Change in operating assets and liabilities (1,994) (2,100)
Share-based compensation 19 11
Change in minority interests 15 16
Other 67 36

Net cash provided by operating activities 424 406

Cash flows from investing activities:
Purchase of property and equipment (717) (675)
Acquisition of hospitals and health care
entities (44) (10)
Disposal of hospitals and health care entities 110 65
Change in investments (11) 192
Other 13 10

Net cash used in investing activities (649) (418)

Cash flows from financing activities:
Net change in revolving bank credit facility 900 (210)
Repayment of long-term debt (703) (148)
Issuance of common stock - 100
Other 3 (14)

Net cash provided by (used in) financing
activities 200 (268)

Change in cash and cash equivalents (25) (280)
Cash and cash equivalents at beginning of period 393 634

Cash and cash equivalents at end of period $368 $354

Interest payments $1,007 $1,092
Income tax payments, net of refunds $532 $227

HCA Inc.
Operating Statistics

For the Six Months
Second Quarter Ended June 30,
2008 2007 2008 2007

Consolidating Hospitals:

Number of Hospitals 161 164 161 164
Weighted Average Licensed
Beds 38,419 39,222 38,413 39,245
Licensed Beds at End of
Period 38,448 39,175 38,448 39,175

Reported:

Admissions 382,600 383,200 784,300 787,000
% Change -0.2% -0.4%
Equivalent Admissions 587,600 582,500 1,188,900 1,183,700
% Change 0.9% 0.4%
Revenue per Equivalent
Admission $11,878 $11,552 $11,865 $11,325
% Change 2.8% 4.8%

Inpatient Revenue per
Admission $11,175 $10,900 $11,193 $10,638
% Change 2.5% 5.2%

Patient Days 1,887,600 1,899,500 3,912,200 3,921,000
Equivalent Patient
Days 2,900,100 2,887,100 5,930,900 5,897,100

Inpatient Surgery Cases 125,000 131,200 250,400 261,700
% Change -4.7% -4.3%
Outpatient Surgery Cases 202,100 204,200 399,000 408,400
% Change -1.0% -2.3%

Emergency Room Visits 1,297,600 1,258,700 2666,400 2,553,900
% Change 3.1% 4.4%

Outpatient Revenues as a
Percentage of Patient
Revenues 37.7% 36.8% 36.7% 36.4%

Average Length of Stay 4.9 5.0 5.0 5.0

Occupancy 54.0% 53.2% 56.0% 55.2%
Equivalent Occupancy 82.9% 80.9% 84.9% 83.0%

Same Facility:
Admissions 381,000 376,100 781,500 773,000
% Change 1.3% 1.1%
Equivalent Admissions 584,100 572,500 1,182,400 1,163,300
% Change 2.0% 1.6%
Revenue per Equivalent
Admission $11,852 $11,510 $11,840 $11,291
% Change 3.0% 4.9%
Inpatient Revenue per
Admission $11,179 $10,905 $11,197 $10,639
% Change 2.5% 5.2%

Inpatient Surgery Cases 124,800 125,500 249,700 251,200
% Change -0.5% -0.6%
Outpatient Surgery Cases 200,200 201,700 395,300 401,700
% Change -0.7% -1.6%

Emergency Room Visits 1,290,900 1,236,600 2,650,500 2,510,100
% Change 4.4% 5.6%

Number of Consolidating and
Nonconsolidating (Equity Joint
Ventures) Hospitals:

Consolidating 161 164 161 164
Nonconsolidating (Equity
Joint Ventures) 8 8 8 8

Total Number of Hospitals 169 172 169 172

SOURCE HCA

Investor Contact: Mark Kimbrough, +1-615-344-2688, Media Contact: Ed
Fishbough, +1-615-344-2810, both of HCA