HCA Healthcare, Inc.

Welcome to the HCA Healthcare Fourth Quarter 2023 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 Basin, and CFO, Bill Rutherford. Sam and Bill will provide some prepared remarks and then we will 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.

All right. Good morning to everybody, and thank you for joining the call. We finished 2023 better than expected across most dimensions of our business. In the quarter, we experienced strong demand for services across our diversified portfolio of markets, facilities, and service lines. This growth, coupled with improved cost trends, drove solid financial performance in the fourth quarter. Diluted earnings per share, excluding gains on sales, were $5.90. which represented a 27% increase over prior year. We are encouraged by these results and believe the operational momentum we have created should position us well for 2024. As mentioned at our recent Investor Day, the staying power of HCA Healthcare was on display again throughout the year. Diluted earnings per share, excluding gains and losses on sales and debt retirement, for the year grew almost 13% as compared to 2022. As a management team, we pride ourselves on the following. First, owning our realities, whatever they are. Next, making a big company small so we can adjust timely. And third, being disciplined in thought, resource allocation, and execution, helping us to accomplish our mission. Once again, I believe our people have impressively demonstrated these traits in the face of new challenges and delivered positive outcomes for our patients, the communities we serve, and our other stakeholders. 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 for our company. Same facility volumes across the company were strong in the fourth quarter, Admissions grew 3% year-over-year. Equivalent admissions were up 4%. Emergency room visits grew 2%. Inpatient and outpatient surgery volumes increased approximately 1%. Most of our other volume categories, including cardiac procedures and rehab admissions, had solid growth metrics in the quarter also. All domestic divisions had equivalent admissions growth in the quarter. Additionally, payer mix and acuity levels in the quarter improved year over year. These factors, along with certain enhancements in a couple of states' Medicaid supplemental programs, helped produce same facilities revenue growth of 11% in the quarter. Bill will provide more detail on revenue in his comments. Operating margins improved in the quarter as we were able to generate solid operating leverage across the company on the increased revenue we produced as compared to the prior year, but even more impressively when compared sequentially to the third quarter. We executed well over the year on our people agenda. In the quarter, we saw further progress on key metrics as evidenced by solid employee engagement results, stable turnover trends, and reductions in contract labor utilization. As we have detailed in the past, we have implemented a comprehensive human resources plan. We expect to make further progress on it as we move into 2024. Our plan will remain a top organizational priority with significant investments in workforce development and training, which includes expansions in both Galen College of Nursing and our Centers for Clinical Advancement. With respect to hospital-based physician costs in the quarter, we slowed the rate of growth. As it pertains to Valesco, our physician staffing joint venture, we reduced the operating loss in the fourth quarter more in line with our expectations. As indicated in our investor day, we expect to invest significantly this year in our long-term plan, which we designed to take our company from strength to strength and achieve the growth potential we see in our core business. These investments revolve around three distinct opportunities. The first one includes continued network expansion in facilities, services, and workforce to to meet the demand growth that we expect in our markets while also supporting our efforts to increase market share. In 2024, we have over $2 billion of new capital projects scheduled to come online that will increase capacity. Additionally, we expect to integrate a number of newly acquired hospitals and outpatient facilities that should complement our networks. The second opportunity includes a robust agenda designed to advance digital capabilities across the company and unlock the embedded value we see in our operations. As high-performing as we are today, we believe there is more operational potential inside our company. With evolving technological tools, we are investing to unlock this value. We believe this initiative, together with our care transformation and innovation program, will enhance quality, drive further efficiencies through our financial resiliency program, and improve overall operational management capabilities, including integrating our revenue cycle in case management functions better. The third area of opportunity pertains to the flexibility we have to use our balance sheet position and strong cash flow production to invest heavily in our business and our people while also allocating capital to our shareholders. In 2024, we plan to increase capital spending to over $5 billion and enhance our share repurchase program to around $5 billion. We continue to believe this strategic plan will produce more winning plays for our organization, allowing us to deliver better services for patients while also creating value for other stakeholders. Let me close with this. The constants in our organization consist of three principles, giving our patients what they deserve whenever they need services, partnering with our physicians to deliver high-quality outcomes, and leveraging the distinct elements of HCA healthcare to improve performance. Our approach to delivering on these core values comes from what we term the HCA way. That is supporting our local provider systems with value-added enterprise-level capabilities coupled with disciplined and detail-oriented management teams that relentlessly focus on execution. This operating philosophy has helped us navigate different economic cycles, adapt to changes in the industry, and address challenges such as the COVID pandemic. As we look to the future, we have designed our next-generation growth plan to build upon the strengths we have developed over the years and take advantage of the opportunities in front of us. I am proud of HCA Healthcare, and I'm even more proud of our people. We will move into 2024 and the years ahead with greater purpose, with a renewed agenda to drive sustained growth, and with confidence in our ability to deliver value and positive outcomes for our stakeholders. With that, I'll turn the call to Bill, and he will discuss in more detail the quarter's results and 2024 guidance.