Forward Looking Statements and Non GAAP Financial Measures

Transcription

1 HCA Investor Update

2 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 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 under headings such as Risk Factors in our annual report on Form 10 K for the year ended December 31, 2015 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, 2015 and quarter and six months ended June 30, 2016 located on the Company s investor relations page at include a reconciliation 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. 1

3 Our strategy: To leverage the scale and capabilities of HCA in the local markets to create competitive advantage and be the provider system of choice for patients and physicians Industry leading quality and service Profitable growth through distinctive physician &patient relationships Industry leading efficiency A well informed response to the market environment Unparalleled development of future leaders 2

4 Driving value for key stakeholders Patients Safe High quality Compassionate Convenient User friendly Cost effective Physicians Clinical capabilities Efficient place to practice Voice Growth Employees Compensation and benefits Training and development Resources Advancement Payers Comprehensive network of access points and service lines Competitively priced Physician network Shareholders Earnings growth Return on capital Future growth Management Governance Clinical Outcomes 3

5 Today s site specific care delivery Urgent Care We believe the future will reward comprehensive integrated delivery networks FreeStanding ERs Specialists Hospitals Primary Care Behavioral Health Surgery Centers Imaging Centers 4

6 Sustaining top line growth Admissions 1.9M 3.8% Equivalent Admissions 3.1M 4.8% ER Visits 8.1M 7.1% Surgeries 1.4M 2.5% Revenue $39.7B 7.2% Values represent 2015 results Percentages represent 5 year CAGR:

7 Sustaining market share growth 25.4% 25.2% 25.2% 25.0% 24.8% 24.6% 24.4% 24.2% 24.7% Share gains over PY in 22 of 38 Markets HCA Growth in 10 of 19 Service Lines 24.0% 23.8% Note: Percentages represent current market share 1 Market Share Notes: Source = State data via Stratasan 6

8 Strengthening a diversified portfolio San Jose 17% Salt Lake 20% Las Vegas 32% Western Idaho Idaho Falls Denver 32% Kansas City 23% Nashville 34% Terre Haute NOVA New Hampshire Richmond 37% Las Vegas Austin 39% Dallas/ Fort Worth 18% Wichita Oklahoma City Frankfort NWGA Atlanta Chattanooga Augusta Middle GA SWVA Myrtle Beach Charleston London London Anchorage El Paso San Antonio 35% Corpus Christi McAllen Brownsville Lafayette Central Louisiana New Orleans Houston 19% Panhandle Tallahassee Tampa/ St. Pete 30% Jacksonville North Central Florida Orlando Treasure Coast Miami/Fort Lauderdale 22% Note: Percentages represent current market share 1 7

9 Growing diversification in mix of revenue Acute Care Ambulatory Services Access Centers Physicians ~830 Hospitals ASCs Urgent Care Centers Physician Clinics 44K K Licensed Beds GI Centers Freestanding ERs Active Medical Staff Enterprise Services Shared Services 8

10 Quality agenda is yielding results Delivering clinical excellence Continuing strong performance on external reporting Reducing complications and mortality through clinical excellence program Maximizing meaningful use incentives Piloting front end EHR strategies Leveraging the clinical data warehouse for clinical and operational insights Developing a national reputation for improving clinical outcomes Making progress on patient experience, but room exists for improvement 9

11 Making significant investments in our markets $14+ billion since the IPO Acquisitions Hospitals 17 Beds 3,965 Capacity Free Standing ERs FSER Beds ER Beds Hospital Beds ,258 10

12 EBITDA growth up 34% and margins at industry leading levels 5 year Adjusted EBITDA CAGR: 6.2% 5 year Adj. EPS CAGR: 13.7%* * Adj. EPS excludes the impact of items such as, but not limited to, gains or losses on sales of facilities, losses on retirement of debt, legal claim costs, impairments of long lived assets 11

13 Balanced approach to capital deployment Cash Flows from Operations $22.8B Capital Expenditures $10.9B Acquisitions $3.9B Special Dividends $3.2B Share Repurchases $8.0B Use of Cash Flows from March 2011 IPO through 2Q

14 Strategy is strengthening the sources of differentiation Diversified portfolio Financial strength Scale Deep and experienced leadership Strong operating culture 13

15 Market demand for healthcare is still growing CMS projects health spending for U.S. to grow 5.8% annually for : 3 & 5 Year Forecasts of Inpatient Admit Growth Rates by Service Line Key Drivers: Population growth Aging population Chronic conditions Clinical innovation ACA coverage expansion 14

16 National health expenditure projections forecast accelerating growth $6,000 $5,500 $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 3,197 National Health Expenditure Projections Billions 3,351 3,522 3,731 3,959 4,198 4,457 4,733 5,022 5,631 5,322 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 1% overall population growth annually through 24 Over 64 population to grow 3.4% annually during same time period Health spending outpacing GDP growth by 1.1% per year Health share of GDP to rise to 19.6% by 24, up 220 bps since 13 15

17 HCA markets are more favorable than U.S. HCA U.S. 5 year Population CAGR 4 1.2% 0.7% 5 year Demand CAGR 5 2.2% 1.6% GDP Growth 6 3.0% 2.4% Unemployment Rate 7 4.6% 4.8% Sources: ESRI 5 year CAGR, population projection; Sg2 5 year CAGR, inpatient admissions; U.S. Dept. of Commerce, Bureau of Economic Analysis, 2014% Real GDP Growth; U.S. Dept. of Labor, Bureau of Labor Statistics November 2015P Unemployment Rate, Not Seasonally Adjusted. 16

18 Pricing environment is stable Reimbursement tied to value is still modest While Shared Saving Program has not proven effective, Medicare has migrated to bundled payment pilots No significant commercial payer migration to risk or into provider space Payer consolidation should have a marginal impact, if allowed to move forward Employers: Continued movement to high deductible health plans Slow to adopt defined contribution plans Not moving employees into exchanges 17

19 Alternative payment models are evolving Revenue Model Full Risk Business Risk Management Challenge Balancing the risk & pace of integration investment vs the changing revenue model Corridor risk Bundled Payment Fast Moving? Fee for Value P4P Fee for Service Slow Moving Investment Risk Low High Fragmented delivery Integrated delivery Strengthening our delivery capability 18

20 Competitor dynamics are mostly unchanged Healthcare is still a local business Industry remains largely fragmented with few scaled players Pace of change across the industry is slow No new entrants are materially disrupting the markets Vertical integration (employment) has slowed on the physician side and in the payer space Rational pricing environment remains Capital spending is increasing in some markets 19

21 Growth opportunities still exist in HCA markets Operational Excellence Capacity expansion Coordination Across Continuum Local Sustainable Growth Access and Convenience New facilities Intra network retention Medical staff development Rural outreach Strong Physician Relationships Comprehensive Service Lines Complementary acquisitions 20

22 Leveraging our scale to create local market competitive advantage Economies Innovation Capital Make our business better Drive more growth Get to market faster Support even better execution 21

23 Capacity coming online continues to accelerate 1,200 1, IP Beds ER + FSER Beds Proj 22

24 Advancing the patient experience Big Data/ Best Practices Competent Employees Patient Experience Partnering with Physicians Adding corporate talent Implementing standards on best practices Focusing efforts at certain facilities Leveraging nursing agenda Leadership training Incentives More granular reporting and analytics Technology 23

25 Investing in our people Implementing OneHR platform Expanding Executive Development Program Focusing on nurse retention and nurse directors Leveraging Parallon Workforce Solutions (StaRN) Ongoing HCA summits for service line networking and leadership training Investing in better analytics and management systems 24

26 Partnering with physicians Corporate Support Areas: Time Voice Physician Engagement Growth Practice Operations Provider Relations Chief Medical Officers Hospital Based GME Recruitment Urgent Care Leadership Development Credentialing Branding Program Engagement Surveys Clinical Capabilities 25

27 Healthcare reform potential remains 15.3M eligible enrollees remain across HCA s 20 states, including 30%, or 4.5M, who are tax credit eligible 8 Texas 1.0M* <15% of HCA beds in Medicaid expansion states Florida 825K* HCA Medicaid Expansion State 9 * Tax credit eligible enrollees 26

28 Continue to drive for value Patients Safe High quality Compassionate Convenient User friendly Cost effective Physicians Clinical capabilities Efficient place to practice Voice Growth Employees Compensation and benefits Training and development Resources Advancement Payers Comprehensive network: access and service lines Competitively priced Physician network Clinical Outcomes Shareholders Earnings growth Return on capital Future growth Management Governance CONFIDENTIAL Contains proprietary information. Not intended for external distribution. 27

29 Capitalize further on our sources of differentiation and maintain agility Diversified portfolio Financial strength Scale Deep and experienced leadership Strong operating culture 28

30 Notes and Sources 1 Market Share Notes: Same Store. Composition Market (In Market + In Migration) Statistics are based on inpatient discharge data for the most recently available 48 month period for 30 defined markets. Analysis includes data for 30 markets with data through 4Q 15 Source = State data via Stratasan 2 Aggregate forecast for 32 HCA markets, excluding normal newborns. Sources: Impact of Change v15.0; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP) Agency for Healthcare Research and Quality, Rockville, MD; The Nielsen Company, LLC, 2015; The Nielsen Company, LLC, 2015; Sg2 Analysis, CMS Office of the Actuary in the Centers for Medicare & Medicaid Services, July NHE Projections Forecast Summary: Statistics Data and Systems/Statistics Trends and Reports/NationalHealthExpendData/Downloads/proj2015.pdf 4 ESRI 5 year CAGR, population projection 5 Sg2 5 year CAGR, inpatient admissions Demand based on epidemiology and population forecasts, 2014 base year. Excludes normal newborns. 6 U.S. Dept. of Commerce, Bureau of Economic Analysis 2014% Real GDP Growth over 2013: U.S. Bureau of Economic Analysis, National Real GDP (millions of chained 2009 dollars, gdpnewsrelease.htm. EMBARGOED UNTIL RELEASE AT 8:30 A.M. EST, Nov 24, U.S. Dept. of Labor, Bureau of Labor Statistics November 2015P Unemployment Rate, Not Seasonally Adjusted. Table 1. Civilian labor force and unemployment by state and metropolitan area. As of December 31, Potential enrollment eligible population defined as people who were uninsured or buying their own insurance before the ACA went into effect, who are not eligible for Medicaid or employer coverage, including Tax Credit Eligible, Ineligible for Financial Assistance due to Income, ESI Offer or Citizenship, and In the coverage gap who are citizens or authorized immigrants. Source: KFF Distribution of Eligibility for ACA Health Coverage Among those Remaining Uninsured as of Timeframe: January 12, for notes and sources 9 Kaiser Family Foundation. Status of State Action on the Medicaid Expansion Decision as July 7,