Item 16. Form 10-K Summary

| --- | --- |

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

HCA HEALTHCARE, INC.
By:		/S/ S AMUEL N. H AZEN
		Samuel N. Hazen Chief Executive Officer

Dated: February 18, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/S/ S AMUEL N. H AZEN Samuel N. Hazen		Chief Executive Officer and Director (Principal Executive Officer)		February 18, 2022
/S/ W ILLIAM B. R UTHERFORD William B. Rutherford		Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)		February 18, 2022
/S/ T HOMAS F. F RIST III Thomas F. Frist III		Chairman and Director		February 18, 2022
/S/ M EG G. C ROFTON Meg G. Crofton		Director		February 18, 2022
/S/ R OBERT J. D ENNIS Robert J. Dennis		Director		February 18, 2022
/S/ N ANCY -A NN D E P ARLE Nancy-Ann DeParle		Director		February 18, 2022
/S/ W ILLIAM R. F RIST William R. Frist		Director		February 18, 2022
/S/ C HARLES O. H OLLIDAY , J R . Charles O. Holliday, Jr.		Director		February 18, 2022
/S/ H UGH F. J OHNSTON Hugh F. Johnston		Director		February 18, 2022
/S/ M ICHAEL W. M ICHELSON Michael W. Michelson		Director		February 18, 2022
/S/ W AYNE J. R ILEY Wayne J. Riley		Director		February 18, 2022
/S/ A NDREA B. S MITH Andrea B. Smith		Director		February 18, 2022

HCA HEALTHCARE, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Financial Statements:
Consolidated Income Statements for the years ended December 31, 2021, 2020 and 2019			F-5
Consolidated Comprehensive Income Statements for the years ended December 31, 2021, 2020 and 2019			F-6
Consolidated Balance Sheets, December 31, 2021 and 2020			F-7
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2021, 2020 and 2019			F-8
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019			F-9
Notes to Consolidated Financial Statements			F-10

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

HCA Healthcare, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of HCA Healthcare, Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 18, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-2

		Revenue Recognition
Description of the Matter		For the year ended December 31, 2021, the Company’s revenues were $58.752 billion. As discussed in Note 1 to the consolidated financial statements, revenues are based upon the estimated amounts the Company expects to be entitled to receive from patients and third-party payers. Estimates of contractual allowances under managed care, commercial, and governmental insurance plans are based upon the payment terms specified in the related contractual agreements or as mandated under government payer programs. Management continually reviews the contractual allowances 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. Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care insurance coverage may have discounts applied (uninsured discounts and contractual discounts). The Company also records estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record these revenues and accounts receivable at the estimated amounts the Company expects to collect. The primary collection risks relate to uninsured patient accounts, including amounts owed from patients after insurance has paid the amounts covered by the applicable agreement. Implicit price concessions relate primarily to amounts due directly from patients and are based upon management’s assessment of historical write-offs and expected net collections, business and economic conditions, trends in federal, state and private employer health care coverage and other collection indicators. Auditing management’s estimates of contractual allowances and implicit price concessions was complex and judgmental due to the significant data inputs and subjective assumptions utilized in determining related amounts.
How We Addressed the Matter in Our Audit		We tested internal controls that address the risks of material misstatement related to the measurement and valuation of revenues, including estimation of contractual allowances and implicit price concessions. For example, we tested management’s internal controls over the key data inputs to the contractual allowance and implicit price concession models, significant assumptions underlying management’s models, and management’s internal controls over retrospective hindsight reviews of historical reserve accuracy. To test the estimated contractual allowances and implicit price concessions, we performed audit procedures that included, among others, assessing methodologies and evaluating the significant assumptions discussed above and testing the completeness and accuracy of the underlying data used by the Company in its estimates. We compared the significant assumptions used by management to current industry and economic trends and considered changes, if any, to the Company’s business and other relevant factors. We also assessed the historical accuracy of management’s estimates as a source of potential corroborative or contrary evidence.

F-3

		Professional Liability Claims
Description of the Matter		At December 31, 2021, the Company’s reserves for professional liability risks were $2.022 billion and the Company’s related provision for losses for the year ended December 31, 2021 was $453 million. As discussed in Note 1 to the consolidated financial statements, reserves for professional liability risks represent the estimated ultimate cost of all reported and unreported losses incurred and unpaid as of the consolidated balance sheet date. Management determines professional liability reserves and provisions for losses using individual case-basis valuations and actuarial analyses. Trends in the average frequency (number of claims) and ultimate average severity (cost per claim) of claims are significant assumptions in estimating the reserves.
		Auditing management’s professional liability claims reserves was complex and judgmental due to the significant estimations required in determining the reserves, particularly the actuarial methodology and assumptions related to the severity and frequency of claims.
How We Addressed the Matter in Our Audit		We tested management’s internal controls that address the risks of material misstatement over the Company’s professional liability claims reserve estimation process. For example, we tested internal controls over management’s review of the actuarial methodology and significant assumptions, and the completeness and accuracy of claims data supporting the recorded reserves. To test the Company’s determination of the estimated professional liability expense and reserves, we performed audit procedures that included, among others, testing the completeness and accuracy of underlying claims data used by the Company and its actuaries in its determination of reserves and reviewing the Company’s insurance contracts to assess self-insured limits, deductibles and coverage limits. Additionally, with the involvement of our actuarial specialists, we performed audit procedures that included, among others, assessing the actuarial valuation methodologies utilized by management and its actuaries, testing the significant assumptions, including consideration of Company-specific claim reporting and payment data, assessing the accuracy of management’s historical reserve estimates, and developing an independent range of reserves for comparison to the Company’s recorded amounts.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1994.

Nashville, Tennessee

February 18, 2022

F-4

HCA HEALTHCARE, INC.

CONSOLIDATED INCOME STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

(Dollars in millions, except per share amounts)

		2021				2020				2019
Revenues		$	58,752			$	51,533			$	51,336
Salaries and benefits			26,779				23,874				23,560
Supplies			9,481				8,369				8,481
Other operating expenses			9,961				9,307				9,481
Equity in earnings of affiliates			(113	)			(54	)			(43	)
Depreciation and amortization			2,853				2,721				2,596
Interest expense			1,566				1,584				1,824
Losses (gains) on sales of facilities			(1,620	)			7				(18	)
Losses on retirement of debt			12				295				211
			48,919				46,103				46,092
Income before income taxes			9,833				5,430				5,244
Provision for income taxes			2,112				1,043				1,099
Net income			7,721				4,387				4,145
Net income attributable to noncontrolling interests			765				633				640
Net income attributable to HCA Healthcare, Inc.		$	6,956			$	3,754			$	3,505
Per share data:
Basic earnings per share		$	21.52			$	11.10			$	10.27
Diluted earnings per share		$	21.16			$	10.93			$	10.07
Shares used in earnings per share calculations (in millions):
Basic			323.315				338.274				341.210
Diluted			328.752				343.605				348.226

The accompanying notes are an integral part of the cons

o

lidated financial statements.

F-5

HCA HEALTHCARE, INC.

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

(Dollars in millions)

		2021				2020				2019
Net income		$	7,721			$	4,387			$	4,145
Other comprehensive income (loss) before taxes:
Foreign currency translation			(9	)			18				5
Unrealized (losses) gains on available-for-sale securities			(16	)			14				15
Defined benefit plans			87				(71	)			(63	)
Pension costs included in salaries and benefits			28				28				13
			115				(43	)			(50	)
Change in fair value of derivative financial instruments			1				(66	)			(50	)
Interest costs (benefits) included in interest expense			37				24				(17	)
			38				(42	)			(67	)
Other comprehensive income (loss) before taxes			128				(53	)			(97	)
Income taxes (benefits) related to other comprehensive income items			30				(11	)			(18	)
Other comprehensive income (loss)			98				(42	)			(79	)
Comprehensive income			7,819				4,345				4,066
Comprehensive income attributable to noncontrolling interests			765				633				640
Comprehensive income attributable to HCA Healthcare, Inc.		$	7,054			$	3,712			$	3,426

The accompanying notes are an integral part of t

h

e consolidated financial statements.

F-6

HCA HEALTHCARE, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2021 AND 2020

(Dollars in millions)

		2021				2020
ASSETS
Current assets:
Cash and cash equivalents		$	1,451			$	1,793
Accounts receivable			8,095				7,051
Inventories			1,986				2,025
Other			2,010				1,464
			13,542				12,333
Property and equipment, at cost:
Land			2,496				2,269
Buildings			19,211				18,471
Equipment			28,256				27,082
Construction in progress			1,387				1,495
			51,350				49,317
Accumulated depreciation			(27,287	)			(26,118	)
			24,063				23,199
Investments of insurance subsidiaries			438				388
Investments in and advances to affiliates			448				422
Goodwill and other intangible assets			9,540				8,578
Right-of-use operating lease assets			2,113				2,024
Other			598				546
		$	50,742			$	47,490
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	4,111			$	3,535
Accrued salaries			1,912				1,720
Other accrued expenses			3,322				3,240
Long-term debt due within one year			237				209
			9,582				8,704
Long-term debt, less debt issuance costs and discounts of $248 and $236			34,342				30,795
Professional liability risks			1,514				1,486
Right-of-use operating lease obligations			1,755				1,673
Income taxes and other liabilities			2,060				1,940
Stockholders’ equity:
Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding 305,476,800 shares — 2021 and 339,425,600 shares — 2020			3				3
Capital in excess of par value			—				294
Accumulated other comprehensive loss			(404	)			(502	)
Retained earnings (deficit)			(532	)			777
Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc.			(933	)			572
Noncontrolling interests			2,422				2,320
			1,489				2,892
		$	50,742			$	47,490

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

F-7

HCA HEALTHCARE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

(Dollars in millions)

		Equity (Deficit) Attributable to HCA Healthcare, Inc.																				Equity Attributable to Noncontrolling Interests				Total
		Common Stock								Capital in Excess of Par Value				Accumulated Other Comprehensive Loss				Retained Earnings (Deficit)
		Shares (in millions)				Par Value
Balances, December 31, 2018			342.895			$	3			$	—			$	(381	)		$	(4,572	)		$	2,032			$	(2,918	)
Comprehensive income (loss)															(79	)			3,505				640				4,066
Repurchase of common stock			(7.949	)							(302	)							(729	)							(1,031	)
Share-based benefit plans			3.500								313																313
Cash dividends declared ($1.60 share)																			(555	)							(555	)
Distributions																							(542	)			(542	)
Other											(11	)											113				102
Balances, December 31, 2019			338.446				3				—				(460	)			(2,351	)			2,243				(565	)
Comprehensive income (loss)															(42	)			3,754				633				4,345
Repurchase of common stock			(3.287	)															(441	)							(441	)
Share-based benefit plans			4.267								300								(35	)							265
Cash dividends declared ($0.43 share)																			(150	)							(150	)
Distributions																							(626	)			(626	)
Other											(6	)											70				64
Balances, December 31, 2020			339.426				3				294				(502	)			777				2,320				2,892
Comprehensive income															98				6,956				765				7,819
Repurchase of common stock			(37.812	)							(578	)							(7,637	)							(8,215	)
Share-based benefit plans			3.863								280																280
Cash dividends declared ($1.92 share)																			(628	)							(628	)
Distributions																							(749	)			(749	)
Other											4												86				90
Balances, December 31, 2021			305.477			$	3			$	—			$	(404	)		$	(532	)		$	2,422			$	1,489

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

F-8

HCA HEALTHCARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2021, 2020 AND 2019

(Dollars in millions)

		2021				2020				2019
Cash flows from operating activities:
Net income		$	7,721			$	4,387			$	4,145
Adjustments to reconcile net income to net cash provided by operating activities:
Increase (decrease) in cash from operating assets and liabilities:
Accounts receivable			(962	)			327				(326	)
Inventories and other assets			(540	)			(304	)			(158	)
Accounts payable and accrued expenses			999				1,255				396
Depreciation and amortization			2,853				2,721				2,596
Income taxes			(70	)			41				250
Losses (gains) on sales of facilities			(1,620	)			7				(18	)
Losses on retirement of debt			12				295				211
Amortization of debt issuance costs			27				30				30
Share-based compensation			440				362				347
Other			99				111				129
Net cash provided by operating activities			8,959				9,232				7,602
Cash flows from investing activities:
Purchase of property and equipment			(3,577	)			(2,835	)			(4,158	)
Acquisition of hospitals and health care entities			(1,105	)			(568	)			(1,682	)
Sales of hospitals and health care entities			2,160				68				61
Change in investments			( 117	)			(20	)			25
Other			( 4	)			(38	)			34
Net cash used in investing activities			(2,643	)			(3,393	)			(5,720	)
Cash flows from financing activities:
Issuances of long-term debt			4,344				2,700				6,451
Net change in revolving credit facilities			2,780				(2,480	)			(560	)
Repayment of long-term debt			(3,869	)			(3,437	)			(5,324	)
Distributions to noncontrolling interests			(749	)			(626	)			(542	)
Payment of debt issuance costs			(38	)			(35	)			(73	)
Payment of dividends			(624	)			(153	)			(550	)
Repurchase of common stock			(8,215	)			(441	)			(1,031	)
Other			(284	)			(205	)			(142	)
Net cash used in financing activities			(6,655	)			(4,677	)			(1,771	)
Effect of exchange rate changes on cash and cash equivalents			(3	)			10				8
Change in cash and cash equivalents			(342	)			1,172				119
Cash and cash equivalents at beginning of period			1,793				621				502
Cash and cash equivalents at end of period		$	1,451			$	1,793			$	621
Interest payments		$	1,502			$	1,607			$	1,914
Income tax payments, net		$	2,182			$	1,002			$	849

The accompanying notes are a

n

integral part of the consolidated financial statements.

F-9

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — 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 December 31, 2021 these affiliates owned and operated 182 hospitals, 125 freestanding surgery centers, 21 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 preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

The consolidated financial statements include all subsidiaries and entities controlled by HCA. We generally define “control” as ownership of a majority of the voting interest of an entity. The consolidated financial statements include entities in which we absorb a majority of the entity’s expected losses, receive a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. The accounts of acquired entities are included in our consolidated financial statements for periods subsequent to our acquisition of controlling interests. Significant intercompany transactions have been eliminated. Investments in entities we do not control, but in which we have a substantial ownership interest and can exercise significant influence, are accounted for using the equity method.

The majority of our expenses are “cost of revenue” items. Costs that could be classified as general and administrative include our corporate office costs, which were $400 million, $416 million and $370 million for the years ended December 31, 2021, 2020 and 2019, respectively.

COVID-19

Pandemic

On March 11, 2020, the World Health Organization designated

COVID-19

as a global pandemic. Patient volumes and the related revenues for most of our services were significantly impacted during the latter portion of the first quarter and the first half of the second quarter of 2020 and have continued to be impacted as various policies were implemented by federal, state and local governments in response to the

COVID-19

pandemic. During the second quarter of 2021, our patient volumes improved as the effects of the pandemic moderated and certain pandemic-related restrictions and policies were eased. For the remainder of 2021, our patient volumes exhibited consistent growth over the prior year, with the exception of inpatient surgeries, and included a resurgence of

COVID-19

admissions and the

re-imposition

of pandemic-related restrictions in certain markets. We believe the extent of the

COVID-19

pandemic’s impact on our operating results and financial condition has been and will continue to be driven by many factors, most of which are beyond our control and ability to forecast. Because of these uncertainties, we cannot estimate how long or to what extent the pandemic will impact our operations.

F-10

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — ACCOUNTING POLICIES (continued)

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.

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 discounts and contractual 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. Our revenues by primary third-party payer classification and other (including uninsured patients) for the years ended December 31, are summarized in the following table (dollars in millions):

		Years Ended December 31,
		2021				Ratio				2020				Ratio				2019				Ratio
Medicare		$	10,447				17.8	%		$	10,420				20.2	%		$	10,798				21.0	%
Managed Medicare			8,424				14.3				6,997				13.6				6,452				12.6
Medicaid			2,290				3.9				1,965				3.8				1,572				3.1
Managed Medicaid			3,124				5.3				2,621				5.1				2,450				4.8
Managed care and other insurers			30,295				51.6				26,535				51.5				26,544				51.6
International (managed care and other insurers)			1,336				2.3				1,120				2.2				1,162				2.3
Other			2,836				4.8				1,875				3.6				2,358				4.6
Revenues		$	58,752				100.0	%		$	51,533				100.0	%		$	51,336				100.0	%

Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and filed and as final settlements are determined (in relation to certain government programs, primarily

F-11

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — ACCOUNTING POLICIES (continued)

Revenues (continued)

Medicare, this is generally referred to as the “cost report” filing and settlement process). The adjustments to estimated Medicare and Medicaid reimbursement amounts and disproportionate-share funds related primarily to cost reports filed during the respective year resulted in net increases to revenues of $53 million, $70 million and $51 million in 2021, 2020 and 2019, respectively. The adjustments to estimated reimbursement amounts related primarily to cost reports filed during previous years resulted in a net increase to revenues of $19 million in 2021, a net reduction to revenues of $5 million in 2020 and a net increase to revenues of $13 million in 2019.

The Emergency Medical Treatment and Labor Act (“EMTALA”) requires any hospital participating in the Medicare program to conduct an appropriate medical screening examination of every person who presents to the hospital’s emergency room for treatment and, if the individual is suffering from an emergency medical condition, to either stabilize the condition or make an appropriate transfer of the individual to a facility able to handle the condition. The obligation to screen and stabilize emergency medical conditions exists regardless of an individual’s ability to pay for treatment. Federal and state laws and regulations require, and our commitment to providing quality patient care encourages, us to provide services to patients who are financially unable to pay for the health care services they receive.

Patients treated at hospitals for

non-elective

care, who have income at or below 400% of the federal poverty level, are eligible for charity care, and we limit the patient responsibility amounts for these patients to a percentage of their annual household income, computed on a sliding scale based upon their annual income and the applicable percentage of the federal poverty level. Patients treated at hospitals for

non-elective

care, who have income above 400% of the federal poverty level, are eligible for certain other discounts which limit the patient responsibility amounts for these patients to a percentage of their annual household income, computed on a sliding scale based upon their annual income and the applicable percentage of the federal poverty level. We apply additional discounts to limit patient responsibility for certain emergency services. The federal poverty level is established by the federal government and is based on income and family size. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues. We provide discounts to uninsured patients who do not qualify for Medicaid or charity care. We may attempt to provide assistance to uninsured patients to help determine whether they may qualify for Medicaid, other federal or state assistance, or charity care. If an uninsured patient does not qualify for these programs, the uninsured discount is applied.

The collection of outstanding receivables from Medicare, Medicaid, managed care payers, other third-party payers and patients is our primary source of cash and is critical to our operating performance. The primary collection risks relate to uninsured patient accounts, including patient accounts for which the primary insurance carrier has paid the amounts covered by the applicable agreement, but patient responsibility amounts (deductibles and copayments) remain outstanding. Implicit price concessions relate primarily to amounts due directly from patients. Estimated implicit price concessions are recorded for all uninsured accounts, regardless of the age of those accounts. Accounts are written off when all reasonable collection efforts have been performed.

The estimates for implicit price concessions are based upon management’s assessment of historical writeoffs and expected net collections, business and economic conditions, trends in federal, state and private employer health care coverage and other collection indicators. Management relies on the results of detailed reviews of historical writeoffs and collections at facilities that represent a majority of our revenues and accounts receivable (the “hindsight analysis”) as a primary source of information in estimating the collectability of our accounts receivable. We perform the hindsight analysis quarterly, utilizing rolling twelve-months accounts

F-12

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — ACCOUNTING POLICIES (continued)

Revenues (continued)

receivable collection and writeoff data. We believe our quarterly updates to the estimated implicit price concession amounts at each of our hospital facilities provide reasonable estimates of our revenues and valuations of our accounts receivable. These routine, quarterly changes in estimates have not resulted in material adjustments to the valuations of our accounts receivable or

period-to-period

comparisons of our revenues. At December 31, 2021 and 2020, estimated implicit price concessions of $6.784 billion and $6.108 billion, respectively, had been recorded to adjust our revenues and accounts receivable to the estimated amounts we expect to collect.

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 years ended December 31, follows (dollars in millions):

		2021				2020				2019
Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation and amortization)		$	49,074			$	44,271			$	44,118
Cost-to-charges ratio (patient care costs as percentage of gross patient charges)			11.3	%			12.0	%			12.0	%
Total uncompensated care		$	29,642			$	29,029			$	31,105
Multiply by the cost-to-charges ratio			11.3	%			12.0	%			12.0	%
Estimated cost of total uncompensated care		$	3,350			$	3,483			$	3,733

The total uncompensated care amounts include charity care of $13.644 billion, $13.763 billion and $13.260 billion for the years ended December 31, 2021, 2020 and 2019, respectively. The estimated cost of charity care was $1.542 billion, $1.652 billion and $1.591 billion for the years ended December 31, 2021, 2020 and 2019, respectively.

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with a maturity of three months or less when purchased. Our insurance subsidiaries’ cash equivalent investments in excess of the amounts required to pay estimated professional liability claims during the next twelve months are not included in cash and cash equivalents as these funds are not available for general corporate purposes. Carrying values of cash and cash equivalents approximate fair value due to the short-term nature of these instruments.

Our cash management system provides for daily investment of available balances and the funding of outstanding checks when presented for payment. Outstanding, but unpresented, checks totaling $536 million and $495 million at December 31, 2021 and 2020, respectively, have been included in “accounts payable” in the consolidated balance sheets. Upon presentation for payment, these checks are funded through available cash balances or our credit facility.

F-13

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — ACCOUNTING POLICIES (continued)

Accounts Receivable

We receive payments for services rendered from federal and state agencies (under the Medicare and Medicaid programs), managed care health plans, commercial insurance companies, employers and patients. We recognize that revenues and receivables from government agencies are significant to our operations, but do not believe there are significant credit risks associated with these government agencies. We do not believe there are any other significant concentrations of revenues from any particular payer that would subject us to any significant credit risks in the collection of our accounts receivable. Days revenues in accounts receivable were 49 days, 45 days and 50

days at December 31, 2021, 2020 and 2019, respectively. The five-day decline during 2020 was primarily related to the COVID-19 impacts of continuing to collect our accounts receivable from the pre-COVID-19 period, while experiencing lower revenues (primarily during the first and second quarters of 2020) that slowed the return of our accounts receivable balances back to pre-COVID-19 levels in 2021. Changes in general economic conditions, patient accounting service center operations, payer mix, or federal or state governmental health care coverage could affect our collection of accounts receivable, cash flows and results of operations.

Inventories

Inventories are stated at the lower of cost

(first-in,

first-out)

or market.

Property and Equipment

Depreciation expense, computed using the straight-line method, was $2.826 billion in 2021, $2.693 billion in 2020 and $2.579 billion in 2019. Buildings and improvements are depreciated over estimated useful lives ranging generally from 10 to 40 years. Estimated useful lives of equipment vary generally from four to 10 years.

When events, circumstances or operating results indicate the carrying values of certain long-lived assets expected to be held and used might be impaired, we prepare projections of the undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the projections indicate the recorded amounts are not expected to be recoverable, such amounts are reduced to estimated fair value. Fair value may be estimated based upon internal evaluations that include quantitative analyses of revenues and cash flows, reviews of recent sales of similar assets and independent appraisals.

Long-lived assets to be disposed of are reported at the lower of their carrying amounts or fair value less costs to sell or close. The estimates of fair value are usually based upon recent sales of similar assets and market responses based upon discussions with and offers received from potential buyers.

Investments of Insurance Subsidiaries

At December 31, 2021 and 2020, the investment securities held by our insurance subsidiaries were classified as

“available-for-sale”

as defined in Accounting Standards Codification (“ASC”) No. 320,

Investments — Debt Securities

and are recorded at fair value. The investment securities are held for the purpose of providing a funding source to pay liability claims covered by the insurance subsidiaries. We perform quarterly assessments of individual investment securities to determine whether declines in fair value are due to credit-related or noncredit-related factors. Our investment securities evaluation process involves subjective judgments, often involves estimating the outcome of future events, and requires a significant level of professional judgment in determining whether a credit-related impairment has occurred. We evaluate, among other things, the financial position and

F-14

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — ACCOUNTING POLICIES (continued)

Investments of Insurance Subsidiaries (continued)

near term prospects of the issuer, conditions in the issuer’s industry, liquidity of the investment, changes in the amount or timing of expected future cash flows from the investment, and recent downgrades of the issuer by a rating agency, to determine if, and when, a decline in the fair value of an investment below amortized cost is considered to be a credit-related impairment. The extent to which the fair value of the investment is less than amortized cost and our ability and intent to retain the investment, to allow for any anticipated recovery of the investment’s fair value, are important components of our investment securities evaluation process

.

Goodwill and Intangible Assets

Goodwill is not amortized but is subject to annual impairment tests. In addition to the annual impairment review, impairment reviews are performed whenever circumstances indicate a possible impairment may exist. Impairment testing for goodwill is done at the reporting unit level. Reporting units are one level below the business segment level, and our impairment testing is performed at the operating division level. We compare the fair value of the reporting unit assets to the carrying amount, on at least an annual basis, to determine if there is potential impairment. If the fair value of the reporting unit assets is less than their carrying value, an impairment loss is recognized. Fair value is estimated based upon internal evaluations of each reporting unit that include quantitative analyses of market multiples, revenues and cash flows and reviews of recent sales of similar facilities. No goodwill impairments were recognized during 2021, 2020 or 2019.

During 2021, goodwill increased by $1.002 billion related to acquisitions and declined by $75 million related to foreign currency translation and other adjustments. During 2020, goodwill increased by $279 million related to acquisitions, including the finalization of the accounting for certain prior year acquisitions, and declined by $9 million related to foreign currency translation and other adjustments.

During 2021, identifiable intangible assets increased by $60 million related to acquisitions and declined by $25 million due to amortization and other adjustments. During 2020, identifiable intangible assets increased by $65 million related to acquisitions, including the finalization of the accounting for certain prior year acquisitions, and declined by $26 million due to amortization and other adjustments. Identifiable intangible assets

with finite lives

are amortized over estimated lives ranging generally from three to 10 years. The gross carrying amounts of

amortizable

identifiable intangible assets at December 31, 2021 and 2020 were $274 million and $249 million, respectively, and accumulated amortization was

$175 million and $149 million, respectively. The gross carrying amounts of indefinite-lived identifiable intangible assets at December 31, 2021 and

2020 were $304 million and $269 million, respectively. Indefinite-lived identifiable intangible assets are not amortized but are

subject to annual

impairment tests, and impairment reviews are performed whenever circumstances indicate a possible impairment may exist.

Debt Issuance Costs and Discounts

Debt issuance costs and discounts are amortized based upon the terms of the respective debt obligations. The gross carrying amount of debt issuance costs and discounts at December 31, 2021 and 2020 was $446 million and $411 million, respectively, and accumulated amortization was $198 million and $175 million, respectively. Amortization of debt issuance costs and discounts is included in interest expense and was $27 million, $30 million and $30 million for 2021, 2020 and 2019, respectively.

F-15

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — ACCOUNTING POLICIES (continued)

Professional Liability Claims

Reserves for professional liability risks were $2.022 billion and $1.963 billion at December 31, 2021 and 2020, respectively. The current portion of the reserves, $508 million and $477 million at December 31, 2021 and 2020, respectively, is included in “other accrued expenses” in the consolidated balance sheets. Provisions for losses related to professional liability risks were $453 million, $435 million and $497 million for 2021, 2020 and 2019, respectively, and are included in “other operating expenses” in our consolidated income statements. Provisions for losses related to professional liability risks are based upon actuarially determined estimates. During 2021, 2020 and 2019, we recorded reductions to the provision for professional liability risks of $87 million, $112 million and $50 million, respectively, due to the receipt of updated actuarial information. Loss and loss expense reserves represent the estimated ultimate net cost of all reported and unreported losses incurred through the respective consolidated balance sheet dates. The reserves for unpaid losses and loss expenses are estimated using individual case-basis valuations and actuarial analyses. Those estimates are subject to the effects of trends in loss severity and frequency. The estimates are continually reviewed and adjustments are recorded as experience develops or new information becomes known. Adjustments to the estimated reserve amounts are included in current operating results. The reserves for professional liability risks cover approximately 2,100 and 2,300 individual claims at December 31, 2021 and 2020, respectively, and estimates for unreported potential claims. The time period required to resolve these claims can vary depending upon the jurisdiction and whether the claim is settled or litigated. During 2021 and 2020, $384 million and $292 million, respectively, of net payments were made for professional and general liability claims. The estimation of the timing of payments beyond a year can vary significantly. Although considerable variability is inherent in professional liability reserve estimates, we believe the reserves for losses and loss expenses are adequate; however, there can be no assurance the ultimate liability will not exceed our estimates.

A portion of our professional liability risks is insured through our insurance subsidiary. Subject, in most cases, to a $15 million per occurrence self-insured retention, our facilities are insured by our insurance subsidiary for losses up to $75 million per occurrence. The insurance subsidiary has obtained reinsurance for professional liability risks generally above a retention level of either $25 million or $35 million per occurrence, depending on the jurisdiction for the related claim. We also maintain professional liability insurance with unrelated commercial carriers for losses in excess of amounts insured by our insurance subsidiary.

The obligations covered by reinsurance and excess insurance contracts are included in the reserves for professional liability risks, as we remain liable to the extent the reinsurers and excess insurance carriers do not meet their obligations under the reinsurance and excess insurance contracts. The amounts receivable under the reinsurance contracts include $44 million and $31 million at December 31, 2021 and 2020, respectively, recorded in “other assets,” and $11 million and $8 million at December 31, 2021 and 2020, respectively, recorded in “other current assets.”

Financial Instruments

Derivative financial instruments are employed to manage interest rate risks, and are not used for trading or speculative purposes. We recognize our interest rate swap derivative instruments in the consolidated balance sheets at fair value. Changes in the fair value of derivatives are recognized periodically in stockholders’ equity, as a component of other comprehensive income (loss), provided the derivative financial instrument qualifies for hedge accounting. Gains and losses on derivatives designated as cash flow hedges, to the extent they are effective, are recorded in other comprehensive income (loss), and subsequently reclassified to earnings to offset

F-16

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — ACCOUNTING POLICIES (continued)

Financial Instruments (continued)

the impact of the forecasted transactions when they occur. In the event the forecasted transaction to which a cash flow hedge relates is no longer likely, the amount in other comprehensive income is recognized in earnings and generally the derivative is terminated.

The net interest paid or received on interest rate swaps is recognized as an adjustment to interest expense. Gains and losses resulting from the early termination of interest rate swap agreements are deferred and amortized as adjustments to interest expense over the remaining term of the debt originally associated with the terminated swap.

Noncontrolling Interests in Consolidated Entities

The consolidated financial statements include all assets, liabilities, revenues and expenses of less than 100% owned entities that we control. Accordingly, we have recorded noncontrolling interests in the earnings and equity of such entities.

NOTE 2 — SHARE-BASED COMPENSATION

Stock Incentive Plans

Our stock incentive plans are designed to promote the long-term financial interests and growth of the Company by attracting and retaining management and other personnel, motivating them to achieve long range goals and aligning their interests with those of our stockholders through opportunities for stock-based compensation and stock ownership in the Company. Stock option, stock appreciation right (“SARs”) and restricted share unit (“RSUs”) grants vest solely based upon continued employment over a specific period of time, and performance share unit (“PSUs”) grants vest based upon both continued employment over a specific period of time and the achievement of predetermined financial targets over a specific period of time. At December 31, 2021 there were

16.290 million shares available for future grants.

Employee Stock Purchase Plan

Our employee stock purchase plan (“ESPP”) provides our participating employees an opportunity to obtain shares of our common stock at a discount (through payroll deductions over three-month periods). At December 31, 2021, 5.173 million shares of common stock were reserved for ESPP issuances. During 2021, 2020 and 2019, the Company recognized $15 million, $13 million and $12 million, respectively, of compensation expense related to the ESPP.

Stock Option, SAR, RSU and PSU Activity

The fair value of each stock option and SAR award is estimated on the grant date, using valuation models and the weighted average assumptions indicated in the following table. Awards under our stock incentive plans generally vest based on continued employment (“Time Stock Options and SARs” and “RSUs”) or based upon continued employment and the achievement of certain financial targets (“Performance Stock Options and SARs” and “PSUs”). PSUs have a three-year cumulative earnings per share target, and the number of PSUs earned can vary from zero (for actual performance of less than 90% of target for 2021, 2020 and 2019 grants) to two times the original PSU grant (for actual performance of 110% or more of target for 2021, 2020 and 2019 grants). Each

F-17

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2 — SHARE-BASED COMPENSATION (continued)

Stock Option, SAR, RSU and PSU Activity (continued)

grant is valued as a single award with an expected term equal to the average expected term of the component vesting tranches. The expected term of the share-based award is limited by the contractual term. We use historical exercise behavior data and other factors to estimate the expected term of the options and SARs.

Compensation cost is recognized on the straight-line attribution method. The straight-line attribution method requires that total compensation expense recognized must at least equal the vested portion of the grant-date fair value. The expected volatility is derived using historical stock price information for our common stock and the volatility implied by the trading of options to purchase our stock on open-market exchanges. The risk-free interest rate is the approximate yield on United States Treasury Strips having a life equal to the expected share-based award life on the date of grant. The expected life is an estimate of the number of years a share-based award will be held before it is exercised. The expected dividend yield is estimated based on the assumption that the dividend yield at date of grant will be maintained over the expected life of the grant.

		2021				2020				2019
Risk-free interest rate			0.68	%			1.44	%			2.50	%
Expected volatility			36	%			27	%			27	%
Expected life, in years			6.17				6.15				6.18
Expected dividend yield			1.10	%			1.19	%			1.16	%

Information regarding Time Stock Options and SARs and Performance Stock Options and SARs activity during 2021, 2020 and 2019 is summarized below (share amounts in thousands):

		Time Stock Options and SARs				Performance Stock Options and SARs				Total Stock Options and SARs				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term				Aggregate Intrinsic Value (dollars in millions)
Options and SARs outstanding, December 31, 2018			9,360				2,667				12,027			$	61.49
Granted			1,349				—				1,349				138.31
Exercised			(1,137	)			(523	)			(1,660	)			44.45
Cancelled			(522	)			—				(522	)			93.26
Options and SARs outstanding, December 31, 2019			9,050				2,144				11,194				71.79
Granted			1,120				—				1,120				144.47
Exercised			(2,159	)			(1,325	)			(3,484	)			44.07
Cancelled			(175	)			—				(175	)			111.69
Options and SARs outstanding, December 31, 2020			7,836				819				8,655				91.53
Granted			877				—				877				174.98
Exercised			(2,443	)			(533	)			(2,976	)			67.57
Cancelled			(108	)			—				(108	)			138.32
Options and SARs outstanding, December 31, 2021			6,162				286				6,448			$	113.15				6.2 years			$	927
Options and SARs exercisable, December 31, 2021			3,486				286				3,772			$	89.70				5.0 years			$	631

F-18

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2 — SHARE-BASED COMPENSATION (continued)

Stock Option, SAR, RSU and PSU Activity (continued)

The weighted average fair values of stock options and SARs granted during 2021, 2020 and 2019 were $54.57, $35.98 and $38.21 per share, respectively. The total intrinsic value of stock options and SARs exercised during 2021, 2020 and 2019 was $404 million, $328 million and $153 million, respectively. As of December 31, 2021, the unrecognized compensation cost related to nonvested stock options and SARs was $46 million.

Information regarding RSUs and PSUs activity during 2021, 2020 and 2019 is summarized below (share amounts in thousands):

		RSUs				PSUs				Total RSUs and PSUs				Weighted Average Grant Date Fair Value
RSUs and PSUs outstanding, December 31, 2018			3,123				3,422				6,545			$	86.32
Granted			973				796				1,769				138.45
Performance adjustment			—				227				227				69.94
Vested			(1,216	)			(1,251	)			(2,467	)			75.97
Cancelled			(260	)			(159	)			(419	)			103.27
RSUs and PSUs outstanding, December 31, 2019			2,620				3,035				5,655				105.23
Granted			1,048				808				1,856				144.17
Performance adjustment			—				206				206				81.89
Veste d			(1,030	)			(1,364	)			(2,394	)			88.63
Cancelled			(162	)			(93	)			(255	)			124.50
RSUs and PSUs outstanding, December 31, 2020			2,476				2,592				5,068				125.40
Granted			899				689				1,588				174.34
Performance adjustment			—				684				684				102.02
Vested			(992	)			(1,772	)			(2,764	)			106.62
Cancelled			(192	)			(110	)			(302	)			149.07
RSUs and PSUs outstanding, December 31, 2021			2,191				2,083				4,274			$	150.32

The total fair value of RSUs and PSUs that vested during 2021, 2020 and 2019 was $475 million, $349 million and $346 million, respectively. As of December 31, 2021, the unrecognized compensation cost related to RSUs and PSUs was $420 million.

NOTE 3 — ACQUISITIONS AND DISPOSITIONS

During 2021, we paid $67 million to acquire

two

hospital facilities, one in southern Georgia and one in Tennessee, $594 million to acquire a network of urgent care centers in Florida and $114 million to acquire other nonhospital health care entities (noncontrolling interests of $117 million were recorded).

The acquisition of the network of urgent care centers occurred during December 2021. At December 31, 2021, our purchase accounting procedures were not complete, and completion of these procedures will include an analysis of the leases assumed and our review for possible identifiable intangible assets acquired.

We also paid $330 million and assumed certain liabilities to acquire an 80% interest (noncontrolling interests of $100 million were recorded) in a venture providing post-acute care services (home health and hospice). During 2020, we paid $568 million to acquire a hospital in New Hampshire and other nonhospital health care entities. During 2019, we paid $1.384 billion to

F-19

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 3 — ACQUISITIONS AND DISPOSITIONS (continued)

acquire a seven-hospital health system in North Carolina and $298 million to acquire nonhospital health care entities. Purchase price amounts have been allocated to the related assets acquired and liabilities

assumed based upon their respective fair values. The purchase price paid in excess of the fair value of identifiable net assets of these acquired entities aggregated $

1.002

billion, $

million and $

million in

2021

,

2020

and

2019

, respectively. The consolidated financial statements include the accounts and operations of the acquired entities subsequent to the respective acquisition dates. The pro forma effects of these acquired entities on our results of operations for periods prior to the respective acquisition dates were not significant.

During 2021, we received proceeds of $1.502 billion and recognized a pretax gain of $1.226 billion ($920 million after tax) related to the sale of five

hospital facilities in Georgia, comprised of

three facilities from our American Group (northern Georgia market) and two facilities from our National Group (southern Georgia market). We also received proceeds of $658 million and recognized a pretax gain of $394 million ($294 million after tax) related to sales of other health care entity investments and real estate. During 2020, we received proceeds of $68 million and recognized a pretax loss of $7 million ($9 million after tax) related to the sale of a hospital facility from our American Group (Mississippi market) and sales of real estate and other investments. During 2019, we received proceeds of $61 million and recognized a pretax gain of $18 million ($13 million after tax) related to the sale of a hospital facility from our American Group (a Louisiana market) and sales of real estate and other investments.

NOTE 4 — INCOME TAXES

The provision for income taxes consists of the following (dollars in millions):

		2021				2020				2019
Current:
Federal		$	1,769			$	1,021			$	670
State			311				126				134
Foreign			15				5				17
Deferred:
Federal			24				(73	)			254
State			(18	)			(39	)			29
Foreign			11				3				(5	)
		$	2,112			$	1,043			$	1,099

Our provision for income taxes for the years ended December 31, 2021, 2020 and 2019 included tax benefits of $119 million, $92 million and $65 million, respectively, related to the settlement of employee equity awards. Our foreign pretax income was $64 million, $9 million and $50 million for the years ended December 31, 2021, 2020 and 2019, respectively.

F-20

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 4 — INCOME TAXES (continued)

A reconciliation of the federal statutory rate to the effective income tax rate follows:

		2021				2020				2019
Federal statutory rate			21.0	%			21.0	%			21.0	%
State income taxes, net of federal tax benefit			2.0				1.9				2.7
Change in liability for uncertain tax positions			0.7				(0.2	)			0.4
Tax benefit from settlements of employee equity awards			(1.2	)			(1.8	)			(1.3	)
Other items, net			0.8				0.8				1.1
Effective income tax rate on income attributable to HCA Healthcare, Inc.			23.3				21.7				23.9
Income attributable to noncontrolling interests from consolidated partnerships			(1.8	)			(2.5	)			(2.9	)
Effective income tax rate on income before income taxes			21.5	%			19.2	%			21.0	%

A summary of the items comprising the deferred tax assets and liabilities at December 31 follows (dollars in millions):

		2021								2020
		Assets				Liabilities				Assets				Liabilities
Depreciation and fixed asset basis differences		$	—			$	737			$	—			$	678
Allowances for professional liability and other risks			426				—				407				—
Accounts receivable			348				—				283				—
Compensation			502				—				487				—
Right-of-use lease assets and obligations			428				419				416				409
Other			499				652				485				606
		$	2,203			$	1,808			$	2,078			$	1,693

At December 31, 2021, federal and state net operating loss carryforwards (expiring in years 2024 through 2040) available to offset future taxable income approximated $31 million and $99 million, respectively. Utilization of net operating loss carryforwards in any one year may be limited.

The following table summarizes the activity related to our unrecognized tax benefits (dollars in millions):

		2021				2020
Balance at January 1		$	469			$	522
Additions based on tax positions related to the current year			57				(3	)
Additions for tax positions of prior years			66				13
Reductions for tax positions of prior years			(6	)			(30	)
Settlements			(3	)			(22	)
Lapse of applicable statutes of limitations			(7	)			(11	)
Balance at December 31		$	576			$	469

F-21

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 4 — INCOME TAXES (continued)

Our liability for unrecognized tax benefits was $642 million, including accrued interest of $99 million and excluding $33 million that was recorded as reductions of the related deferred tax assets, as of December 31, 2021 ($508 million, $73 million and $34 million, respectively, as of December 31, 2020). Unrecognized tax benefits of $217 million as of December 31, 2021 ($157 million as of December 31, 2020) would affect the effective rate, if recognized.

The Internal Revenue Service (“IRS”) was conducting an examination of the Company’s 2016, 2017 and 2018 federal income tax returns and the 2019 return for one affiliated partnership at December 31, 2021. We are also subject to examination by state and foreign taxing authorities. Depending on the resolution of any federal, state and foreign tax disputes, the completion of examinations by federal, state or foreign taxing authorities, or the expiration of statutes of limitation for specific taxing jurisdictions, we believe it is reasonably possible that our liability for unrecognized tax benefits may significantly increase or decrease within the next 12 months. However, we are currently unable to estimate the range of any possible change.

NOTE 5 — 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 stock options, SARs, RSUs and PSUs, computed using the treasury stock method. During 2021, 2020 and 2019, we repurchased 37.812 million shares, 3.287 million shares and 7.949 million shares, respectively, of our common stock. The following table sets forth the computations of basic and diluted earnings per share for the years ended December 31, 2021, 2020 and 2019 (dollars and shares in millions, except per share amounts):

		2021				2020				2019
Net income attributable to HCA Healthcare, Inc.		$	6,956			$	3,754			$	3,505
Weighted average common shares outstanding			323.315				338.274				341.210
Effect of dilutive incremental shares			5.437				5.331				7.016
Shares used for diluted earnings per share			328.752				343.605				348.226
Earnings per share:
Basic earnings per share		$	21.52			$	11.10			$	10.27
Diluted earnings per share		$	21.16			$	10.93			$	10.07

F-22

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6 — INVESTMENTS OF INSURANCE SUBSIDIARIES

A summary of the insurance subsidiaries’ investments at December 31 follows (dollars in millions):

		2021
		Amortized Cost				Unrealized Amounts								Fair Value
		Gains				Losses
Debt securities		$	400			$	18			$	(2	)		$	416
Money market funds and other			125				—				—				125
		$	525			$	18			$	(2	)			541
Amounts classified as current assets															(103	)
Investment carrying value														$	438
		2020
		Amortized Cost				Unrealized Amounts								Fair Value
		Gains				Losses
Debt securities		$	384			$	32			$	—			$	416
Money market funds and other			88				—				—				88
		$	472			$	32			$	—				504
Amounts classified as current assets															(116	)
Investment carrying value														$	388

At December 31, 2021 and 2020, the investments in debt securities of our insurance subsidiaries were classified as

“available-for-sale.”

Changes in unrealized gains and losses are recorded as adjustments to other comprehensive income (loss).

Scheduled maturities of investments in debt securities at December 31, 2021 were as follows (dollars in millions):

		Amortized Cost				Fair Value
Due in one year or less		$	3			$	3
Due after one year through five years			128				135
Due after five years through ten years			176				183
Due after ten years			93				95
		$	400			$	416

The average expected maturity of the investments in debt securities at December 31, 2021 was 6.1 years, compared to the average scheduled maturity of 9.5 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.

F-23

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 7 — FINANCIAL INSTRUMENTS

Interest Rate Swap Agreements

We have entered into interest rate swap agreements to manage our exposure to fluctuations in interest rates. These swap agreements involve the exchange of fixed and variable rate interest payments between us and our counterparties based on common notional principal amounts and maturity dates.

Pay-fixed

interest rate swaps effectively convert variable rate obligations to fixed interest rate obligations. The interest payments under these agreements are settled on a net basis. The net interest payments, based on the notional amounts in these agreements, generally match the timing of the related liabilities for the interest rate swap agreements which have been designated as cash flow hedges. The notional amounts of the swap agreements represent amounts used to calculate the exchange of cash flows and are not our assets or liabilities. Our credit risk related to these agreements is considered low because the swap agreements are with creditworthy financial institutions.

The following table sets forth our interest rate swap agreement, which has been designated as a cash flow hedge, at December 31, 2021 (dollars in millions):

		Notional Amount				Maturity Date				Fair Value
Pay-fixed interest rate swap		$	500				December 2022			$	(8	)

During the next 12 months, we estimate $8 million will be reclassified from accumulated other comprehensive income (“OCI”) and will be included in interest expense.

Derivatives — Results of Operations

The following table presents the effect of our interest rate swaps on our results of operations for the year ended December 31, 2021 (dollars in millions):

Derivatives in Cash Flow Hedging Relationships		Amount of Gain Recognized in OCI on Derivatives, Net of Tax				Location of Loss Reclassified from Accumulated OCI into Operations				Amount of Loss Reclassified from Accumulated OCI into Operations
Interest rate swaps		$	1				Interest expense			$	37

Credit-risk-related Contingent Features

We have an agreement with our derivative counterparty that contains a provision where we could be declared in default on our derivative obligation if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. As of December 31, 2021, we have not been required to post any collateral related to this agreement. If we had breached this provision at December 31, 2021, we would have been required to settle our obligation under the agreement at the estimated termination value of $8 million.

F-24

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 — 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. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment.

Investment Securities

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.

Derivative Financial Instruments

We have entered into interest rate swap agreements to manage our exposure to fluctuations in interest rates. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. We incorporate credit valuation adjustments to reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements of these instruments.

F-25

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (continued)

The following tables summarize our assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 and 2020, aggregated by the level in the fair value hierarchy within which those measurements fall (dollars in millions):

		December 31, 2021
		Fair Value				Fair Value Measurements Using
		Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets:
Investments of insurance subsidiaries:
Debt securities		$	416			$	—			$	416			$	—
Money market funds and other			125				125				—				—
Investments of insurance subsidiaries			541				125				416				—
Less amounts classified as current assets			(103	)			(103	)			—				—
		$	438				22			$	416			$	—
Liabilities:
Interest rate swap (Other accrued expenses)		$	8			$	—			$	8			$	—

		December 31, 2020
		Fair Value				Fair Value Measurements Using
		Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets:
Investments of insurance subsidiaries:
Debt securities		$	416			$	—			$	416			$	—
Money market funds and other			88				88				—				—
Investments of insurance subsidiaries			504				88				416				—
Less amounts classified as current assets			(116	)			(87	)			(29	)			—
		$	388				1			$	387			$	—
Liabilities:
Interest rate swaps (Income taxes and other liabilities)		$	46			$	—			$	46			$	—

The estimated fair value of our long-term debt was $38.541 billion and $35.814 billion at December 31, 2021 and 2020, respectively, compared to carrying amounts, excluding debt issuance costs and discounts, aggregating $34.827 billion and $31.240 billion, respectively. The estimates of fair value are generally based upon the quoted market prices or quoted market prices for similar issues of long-term debt with the same maturities.

F-26

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9 — LONG-TERM DEBT

A summary of long-term debt at December 31, including related interest rates at December 31, 2021, follows (dollars in millions):

		2021				2020
Senior secured asset-based revolving credit facility (effective interest rate of 1.4 %)		$	2,780			$	—
Senior secured revolving credit facility			—				—
Senior secured term loan facilities (effective interest rate of 2.1%)			1,960				3,671
Senior secured notes (effective interest rate of 4.8%)			16,200				13,850
Other senior secured debt (effective interest rate of 4.3%)			935				767
Senior secured debt			21,875				18,288
Senior unsecured notes (effective interest rate of 5.5%)			12,952				12,952
Debt issuance costs and discounts			(248	)			(236	)
Total debt (average life of 8.9 years, rates averaging 4.6%)			34,579				31,004
Less amounts due within one year			237				209
		$	34,342			$	30,795

During June 2021, we issued $2.350 billion aggregate principal amount of senior secured notes comprised of $850 million aggregate principal amount of

2 3/8

% notes due 2031 and $1.500 billion aggregate principal amount of

3 1/2

% notes due 2051 (the “June 2021 Notes”). We also amended and restated our senior secured revolving credit facility and our senior secured asset-based revolving credit facility, including increasing availability under the asset-based revolving credit facility to $4.500 billion, extending the maturity date on both facilities to June 30, 2026 and entering into a new $1.500 billion term

loan A

facility and a new $500

million term loan B facility (the “Credit Agreement Transactions”). We used the net proceeds from the June 2021 Notes and the Credit Agreement Transactions to retire $3.657 billion of term loan facilities. The pretax loss on retirement of debt was

$12 million.

Senior Secured Credit Facilities And Other Senior Secured Debt

We have entered into the following senior secured credit facilities: (i) a $4.500 billion asset-based revolving credit facility maturing on June 30, 2026 with a borrowing base of 85% of eligible accounts receivable, subject to customary reserves and eligibility criteria ($2.780 billion outstanding at December 31, 2021) (the “ABL credit facility”); (ii) a $2.000 billion senior secured revolving credit facility maturing on June 30, 2026 (none outstanding at December 31, 2021 without giving effect to certain outstanding letters of credit); (iii) a $1.462 billion senior secured term loan

A

facility maturing on June 30, 2026; and (iv) a $498 million senior secured term loan

B

facility maturing on June 30, 2028. We refer to the facilities described under (ii) through (iv) above, collectively, as the “cash flow credit facility” and, together with the ABL credit facility, the “senior secured credit facilities.”

Borrowings under the senior secured credit facilities bear interest at a rate equal to, at our option, either (a) a base rate determined by reference to the higher of (1) the federal funds rate plus 0.50% or (2) the prime rate of Bank of America or (b) a LIBOR rate for the currency of such borrowing for the relevant interest period, plus, in each case, an applicable margin. The applicable margin for borrowings under the senior secured credit facilities may be reduced subject to attaining certain leverage ratios.

F-27

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9 — LONG-TERM DEBT (continued)

Senior Secured Credit Facilities And Other Senior Secured Debt (continued)

The senior secured credit facilities contain a number of covenants that restrict, subject to certain exceptions, our (and some or all of our subsidiaries’) ability to incur additional indebtedness, repay subordinated indebtedness, create liens on assets, sell assets, make investments, loans or advances, engage in certain transactions with affiliates, pay dividends and distributions, and enter into sale and leaseback transactions. In addition, we are required to satisfy and maintain a maximum total leverage ratio covenant under the cash flow credit facility and, in certain situations under the ABL credit facility, a minimum interest coverage ratio covenant.

Senior secured notes consist of

(i) $1.250 billion aggregate principal amount of 4.75% first lien notes due 2023; (ii) $2.000 billion aggregate principal amount of 5.00% first lien notes due 2024; (iii) $1.400 billion aggregate principal amount of 5.25% first lien notes due 2025; (iv) $1.500 billion aggregate principal amount of 5.25% first lien notes due 2026; (v) $1.200 billion aggregate principal amount of 4.50% first lien notes due 2027; (vi) $2.000 billion aggregate principal amount of 4 1/8% first lien notes due 2029; (vii) $850 million aggregate principal amount of 2 3/8% first lien notes due 2031; (viii) $1.000 billion aggregate principal amount of 5 1/8% first lien notes due 2039; (ix) $1.500 billion aggregate principal amount of 5.50% first lien notes due 2047; (x) $2.000 billion aggregate principal amount of 5 1/4% first lien notes due 2049; and (xi) $1.500 billion aggregate principal amount of 3 1/2% first lien notes due 2051. Finance leases and other secured debt totaled $935 million at December 31, 2021.

We use interest rate swap agreements to manage the variable rate exposure of our debt portfolio. At December 31, 2021, we had entered into an effective interest rate swap agreement, in a notional amount of $500 million, in order to hedge a portion of our exposure to variable rate interest payments associated with the senior secured credit facilities. The effect of the interest rate swap is reflected in the effective interest rates for the senior secured credit facilities.

Senior Unsecured Notes

Senior unsecured notes consist of (i) $12.091 billion aggregate principal amount of senior notes with maturities ranging from 2023 to 2033; (ii) an aggregate principal amount of $125 million medium-term notes maturing 2025; and (iii) an aggregate principal amount of $736 million debentures with maturities ranging from 2023 to 2095.

General Debt Information

The senior secured credit facilities and senior secured notes are fully and unconditionally guaranteed by substantially all existing and future, direct and indirect, 100% owned material domestic subsidiaries that are “Unrestricted Subsidiaries” under our Indenture (the “1993 Indenture”) dated December 16, 1993 (except for certain special purpose subsidiaries that only guarantee and pledge their assets under our ABL credit facility).

All obligations under the ABL credit facility, and the guarantees of those obligations, are secured, subject to permitted liens and other exceptions, by a first-priority lien on substantially all of the receivables of the borrowers and each guarantor under such ABL credit facility (the “Receivables Collateral”).

F-28

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9 — LONG-TERM DEBT (continued)

General Debt Information (continued)

All obligations under the cash flow credit facility and the guarantees of such obligations are secured, subject to permitted liens and other exceptions, by:

	•		a first-priority lien on the capital stock owned by HCA Inc., or by any guarantor, in each of their respective first-tier subsidiaries;

	•		a first-priority lien on substantially all present and future assets of HCA Inc. and of each guarantor other than (i) “Principal Properties” (as defined in the 1993 Indenture), (ii) certain other real properties and (iii) deposit accounts, other bank or securities accounts, cash, leaseholds, motor-vehicles and certain other exceptions; and

	•		a second-priority lien on certain of the Receivables Collateral.

Our senior secured notes and the related guarantees are secured by first-priority liens, subject to permitted liens, on our and our subsidiary guarantors’ assets, subject to certain exceptions, that secure our cash flow credit facility on a first-priority basis and are secured by second-priority liens, subject to permitted liens, on our and our subsidiary guarantors’ assets that secure our ABL credit facility on a first-priority basis and our other cash flow credit facility on a second-priority basis.

Maturities of long-term debt in years 2023 through 2026 are $2.857

b

illion, $2.353 billion, $4.607 billion and $5.279 billion, respectively.

NOTE 10 — LEASES

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related assets and obligations at the present value of lease payments over the term. Many of our leases include rental escalation clauses and renewal options that are factored into our determination of lease payments, when appropriate. We do not separate lease and nonlease components of contracts. Generally, we use our estimated incremental borrowing rate to discount the lease payments, as most of our leases do not provide a readily determinable implicit interest rate.

F-29

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 10 — LEASES (continued)

The following table presents our lease-related assets and liabilities at December 31, 2021 and 2020 (dollars in millions):

		Balance Sheet Classification				2021				2020
Assets:
Operating leases			Right-of-use operating lease assets			$	2,113			$	2,024
Finance leases			Property and equipment				637				553
Total lease assets						$	2,750			$	2,577
Liabilities:
Current:
Operating leases			Other accrued expenses			$	392			$	379
Finance leases			Long-term debt due within one year				143				128
Noncurrent:
Operating leases			Right-of-use operating lease obligations				1,755				1,673
Finance leases			Long-term debt				577				494
Total lease liabilities						$	2,867			$	2,674
Weighted-average remaining term:
Operating leases							10.2 years				10.4 years
Finance leases							10.4 years				11.5 years
Weighted-average discount rate:
Operating leases							4.4	%			4.8	%
Finance leases							4.4	%			5.4	%

The following table presents certain information related to lease expense for finance and operating leases for the years ended December 31, 2021, 2020 and 2019 (dollars in millions):

		2021				2020				2019
Finance lease expense:
Depreciation and amortization		$	135			$	106			$	93
Interest			29				31				32
Operating leases(1)			478				447				389
Short-term lease expense(1)			354				322				316
Variable lease expense(1)			157				154				150
		$	1,153			$	1,060			$	980

(1)	Expenses are included in “other operating expenses” in our consolidated income statements.

The following table presents supplemental cash flow information for the years ended December 31, 2021, 2020 and 2019 (dollars in millions):

		2021				2020				2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases		$	474			$	445			$	404
Operating cash flows for finance leases			29				31				32
Financing cash flows for finance leases			123				86				79

F-30

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 10 — LEASES (continued)

Maturities of Lease Liabilities

The following table reconciles the undiscounted minimum lease payment amounts to the operating and finance lease liabilities recorded on the balance sheet at December 31, 2021 and 2020 (dollars in millions):

		2021								2020
		Operating Leases				Finance Leases				Operating Leases				Finance Leases
Year 1		$	438			$	165			$	431			$	155
Year 2			378				126				366				125
Year 3			320				132				307				81
Year 4			267				98				255				82
Year 5			219				70				207				51
Thereafter			1,148				350				1,136				353
Total minimum lease payments			2,770				941				2,702				847
Less: amount of lease payments representing interest			(623	)			(221	)			(650	)			(225	)
Present value of future minimum lease payments			2,147				720				2,052				622
Less: current lease obligations			(392	)			(143	)			(379	)			(128	)
Long-term lease obligations		$	1,755			$	577			$	1,673			$	494

NOTE 11 — CONTINGENCIES

We operate in a highly regulated and litigious industry. As a result, various lawsuits, claims and legal and regulatory proceedings have been and can be expected to be instituted or asserted against us. We are also subject to claims and suits arising in the ordinary course of business, including claims for personal injuries or wrongful restriction of, or interference with, physicians’ staff privileges. In certain of these actions the claimants may seek punitive damages against us, which may not be covered by insurance. We are also subject to claims by various taxing authorities for additional taxes and related interest and penalties. The resolution of any such lawsuits, claims or legal and regulatory proceedings could have a material, adverse effect on our results of operations, financial position or liquidity.

Government Investigations, Claims and Litigation

Health care companies are subject to numerous investigations by various governmental agencies. Under the federal False Claims Act (“FCA”), private parties have the right to bring

qui tam

, or “whistleblower,” suits against companies that submit false claims for payments to, or improperly retain overpayments from, the government. Some states have adopted similar state whistleblower and false claims provisions. Certain of our individual facilities have received, and from time to time, other facilities may receive, government inquiries from, and may be subject to investigation by, federal and state agencies. Depending on whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a material, adverse effect on our results of operations, financial position or liquidity.

F-31

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 11 — CONTINGENCIES (continued)

Government Investigations, Claims and

Litigation

(continued)

Texas operates a state Medicaid program pursuant to a waiver from the Centers for Medicare & Medicaid Services under Section 1115 of the Social Security Act (“Program”). The Program includes uncompensated-care pools; payments from these pools are intended to defray the uncompensated costs of services provided by our and other hospitals to Medicaid eligible or uninsured individuals. Separately, we and other hospitals provide charity care services in several communities in the state. In 2018, the Civil Division of the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of Texas requested information about whether the Program, as operated in Harris County, complied with the laws and regulations applicable to provider related donations, and the Company cooperated with that request. On May 21, 2019, a

qui tam

lawsuit asserting violations of the FCA and the Texas Medicaid Fraud Prevention Act related to the Program, as operated in Harris County, was unsealed by the U.S. District Court for the Southern District of Texas. Both the federal and state governments declined to intervene in the

qui tam

lawsuit. The Company believes that our participation is and has been consistent with the requirements of the Program and is vigorously defending against the lawsuit being pursued by the relator. We cannot predict what effect, if any, the

qui tam

lawsuit could have on the Company.

NOTE 12 — CAPITAL STOCK

The amended and restated certificate of incorporation authorizes the Company to issue up to 1,800,000,000 shares of common stock, and our amended and restated

by-laws

set the number of directors constituting the board of directors of the Company at not less than three members, the exact number to be determined from time to time by resolution adopted by the affirmative vote of a majority of the total number of directors then in office.

Share Repurchase Transactions

During January 2022 and February 2021, our Board of Directors authorized share repurchase programs for up to $8 billion and $6 billion, respectively, of the Company’s outstanding common stock. During January 2020, January 2019 and October 2017, our Board of Directors authorized share repurchase programs for up to $6 billion ($2 billion for each authorization) of our outstanding common stock.

During 2021, we repurchased 37.812 million shares of our common stock at an average price of $217.25 per share through market purchases pursuant to the $2 billion share repurchase program authorized during January 2019 (which was completed during 2021), the $2 billion share repurchase program authorized during January 2020 (which was completed during 2021) and the $6 billion share repurchase program authorized during February 2021. At December 31, 2021, we had $586 million of repurchase authorization available under the February 2021 authorization. During 2020, we repurchased 3.287 million shares of our common stock at an average price of $134.18 per share through market purchases pursuant to the $2 billion share repurchase program authorized during January 2019. During 2019, we repurchased 7.949 million shares of our common stock at an average price of $129.71 per share through market purchases pursuant to the October 2017 authorization (which was completed during 2019) and the January 2019 authorization.

F-32

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 13 — EMPLOYEE BENEFIT PLANS​​​​​​​

We maintain defined contribution benefit plans that are available

to employees who

meet certain minimum requirements. Certain of the plans require that we match specified percentages of participant contributions up to certain maximum levels (generally, 100% of the first 3% to 9

%, depending upon years of vesting service, of compensation deferred by participants). Benefits expense under these plans totaled

$560 million for 2021, $552 million for 2020 and $532 million for 2019. Our matching contributions are funded during the year following the participant contributions.​​​​​​​

We maintain the noncontributory, nonqualified Restoration Plan to provide certain retirement benefits for eligible employees. Eligibility for the Restoration Plan is based upon earning eligible compensation in excess of a base amount and attaining 1,000 or more hours of service during the plan year. Company credits to participants’ hypothetical account balances (the Restoration Plan is not funded) depend upon participants’ compensation, years of vesting service, hypothetical investment returns (gains or losses) and certain IRS limitations. Benefits expense under this plan was $38 million for 2021, $35 million for 2020 and $44 million for 2019. Accrued benefits liabilities under this plan totaled $258 million at December 31, 2021 and $242 million at December 31, 2020.

We maintain a Supplemental Executive Retirement Plan (“SERP”) for certain executives (the SERP is not funded). The plan is designed to ensure that upon retirement the participant receives the value of a prescribed life annuity from the combination of the SERP and our other benefit plans. Benefits expense under the plan was $22 million for 2021, $24 million for 2020 and $19 million for 2019. Accrued benefits liabilities under this plan totaled $201 million at December 31, 2021 and $204 million at December 31, 2020.

We maintain defined benefit pension plans which resulted from certain hospital acquisitions in prior years. Benefits expense under these plans was $4 million for 2021, $8 million for 2020, and $11 million for 2019. Accrued benefits liabilities under these plans totaled $9 million at December 31, 2021 and $96 million at December 31, 2020.

NOTE 14 — SEGMENT AND GEOGRAPHIC INFORMATION

We operate in one line of business, which is operating hospitals and related health care entities. We operate in two geographically organized groups: the National and American Groups. At December 31, 2021, the National Group included 96 hospitals located in Alaska, California, Florida, Georgia, Idaho, Indiana, northern Kentucky, Nevada, New Hampshire, North Carolina, South Carolina, Utah and Virginia, and the American Group included 79 hospitals located in Colorado, Kansas, southern Kentucky, Louisiana, Missouri, Tennessee and Texas. We also operate seven hospitals in England, and these facilities are included in the Corporate and other group.

F-33

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14 — SEGMENT AND GEOGRAPHIC INFORMATION (continued)

Adjusted segment EBITDA is defined as income before depreciation

and amortization, interest expense, losses and gains on sales of facilities, losses on retirement of debt, income taxes and net income attributable to noncontrolling interests. We use adjusted segment EBITDA as an analytical indicator for purposes of allocating resources to geographic areas and assessing their performance. Adjusted segment EBITDA is commonly used as an analytical indicator within the health care industry, and also serves as a measure of leverage capacity and debt service ability. Adjusted segment EBITDA should not be considered as a measure of financial performance under generally accepted accounting principles, and the items excluded from adjusted segment EBITDA are significant components in understanding and assessing financial performance. Because adjusted segment EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, adjusted segment EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. The geographic distributions of our revenues, equity in earnings of affiliates, adjusted segment EBITDA, depreciation and amortization, assets and goodwill and other intangible assets are summarized in the following table (dollars in millions):

		For the Years Ended December 31,
		2021				2020				2019
Revenues:
National Group		$	29,826			$	25,694			$	25,913
American Group			26,152				23,593				23,173
Corporate and other			2,774				2,246				2,250
		$	58,752			$	51,533			$	51,336
Equity in earnings of affiliates:
National Group		$	(33	)		$	(28	)		$	(2	)
American Group			(53	)			(42	)			(44	)
Corporate and other			(27	)			16				3
		$	(113	)		$	(54	)		$	(43	)
Adjusted segment EBITDA:
National Group		$	7,200			$	5,532			$	5,634
American Group			6,156				5,333				4,904
Corporate and other			(712	)			(828	)			(681	)
		$	12,644			$	10,037			$	9,857
Depreciation and amortization:
National Group		$	1,359			$	1,216			$	1,161
American Group			1,183				1,164				1,117
Corporate and other			311				341				318
		$	2,853			$	2,721			$	2,596

F-34

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14 — SEGMENT AND GEOGRAPHIC INFORMATION (continued)

		For the Years Ended December 31,
		2021				2020				2019
Adjusted segment EBITDA		$	12,644			$	10,037			$	9,857
Depreciation and amortization			2,853				2,721				2,596
Interest expense			1,566				1,584				1,824
Losses (gains) on sales of facilities			(1,620	)			7				(18	)
Losses on retirement of debt			12				295				211
Income before income taxes		$	9,833			$	5,430			$	5,244
		December 31,
		2021				2020				2019
Assets:
National Group		$	21,205			$	18,913			$	18,290
American Group			21,428				20,760				20,608
Corporate and other			8,109				7,817				6,160
		$	50,742			$	47,490			$	45,058

		National Group				American Group				Corporate and Other				Total
Goodwill and other intangible assets:
Balance at December 31, 2018		$	1,597			$	5,729			$	627			$	7,953
Acquisitions			155				39				138				332
Foreign currency translation, amortization and other			(13	)			(3	)			—				(16	)
Balance at December 31, 2019			1,739				5,765				765				8,269
Acquisitions			38				27				279				344
Foreign currency translation, amortization and other			(2	)			(17	)			(16	)			(35	)
Balance at December 31, 2020			1,775				5,775				1,028				8,578
Acquisitions			735				67				260				1,062
Foreign currency translation, amortization and other			(18	)			(10	)			(72	)			(100	)
Balance at December 31, 2021		$	2,492			$	5,832			$	1,216			$	9,540

F-35

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 15 — OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss are as follows (dollars in millions):

		Unrealized Gains on Available- for-Sale Securities				Foreign Currency Translation Adjustments				Defined Benefit Plans				Change in Fair Value of Derivative Instruments				Total
Balances at December 31, 2018		$	3			$	(283	)		$	(148	)		$	47			$	(381	)
Unrealized gains on available-for-sale securities, net of $4 of income taxes			11				—				—				—				11
Foreign currency translation adjustments, net of $5 of income taxes			—				—				—				—				—
Defined benefit plans, net of $14 income tax benefit			—				—				(49	)			—				(49	)
Change in fair value of derivative instruments, net of $13 income tax benefit			—				—				—				(37	)			(37	)
Expense (income) reclassified into operations from other comprehensive income, net of $3 income tax benefit and $3 of income taxes, respectively			—				—				10				(14	)			(4	)
Balances at December 31, 2019			14				(283	)			(187	)			(4	)			(460	)
Unrealized gains on available-for-sale securities, net of $3 of income taxes			11				—				—				—				11
Foreign currency translation adjustments, net of $6 of income taxes			—				12				—				—				12
Defined benefit plans, net of $16 income tax benefit			—				—				(55	)			—				(55	)
Change in fair value of derivative instruments, net of $15 income tax benefit			—				—				—				(51	)			(51	)
Expense reclassified into operations from other comprehensive income, net of $6 and $5 of income tax benefits, respectively			—				—				22				19				41
Balances at December 31, 2020			25				(271	)			(220	)			(36	)			(502	)
Unrealized losses on available-for-sale securities, net of $3 income tax benefit			(13	)			—				—				—				(13	)
Foreign currency translation adjustments, net of $2 income tax benefit			—				(7	)			—				—				(7	)
Defined benefit plans, net of $20 of income taxes			—				—				67				—				67
Change in fair value of derivative instruments			—				—				—				1				1
Expense reclassified into operations from other comprehensive income, net of $7 and $8 income tax benefits, respectively			—				—				21				29				50
Balances at December 31, 2021		$	12			$	(278	)		$	(132	)		$	(6	)		$	(404	)

F-36

HCA HEALTHCARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 16 — ACCRUED EXPENSES

A summary of other accrued expenses

at December 31 follows (dollars in millions):

		2021				2020
Professional liability risks		$	508			$	477
Defined contribution benefit plans			549				547
Right-of-use operating leases			392				379
Taxes other than income			361				343
Interest			353				315
Government stimulus refund liability			79				83
Other			1,080				1,096
		$	3,322			$	3,240

F-3