HCA Healthcare, Inc.

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 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. You must risk uncertainty that 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 HCAE healthcare 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, Frank, thank you. Good morning to everybody and thank you for joining the call. The positive fundamentals we saw in our business this past year continued into the first quarter of 2024. This momentum generated strong financial results that were driven by broad-based volume growth improved payer mix, and solid operating margins. As we look to the rest of the year, we remain encouraged by our performance, the overall backdrop of growing demand for our services, and our enhanced ability across our networks to serve our communities. The people of ACA Healthcare continue to deliver for our patients with improvements in key non-financial metrics, including improved quality outcomes, more efficient process measures in emergency room services, which have accelerated time to discharge and increased satisfaction, and finally, better inpatient capacity management with reduced length of stay and increased acceptance of patients who needed to be transferred to our hospitals. As compared to the prior year, diluted earnings per share, as adjusted, increased almost 9% in the first quarter to $5.36. Same facilities volumes were favorable across the company. Inpatient admissions grew 6% year over year. Inpatient surgeries were up almost 2%. Equivalent admissions grew 5%, and emergency room visits increased 7%. Most of our other volume categories, including cardiac procedures and rehab admissions, also had solid growth metrics in the quarter. While outpatient surgery revenue increased year-over-year due primarily to favorable payer mix, total cases declined 2%. We attribute most of this decrease to the effects of the calendar and the redetermination process, which drove a considerable decline in Medicaid volume. All domestic divisions had growth in inpatient admissions and equivalent admissions, And finally, payer mix and acuity levels improved as compared to the prior year. Commercial volumes represented approximately 36% of equivalent admissions. Last year, they were 34% of the total. The case mix for our inpatient business increased slightly, continuing the upward trend we have seen over the past few years. Same facilities revenue. grew almost 9% as a result of these volume metrics, coupled with 3.5% higher reimbursement per equivalent admission. We continue to make progress on our cost agenda. Operating costs across most categories were in line with our expectations. As part of our capital spending plan, the number of facilities or sites for care increased by almost 5% to around 2,600, and we added approximately 2% to our inpatient bed capacity. As we move through the remainder of the year, we will maintain a disciplined approach to our operations while continuing to invest appropriately in our strategic agenda, which we believe should position the company favorably to meet our long-term objectives. With that, I will turn the call to Bill for his last earnings call. I want to congratulate him again on his tremendous career with the company. It's been my privilege to work with him over these years. I want to thank him for a job well done.

Great. Good morning, everyone. Thank you, Sam. I appreciate that. We believe our first quarter performance represents a strong start to the year, and we continue to combine solid operational performance with a disciplined and balanced allocation of capital to generate value over time. We had strong top-line growth, with revenues growing 11.2% over the prior year and a quarter. Sam highlighted the same facility volume, acuity, and mixed metrics that drove our almost 9% same facility revenue growth in the quarter. So let me highlight a few points on our operating costs. Overall, operating costs remained as well. Adjusted EBITDA margin was 19.3% in the quarter. Labor results were solid, with as reported labor costs as a percent of revenue improving 100 basis points from the prior year. We continue to see good trends on contract labor, which improved 21.7% for the prior year and represented 5.1% of total labor costs. Supply costs and percent of revenues improved 10 basis points from the prior year. While other operating costs and percent of revenue has grown compared to the prior year, it has remained relatively consistent for the past three quarters. the sequential growth of professional fee expense continued to moderate and perform in line with our expectations. In addition, the Valesco operations performed better than our expectations in the quarter. Adjusted EBITDA was $3.35 billion in the quarter, which represented a 5.7% increase over prior year. I will mention, as a reminder, we recorded a $145 million favorable settlement in the first quarter of last year. So we are pleased with the operational performance for the company during the first quarter. Next, let me speak to capital allocation as we continue to deploy a balanced allocation of capital. Cash flow from operations was just under $2.5 billion in the quarter. Capital expenditures totaled $1.1 billion and we repurchased just under $1.2 billion of our outstanding shares during the quarter. Our debt to adjusted EBITDA leverage remains near the low end of our stated guidance range, and we believe we are well positioned from a balance sheet perspective. Finally, in our release this morning, we are reaffirming our full-year 2024 guidance range. So with that, I'll turn the call over to Frank and open it up for Q&A, and we look forward to your questions.