credit suisse healthcare conference november 11 -12, 2014, phoenix, az bill rutherford – cfo and...
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Credit Suisse Healthcare Conference November 11 -12, 2014, Phoenix, AZ
Bill Rutherford – CFO and Executive Vice President Vic Campbell – Senior Vice President Dr. Ravi Chari – Vice President – Clinical Excellence Mark Kimbrough – Vice President – Investor Relations
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FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES
This presentation may contain certain forward-looking statements provided by Company management. These statements are intended to be covered by the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, including statements regarding future operations, financial results, cash flows, costs and cost management initiatives, capital structure management, growth rates, and operational and strategic initiatives, and can also be identified by the use of words like “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “intend,” “plan,” “initiative,” “continue” or words or phrases of similar meaning. These forward-looking statements speak only as of the date hereof and 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. These risks and uncertainties are described in headings such as “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2013 and other reports filed with the Securities and Exchange Commission. As a consequence, current plans, anticipated actions and future financial position and results of operations may differ significantly from those expressed in any forward-looking statements in today’s presentation. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented and we do not intend to update any of these forward-looking statements.
The presentation may contain certain non-GAAP measures, including Adjusted EBITDA. The Company’s earnings releases for the year ended December 31, 2013, and for the quarter and nine months ended September 30, 2014, located on the Company’s investor relations page at www.hcahealthcare.com, include reconciliations of the difference between certain non-GAAP financial measures with the most directly comparable financial measure calculated in accordance with GAAP. These non-GAAP financial measures should not be considered alternatives to the GAAP financial measures.
References to “Company” used herein refer to HCA Holdings, Inc. and its affiliates, unless otherwise stated or indicated by context.
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Most people know HCA as a hospital company, with leading market positions across the U.S.
Salt Lake City Denver
Kansas City
Miami/Fort Lauderdale/WPB
Dallas /Fort Worth
San Antonio
New Hampshire
Western Idaho
San Jose
Southern California
Las Vegas
Idaho Falls
Myrtle Beach
Trident / Charleston
JacksonvilleNorth Central Florida
OrlandoTreasure Coast
N-VA
Richmond
S-VA
Augusta
Tallahassee
Wichita
Oklahoma City
Central Louisiana
Lafayette
New OrleansPanhandle
El Paso
Corpus Christi
McAllen
Brownsville
TerreHaute
Frankfort
ChattanoogaNWGAAtlanta
Middle GA
Anchorage
Nashville
HoustonTampa
Austin
Central London
Note: Gold labels indicate top 10 domestic markets by 2013 Adjusted EBITDA.
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HCA is the largest non-governmental hospital provider in the U.S. … and much more
#1 or #2 in key markets with market shares
ranging from ~ 20% to 40%
Operating in 17 of 25 fastest growing MSAs with
populations > 500,000
Provide ~ 4% - 5% of all U.S. hospital services
Leading hospital provider (1)…
Leader across a range of services …
One of the largest clinical networks, with over 35K
active physicians
Leader in oncology clinical trials, 2nd to MD
Anderson
Third largest acute inpatient psychiatric provider
A leading national player in ASCs
AND
(1) Based on most recently available data for each metric.
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Percentage Change From Prior Year
Nine Months Ended Sept. 30, 2014
2.0%Equivalent
Admissions(1)
4.3%Revenue per
Equivalent Admission(1)
7.6%Revenues
12.6%
Adjusted EBITDA
32.8%
Net Income Attributable to
HCA Holdings, Inc.(2)
36.3%
Diluted Earnings Per Share(2)
(1) Same facility through 09/30/14 compared to prior year period
(2) Net income attributable to HCA Holdings, Inc. and diluted earning per share exclude losses (gains) on sales of facilities, losses on retirement of debt and legal claim costs.
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Acquisitions
Cash Flow from Operations
Capital Expenditures
Special Dividends
Share Repurchases
$13.7 B
$6.6 B
$2.5 B
$3.2B
$2.75B
Cash Flow Trends since March 2011 IPO*
* HCA Holdings, Inc. cash flow data for the period from April 2011 through 3Q 2014
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When thinking about growth strategies, we focus on a number of dimensions … in addition to clinical quality
Breadth and depth of services
Access points Capital deployment
Core services
Service Line Focus
High intensity and deep service capability E.g., TAVR, Trauma, Stroke network
E.g., Cardio, Neuro, ED Womens, Behavioral, Rehab
10 hospitals3 free-standing EDs43 medical group locations11 urgent care centers
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HCA States Economic Indicators – Favorable Trending% Change in Key Economic Indicators
Weak Favorable
-2.5% 9.7%Real GDP
2013 YoY Growth
2.57%
1.84%
2.12%
Median of HCA’s Top 6
States
US Average
Range of HCA’s Top 6 States
US Range75th Percentile of HCA States
1.5% 7.6%Personal Income
2013 YoY Growth
3.07%
2.57%
2.83%
-34.2% 47.8%
Single Family Housing Permits Start
April 2014 YTD over PY
6.13%
-0.70%
6.50%
-6.0% 13.0%
State General Sales & Gross Receipt Taxes
2013 YoY Growth
6.56%
3.88%
5.80%
-0.79%-4.3% 2.1%
Birth Rate 2013 YoY Growth
0.00%-0.78%
0.5% -2.5%Unemployment
May 2014 over PY
-1.50%
-1.20%
-1.35%
HCA Top States:•California•Colorado
•Florida•Kansas
•Tennessee•Texas
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Clinical Excellence is about Reducing Negative Clinical Variation
CE is our approach to clinical performance improvement that asks a physician led team to use clinical evidence to change physician practice choices and behavior to reduce negative clinical variation
HCA has created clinical data systems to measure and monitor clinical performance and a knowledge center to establish and share best evidenced care and practices
HCA achieves CE by having the team leading the care initiative take ownership and be accountable for performance improvement
We believe our CE initiatives differentiate our hospitals in the market as a premier clinical organization through:
• Collaborating with physicians to align practice choices with best practice• Teaching facility leaders to leverage HCA’s disciplined operational management culture to achieve the same rigor
around clinical performance improvement• Improving patient outcomes, patient safety and patient care
1Includes YOY impact for CE initiatives selected 7 care lines: AMI, CABG, Sepsis, Hip/Knee, Spine and Stroke
2013
Full YearCY 2014
Through June 30th
Lives Saved1 688 746
Mortality Rate Reduction 4.6% 9.2%
Complications Avoided 1,175 624
Complication Rate Reduction 8% 11%
Length of Stay days avoided 33,531 21,995
Reduction in average LOS 0.35 0.40Source: MedPAR and Company data
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We are confident that our core strengths will continue to position us for future success
Strongoperatingculture
Deep andexperiencedleadership
Financialstrength
Scale
Strong,diversifiedassets and
markets