Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nyse  >  HCA Healthcare, Inc.    HCA

HCA HEALTHCARE, INC.

(HCA)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsPress ReleasesOfficial PublicationsSector newsMarketScreener StrategiesAnalyst Recommendations

HCA HEALTHCARE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

10/29/2020 | 03:26pm EST
Forward-Looking Statements
This quarterly report on
Form 10-Q
includes certain disclosures which contain "forward-looking statements" within
the meaning of the federal securities laws, which involve risks and
uncertainties. Forward-looking statements include statements regarding expected
share-based compensation expense, expected capital expenditures and expected net
claim payments and all other statements that do not relate solely to historical
or current facts, and can be identified by the use of words like "may,"
"believe," "will," "expect," "project," "estimate," "anticipate," "plan,"
"initiative" or "continue." These forward-looking statements are based on our
current plans and expectations and are subject to a number of known and unknown
uncertainties and risks, many of which are beyond our control, which could
significantly affect current plans and expectations and our future financial
position and results of operations. These factors include, but are not limited
to, (1) developments related to
COVID-19,
including, without limitation, related to the length and severity of the
pandemic; the volume of canceled or rescheduled procedures and the volume of
COVID-19
patients cared for across our health systems; measures we are taking to respond
to the
COVID-19
pandemic; the impact and terms of government and administrative regulation and
stimulus (including the Families First Coronavirus Response Act ("FFCRA"), the
Coronavirus Aid, Relief and Economic Security ("CARES") Act, the Paycheck
Protection Program and Health Care Enhancement Act and other enacted
legislation); changes in revenues due to declining patient volumes, changes in
payor mix and deteriorating macroeconomic conditions (including increases in
uninsured and underinsured patients); potential increased expenses related to
labor, supply chain or other expenditures; workforce disruptions; supply
shortages and disruptions; and the timing and availability of effective medical
treatments and vaccines, (2) the impact of our substantial indebtedness and the
ability to refinance such indebtedness on acceptable terms, as well as risks
associated with disruptions in the financial markets and the business of
financial institutions as the result of the
COVID-19
pandemic which could impact us from a financial perspective, (3) the impact of
the Patient Protection and Affordable Care Act, as amended by the Health Care
and Education Reconciliation Act of 2010 (collectively, the "Affordable Care
Act"), including the effects of court challenges to, any repeal of, or changes
to, the Affordable Care Act or additional changes to its implementation, the
possible enactment of additional federal or state health care reforms and
possible changes to other federal, state or local laws or regulations affecting
the health care industry, including single-payer proposals (often referred to as
"Medicare for All"), and also including any such laws or governmental
regulations which are adopted in response to the
COVID-19
pandemic, (4) the effects related to the continued implementation of the
sequestration spending reductions required under the Budget Control Act of 2011,
and related legislation extending these reductions, and the potential for future
deficit reduction legislation that may alter these spending reductions, which
include cuts to Medicare payments, or create additional spending reductions,
(5) increases in the amount and risk of collectability of uninsured accounts and
deductibles and copayment amounts for insured accounts, (6) the ability to
achieve operating and financial targets, and attain expected levels of patient
volumes and control the costs of providing services, (7) possible changes in
Medicare, Medicaid and other state programs, including Medicaid supplemental
payment programs or Medicaid waiver programs, that may impact reimbursements to
health care providers and insurers and the size of the uninsured or underinsured
population, (8) the highly competitive nature of the health care business,
(9) changes in service mix, revenue mix and surgical volumes, including
potential declines in the population covered under third-party payer agreements,
the ability to enter into and renew third-party payer provider agreements on
acceptable terms and the impact of consumer-driven health plans and physician
utilization trends and practices, (10) the efforts of health insurers, health
care providers, large employer groups and others to contain health care costs,
(11) the outcome of our continuing efforts to monitor, maintain and comply with
appropriate laws, regulations, policies and procedures, (12) increases in wages
and the ability to attract and retain qualified management and personnel,
including affiliated physicians, nurses and medical and technical support
personnel, (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, including economic and business conditions (and the
impact thereof on the financial markets and banking

                                       20
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements (continued)


industry) resulting from the
COVID-19
pandemic, (16) the emergence of and effects related to other pandemics,
epidemics and infectious diseases, (17) future divestitures which may result in
charges and possible impairments of long-lived assets, (18) changes in business
strategy or development plans, (19) delays in receiving payments for services
provided, (20) the outcome of pending and any future tax audits, disputes and
litigation associated with our tax positions, (21) potential adverse impact of
known and unknown government investigations, litigation and other claims that
may be made against us, (22) the impact of potential cybersecurity incidents or
security breaches, (23) our ongoing ability to demonstrate meaningful use of
certified electronic health record ("EHR") technology and the impact of
interoperability requirements, (24) the impact of natural disasters, such as
hurricanes and floods, or similar events beyond our control, (25) changes in the
U.S. federal, state, or foreign tax laws including interpretive guidance that
may be issued by taxing authorities or other standard setting bodies, and
(26) other risk factors described in our annual report on
Form 10-K
for the year ended December 31, 2019, our quarterly report on Form
10-Q
for the quarter ended June 30, 2020 and our other filings with the Securities
and Exchange Commission. As a consequence, current plans, anticipated actions
and future financial position and results of operations may differ from those
expressed in any forward-looking statements made by or on behalf of HCA. You are
cautioned not to unduly rely on such forward-looking statements when evaluating
the information presented in this report, which forward-looking statements
reflect management's views only as of the date of this report. We undertake no
obligation to revise or update any forward-looking statements, whether as a
result of new information, future events or otherwise.
COVID-19
Pandemic and CARES Act Funding
On March 11, 2020, the World Health Organization designated
COVID-19
as a global pandemic. Patient volumes and the related revenues for most of our
services were significantly impacted during the latter portion of the first
quarter and the first half of the second quarter and have continued to be
impacted into the third quarter of 2020 as various policies were implemented by
federal, state and local governments in response to the
COVID-19
pandemic that have caused many people to remain at home and forced the closure
of or limitations on certain businesses, as well as suspended elective surgical
procedures by health care facilities. While many of these restrictions have been
eased across the U.S. and most states have lifted moratoriums on
non-emergent
procedures, some restrictions remain in place, and we are unable to predict the
future impact of the pandemic on our operations.
During the nine months ended September 30, 2020, we received $4.449 billion of
accelerated Medicare payments and $1.674 billion in general and targeted
distributions from the Provider Relief Fund (net of amounts returned), both as
provided for and established under the CARES Act. The Provider Relief Fund
distributions were accounted for as government grants, and recognized on a
systematic and rational basis as other income, once there is reasonable
assurance that the applicable terms and conditions required to retain the funds
will be met. Based on our analysis of the compliance and reporting requirements
of the Provider Relief Fund and the impact of the pandemic on our operating
results from the beginning of the pandemic in March through June 30, 2020, we
recognized $822 million related to the general distribution funds during the
quarter ended June 30, 2020.
During the quarter ended September 30, 2020, we continued to evaluate our
operating results and gave consideration to the updated reporting guidelines
issued in September by the U.S. Department of Health and Human Services that
significantly changed the measurement of Provider Relief Fund distributions
providers are able to retain. Based on our assessment of the likelihood of
meeting the applicable terms and conditions of the Provider Relief Fund, during
the quarter ended September 30, 2020 we reversed the $822 million of government
stimulus income recognized during the quarter ended June 30, 2020. On October 8,
2020, we announced our

                                       21
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

COVID-19

Pandemic and CARES Act Funding (continued)


decision to return, or repay early, all of our share of the Provider Relief Fund
distributions of approximately $1.6 billion and the approximately $4.4 billion
of Medicare accelerated payments. The total accelerated Medicare payments and
Provider Relief Fund distributions received are recorded under the caption
"government stimulus refund liability" in our condensed consolidated balance
sheet at September 30, 2020.
We believe the extent of the
COVID-19
pandemic's impact on our operating results and financial condition has been and
will continue to be driven by many factors, most of which are beyond our control
and ability to forecast. Such factors include, but are not limited to, the scope
and duration of
stay-at-home
practices and business closures and restrictions, recommended suspensions of
elective procedures, continued declines in patient volumes for an indeterminable
length of time, increases in the number of uninsured and underinsured patients
as a result of higher sustained rates of unemployment, incremental expenses
required for supplies and personal protective equipment, and changes in
professional and general liability exposure. Because of these and other
uncertainties, we cannot estimate the length or severity of the impact of the
pandemic on our business. If we incur declines in cash flows and results of
operations, such declines could have an impact on the inputs and assumptions
used in significant accounting estimates, including estimated implicit price
concessions related to uninsured patient accounts, professional and general
liability reserves, and potential impairments of goodwill and long-lived assets.
During the third quarter of 2020, we believe COVID-19 cases at our hospitals
contributed to an increase in patient acuity and had a positive impact on our
average reimbursement per case. However, the impact of COVID-19 in future
periods may vary and could adversely impact our results of operations.
Third Quarter 2020 Operations Summary
Revenues increased to $13.311 billion in the third quarter of 2020 from
$12.694 billion in the third quarter of 2019. Net income attributable to HCA
Healthcare, Inc. totaled $668 million, or $1.95 per diluted share, for the
quarter ended September 30, 2020, compared to $612 million, or $1.76 per diluted
share, for the quarter ended September 30, 2019. Third quarter results for 2020
include the reversal of $822 million, or $1.72 per diluted share, of government
stimulus income recorded in the second quarter of 2020 related to general
distribution funds from the Provider Relief Fund established by the CARES Act.
Third quarter results for 2020 also include gains on sales of facilities of
$14 million, or $0.03 per diluted share. Third quarter results for 2019 include
losses on retirement of debt of $211 million, or $0.47 per diluted share. All
"per diluted share" disclosures are based upon amounts net of the applicable
income taxes. Shares used for diluted earnings per share were 343.346 million
shares for the quarter ended September 30, 2020 and 347.487 million shares for
the quarter ended September 30, 2019. During 2019 and the first nine months of
2020, we repurchased 7.949 million shares and 3.287 million shares of our common
stock, respectively.
Due to the
COVID-19
pandemic, patient volumes and the related revenues for most of our services were
significantly impacted during the latter portion of the first quarter and the
first half of the second quarter and have continued to be impacted into the
third quarter of 2020 as various policies were implemented by federal, state and
local governments in response to the
COVID-19
pandemic that have caused many people to remain at home and forced the closure
of or limitations on certain businesses, as well as suspended elective surgical
procedures by health care facilities. Revenues increased 4.9% on a consolidated
basis and 4.5% on a same facility basis for the quarter ended September 30,
2020, compared to the quarter ended September 30, 2019. The increase in
consolidated revenues can be primarily attributed to the net impact of a 15.3%
increase in revenue per equivalent admission offset by a 9.1% decline in
equivalent admissions. The same facility revenues increase primarily resulted
from the net impact of a 14.8% increase in same facility revenue per equivalent
admission offset by a 9.0% decline in same facility equivalent admissions.

                                       22
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Third Quarter 2020 Operations Summary (continued)


During the quarter ended September 30, 2020, consolidated admissions and same
facility admissions declined 3.9% and 3.8%, respectively, compared to the
quarter ended September 30, 2019. Surgeries declined 6.7% on a consolidated
basis and declined 6.5% on a same facility basis during the quarter ended
September 30, 2020, compared to the quarter ended September 30, 2019. Emergency
department visits declined 20.1% and 20.3% on a consolidated basis and on a same
facility basis, respectively, during the quarter ended September 30, 2020,
compared to the quarter ended September 30, 2019. Consolidated and same facility
uninsured admissions declined 12.7% and 14.2%, respectively, for the quarter
ended September 30, 2020, compared to the quarter ended September 30, 2019.
Cash flows from operating activities increased $591 million, from $2.126 billion
for the third quarter of 2019 to $2.717 billion for the third quarter of 2020.
The increase in cash provided by operating activities was primarily related to
the net effect of an increase in net income, excluding the government stimulus
income reversal, gains on sales of facilities and losses on retirement of debt,
of $488 million, receipt of an additional $302 million in Provider Relief Funds,
and positive changes in working capital of $277 million, primarily from the
increase in accounts payable and accrued expenses, offset by declines related to
income taxes of $486 million.
Results of Operations
Revenue/Volume Trends
Our revenues generally relate to contracts with patients in which our
performance obligations are to provide health care services to the patients.
Revenues are recorded during the period our obligations to provide health care
services are satisfied. Our performance obligations for inpatient services are
generally satisfied over periods that average approximately five days, and
revenues are recognized based on charges incurred in relation to total expected
charges. Our performance obligations for outpatient services are generally
satisfied over a period of less than one day. The contractual relationships with
patients, in most cases, also involve a third-party payer (Medicare, Medicaid,
managed care health plans and commercial insurance companies, including plans
offered through the health insurance exchanges) and the transaction prices for
the services provided are dependent upon the terms provided by (Medicare and
Medicaid) or negotiated with (managed care health plans and commercial insurance
companies) the third-party payers. The payment arrangements with third-party
payers for the services we provide to the related patients typically specify
payments at amounts less than our standard charges. Medicare generally pays for
inpatient and outpatient services at prospectively determined rates based on
clinical, diagnostic and other factors. Services provided to patients having
Medicaid coverage are generally paid at prospectively determined rates per
discharge, per identified service or per covered member. Agreements with
commercial insurance carriers, managed care and preferred provider organizations
generally provide for payments based upon predetermined rates per diagnosis, per
diem rates or discounted
fee-for-service
rates. Management continually reviews the contractual estimation process to
consider and incorporate updates to laws and regulations and the frequent
changes in managed care contractual terms resulting from contract renegotiations
and renewals.

                                       23
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Revenue/Volume Trends (continued)

Revenues increased 4.9% from $12.694 billion in the third quarter of 2019 to
$13.311 billion in the third quarter of 2020. Our revenues are based upon the
estimated amounts we expect to be entitled to receive from patients and
third-party payers. Estimates of contractual allowances under managed care and
commercial insurance plans are based upon the payment terms specified in the
related contractual agreements. Revenues related to uninsured patients and
uninsured copayment and deductible amounts for patients who have health care
coverage may have discounts applied (uninsured discounts and contractual
discounts). We also record estimated implicit price concessions (based primarily
on historical collection experience) related to uninsured accounts to record
self-pay
revenues at the estimated amounts we expect to collect. Patients treated at our
hospitals for
non-elective
care, who have income at or below 400% of the federal poverty level, are
eligible for charity care. Because we do not pursue collection of amounts
determined to qualify as charity care, they are not reported in revenues. Our
revenues by primary third-party payer classification and other (including
uninsured patients) for the quarters and nine months ended September 30, 2020
and 2019 are summarized in the following table (dollars in millions):

                                                               Quarter
                                              2020        Ratio         2019        Ratio
Medicare                                    $  2,603        19.6 %    $  2,592        20.4 %
Managed Medicare                               1,760        13.2         1,615        12.7
Medicaid                                         445         3.3           361         2.8
Managed Medicaid                                 707         5.3           641         5.0
Managed care and insurers                      6,752        50.7         6,554        51.7
International (managed care and insurers)        307         2.3           282         2.2
Other                                            737         5.6           649         5.2

Revenues                                    $ 13,311       100.0 %    $ 12,694       100.0 %




                                                             Nine Months
                                              2020        Ratio         2019        Ratio
Medicare                                    $  7,618        20.5 %    $  7,997        21.2 %
Managed Medicare                               5,074        13.6         4,799        12.7
Medicaid                                       1,423         3.8         1,124         3.0
Managed Medicaid                               1,904         5.1         1,808         4.8
Managed care and insurers                     19,028        51.0        19,405        51.1
International (managed care and insurers)        838         2.3           863         2.3
Other                                          1,355         3.7         1,817         4.9

Revenues                                    $ 37,240       100.0 %    $ 37,813       100.0 %



Consolidated and same facility revenue per equivalent admission increased 15.3%
and 14.8%, respectively, in the third quarter of 2020, compared to the third
quarter of 2019. Consolidated and same facility equivalent admissions declined
9.1% and 9.0%, respectively, in the third quarter of 2020, compared to the third
quarter of 2019. Consolidated and same facility outpatient surgeries declined
6.7% and 6.3%, respectively, in the third quarter of 2020, compared to the third
quarter of 2019. Consolidated and same facility inpatient surgeries both
declined 6.8% in the third quarter of 2020, compared to the third quarter of
2019. Consolidated and same facility emergency department visits declined 20.1%
and 20.3%, respectively, in the third quarter of 2020, compared to the third
quarter of 2019.

                                       24
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Revenue/Volume Trends (continued)

To quantify the total impact of the trends related to uninsured patient
accounts, we believe it is beneficial to view total uncompensated care, which is
comprised of charity care, uninsured discounts and implicit price concessions. A
summary of the estimated cost of total uncompensated care for the quarters and
nine months ended September 30, 2020 and 2019 follows (dollars in millions):

                                                        Quarter                     Nine Months
                                                  2020           2019           2020           2019
Patient care costs (salaries and benefits,
supplies, other operating expenses and
depreciation and amortization)                  $ 11,170$ 11,060$ 32,428$ 32,619
Cost-to-charges
ratio (patient care costs as percentage of
gross patient charges)                              12.0 %         12.3 %         12.1 %         12.1 %
Total uncompensated care                        $  7,023$  7,923$ 21,625$ 22,703
Multiply by the
cost-to-charges
ratio                                               12.0 %         12.3 %         12.1 %         12.1 %

Estimated cost of total uncompensated care $ 843$ 975

$ 2,617$ 2,747




Same facility uninsured admissions declined by 6,492 admissions, or 14.2%, in
the third quarter of 2020 compared to the third quarter of 2019, primarily due
to the reimbursement received as provided for under the FFCRA and subsequent
legislation for uninsured patients diagnosed with COVID-19, and the resulting
classification of those patients as an insured admission. Same facility
uninsured admissions declined 10.0%, in the second quarter of 2020 compared to
the second quarter of 2019. Same facility uninsured admissions increased 7.1%,
in the first quarter of 2020 compared to the first quarter of 2019. Same
facility uninsured admissions in 2019, compared to 2018, increased 6.8% in the
fourth quarter, increased 2.1% in the third quarter, increased 5.1% in the
second quarter, and were flat in the first quarter.
The approximate percentages of our admissions related to Medicare, managed
Medicare, Medicaid, managed Medicaid, managed care and insurers and the
uninsured for the quarters and nine months ended September 30, 2020 and 2019 are
set forth in the following table.

                                Quarter             Nine Months
                            2020       2019       2020       2019
Medicare                       25 %       28 %       26 %       29 %
Managed Medicare               19         18         19         19
Medicaid                        5          5          6          5
Managed Medicaid               13         12         12         12
Managed care and insurers      30         28         29         27
Uninsured                       8          9          8          8

                              100 %      100 %      100 %      100 %




                                       25
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Revenue/Volume Trends (continued)

The approximate percentages of our inpatient revenues related to Medicare,
managed Medicare, Medicaid, managed Medicaid, managed care and insurers for the
quarters and nine months ended September 30, 2020 and 2019 are set forth in the
following table.

                                Quarter             Nine Months
                            2020       2019       2020       2019
Medicare                       25 %       28 %       27 %       28 %
Managed Medicare               15         14         15         15
Medicaid                        5          4          5          4
Managed Medicaid                6          6          6          5
Managed care and insurers      49         47         47         47
Uninsured                       -          1          -          1

                              100 %      100 %      100 %      100 %



At September 30, 2020, we had 91 hospitals in the states of Texas and Florida.
During the third quarter of 2020, 55% of our admissions and 49% of our revenues
were generated by these hospitals. Uninsured admissions in Texas and Florida
represented 71% of our uninsured admissions during the third quarter of 2020.
We receive a significant portion of our revenues from government health
programs, principally Medicare and Medicaid, which are highly regulated and
subject to frequent and substantial changes. In December 2017, the Centers for
Medicare & Medicaid Services ("CMS") announced that it will phase out federal
matching funds for Designated State Health Programs under waivers granted under
Section 1115 of the Social Security Act. Texas currently operates its Healthcare
Transformation and Quality Improvement Program pursuant to a Medicaid waiver. In
December 2017, CMS approved an extension of this waiver through September 30,
2022, but indicated that it will phase out some of the federal funding. Our
Texas Medicaid revenues included Medicaid supplemental payments of $154 million
and $103 million during the third quarters of 2020 and 2019, respectively, and
$455 million and $317 million during the first nine months of 2020 and 2019,
respectively.
In addition, we receive supplemental payments in several other states. We are
aware these supplemental payment programs are currently being reviewed by
certain state agencies and some states have made requests to CMS to replace
their existing supplemental payment programs. It is possible these reviews and
requests will result in the restructuring of such supplemental payment programs
and could result in the payment programs being reduced or eliminated. Because
deliberations about these programs are ongoing, we are unable to estimate the
financial impact the program structure modifications, if any, may have on our
results of operations.
Key Performance Indicators
We present certain metrics and statistical information that management uses when
assessing our results of operations. We believe this information is useful to
investors as it provides insight to how management evaluates operational
performance and trends between reporting periods. Information on how these
metrics and statistical information are defined is provided in the following
tables summarizing operating results and statistical data.

                                       26
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)


Operating Results Summary
The following is a comparative summary of results of operations for the quarters
and nine months ended September 30, 2020 and 2019 (dollars in millions):

                                                                          Quarter
                                                              2020                       2019
                                                       Amount        Ratio        Amount        Ratio
Revenues                                              $ 13,311        100.0      $ 12,694        100.0

Salaries and benefits                                    6,097         45.8         5,971         47.0
Supplies                                                 2,128         16.0         2,090         16.5
Other operating expenses                                 2,251         16.9         2,352         18.5
Government stimulus income reversal                        822          6.2             -            -
Equity in earnings of affiliates                           (40 )       (0.3 )          (4 )          -
Depreciation and amortization                              694          5.2           647          5.1
Interest expense                                           385          2.9           448          3.5
Gains on sales of facilities                                              (
                                                           (14 )        0.1 )           -            -
Losses on retirement of debt                                 -            -           211          1.7

                                                        12,323         92.6        11,715         92.3

Income before income taxes                                 988          7.4           979          7.7
Provision for income taxes                                 209          1.5           215          1.7

Net income                                                 779          5.9           764          6.0
Net income attributable to noncontrolling interests        111          0.9 

152 1.2

Net income attributable to HCA Healthcare, Inc.$ 668 5.0

     $    612          4.8

% changes from prior year:
Revenues                                                   4.9 %                     10.9 %
Income before income taxes                                 0.9                       (8.4 )
Net income attributable to HCA Healthcare, Inc.            9.0                      (19.3 )
Admissions(a)                                             (3.9 )                      5.9
Equivalent admissions(b)                                  (9.1 )                      7.5
Revenue per equivalent admission                          15.3              

3.1

Same facility % changes from prior year(c):
Revenues                                                   4.5                        6.3
Admissions(a)                                             (3.8 )                      3.2
Equivalent admissions(b)                                  (9.0 )                      4.2
Revenue per equivalent admission                          14.8                        2.0



                                       27
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Operating Results Summary (continued)

                                                                         Nine Months
                                                               2020                       2019
                                                       Amount         Ratio        Amount        Ratio
Revenues                                              $ 37,240         100.0      $ 37,813        100.0

Salaries and benefits                                   17,545          47.1        17,455         46.2
Supplies                                                 5,999          16.1         6,249         16.5
Other operating expenses                                 6,825          18.3         7,013         18.6
Equity in earnings of affiliates                           (48 )        (0.1 )         (23 )       (0.1 )
Depreciation and amortization                            2,059           5.6         1,902          4.9
Interest expense                                         1,201           3.2         1,386          3.7
Losses (gains) on sales of facilities                        6             -           (17 )          -
Losses on retirement of debt                               295           0.8           211          0.6

                                                        33,882          91.0        34,176         90.4

Income before income taxes                               3,358           9.0         3,637          9.6
Provision for income taxes                                 665           1.8           765          2.0

Net income                                               2,693           

7.2 2,872 7.6 Net income attributable to noncontrolling interests 365 0.9

           438          1.2

Net income attributable to HCA Healthcare, Inc.$ 2,328 6.3 $ 2,434 6.4

% changes from prior year:
Revenues                                                  (1.5 )%                      9.9 %
Income before income taxes                                (7.7 )                      (5.4 )
Net income attributable to HCA Healthcare, Inc.           (4.4 )                     (10.6 )
Admissions(a)                                             (5.1 )                       4.6
Equivalent admissions(b)                                  (9.8 )                       6.2
Revenue per equivalent admission                           9.1                         3.5
Same facility % changes from prior year(c):
Revenues                                                  (2.1 )                       5.7
Admissions(a)                                             (5.3 )                       2.1
Equivalent admissions(b)                                  (9.9 )                       3.0
Revenue per equivalent admission                           8.6                         2.6



(a) Represents the total number of patients admitted to our hospitals and is used

by management and certain investors as a general measure of inpatient volume.

(b) Equivalent admissions are used by management and certain investors as a

general measure of combined inpatient and outpatient volume. Equivalent

admissions are computed by multiplying admissions (inpatient volume) by the

sum of gross inpatient revenues and gross outpatient revenues and then

dividing the resulting amount by gross inpatient revenues. The equivalent

admissions computation "equates" outpatient revenues to the volume measure

(admissions) used to measure inpatient volume, resulting in a general measure

of combined inpatient and outpatient volume.

(c) Same facility information excludes the operations of hospitals and their

related facilities which were either acquired or divested during the current

    and prior period.



                                       28
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)


Quarters Ended September 30, 2020 and 2019
Revenues increased to $13.311 billion in the third quarter of 2020 from
$12.694 billion in the third quarter of 2019. Net income attributable to HCA
Healthcare, Inc. totaled $668 million, or $1.95 per diluted share, for the
quarter ended September 30, 2020, compared to $612 million, or $1.76 per diluted
share, for the quarter ended September 30, 2019. Third quarter results for 2020
include the reversal of $822 million, or $1.72 per diluted share, of government
stimulus income previously recorded in the second quarter of 2020 related to
general distribution funds from the Provider Relief Fund established by the
CARES Act. Third quarter results for 2020 also include gains on sales of
facilities of $14 million, or $0.03 per diluted share. Third quarter results for
2019 include losses on retirement of debt of $211 million, or $0.47 per diluted
share.
Due to the
COVID-19
pandemic, patient volumes and the related revenues for most of our services were
significantly impacted during the latter portion of the first quarter and the
first half of the second quarter and have continued to be impacted into the
third quarter of 2020 as various policies were implemented by federal, state and
local governments in response to the
COVID-19
pandemic that have caused many people to remain at home and forced the closure
of or limitations on certain businesses, as well as suspended elective surgical
procedures by health care facilities. During the third quarter of 2020, we
believe COVID-19 cases at our hospitals contributed to an increase in patient
acuity and had a positive impact on our average reimbursement per case. However,
the impact of COVID-19 in future periods may vary and could adversely impact our
results of operations. Revenues increased 4.9% on a consolidated basis and 4.5%
on a same facility basis for the quarter ended September 30, 2020, compared to
the quarter ended September 30, 2019. The increase in consolidated revenues can
be primarily attributed to the net impact of a 15.3% increase in revenue per
equivalent admission offset by a 9.1% decline in equivalent admissions. The same
facility revenues increase primarily resulted from the net impact of a 14.8%
increase in same facility revenue per equivalent admission offset by a 9.0%
decline in same facility equivalent admissions offset.
Salaries and benefits, as a percentage of revenues, were 45.8% in the third
quarter of 2020 and 47.0% in the third quarter of 2019. Salaries and benefits
per equivalent admission increased 12.3% in the third quarter of 2020 compared
to the third quarter of 2019. Same facility labor rate increases averaged 5.2%
for the third quarter of 2020 compared to the third quarter of 2019. Due to the
COVID-19
pandemic, during the second quarter of 2020 we suspended annual merit increases
and implemented temporary salary reductions. During the third quarter of 2020,
we revised these compensation decisions and recorded $102 million, or $0.23 per
diluted share, of additional compensation expense.
Supplies, as a percentage of revenues, were 16.0% in the third quarter of 2020
and 16.5% in the third quarter of 2019. Supply costs per equivalent admission
increased 11.9% in the third quarter of 2020 compared to the third quarter of
2019. Supply costs per equivalent admission increased 9.9% for medical devices,
14.0% for pharmacy supplies and 12.5% for general medical and surgical items in
the third quarter of 2020 compared to the third quarter of 2019.
Other operating expenses, as a percentage of revenues, were 16.9% in the third
quarter of 2020 and 18.5% in the third quarter of 2019. Other operating expenses
is primarily comprised of contract services, professional fees, repairs and
maintenance, rents and leases, utilities, insurance (including professional
liability insurance) and nonincome taxes. Provisions for losses related to
professional liability risks were $26 million and $89 million for the third
quarters of 2020 and 2019, respectively. During the third quarters of 2020 and
2019, we recorded reductions of $112 million, or $0.25 per diluted share, and
$50 million, or $0.11 per diluted share, respectively, to our provision for
professional liability risks related to the receipt of updated actuarial
information.
During the third quarter of 2020, we recorded the reversal of $822 million of
government stimulus income previously recorded in the second quarter of 2020
related to general distribution funds received from the Provider Relief Fund
established by the CARES Act.

                                       29
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Quarters Ended September 30, 2020 and 2019 (continued)

Equity in earnings of affiliates was $40 million and $4 million in the third
quarters of 2020 and 2019, respectively.
Depreciation and amortization increased $47 million, from $647 million in the
third quarter of 2019 to $694 million in the third quarter of 2020. The increase
in depreciation relates primarily to capital expenditures at our existing
facilities.
Interest expense was $385 million in the third quarter of 2020 and $448 million
in the third quarter of 2019. Our average debt balance was $30.952 billion for
the third quarter of 2020 compared to $34.693 billion for the third quarter of
2019. The average effective interest rate for our long-term debt declined to
4.9% for the quarter ended September 30, 2020 from 5.1% for the quarter ended
September 30, 2019.
During the third quarter of 2020, we recorded gains on sales of facilities of
$14 million.
During June 2019, we issued $5.000 billion aggregate principal amount of senior
secured notes comprised of $2.000 billion aggregate principal amount of 4 1/8%
notes due 2029, $1.000 billion aggregate principal amount of 5 1/8% notes due
2039 and $2.000 billion aggregate principal amount of 5 1/4% notes due 2049.
During July 2019, we redeemed all $600 million outstanding aggregate principal
amount of 4.250% senior secured notes due 2019, all $3.000 billion outstanding
aggregate principal amount of 6.500% senior secured notes due 2020 and all
$1.350 billion outstanding aggregate principal amount of 5.875% senior secured
notes due 2022. The pretax loss on retirement of debt for these redemptions was
$211 million.
The effective tax rates were 23.8% and 26.0% for the third quarters of 2020 and
2019, respectively. The effective tax rate computations exclude net income
attributable to noncontrolling interests as it relates to consolidated
partnerships.
Net income attributable to noncontrolling interests declined from $152 million
for the third quarter of 2019 to $111 million for the third quarter of 2020. The
decline in net income attributable to noncontrolling interests related primarily
to the government stimulus income reversal for certain joint ventures.
Nine Months Ended September 30, 2020 and 2019
Revenues declined to $37.240 billion in the first nine months of 2020 from
$37.813 billion in the first nine months of 2019. Net income attributable to HCA
Healthcare, Inc. totaled $2.328 billion, or $6.79 per diluted share, for the
nine months ended September 30, 2020, compared to $2.434 billion, or $6.98 per
diluted share, for the nine months ended September 30, 2019. Results for the
first nine months of 2020 included $60 million, or $0.13 per diluted share, of
employee retention payroll tax credits, as provided for by the CARES Act.
Results for the first nine months of 2020 also included losses on sales of
facilities of $6 million, or $0.03 per diluted share, and losses on retirement
of debt of $295 million, or $0.66 per diluted share. Results for the first nine
months of 2019 included gains on sales of facilities of $17 million, or $0.04
per diluted share, and losses on retirement of debt of $211 million, or $0.47
per diluted share. Revenues for the first nine months of 2020 and 2019,
respectively, include $55 million, or $0.12 per diluted share, related to the
settlement of Medicare outlier calculations for prior periods and $86 million,
or $0.19 per diluted share, related to the resolution of transaction price
differences regarding certain
out-of-network
services performed in prior periods. All "per diluted share" disclosures are
based upon amounts net of the applicable income taxes. Shares used for diluted
earnings per share were 343.014 million shares for the nine months ended
September 30, 2020 and 348.712 million shares for the nine months ended
September 30, 2019.

                                       30
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Nine Months Ended September 30, 2020 and 2019 (continued)

Due to the
COVID-19
pandemic, patient volumes and the related revenues for most of our services were
significantly impacted during the latter portion of the first quarter and the
first half of the second quarter and have continued to be impacted into the
third quarter of 2020 as various policies were implemented by federal, state and
local governments in response to the
COVID-19
pandemic that have caused many people to remain at home and forced the closure
of or limitations on certain businesses, as well as suspended elective surgical
procedures by health care facilities. During the third quarter of 2020, we
believe COVID-19 cases at our hospitals contributed to an increase in patient
acuity and had a positive impact on our average reimbursement per case. However,
the impact of COVID-19 in future periods may vary and could adversely impact our
results of operations. Revenues declined 1.5% on a consolidated basis and 2.1%
on a same facility basis for the nine months ended September 30, 2020, compared
to the nine months ended September 30, 2019. The decline in consolidated
revenues can be primarily attributed to the net impact of a 9.8% decline in
equivalent admissions offset by a 9.1% increase in revenue per equivalent
admission. The same facility revenues decline primarily resulted from the net
impact of a 9.9% decline in same facility equivalent admissions offset by an
8.6% increase in same facility revenue per equivalent admission.
Salaries and benefits, as a percentage of revenues, were 47.1% in the first nine
months of 2020 and 46.2% in the first nine months of 2019. Salaries and benefits
per equivalent admission increased 11.4% in the first nine months of 2020
compared to the first nine months of 2019. Same facility labor rate increases
averaged 2.8% for the first nine months of 2020 compared to the first nine
months of 2019.
Supplies, as a percentage of revenues, were 16.1% in the first nine months of
2020 and 16.5% in the first nine months of 2019. Supply costs per equivalent
admission increased 6.4% in the first nine months of 2020 compared to the first
nine months of 2019. Supply costs per equivalent admission increased 4.5% for
medical devices, 5.2% for pharmacy supplies and 8.1% for general medical and
surgical items in the first nine months of 2020 compared to the first nine
months of 2019.
Other operating expenses, as a percentage of revenues, were 18.3% in the first
nine months of 2020 and 18.6% in the first nine months of 2019. Other operating
expenses is primarily comprised of contract services, professional fees, repairs
and maintenance, rents and leases, utilities, insurance (including professional
liability insurance) and nonincome taxes. Provisions for losses related to
professional liability risks were $305 million and $358 million for the first
nine months of 2020 and 2019, respectively. During the first nine months of 2020
and 2019, we recorded reductions of $112 million, or $0.25 per diluted share,
and $50 million, or $0.11 per diluted share, respectively, to our provision for
professional liability risks related to the receipt of updated actuarial
information.
Equity in earnings of affiliates was $48 million and $23 million in the first
nine months of 2020 and 2019, respectively.
Depreciation and amortization increased $157 million, from $1.902 billion in the
first nine months of 2019 to $2.059 billion in the first nine months of 2020.
The increase in depreciation relates primarily capital expenditures at our
existing facilities.
Interest expense was $1.201 billion in the first nine months of 2020 and
$1.386 billion in the first nine months of 2019. Our average debt balance was
$32.223 billion for the first nine months of 2020 compared to $34.422 billion
for the first nine months of 2019. The average effective interest rate for our
long-term debt declined to 5.0% for the nine months ended September 30, 2020
from 5.4% for the nine months ended September 30, 2019.

                                       31
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (continued)
Nine Months Ended September 30, 2020 and 2019 (continued)

During the first nine months of 2020 and 2019, we recorded losses on sales of
facilities of $6 million and gains on sales of facilities of $17 million,
respectively.
During February 2020, we issued $2.700 billion aggregate principal amount of
3.50% senior unsecured notes due 2030. During March 2020, we used the net
proceeds for the redemption of all $1.000 billion outstanding aggregate
principal amount of HCA Healthcare, Inc.'s 6.25% senior notes due 2021 and,
together with available funds, for the redemption of all $2.000 billion
outstanding aggregate principal amount of HCA Inc.'s 7.50% senior notes due
2022. The pretax loss on retirement of debt was $295 million. During June 2019,
we issued $5.000 billion aggregate principal amount of senior secured notes
comprised of $2.000 billion aggregate principal amount of 4 1/8% notes due 2029,
$1.000 billion aggregate principal amount of 5 1/8% notes due 2039 and
$2.000 billion aggregate principal amount of 5 1/4% notes due 2049. During July
2019, we redeemed all $600 million outstanding aggregate principal amount of
4.250% senior secured notes due 2019, all $3.000 billion outstanding aggregate
principal amount of 6.500% senior secured notes due 2020 and all $1.350 billion
outstanding aggregate principal amount of 5.875% senior secured notes due 2022.
The pretax loss on retirement of debt for these redemptions was $211 million.
The effective tax rates were 22.2% and 23.9% for the first nine months of 2020
and 2019, respectively. The effective tax rate computations exclude net income
attributable to noncontrolling interests as it relates to consolidated
partnerships. Our provisions for income taxes for the first nine months of 2020
and 2019 included tax benefits of $59 million and $56 million, respectively,
related to employee equity award settlements. Excluding the effect of these
adjustments, the effective tax rate for the first nine months of 2020 and 2019
would have been 24.2% and 25.7%, respectively.
Net income attributable to noncontrolling interests declined from $438 million
for the first nine months of 2019 to $365 million for the first nine months of
2020. The decline in net income attributable to noncontrolling interests related
primarily to the operations of joint ventures in two of our Texas markets and
our surgery center partnerships.
Liquidity and Capital Resources
Cash provided by operating activities totaled $12.815 billion in the first nine
months of 2020 compared to $5.097 billion in the first nine months of 2019. The
$7.718 billion increase in cash provided by operating activities in the first
nine months of 2020 compared to the first nine months of 2019, related primarily
to the combined effect of the receipt of $6.123 billion related to unapplied
accelerated Medicare payments and Provider Relief Funds as provided for in the
CARES Act, and positive changes in working capital of $1.742 billion, primarily
from the collection of patient accounts receivable. On October 8, 2020, we
announced our decision to return, or repay early, all of our share of the
Provider Relief Fund distributions of approximately $1.6 billion and the
approximately $4.4 billion of Medicare accelerated payments that have been
received under the CARES Act. The repayment of these funds will be recorded as a
reduction to our cash flows from operating activities. Our cash flows from
operating activities of $12.815 billion for the nine months ended September 30,
2020 includes this approximately $6 billion of funds that we have announced we
will repay, and the exclusion of the impact of these cash flows would reduce our
cash flows provided by operating activities for the first nine months of 2020 to
$6.815 billion.

                                       32
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (continued)


Interest payments and net income tax payments in the first nine months of 2020
and 2019 totaled $2.009 billion and $2.206 billion, respectively. Working
capital totaled $1.887 billion at September 30, 2020 and $3.439 billion at
December 31, 2019. The $1.552 billion decline in working capital is primarily
related to a decline in accounts receivable of $947 million and a $365 million
increase in accounts payable.
Cash used in investing activities was $2.483 billion in the first nine months of
2020 compared to $4.375 billion in the first nine months of 2019. Acquisitions
of hospitals and health care entities declined from $1.592 billion in the first
nine months of 2019 (which included the acquisition of a seven-hospital health
system in North Carolina) to $380 million in the first nine months of 2020.
Excluding acquisitions, capital expenditures were $2.087 billion in the first
nine months of 2020 and $2.884 billion in the first nine months of 2019. Planned
capital expenditures are expected to approximate $3.0 billion in 2020. At
September 30, 2020, there were projects under construction which had estimated
additional costs to complete and equip over the next five years of approximately
$3.1 billion. We expect to finance capital expenditures with internally
generated and borrowed funds.
Cash used in financing activities totaled $4.361 billion in the first nine
months of 2020 compared to $661 million in the first nine months of 2019. During
the first nine months of 2020, net cash flows used in financing activities
included a net decline of $3.183 billion in our indebtedness, payments of
dividends of $153 million, repurchases of common stock of $441 million,
distributions to noncontrolling interests of $393 million and payments of debt
issuance costs of $35 million. During the first nine months of 2019, net cash
flows used in financing activities included a net increase of $1.132 billion in
our indebtedness, payment of dividends of $414 million, repurchases of common
stock of $759 million, distributions to noncontrolling interests of $404 million
and payments of debt issuance costs of $71 million.
In response to the risks the
COVID-19
pandemic presents to our business, we have suspended our share repurchase and
quarterly dividend programs and reduced certain planned projects and capital
expenditures. We expect to evaluate resumption of these programs at a future
date.
We are a highly leveraged company with significant debt service requirements.
Our debt totaled $30.964 billion at September 30, 2020. Our interest expense was
$1.201 billion for the first nine months of 2020 and $1.386 billion for the
first nine months of 2019.
In addition to cash flows from operations, available sources of capital include
amounts available under our senior secured credit facilities ($7.710 billion
available as of both September 30, 2020 and October 26, 2020) and anticipated
access to public and private debt markets.
During February 2020, we issued $2.700 billion aggregate principal amount of
3.50% senior notes due 2030. During March 2020, we used the net proceeds for the
redemption of all $1.000 billion outstanding aggregate principal amount of HCA
Healthcare, Inc.'s 6.25% senior notes due 2021 and, together with available
funds, for the redemption of all $2.000 billion outstanding aggregate principal
amount of HCA Inc.'s 7.50% senior notes due 2022.
In response to the risks the
COVID-19
pandemic presents to our business, during March 2020, we entered into a credit
agreement that provides for
a 364-day secured
term loan facility for an aggregate principal amount of up to $2.000 billion.
The facility will mature in March 2021. If drawn, amounts outstanding under the
credit agreement will bear interest at either (i) the LIBOR rate plus 2.50% or
(ii) an alternate base rate as defined in the credit agreement. As of
September 30, 2020 and October 29, 2020, there were no amounts outstanding nor
draw notices pending under the facility.

                                       33
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (continued)


During the nine months ended September 30, 2020, we received $4.449 billion of
accelerated Medicare payments and $1.674 billion in general and targeted
distributions from the Provider Relief Fund (net of amounts returned), both as
provided for and established under the CARES Act. On October 8, 2020, we
announced our decision to return, or repay early, all of our share of the
Provider Relief Fund distributions of approximately $1.6 billion and the
approximately $4.4 billion of Medicare accelerated payments. We expect to repay
the entire amount using available cash and future cash flows from operations.
Investments of our insurance subsidiaries, held to maintain statutory equity
levels and to provide liquidity to pay claims, totaled $486 million and
$462 million at September 30, 2020 and December 31, 2019, respectively. An
insurance subsidiary maintained net reserves for professional liability risks of
$187 million and $175 million at September 30, 2020 and December 31, 2019,
respectively. Our facilities are insured by a 100% owned insurance subsidiary
for losses up to $50 million per occurrence; however, this coverage is generally
subject, in most cases, to a $15 million per occurrence self-insured retention.
Net reserves for the self-insured professional liability risks retained were
$1.702 billion and $1.606 billion at September 30, 2020 and December 31, 2019,
respectively. Claims payments, net of reinsurance recoveries, during the next
12 months are expected to approximate $487 million. We estimate that
approximately $440 million of the expected net claim payments during the next
12 months will relate to claims subject to the self-insured retention.
Management believes that cash flows from operations, amounts available under our
senior secured credit facilities and our anticipated access to public and
private debt markets will be sufficient to meet expected liquidity needs during
the next 12 months.
Summarized Financial Information
HCA Inc., a direct wholly-owned subsidiary of HCA Healthcare, Inc., is the
obligor under a substantial portion of our indebtedness, including our senior
secured credit facilities, senior secured notes and senior unsecured notes. The
senior secured notes and senior unsecured notes issued by HCA Inc. are fully and
unconditionally guaranteed by HCA Healthcare, Inc. The senior secured credit
facilities and senior secured notes are fully and unconditionally guaranteed,
subject to customary release provisions, by substantially all existing and
future, direct and indirect, 100% owned material domestic subsidiaries that are
"Unrestricted Subsidiaries" under our Indenture dated December 16, 1993 (except
for certain special purpose subsidiaries that only guarantee and pledge their
assets under our senior secured asset-based revolving credit facility). For
further information regarding such guarantees, refer to the applicable
indentures that are filed as exhibits to our annual report on Form
10-K
for the year ended December 31, 2019.

                                       34
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
Summarized Financial Information (continued)

Summarized financial information is presented on a combined basis and
transactions between the combining entities have been eliminated. Financial
information for nonguarantor entities has been excluded. The summarized
operating results information for the nine months ended September 30, 2020 and
year ended December 31, 2019 and the summarized balance sheet information at
September 30, 2020 and December 31, 2019, for HCA Healthcare, Inc., HCA Inc. and
the subsidiary guarantors (the Parent, Subsidiary Issuer and Subsidiary
Guarantors) follow (dollars in millions):
Nine Months Ended September 30, 2020 and Year Ended December 31, 2019:

                                                   Nine Months                      Year

                                                September 30, 2020            December 31, 2019
Revenues                                       $             22,406          $            29,220
Income before income taxes                                    2,642                        3,912
Net income                                                    2,071                        2,993
Net income attributable to Parent,
Subsidiary Issuer and Subsidiary
Guarantors                                                    2,017                        2,902

At September 30, 2020 and December 31,
2019:

                                                  September 30,                 December 31,

                                                       2020                         2019
Current assets                                 $             11,252          $             6,090
Property and equipment, net                                  14,795                       13,418
Goodwill and other intangible assets                          5,777                        5,743
Total noncurrent assets                                      21,640                       19,977
Total assets                                                 32,892                       26,067

Current liabilities                                           9,528                        4,504
Long-term debt, net                                          30,457                       33,227
Intercompany balances                                         2,901                          (53 )
Income taxes and other liabilities                              799                          879
Total noncurrent liabilities                                 34,654                       34,398

Stockholders' deficit attributable to
Parent, Subsidiary Issuer and Subsidiary
Guarantors                                                  (11,392 )                    (12,941 )
Noncontrolling interests                                        102                          106


Market Risk
We are exposed to market risk related to changes in market values of securities.
The investments in our 100% owned insurance subsidiaries were $486 million at
September 30, 2020. These investments are carried at fair value, with changes in
unrealized gains and losses that are not credit-related being recorded as
adjustments to other comprehensive income. At September 30, 2020, we had a net
unrealized gain of $31 million on the insurance subsidiaries' investments.
We are exposed to market risk related to market illiquidity. Investments in debt
and equity securities of our 100% owned insurance subsidiaries could be impaired
by the inability to access the capital markets. Should the 100% owned insurance
subsidiaries require significant amounts of cash in excess of normal cash
requirements to pay claims and other expenses on short notice, we may have
difficulty selling these investments in a timely

                                       35
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity and Capital Resources (continued)
Market Risk (continued)

manner or be forced to sell them at a price less than what we might otherwise
have been able to in a normal market environment. We may be required to
recognize credit-related impairments on our investment securities in future
periods should issuers default on interest payments or should the fair market
valuations of the securities deteriorate due to ratings downgrades or other
issue-specific factors.
We are also exposed to market risk related to changes in interest rates, and we
periodically enter into interest rate swap agreements to manage our exposure to
these fluctuations. Our interest rate swap agreements involve the exchange of
fixed and variable rate interest payments between two parties, based on common
notional principal amounts and maturity dates. The notional amounts of the swap
agreements represent balances used to calculate the exchange of cash flows and
are not our assets or liabilities. Our credit risk related to these agreements
is considered low because the swap agreements are with creditworthy financial
institutions. The interest payments under these agreements are settled on a net
basis. These derivatives have been recognized in the financial statements at
their respective fair values. Changes in the fair value of these derivatives,
which are designated as cash flow hedges, are included in other comprehensive
income.
With respect to our interest-bearing liabilities, approximately $1.185 billion
of long-term debt at September 30, 2020 was subject to variable rates of
interest, while the remaining balance in long-term debt of $29.779 billion at
September 30, 2020 was subject to fixed rates of interest. Both the general
level of interest rates and, for the senior secured credit facilities, our
leverage affect our variable interest rates. Our variable debt is comprised
primarily of amounts outstanding under the senior secured credit facilities.
Borrowings under the senior secured credit facilities bear interest at a rate
equal to an applicable margin plus, at our option, either (a) a base rate
determined by reference to the higher of (1) the federal funds rate plus 0.50%
or (2) the prime rate of Bank of America or (b) a LIBOR rate for the currency of
such borrowing for the relevant interest period. The applicable margin for
borrowings under the senior secured credit facilities may fluctuate according to
a leverage ratio. The average effective interest rate for our long-term debt was
5.0% and 5.4% for the nine months ended September 30, 2020 and 2019,
respectively.
The estimated fair value of our total long-term debt was $34.739 billion at
September 30, 2020. The estimates of fair value are based upon the quoted market
prices for the same or similar issues of long-term debt with the same
maturities. Based on a hypothetical 1% increase in variable interest rates, the
potential annualized reduction to future pretax earnings would be approximately
$12 million. To mitigate the impact of fluctuations in interest rates, we
generally target a portion of our debt portfolio to be maintained at fixed
rates.
We are exposed to currency translation risk related to our foreign operations.
We currently do not consider the market risk related to foreign currency
translation to be material to our consolidated financial statements or our
liquidity.
Tax Examinations
The Internal Revenue Service was conducting an examination of the Company's
2016, 2017 and 2018 federal income tax returns at September 30, 2020. We are
also subject to examination by state and foreign taxing authorities. Management
believes HCA Healthcare, Inc. and its predecessors, subsidiaries and affiliates
properly reported taxable income and paid taxes in accordance with applicable
laws and agreements established with IRS, state and foreign taxing authorities
and final resolution of any disputes will not have a material, adverse effect on
our results of operations or financial position. However, if payments due upon
final resolution of any issues exceed our recorded estimates, such resolutions
could have a material, adverse effect on our results of operations or financial
position.

                                       36
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

                                 Operating Data

                                                                 2020           2019
Number of hospitals in operation at:
March 31                                                             186             185
June 30                                                              186             184
September 30                                                         187             184
December 31                                                                          184
Number of freestanding outpatient surgical centers in
operation at:
March 31                                                             123             124
June 30                                                              122             125
September 30                                                         121             125
December 31                                                                          123
Licensed hospital beds at(a):
March 31                                                          49,357          48,455
June 30                                                           49,403          48,483
September 30                                                      49,473          48,588
December 31                                                                       49,035
Weighted average licensed beds(b):
Quarter:
First                                                             49,160          48,036
Second                                                            49,358          48,429
Third                                                             49,479          48,535
Fourth                                                                            48,911
Year                                                                              48,480
Average daily census(c):
Quarter:
First                                                             28,822          28,966
Second                                                            24,844          27,808
Third                                                             28,186          27,502
Fourth                                                                            28,274
Year                                                                              28,134
Admissions(d):
Quarter:
First                                                            528,244         523,196
Second                                                           452,992         518,253
Third                                                            506,756         527,284
Fourth                                                                           540,194
Year                                                                           2,108,927
Equivalent admissions(e):
Quarter:
First                                                            889,035         889,956
Second                                                           723,136         903,419
Third                                                            835,576         918,964
Fourth                                                                           933,996
Year                                                                           3,646,335



                                       37
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
                           Operating Data (continued)

                                                        2020             2019
Average length of stay (days)(f):
Quarter:
First                                                        5.0              5.0
Second                                                       5.0              4.9
Third                                                        5.1              4.8
Fourth                                                                        4.8
Year                                                                          4.9
Emergency room visits(g):
Quarter:
First                                                  2,264,707        2,287,440
Second                                                 1,516,116        2,253,337
Third                                                  1,813,661        2,269,364
Fourth                                                                  2,350,988
Year                                                                    9,161,129
Outpatient surgeries(h):
Quarter:
First                                                    226,319          240,846
Second                                                   170,911          253,441
Third                                                    232,493          249,177
Fourth                                                                    266,483
Year                                                                    1,009,947
Inpatient surgeries(i):
Quarter:
First                                                    135,145          137,363
Second                                                   118,591          140,473
Third                                                    133,492          143,215
Fourth                                                                    145,584
Year                                                                      566,635
Days revenues in accounts receivable(j):
Quarter:
First                                                         49               53
Second                                                        50               52
Third                                                         44               52
Fourth                                                                         50
Outpatient revenues as a % of patient revenues(k):
Quarter:
First                                                         37 %             38 %
Second                                                        32 %             39 %
Third                                                         36 %             39 %
Fourth                                                                         39 %
Year                                                                           39 %



                                       38
--------------------------------------------------------------------------------
                ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
                           Operating Data (continued)

(a) Licensed beds are those beds for which a facility has been granted approval

to operate from the applicable state licensing agency.

(b) Represents the average number of licensed beds, weighted based on periods

owned.

(c) Represents the average number of patients in our hospital beds each day.

(d) Represents the total number of patients admitted to our hospitals and is used

by management and certain investors as a general measure of inpatient volume.

(e) Equivalent admissions are used by management and certain investors as a

general measure of combined inpatient and outpatient volume. Equivalent

admissions are computed by multiplying admissions (inpatient volume) by the

sum of gross inpatient revenues and gross outpatient revenues and then

dividing the resulting amount by gross inpatient revenues. The equivalent

admissions computation "equates" outpatient revenues to the volume measure

(admissions) used to measure inpatient volume resulting in a general measure

of combined inpatient and outpatient volume.

(f) Represents the average number of days admitted patients stay in our

hospitals.

(g) Represents the number of patients treated in our emergency rooms.

(h) Represents the number of surgeries performed on patients who were not

admitted to our hospitals. Pain management and endoscopy procedures are not

included in outpatient surgeries.

(i) Represents the number of surgeries performed on patients who have been

admitted to our hospitals. Pain management and endoscopy procedures are not

included in inpatient surgeries.

(j) Revenues per day is calculated by dividing revenues for the quarter by the

days in the quarter. Days revenues in accounts receivable is then calculated

as accounts receivable at the end of the quarter divided by revenues per day.

(k) Represents the percentage of patient revenues related to patients who are not

    admitted to our hospitals.



                                       39

--------------------------------------------------------------------------------

© Edgar Online, source Glimpses

All news about HCA HEALTHCARE, INC.
01/14HCA HEALTHCARE : Inc. 4th Quarter 2020 Earnings Conference Call
BU
01/08HCA HEALTHCARE : Credit Suisse Adjusts HCA Healthcare's Price Target to $197 fro..
MT
01/07OPTIONS : Option Implied Volatility for Hospital Groups
MT
01/05HCA HEALTHCARE : Deutsche Bank Adjusts HCA Healthcare PT to $180 From $150, Main..
MT
01/05HCA HEALTHCARE : Truist Adjusts HCA Healthcare's Price Target to $190 From $165,..
MT
2020HCA HEALTHCARE : Mizuho Securities Adjusts HCA Healthcare PT to $180 From $170, ..
MT
2020HCA HEALTHCARE : JPMorgan Upgrades HCA Healthcare to Overweight From Neutral; Pr..
MT
2020HCA HEALTHCARE : Collects Record-Breaking 13,523 Pounds of Medication During 202..
BU
2020HCA HEALTHCARE : Mitch Edgeworth Appointed President of HCA Healthcare's TriStar..
BU
2020Mizuho Adjusts HCA Healthcare's Price Target to $170 From $150, Reiterates Bu..
MT
More news