HCA Healthcare, Inc. — 2021 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing, not a standalone fourth-quarter report; the supplied filing text does not provide a clear set of Q4-only results. Unless noted otherwise, financial amounts below are in U.S. dollars.
Business context
HCA operated 182 hospitals, 125 freestanding surgery centers and 21 freestanding endoscopy centers in 20 U.S. states and England at year-end. Its business includes inpatient and outpatient hospital services, surgery, emergency care and related health services.
Key financial metrics
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $58.752 billion | $51.533 billion |
| Income before income taxes | $9.833 billion | $5.430 billion |
| Net income attributable to HCA | $6.956 billion | $3.754 billion |
| Diluted earnings per share | $21.16 | $10.93 |
| Operating cash flow | $8.959 billion | $9.232 billion |
| Capital expenditures, excluding acquisitions | $3.577 billion | $2.835 billion |
| Interest expense | $1.566 billion | $1.584 billion |
| Total debt at year-end | $34.579 billion | $31.004 billion |
| Cash and cash equivalents at year-end | $1.451 billion | $1.793 billion |
- Revenue increased 14.0%. Income attributable to HCA rose 85.3%; diluted EPS increased as the weighted-average diluted share count fell to 328.752 million from 343.605 million.
- Net income attributable to HCA was 11.8% of revenue, versus 7.3% in 2020. Income before taxes was 16.7% of revenue, versus 10.5%.
- Adjusted segment EBITDA, a non-GAAP measure, was $12.644 billion, up from $10.037 billion; its margin was approximately 21.5%, compared with 19.5%.
- Working capital was $3.960 billion, versus $3.629 billion. HCA reported $3.640 billion available under its senior secured credit facilities at year-end, subject to facility terms and borrowing-base limits.
- Debt included $4.240 billion at variable rates. The average interest rate on long-term debt was 4.9%, versus 5.0% in 2020.
Material changes versus 2020
- Revenue growth reflected increases of 6.8% in revenue per equivalent admission and 6.8% in equivalent admissions. Same-facility revenue grew 14.4%.
- Admissions rose 4.0% and emergency-room visits rose 13.8%; outpatient surgeries increased 14.2%. Inpatient surgeries were essentially flat, down 0.1%. Occupancy increased to 71% from 66%.
- Labor costs rose: salaries and benefits increased to $26.779 billion, although they declined as a share of revenue to 45.6% from 46.3%. Same-facility labor rates averaged 7.5% higher, reflecting greater use of contract, overtime and premium-rate staffing.
- Operating cash flow declined $273 million. Management attributed the decline to a $1.781 billion negative change in working-capital items, primarily increased accounts receivable, partly offset by higher earnings.
- Reported earnings included $1.620 billion of gains on facility sales, primarily the sale of five Georgia hospitals and other health care investments. By contrast, 2020 included $295 million of debt-retirement losses. These items materially affect the year-over-year earnings comparison.
- HCA issued $2.350 billion of secured notes and entered into new or amended credit facilities in 2021, using proceeds in part to retire $3.657 billion of term loans. Year-end debt increased by $3.575 billion.
Outlook, commentary, risks and unusual items
- Management expects 2022 capital expenditures of approximately $4.2 billion and stated that operating cash flow, available credit facilities and anticipated debt-market access should meet foreseeable liquidity needs. The filing does not provide specific revenue or earnings guidance.
- Management described patient volumes as recovering during 2021, but noted renewed COVID-19 admissions and restrictions later in the year. It said the pandemic’s future operating and financial effects remain difficult to predict.
- Staff shortages, wage inflation, contract labor costs and supply disruptions may constrain capacity and pressure margins. The filing also discusses potential staffing effects from COVID-19 vaccination requirements.
- HCA is highly leveraged. Debt covenants, refinancing conditions and floating-rate exposure could constrain financial flexibility; management estimated a 1 percentage-point rate increase would reduce annual pretax earnings by approximately $42 million.
- Operations are geographically concentrated: Florida and Texas generated 49% of 2021 revenue. The Texas Medicaid waiver and directed-payment arrangements remained subject to uncertainty; Texas waiver supplemental payments were $534 million in 2021, down from $599 million in 2020.
- Other significant exposures include changes to Medicare and Medicaid reimbursement, payer contract pressure, patient collections, regulatory investigations and litigation, professional-liability claims, cybersecurity, and hurricane and climate-related disruption. HCA reported a $2.022 billion professional-liability reserve and described a pending whistleblower lawsuit concerning the Texas Medicaid program.
- HCA returned approximately $6.1 billion of COVID-related Provider Relief Fund distributions and accelerated Medicare payments in 2020. 2021 cash flow also included working-capital effects; the filing reports $79 million of government-stimulus refund liability at year-end.
- Shareholder returns were substantial: HCA repurchased $8.215 billion of stock and paid $624 million in dividends during 2021. The board authorized an additional $8 billion repurchase program in January 2022 and declared a quarterly dividend of $0.56 per share.
Important facts for investors to verify
- How much of 2021 earnings growth reflects recurring hospital operations versus the $1.620 billion facility-sale gain, and what earnings look like excluding unusual items.
- Whether patient volumes, especially inpatient surgeries, sustain recovery, and whether staffing and supply costs continue to rise faster than revenue.
- Accounts-receivable quality and cash conversion: operating cash flow fell, receivables increased, and days revenue in accounts receivable rose to 49 from 45.
- Debt maturities, variable-rate exposure, covenant headroom and remaining borrowing availability; verify the effect of further rate increases and refinancing needs.
- Resolution and renewal of Texas Medicaid waiver and directed-payment programs, as well as potential changes to other supplemental reimbursement programs.
- Professional-liability reserve assumptions, the Texas Medicaid whistleblower matter and other material contingencies; the filing’s auditor identified revenue recognition and professional-liability reserves as critical audit matters.
- Execution of the $4.2 billion capital-spending plan alongside share repurchases, dividends and debt management. The auditor issued an unqualified opinion on the financial statements and internal controls.