HCA Healthcare, Inc.

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 bonds 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. Thank you, Frank, and good morning to everybody. The company finished the year with strong business fundamentals that were consistent with the previous quarters this year. Demand for healthcare services remained strong. Operations were in good order and stable. and the company continued to see favorable investment opportunities. These fundamentals represent a good starting point as we enter 2025. Our teams have done a fantastic job in remediating a number of facilities in North Carolina, Georgia, and West Florida that were impacted by the two major hurricanes we experienced a few months ago. All of these facilities, including Mission Hospital in Nashville, where the community's recovery efforts continued, and Largo Hospital in our West Florida division resumed normal operations in the quarter. As we end 2024, the first half of this decade has been another period of long-term growth for the company. We have seen operational improvements across key performance indicators, and we have delivered increased value for our shareholders. These accomplishments position us well for the future. I'm grateful to our colleagues who made this happen. We believe the HCA way of combining our high-quality local health networks with the capabilities of a national system consistently produces better patient outcomes, drives greater innovation and efficiency, and yields stronger financial results. While gratified with these accomplishments, we will maintain our pursuits to improve outcomes further for our stakeholders. We believe the strength of our cash flow and balance sheet position as well for investing further in our networks to increase access, expand capacity, and enhance clinical capabilities. They also allow significant investments in our people to improve training while also creating career growth in our companies. And finally, this financial strength creates opportunities to deliver value to our shareholders by effectively allocating capital to generate favorable returns. Diluted earnings per share, as adjusted, increased 5.4% in the fourth quarter as compared to the prior year. These results included the effects of the two major hurricanes. In the quarter, we estimate the financial impact from increased costs and lost revenue equated to approximately $0.60 per share. This was in line with the estimation we provided on our previous earnings call. Revenue growth was approximately 6%. Demand, payer mix, and acuity continued to be strong across most service categories and markets. On a same facilities basis, inpatient admissions and equivalent admissions grew 3%. Emergency room visits increased 2.4%. Inpatient surgeries were up 2.8%. Outpatient surgery cases, while down 1.3%, again, due to the strong payer mix and service mix, we had solid revenue growth in this service line. And lastly, rehab, obstetrics, and cardiac procedure volumes continued to be strong. Operating costs were well managed by our teams and remained in line with our expectations. Before I close, you will see that our earnings guidance for 2025 aligns with the preliminary outlook we provided on our prior call. And with that, I'll turn the call to Mike for details.

Thank you, Sam, and good morning, everyone. I will provide additional comments on the quarter and year and then discuss our 2025 guidance. Regarding the fourth quarter, we are pleased with results of the quarter, which demonstrates the excellence of our teams in responding to challenges and still producing solid results. As Sam noted, we estimate that the adverse hurricane impact in fourth quarter of 2024 was approximately $200 million, or $0.60 per diluted shares, in line with our expectations. These estimates do not include any insurance recoveries the company may receive in the future. Considering the hurricane impact, we had good top line growth. Sam reviewed the volume information for the quarter. Our volume in the quarter was adversely impacted by both the hurricane impact and a depressed respiratory season compared to the fourth quarter of 2023. Saint facility net revenue per equivalent admissions increased 2.9% over prior year in line with our expectations. Consistent with our trends all year, payer mix remained strong in the fourth quarter of 2024 with same facility managed care admissions up 9.2% compared to the prior year quarter. While our operations performed well in the quarter, adjusted EBITDA margin declined 60 basis points compared to the prior year quarter. This decline is primarily related to the impact of the hurricanes on our Largo Hospital in Tampa and the North Carolina Division, which had a 100 basis point unfavorable impact on adjusted EBITDA margin in the quarter. Additional expenses related to these hurricanes, including repair costs for our Largo Hospital, drove the increase in other operating expenses as a percent of revenue and half of the supply increase. Adjusted EBITDA on the quarter grew 2.6% compared to the prior year quarter, which reflects the impact of the hurricanes. Diluted earnings per share as adjusted in the fourth quarter grew 5.4% over the prior year quarter, also reflecting the impact of the hurricanes. Let me briefly highlight our full year results for 2024. We had strong pipeline growth of 8.7%, with revenue per equivalent mission up 3.2%, and equivalent missions growing 4.5%. We posted a 10 basis point improvement in adjusted EBITDA margin for the year. Adjusted EBITDA increased 9% over prior year, and diluted earnings per share increased 15.5% over the prior year. We estimate that the lost revenue and additional expenses from the hurricanes adversely impacted full year 2024 by $250 million or 73 cents per diluted share. Our full year incremental net benefit from supplemental payment programs was approximately 400 million with fourth quarter being the lowest incremental net benefit of the year. This is an increase from the 100 to $200 million incremental net benefit we expected largely due to one-time payments and higher than expected program payments in a few states. When we consider the $250 million unfavorable hurricane impact, the prior year 145 million payer settlement, and the incremental net Medicaid supplemental program benefit in the year, we are very pleased with the core operating performance of the company in 2024. Moving to capital allocations. We continue to deploy a balanced strategy of allocating capital for long-term value creation. Cash flow from operations was $2.6 billion in the quarter and $10.5 billion for the year. This represents an 11% increase in operating cash flow in 2024 over a prior year, indicative of great work by our operating and administrative teams. Capital expenditures totaled $1.29 billion in the quarter and $4.9 billion in the year. and we paid $1.7 billion for repurchases of our outstanding shares during the quarter and $6 billion in the year. We paid $165 million in dividends for the quarter and $690 million for the year. Our debt to adjusted EBITDA leverage remains at the low end of our stated guidance range, and we believe we are well positioned from a balance sheet perspective. As a result, we are lowering our targeted leverage ratio from our current three to four times to 2.75 to 3.75 times. We believe this new range fits our profile and our anticipated use of leverage as a company, assuming no significant transactions or extraordinary events. So with that, let me speak to our 2025 guidance for a moment. As noted in our guidance this morning, we are providing full-year 2025 guidance as follows. We expect revenues to range between $72.8 billion and $75.8 billion. We expect net income attributable to HCA Healthcare to range between $5.85 billion and $6.29 billion. We expect adjusted EBITDA to range between $14.3 billion and $15.1 billion. We expect diluted earnings per share to range between $24.05 and $25.85. We expect capital spending to be approximately $5 billion to $5.2 billion. Our guidance assumes a growth in equivalent admissions between 3% and 4%, and net revenue per equivalent admission between 2% and 3%. Regarding the effects of the 2024 hurricanes on our earning guidance for 2025, we expect a year-over-year increase in adjusted EBITDA from the reopening at Largo. and a year-over-year decline in the North Carolina division, as our current assumptions in this market will have lingering effects of Hurricane Helene throughout much of 2025. The increase at Largo and the decline in North Carolina are expected to offset and are not expected to produce a tailwind for us in 2025. Regarding Medicaid supplemental payment programs, as we've said in these past, these programs are complex, variable in timing, and do not fully cover our costs to treat Medicaid patients. Based on current assumptions, when we aggregate the impact of all of our supplemental payment programs, our guidance contemplate the net effect of Medicaid supplemental payment programs to range from being flat to 2024 to a $250 million headwind, driven by one-time payments received in a few states in 2024. The new Tennessee program is considered in this range. We expect full year margins to be consistent with 2024 and cash flow from operations to range from 10.75 billion to 11.25 billion. As noted in our release this morning, our board of directors has authorized a new $10 billion share repurchase program, and we anticipate completing a significant portion in 2025, subject to market conditions and other factors. In addition, our board declared an increase in our quarterly dividend, from 66 cents to 72 cents per share. And with that, I will turn the call over to Frank for questions.