Question
HCA is the largest private operator of health care facilities in the world with hundred of facilities in over 20 states. In 2006, private equity
HCA is the largest private operator of health care facilities in the world with hundred of facilities in over 20 states. In 2006, private equity buyers took the company private in a $31.6 billion acquisition. In broad terms how costly do you think financial distress would be to HCA if it began to appear the company might be having difficulty servicing its debt?
HCA INC | |||||
ANNUAL INCOME STATEMENT | |||||
($ MILLIONS, EXCEPT PER SHARE) | |||||
Dec09 | Dec08 | Dec07 | Dec06 | Dec05 | |
Sales | $ 30,052 | $ 28,374 | $ 26,858 | $ 25,477 | $ 24,455 |
Cost of Goods Sold | 24,826 | 24,023 | 22,480 | 21,448 | 20,391 |
Gross Profit | 5,226 | 4,351 | 4,378 | 4,029 | 4,064 |
Depreciation | 1,425 | 1,416 | 1,426 | 1,391 | 1,374 |
Operating Profit | 3,801 | 2,935 | 2,952 | 2,638 | 2,690 |
Interest Expense | 1,987 | 2,021 | 2,215 | 955 | 655 |
Non-Operating Income/Expense | 188 | 256 | 661 | 179 | 412 |
Pretax Income | 2,002 | 1,170 | 1,398 | 1,862 | 2,327 |
Total Income Taxes | 627 | 268 | 316 | 625 | 725 |
Minority Interest | 321 | 229 | 208 | 201 | 178 |
Net Income | $ 1,054 | $ 673 | $ 874 | $ 1,036 | $ 1,424 |
ANNUAL BALANCE SHEET | |||||
ASSETS | Dec09 | Dec08 | Dec07 | Dec06 | Dec05 |
Cash & Equivalents | $ 312 | $ 465 | $ 393 | $ 634 | $ 336 |
Net Receivables | 3,692 | 3,780 | 3,895 | 3,705 | 3,332 |
Inventories | 802 | 737 | 710 | 669 | 616 |
Other Current Assets | 1,771 | 1,319 | 1,207 | 1,070 | 931 |
Total Current Assets | 6,577 | 6,301 | 6,205 | 6,078 | 5,215 |
Gross Plant, Property & Equipment | 24,669 | 23,714 | 22,579 | 21,907 | 20,818 |
Accumulated Depreciation | 13,242 | 12,185 | 11,137 | 10,238 | 9,439 |
Net Plant, Property & Equipment | 11,427 | 11,529 | 11,442 | 11,669 | 11,379 |
Investments at Equity | 853 | 842 | 688 | 679 | 627 |
Other Investments | 1,166 | 1,422 | 1,669 | 1,886 | 2,134 |
Intangibles | 2,577 | 2,580 | 2,629 | 2,601 | 2,626 |
Deferred Charges | 418 | 458 | 539 | 614 | 85 |
Other Assets | 1,113 | 1,148 | 853 | 148 | 159 |
TOTAL ASSETS | 24,131 | 24,280 | 24,025 | 23,675 | 22,225 |
LIABILITIES | |||||
Long Term Debt Due In One Year | 846 | 404 | 308 | 293 | 586 |
Accounts Payable | 1,460 | 1,370 | 1,370 | 1,415 | 1,484 |
Taxes Payable | - | 224 | 190 | - | - |
Accrued Expenses | 2,007 | 1,912 | 1,981 | 1,868 | 1,825 |
Total Current Liabilities | 4,313 | 3,910 | 3,849 | 3,576 | 3,895 |
Long Term Debt | 24,824 | 26,585 | 27,000 | 28,115 | 9,889 |
Deferred Taxes | - | - | - | 390 | 830 |
Minority Interest | 1,008 | 995 | 938 | 907 | 828 |
Other Liabilities | 2,825 | 2,890 | 2,612 | 1,936 | 1,920 |
TOTAL LIABILITIES | 32,970 | 34,380 | 34,399 | 34,924 | 17,362 |
Preferred Stock | 147 | 155 | 164 | 125 | - |
Common Stock | 1 | 1 | 1 | 1 | 4 |
Capital Surplus | 226 | 165 | 112 | - | - |
Retained Earnings | (9,213) | (10,421) | (10,651) | (11,375) | 4,859 |
Common Equity | (8,986) | (10,255) | (10,538) | (11,374) | 4,863 |
TOTAL EQUITY | (8,839) | (10,100) | (10,374) | (11,249) | 4,863 |
TOTAL LIABILITIES & EQUITY | $ 24,131 | $ 24,280 | $ 24,025 | $ 23,675 | $ 22,225 |
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