2. HCA’s management will be providing certain forward-looking statements during today’s presentation.
These statements are intended to be covered by the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely
to historical or current facts, including statements regarding future operations, cash flows, cost
management initiatives and capital structure management and can also be identified by the use of words
management,
like “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “initiative,” “continue” or
words or phrases of similar meaning. These forward-looking statements speak only as of the date hereof
and are based on our current plans and expectations and are subject to a number of known and unknown
uncertainties and risks, many of which are beyond our control. These risks and uncertainties are described
in headings such as “Risk Factors” or “Forward Looking Statements” in our annual report on Form 10-
g g p
K, our quarterly reports on Form 10-Q and other filings with the SEC. As a consequence, current
plans, anticipated actions and future financial position and results of operations may differ significantly
from those expressed in any forward-looking statements in today’s presentation. You are cautioned not to
unduly rely on such forward-looking statements when evaluating the information presented and we do not
intend to update any of these forward-looking statements.
The presentation also contains certain non-GAAP financial measures. The Company’s
earnings releases, located on the company’s investor relations page at www.hcahealthcare.com, include a
reconciliation of the difference between certain of the non-GAAP financial measures presented with the
most directly comparable financial measure calculated in accordance with GAAP. Other non-GAAP
financial measures presented are reconciled on slides included in this presentation These non-GAAP
presentation. non GAAP
financial measures should not be considered an alternative to the GAAP financial measures.
3. Introduction to HCA Today
Leading investor-owned provider
Western Group International
Anchorage
of acute care services, primarily
Central Group Central
London
Eastern Group focused in urban and suburban
settings (~2.4x next largest
investor-owned provider)
Western W
Western C Northeast
Idaho
Idaho
Accounted for approximately 5%
W Idaho Falls
Idaho Falls
of inpatient admissions in U.S. last
Kansas City
No. VA
W Terre Haute
C
year
Utah
Ut h
Utah Terre
W Denver
Wichita C C Richmond
Haute
Kansas City
San Jose
San Jose C SWSW VA
VA
Frankfort
Frankfort
W Wichita
W Company operates 166
Chattanooga
Las Vegas C
W W Nashville Augusta Grand Strand
Oklahoma City
hospitals(1) and 107 freestanding
Southern
Oklahoma City NW GANW GA
California Central Atlanta Trident/Charleston
Louisiana Atlanta E
surgery centers(1) in 20
El Paso Dallas/FtW W Columbus
Dallas/FW Middle GA
Columbus Palmyra
E
Austin
W Jacksonville
Panhandle**
Austin
states, and England
Antonio W Houston
San San AntonioHouston North Central Florida
Panhandle
W
W Treasure Coast
Tallahassee
Lafayette
EBITDA in 2007 was $4.6B and
Palm Beach
W Corpus Christi Tampa
McAllen W Broward
New Orleans
September 2008 YTD is $3.3B
Brownsville Dade
REVENUE BY REVENUE BY
~ 186,000 employees
GEOGRAPHY PATIENT MIX
International and
Other
~ 35,000 affiliated physicians
3% Outpatient
37%
Eastern Western
More than 40,000 licensed beds
30% 43% Inpatient
63%
Central
24%
(1) Includes 8 nonconsolidated hospitals and 8 nonconsolidated surgery centers and 2,367 beds managed under joint ventures
2
4. Local Market Leadership with Extensive Geographic Diversity
HCA maintains the #1 or #2 inpatient market position with 20% to 40% market share in most
geographies, which provides additional negotiating leverage
Geographically diverse portfolio of markets help insulate the company from market-level fluctuations
Dallas/Ft.
Dallas/Ft.
Dallas/Ft. Worth
Worth
Worth
18.0% 1,4
20.4%1,4
20.4%1,4
International
El Paso
El Paso
El Paso
32.0%2,5
32 0%2,54
32.0% 1
34.2%
34 2% 1,4
Austin
Austin
Austin
39.8% 1,4
47.2%2,5
47.2%2,5
Western W C
Idaho San Houston
San Houston
San Houston
W Idaho Falls
Denver
20.0%1,5
Antonio
Denver 20.0%1,5
Antonio 18.2% 1,4
Antonio
Denver
32.2% 2,4 Kansas City
Kansas City
Kansas Cityy
32.5%1,9 34.6%1,5
32 5%1,9
32.5% 34 6%1,54
29.1% ,
29 1% 1,4
34.6% 1
24.7%1,6
24 7%1 6
Utah
Ut h 22.9%
24.7%1,6 3,4
Utah
Utah W Terre Haute
19.6% 2,6
20.1% 3,4
20.1%2,6 C
Utah
W
Richmond
Richmond
Richmond
C C
Kansas City
San Jose 39.4% 2,4
44.0%3,6
C
44.0%3,6
SW VA
Frankfort
W Wichita W
Jacksonville
Jacksonville
Nashville Jacksonville
Nashville
Las Vegas Nashville
Las Vegas C
Las Vegas 20.7% 1,4
23.0%2,3
W
W 23.0%2,3
32.5%
30.1%1,6
W Panhandle
30.1%1,6 2,4
32.2%1,7
31.5%
32.2%1,71,4 Panhandle
Panhandle
Oklahoma City 30.2% 2,4
34.7%2,3
34.7%2,3
OklahomaCity City
Oklahoma2,6City
Southern E
Southern
Southern 19.7%
19 7%
15.3% 2,6
15 3% 2 6
19.7%
19 7% 3,4
Ft. Pierce
Ft Pi
California Ft.Pierce
Pierce
California NC Florida
California NC Florida
E NC Florida
19.1%2,5,8 54.1%2,3
49.5% 2,3
19.1%2,5,8 54.1% 2,4
Charleston 34.9%2,3
13.6% 3,4 34.3% 2,4
Charleston 34.9%2,3
Charleston
29.1% 2,10
28.0% 3,4
28.0%2,10
Tampa Bay
Tampa
Western Group Tampa Bay
27.7%2,3
27.7%2,3
26.4% 2,4
Central Group Broward
Broward
Broward
22.6% 2,3
23.1% 2,4
23.1%2,3
Eastern Group
Source:
Notes:
2006 1st Q t data
Quarter d t 4.
4 Mdtt
Medstat
1.
1 Dade
Dd
Dade
Dade
15.6%2,3
2006 3rd Quarter data 5. South Carolina Office of research & Statistics 13.9% 2,3
2. 15.6% 2,4
2005
3.
3
5. Key Initiatives
Quality Programs
Physician Engagement Strategies
- CMS 90th percentile performance
- Advisory Committees
- Centralized Credentialing
- Physician Sales
- Electronic Health Record (EHR)
- Hospitalist
y
- Physician Portal / EHR
Service Line Strategies
Access Points
- Cardiology
- Freestanding EDs
- Orthopedic
- Rural Outreach
- Oncology
- Primary Care Practice
- Women’s Services / NICU
- EMS Relationship
4
9. Same Facility
Outpatient Services
ER Visits by Payer
2nd Quarter 3rd Quarter
1st Quarter
*Restating same store to include “new” ASCs which cannibalized existing hospital
Mix % Change
based outpatient surgeries
1.2%
tpatient
Surgeries
-0.3%
20.3% Medicare 3.0%
-2.3% 0.8%S t YTD __._%
%
Sept
Out
-0.7% -0.7% 22.2%
-2.7% -0.3%*
Medicaid 13.9%
Sept YTD
__._%
0.8% -0.3% Managed/
33.6% -1.2%
ASC Based
Discounted
t
Outpatient
Surgeries
s
-0.7% -0.8% 23.9% Uninsured -0.2%
_._%
Source: QMIRS 3rd Quarter 2008
Mix % Change
spital Based
-0.7%
Outpatient
Surgeries
0.8% 20.7% 4.9%
Medicare
__._%
Sept YTD
-4 0%
4.0%
S
Hos
22.2%
%
-1.0% 12.7%
Medicaid
__._%
ER Visits
33.6% 0.1%
Managed/
6.8% Discounted
V
4.4%
4 4%
2.9%Sept YTD
23.5% 4.5%
+4.8% Uninsured
Source: QMIRS September 2008 YTD
8
10. Same Facility
Net Revenue
1st Quarter 2nd Quarter 3rd Quarter Sept YTD
+4.2%
R/AA
5.1% 5.6% +4.4%
ash
3.7%
Ca
NR
4.5%
4.7%
2.5%
Excluding UPL
Revenue Mix - YTD
Revenue Mix - QTD
Mix per AA % Change per AA % Change
Mix
5.4%
5 4%
Medicare 4.4%
4 4%
28.6%
28 6% Medicare
29.9%
__._%
__._%
9.3% 6.0%
3.6%
Medicaid * 8.4% *
Medicaid
__._%
%
__._%
% Managed/
46.6% 6.2%
7.1% Managed/
46.2%
Discounted
Discounted
Uninsured
9.3% 7.3%
1.4% Uninsured
9.3%
6.2% Other
_._%
% Other
Oth
_._%
% 6.2%
3rd Quarter 2008 Source: QMIRS September 2008 YTD
Source: QMIRS
9
* Medicaid per AA Change Excludes UPL
11. Same Facility
Expense Management
Supply Cost by Category
2nd Quarter 3rd Quarter
1st Quarter
xp./AA
Sept YTD
% Total Per AA % change
+5.7%
+6.3%
7.2%
ash
Medical
6.0% 6.0% +4.8%
4.8%
Op.Ex
34.6%
34 6% Devices
Di
Ca
7.0%
5.7%
4.5%
Pharmacy
Excluding UPL +0.3%
19.4%
Sept YTD
+4.9%
+4 9% Commodity
Wage
+5.1%
Rate
4.9%
4.8% 5.1%
40.0%
+14.2%
Blood
6.0%
East, West & Central Hospital Operations –
p p
3rd Q
Quarter 2008
t
Including rebates
Sept YTD
+1.5%
EEOB
Medical
1.8% 1.1% 1.8% +5.6%
35.0% Devices
E
Pharmacy +0.8%
As Reported 19.6%
Sept YTD
plies
Commodity
+5.3% +5.0%
/AA
A
6.4% 39.4%
39 4%
Supp
4.5%
4 5% 4.9%
4 9%
Blood +17.6%
6.0%
East, West & Central Hospital Operations –
September 2008 YTD 10
Including rebates
12. As Reported
($ in millions)
Other Operating Expenses
Contract Services
Professional Fees
$863.8 3.4%
$500 $900
19.6%
$835.7
$421.9
$352.8
$
$400 $800
$300 $700
$200 $600
2007 2008 2007 2008
September YTD September YTD
Utilities
Repairs & Maintenance
$500
$500 $437.6
7.6% 9.3%
$406.8
$
$400 $342.5
$400
$313.2
$300
$300
$200
$200
2007 2008
2007 2008
September YTD
September YTD
11
13. HealthTrust Purchasing Group
HPG functions as a traditional GPO offering contracts in the areas of
supplies, pharmaceuticals, medical devices, and capital equipment
Currently serves over 4,000 members, including more than 1,400 acute care
hospitals and 400+ surgery centers
Over 1,200 contracts with $15 billion annualized compliant purchasing volume
Generates significant annual profits from administrative fees from suppliers for
pe o
performing GPO services; s g ca t y lowered t e Co pa y s supp y costs
g G O se ces; significantly o e ed the Company's supply
Per-unit cost advantage over competitors
Established
E t bli h d separate di i i
t division, C T t i 2006 t provide non-healthcare
CoreTrust, in to id h lth
contracts (e.g. office supplies, pc’s, copiers) to non-healthcare Fortune 500
companies
12
14. Capex Discipline and Flexibility
Portfolio of hospitals is well-capitalized
Portions of both “routine capital” as well as “new” and “expansion / renovation” capital could be delayed to
increase cash flow if needed
CAPITAL EXPENDITURES
($ in billions)
2008E
2007
2005 2006
2004
$1.65
$1.5
$1.6 $1.85
$1.52
$2.0
$1.6
Facility Expansion /
Renovation Projects
$1.2 New & Replacement
Facilities
Infrastructure
$0.8 Development
Routine
$0.4
$0.0
2004 2005 2006 2007 2008E
13
16. Debt Portfolio
($ in millions)
Increase/
9/30/2008 12/31/2007 (Decrease)
Bank Revolver $ - $ - $ -
Asset-Based Revolver 1,880 1,350 530
Term Loan A 2,553 2,638 (85)
Term Loan B 8,646 8,712 (66)
European Term Loan 887 967 (80)
Total Bank Debt 13,966 13,667 299
Second Lien Cash Pay Notes 4,200 4,200 -
Second Lien Toggle Notes 1,500 1,500 -
Other Secured Debt 406 427 (21)
Total Senior Secured Debt 20,072 19,794 278
Unsecured Notes, net 6,969 7,514 (545)
Total Debt $ 27,041 $ 27,308 $ (267)
Debt
D bt / EBITDA 6.0x
60 5.9x
59
15
17. Free Cash Flow
($ in millions)
9 Months Ended
September 30,
2008 2007
Free cash flow analysis:
Free cash flow analysis:
Net cash provided by operating activities:
Net income……………………………………………………………………………… $ 397 $ 596
Provision for doubtful accounts……………………………………………… 2,520 2,218
Depreciation and amortization………………………………………………… 1,062 1,072
Income taxes…………………………………………………………………………… ( (379)
) ( )
(103)
Gains on sales of facilities………………………………………………………… (90)
(332)
Impairment of long‐lived assets……………………………………………… 53
24
Changes in operating assets and liabilities………………………………… (2,420)
(2,598)
Share‐based compensation……………………………………………………… 25
17
Change in minority interest……………………………………………………… 10
33
Other……………………………………………………………………………………… 86
58
Net cash provided by operating activities……………………… $
1,264 $ 985
Less:
Capital expenditures…………………………………………………………………
Capital expenditures………………………………………………………………… 1,115 997
Free cash flow…………………………………………………………………………………… $ 149 $
(12)
16
18. LTM Cash Flow
LTM Cash Flow From Operations and Cash Flow From Operations Before Interest & Taxes (“CFOBIT”)
$4,500
$4,000
$3,500
$millions
$3,000
$2,500
$2,000
$1,500
$1,000
4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08
Quarter Ended
Cash Flow From Operations CFOBIT
17
19. Scheduled Maturities
($ in millions)
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
'08 '09 '10 '11 '12 '13 '14 '15 '16 '23 '24 '25 '27 '33 '36 '95
Public Debt - Unsecured Public Debt - 2nd Lien Bonds
Bank Term D bt
B kT Debt Bank Revolvers - C
B kR l Commitment
it t
2008 2009 2010 2011 2012 2013 2014 2015 2016
Public Debt - Unsecured $12 $46 $923 $314 $902 $1,000 $621 $900 $1,000
Public Debt - 2nd Lien Bonds - - - - - - 1,000 - 4,700
Bank Term Debt 54 328 328 553 1,728 9,097 - - -
Bank R
B k Revolvers - C
l Commitment
it t - - - - 4,000
4 000 - - - -
Total $66 $373 $1,251 $867 $6,630 $10,097 $1,621 $900 $5,700
18
Note: Excludes $406 million of other secured debt (primarily capitalized leases)
20. Financial Considerations
Focus is on cash conservation and improving liquidity
Currently reviewing potential cost cutting strategies, size of
cost-cutting strategies
the capital expenditure program and utilizing alternative
financing sources to improve liquidity
PIK Toggle Notes – election to PIK improves liquidity; PIK
option exercised on the Toggle Notes for the next interest
period (ending 5/15/09)
Operations and ability to generate cash remain strong despite
industry and general economic challenges
Liquidity position is strong with Revolver capacity of ~$2
billion at 9/30/08 and no meaningful debt maturities until 2nd
half of 2010
19
22. Supplemental Operating Results Summary
($ in millions)
For the Nine Months
Third Quarter Ended September 30,
2008 2007 2008 2007
Revenues $ 7,002 $ 6,569 $ 21,109 $ 19,975
Net income $ 86 $ 300 $ 397 $ 596
Gains on sales of facilities (net of tax) (29) (193) (203)
(53)
Impairment of long-lived assets (net of tax) 28 — 34 15
Net income, excluding gains on sales of facilities and
impairment of long-lived assets 85 107 378 408
Depreciation and amortization 356 1,072
350 1,062
Interest expense
p 497 560 1,521
, 1,674
,
Minority interests in earnings of consolidated entities 49 44 161 160
Provision for income taxes 72 (84) 215 125
Adjusted EBITDA (a) $ 983 $ 3,439
$ 1,053 $ 3,337
(a) Net income, excluding gains on sales of facilities and impairment of long‐lived assets and adjusted EBITDA are non‐GAAP financial
measures. We believe that net income, excluding gains on sales of facilities and impairment of long‐lived assets and adjusted EBITDA are
important measures that supplement discussions and analysis of our results of operations. We believe that it is useful to investors to
provide disclosures of our results of operations on the same basis as that used by management. Management relies upon net income,
excluding gains on sales of facilities and impairment of long‐lived assets and adjusted EBITDA as the primary measures to review and
assess operating performance of its hospital facilities and their management teams.
Management and investors review both the overall performance (including; net income, excluding gains on sales of facilities and
impairment of long‐lived assets and GAAP net income) and operating performance (adjusted EBITDA) of our health care facilities.
Adjusted EBITDA and the adjusted EBITDA margin (adjusted EBITDA divided by revenues) are utilized by management and investors to
compare our current operating results with the corresponding periods during the previous year and to compare our operating results
with other companies in the health care industry. It is reasonable to expect that gains on sales of facilities and impairments of long‐lived
assets will occur in future periods, but the amounts recognized can vary significantly from quarter to quarter, do not directly relate to
the ongoing operations of our health care facilities and complicate quarterly comparisons of our results of operations and operations
comparisons with other health care companies.
Net income, excluding gains on sales of facilities and impairment of long‐lived assets and adjusted EBITDA are not measures of financial
, gg p g j
performance under accounting principles generally accepted in the United States, and should not be considered as alternatives to net
income as a measure of operating performance or cash flows from operating, investing and financing activities as a measure of liquidity.
Because net income, excluding gains on sales of facilities and impairment of long‐lived assets and adjusted EBITDA are not
measurements determined in accordance with generally accepted accounting principles and are susceptible to varying calculations, net
income, excluding gains on sales of facilities and impairment of long‐lived assets and adjusted EBITDA, as presented, may not be
21
comparable to other similarly titled measures presented by other companies.
