<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report February 13, 1998
(Date of Earliest Event Reported)
COLUMBIA/HCA HEALTHCARE CORPORATION
(Exact name of Registrant as specified in its Charter)
DELAWARE
(State of Incorporation)
001-11239 75-2497104
(Commission (I.R.S. Employer
File Number) Identification No.)
One Park Plaza, Nashville, Tennessee 37203
(Address of principal executive offices) (Zip Code)
(615) 344-9551
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
On February 13, 1998, Columbia/HCA Healthcare Corporation (the
"Company") announced final results for the fourth quarter and twelve months
ended December 31, 1997. Consistent with a previous release, the Company
announced weaker than expected financial results and significant restructuring
and certain other charges in the fourth quarter. A copy of the earnings release
dated February 13, 1998 is attached as Exhibit 20 and incorporated herein by
reference.
Separately, on February 6, 1998, Moody's Investors Service
downgraded the senior debt ratings of the Company to Ba2 from Baa2 and lowered
the long term debt ratings of certain of the Company's subsidiaries. Moody's
also lowered the Company's commercial paper rating to Not-Prime from Prime-3. On
February 9, 1998, Standard & Poor's affirmed its ratings of BBB (senior debt),
BBB- (subordinated debt) and A-3 (commercial paper) on the Company and
affiliated companies. On February 10, 1998, Fitch Investors Service downgraded
the Company's senior debt to BBB- from BBB+ and lowered the rating on the
Company's commercial paper programs to F3 from F2.
ITEM 7. EXHIBIT
Exhibit 20 Copy of press release dated February 13, 1998 relating
to fourth quarter and 1997 results.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
COLUMBIA/HCA HEALTHCARE CORPORATION
/s/ JOHN M. FRANCK II
- -----------------------------------------
John M. Franck II
Corporate Secretary
DATED: February 19, 1998
<PAGE>
EXHIBIT 20
COLUMBIA/HCA NEWS
Healthcare Corporation
FOR IMMEDIATE RELEASE
INVESTOR CONTACT: MEDIA CONTACT:
Mark Kimbrough 615/344-2688 Jeff Prescott 615/344-5708
COLUMBIA/HCA REPORTS FOURTH QUARTER AND 1997 RESULTS
In Line with February 6, 1998 Pre-Announcement
NASHVILLE,TN., FEBRUARY 13, 1998 --- Columbia/HCA Healthcare Corporation,
(NYSE:COL) today announced final results for the fourth quarter and twelve
months ended December 31, 1997. On February 6, 1998, the Company announced that
it anticipated reporting weaker than expected financial results in the fourth
quarter and that it anticipated recording significant restructuring and certain
other charges in the fourth quarter.
The Company recorded after-tax charges during the fourth quarter of $732
million of impairment charges related to assets being closed or divested, $55
million of costs associated with ongoing government investigations and severance
cost and $56 million of charges related to a change in accounting principles.
Approximately $443 million of the asset impairment charges relates to
anticipated sales of the Company's home health operations and certain business
units acquired from Value Health in 1997. The change in accounting policy
relates to the Company's method of accounting for start-up costs and resulted in
a write-off of the costs capitalized as of January 1, 1997.
Revenues from continuing operations for the fourth quarter ended December
31, 1997 totaled $4.4 billion compared to $4.8 billion in the fourth quarter of
1996. Before income or loss from discontinued operations and restructuring and
asset impairment charges, net loss from continuing operations totaled $404
million, or $0.63 per diluted share for the fourth quarter of 1997 compared to
income of $398 million, or $0.58 per diluted share in the fourth quarter of
1996. After income or loss from discontinued operations and restructuring and
asset impairment charges, net loss for the fourth quarter totaled $1.293
billion or $2.01 per diluted share versus net income of $414 million or $0.61
per diluted share from the same period last year.
1
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Revenues from continuing operations for the twelve months ended December
31, 1997 totaled $18.82 billion compared with $18.79 billion for 1996. Before
income from discontinued operations and restructuring and asset impairment
charges, income from continuing operations totaled $565 million or $0.85 per
diluted share compared to $1.5 billion or $2.15 per diluted share in 1996.
After income or loss from discontinued operations and restructuring and asset
impairment charges, net loss totaled $305 million or $0.46 per diluted share in
1997 compared to net income of $1.5 billion or $2.22 per diluted share in 1996.
During the fourth quarter, the Company experienced a 9% (approximately $440
million) decline in revenues from prior year. The decline was attributable to
several factors, including divestitures of facilities (approximately $90
million); recording 1997 Medicare cost reports and delays experienced in
obtaining settlements of cost reports filed in prior years (approximately $140
million) and decreases in Medicare rates of reimbursement mandated by the
Balanced Budget Act of 1997 which became effective October 1, 1997
(approximately $50 million). Also contributing to the decline were continued
increases in discounts from managed care payers and changes in estimates of
reserves for discounts from managed care payers and contractual allowances from
government payers. During the quarter, managed care as a percent of total
admissions increased to 37% compared to 33% during the fourth quarter of 1996.
Also during the quarter, costs incurred were higher than anticipated
primarily due to increases in salaries, wages and benefits, other operating
expenses and bad debt expense.
During the quarter, same facility admissions increased by 0.6 percent,
adjusted admissions, which reflect both inpatient and outpatient volumes,
increased by 2.1 percent. Patient satisfaction levels rose slightly in the
fourth quarter for the first time in two years. For the year, same facility
admissions increased by 1.7% and adjusted admissions increased by 3.5%.
At December 31, 1997, the Company's balance sheet reflected total debt of
approximately $9.4 billion, stockholders equity of $7.3 billion and total assets
of $22.0 billion. Capital expenditures in 1997 totaled $1.4 billion, excluding
costs associated with assets classified as discontinued operations of
approximately $1.1 billion and other acquisitions of approximately $411 million.
"Our new leadership team has continued to focus on creating positive
changes in Columbia/HCA's operations, corporate culture and organization. We
have put in place an organization focused on local community based healthcare,
developed a new ethics and compliance program and streamlined our management
structure to enhance our commitment to providing quality patient care," stated
Thomas F. Frist, Jr. M.D., Chairman and Chief Executive Officer. "Regarding the
investigation, we are having an ongoing dialogue with the government. It is not
appropriate to comment on these discussions."
2
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Jack O. Bovender, President and Chief Operating Officer, said, "While we
realize that 1998 will continue to present challenges, we expect the Company to
experience significant benefits from the internal reorganization and
restructuring plan which became effective January 1, 1998. We are confident that
we have taken significant steps forward in our efforts to reposition the Company
for 1998 and future years."
Columbia/HCA's annual stockholders meeting will be held on May 14, 1998 in
Nashville, Tennessee, for shareholders of record as of March 23, 1998.
# # #
All references to "Company or Columbia/HCA" as used throughout this document
refer to Columbia/HCA Healthcare Corporation and its affiliates.
Certain of the above information is forward-looking and as such, only reflects
the company's best assessment at this time. Investors are cautioned that
forward-looking statements involve risks and uncertainty, that actual results
may differ materially from such statements, and that investors should not place
undue reliance on such statements. For a discussion of factors that may affect
actual results, investors should refer to the Company's filings with the
Securities and Exchange Commission.
3
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
CONSOLIDATED OPERATING RESULTS SUMMARY
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
FOR THE TWELVE MONTHS
FOURTH QUARTER ENDED DECEMBER 31,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues ...................................................................... $ 4,374 $ 4,817 $ 18,819 $ 18,786
Operating income (a) .......................................................... $ (175) $ 1,125 $ 2,851 $ 4,214
Net income (loss):
Income (loss) from continuing operations excluding the write-down of
long-lived assets and restructuring and investigation related costs .. $ (404) $ 398 $ 565 $ 1,461
Write-down of long-lived assets (net of tax) ............................. (290) - (290) -
Restructuring and investigation related costs (net of tax) .............. (55) - (93) -
Discontinued operations:
Income (loss) from operations of discontinued businesses (net of tax) (45) 16 12 44
Estimated loss on disposal of discontinued businesses (net of tax) .. (443) - (443) -
Cumulative effect of accounting change (net of tax) ...................... (56) - (56) -
-------------------- --------------------
Net income (loss) ........................................................ $ (1,293) $ 414 $ (305) $ 1,505
==================== ====================
Basic earnings (loss) per share:
Income (loss) from continuing operations excluding the write-down of
long-lived assets and restructuring and investigation related costs .. $ (0.63) $ 0.58 $ 0.86 $ 2.17
Write-down of long-lived assets (net of tax) ............................. (0.45) - (0.44) -
Restructuring and investigation related costs (net of tax) ............... (0.08) - (0.14) -
Discontinued operations:
Income (loss) from operations of discontinued businesses (net of tax) (0.07) 0.03 0.02 0.07
Estimated loss on disposal of discontinued businesses (net of tax) .. (0.69) - (0.67) -
Cumulative effect of accounting change (net of tax) ...................... (0.09) - (0.09) -
-------------------- --------------------
Net income (loss) ........................................................ $ (2.01) $ 0.61 $ (0.46) $ 2.24
==================== ====================
Shares used in computing basic earnings per share (000) ....................... 644,508 671,330 657,931 670,774
Diluted earnings (loss) per share:
Income (loss) from continuing operations excluding the write-down of
long-lived assets and restructuring and investigation related costs .. $ (0.63) $ 0.58 $ 0.85 $ 2.15
Write-down of long-lived assets (net of tax) ............................. (0.45) - (0.44) -
Restructuring and investigation related costs (net of tax) ............... (0.08) - (0.14) -
Discontinued operations:
Income (loss) from operations of discontinued businesses (net of tax) (0.07) 0.03 0.02 0.07
Estimated loss on disposal of discontinued businesses (net of tax) .. (0.69) - (0.67) -
Cumulative effect of accounting change (net of tax) ...................... (0.09) - (0.08) -
-------------------- ------------- ------
Net income (loss) ........................................................ $ (2.01) $ 0.61 $ (0.46) $ 2.22
==================== ====================
Shares used in computing diluted earnings per share (000) ..................... 644,508 678,102 663,090 677,886
</TABLE>
===============
(a) Income from continuing operations before depreciation and amortization,
interest expense, write-down of long-lived assets, restructuring and
investigation related costs, minority interests and income taxes.
Certain prior year amounts have been reclassified to conform to current
year presentation.
4
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FOURTH QUARTERS AND YEARS ENDED DECEMBER 31, 1997 AND 1996
($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOURTH QUARTER YEAR
---------------------- ----------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues ........................................................ $ 4,374 $ 4,817 $ 18,819 $ 18,786
--------- --------- --------- ---------
Salaries and benefits ........................................... 2,010 1,793 7,631 7,205
Supplies ........................................................ 712 663 2,722 2,655
Other operating expenses ........................................ 1,335 951 4,263 3,689
Provision for doubtful accounts ................................. 444 331 1,420 1,196
Equity in earnings of affiliates ................................ 48 (46) (68) (173)
--------- --------- --------- ---------
4,549 3,692 15,968 14,572
--------- --------- --------- ---------
EBDITA ...................................................... (175) 1,125 2,851 4,214
Depreciation and amortization ................................... 315 301 1,238 1,143
Interest expense ................................................ 132 117 493 488
Write-down of long-lived assets ................................. 442 - 442 -
Restructuring and investigation related costs ................... 76 - 140 -
--------- --------- --------- ---------
Income (loss) from continuing operations before
minority interests and income taxes ........................ (1,140) 707 538 2,583
Minority interests in earnings of consolidated entities ......... 25 39 150 141
--------- --------- --------- ---------
Income (loss) from continuing operations before income taxes .... (1,165) 668 388 2,442
Provision for income taxes (benefits) ........................... (416) 270 206 981
--------- --------- --------- ---------
Income (loss) from continuing operations ........................ (749) 398 182 1,461
Discontinued operations:
Income (loss) from operations of discontinued businesses ... (45) 16 12 44
Estimated loss on disposal of discontinued businesses ...... (443) - (443) -
Cumulative effect of accounting change .......................... (56) - (56) -
--------- --------- --------- ---------
Net income (loss) ........................................... $ (1,293) $ 414 $ (305) $ 1,505
========= ========= ========= =========
Basic earnings (loss) per share:
Income (loss) from continuing operations excluding the
write-down of long-lived assets and restructuring
and investigation related costs ........................ $ (0.63) $ 0.58 $ 0.86 $ 2.17
Write-down of long-lived assets ............................. (0.45) $ - (0.44) $ -
Restructuring and investigation related costs ............... (0.08) - (0.14) -
Discontinued operations:
Income (loss) from operations of discontinued businesses (0.07) 0.03 0.02 0.07
Estimated loss on disposal of discontinued businesses .. (0.69) - (0.67) -
Cumulative effect of accounting change ...................... (0.09) - (0.09) -
--------- --------- --------- ---------
Net income (loss) ........................................... $ (2.01) $ 0.61 $ (0.46) $ 2.24
========= ========= ========= =========
Shares used in computing basic earnings per share (000) ......... 644,508 671,330 657,931 670,774
Diluted earnings (loss) per share:
Income (loss) from continuing operations excluding the
write-down of long-lived assets and restructuring
and investigation related costs ........................ $ (0.63) $ 0.58 $ 0.85 $ 2.15
Write-down of long-lived assets ............................. (0.45) $ - (0.44) $ -
Restructuring and investigation related costs ............... (0.08) - (0.14) -
Discontinued operations:
Income (loss) from operations of discontinued businesses (0.07) 0.03 0.02 0.07
Estimated loss on disposal of discontinued businesses .. (0.69) - (0.67) -
Cumulative effect of accounting change ...................... (0.09) - (0.08) -
--------- --------- --------- ---------
Net income (loss) ........................................... $ (2.01) $ 0.61 $ (0.46) $ 2.22
========= ========= ========= =========
Shares used in computing diluted earnings per share (000) ....... 644,508 678,102 663,090 677,886
</TABLE>
Certain prior year amounts have been reclassified to conform to current year
presentation.
5
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COLUMBIA/HCA HEALTHCARE CORPORATION
OPERATING STATISTICS
FOR THE FOURTH QUARTERS AND YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
FOURTH QUARTER YEAR
------------------------ ------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
CONSOLIDATED HOSPITALS:
- -----------------------
Number of Hospitals 309 319 309 319
Weighted Average Licensed Beds 60,983 62,385 61,096 62,708
Licensed Beds at End of Period 60,643 61,931 60,643 61,931
Admissions 479,000 479,100 1,915,100 1,895,400
Adjusted Admissions 728,600 718,500 2,901,400 2,826,000
Patient Days 2,337,800 2,432,200 9,492,300 9,712,900
Adjusted Patient Days 3,556,100 3,648,300 14,380,800 14,482,000
Emergency Room Visits 1,398,500 1,348,300 5,535,200 5,351,200
Outpatient Revenues as a
Percentage of Patient Revenues 37.3% 36.4% 37.0% 36.0%
Surgery Cases 484,700 493,400 1,976,900 1,945,500
Average Length of Stay 4.9 5.1 5.0 5.1
Occupancy 41.7% 42.4% 42.6% 42.3%
Adjusted Occupancy 63.5% 63.6% 64.5% 63.1%
Revenues (millions) $ 4,374 $ 4,817 $ 18,819 $ 18,786
Revenues Per Adjusted Patient Day $ 1,230 $ 1,321 $ 1,309 $ 1,297
Revenues Per Adjusted Admission $ 6,004 $ 6,705 $ 6,486 $ 6,648
NUMBER OF CONSOLIDATED AND NON-CONSOLIDATED
- -------------------------------------------
(50/50 EQUITY JOINT VENTURES) HOSPITALS:
- ----------------------------------------
Consolidated 309 319
Non-Consolidated (50/50 Equity
Joint Ventures) 27 22
----------- -----------
Total Number of Hospitals 336 341
=========== ===========
</TABLE>
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