10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

The accompanying notes are an integral part of the condensed consolidated financial statements.

NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

HCA Healthcare, Inc. is a holding company whose affiliates own and operate hospitals and related health care entities. The term “affiliates” includes direct and indirect subsidiaries of HCA Healthcare, Inc. and partnerships and joint ventures in which such subsidiaries are partners. At March 31, 2024, these affiliates owned and operated 188 hospitals, 121 freestanding surgery centers, 24 freestanding endoscopy centers and provided extensive outpatient and ancillary services. HCA Healthcare, Inc.’s facilities are located in 20 states and England. The terms “Company,” “HCA,” “we,” “our” or “us,” as used herein and unless otherwise stated or indicated by context, refer to HCA Healthcare, Inc. and its affiliates. The terms “facilities” or “hospitals” refer to entities owned and operated by affiliates of HCA and the term “employees” refers to employees of affiliates of HCA.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal and recurring nature.

The majority of our expenses are “costs of revenues” items. Costs that could be classified as general and administrative would include our corporate office costs, which were $78 million and $74 million for the quarters ended March 31, 2024 and 2023, respectively. Operating results for the quarter are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. For further information, refer to the consolidated financial statements and footnotes thereto included in our annual report on Form 10-K for the year ended December 31, 2023.

Revenues

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.

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenues (continued)

Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual adjustments 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 and other discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record these 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 ended March 31, 2024 and 2023 are summarized in the following table (dollars in millions):


	2024		Ratio			2023		Ratio
Medicare	$	2,838		16.4	%	$	2,738		17.6	%
Managed Medicare		3,026		17.4			2,559		16.4
Medicaid		1,000		5.8			735		4.7
Managed Medicaid		978		5.6			913		5.9
Managed care and insurers		8,545		49.2			7,623		48.9
International (managed care and insurers)		412		2.4			375		2.4
Other		540		3.2			648		4.1
Revenues	$	17,339		100.0	%	$	15,591		100.0	%

Managed care and insurers revenues for the quarter ended March 31, 2023 include $145 million related to resolving certain disputed claims from prior years with a commercial payer.

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 ended March 31, 2024 and 2023 follows (dollars in millions):


	2024			2023
Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation and amortization)	$	14,779		$	13,157
Cost-to-charges ratio (patient care costs as percentage of gross patient charges)		10.1	%		10.4	%
Total uncompensated care	$	10,002		$	7,991
Multiply by the cost-to-charges ratio		10.1	%		10.4	%
Estimated cost of total uncompensated care	$	1,010		$	831

The total uncompensated care amounts for the quarters ended March 31, 2024 and 2023 include charity care of $3.978 billion and $3.595 billion, respectively, and the related estimated costs of charity care were $402 million and $374 million, respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

During the quarter ended March 31, 2024, we paid $50 million to acquire two hospital facilities in Texas and $46 million to acquire nonhospital health care entities. During the quarter ended March 31, 2023, we paid $83 million to acquire a hospital facility in Texas and $32 million to acquire nonhospital health care entities. Purchase price amounts are allocated to the related assets acquired and liabilities assumed based upon their respective fair values.

NOTE 4 — EARNINGS PER SHARE

We compute basic earnings per share using the weighted average number of common shares outstanding. We compute diluted earnings per share using the weighted average number of common shares outstanding, plus the dilutive effect of outstanding equity awards, computed using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share for the quarters ended March 31, 2024 and 2023 (dollars and shares in millions, except per share amounts):


	2024		2023
Net income attributable to HCA Healthcare, Inc.	$	1,591	$	1,363

Weighted average common shares outstanding		264.435		276.910
Effect of dilutive incremental shares		3.581		4.051
Shares used for diluted earnings per share		268.016		280.961
Earnings per share:
Basic earnings	$	6.01	$	4.92
Diluted earnings	$	5.93	$	4.85

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5 — INVESTMENTS OF INSURANCE SUBSIDIARIES

A summary of our insurance subsidiaries’ investments at March 31, 2024 and December 31, 2023 follows (dollars in millions):


	March 31, 2024
			Unrealized Amounts
	Amortized Cost		Gains		Losses			Fair Value
Debt securities	$	402	$	—	$	(30	)	$	372
Money market funds and other		194		—		—			194
	$	596	$	—	$	(30	)		566
Amounts classified as current assets									(95	)
Investment carrying value								$	471


	December 31, 2023
			Unrealized Amounts
	Amortized Cost		Gains		Losses			Fair Value
Debt securities	$	404	$	1	$	(29	)	$	376
Money market funds and other		188		—		—			188
	$	592	$	1	$	(29	)		564
Amounts classified as current assets									(87	)
Investment carrying value								$	477

At March 31, 2024 and December 31, 2023, the investments in debt securities of our insurance subsidiaries were classified as “available-for-sale.” Changes in unrealized gains and losses that are not credit-related are recorded as adjustments to other comprehensive income or loss.

Scheduled maturities of investments in debt securities at March 31, 2024 were as follows (dollars in millions):


	Amortized Cost		Fair Value
Due in one year or less	$	14	$	14
Due after one year through five years		147		141
Due after five years through ten years		161		143
Due after ten years		80		74
	$	402	$	372

The average expected maturity of the investments in debt securities at March 31, 2024 was 5.0 years, compared to the average scheduled maturity of 8.7 years. Expected and scheduled maturities may differ because the issuers of certain securities have the right to call, prepay or otherwise redeem such obligations prior to their scheduled maturity date.

NOTE 6 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Accounting Standards Codification 820, Fair Value Measurements and Disclosures (“ASC 820”), emphasizes fair value is a market-based measurement, and fair value measurements should be determined based on the assumptions market participants would use in pricing assets or liabilities. ASC 820 utilizes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity.

The investments of our insurance subsidiaries are generally classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

The following tables summarize the investments of our insurance subsidiaries measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, aggregated by the level in the fair value hierarchy within which those measurements fall (dollars in millions):


	March 31, 2024
				Fair Value Measurements Using
	Fair Value			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Debt securities	$	372		$	—		$	372	$	—
Money market funds and other		194			194			—		—
Investments of insurance subsidiaries		566			194			372		—
Less amounts classified as current assets		(95	)		(95	)		&#



Delaware	27-3865930
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Park Plaza Nashville, Tennessee	37203
(Address of principal executive offices)	(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Voting common stock, $.01 par value	HCA	New York Stock Exchange


Class of Common Stock	Outstanding at April 30, 2024
Voting common stock, $.01 par value	261,914,100 shares



		Page of Form 10-Q
Part I.	Financial Information

Item 1.	Financial Statements (Unaudited):

	Condensed Consolidated Income Statements — for the quarters ended March 31, 2024 and 2023	3

	Condensed Consolidated Comprehensive Income Statements — for the quarters ended March 31, 2024 and 2023	4

	Condensed Consolidated Balance Sheets — March 31, 2024 and December 31, 2023	5

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) — for the quarters ended March 31, 2024 and 2023	6

	Condensed Consolidated Statements of Cash Flows — for the quarters ended March 31, 2024 and 2023	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

Item 4.	Controls and Procedures	27

Part II.	Other Information

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 5.	Other Information	28

Item 6.	Exhibits	29

Signatures		30


	2024			2023
Revenues	$	17,339		$	15,591

Salaries and benefits		7,707			7,084
Supplies		2,671			2,423
Other operating expenses		3,606			2,894
Equity in losses of affiliates		2			18
Depreciation and amortization		795			756
Interest expense		512			479
Losses (gains) on sales of facilities		(201	)		15
		15,092			13,669
Income before income taxes		2,247			1,922
Provision for income taxes		445			379
Net income		1,802			1,543
Net income attributable to noncontrolling interests		211			180
Net income attributable to HCA Healthcare, Inc.	$	1,591		$	1,363
Per share data:
Basic earnings	$	6.01		$	4.92
Diluted earnings	$	5.93		$	4.85
Shares used in earnings per share calculations (in millions):
Basic		264.435			276.910
Diluted		268.016			280.961



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐


	March 31, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,284		$	935
Accounts receivable		10,044			9,958
Inventories		1,903			2,021
Other		2,051			2,013
		15,282			14,927

Property and equipment, at cost		59,440			58,548
Accumulated depreciation		(31,344	)		(30,833	)
		28,096			27,715

Investments of insurance subsidiaries		471			477
Investments in and advances to affiliates		736			756
Goodwill and other intangible assets		9,967			9,945
Right-of-use operating lease assets		2,211			2,207
Other		199			184
	$	56,962		$	56,211
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,735		$	4,233
Accrued salaries		1,759			2,127
Other accrued expenses		3,619			3,871
Long-term debt due within one year		3,028			2,424
		13,141			12,655

Long-term debt, less debt issuance costs and discounts of $381 and $333		37,163			37,169
Professional liability risks		1,571			1,557
Right-of-use operating lease obligations		1,912			1,903
Income taxes and other liabilities		1,905			1,867

Stockholders’ equity:
Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding 263,215,800 shares — 2024 and 265,537,300 shares — 2023		3			3
Accumulated other comprehensive loss		(433	)		(425	)
Retained deficit		(1,185	)		(1,352	)
Stockholders’ deficit attributable to HCA Healthcare, Inc.		(1,615	)		(1,774	)
Noncontrolling interests		2,885			2,834
		1,270			1,060
	$	56,962		$	56,211


	Equity (Deficit) Attributable to HCA Healthcare, Inc.
						Capital			Accumulated						Equity
	Common Stock					in Excess			Other						Attributable to
	Shares			Par		of Par			Comprehensive			Retained			Noncontrolling
	(in millions)			Value		Value			Loss			Deficit			Interests			Total
Balances, December 31, 2022		277.378		$	3	$	—		$	(490	)	$	(2,280	)	$	2,694		$	(73	)
Comprehensive income										20			1,363			180			1,563
Repurchase of common stock		(3.340	)										(849	)					(849	)
Share-based benefit plans		1.902											(87	)					(87	)
Cash dividends declared ($0.60 per share)													(168	)					(168	)
Distributions																(187	)		(187	)
Other													(7	)		40			33
Balances, March 31, 2023		275.940			3		—			(470	)		(2,028	)		2,727			232
Comprehensive income										14			1,193			219			1,426
Repurchase of common stock		(3.311	)										(924	)					(924	)
Share-based benefit plans		0.303											72						72
Cash dividends declared ($0.60 per share)													(165	)					(165	)
Distributions																(155	)		(155	)
Other													2			(27	)		(25	)
Balances, June 30, 2023		272.932			3		—			(456	)		(1,850	)		2,764			461
Comprehensive income (loss)										(35	)		1,079			196			1,240
Repurchase of common stock		(4.167	)				(86	)					(1,065	)					(1,151	)
Share-based benefit plans		0.202					86						15						101
Cash dividends declared ($0.60 per share)													(164	)					(164	)
Distributions																(155	)		(155	)
Other													(4	)		29			25
Balances, September 30, 2023		268.967			3		—			(491	)		(1,989	)		2,834			357
Comprehensive income										66			1,607			254			1,927
Repurchase of common stock		(3.647	)				(86	)					(832	)					(918	)
Share-based benefit plans		0.217					86												86
Cash dividends declared ($0.60 per share)													(161	)					(161	)
Distributions																(143	)		(143	)
Other													23			(111	)		(88	)
Balances, December 31, 2023		265.537			3		—			(425	)		(1,352	)		2,834			1,060
Comprehensive income (loss)										(8	)		1,591			211			1,794
Repurchase of common stock		(3.894	)										(1,187	)					(1,187	)
Share-based benefit plans		1.573											(68	)					(68	)
Cash dividends declared ($0.66 per share)													(176	)					(176	)
Distributions																(152	)		(152	)
Other													7			(8	)		(1	)
Balances, March 31, 2024		263.216		$	3	$	—		$	(433	)	$	(1,185	)	$	2,885		$	1,270


	2024			2023
Cash flows from operating activities:
Net income	$	1,802		$	1,543
Adjustments to reconcile net income to net cash provided by operating activities:
Increase (decrease) in cash from operating assets and liabilities:
Accounts receivable		(90	)		238
Inventories and other assets		77			(214	)
Accounts payable and accrued expenses		(517	)		(1,066	)
Depreciation and amortization		795			756
Income taxes		444			372
Losses (gains) on sales of facilities		(201	)		15
Amortization of debt issuance costs and discounts		9			9
Share-based compensation		87			77
Other		63			73
Net cash provided by operating activities		2,469			1,803
Cash flows from investing activities:
Purchase of property and equipment		(1,118	)		(1,197	)
Acquisition of hospitals and health care entities		(96	)		(115	)
Sales of hospitals and health care entities		310			165
Change in investments		2			(13	)
Other		(1	)		9
Net cash used in investing activities		(903	)		(1,151	)
Cash flows from financing activities:
Issuance of long-term debt		4,483			—
Net change in revolving credit facilities		(1,880	)		1,240
Repayment of long-term debt		(2,066	)		(550	)
Distributions to noncontrolling interests		(152	)		(187	)
Payment of debt issuance costs		(40	)		(3	)
Payment of dividends		(185	)		(175	)
Repurchase of common stock		(1,180	)		(846	)
Other		(196	)		(204	)
Net cash used in financing activities		(1,216	)		(725	)
Effect of exchange rate changes on cash and cash equivalents		(1	)		7
Change in cash and cash equivalents		349			(66	)
Cash and cash equivalents at beginning of period		935			908
Cash and cash equivalents at end of period	$	1,284		$	842
Interest payments	$	538		$	574
Income tax payments, net	$	1		$	7