<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 October 27, 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 October 27, 1998, Columbia/HCA Healthcare Corporation (the "Company")
announced operating results for the third quarter and nine months ended
September 30, 1998.
Revenues from continuing operations approximated $4.579 billion for the
third quarter ended September 30, 1998, compared to $4.612 billion during the
same quarter last year. Net income from continuing operations, before gains on
sales of facilities, impairment of long-lived assets, restructuring and
investigation related costs, totaled $131 million, or $.20 per diluted share for
the third quarter of 1998, compared to $129 million, or $.20 per diluted share
for the same period of 1997. Net income totaled $146 million, or $.22 per
diluted share for the third quarter of 1998 compared to $97 million, or $.16 per
diluted share in 1997.
Revenues for the nine months ended September 30, 1998 totaled $14.3
billion, compared to $14.4 billion in the first nine months of 1997. Net income
from continuing operations, before gains on sales of facilities, impairment of
long-lived assets, restructuring and investigation related costs, totaled $563
million, or $.87 per diluted share in the first nine months of 1998 compared to
$969 million, or $1.45 per diluted share for the nine months ended September 30,
1997. Net income totaled $421 million, or $.65 per diluted share in 1998,
compared to $932 million, or $1.40 per diluted share in 1997.
ITEM 7. EXHIBIT
Exhibit 20 Copy of press release dated October 27, 1998 relating to
third quarter earnings release.
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: October 28, 1998
<PAGE>
EXHIBIT 20
[LETTERHEAD OF COLUMBIA/HCA APPEARS HERE]
NEWS
================================================================================
FOR IMMEDIATE RELEASE
INVESTOR CONTACT: MEDIA CONTACT:
Mark Kimbrough 615-344-2688 Jeff Prescott 615-344-5708
COLUMBIA/HCA REPORTS THIRD QUARTER EARNINGS
NET INCOME PER SHARE OF $.22 IN 1998 VS. $.16 IN 1997
EPS FROM CONTINUING OPERATIONS OF $.20 IN 1998 VS. $.20 IN 1997
EXCLUDING NON-RECURRING ITEMS
NASHVILLE, TENN., OCTOBER 27, 1998---Columbia/HCA Healthcare Corporation (NYSE:
COL) today announced operating results for the third quarter and nine months
ended September 30, 1998.
Revenues from continuing operations approximated $4.579 billion for the
third quarter ended September 30, 1998, compared to $4.612 billion during the
same quarter last year. Net income from continuing operations, before gains on
sales of facilities, impairment of long-lived assets, restructuring and
investigation related costs, totaled $131 million, or $.20 per diluted share for
the third quarter of 1998, compared to $129 million, or $.20 per diluted share
for the same period of 1997. Net income totaled $146 million, or $.22 per
diluted share for the third quarter of 1998 compared to $97 million, or $.16 per
diluted share in 1997.
Revenues for the nine months ended September 30, 1998 totaled $14.3
billion, compared to $14.4 billion in the first nine months of 1997. Net income
from continuing operations, before gains on sales of facilities, impairment of
long-lived assets, restructuring and investigation related costs, totaled $563
million, or $.87 per diluted share in the first nine months of 1998 compared to
$969 million, or $1.45 per diluted share for the nine months ended September 30,
1997. Net income totaled $421 million, or $.65 per diluted share in 1998,
compared to $932 million, or $1.40 per diluted share in 1997.
In August 1998, the Company commenced a $1 billion stock repurchase
program, which is expected to be completed through a series of forward purchase
contracts. Under this program, as of October 27, 1998, approximately 25 million
shares of Columbia/HCA common stock have been purchased for approximately $568
million. Pursuant to the terms of the purchase contracts, the Company delays any
cash payment for shares and such shares remain issued and outstanding until the
contracts are settled.
During the third quarter, the Company sold 17 hospitals, 34 surgery centers
and certain other non-core assets for approximately $1.5 billion, resulting in a
pretax gain of $537 million ($242 million net of tax), or $.38 per diluted
share.
Also, during the third quarter, as part of its strategic business plan, the
Company decided to divest a group of its medical office buildings. The
divestiture is expected to be completed through either sales or the transfer of
the medical office buildings to a joint venture in which the Company anticipates
maintaining a minority ownership interest. The Company expects to receive
proceeds of approximately $300 million, upon completion. The recorded value for
these medical office buildings, along with certain hospitals and other assets
expected to be sold, was reduced to fair value, based upon estimates of sales
values. This resulted in a non-cash, asset impairment charge of approximately
$334 million, pre-tax ($197 million net of tax) or $.31 per diluted share,
during the quarter.
<PAGE>
At September 30, 1998, the Company's balance sheet reflected total debt of
approximately $6.8 billion, stockholders equity of approximately $7.7 billion
and total assets of approximately $20.0 billion. Debt was reduced by
approximately $1.5 billion during the third quarter of 1998. Total debt has
been reduced by approximately $2.6 billion since the beginning of the year. The
Company's debt-to-total capital ratio improved during the third quarter to
approximately 45 percent, compared to 50 percent at June 30, 1998, and 54
percent at December 31, 1997.
Excluding assets held for sale or to be spun to shareholders, same-facility
admissions increased by 1.4 percent compared to the third quarter of 1997.
In August 1998, the Company filed a ruling request with the Internal
Revenue Service for tax-free spin-offs to stockholders of its America and
Pacific groups of hospitals which are currently included in the Company's
continuing operations.
During the third quarter of 1998, the America Group had revenues of $121
million and earnings before management fees, depreciation, interest and taxes of
$16.1 million. Same-facility admissions, for hospitals in the America group
decreased by 1.2 percent compared to the third quarter of 1997.
The Pacific group had revenues of $449 million and earnings before
management fees, depreciation, interest and taxes of $39.1 million in the third
quarter of 1998. Same-facility admissions for hospitals in the Pacific Group
decreased 0.4 percent compared to the third quarter of 1997.
Assets either sold during the quarter or identified as being held for sale
during previous quarters (excluding the previously mentioned assets identified
as impaired during the third quarter, had revenues of $348 million and earnings
before depreciation, interest and taxes of $7.3 million in the third quarter of
1998. The assets sold and held for sale had a negative impact on the Company's
reported revenues, earnings and admissions. Management anticipates that the
assets held for sale will continue to have a negative impact on the Company's
reported results until such time as these sales are completed.
* * *
This press release contains forward-looking statements based on current
management expectations. Numerous factors exist which may cause results to
differ materially from those anticipated in the forward-looking statements.
Many of the factors that will determine the Company's future results are beyond
the ability of the Company to control or predict. These statements are subject
to risks and uncertainties and, therefore, actual results may differ materially.
Readers should not place undue reliance on forward-looking statements, which
reflect management's views only as of the date hereof. The Company undertakes
no obligation to revise or update any forward-looking statements, or to make any
other forward-looking statements, whether as a result of new information, future
events or otherwise. Readers should also carefully review the risk factors and
uncertainties as detailed from time to time in the Company's filings with the
Securities and Exchange Commission.
2
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
CONSOLIDATED OPERATING RESULTS SUMMARY
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
THIRD QUARTER ENDED SEPTEMBER 30,
------------------- -------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues.............................................................................. $4,579 $4,612 $14,261 $ 14,445
Operating income (a).................................................................. $682 $691 $ 2,379 $ 3,026
Net income:
Income from continuing operations, gains on sales of facilities, impairment of
long-lived assets and restructuring of operations and investigation
related costs.................................................................. $131 $129 $563 $969
Gains on sales of facilities (net of tax)......................................... 242 - 242 -
Impairment of long-lived assets (net of tax)...................................... (197) - (197) -
Restructuring of operations and investigation related costs (net of tax).......... (13) (38) (53) (38)
Discontinued operations:
Income (loss) from operations of discontinued businesses (net of tax)......... (17) 6 (61) 57
Loss on disposal of discontinued businesses (net of tax)...................... - - (73) -
Cumulative effect of accounting change (net of tax)............................... - - - (56)
------------------- -------------------
Net income........................................................................ $146 $97 $421 $932
=================== ===================
Diluted earnings per share:
Income from continuing operations, excluding gains on sales of facilities,
impairment of long-lived assets and restructuring of operations and
investigation related costs.................................................... $0.20 $0.20 $0.87 $1.45
Gains on sales of facilities...................................................... 0.38 - 0.38 -
Impairment of long-lived assets................................................... (0.31) - (0.31) -
Restructuring of operations and investigation related costs....................... (0.02) (0.05) (0.08) (0.06)
Discontinued operations:
Income (loss) from operations of discontinued businesses...................... (0.03) 0.01 (0.10) 0.09
Loss on disposal of discontinued businesses................................... - - (0.11) -
Cumulative effect of accounting change............................................ - - - (0.08)
------------------- -------------------
Net income........................................................................ $0.22 $0.16 $0.65 $1.40
=================== ===================
Shares used in computing diluted earnings per share (000)............................. 647,243 657,807 646,734 668,136
</TABLE>
- -----------------------------------
(a) Income from continuing operations before depreciation and amortization,
interest expense,/ gains on sales of facilities, impairment of long-lived
assets, restructuring of operations and investigation related costs,
minority interests and income taxes.
Certain prior year amounts have been reclassified to conform to current
year presentation.
3
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
THIRD QUARTER
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997
------------------ -------------------
AMOUNT RATIO Amount Ratio
------------------ -------------------
<S> <C> <C> <C> <C>
Revenues........................................................ $ 4,579 100.0 % $ 4,612 100.0 %
Salaries and benefits........................................... 1,900 41.5 1,895 41.1
Supplies........................................................ 730 15.9 653 14.2
Other operating expenses........................................ 914 20.0 1,023 22.1
Provision for doubtful accounts................................. 369 8.1 369 8.0
Equity in earnings of affiliates................................ (16) (0.4) (19) (0.4)
------------------ -------------------
3,897 85.1 3,921 85.0
------------------ -------------------
EBDITA...................................................... 682 14.9 691 15.0
Depreciation and amortization................................... 312 6.7 319 6.9
Interest expense................................................ 142 3.1 125 2.7
Gains on sales of facilities.................................... (537) (11.7) - -
Impairment of long-lived assets................................. 334 7.3 - -
Restructuring of operations and investigation related costs..... 21 0.5 64 1.4
------------------ -------------------
Income from continuing operations before minority interests
and income taxes............................................. 410 9.0 183 4.0
Minority interests in earnings of consolidated entities......... 16 0.4 33 0.7
------------------ -------------------
Income from continuing operations before income taxes........... 394 8.6 150 3.3
Provision for income taxes...................................... 231 5.0 59 1.3
------------------ -------------------
Income from continuing operations............................... 163 3.6 91 2.0
Income (loss) from operations of discontinued
businesses (net of tax)...................................... (17) (0.4) 6 0.1
------------------ -------------------
Net income................................................... $ 146 3.2 $ 97 2.1
================== ===================
Diluted earnings per share:
Income from continuing operations, excluding gains on
sales of facilities, impairment of long-lived assets and
restructuring of operations and investigation
related costs............................................ $ 0.20 $ 0.20
Gains on sales of facilities................................. 0.38 -
Impairment of long-lived assets.............................. (0.31) -
Restructuring of operations and investigation related costs.. (0.02) (0.05)
Income (loss) from operations of discontinued businesses..... (0.03) 0.01
---------- -----------
Net income................................................ $ 0.22 $ 0.16
========== ===========
Shares used in computing diluted earnings per share (000)....... 647,243 657,807
</TABLE>
Certain prior year amounts have been reclassified to conform to current year
presentation.
4
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997
------------------ -------------------
AMOUNT RATIO AMOUNT RATIO
------------------ -------------------
<S> <C> <C> <C> <C>
Revenues........................................................... $ 14,261 100.0 % $ 14,445 100.0 %
Salaries and benefits.............................................. 5,911 41.4 5,621 38.9
Supplies........................................................... 2,195 15.4 2,010 13.9
Other operating expenses........................................... 2,815 19.7 2,928 20.2
Provision for doubtful accounts.................................... 1,052 7.4 976 6.8
Equity in earnings of affiliates................................... (91) (0.6) (116) (0.8)
------------------ -------------------
11,882 83.3 11,419 79.0
------------------ -------------------
EBDITA......................................................... 2,379 16.7 3,026 21.0
Depreciation and amortization...................................... 932 6.6 923 6.5
Interest expense................................................... 440 3.1 361 2.5
Gains on sales of facilities....................................... (537) (3.8) - -
Impairment of long-lived assets.................................... 334 2.3 - -
Restructuring of operations and investigation related costs........ 90 0.6 64 0.4
------------------ -------------------
Income from continuing operations before minority interests
and income taxes................................................ 1,120 7.9 1,678 11.6
Minority interests in earnings of consolidated entities............ 54 0.4 125 0.8
------------------ -------------------
Income from continuing operations before income taxes.............. 1,066 7.5 1,553 10.8
Provision for income taxes......................................... 511 3.6 622 4.4
------------------ -------------------
Income from continuing operations.................................. 555 3.9 931 6.4
Discontinued operations:
Income (loss) from operations of discontinued
businesses (net of tax)...................................... (61) (0.4) 57 0.4
Loss on disposal of discontinued businesses (net of tax)........ (73) (0.5) - -
Cumulative effect of accounting change (net of tax)................ - - (56) (0.4)
------------------ -------------------
Net income...................................................... $ 421 3.0 $ 932 6.4
================== ===================
Diluted earnings per share:
Income from continuing operations, excluding gains on sales
of facilities, impaired of long-lived assets and
restructuring of operations and investigation related
costs....................................................... $ 0.87 $ 1.45
Gains on sales of facilities.................................... 0.38 -
Impairment of long-lived assets................................. (0.31) -
Restructuring of operations and investigation related costs..... (0.08) (0.06)
Discontinued operations:
Income (loss) from operations of discontinued businesses..... (0.10) 0.09
Loss on disposal of discontinued businesses.................. (0.11) -
Cumulative effect of accounting change.......................... - (0.08)
---------- -----------
Net income................................................................. $ 0.65 $ 1.40
========== ===========
Shares used in computing diluted earnings per share (000)..................... 646,734 668,136
</TABLE>
Certain prior year amounts have been reclassified to conform to current year
presentation.
5
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30, DECEMBER 31,
1998 1998 1997
--------------- ---------- ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................ $175 $25 $110
Accounts receivable, net................................................. 2,357 2,427 2,522
Other.................................................................... 1,565 1,594 1,791
--------------- ---------- ------------
Total current assets............................................... 4,097 4,046 4,423
Property and equipment, at cost............................................... 16,006 16,814 16,254
Accumulated depreciation...................................................... (6,280) (6,442) (6,024)
--------------- ---------- ------------
9,726 10,372 10,230
Investments of insurance subsidiary........................................... 1,559 1,508 1,422
Investments in and advances to affiliates..................................... 1,155 1,371 1,329
Intangible assets, net of accumulated amortization............................ 3,044 3,405 3,521
Net assets of discontinued operations......................................... 77 141 841
Other......................................................................... 350 205 236
--------------- ---------- ------------
$20,008 $21,048 $22,002
=============== ========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................................... $745 $727 $929
Other current liabilities................................................ 1,977 1,623 1,712
Long-term debt due within one year....................................... 1,471 2,669 132
--------------- ---------- ------------
Total current liabilities.......................................... 4,193 5,019 2,773
Long term debt................................................................ 5,371 5,693 9,276
Professional liability risks, deferred taxes and
other liabilities....................................................... 1,910 1,926 1,867
Minority interests in equity of consolidated entities......................... 829 830 836
Stockholders' equity.......................................................... 7,705 7,580 7,250
--------------- ---------- ------------
$20,008 $21,048 $22,002
=============== ========== ============
Current ratio................................................................. 0.98 0.81 1.59
Ratio of debt to debt plus common and minority equity......................... 44.5% 49.9% 53.8%
</TABLE>
6
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
OPERATING STATISTICS
FOR THE THIRD QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
THIRD QUARTER ENDED SEPTEMBER 30,
---------------------- ------------------------
1998 1997 1998 1997
---------- --------- ----------- ----------
CONSOLIDATED HOSPITALS:
- ----------------------
<S> <C> <C> <C> <C>
Number of Hospitals 294 314 294 314
Weighted Average Licensed Beds 59,396 60,981 60,286 61,134
Licensed Beds at End of Period 57,521 61,071 57,521 61,071
Admissions 458,800 461,700 1,440,800 1,436,100
Equivalent Admissions 703,800 711,300 2,191,500 2,172,800
Patient Days 2,260,700 2,239,600 7,170,800 7,154,500
Equivalent Patient Days 3,468,000 3,452,400 10,906,800 10,824,700
Emergency Room Visits 1,400,400 1,393,800 4,228,100 4,136,700
Outpatient Revenues as a Percentage of Patient 37.9% 38.1% 37.3% 36.9%
Revenues
Average Length of Stay 4.9 4.9 5.0 5.0
Occupancy 41.4% 39.9% 43.6% 42.9%
Equivalent Occupancy 63.5% 61.4% 66.3% 64.9%
NUMBER OF CONSOLIDATED AND NON-CONSOLIDATED
- -------------------------------------------
(50/50 EQUITY JOINT VENTURES) HOSPITALS:
- ------------------------------------------
Consolidated 294 314
Non-Consolidated (50/50 Equity Joint Ventures) 24 27
------------ ------
Total Number of Hospitals 318 341
============ ======
=================================================================================================================================
<CAPTION>
THIRD QUARTER 1998 GROUP RESULTS
CORE ASSETS PACIFIC AMERICA ASSETS SOLD OR
HELD FOR SALE
<S> <C> <C> <C> <C>
REVENUES $3.7 Billion $449 Million $121 Million $348 Million
.EBDITA $619 Million $39.1 Million $16.1 Million $7.3 Million
% MARGIN 17% 9% 13% 2%
SAME-FACILITY ADMISSIONS 1.4% -0.4% -1.2% *-5.5%
</TABLE>
*Includes only those facilities held for sale @ 9/30/98; admissions for
facilities sold and held for sale during the quarter decreased 22%
.EBDITA -before management fees, depreciation, and amortization, interest
expense, gains on sales of facilities, impairment of long-lived assets,
restructuring of operations and investigation related costs, minority interests
and income taxes
Certain prior year amounts have been reclassified to conform to current year
presentation.
7
