HCA Holdings, Inc. (HCA)

HCA 
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Start Time: 10:03

End Time: 10:59

HCA Holdings, Inc. (HCA)

Q3 2012 Earnings Call

November 1 2012, 2012 10:00 am ET

Executive

Victor L. Campbell – Senior Vice President

Richard M. Bracken – Chairman and Chief Executive Officer

R. Milton Johnson – President and Chief Financial Officer

Mark Kimbrough – Investor Relations

David G. Anderson – Senior Vice President - Finance and Treasurer

Samuel N. Hazen – President of Operations

Dr. Jonathan B. Perlin – Chief Medical Officer

Analysts

Frank Morgan – RBC Capital Markets

Colleen Elizabeth Lang – Lazard Capital Markets LLC

Joshua Raskin – Barclays Capital

A.J. Rice – UBS

Sheryl Skolnick – CRT Capital Group

John Ransom – Raymond James

Kevin Fischbeck – Bank of America/Merrill Lynch

Gary Taylor – Citigroup

Darren Lehrich – Deutsche Bank Securities

Kevin Campbell – Avondale Partners LLC

Jake Hindelong – Imperial Capital, LLC

Gary Lieberman – Wells Fargo Securities, LLC

Ralph Giacobbe – Credit Suisse

Presentation

Operator

Good day everyone and welcome to the HCA Third Quarter 2012 Earnings Release Conference Call. As a reminder, today’s call is being recorded. At this time for opening remarks and introductions, I’d like to turn the call over to the Senior Vice President, Mr. Vic Campbell. Please go ahead, sir.

Victor L. Campbell

All right, thank you very much and good morning everyone. Mark Kimbrough, our Chief Investor Relations Officer, and I would like to welcome all of you on today’s call, including those who are listening on the webcast. With me here this morning is our Chairman and CEO, Richard Bracken; our President and CFO, Milton Johnson; and Sam Hazen, President of Operations. And we have several other members of the senior management team here with us as well to assist during the Q&A.

Before I turn the call over to Richard, let me remind everyone that should today’s call contain any forward-looking statements, they are based on management’s current expectations. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those that might be expressed today. Many of these factors are listed in today’s press release and in our various SEC filings.

Many of the factors that will determine the company’s future results are beyond the ability of the company to control or predict. In light of the significant uncertainties inherent in any forward-looking statements, you should not place undue reliance on these statements. The company undertakes no obligation to revise or update any forward-looking statements whether as a result of new information or future events. And as you heard, the call is being recorded and replay will be available later today.

With that, I’d turn the call over to Richard Bracken.

Richard M. Bracken

Thank you, Vic and good morning to all. With Hurricane Sandy and the storms creating so much destruction and chaos in the Northeast, we do very much appreciate those of you who are able to join us on our call this morning. Our thoughts are with all of you as you are dealing with the aftermath of this horrible storm.

Before Milton and Sam provide details on our third quarter performance, let me take a moment to provide a couple of thoughts. On balance, we were pleased with the results of the third quarter. Our volume trends continue to show stable growth, market share trends remain favorable, patient acuity or case mix continue to increase consistent with recent quarterly trends, expense management was aligned with expectations, and we were recognized for some success in our quality performance agenda. However, revenues per unit continue to be under pressure and to some extent, offset certain of these more favorable metrics.

All-in-all, the quarter close within our general expectations and of course, we will talk about all of this in just a minute. Through the first nine months of 2012, the company has achieved adjusted EBITDA of $4.925 billion or growth of 11.4%, compared to the prior year.

On a same facility basis, year-to-date admissions and equivalent admissions increased 2.6% and 3.8% respectively, slightly ahead of our expectations. We have now experienced 20 consecutive quarters of positive equivalent admissions growth. Year-to-date, same facility growth rate of emergency visits was robust at 7.2%. Importantly, we believe adjusted EBITDA performance is on track for our full-year and our reconfirming our previously stated guidance for 2012.

On October 23, the company’s Board of Directors approved a special cash dividend of $2.50 per share. The record dates for this dividend is November 2, with a payment date of November 16 and we are pleased to be able to provide this special dividend to our shareholders. We are confident that this dividend will not impede our ability to invest in our markets or negatively affect our ability to make acquisition. The impact of this dividend on the company’s leverage is modest taking us from a 4.1 times debt-to-adjusted EBITDA at September 30 to a pro forma ratio of 4.3 times and you may recall this leverage ratio was 4.5 times at December 31 last year.

During October, we were able to complete two important financing transactions. First, we issued $2.5 billion of public notes with 10.5 year maturities that historically low interest rate, which was comprised of $1.25 billion of secured notes with a 4.75% coupon and a $1.25 billion of unsecured notes with a 5.875% coupon. In addition, we replaced our cash flow, revolving credit facility extending the maturity to November 2016 and lowering by 100 basis points, the borrowing spread schedule take effects later this month.

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