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HCA Reports Third Quarter 2008 Results

November 6, 2008

NASHVILLE, Tenn., Nov. 6 /PRNewswire-FirstCall/ — HCA today announced financial and operating results for its third quarter ended September 30, 2008.

   Third Quarter Summary:       -- Revenues increased 6.6 percent to $7.002 billion.      -- Net income totaled $86 million, compared to $300 million in the         third quarter of 2007 (gains on sales of facilities were         $50 million, compared to $316 million in the third quarter of 2007).      -- Adjusted EBITDA totaled $1.053 billion, compared to $983 million in         the third quarter of 2007.      -- Interest expense decreased to $497 million, from $560 million in the         third quarter of 2007.      -- Same facility admissions increased 0.4 percent, and same facility         equivalent admissions increased 1.9 percent.      -- Same facility revenue per equivalent admission increased         5.7 percent.      -- Same facility inpatient surgeries declined 1.2 percent, while same         facility outpatient surgical cases increased 0.8 percent.    

Revenues for the third quarter totaled $7.002 billion, compared to $6.569 billion in the third quarter of 2007. Adjusted EBITDA in the quarter totaled $1.053 billion, compared to $983 million in the third quarter of 2007. A table describing adjusted EBITDA and reconciling net income to adjusted EBITDA for these periods is included in this release. Net income for the third quarter of 2008 totaled $86 million, compared to $300 million in the third quarter of 2007. Results for the third quarter of 2008 include gains on sales of facilities of $50 million compared to $316 million in the third quarter of 2007. Results for the third quarter of 2008 also include an impairment of long-lived assets of $44 million.

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The provision for doubtful accounts increased to $819 million, or 11.7 percent of revenues, in the third quarter of 2008 from $774 million, or 11.8 percent of revenues, in the third quarter of 2007. Same facility uninsured admissions increased 0.9 percent in the third quarter of 2008 compared to the third quarter of 2007.

Interest expense decreased to $497 million in the third quarter of 2008, compared to $560 million in the same period of 2007, due primarily to a reduction in the average effective interest rate on total debt.

Same facility admissions increased 0.4 percent and same facility equivalent admissions increased 1.9 percent in the third quarter of 2008 compared to the third quarter of 2007. Same facility inpatient surgeries declined 1.2 percent and same facility outpatient surgeries increased 0.8 percent in the third quarter of 2008 compared to the third quarter of 2007. Same facility revenue per equivalent admission increased 5.7 percent in the third quarter of 2008 compared to the third quarter of 2007. Same facility charity and uninsured discounts totaled $917 million in the third quarter of 2008 compared to $793 million in the third quarter of 2007.

Revenues for the nine months ended September 30, 2008 totaled $21.109 billion compared to $19.975 billion for the same nine months of 2007. Adjusted EBITDA for the nine month period in 2008 was $3.337 billion compared to $3.439 billion for the same nine months of 2007. HCA’s net income totaled $397 million during the first nine months of 2008 compared to $596 million for the same nine month period of 2007. Results for the nine months ended September 30, 2008 include gains on sales of facilities of $90 million, compared to $332 million of gains on sales of facilities for the nine months ended September 30, 2007, and impairments on long-lived assets of $53 million in the nine month period in 2008 compared to a $24 million impairment of long- lived assets in the same nine month period of 2007.

As of September 30, 2008 HCA’s balance sheet reflected cash and cash equivalents of $444 million, total debt of $27.041 billion, and total assets of $23.793 billion. During the third quarter, capital expenditures totaled $398 million.

As of September 30, 2008, HCA operated 166 hospitals and 107 freestanding surgery centers, including eight hospitals and eight freestanding surgery centers operated through equity method joint ventures.

Earnings Conference Call

HCA will host a conference call for investors at 9:00 a.m. Central Standard Time today. All interested investors are invited to access a live audio broadcast of the call via webcast. The broadcast also will be available on a replay basis beginning this afternoon. The webcast can be accessed at:

http://www.videonewswire.com/event.asp?id=52343

or through the Company’s Investor Relations web page, http://www.hcahealthcare.com/.

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements based on current management expectations. Those forward-looking statements include all statements other than those made solely with respect to historical fact. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those expressed in any forward-looking statements. These factors include, but are not limited to, (1) the ability to recognize the benefits of the recapitalization; (2) the impact of the substantial indebtedness incurred to finance the recapitalization; (3) increases, particularly in the current economic downturn, in the amount and risk of collectibility of uninsured accounts, and deductibles and copayment amounts for insured accounts; (4) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services; (5) possible changes in the Medicare, Medicaid and other state programs, including Medicaid supplemental payments pursuant to upper payment limit programs, that may impact reimbursements to health care providers and insurers; (6) the highly competitive nature of the health care business; (7) changes in revenue mix and the ability to enter into and renew managed care provider agreements on acceptable terms; (8) the efforts of insurers, health care providers and others to contain health care costs; (9) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures and our corporate integrity agreement with the government; (10) changes in federal, state or local laws or regulations affecting the health care industry; (11) increases in wages and the ability to attract and retain qualified management and personnel, including affiliated physicians, nurses and medical and technical support personnel; (12) the possible enactment of federal or state health care reform; (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; (16) future divestitures which may result in charges; (17) changes in business strategy or development plans; (18) the outcome of pending and any future tax audits, appeals and litigation associated with our tax positions; (19) delays in receiving payment for services provided; (20) potential liabilities and other claims that may be asserted against us; (21) other risk factors described in our Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. Many of the factors that will determine our future results are beyond our ability to control or predict. In light of the significant uncertainties inherent in the forward-looking statements contained herein, readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward- looking statements, whether as a result of new information, future events or otherwise.

All references to “Company” and “HCA” as used throughout this document refer to HCA Inc. and its affiliates.

                                  HCA Inc.                       Consolidated Income Statements                               Third Quarter                           (Dollars in millions)                                              2008                2007                                       Amount     Ratio    Amount     Ratio    Revenues                            $7,002     100.0%   $6,569     100.0%    Salaries and benefits                2,883      41.2     2,701      41.1   Supplies                             1,141      16.3     1,085      16.5   Other operating expenses             1,146      16.4     1,076      16.4   Provision for doubtful accounts        819      11.7       774      11.8   Losses on investments                    1         -         1         -   Equity in earnings of affiliates       (41)     (0.6)      (51)     (0.8)   Depreciation and amortization          350       5.0       356       5.5   Interest expense                       497       7.1       560       8.5   Gains on sales of facilities           (50)     (0.7)     (316)     (4.8)   Impairment of long-lived assets         44       0.6         -         -                                         6,790      97.0     6,186      94.2    Income before minority interests    and income taxes                      212       3.0       383       5.8    Minority interests in earnings of    consolidated entities                  49       0.7        44       0.6    Income before income taxes             163       2.3       339       5.2    Provision for income taxes              77       1.1        39       0.6       Net income                          $86       1.2      $300       4.6                                     HCA Inc.                       Consolidated Income Statements           For the Nine Months Ended September 30, 2008 and 2007                           (Dollars in millions)                                              2008                2007                                       Amount     Ratio    Amount     Ratio    Revenues                           $21,109     100.0%  $19,975     100.0%    Salaries and benefits                8,563      40.6     8,002      40.1   Supplies                             3,463      16.4     3,284      16.4   Other operating expenses             3,396      16.1     3,194      16.0   Provision for doubtful accounts      2,520      11.9     2,218      11.1   Gains on investments                     -         -        (6)        -   Equity in earnings of affiliates      (170)     (0.8)     (156)     (0.8)   Depreciation and amortization        1,062       5.0     1,072       5.4   Interest expense                     1,521       7.2     1,674       8.4   Gains on sales of facilities           (90)     (0.4)     (332)     (1.7)   Impairment of long-lived assets         53       0.3        24       0.1                                        20,318      96.3    18,974      95.0    Income before minority interests    and income taxes                      791       3.7     1,001       5.0    Minority interests in earnings    of consolidated entities              161       0.7       160       0.8    Income before income taxes             630       3.0       841       4.2    Provision for income taxes             233       1.1       245       1.2       Net income                         $397       1.9      $596       3.0                                     HCA Inc.                   Supplemental Operating Results Summary                           (Dollars in millions)                                                           For the Nine Months                                         Third Quarter    Ended September 30,                                        2008      2007      2008      2007    Revenues                            $7,002    $6,569   $21,109   $19,975    Net income                             $86      $300      $397      $596      Gains on sales of facilities       (net of tax)                       (29)     (193)      (53)     (203)      Impairment of long-lived assets       (net of tax)                        28         -        34        15    Net income, excluding gains on sales    of facilities and impairment of    long-lived assets                      85       107       378       408      Depreciation and amortization       350       356     1,062     1,072      Interest expense                    497       560     1,521     1,674      Minority interests in earnings of       consolidated entities               49        44       161       160      Provision for income taxes           72       (84)      215       125       Adjusted EBITDA (a)              $1,053      $983    $3,337    $3,439     (a)  Net income, excluding gains on sales of facilities and impairment of        long-lived assets and adjusted EBITDA are non-GAAP financial        measures.  We believe that net income, excluding gains on sales of        facilities and impairment of long-lived assets and adjusted EBITDA        are important measures that supplement discussions and analysis of        our results of operations.  We believe that it is useful to investors        to provide disclosures of our results of operations on the same basis        as that used by management.  Management relies upon net income,        excluding gains on sales of facilities and impairment of long-lived        assets and adjusted EBITDA as the primary measures to review and        assess operating performance of its hospital facilities and their        management teams.         Management and investors review both the overall performance        (including; net income, excluding gains on sales of facilities and        impairment of long-lived assets and GAAP net income) and operating        performance (adjusted EBITDA) of our health care facilities.        Adjusted EBITDA and the adjusted EBITDA margin (adjusted EBITDA        divided by revenues) are utilized by management and investors to        compare our current operating results with the corresponding periods        during the previous year and to compare our operating results with        other companies in the health care industry.  It is reasonable to        expect that gains on sales of facilities and impairments of        long-lived assets will occur in future periods, but the amounts        recognized can vary significantly from quarter to quarter, do not        directly relate to the ongoing operations of our health care        facilities and complicate quarterly comparisons of our results of        operations and operations comparisons with other health care        companies.         Net income, excluding gains on sales of facilities and impairment of        long-lived assets and adjusted EBITDA are not measures of financial        performance under accounting principles generally accepted in the        United States, and should not be considered as alternatives to net        income as a measure of operating performance or cash flows from        operating, investing and financing activities as a measure of        liquidity.  Because net income, excluding gains on sales of        facilities and impairment of long-lived assets and adjusted EBITDA        are not measurements determined in accordance with generally accepted        accounting principles and are susceptible to varying calculations,        net income, excluding gains on sales of facilities and impairment of        long-lived assets and adjusted EBITDA, as presented, may not be        comparable to other similarly titled measures presented by other        companies.                                     HCA Inc.                   Condensed Consolidated Balance Sheets                           (Dollars in millions)                                           September 30, June 30, December 31,                                               2008        2008       2007    ASSETS   Current assets:      Cash and cash equivalents                $444        $368       $393      Accounts receivable, less allowance       for doubtful accounts                  3,699       3,922      3,895      Inventories                               716         715        710      Deferred income taxes                     722         727        592      Other                                     517         557        615          Total current assets                 6,098       6,289      6,205    Property and equipment, at cost           23,406      23,145     22,579   Accumulated depreciation                 (11,968)    (11,709)   (11,137)                                             11,438      11,436     11,442    Investments of insurance subsidiary        1,483       1,526      1,669   Investments in and advances to affiliates    824         833        688   Goodwill                                   2,601       2,630      2,629   Deferred loan costs                          478         498        539   Other                                        871         858        853                                             $23,793     $24,070    $24,025     LIABILITIES AND STOCKHOLDERS' DEFICIT   Current liabilities:      Accounts payable                       $1,191      $1,214     $1,370      Accrued salaries                          849         785        780      Other accrued expenses                  1,235       1,064      1,391      Long-term debt due within one year        368         341        308          Total current liabilities            3,643       3,404      3,849    Long-term debt                            26,673      27,274     27,000   Professional liability risks               1,114       1,160      1,233   Deferred taxes and other liabilities       1,375       1,295      1,379   Minority interests in equity of    consolidated entities                       969         959        938    Equity securities with contingent    redemption rights                           163         163        164    Stockholders' deficit                    (10,144)    (10,185)   (10,538)                                             $23,793     $24,070    $24,025                                     HCA Inc.                   Consolidated Statements of Cash Flows           For the Nine Months Ended September 30, 2008 and 2007                           (Dollars in millions)                                                          2008          2007   Cash flows from operating activities:      Net income                                         $397          $596      Adjustments to reconcile net income to net       cash provided by operating activities:         Provision for doubtful accounts                2,520         2,218         Depreciation and amortization                  1,062         1,072         Income taxes                                    (379)         (103)         Gains on sales of facilities                     (90)         (332)         Impairment of long-lived assets                   53            24         Change in operating assets and liabilities    (2,420)       (2,598)         Share-based compensation                          25            17         Change in minority interests                      10            33         Other                                             86            58             Net cash provided by operating activities   1,264           985    Cash flows from investing activities:      Purchase of property and equipment               (1,115)         (997)      Acquisition of hospitals and health care       entities                                           (76)          (21)      Disposition of hospitals and health care       entities                                           185           484      Change in investments                                30           156      Other                                                 4            13          Net cash used in investing activities           (972)         (365)    Cash flows from financing activities:      Net change in revolving bank credit facility        530          (370)      Repayment of long-term debt                        (775)         (623)      Issuance of common stock                              -           100      Other                                                 4           (14)          Net cash used in financing activities           (241)         (907)    Change in cash and cash equivalents                     51          (287)   Cash and cash equivalents at beginning of period       393           634    Cash and cash equivalents at end of period            $444          $347    Interest payments                                   $1,380        $1,522   Income tax payments, net of refunds                   $612          $348                                      HCA Inc.                            Operating Statistics                                                          For the Nine Months                                        Third Quarter    Ended September 30,                                       2008      2007      2008      2007   Consolidating Hospitals:       Number of Hospitals               158        162        158        162      Weighted Average Licensed       Beds                          38,390     38,990     38,405     39,159      Licensed Beds at End of       Period                        38,386     38,939     38,386     38,939    Reported:      Admissions                    377,400    381,700  1,161,700  1,168,700         % Change                      -1.1%                 -0.6%      Equivalent Admissions         587,400    583,400  1,776,300  1,767,100         % Change                       0.7%                  0.5%      Revenue per Equivalent       Admission                    $11,922    $11,260    $11,884    $11,304         % Change                       5.9%                  5.1%      Inpatient Revenue per       Admission                    $11,224    $10,476    $11,203    $10,585         % Change                       7.1%                  5.8%       Patient Days                1,833,700  1,880,800  5,745,900  5,801,800      Equivalent Patient Days     2,854,700  2,875,200  8,785,600  8,772,300       Inpatient Surgery Cases       121,400    128,300    371,800    390,000         % Change                      -5.4%                 -4.7%      Outpatient Surgery Cases      196,500    196,400    595,500    604,800         % Change                       0.1%                 -1.5%       Emergency Room Visits       1,303,100  1,273,900  3,969,500  3,827,800         % Change                       2.3%                  3.7%       Outpatient Revenues as a       Percentage of Patient       Revenues                        38.5%      38.0%      37.3%      36.9%       Average Length of Stay            4.9        4.9        4.9        5.0       Occupancy                        51.9%      52.4%      54.6%      54.3%      Equivalent Occupancy             80.8%      80.1%      83.5%      82.1%    Same Facility:      Admissions                    376,700    375,100  1,156,400  1,146,600         % Change                       0.4%                  0.9%      Equivalent Admissions         585,000    573,900  1,764,700  1,734,800         % Change                       1.9%                  1.7%      Revenue per Equivalent       Admission                    $11,882    $11,239    $11,856    $11,272         % Change                       5.7%                  5.2%      Inpatient Revenue per       Admission                    $11,226    $10,495    $11,203    $10,585         % Change                       7.0%                  5.8%       Inpatient Surgery Cases       122,600    124,100    369,700    372,200         % Change                      -1.2%                 -0.7%      Outpatient Surgery Cases      195,500    193,900    589,400    593,500         % Change                       0.8%                 -0.7%       Emergency Room Visits       1,295,100  1,258,100  3,947,300  3,768,200         % Change                       2.9%                  4.8%    Number of Consolidating and    Nonconsolidating    (Equity Joint Ventures)    Hospitals:       Consolidating                     158        162        158        162      Nonconsolidating (Equity       Joint Ventures)                    8          8          8          8       Total Number of Hospitals         166        170        166        170  

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HCA

CONTACT: Investors, Mark Kimbrough, +1-615-344-2688, or Media, EdFishbough, +1-615-344-2810, both of HCA

Web site: http://www.hcahealthcare.com/




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