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HCA Healthcare Research

Glen M Losev
Team: Health Care
BI Industry Analyst

1. HCA Healthcare: Company Outlook

(Bloomberg Intelligence) -- THESIS: HCA Table of Contents

Healthcare's strategy of building hospitals in areas Key Topics Financial Review

with high demand, setting up satellites to aid its Laser Focused Operations Earnings
NEW
facilities and recruiting top specialists, coupled Market Dominance Long-Term Drivers
with its dominance in its geographic markets, Capital Deployment
Hospital Industry CliffsNotes
positions the company to deliver long-term
adjusted Ebitda growth of at least 5%. The first half proved to be volatile for the company and the
hospital group, with high labor costs, the January omicron wave and slower recovery of medical and
surgical care. Yet these headwinds should reverse after the summer, positioning HCA for growth in 2H
and into 2023. (07/22/22)

Key Topics

Laser Focused Operations

HCA's Savvy Market Positioning and Operations Drive Growth

HCA Healthcare's steady volume and stable pricing growth, stemming from the company's strong
position in core markets, should return when the pandemic is contained. This, coupled with focused
cost-management initiatives, market-share expansion in established markets and improving margin
at recently acquired facilities, may drive long-term earnings growth. (04/29/22)

Market Dominance

HCA Seeks to Dominate Its Markets by Offering Satellite Services

HCA Healthcare aims to control any market in which it operates, and holds at least the No. 2 position
in most of its markets. The company's strategy is centered on building a network of satellite offices --
including surgery centers, physician offices or free-standing emergency departments -- to support a
central inpatient hospital and provide a continuum of care. (04/29/22)

Capital Deployment

HCA Operating Credo: You’ve Got to Spend Money to Make Money

Since its IPO in 2011 and through 2019, HCA Healthcare spent $44.9 billion on capital deployment,
excluding $3.2 billion in special dividends. Capital spending of $23.2 billion and share buybacks at
$13.5 billion were the largest outlays. We expect acquisitions and dividend payments to be a larger
portion of total capital deployment as the pandemic comes under control. (04/29/22)

Hospital Industry CliffsNotes

Hospitals' Financial Strain Exacerbated by Pandemic Pressure

The pandemic added to acute-care facilities' decade-long financial strain, stemming from reduced
demand for services amid better therapeutics, a health-conscious environment and aging-but-

This report may not be modified or altered in any way. The BLOOMBERG PROFESSIONAL service and BLOOMBERG Data are owned and
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Bloomberg® 08/01/2022 06:32:41

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healthier retirees, coupled with lower pricing and a negative industry view by Washington. For-profit
hospitals manage to survive through innovation, market-share gains and focused cost management.
(04/29/22)

Financial Review

Earnings

2. HCA 2Q Results, Guidance Point to Stronger 2H: Earnings Outlook

Post-2Q Earnings Outlook: HCA exceeded expected 2Q results but remained conservative in
maintaining its 2022 outlook following the 1Q miss and prolonged labor overhang commentary. Still,
the guidance translates to a stronger 2H, with upside potential amid easing staffing headwinds when
travel-nursing contracts signed during the January omicron wave expire in September and medical-
and surgical-care recovery accelerates after summer vacations.

HCA delivered a solid 2Q, highlighted by better-than-expected revenue growth and cost-management
acumen. The company generated adjusted Ebitda of $3 billion (margin 20.5%) on revenue of $14.8
billion. (07/22/22)

Highlights From Recent Results:

2022 Guidance Maintained
$14.8 Billion 4Q Revenue Is $193 Million Above Consensus
Same-Facility Volume: Admissions Down 1.2%; Adjusted
Admissions Rise 0.5%; Trend Is Up Strongly Adjusting for 2021
Comparisons
Same-Facility Surgeries: Inpatient Down 2.3%, Outpatient Down
1.4% Facing Tough 2021 Comps
Revenue Per Adjusted Admission Up 3.5%; Lower Sequentially
on Lower Acuity
Adjusted Ebitda of $3 Billion vs. Consensus of $2.8 Billion;
Margin at 20.5% (144 Bps Above Expectations)
Additional Resources:
Analyzer | BI »
Company Outlook | BICO »
Earnings Release | NSN »

Long-Term Drivers

3. HCA Healthcare Resets 2022 Outlook; Long-Term Strength Remains

HCA Healthcare cut guidance for revenue by $500 million to $59.5-$61.5 billion and adjusted Ebitda
by $700 million to $11.8-$12.4 billion after a sluggish medical recovery and high labor costs hit 1Q
results. The reset positions the company to deliver upside over its targets as pandemic headwinds
lessen, even if they're unlikely to dissipate entirely in 2022. HCA's strong positioning in attractive
markets and long-term investments in labor and integrated patient care should set the company up
for strong growth as the environment normalizes.

The Bloomberg Interactive Calculator uses Bloomberg's detailed consensus estimates to create an
integrated three-statement financial model. (04/27/22)

This report may not be modified or altered in any way. The BLOOMBERG PROFESSIONAL service and BLOOMBERG Data are owned and
distributed locally by Bloomberg Finance LP ("BFLP") and its subsidiaries in all jurisdictions other than Argentina, Bermuda, China, India,
Japan and Korea (the ("BFLP Countries"). BFLP is a wholly-owned subsidiary of Bloomberg LP ("BLP"). BLP provides BFLP with all the global
marketing and operational support and service for the Services and distributes the Services either directly or through a non-BFLP
subsidiary in the BLP Countries. BFLP, BLP and their affiliates do not provide investment advice, and nothing herein shall constitute an offer
of financial instruments by BFLP, BLP or their affiliates.

Bloomberg® 08/01/2022 06:32:41

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Bloomberg Interactive Calculator (Click to Open)

Source: Company Filings, Bloomberg Intelligence

To contact the analyst for this research:

Glen M Losev at glosev8@bloomberg.net

This report may not be modified or altered in any way. The BLOOMBERG PROFESSIONAL service and BLOOMBERG Data are owned and
distributed locally by Bloomberg Finance LP ("BFLP") and its subsidiaries in all jurisdictions other than Argentina, Bermuda, China, India,
Japan and Korea (the ("BFLP Countries"). BFLP is a wholly-owned subsidiary of Bloomberg LP ("BLP"). BLP provides BFLP with all the global
marketing and operational support and service for the Services and distributes the Services either directly or through a non-BFLP
subsidiary in the BLP Countries. BFLP, BLP and their affiliates do not provide investment advice, and nothing herein shall constitute an offer
of financial instruments by BFLP, BLP or their affiliates.

Bloomberg® 08/01/2022 06:32:41