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Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
Or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-11239
HCA Healthcare, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 27-3865930 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| One Park Plaza Nashville**,** Tennessee | 37203 |
| (Address of principal executive offices) | (Zip Code) |
(615) 344-9551
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Voting common stock, $.01 par value | HCA | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.
| Class of Common Stock | Outstanding at October 24, 2022 |
| Voting common stock, $.01 par value | 282,716,700 shares |
HCA HEALTHCARE, INC.
Form 10-Q
September 30, 2022
HCA HEALTHCARE, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
Unaudited
(Dollars in millions, except per share amounts)
| Quarter | Nine Months | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | 14,971 | $ | 15,276 | $ | 44,736 | $ | 43,688 | ||||||||
| Salaries and benefits | 6,899 | 7,094 | 20,630 | 19,780 | ||||||||||||
| Supplies | 2,320 | 2,463 | 6,942 | 7,067 | ||||||||||||
| Other operating expenses | 2,860 | 2,530 | 8,305 | 7,424 | ||||||||||||
| Equity in earnings of affiliates | **(**10 | ) | (35 | ) | **(**29 | ) | (78 | ) | ||||||||
| Depreciation and amortization | 749 | 716 | 2,219 | 2,125 | ||||||||||||
| Interest expense | 446 | 398 | 1,288 | 1,168 | ||||||||||||
| Losses (gains) on sales of facilities | 3 | (1,047 | ) | 25 | (1,057 | ) | ||||||||||
| Losses on retirement of debt | — | — | 78 | 12 | ||||||||||||
| 13,267 | 12,119 | 39,458 | 36,441 | |||||||||||||
| Income before income taxes | 1,704 | 3,157 | 5,278 | 7,247 | ||||||||||||
| Provision for income taxes | 360 | 685 | 1,090 | 1,531 | ||||||||||||
| Net income | 1,344 | 2,472 | 4,188 | 5,716 | ||||||||||||
| Net income attributable to noncontrolling interests | 210 | 203 | 626 | 574 | ||||||||||||
| Net income attributable to HCA Healthcare, Inc. | $ | 1,134 | $ | 2,269 | $ | 3,562 | $ | 5,142 | ||||||||
| Per share data: | ||||||||||||||||
| Basic earnings | $ | 3.97 | $ | 7.13 | $ | 12.13 | $ | 15.67 | ||||||||
| Diluted earnings | $ | 3.91 | $ | 7.00 | $ | 11.97 | $ | 15.43 | ||||||||
| Shares used in earnings per share calculations (in millions): | ||||||||||||||||
| Basic | 285.958 | 318.072 | 293.583 | 328.048 | ||||||||||||
| Diluted | 289.852 | 324.029 | 297.702 | 333.248 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
HCA HEALTHCARE, INC.
CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS
FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
Unaudited
(Dollars in millions)
| Quarter | Nine Months | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net income | $ | 1,344 | $ | 2,472 | $ | 4,188 | $ | 5,716 | ||||||||
| Other comprehensive (loss) income before taxes: | ||||||||||||||||
| Foreign currency translation | **(**76 | ) | (31 | ) | **(**181 | ) | (20 | ) | ||||||||
| Unrealized losses on available-for-sale securities | **(**16 | ) | (3 | ) | **(**58 | ) | (12 | ) | ||||||||
| Losses included in other operating expenses | — | — | 1 | — | ||||||||||||
| **(**16 | ) | (3 | ) | **(**57 | ) | (12 | ) | |||||||||
| Defined benefit plans | — | — | — | — | ||||||||||||
| Pension costs included in salaries and benefits | 2 | 7 | 7 | 21 | ||||||||||||
| 2 | 7 | 7 | 21 | |||||||||||||
| Change in fair value of derivative financial instruments | 1 | (1 | ) | 6 | (1 | ) | ||||||||||
| Interest costs included in interest expense | — | 10 | 4 | 28 | ||||||||||||
| 1 | 9 | 10 | 27 | |||||||||||||
| Other comprehensive (loss) income before taxes | **(**89 | ) | (18 | ) | **(**221 | ) | 16 | |||||||||
| Income taxes (benefits) related to other comprehensive income items | **(**12 | ) | (1 | ) | **(**33 | ) | 6 | |||||||||
| Other comprehensive (loss) income | **(**77 | ) | (17 | ) | **(**188 | ) | 10 | |||||||||
| Comprehensive income | 1,267 | 2,455 | 4,000 | 5,726 | ||||||||||||
| Comprehensive income attributable to noncontrolling interests | 210 | 203 | 626 | 574 | ||||||||||||
| Comprehensive income attributable to HCA Healthcare, Inc. | $ | 1,057 | $ | 2,252 | $ | 3,374 | $ | 5,152 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
HCA HEALTHCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(Dollars in millions)
| September 30, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 999 | $ | 1,451 | ||||
| Accounts receivable | 8,552 | 8,095 | ||||||
| Inventories | 2,009 | 1,986 | ||||||
| Other | 1,921 | 2,010 | ||||||
| 13,481 | 13,542 | |||||||
| Property and equipment, at cost | 53,730 | 51,350 | ||||||
| Accumulated depreciation | **(**28,752 | ) | (27,287 | ) | ||||
| 24,978 | 24,063 | |||||||
| Investments of insurance subsidiaries | 372 | 438 | ||||||
| Investments in and advances to affiliates | 444 | 448 | ||||||
| Goodwill and other intangible assets | 9,651 | 9,540 | ||||||
| Right-of-use operating lease assets | 2,097 | 2,113 | ||||||
| Other | 461 | 598 | ||||||
| $ | 51,484 | $ | 50,742 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 4,161 | $ | 4,111 | ||||
| Accrued salaries | 1,625 | 1,912 | ||||||
| Other accrued expenses | 3,780 | 3,322 | ||||||
| Long-term debt due within one year | 218 | 237 | ||||||
| 9,784 | 9,582 | |||||||
| Long-term debt, less debt issuance costs and discounts of $309 and $248 | 37,492 | 34,342 | ||||||
| Professional liability risks | 1,510 | 1,514 | ||||||
| Right-of-use operating lease obligations | 1,762 | 1,755 | ||||||
| Income taxes and other liabilities | 1,714 | 2,060 | ||||||
| Stockholders’ equity (deficit): | ||||||||
| Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding 283,903,500 shares — 2022 and 305,476,800 shares — 2021 | 3 | 3 | ||||||
| Accumulated other comprehensive loss | **(**592 | ) | (404 | ) | ||||
| Retained deficit | **(**2,781 | ) | (532 | ) | ||||
| Stockholders’ deficit attributable to HCA Healthcare, Inc. | **(**3,370 | ) | (933 | ) | ||||
| Noncontrolling interests | 2,592 | 2,422 | ||||||
| **(**778 | ) | 1,489 | ||||||
| $ | 51,484 | $ | 50,742 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
HCA HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
Unaudited
(Dollars in millions)
| Equity (Deficit) Attributable to HCA Healthcare, Inc. | ||||||||||||||||||||||||||||
| Capital | Accumulated | Equity | ||||||||||||||||||||||||||
| Common Stock | in Excess | Other | Retained | Attributable to | ||||||||||||||||||||||||
| Shares | Par | of Par | Comprehensive | Earnings | Noncontrolling | |||||||||||||||||||||||
| (in millions) | Value | Value | Loss | (Deficit) | Interests | Total | ||||||||||||||||||||||
| Balances, December 31, 2020 | 339.426 | $ | 3 | $ | 294 | $ | (502 | ) | $ | 777 | $ | 2,320 | $ | 2,892 | ||||||||||||||
| Comprehensive income | 11 | 1,423 | 157 | 1,591 | ||||||||||||||||||||||||
| Repurchase of common stock | (8.477 | ) | (225 | ) | (1,302 | ) | (1,527 | ) | ||||||||||||||||||||
| Share-based benefit plans | 2.765 | (75 | ) | (75 | ) | |||||||||||||||||||||||
| Cash dividends declared ($0.48 per share) | (163 | ) | (163 | ) | ||||||||||||||||||||||||
| Distributions | (234 | ) | (234 | ) | ||||||||||||||||||||||||
| Other | 6 | (8 | ) | (2 | ) | |||||||||||||||||||||||
| Balances, March 31, 2021 | 333.714 | 3 | — | (491 | ) | 735 | 2,235 | 2,482 | ||||||||||||||||||||
| Comprehensive income | 16 | 1,450 | 214 | 1,680 | ||||||||||||||||||||||||
| Repurchase of common stock | (11.261 | ) | (142 | ) | (2,145 | ) | (2,287 | ) | ||||||||||||||||||||
| Share-based benefit plans | 0.372 | 140 | 140 | |||||||||||||||||||||||||
| Cash dividends declared ($0.48 per share) | (161 | ) | (161 | ) | ||||||||||||||||||||||||
| Distributions | (123 | ) | (123 | ) | ||||||||||||||||||||||||
| Other | 2 | 57 | 59 | |||||||||||||||||||||||||
| Balances, June 30, 2021 | 322.825 | 3 | — | (475 | ) | (121 | ) | 2,383 | 1,790 | |||||||||||||||||||
| Comprehensive income | (17 | ) | 2,269 | 203 | 2,455 | |||||||||||||||||||||||
| Repurchase of common stock | (9.605 | ) | (130 | ) | (2,199 | ) | (2,329 | ) | ||||||||||||||||||||
| Share-based benefit plans | 0.282 | 127 | 127 | |||||||||||||||||||||||||
| Cash dividends declared ($0.48 per share) | (155 | ) | (155 | ) | ||||||||||||||||||||||||
| Distributions | (144 | ) | (144 | ) | ||||||||||||||||||||||||
| Other | 3 | 78 | 81 | |||||||||||||||||||||||||
| Balances, September 30, 2021 | 313.502 | 3 | — | (492 | ) | (206 | ) | 2,520 | 1,825 | |||||||||||||||||||
| Comprehensive income | 88 | 1,814 | 191 | 2,093 | ||||||||||||||||||||||||
| Repurchase of common stock | (8.469 | ) | (81 | ) | (1,991 | ) | (2,072 | ) | ||||||||||||||||||||
| Share-based benefit plans | 0.444 | 88 | 88 | |||||||||||||||||||||||||
| Cash dividends declared ($0.48 per share) | (149 | ) | (149 | ) | ||||||||||||||||||||||||
| Distributions | (248 | ) | (248 | ) | ||||||||||||||||||||||||
| Other | (7 | ) | (41 | ) | (48 | ) | ||||||||||||||||||||||
| Balances, December 31, 2021 | 305.477 | 3 | — | (404 | ) | (532 | ) | 2,422 | 1,489 | |||||||||||||||||||
| Comprehensive income | (43 | ) | 1,273 | 192 | 1,422 | |||||||||||||||||||||||
| Repurchase of common stock | (8.375 | ) | (2,101 | ) | (2,101 | ) | ||||||||||||||||||||||
| Share-based benefit plans | 1.879 | (57 | ) | (57 | ) | |||||||||||||||||||||||
| Cash dividends declared ($0.56 per share) | (171 | ) | (171 | ) | ||||||||||||||||||||||||
| Distributions | (171 | ) | (171 | ) | ||||||||||||||||||||||||
| Other | (1 | ) | 4 | 3 | ||||||||||||||||||||||||
| Balances, March 31, 2022 | 298.981 | 3 | — | (447 | ) | (1,589 | ) | 2,447 | 414 | |||||||||||||||||||
| Comprehensive income | (68 | ) | 1,155 | 224 | 1,311 | |||||||||||||||||||||||
| Repurchase of common stock | (12.230 | ) | (111 | ) | (2,571 | ) | (2,682 | ) | ||||||||||||||||||||
| Share-based benefit plans | 0.253 | 118 | 118 | |||||||||||||||||||||||||
| Cash dividends declared ($0.56 per share) | (163 | ) | (163 | ) | ||||||||||||||||||||||||
| Distributions | (162 | ) | (162 | ) | ||||||||||||||||||||||||
| Other | (7 | ) | 29 | 22 | ||||||||||||||||||||||||
| Balances, June 30, 2022 | 287.004 | 3 | — | (515 | ) | (3,168 | ) | 2,538 | (1,142 | ) | ||||||||||||||||||
| Comprehensive income | **(**77 | ) | 1,134 | 210 | 1,267 | |||||||||||||||||||||||
| Repurchase of common stock | (3.361 | ) | **(**113 | ) | **(**585 | ) | **(**698 | ) | ||||||||||||||||||||
| Share-based benefit plans | 0.261 | 116 | 116 | |||||||||||||||||||||||||
| Cash dividends declared ($0.56 per share) | **(**162 | ) | **(**162 | ) | ||||||||||||||||||||||||
| Distributions | **(**217 | ) | **(**217 | ) | ||||||||||||||||||||||||
| Other | **(**3 | ) | 61 | 58 | ||||||||||||||||||||||||
| Balances, September 30, 2022 | 283.904 | $ | 3 | $ | — | $ | **(**592 | ) | $ | **(**2,781 | ) | $ | 2,592 | $ | **(**778 | ) |
The accompanying notes are an integral part of the condensed consolidated financial statements.
HCA HEALTHCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
Unaudited
(Dollars in millions)
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 4,188 | $ | 5,716 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Increase (decrease) in cash from operating assets and liabilities: | ||||||||
| Accounts receivable | **(**487 | ) | (1,312 | ) | ||||
| Inventories and other assets | 53 | (333 | ) | |||||
| Accounts payable and accrued expenses | **(**644 | ) | 731 | |||||
| Depreciation and amortization | 2,219 | 2,125 | ||||||
| Income taxes | 159 | 185 | ||||||
| Losses (gains) on sales of facilities | 25 | (1,057 | ) | |||||
| Losses on retirement of debt | 78 | 12 | ||||||
| Amortization of debt issuance costs and discounts | 22 | 21 | ||||||
| Share-based compensation | 258 | 341 | ||||||
| Other | 124 | 87 | ||||||
| Net cash provided by operating activities | 5,995 | 6,516 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | **(**3,072 | ) | (2,385 | ) | ||||
| Acquisition of hospitals and health care entities | **(**176 | ) | (488 | ) | ||||
| Sales of hospitals and health care entities | 652 | 1,980 | ||||||
| Change in investments | 10 | (38 | ) | |||||
| Other | **(**10 | ) | 2 | |||||
| Net cash used in investing activities | **(**2,596 | ) | (929 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Issuance of long-term debt | 5,976 | 4,337 | ||||||
| Net change in revolving credit facilities | **(**230 | ) | 500 | |||||
| Repayment of long-term debt | **(**2,774 | ) | (3,787 | ) | ||||
| Distributions to noncontrolling interests | **(**550 | ) | (501 | ) | ||||
| Payment of debt issuance costs | **(**53 | ) | (38 | ) | ||||
| Payment of dividends | **(**497 | ) | (476 | ) | ||||
| Repurchase of common stock | **(**5,481 | ) | (6,143 | ) | ||||
| Other | **(**209 | ) | (241 | ) | ||||
| Net cash used in financing activities | **(**3,818 | ) | (6,349 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | **(**33 | ) | (4 | ) | ||||
| Change in cash and cash equivalents | **(**452 | ) | (766 | ) | ||||
| Cash and cash equivalents at beginning of period | 1,451 | 1,793 | ||||||
| Cash and cash equivalents at end of period | $ | 999 | $ | 1,027 | ||||
| Interest payments | $ | 1,329 | $ | 1,127 | ||||
| Income tax payments, net | $ | 931 | $ | 1,346 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — BASIS OF PR****ESENTATION AND SIGNIFICANT 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 September 30, 2022, 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 accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal and recurring nature.
The majority of our expenses are “costs of revenues” items. Costs that could be classified as general and administrative would include our corporate office costs, which were $91 million and $87 million for the quarters ended September 30, 2022 and 2021, respectively, and $281 million and $301 million for the nine months ended September 30, 2022 and 2021, respectively. Operating results for the quarter and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. For further information, refer to the consolidated financial statements and footnotes thereto included in our annual report on Form 10-K for the year ended December 31, 2021.
COVID-19
We believe the extent of COVID-19’s impact on our operating results and financial condition has been and could 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 COVID-19 will impact our operations.
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.
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenues (continued)
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. Patients treated at our hospitals for non-elective care, who have income at or below 400% of the federal poverty level, are eligible for charity care. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues. Our revenues by primary third-party payer classification and other (including uninsured patients) for the quarters and nine months ended September 30, 2022 and 2021 are summarized in the following table (dollars in millions):
| Quarter | ||||||||||||||||
| 2022 | Ratio | 2021 | Ratio | |||||||||||||
| Medicare | $ | 2,569 | 17.2 | % | $ | 2,645 | 17.3 | % | ||||||||
| Managed Medicare | 2,229 | 14.9 | 2,124 | 13.9 | ||||||||||||
| Medicaid | 797 | 5.3 | 692 | 4.5 | ||||||||||||
| Managed Medicaid | 939 | 6.3 | 813 | 5.3 | ||||||||||||
| Managed care and insurers | 7,184 | 47.9 | 7,998 | 52.4 | ||||||||||||
| International (managed care and insurers) | 311 | 2.1 | 324 | 2.1 | ||||||||||||
| Other | 942 | 6.3 | 680 | 4.5 | ||||||||||||
| Revenues | $ | 14,971 | 100.0 | % | $ | 15,276 | 100.0 | % | ||||||||
| Nine Months | ||||||||||||||||
| 2022 | Ratio | 2021 | Ratio | |||||||||||||
| Medicare | $ | 7,790 | 17.4 | % | $ | 7,816 | 17.9 | % | ||||||||
| Managed Medicare | 6,813 | 15.2 | 6,281 | 14.4 | ||||||||||||
| Medicaid | 1,987 | 4.4 | 1,722 | 3.9 | ||||||||||||
| Managed Medicaid | 3,003 | 6.7 | 2,369 | 5.4 | ||||||||||||
| Managed care and insurers | 21,480 | 48.1 | 22,300 | 51.0 | ||||||||||||
| International (managed care and insurers) | 992 | 2.2 | 995 | 2.3 | ||||||||||||
| Other | 2,671 | 6.0 | 2,205 | 5.1 | ||||||||||||
| Revenues | $ | 44,736 | 100.0 | % | $ | 43,688 | 100.0 | % |
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenues (continued)
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 quarters and nine months ended September 30, 2022 and 2021 follows (dollars in millions):
| Quarter | Nine Months | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation and amortization) | $ | 12,828 | $ | 12,803 | $ | 38,096 | $ | 36,396 | ||||||||
| Cost-to-charges ratio (patient care costs as percentage of gross patient charges) | 11.2 | % | 11.8 | % | 11.2 | % | 11.4 | % | ||||||||
| Total uncompensated care | $ | 8,050 | $ | 7,782 | $ | 23,512 | $ | 22,299 | ||||||||
| Multiply by the cost-to-charges ratio | 11.2 | % | 11.8 | % | 11.2 | % | 11.4 | % | ||||||||
| Estimated cost of total uncompensated care | $ | 901 | $ | 916 | $ | 2,633 | $ | 2,542 |
The total uncompensated care amounts include charity care of $3.206 billion and $3.509 billion, respectively, and the related estimated costs of charity care were $359 million and $413 million, respectively, for the quarters ended September 30, 2022 and 2021. The total uncompensated care amounts include charity care of $10.281 billion and $10.135 billion, respectively, and the related estimated costs of charity care were $1.151 billion and $1.155 billion, respectively, for the nine months ended September 30, 2022 and 2021.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
NOTE 2 — ACQUISITIONS AND DISPOSITIONS
During the nine months ended September 30, 2022, we paid $176 million to acquire nonhospital health care entities. During the nine months ended September 30, 2021, we paid $67 million to acquire two hospital facilities, one in southern Georgia and one in Tennessee, and $91 million to acquire other nonhospital health care entities. We also paid $330 million and assumed certain liabilities to acquire an 80% interest in a venture providing post-acute care services (home health and hospice). Purchase price amounts have been allocated to the related assets acquired and liabilities assumed based upon their respective fair values.
During the nine months ended September 30, 2022, we received proceeds of $38 million and recognized pretax losses of $25 million related to sales of real estate and other health care entity investments. We also received net proceeds of $614 million on September 30, 2022 related to the sale of a controlling interest in a subsidiary of our group purchasing organization, which was effective October 1, 2022. During the nine months ended September 30, 2021, we received proceeds of $860 million and recognized a pretax gain of $655 million related to the sale of four hospital facilities in Georgia (two facilities in northern Georgia and two facilities in southern Georgia). We received proceeds of $647 million on September 30, 2021 related to the sale of a hospital facility in northern Georgia, which sale was effective October 1, 2021. We also received proceeds of $473 million and recognized a pretax gain of $402 million related to sales of other health care entity investments and minor real estate assets.
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 — INCOME TAXES
Our provisions for income taxes for the quarters ended September 30, 2022 and 2021 were $360 million and $685 million, respectively, and the effective tax rates were 24.1% and 23.2%, respectively. Our provisions for income taxes for the nine months ended September 30, 2022 and 2021 were $1.090 billion and $1.531 billion, respectively, and the effective tax rates were 23.4% and 22.9%, respectively. Our provisions for income taxes included tax benefits related to settlements of employee equity awards of $70 million and $96 million for the nine months ended September 30, 2022 and 2021, respectively.
Our liability for unrecognized tax benefits was $670 million, including accrued interest of $116 million, as of September 30, 2022 ($642 million and $99 million, respectively, as of December 31, 2021). Unrecognized tax benefits of $246 million ($217 million as of December 31, 2021) would affect the effective rate, if recognized.
At September 30, 2022, the Internal Revenue Service was conducting examinations of the Company’s 2016, 2017 and 2018 federal income tax returns and the 2019 return for one affiliated partnership. 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 4 — 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 equity awards, computed using the treasury stock method.
The following table sets forth the computation of basic and diluted earnings per share for the quarters and nine months ended September 30, 2022 and 2021 (dollars and shares in millions, except per share amounts):
| Quarter | Nine Months | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net income attributable to HCA Healthcare, Inc. | $ | 1,134 | $ | 2,269 | $ | 3,562 | $ | 5,142 | ||||||||
| Weighted average common shares outstanding | 285.958 | 318.072 | 293.583 | 328.048 | ||||||||||||
| Effect of dilutive incremental shares | 3.894 | 5.957 | 4.119 | 5.200 | ||||||||||||
| Shares used for diluted earnings per share | 289.852 | 324.029 | 297.702 | 333.248 | ||||||||||||
| Earnings per share: | ||||||||||||||||
| Basic earnings | $ | 3.97 | $ | 7.13 | $ | 12.13 | $ | 15.67 | ||||||||
| Diluted earnings | $ | 3.91 | $ | 7.00 | $ | 11.97 | $ | 15.43 |
NOTE 5 — INVESTMENTS OF INSURANCE SUBSIDIARIES
A summary of our insurance subsidiaries’ investments at September 30, 2022 and December 31, 2021 follows (dollars in millions):
| September 30, 2022 | ||||||||||||||||
| Unrealized Amounts | ||||||||||||||||
| Amortized Cost | Gains | Losses | Fair Value | |||||||||||||
| Debt securities | $ | 410 | $ | — | $ | **(**41 | ) | $ | 369 | |||||||
| Money market funds and other | 124 | — | — | 124 | ||||||||||||
| $ | 534 | $ | — | $ | **(**41 | ) | 493 | |||||||||
| Amounts classified as current assets | **(**121 | ) | ||||||||||||||
| Investment carrying value | $ | 372 |
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 5 — INVESTMENTS OF INSURANCE SUBSIDIARIES (continued)
| December 31, 2021 | ||||||||||||||||
| Unrealized Amounts | ||||||||||||||||
| Amortized Cost | Gains | Losses | Fair Value | |||||||||||||
| 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 |
At September 30, 2022 and December 31, 2021, the investments in debt securities of our insurance subsidiaries were classified as “available-for-sale.” Changes in unrealized gains and losses that are not credit-related are recorded as adjustments to other comprehensive income (loss).
Scheduled maturities of investments in debt securities at September 30, 2022 were as follows (dollars in millions):
| Amortized Cost | Fair Value | |||||||
| Due in one year or less | $ | 26 | $ | 26 | ||||
| Due after one year through five years | 127 | 121 | ||||||
| Due after five years through ten years | 181 | 155 | ||||||
| Due after ten years | 76 | 67 | ||||||
| $ | 410 | $ | 369 |
The average expected maturity of the investments in debt securities at September 30, 2022 was 5.8 years, compared to the average scheduled maturity of 8.7 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.
NOTE 6 — 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.
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 6 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (continued)
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 Instrument
We have entered into an interest rate swap agreement to manage our exposure to fluctuations in interest rates. The valuation of this instrument is determined using widely accepted valuation techniques, including a discounted expected cash flow analysis.
The following tables summarize our assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall (dollars in millions):
| September 30, 2022 | ||||||||||||||||
| Fair Value Measurements Using | ||||||||||||||||
| Fair Value | 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 | $ | 369 | $ | — | $ | 369 | $ | — | ||||||||
| Money market funds and other | 124 | 124 | — | — | ||||||||||||
| Investments of insurance subsidiaries | 493 | 124 | 369 | — | ||||||||||||
| Less amounts classified as current assets | **(**121 | ) | **(**115 | ) | **(**6 | ) | — | |||||||||
| $ | 372 | $ | 9 | $ | 363 | $ | — | |||||||||
| Interest rate swap (Other current assets) | $ | 2 | $ | — | $ | 2 | $ | — |
| December 31, 2021 | ||||||||||||||||
| Fair Value Measurements Using | ||||||||||||||||
| Fair Value | 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 | $ | — |
The estimated fair value of our debt was $34.293 billion and $38.541 billion at September 30, 2022 and December 31, 2021, respectively, compared to carrying amounts, excluding debt issuance costs and discounts, aggregating $38.019 billion and $34.827 billion, respectively. The estimates of fair value are generally based upon the quoted market prices or quoted market prices for similar issues of debt with the same maturities.
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 7 — LONG-TERM DEBT
A summary of long-term debt at September 30, 2022 and December 31, 2021, including related interest rates at September 30, 2022, follows (dollars in millions):
| September 30, 2022 | December 31, 2021 | ||||||
| Senior secured asset-based revolving credit facility (effective interest rate of 4.1%) | $ | 2,550 | $ | 2,780 | |||
| Senior secured revolving credit facility | — | — | |||||
| Senior secured term loan facilities (effective interest rate of 4.3%) | 1,900 | 1,960 | |||||
| Senior secured notes | — | 16,200 | |||||
| Other senior secured debt (effective interest rate of 4.1%) | 917 | 935 | |||||
| Senior secured debt | 5,367 | 21,875 | |||||
| Senior unsecured notes (effective interest rate of 4.9%) | 32,652 | 12,952 | |||||
| Debt issuance costs and discounts | **(**309 | ) | (248 | ) | |||
| Total debt (average life of 9.9 years, rates averaging 4.8%) | 37,710 | 34,579 | |||||
| Less amounts due within one year | 218 | 237 | |||||
| $ | 37,492 | $ | 34,342 |
During March 2022, we issued $6.000 billion aggregate principal amount of senior secured notes comprised of (i) $1.000 billion aggregate principal amount of 3 1/8% senior secured notes due 2027, (ii) $500 million aggregate principal amount of 3 3/8% senior secured notes due 2029, (iii) $2.000 billion aggregate principal amount of 3 5/8% senior secured notes due 2032, (iv) $500 million aggregate principal amount of 4 3/8% senior secured notes due 2042 and (v) $2.000 billion aggregate principal amount of 4 5/8% senior secured notes due 2052. During March 2022, we used a portion of the net proceeds to pay down our revolving credit facilities. During the second quarter of 2022, we redeemed all $1.250 billion outstanding aggregate principal amount of our 4.75% senior secured notes due 2023 and all $1.250 billion outstanding aggregate principal amount of our 5.875% senior notes due 2023. The pretax loss on retirement of debt for these two redemptions was $78 million.
During May 2022, Standard & Poor's Rating Services ("S&P") announced it had issued an investment grade rating with respect to the issuer credit rating of HCA Healthcare, Inc. and its subsidiaries. S&P's announcement, in conjunction with the Moody's Investors Service, Inc. upgrade in 2021, permitted the permanent release of the subsidiary guarantees and all collateral securing our senior secured notes. As a result of these releases, the senior secured notes are now classified as senior unsecured notes. The subsidiary guarantees and collateral securing our senior secured credit facilities are not affected.
NOTE 8 — 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.
Health care companies are routinely subject to 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.
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 8 — CONTINGENCIES (continued)
Texas operates a state Medicaid program pursuant to a waiver from the Centers for Medicare & Medicaid Services ("CMS") 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 9 — SHARE REPURCHASE TRANSACTIONS AND OTHER COMPREHENSIVE LOSS
During January 2022 and February 2021, our Board of Directors authorized share repurchase programs for up to $8 billion and $6 billion, respectively, of our outstanding common stock. During the nine months ended September 30, 2022, we repurchased 23.966 million shares of our common stock at an average price of $228.68 per share through market purchases pursuant to the February 2021 authorization (which was completed during the first quarter of 2022) and the January 2022 authorization. At September 30, 2022, we had $3.106 billion of repurchase authorization available under the January 2022 authorization.
The components of accumulated other comprehensive loss are as follows (dollars in millions):
| Unrealized Gains (Losses) on Available- for-Sale Securities | Foreign Currency Translation Adjustments | Defined Benefit Plans | Change in Fair Value of Derivative Instruments | Total | ||||||||||||||||
| Balances at December 31, 2021 | $ | 12 | $ | (278 | ) | $ | (132 | ) | $ | (6 | ) | $ | (404 | ) | ||||||
| Unrealized losses on available-for-sale securities, net of $13 income tax benefit | (45 | ) | (45 | ) | ||||||||||||||||
| Foreign currency translation adjustments, net of $24 income tax benefit | (157 | ) | (157 | ) | ||||||||||||||||
| Change in fair value of derivative instruments, net of $1 of income taxes | 5 | 5 | ||||||||||||||||||
| Expense reclassified into operations from other comprehensive income, net of none, $2 and $1 income tax benefits, respectively | 1 | 5 | 3 | 9 | ||||||||||||||||
| Balances at September 30, 2022 | $ | (32 | ) | $ | (435 | ) | $ | (127 | ) | $ | 2 | $ | (592 | ) |
HCA HEALTHCARE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 10 — 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. The National Group includes 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 includes 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.
Adjusted segment EBITDA is defined as income before depreciation and amortization, interest expense, gains and losses 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 and depreciation and amortization for the quarters and nine months ended September 30, 2022 and 2021 are summarized in the following table (dollars in millions):
| Quarter | Nine Months | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues: | ||||||||||||||||
| National Group | $ | 7,635 | $ | 7,787 | $ | 22,490 | $ | 22,143 | ||||||||
| American Group | 6,599 | 6,767 | 19,872 | 19,562 | ||||||||||||
| Corporate and other | 737 | 722 | 2,374 | 1,983 | ||||||||||||
| $ | 14,971 | $ | 15,276 | $ | 44,736 | $ | 43,688 | |||||||||
| Losses (equity) in earnings of affiliates: | ||||||||||||||||
| National Group | $ | **(**1 | ) | $ | (14 | ) | $ | **(**3 | ) | $ | (30 | ) | ||||
| American Group | **(**13 | ) | (14 | ) | **(**31 | ) | (38 | ) | ||||||||
| Corporate and other | 4 | (7 | ) | 5 | (10 | ) | ||||||||||
| $ | **(**10 | ) | $ | (35 | ) | $ | **(**29 | ) | $ | (78 | ) | |||||
| Adjusted segment EBITDA: | ||||||||||||||||
| National Group | $ | 1,550 | $ | 1,780 | $ | 4,656 | $ | 5,330 | ||||||||
| American Group | 1,389 | 1,604 | 4,417 | 4,698 | ||||||||||||
| Corporate and other | **(**37 | ) | (160 | ) | **(**185 | ) | (533 | ) | ||||||||
| $ | 2,902 | $ | 3,224 | $ | 8,888 | $ | 9,495 | |||||||||
| Depreciation and amortization: | ||||||||||||||||
| National Group | $ | 369 | $ | 343 | $ | 1,088 | $ | 1,005 | ||||||||
| American Group | 309 | 295 | 914 | 884 | ||||||||||||
| Corporate and other | 71 | 78 | 217 | 236 | ||||||||||||
| $ | 749 | $ | 716 | $ | 2,219 | $ | 2,125 | |||||||||
| Adjusted segment EBITDA | $ | 2,902 | $ | 3,224 | $ | 8,888 | $ | 9,495 | ||||||||
| Depreciation and amortization | 749 | 716 | 2,219 | 2,125 | ||||||||||||
| Interest expense | 446 | 398 | 1,288 | 1,168 | ||||||||||||
| Losses (gains) on sales of facilities | 3 | (1,047 | ) | 25 | (1,057 | ) | ||||||||||
| Losses on retirement of debt | — | — | 78 | 12 | ||||||||||||
| Income before income taxes | $ | 1,704 | $ | 3,157 | $ | 5,278 | $ | 7,247 |
Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF