HCA Healthcare, Inc.

Good morning and welcome to the HCA Healthcare Fourth 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 on 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 a few 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.

All right, good morning and thank you for joining the call. We finished 2022 as expected with pre-pandemic seasonality demand norms driving solid volume growth. Additionally, we continue to see progress with our labor agenda. These factors help produce solid earnings in the fourth quarter that were consistent with our guidance. We are encouraged by this outcome and believe this operational momentum should position us well for 2023. 2022 was a tale of two halves, with the first half being more about winding down from the previous two years of intense COVID activity and responding to the resulting challenges. The second half was more about normalization, which included strong demand and an improving labor market. Once again, I believe our people have demonstrated an impressive capability in the face of these dynamic forces and delivered for our patients, the communities we serve, and other stakeholders. Healthcare people in general are unique, but I believe HCA healthcare people are even more special. I often refer to them as can-do people. And again, this past year, I think they proved it. I want to thank them for their hard work and everything they do each and every day for our company. Same facility volumes across the company were strong in the fourth quarter. Admissions grew 3% year over year. Non-COVID admissions increased in excess of 5%. Equivalent admissions were up 5.4%. with impressive growth of 11% in the emergency room. Most of our other volume categories had solid growth metrics in the quarter also. The payer mix and acuity levels in the quarter remained at favorable levels. These factors produced revenue growth against a difficult comparison of 3% in the quarter. With respect to our people agenda, we were pleased with the improvements we saw in key metrics Turnover numbers for registered nurses were down 26% in the fourth quarter as compared to the previous four quarters average. Our turnover rate is still higher than we want, but we believe it is better than the industry average. Employee engagement scores recovered to around pre-pandemic levels. Again, our engagement is above the industry average. Our recruiting teams continue to generate results for the company. Hiring increased 6% year over year in 2022. And lastly, we opened our seventh Galen College of Nursing school this year. With respect to labor costs during the quarter, we experienced stable labor costs per hour with utilization of contract labor declining. As we have detailed in the past, we have implemented a robust human resources plan. We executed well on it and expect to make further progress as we move into 2023. It remains a top organizational priority. Even with the progress, we continue this quarter to experience capacity constraints, creating situations where we were unable to deliver services in certain situations. Also in the quarter, we saw value from our portfolio optimization plan and closed two joint ventures with strategic partners. One was with our Sarah Cannon Research Institute, which we combined with McKesson's Cancer Research Entity. We believe the combination of these two entities will produce better cancer research and more clinical trials across the country, providing even more community-based resources for physicians and patients to fight this disease. The second co-venture is with our Core Trust Purchasing Organization. We closed on a new partnership with Blackstone. We believe this new relationship can expand our ability to offer commercial purchasing and services solution to a broader variety of customers. We believe both of these deals achieved our strategic objectives and connected us with a better platform for success in the future. We are excited to partner with both entities. We also implemented our capital plan for the year as expected, including redeploying the proceeds from these two new joint ventures. Bill will provide more details in his comments. And finally, we announced in the last quarter a significant leadership transition that we believe will position the organization better with responding timelier to market dynamics while also strengthening the alignment of corporate functions to our strategy. The executives who are part of this transition are all proven HCA executives. They understand and appreciate our culture, and they know how to execute. As we push ahead into 2023 and beyond, we believe the strong demand for healthcare services presents opportunity for HCA Healthcare in an otherwise challenging macro environment. We believe the company is well positioned culturally, competitively, and financially to capitalize. Our agenda next year will be focused on the following three areas. First, overcoming labor and capacity challenges. Again, we believe we have the appropriate initiatives in place to respond to these. Second, counter inflationary pressures. Again, we have numerous efforts in place to contend with these forces while ensuring we continue to deliver high-quality outcomes to our patients. And third, accelerating growth with our winning plays. This agenda continues to leverage capital investments in outpatient facilities, clinical equipment for our physicians, and service line expansion. On top of our 2023 agenda, we are also making investments in our long-term plan, which includes four primary elements. The first one is advancing our clinical systems and digital capabilities. Second is transforming care models with innovative solutions. Third is expanding our workforce development programs. And fourth is investing capital in our networks to expand their offerings. These efforts are pressuring our results some in the current year, but we believe they are necessary in creating a platform for ultimately optimizing our networks so they can deliver even better patient care in the future. Let me close with this. The last three years have been an extraordinary experience for everyone at HCA Healthcare. There's been no rest nor retreat for our people, and it was truly a challenge like no other. I strongly believe, however, that our board, our management teams, and our caregivers have shined through it all. We went into the pandemic with two priorities, to protect our people and to protect the organization so we could continue providing high-quality healthcare to the communities we serve. I believe strongly that we showed up, we delivered on these priorities, and we did it the right way. I am proud of HCA Healthcare, and I'm even more proud of our people. The future for our company is even brighter because of the past three years and what we learned. Now, we will move into 2023 and the years ahead with greater purpose, with a renewed agenda to drive growth, and with more confidence in our ability to deliver value for all of our stakeholders. With that, I will turn the call to Bill, and he will discuss the quarter's results in more detail in our 2023 guidance.