HCA Healthcare, Inc.

Welcome to the HCA Healthcare First Quarter 2022 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations, Mr. Frank Morgan. Please go ahead, sir.

Good morning, and welcome to everyone to today's call. With me this morning is our CEO, Sam Hazen, and CFO, Bill Rutherford. Sam and Bill will provide some prepared remarks And then we'll take questions. Before I turn the call over to Sam, let me remind everyone that should today's call contain any forward-looking statements, they're based on management's current expectations. Numerous risks, uncertainties, and other factors may cause actual results to differ materially from those that might be expressed today. More information on forward-looking statements and these factors are listed in today's press release and in our various SEC filings. On this morning's call, we may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure. A table providing supplemental information on adjusted EBITDA and reconciling net income attributable to HCA Healthcare, Inc. is included in today's release. This morning's call is being recorded, and a replay of the call will be available later today. With that, I'll now turn the call over to Sam.

Good morning and thank you for joining our call. The COVID-19 pandemic continued to influence our results in the first quarter with the Omicron surge, which slowed in the middle of the quarter. More significantly, the challenging labor market pressured margins as the cost of labor increased more than we expected as compared to the first quarter of the prior year. In the face of these challenges, however, we had a number of positive volume and revenue indicators that were encouraging. Compared to the first quarter of prior year, same facility admissions increased 2%. During the quarter, we provided care to approximately 49,000 COVID-19 inpatients, which represented approximately 10% of total admissions consistent with prior year. Non-COVID admissions grew 2.2%. This growth occurred in February and March. Inpatient surgeries grew approximately 1%. And across our inpatient business, acuity levels and payer mix continued to be strong. Outpatient volumes also rebounded strongly in the quarter. Same facility emergency room visits grew 15%. Same facility outpatient surgeries grew nearly 7%. and outpatient cardiac related procedures grew by approximately 7%. We continue to believe that overall demand for healthcare remains strong in our markets across most categories with favorable population trends and other contributing factors that developed during the pandemic driving it. Total revenues grew 6.9% compared to the first quarter of 2021. Same facility inpatient revenues grew 5.4%, and same facility outpatient revenues grew 10.6%. Bill will provide more color on our revenues in his comments. I realize that our bottom line financial results were not what we expected, but these top line metrics were positive. Diluted earnings per share, excluding gains on sales of facilities, were $4.12, which was down two cents from the prior year. In the quarter, we experienced higher levels of contract labor expenses than planned. As compared to the fourth quarter, we saw modest improvements in certain contract labor metrics. We expect further improvements in the remainder of the year as we align the workforce appropriately by reducing both the utilization of contract labor and the associated hourly rates for these contracts. In some situations, the challenges in the labor market also constrained our capacity, preventing us from delivering hospital services to certain patients. By the end of the quarter, we were able to overcome some of these capacity constraints, and for the most part, our transfer centers were able to operate normally and move more patients to the proper setting in our networks. It is important to understand we are doing what we absolutely have to do to take care of our patients and we will always do that. This past quarter, our teams continue to show up and deliver on our promise to provide high quality care to patients who need our services. I want to thank them for their commitment and hard work during these challenging times. We do, however, have numerous initiatives underway around retention, recruitment, capacity management and new care models that we believe will help offset some of these labor pressures. However, we now believe improvement in our labor costs will be slower than originally anticipated. This factor primarily influenced our revised outlook for 2022. We will continue to invest in our people, in our relationships and in our networks. We believe these investments are appropriate and should help us address the long-term opportunities for growth that exist in our markets. At the end of the quarter, we had approximately 2,500 facilities or sites of care in HCA healthcare networks. This represents a 15% increase over last year. Recently, we published our annual impact report for 2021, which highlights the tremendous impact our colleagues had on the patients and communities we serve. You can find the details on our website. Before I turn the call over to Bill, let me end my comments with this. Over the past few years, we have demonstrated an ability to adjust effectively to whatever our realities are, and I'm confident we will do it again. With that, I'll turn the call over to Bill. Thank you.