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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-11239

HCA Healthcare, Inc.

(Exact name of registrant as specified in its charter)

Delaware | 27-3865930
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer 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)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Voting common stock, $.01 par value | HCA | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☒ | Accelerated filer | ☐
Non-accelerated filer | ☐ | Smaller reporting company | ☐
Emerging growth company | ☐ |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Class of Common Stock | Outstanding at October 24, 2022
Voting common stock, $.01 par value | 282,716,700 shares

Form 10-Q

September 30, 2022

|  | Page of Form 10-Q
Part I. | Financial Information |
Item 1. | Financial Statements (Unaudited): |
| Condensed Consolidated Income Statements — for the quarters and nine months ended September 30, 2022 and 2021 | 3
| Condensed Consolidated Comprehensive Income Statements — for the quarters and nine months ended September 30, 2022 and 2021 | 4
| Condensed Consolidated Balance Sheets — September 30, 2022 and December 31, 2021 | 5
| Condensed Consolidated Statements of Stockholders’ Equity (Deficit) — for the quarters and nine months ended September 30, 2022 and 2021 | 6
| Condensed Consolidated Statements of Cash Flows — for the nine months ended September 30, 2022 and 2021 | 7
| Notes to Condensed Consolidated Financial Statements | 8
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 31
Item 4. | Controls and Procedures | 31
Part II. | Other Information |
Item 1. | Legal Proceedings | 31
Item 1A. | Risk Factors | 31
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 32
Item 6. | Exhibits | 33
Signatures | 34

2

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS

FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Unaudited

(Dollars in millions, except per share amounts)

|  | Quarter |  |  | Nine Months |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Revenues |  | $ | 14,971 |  |  | $ | 15,276 |  |  | $ | 44,736 |  |  | $ | 43,688 |
Salaries and benefits |  |  | 6,899 |  |  |  | 7,094 |  |  |  | 20,630 |  |  |  | 19,780 |
Supplies |  |  | 2,320 |  |  |  | 2,463 |  |  |  | 6,942 |  |  |  | 7,067 |
Other operating expenses |  |  | 2,860 |  |  |  | 2,530 |  |  |  | 8,305 |  |  |  | 7,424 |
Equity in earnings of affiliates |  |  | (10 | ) |  |  | (35 | ) |  |  | (29 | ) |  |  | (78 | )
Depreciation and amortization |  |  | 749 |  |  |  | 716 |  |  |  | 2,219 |  |  |  | 2,125 |
Interest expense |  |  | 446 |  |  |  | 398 |  |  |  | 1,288 |  |  |  | 1,168 |
Losses (gains) on sales of facilities |  |  | 3 |  |  |  | (1,047 | ) |  |  | 25 |  |  |  | (1,057 | )
Losses on retirement of debt |  |  | — |  |  |  | — |  |  |  | 78 |  |  |  | 12 |
|  |  | 13,267 |  |  |  | 12,119 |  |  |  | 39,458 |  |  |  | 36,441 |
Income before income taxes |  |  | 1,704 |  |  |  | 3,157 |  |  |  | 5,278 |  |  |  | 7,247 |
Provision for income taxes |  |  | 360 |  |  |  | 685 |  |  |  | 1,090 |  |  |  | 1,531 |
Net income |  |  | 1,344 |  |  |  | 2,472 |  |  |  | 4,188 |  |  |  | 5,716 |
Net income attributable to noncontrolling interests |  |  | 210 |  |  |  | 203 |  |  |  | 626 |  |  |  | 574 |
Net income attributable to HCA Healthcare, Inc. |  | $ | 1,134 |  |  | $ | 2,269 |  |  | $ | 3,562 |  |  | $ | 5,142 |
Per share data: |  |  |  |  |  |  |  |  |  |  |  |
Basic earnings |  | $ | 3.97 |  |  | $ | 7.13 |  |  | $ | 12.13 |  |  | $ | 15.67 |
Diluted earnings |  | $ | 3.91 |  |  | $ | 7.00 |  |  | $ | 11.97 |  |  | $ | 15.43 |
Shares used in earnings per share calculations (in millions): |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 285.958 |  |  |  | 318.072 |  |  |  | 293.583 |  |  |  | 328.048 |
Diluted |  |  | 289.852 |  |  |  | 324.029 |  |  |  | 297.702 |  |  |  | 333.248 |

The accompanying notes are an integral part of the condensed consolidated financial statements.

3

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Unaudited

(Dollars in millions)

|  | Quarter |  |  | Nine Months |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Net income |  | $ | 1,344 |  |  | $ | 2,472 |  |  | $ | 4,188 |  |  | $ | 5,716 |
Other comprehensive (loss) income before taxes: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation |  |  | (76 | ) |  |  | (31 | ) |  |  | (181 | ) |  |  | (20 | )
Unrealized losses on available-for-sale securities |  |  | (16 | ) |  |  | (3 | ) |  |  | (58 | ) |  |  | (12 | )
Losses included in other operating expenses |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |
|  |  | (16 | ) |  |  | (3 | ) |  |  | (57 | ) |  |  | (12 | )
Defined benefit plans |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Pension costs included in salaries and benefits |  |  | 2 |  |  |  | 7 |  |  |  | 7 |  |  |  | 21 |
|  |  | 2 |  |  |  | 7 |  |  |  | 7 |  |  |  | 21 |
Change in fair value of derivative financial instruments |  |  | 1 |  |  |  | (1 | ) |  |  | 6 |  |  |  | (1 | )
Interest costs included in interest expense |  |  | — |  |  |  | 10 |  |  |  | 4 |  |  |  | 28 |
|  |  | 1 |  |  |  | 9 |  |  |  | 10 |  |  |  | 27 |
Other comprehensive (loss) income before taxes |  |  | (89 | ) |  |  | (18 | ) |  |  | (221 | ) |  |  | 16 |
Income taxes (benefits) related to other comprehensive income items |  |  | (12 | ) |  |  | (1 | ) |  |  | (33 | ) |  |  | 6 |
Other comprehensive (loss) income |  |  | (77 | ) |  |  | (17 | ) |  |  | (188 | ) |  |  | 10 |
Comprehensive income |  |  | 1,267 |  |  |  | 2,455 |  |  |  | 4,000 |  |  |  | 5,726 |
Comprehensive income attributable to noncontrolling interests |  |  | 210 |  |  |  | 203 |  |  |  | 626 |  |  |  | 574 |
Comprehensive income attributable to HCA Healthcare, Inc. |  | $ | 1,057 |  |  | $ | 2,252 |  |  | $ | 3,374 |  |  | $ | 5,152 |

The accompanying notes are an integral part of the condensed consolidated financial statements.

4

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(Dollars in millions)

|  | September 30, 2022 |  |  | December 31, 2021 |
ASSETS |  |  |  |  |  |
Current assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 999 |  |  | $ | 1,451 |
Accounts receivable |  |  | 8,552 |  |  |  | 8,095 |
Inventories |  |  | 2,009 |  |  |  | 1,986 |
Other |  |  | 1,921 |  |  |  | 2,010 |
|  |  | 13,481 |  |  |  | 13,542 |
Property and equipment, at cost |  |  | 53,730 |  |  |  | 51,350 |
Accumulated depreciation |  |  | (28,752 | ) |  |  | (27,287 | )
|  |  | 24,978 |  |  |  | 24,063 |
Investments of insurance subsidiaries |  |  | 372 |  |  |  | 438 |
Investments in and advances to affiliates |  |  | 444 |  |  |  | 448 |
Goodwill and other intangible assets |  |  | 9,651 |  |  |  | 9,540 |
Right-of-use operating lease assets |  |  | 2,097 |  |  |  | 2,113 |
Other |  |  | 461 |  |  |  | 598 |
|  | $ | 51,484 |  |  | $ | 50,742 |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |
Accounts payable |  | $ | 4,161 |  |  | $ | 4,111 |
Accrued salaries |  |  | 1,625 |  |  |  | 1,912 |
Other accrued expenses |  |  | 3,780 |  |  |  | 3,322 |
Long-term debt due within one year |  |  | 218 |  |  |  | 237 |
|  |  | 9,784 |  |  |  | 9,582 |
Long-term debt, less debt issuance costs and discounts of $309 and $248 |  |  | 37,492 |  |  |  | 34,342 |
Professional liability risks |  |  | 1,510 |  |  |  | 1,514 |
Right-of-use operating lease obligations |  |  | 1,762 |  |  |  | 1,755 |
Income taxes and other liabilities |  |  | 1,714 |  |  |  | 2,060 |
Stockholders’ equity (deficit): |  |  |  |  |  |
Common stock $0.01 par; authorized 1,800,000,000 shares; outstanding 283,903,500 shares — 2022 and 305,476,800 shares — 2021 |  |  | 3 |  |  |  | 3 |
Accumulated other comprehensive loss |  |  | (592 | ) |  |  | (404 | )
Retained deficit |  |  | (2,781 | ) |  |  | (532 | )
Stockholders’ deficit attributable to HCA Healthcare, Inc. |  |  | (3,370 | ) |  |  | (933 | )
Noncontrolling interests |  |  | 2,592 |  |  |  | 2,422 |
|  |  | (778 | ) |  |  | 1,489 |
|  | $ | 51,484 |  |  | $ | 50,742 |

The accompanying notes are an integral part of the condensed consolidated financial statements.

5

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Unaudited

(Dollars in millions)

|  | Equity (Deficit) Attributable to HCA Healthcare, Inc. |  |  |  |  |  |  |
|  |  |  |  |  |  |  | Capital |  |  | Accumulated |  |  |  |  |  | Equity |  |  |  |
|  | Common Stock |  |  | in Excess |  |  | Other |  |  | Retained |  |  | Attributable to |  |  |  |
|  | Shares |  |  | Par |  |  | of Par |  |  | Comprehensive |  |  | Earnings |  |  | Noncontrolling |  |  |  |
|  | (in millions) |  |  | Value |  |  | Value |  |  | Loss |  |  | (Deficit) |  |  | Interests |  |  | Total |
Balances, December 31, 2020 |  |  | 339.426 |  |  | $ | 3 |  |  | $ | 294 |  |  | $ | (502 | ) |  | $ | 777 |  |  | $ | 2,320 |  |  | $ | 2,892 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  | 11 |  |  |  | 1,423 |  |  |  | 157 |  |  |  | 1,591 |
Repurchase of common stock |  |  | (8.477 | ) |  |  |  |  |  | (225 | ) |  |  |  |  |  | (1,302 | ) |  |  |  |  |  | (1,527 | )
Share-based benefit plans |  |  | 2.765 |  |  |  |  |  |  | (75 | ) |  |  |  |  |  |  |  |  |  |  |  | (75 | )
Cash dividends declared ($0.48 per share) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (163 | ) |  |  |  |  |  | (163 | )
Distributions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (234 | ) |  |  | (234 | )
Other |  |  |  |  |  |  |  |  | 6 |  |  |  |  |  |  |  |  |  | (8 | ) |  |  | (2 | )
Balances, March 31, 2021 |  |  | 333.714 |  |  |  | 3 |  |  |  | — |  |  |  | (491 | ) |  |  | 735 |  |  |  | 2,235 |  |  |  | 2,482 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  | 16 |  |  |  | 1,450 |  |  |  | 214 |  |  |  | 1,680 |
Repurchase of common stock |  |  | (11.261 | ) |  |  |  |  |  | (142 | ) |  |  |  |  |  | (2,145 | ) |  |  |  |  |  | (2,287 | )
Share-based benefit plans |  |  | 0.372 |  |  |  |  |  |  | 140 |  |  |  |  |  |  |  |  |  |  |  |  | 140 |
Cash dividends declared ($0.48 per share) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (161 | ) |  |  |  |  |  | (161 | )
Distributions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (123 | ) |  |  | (123 | )
Other |  |  |  |  |  |  |  |  | 2 |  |  |  |  |  |  |  |  |  | 57 |  |  |  | 59 |
Balances, June 30, 2021 |  |  | 322.825 |  |  |  | 3 |  |  |  | — |  |  |  | (475 | ) |  |  | (121 | ) |  |  | 2,383 |  |  |  | 1,790 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  | (17 | ) |  |  | 2,269 |  |  |  | 203 |  |  |  | 2,455 |
Repurchase of common stock |  |  | (9.605 | ) |  |  |  |  |  | (130 | ) |  |  |  |  |  | (2,199 | ) |  |  |  |  |  | (2,329 | )
Share-based benefit plans |  |  | 0.282 |  |  |  |  |  |  | 127 |  |  |  |  |  |  |  |  |  |  |  |  | 127 |
Cash dividends declared ($0.48 per share) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (155 | ) |  |  |  |  |  | (155 | )
Distributions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (144 | ) |  |  | (144 | )
Other |  |  |  |  |  |  |  |  | 3 |  |  |  |  |  |  |  |  |  | 78 |  |  |  | 81 |
Balances, September 30, 2021 |  |  | 313.502 |  |  |  | 3 |  |  |  | — |  |  |  | (492 | ) |  |  | (206 | ) |  |  | 2,520 |  |  |  | 1,825 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  | 88 |  |  |  | 1,814 |  |  |  | 191 |  |  |  | 2,093 |
Repurchase of common stock |  |  | (8.469 | ) |  |  |  |  |  | (81 | ) |  |  |  |  |  | (1,991 | ) |  |  |  |  |  | (2,072 | )
Share-based benefit plans |  |  | 0.444 |  |  |  |  |  |  | 88 |  |  |  |  |  |  |  |  |  |  |  |  | 88 |
Cash dividends declared ($0.48 per share) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (149 | ) |  |  |  |  |  | (149 | )
Distributions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (248 | ) |  |  | (248 | )
Other |  |  |  |  |  |  |  |  | (7 | ) |  |  |  |  |  |  |  |  | (41 | ) |  |  | (48 | )
Balances, December 31, 2021 |  |  | 305.477 |  |  |  | 3 |  |  |  | — |  |  |  | (404 | ) |  |  | (532 | ) |  |  | 2,422 |  |  |  | 1,489 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  | (43 | ) |  |  | 1,273 |  |  |  | 192 |  |  |  | 1,422 |
Repurchase of common stock |  |  | (8.375 | ) |  |  |  |  |  |  |  |  |  |  |  | (2,101 | ) |  |  |  |  |  | (2,101 | )
Share-based benefit plans |  |  | 1.879 |  |  |  |  |  |  |  |  |  |  |  |  | (57 | ) |  |  |  |  |  | (57 | )
Cash dividends declared ($0.56 per share) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (171 | ) |  |  |  |  |  | (171 | )
Distributions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (171 | ) |  |  | (171 | )
Other |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1 | ) |  |  | 4 |  |  |  | 3 |
Balances, March 31, 2022 |  |  | 298.981 |  |  |  | 3 |  |  |  | — |  |  |  | (447 | ) |  |  | (1,589 | ) |  |  | 2,447 |  |  |  | 414 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  | (68 | ) |  |  | 1,155 |  |  |  | 224 |  |  |  | 1,311 |
Repurchase of common stock |  |  | (12.230 | ) |  |  |  |  |  | (111 | ) |  |  |  |  |  | (2,571 | ) |  |  |  |  |  | (2,682 | )
Share-based benefit plans |  |  | 0.253 |  |  |  |  |  |  | 118 |  |  |  |  |  |  |  |  |  |  |  |  | 118 |
Cash dividends declared ($0.56 per share) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (163 | ) |  |  |  |  |  | (163 | )
Distributions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (162 | ) |  |  | (162 | )
Other |  |  |  |  |  |  |  |  | (7 | ) |  |  |  |  |  |  |  |  | 29 |  |  |  | 22 |
Balances, June 30, 2022 |  |  | 287.004 |  |  |  | 3 |  |  |  | — |  |  |  | (515 | ) |  |  | (3,168 | ) |  |  | 2,538 |  |  |  | (1,142 | )
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  | (77 | ) |  |  | 1,134 |  |  |  | 210 |  |  |  | 1,267 |
Repurchase of common stock |  |  | (3.361 | ) |  |  |  |  |  | (113 | ) |  |  |  |  |  | (585 | ) |  |  |  |  |  | (698 | )
Share-based benefit plans |  |  | 0.261 |  |  |  |  |  |  | 116 |  |  |  |  |  |  |  |  |  |  |  |  | 116 |
Cash dividends declared ($0.56 per share) |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (162 | ) |  |  |  |  |  | (162 | )
Distributions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (217 | ) |  |  | (217 | )
Other |  |  |  |  |  |  |  |  | (3 | ) |  |  |  |  |  |  |  |  | 61 |  |  |  | 58 |
Balances, September 30, 2022 |  |  | 283.904 |  |  | $ | 3 |  |  | $ | — |  |  | $ | (592 | ) |  | $ | (2,781 | ) |  | $ | 2,592 |  |  | $ | (778 | )

The accompanying notes are an integral part of the condensed consolidated financial statements.

6

HCA HEALTHCARE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Unaudited

(Dollars in millions)

|  | 2022 |  |  | 2021 |
Cash flows from operating activities: |  |  |  |  |  |
Net income |  | $ | 4,188 |  |  | $ | 5,716 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |
Increase (decrease) in cash from operating assets and liabilities: |  |  |  |  |  |
Accounts receivable |  |  | (487 | ) |  |  | (1,312 | )
Inventories and other assets |  |  | 53 |  |  |  | (333 | )
Accounts payable and accrued expenses |  |  | (644 | ) |  |  | 731 |
Depreciation and amortization |  |  | 2,219 |  |  |  | 2,125 |
Income taxes |  |  | 159 |  |  |  | 185 |
Losses (gains) on sales of facilities |  |  | 25 |  |  |  | (1,057 | )
Losses on retirement of debt |  |  | 78 |  |  |  | 12 |
Amortization of debt issuance costs and discounts |  |  | 22 |  |  |  | 21 |
Share-based compensation |  |  | 258 |  |  |  | 341 |
Other |  |  | 124 |  |  |  | 87 |
Net cash provided by operating activities |  |  | 5,995 |  |  |  | 6,516 |
Cash flows from investing activities: |  |  |  |  |  |
Purchase of property and equipment |  |  | (3,072 | ) |  |  | (2,385 | )
Acquisition of hospitals and health care entities |  |  | (176 | ) |  |  | (488 | )
Sales of hospitals and health care entities |  |  | 652 |  |  |  | 1,980 |
Change in investments |  |  | 10 |  |  |  | (38 | )
Other |  |  | (10 | ) |  |  | 2 |
Net cash used in investing activities |  |  | (2,596 | ) |  |  | (929 | )
Cash flows from financing activities: |  |  |  |  |  |
Issuance of long-term debt |  |  | 5,976 |  |  |  | 4,337 |
Net change in revolving credit facilities |  |  | (230 | ) |  |  | 500 |
Repayment of long-term debt |  |  | (2,774 | ) |  |  | (3,787 | )
Distributions to noncontrolling interests |  |  | (550 | ) |  |  | (501 | )
Payment of debt issuance costs |  |  | (53 | ) |  |  | (38 | )
Payment of dividends |  |  | (497 | ) |  |  | (476 | )
Repurchase of common stock |  |  | (5,481 | ) |  |  | (6,143 | )
Other |  |  | (209 | ) |  |  | (241 | )
Net cash used in financing activities |  |  | (3,818 | ) |  |  | (6,349 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | (33 | ) |  |  | (4 | )
Change in cash and cash equivalents |  |  | (452 | ) |  |  | (766 | )
Cash and cash equivalents at beginning of period |  |  | 1,451 |  |  |  | 1,793 |
Cash and cash equivalents at end of period |  | $ | 999 |  |  | $ | 1,027 |
Interest payments |  | $ | 1,329 |  |  | $ | 1,127 |
Income tax payments, net |  | $ | 931 |  |  | $ | 1,346 |

The accompanying notes are an integral part of the condensed consolidated financial statements.

7

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — BASIS OF PR ESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

HCA Healthcare, Inc. is a holding company whose affiliates own and operate hospitals and related health care entities. The term “affiliates” includes direct and indirect subsidiaries of HCA Healthcare, Inc. and partnerships and joint ventures in which such subsidiaries are partners. At September 30, 2022, these affiliates owned and operated 182 hospitals, 125 freestanding surgery centers, 21 freestanding endoscopy centers and provided extensive outpatient and ancillary services. HCA Healthcare, Inc.’s facilities are located in 20 states and England. The terms “Company,” “HCA,” “we,” “our” or “us,” as used herein and unless otherwise stated or indicated by context, refer to HCA Healthcare, Inc. and its affiliates. The terms “facilities” or “hospitals” refer to entities owned and operated by affiliates of HCA and the term “employees” refers to employees of affiliates of HCA.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal and recurring nature.

The majority of our expenses are “costs of revenues” items. Costs that could be classified as general and administrative would include our corporate office costs, which were $91 million and $87 million for the quarters ended September 30, 2022 and 2021, respectively, and $281 million and $301 million for the nine months ended September 30, 2022 and 2021, respectively. Operating results for the quarter and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. For further information, refer to the consolidated financial statements and footnotes thereto included in our annual report on Form 10-K for the year ended December 31, 2021.

COVID-19

We believe the extent of COVID-19’s impact on our operating results and financial condition has been and could continue to be driven by many factors, most of which are beyond our control and ability to forecast. Because of these uncertainties, we cannot estimate how long or to what extent COVID-19 will impact our operations.

Revenues

Our revenues generally relate to contracts with patients in which our performance obligations are to provide health care services to the patients. Revenues are recorded during the period our obligations to provide health care services are satisfied. Our performance obligations for inpatient services are generally satisfied over periods that average approximately five days, and revenues are recognized based on charges incurred in relation to total expected charges. Our performance obligations for outpatient services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges. Medicare generally pays for inpatient and outpatient services at prospectively determined rates based on clinical, diagnostic and other factors. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.

8

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenues (continued)

Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual adjustments under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record these revenues at the estimated amounts we expect to collect. Patients treated at our hospitals for non-elective care, who have income at or below 400% of the federal poverty level, are eligible for charity care. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues. Our revenues by primary third-party payer classification and other (including uninsured patients) for the quarters and nine months ended September 30, 2022 and 2021 are summarized in the following table (dollars in millions):

|  | Quarter |
|  | 2022 |  |  | Ratio |  |  | 2021 |  |  | Ratio |
Medicare |  | $ | 2,569 |  |  |  | 17.2 | % |  | $ | 2,645 |  |  |  | 17.3 | %
Managed Medicare |  |  | 2,229 |  |  |  | 14.9 |  |  |  | 2,124 |  |  |  | 13.9 |
Medicaid |  |  | 797 |  |  |  | 5.3 |  |  |  | 692 |  |  |  | 4.5 |
Managed Medicaid |  |  | 939 |  |  |  | 6.3 |  |  |  | 813 |  |  |  | 5.3 |
Managed care and insurers |  |  | 7,184 |  |  |  | 47.9 |  |  |  | 7,998 |  |  |  | 52.4 |
International (managed care and insurers) |  |  | 311 |  |  |  | 2.1 |  |  |  | 324 |  |  |  | 2.1 |
Other |  |  | 942 |  |  |  | 6.3 |  |  |  | 680 |  |  |  | 4.5 |
Revenues |  | $ | 14,971 |  |  |  | 100.0 | % |  | $ | 15,276 |  |  |  | 100.0 | %
|  | Nine Months |
|  | 2022 |  |  | Ratio |  |  | 2021 |  |  | Ratio |
Medicare |  | $ | 7,790 |  |  |  | 17.4 | % |  | $ | 7,816 |  |  |  | 17.9 | %
Managed Medicare |  |  | 6,813 |  |  |  | 15.2 |  |  |  | 6,281 |  |  |  | 14.4 |
Medicaid |  |  | 1,987 |  |  |  | 4.4 |  |  |  | 1,722 |  |  |  | 3.9 |
Managed Medicaid |  |  | 3,003 |  |  |  | 6.7 |  |  |  | 2,369 |  |  |  | 5.4 |
Managed care and insurers |  |  | 21,480 |  |  |  | 48.1 |  |  |  | 22,300 |  |  |  | 51.0 |
International (managed care and insurers) |  |  | 992 |  |  |  | 2.2 |  |  |  | 995 |  |  |  | 2.3 |
Other |  |  | 2,671 |  |  |  | 6.0 |  |  |  | 2,205 |  |  |  | 5.1 |
Revenues |  | $ | 44,736 |  |  |  | 100.0 | % |  | $ | 43,688 |  |  |  | 100.0 | %

9

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenues (continued)

To quantify the total impact of the trends related to uninsured patient accounts, we believe it is beneficial to view total uncompensated care, which is comprised of charity care, uninsured discounts and implicit price concessions. A summary of the estimated cost of total uncompensated care for the quarters and nine months ended September 30, 2022 and 2021 follows (dollars in millions):

|  | Quarter |  |  | Nine Months |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation and amortization) |  | $ | 12,828 |  |  | $ | 12,803 |  |  | $ | 38,096 |  |  | $ | 36,396 |
Cost-to-charges ratio (patient care costs as percentage of gross patient charges) |  |  | 11.2 | % |  |  | 11.8 | % |  |  | 11.2 | % |  |  | 11.4 | %
Total uncompensated care |  | $ | 8,050 |  |  | $ | 7,782 |  |  | $ | 23,512 |  |  | $ | 22,299 |
Multiply by the cost-to-charges ratio |  |  | 11.2 | % |  |  | 11.8 | % |  |  | 11.2 | % |  |  | 11.4 | %
Estimated cost of total uncompensated care |  | $ | 901 |  |  | $ | 916 |  |  | $ | 2,633 |  |  | $ | 2,542 |

The total uncompensated care amounts include charity care of $3.206 billion and $3.509 billion, respectively, and the related estimated costs of charity care were $359 million and $413 million, respectively, for the quarters ended September 30, 2022 and 2021. The total uncompensated care amounts include charity care of $10.281 billion and $10.135 billion, respectively, and the related estimated costs of charity care were $1.151 billion and $1.155 billion, respectively, for the nine months ended September 30, 2022 and 2021.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

NOTE 2 — ACQUISITIONS AND DISPOSITIONS

During the nine months ended September 30, 2022, we paid $176 million to acquire nonhospital health care entities. During the nine months ended September 30, 2021, we paid $67 million to acquire two hospital facilities, one in southern Georgia and one in Tennessee, and $91 million to acquire other nonhospital health care entities. We also paid $330 million and assumed certain liabilities to acquire an 80% interest in a venture providing post-acute care services (home health and hospice). Purchase price amounts have been allocated to the related assets acquired and liabilities assumed based upon their respective fair values.

During the nine months ended September 30, 2022, we received proceeds of $38 million and recognized pretax losses of $25 million related to sales of real estate and other health care entity investments. We also received net proceeds of $614 million on September 30, 2022 related to the sale of a controlling interest in a subsidiary of our group purchasing organization, which was effective October 1, 2022. During the nine months ended September 30, 2021, we received proceeds of $860 million and recognized a pretax gain of $655 million related to the sale of four hospital facilities in Georgia (two facilities in northern Georgia and two facilities in southern Georgia). We received proceeds of $647 million on September 30, 2021 related to the sale of a hospital facility in northern Georgia, which sale was effective October 1, 2021. We also received proceeds of $473 million and recognized a pretax gain of $402 million related to sales of other health care entity investments and minor real estate assets.

10

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 3 — INCOME TAXES

Our provisions for income taxes for the quarters ended September 30, 2022 and 2021 were $360 million and $685 million, respectively, and the effective tax rates were 24.1% and 23.2%, respectively. Our provisions for income taxes for the nine months ended September 30, 2022 and 2021 were $1.090 billion and $1.531 billion, respectively, and the effective tax rates were 23.4% and 22.9%, respectively. Our provisions for income taxes included tax benefits related to settlements of employee equity awards of $70 million and $96 million for the nine months ended September 30, 2022 and 2021, respectively.

Our liability for unrecognized tax benefits was $670 million, including accrued interest of $116 million, as of September 30, 2022 ($642 million and $99 million, respectively, as of December 31, 2021). Unrecognized tax benefits of $246 million ($217 million as of December 31, 2021) would affect the effective rate, if recognized.

At September 30, 2022, the Internal Revenue Service was conducting examinations of the Company’s 2016, 2017 and 2018 federal income tax returns and the 2019 return for one affiliated partnership. We are also subject to examination by state and foreign taxing authorities. Depending on the resolution of any federal, state and foreign tax disputes, the completion of examinations by federal, state or foreign taxing authorities, or the expiration of statutes of limitation for specific taxing jurisdictions, we believe it is reasonably possible that our liability for unrecognized tax benefits may significantly increase or decrease within the next 12 months. However, we are currently unable to estimate the range of any possible change.

NOTE 4 — EARNINGS PER SHARE

We compute basic earnings per share using the weighted average number of common shares outstanding. We compute diluted earnings per share using the weighted average number of common shares outstanding, plus the dilutive effect of outstanding equity awards, computed using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share for the quarters and nine months ended September 30, 2022 and 2021 (dollars and shares in millions, except per share amounts):

|  | Quarter |  |  | Nine Months |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Net income attributable to HCA Healthcare, Inc. |  | $ | 1,134 |  |  | $ | 2,269 |  |  | $ | 3,562 |  |  | $ | 5,142 |
Weighted average common shares outstanding |  |  | 285.958 |  |  |  | 318.072 |  |  |  | 293.583 |  |  |  | 328.048 |
Effect of dilutive incremental shares |  |  | 3.894 |  |  |  | 5.957 |  |  |  | 4.119 |  |  |  | 5.200 |
Shares used for diluted earnings per share |  |  | 289.852 |  |  |  | 324.029 |  |  |  | 297.702 |  |  |  | 333.248 |
Earnings per share: |  |  |  |  |  |  |  |  |  |  |  |
Basic earnings |  | $ | 3.97 |  |  | $ | 7.13 |  |  | $ | 12.13 |  |  | $ | 15.67 |
Diluted earnings |  | $ | 3.91 |  |  | $ | 7.00 |  |  | $ | 11.97 |  |  | $ | 15.43 |

NOTE 5 — INVESTMENTS OF INSURANCE SUBSIDIARIES

A summary of our insurance subsidiaries’ investments at September 30, 2022 and December 31, 2021 follows (dollars in millions):

|  | September 30, 2022 |
|  |  |  |  | Unrealized Amounts |  |  |  |
|  | Amortized Cost |  |  | Gains |  |  | Losses |  |  | Fair Value |
Debt securities |  | $ | 410 |  |  | $ | — |  |  | $ | (41 | ) |  | $ | 369 |
Money market funds and other |  |  | 124 |  |  |  | — |  |  |  | — |  |  |  | 124 |
|  | $ | 534 |  |  | $ | — |  |  | $ | (41 | ) |  |  | 493 |
Amounts classified as current assets |  |  |  |  |  |  |  |  |  |  |  | (121 | )
Investment carrying value |  |  |  |  |  |  |  |  |  |  | $ | 372 |

11

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5 — INVESTMENTS OF INSURANCE SUBSIDIARIES (continued)

|  | December 31, 2021 |
|  |  |  |  | Unrealized Amounts |  |  |  |
|  | Amortized Cost |  |  | Gains |  |  | Losses |  |  | Fair Value |
Debt securities |  | $ | 400 |  |  | $ | 18 |  |  | $ | (2 | ) |  | $ | 416 |
Money market funds and other |  |  | 125 |  |  |  | — |  |  |  | — |  |  |  | 125 |
|  | $ | 525 |  |  | $ | 18 |  |  | $ | (2 | ) |  |  | 541 |
Amounts classified as current assets |  |  |  |  |  |  |  |  |  |  |  | (103 | )
Investment carrying value |  |  |  |  |  |  |  |  |  |  | $ | 438 |

At September 30, 2022 and December 31, 2021, the investments in debt securities of our insurance subsidiaries were classified as “available-for-sale.” Changes in unrealized gains and losses that are not credit-related are recorded as adjustments to other comprehensive income (loss).

Scheduled maturities of investments in debt securities at September 30, 2022 were as follows (dollars in millions):

|  | Amortized Cost |  |  | Fair Value |
Due in one year or less |  | $ | 26 |  |  | $ | 26 |
Due after one year through five years |  |  | 127 |  |  |  | 121 |
Due after five years through ten years |  |  | 181 |  |  |  | 155 |
Due after ten years |  |  | 76 |  |  |  | 67 |
|  | $ | 410 |  |  | $ | 369 |

The average expected maturity of the investments in debt securities at September 30, 2022 was 5.8 years, compared to the average scheduled maturity of 8.7 years. Expected and scheduled maturities may differ because the issuers of certain securities have the right to call, prepay or otherwise redeem such obligations prior to their scheduled maturity date.

NOTE 6 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Accounting Standards Codification 820, Fair Value Measurements and Disclosures (“ASC 820”), emphasizes fair value is a market-based measurement, and fair value measurements should be determined based on the assumptions market participants would use in pricing assets or liabilities. ASC 820 utilizes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment.

12

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6 — ASSETS AND LIABILITIES MEASURED AT FAIR VALUE (continued)

Investment Securities

The investments of our insurance subsidiaries are generally classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

Derivative Financial Instrument

We have entered into an interest rate swap agreement to manage our exposure to fluctuations in interest rates. The valuation of this instrument is determined using widely accepted valuation techniques, including a discounted expected cash flow analysis.

The following tables summarize our assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021, aggregated by the level in the fair value hierarchy within which those measurements fall (dollars in millions):

|  | September 30, 2022 |
|  |  |  |  | Fair Value Measurements Using |
|  | Fair Value |  |  | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Investments of insurance subsidiaries: |  |  |  |  |  |  |  |  |  |  |  |
Debt securities |  | $ | 369 |  |  | $ | — |  |  | $ | 369 |  |  | $ | — |
Money market funds and other |  |  | 124 |  |  |  | 124 |  |  |  | — |  |  |  | — |
Investments of insurance subsidiaries |  |  | 493 |  |  |  | 124 |  |  |  | 369 |  |  |  | — |
Less amounts classified as current assets |  |  | (121 | ) |  |  | (115 | ) |  |  | (6 | ) |  |  | — |
|  | $ | 372 |  |  | $ | 9 |  |  | $ | 363 |  |  | $ | — |
Interest rate swap (Other current assets) |  | $ | 2 |  |  | $ | — |  |  | $ | 2 |  |  | $ | — |

|  | December 31, 2021 |
|  |  |  |  | Fair Value Measurements Using |
|  | Fair Value |  |  | Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Investments of insurance subsidiaries: |  |  |  |  |  |  |  |  |  |  |  |
Debt securities |  | $ | 416 |  |  | $ | — |  |  | $ | 416 |  |  | $ | — |
Money market funds and other |  |  | 125 |  |  |  | 125 |  |  |  | — |  |  |  | — |
Investments of insurance subsidiaries |  |  | 541 |  |  |  | 125 |  |  |  | 416 |  |  |  | — |
Less amounts classified as current assets |  |  | (103 | ) |  |  | (103 | ) |  |  | — |  |  |  | — |
|  | $ | 438 |  |  | $ | 22 |  |  | $ | 416 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Interest rate swap (Other accrued expenses) |  | $ | 8 |  |  | $ | — |  |  | $ | 8 |  |  | $ | — |

The estimated fair value of our debt was $34.293 billion and $38.541 billion at September 30, 2022 and December 31, 2021, respectively, compared to carrying amounts, excluding debt issuance costs and discounts, aggregating $38.019 billion and $34.827 billion, respectively. The estimates of fair value are generally based upon the quoted market prices or quoted market prices for similar issues of debt with the same maturities.

13

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 7 — LONG-TERM DEBT

A summary of long-term debt at September 30, 2022 and December 31, 2021, including related interest rates at September 30, 2022, follows (dollars in millions):

| September 30, 2022 |  |  | December 31, 2021 |
Senior secured asset-based revolving credit facility (effective interest rate of 4.1%) | $ | 2,550 |  |  | $ | 2,780 |
Senior secured revolving credit facility |  | — |  |  |  | — |
Senior secured term loan facilities (effective interest rate of 4.3%) |  | 1,900 |  |  |  | 1,960 |
Senior secured notes |  | — |  |  |  | 16,200 |
Other senior secured debt (effective interest rate of 4.1%) |  | 917 |  |  |  | 935 |
Senior secured debt |  | 5,367 |  |  |  | 21,875 |
Senior unsecured notes (effective interest rate of 4.9%) |  | 32,652 |  |  |  | 12,952 |
Debt issuance costs and discounts |  | (309 | ) |  |  | (248 | )
Total debt (average life of 9.9 years, rates averaging 4.8%) |  | 37,710 |  |  |  | 34,579 |
Less amounts due within one year |  | 218 |  |  |  | 237 |
| $ | 37,492 |  |  | $ | 34,342 |

During March 2022, we issued $6.000 billion aggregate principal amount of senior secured notes comprised of (i) $1.000 billion aggregate principal amount of 3 1/8% senior secured notes due 2027, (ii) $500 million aggregate principal amount of 3 3/8% senior secured notes due 2029, (iii) $2.000 billion aggregate principal amount of 3 5/8% senior secured notes due 2032, (iv) $500 million aggregate principal amount of 4 3/8% senior secured notes due 2042 and (v) $2.000 billion aggregate principal amount of 4 5/8% senior secured notes due 2052. During March 2022, we used a portion of the net proceeds to pay down our revolving credit facilities. During the second quarter of 2022, we redeemed all $1.250 billion outstanding aggregate principal amount of our 4.75% senior secured notes due 2023 and all $1.250 billion outstanding aggregate principal amount of our 5.875% senior notes due 2023. The pretax loss on retirement of debt for these two redemptions was $78 million.

During May 2022, Standard & Poor's Rating Services ("S&P") announced it had issued an investment grade rating with respect to the issuer credit rating of HCA Healthcare, Inc. and its subsidiaries. S&P's announcement, in conjunction with the Moody's Investors Service, Inc. upgrade in 2021, permitted the permanent release of the subsidiary guarantees and all collateral securing our senior secured notes. As a result of these releases, the senior secured notes are now classified as senior unsecured notes. The subsidiary guarantees and collateral securing our senior secured credit facilities are not affected.

NOTE 8 — CONTINGENCIES

We operate in a highly regulated and litigious industry. As a result, various lawsuits, claims and legal and regulatory proceedings have been and can be expected to be instituted or asserted against us. We are also subject to claims and suits arising in the ordinary course of business, including claims for personal injuries or wrongful restriction of, or interference with, physicians’ staff privileges. In certain of these actions the claimants may seek punitive damages against us which may not be covered by insurance. We are also subject to claims by various taxing authorities for additional taxes and related interest and penalties. The resolution of any such lawsuits, claims or legal and regulatory proceedings could have a material, adverse effect on our results of operations, financial position or liquidity.

Health care companies are routinely subject to investigations by various governmental agencies. Under the federal False Claims Act (“FCA”), private parties have the right to bring qui tam, or “whistleblower,” suits against companies that submit false claims for payments to, or improperly retain overpayments from, the government. Some states have adopted similar state whistleblower and false claims provisions. Certain of our individual facilities have received, and from time to time, other facilities may receive, government inquiries from, and may be subject to investigation by, federal and state agencies. Depending on whether the underlying conduct in these or future inquiries or investigations could be considered systemic, their resolution could have a material, adverse effect on our results of operations, financial position or liquidity.

14

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 — CONTINGENCIES (continued)

Texas operates a state Medicaid program pursuant to a waiver from the Centers for Medicare & Medicaid Services ("CMS") under Section 1115 of the Social Security Act (“Program”). The Program includes uncompensated-care pools; payments from these pools are intended to defray the uncompensated costs of services provided by our and other hospitals to Medicaid eligible or uninsured individuals. Separately, we and other hospitals provide charity care services in several communities in the state. In 2018, the Civil Division of the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of Texas requested information about whether the Program, as operated in Harris County, complied with the laws and regulations applicable to provider related donations, and the Company cooperated with that request. On May 21, 2019, a qui tam lawsuit asserting violations of the FCA and the Texas Medicaid Fraud Prevention Act related to the Program, as operated in Harris County, was unsealed by the U.S. District Court for the Southern District of Texas. Both the federal and state governments declined to intervene in the qui tam lawsuit. The Company believes that our participation is and has been consistent with the requirements of the Program and is vigorously defending against the lawsuit being pursued by the relator. We cannot predict what effect, if any, the qui tam lawsuit could have on the Company.

NOTE 9 — SHARE REPURCHASE TRANSACTIONS AND OTHER COMPREHENSIVE LOSS

During January 2022 and February 2021, our Board of Directors authorized share repurchase programs for up to $8 billion and $6 billion, respectively, of our outstanding common stock. During the nine months ended September 30, 2022, we repurchased 23.966 million shares of our common stock at an average price of $228.68 per share through market purchases pursuant to the February 2021 authorization (which was completed during the first quarter of 2022) and the January 2022 authorization. At September 30, 2022, we had $3.106 billion of repurchase authorization available under the January 2022 authorization.

The components of accumulated other comprehensive loss are as follows (dollars in millions):

|  | Unrealized Gains (Losses) on Available- for-Sale Securities |  |  | Foreign Currency Translation Adjustments |  |  | Defined Benefit Plans |  |  | Change in Fair Value of Derivative Instruments |  |  | Total |
Balances at December 31, 2021 |  | $ | 12 |  |  | $ | (278 | ) |  | $ | (132 | ) |  | $ | (6 | ) |  | $ | (404 | )
Unrealized losses on available-for-sale securities, net of $13 income tax benefit |  |  | (45 | ) |  |  |  |  |  |  |  |  |  |  |  | (45 | )
Foreign currency translation adjustments, net of $24 income tax benefit |  |  |  |  |  | (157 | ) |  |  |  |  |  |  |  |  | (157 | )
Change in fair value of derivative instruments, net of $1 of income taxes |  |  |  |  |  |  |  |  |  |  |  | 5 |  |  |  | 5 |
Expense reclassified into operations from other comprehensive income, net of none, $2 and $1 income tax benefits, respectively |  | 1 |  |  |  |  |  |  | 5 |  |  |  | 3 |  |  |  | 9 |
Balances at September 30, 2022 |  | $ | (32 | ) |  | $ | (435 | ) |  | $ | (127 | ) |  | $ | 2 |  |  | $ | (592 | )

15

HCA HEALTHCARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 10 — SEGMENT AND GEOGRAPHIC INFORMATION

We operate in one line of business, which is operating hospitals and related health care entities. We operate in two geographically organized groups: the National and American Groups. The National Group includes 96 hospitals located in Alaska, California, Florida, Georgia, Idaho, Indiana, northern Kentucky, Nevada, New Hampshire, North Carolina, South Carolina, Utah and Virginia, and the American Group includes 79 hospitals located in Colorado, Kansas, southern Kentucky, Louisiana, Missouri, Tennessee and Texas. We also operate seven hospitals in England, and these facilities are included in the Corporate and other group.

Adjusted segment EBITDA is defined as income before depreciation and amortization, interest expense, gains and losses on sales of facilities, losses on retirement of debt, income taxes and net income attributable to noncontrolling interests. We use adjusted segment EBITDA as an analytical indicator for purposes of allocating resources to geographic areas and assessing their performance. Adjusted segment EBITDA is commonly used as an analytical indicator within the health care industry, and also serves as a measure of leverage capacity and debt service ability. Adjusted segment EBITDA should not be considered as a measure of financial performance under generally accepted accounting principles, and the items excluded from adjusted segment EBITDA are significant components in understanding and assessing financial performance. Because adjusted segment EBITDA is not a measurement determined in accordance with generally accepted accounting principles and is thus susceptible to varying calculations, adjusted segment EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. The geographic distributions of our revenues, equity in earnings of affiliates, adjusted segment EBITDA and depreciation and amortization for the quarters and nine months ended September 30, 2022 and 2021 are summarized in the following table (dollars in millions):

|  | Quarter |  |  | Nine Months |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |
National Group |  | $ | 7,635 |  |  | $ | 7,787 |  |  | $ | 22,490 |  |  | $ | 22,143 |
American Group |  |  | 6,599 |  |  |  | 6,767 |  |  |  | 19,872 |  |  |  | 19,562 |
Corporate and other |  |  | 737 |  |  |  | 722 |  |  |  | 2,374 |  |  |  | 1,983 |
|  | $ | 14,971 |  |  | $ | 15,276 |  |  | $ | 44,736 |  |  | $ | 43,688 |
Losses (equity) in earnings of affiliates: |  |  |  |  |  |  |  |  |  |  |  |
National Group |  | $ | (1 | ) |  | $ | (14 | ) |  | $ | (3 | ) |  | $ | (30 | )
American Group |  |  | (13 | ) |  |  | (14 | ) |  |  | (31 | ) |  |  | (38 | )
Corporate and other |  |  | 4 |  |  |  | (7 | ) |  |  | 5 |  |  |  | (10 | )
|  | $ | (10 | ) |  | $ | (35 | ) |  | $ | (29 | ) |  | $ | (78 | )
Adjusted segment EBITDA: |  |  |  |  |  |  |  |  |  |  |  |
National Group |  | $ | 1,550 |  |  | $ | 1,780 |  |  | $ | 4,656 |  |  | $ | 5,330 |
American Group |  |  | 1,389 |  |  |  | 1,604 |  |  |  | 4,417 |  |  |  | 4,698 |
Corporate and other |  |  | (37 | ) |  |  | (160 | ) |  |  | (185 | ) |  |  | (533 | )
|  | $ | 2,902 |  |  | $ | 3,224 |  |  | $ | 8,888 |  |  | $ | 9,495 |
Depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |  |
National Group |  | $ | 369 |  |  | $ | 343 |  |  | $ | 1,088 |  |  | $ | 1,005 |
American Group |  |  | 309 |  |  |  | 295 |  |  |  | 914 |  |  |  | 884 |
Corporate and other |  |  | 71 |  |  |  | 78 |  |  |  | 217 |  |  |  | 236 |
|  | $ | 749 |  |  | $ | 716 |  |  | $ | 2,219 |  |  | $ | 2,125 |
Adjusted segment EBITDA |  | $ | 2,902 |  |  | $ | 3,224 |  |  | $ | 8,888 |  |  | $ | 9,495 |
Depreciation and amortization |  |  | 749 |  |  |  | 716 |  |  |  | 2,219 |  |  |  | 2,125 |
Interest expense |  |  | 446 |  |  |  | 398 |  |  |  | 1,288 |  |  |  | 1,168 |
Losses (gains) on sales of facilities |  |  | 3 |  |  |  | (1,047 | ) |  |  | 25 |  |  |  | (1,057 | )
Losses on retirement of debt |  |  | — |  |  |  | — |  |  |  | 78 |  |  |  | 12 |
Income before income taxes |  | $ | 1,704 |  |  | $ | 3,157 |  |  | $ | 5,278 |  |  | $ | 7,247 |

16

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Lookin g Statements

This quarterly report on Form 10-Q includes certain disclosures which contain “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include statements regarding expected share-based compensation expense, expected capital expenditures and expected net claim payments and all other statements that do not relate solely to historical or current facts, and can be identified by the use of words like “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “initiative” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond our control, which could significantly affect current plans and expectations and our future financial position and results of operations. These factors include, but are not limited to, (1) developments related to COVID-19, including, without limitation, the length and severity of its impact and the spread of virus strains with new epidemiological characteristics; the volume of canceled or rescheduled procedures and the volume and acuity of COVID-19 patients cared for across our health systems; measures we are taking to respond to COVID-19; the impact and terms (including the termination or expiration) of government and administrative regulation and stimulus and relief measures (including the Families First Coronavirus Response Act, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, the Paycheck Protection Program and Health Care Enhancement Act, the Consolidated Appropriations Act, 2021, the American Rescue Plan Act of 2021 (“ARPA”) and other enacted and potential future legislation) and whether various stimulus and relief programs continue or new similar programs are enacted in the future; changes in revenues due to declining patient volumes, changes in payer mix, deteriorating macroeconomic conditions (including increases in uninsured and underinsured patients) and capacity constraints; potential increased expenses related to inflation or labor, supply chain or other expenditures; supply shortages and disruptions; and the timing, availability and adoption of effective medical treatments and vaccines (including boosters), (2) the impact of our substantial indebtedness and the ability to refinance such indebtedness on acceptable terms, (3) the impact of current and future federal and state health reform initiatives and possible changes to other federal, state or local laws and regulations affecting the health care industry, including but not limited to, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”), and the effects of additional changes to the Affordable Care Act, its implementation, or interpretation (including through executive orders and court challenges), and proposals to expand coverage of federally-funded insurance programs as an alternative to private insurance or establish a single-payer system (such reforms often referred to as “Medicare for All”), and also including any such laws or governmental regulations which are adopted in response to COVID-19, (4) the effects related to the implementation of sequestration spending reductions required under the Budget Control Act of 2011, related legislation extending these reductions and those required under the Pay-As-You-Go Act of 2010 (“PAYGO Act”) as a result of the federal budget deficit impact of the ARPA, and the potential for future deficit reduction legislation that may alter these spending reductions, which include cuts to Medicare payments, or create additional spending reductions, (5) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (6) the ability to achieve operating and financial targets, and attain expected levels of patient volumes and control the costs of providing services, (7) possible changes in Medicare, Medicaid and other state programs, including Medicaid supplemental payment programs or Medicaid waiver programs, that may impact reimbursements to health care providers and insurers and the size of the uninsured or underinsured population, (8) increases in wages and the ability to attract, utilize and retain qualified management and other personnel, including affiliated physicians, nurses and medical and technical support personnel, and workforce disruptions, (9) the highly competitive nature of the health care business, (10) changes in service mix, revenue mix and surgical volumes, including potential declines in the population covered under third-party payer agreements, the ability to enter into and renew third-party payer provider agreements on acceptable terms and the impact of consumer-driven health plans and physician utilization trends and practices, (11) the efforts of health insurers, health care providers, large employer groups and others to contain health care costs, (12) the outcome of our continuing efforts to monitor, maintain and comply with appropriate laws, regulations, policies and procedures, (13) the availability and terms of capital to fund the expansion of our business and improvements to our existing facilities, (14) changes in accounting practices, (15) changes in general economic conditions nationally and regionally in our markets, including inflation and economic and business conditions (and the impact thereof on the economy and financial markets) resulting from COVID-19 or other factors, (16) the emergence of and effects related to pandemics, epidemics and infectious diseases, (17) future divestitures which may result in charges and possible impairments of long-lived assets, (18) changes in business strategy or development plans, (19) delays in receiving payments for services provided, (20) the outcome of pending and any future tax audits, disputes and litigation associated with our tax positions, (21) potential adverse impact of known and unknown government investigations, litigation and other claims that may be made against us, (22) the impact of potential cybersecurity incidents or security breaches, (23) our ongoing ability to demonstrate meaningful use of certified electronic health record (“EHR”) technology and the impact of interoperability requirements, (24) the impact of natural disasters, such as hurricanes and floods, physical risks from climate change or similar events beyond our control, (25) changes in U.S. federal, state, or foreign tax laws including interpretive guidance that may be issued by taxing authorities or other standard setting bodies, and (26) other risk factors described in our annual report on Form 10-K for the year ended December 31, 2021 and our other filings with the Securities and Exchange Commission. As a consequence, current plans, anticipated actions and future financial position and results of operations may differ from those expressed in any forward-looking statements made by or on behalf of HCA. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this report, which forward-looking statements reflect management’s views only as of the date of this report. We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.

17

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

COVID-19

We believe the extent of COVID-19’s impact on our operating results and financial condition has been and could continue to be driven by many factors, most of which are beyond our control and ability to forecast. Because of these uncertainties, we cannot estimate how long or to what extent COVID-19 will impact our operations.

Third Quarter 2022 Operations Summary

Revenues declined to $14.971 billion in the third quarter of 2022 from $15.276 billion in the third quarter of 2021. Net income attributable to HCA Healthcare, Inc. totaled $1.134 billion, or $3.91 per diluted share, for the quarter ended September 30, 2022, compared to $2.269 billion, or $7.00 per diluted share, for the quarter ended September 30, 2021. Third quarter results for 2022 and 2021 include losses on sales of facilities of $3 million, or $0.02 per diluted share, and gains on sales of facilities of $1.047 billion, or $2.43 per diluted share, respectively. All “per diluted share” disclosures are based upon amounts net of the applicable income taxes. Shares used for diluted earnings per share were 289.852 million shares for the quarter ended September 30, 2022 and 324.029 million shares for the quarter ended September 30, 2021. During 2021 and the first nine months of 2022, we repurchased 37.812 million shares and 23.966 million shares, respectively, of our common stock.

Revenues declined 2.0% on a consolidated basis and 1.3% on a same facility basis for the quarter ended September 30, 2022, compared to the quarter ended September 30, 2021. The decline in consolidated revenues can be primarily attributed to the net impact of a 3.2% decline in revenue per equivalent admission and a 1.3% increase in equivalent admissions. The decline in same facility revenues primarily resulted from the net impact of a 3.5% decline in same facility revenue per equivalent admission and a 2.3% increase in same facility equivalent admissions. The decline in revenue and revenue per equivalent admission was impacted by significantly higher COVID-19 volumes in the prior year, when COVID-19 represented 12.7% of same facility admissions for the quarter ended September 30, 2021, compared to 5.2% in the quarter ended September 30, 2022. During 2021, Florida approved a Medicaid directed payment program (the state fiscal year is from October 1 through September 30) which also requires annual approval by the Centers for Medicare & Medicaid Services ("CMS"). We recorded revenues of $266 million during the quarter and nine months ended September 30, 2022 (related to the program year ended September 30, 2022, for which CMS approval was received during September 2022) and revenues of $111 million during the quarter and nine months ended September 30, 2021 (related to the program year ended September 30, 2021).

During the quarter ended September 30, 2022, consolidated admissions declined 2.6% and same facility admissions declined 1.5% compared to the quarter ended September 30, 2021. Surgeries increased 2.4% on a consolidated basis and 3.2% on a same facility basis during the quarter ended September 30, 2022, compared to the quarter ended September 30, 2021. Emergency department visits declined 2.5% on a consolidated basis and 1.3% on a same facility basis during the quarter ended September 30, 2022, compared to the quarter ended September 30, 2021. Consolidated and same facility uninsured admissions declined 6.0% and 4.5%, respectively, for the quarter ended September 30, 2022, compared to the quarter ended September 30, 2021.

Cash flows from operating activities increased $743 million, from $2.277 billion for the third quarter of 2021 to $3.020 billion for the third quarter of 2022. The increase in cash provided by operating activities was primarily related to positive changes in working capital items of $932 million.

18

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations

Revenue/Volume Trends

Our revenues generally relate to contracts with patients in which our performance obligations are to provide health care services to the patients. Revenues are recorded during the period our obligations to provide health care services are satisfied. Our performance obligations for inpatient services are generally satisfied over periods that average approximately five days, and revenues are recognized based on charges incurred in relation to total expected charges. Our performance obligations for outpatient services are generally satisfied over a period of less than one day. The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the health insurance exchanges) and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers. The payment arrangements with third-party payers for the services we provide to the related patients typically specify payments at amounts less than our standard charges. Medicare generally pays for inpatient and outpatient services at prospectively determined rates based on clinical, diagnostic and other factors. Services provided to patients having Medicaid coverage are generally paid at prospectively determined rates per discharge, per identified service or per covered member. Agreements with commercial insurance carriers, managed care and preferred provider organizations generally provide for payments based upon predetermined rates per diagnosis, per diem rates or discounted fee-for-service rates. Management continually reviews the contractual estimation process to consider and incorporate updates to laws and regulations and the frequent changes in managed care contractual terms resulting from contract renegotiations and renewals.

Revenues declined 2.0% from $15.276 billion in the third quarter of 2021 to $14.971 billion in the third quarter of 2022. Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual adjustments under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured discounts and contractual discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenues at the estimated amounts we expect to collect. Patients treated at our hospitals for non-elective care, who have income at or below 400% of the federal poverty level, are eligible for charity care. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues. Our revenues by primary third-party payer classification and other (including uninsured patients) for the quarters and nine months ended September 30, 2022 and 2021 are summarized in the following table (dollars in millions):

|  | Quarter |
|  | 2022 |  |  | Ratio |  |  | 2021 |  |  | Ratio |
Medicare |  | $ | 2,569 |  |  |  | 17.2 | % |  | $ | 2,645 |  |  |  | 17.3 | %
Managed Medicare |  |  | 2,229 |  |  |  | 14.9 |  |  |  | 2,124 |  |  |  | 13.9 |
Medicaid |  |  | 797 |  |  |  | 5.3 |  |  |  | 692 |  |  |  | 4.5 |
Managed Medicaid |  |  | 939 |  |  |  | 6.3 |  |  |  | 813 |  |  |  | 5.3 |
Managed care and insurers |  |  | 7,184 |  |  |  | 47.9 |  |  |  | 7,998 |  |  |  | 52.4 |
International (managed care and insurers) |  |  | 311 |  |  |  | 2.1 |  |  |  | 324 |  |  |  | 2.1 |
Other |  |  | 942 |  |  |  | 6.3 |  |  |  | 680 |  |  |  | 4.5 |
Revenues |  | $ | 14,971 |  |  |  | 100.0 | % |  | $ | 15,276 |  |  |  | 100.0 | %
|  | Nine Months |
|  | 2022 |  |  | Ratio |  |  | 2021 |  |  | Ratio |
Medicare |  | $ | 7,790 |  |  |  | 17.4 | % |  | $ | 7,816 |  |  |  | 17.9 | %
Managed Medicare |  |  | 6,813 |  |  |  | 15.2 |  |  |  | 6,281 |  |  |  | 14.4 |
Medicaid |  |  | 1,987 |  |  |  | 4.4 |  |  |  | 1,722 |  |  |  | 3.9 |
Managed Medicaid |  |  | 3,003 |  |  |  | 6.7 |  |  |  | 2,369 |  |  |  | 5.4 |
Managed care and insurers |  |  | 21,480 |  |  |  | 48.1 |  |  |  | 22,300 |  |  |  | 51.0 |
International (managed care and insurers) |  |  | 992 |  |  |  | 2.2 |  |  |  | 995 |  |  |  | 2.3 |
Other |  |  | 2,671 |  |  |  | 6.0 |  |  |  | 2,205 |  |  |  | 5.1 |
Revenues |  | $ | 44,736 |  |  |  | 100.0 | % |  | $ | 43,688 |  |  |  | 100.0 | %

19

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Revenue/Volume Trends (continued)

Consolidated and same facility revenue per equivalent admission declined 3.2% and 3.5%, respectively, in the third quarter of 2022, compared to the third quarter of 2021. Consolidated and same facility equivalent admissions increased 1.3% and 2.3%, respectively, in the third quarter of 2022, compared to the third quarter of 2021. Consolidated and same facility outpatient surgeries increased 1.1% and 2.0%, respectively, in the third quarter of 2022, compared to the third quarter of 2021. Consolidated and same facility inpatient surgeries increased 4.8% and 5.6%, respectively, in the third quarter of 2022, compared to the third quarter of 2021. Consolidated and same facility emergency department visits declined 2.5% and 1.3%, respectively, in the third quarter of 2022, compared to the third quarter of 2021.

To quantify the total impact of the trends related to uninsured patient accounts, we believe it is beneficial to view total uncompensated care, which is comprised of charity care, uninsured discounts and implicit price concessions. A summary of the estimated cost of total uncompensated care for the quarters and nine months ended September 30, 2022 and 2021 follows (dollars in millions):

|  | Quarter |  |  | Nine Months |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Patient care costs (salaries and benefits, supplies, other operating expenses and depreciation and amortization) |  | $ | 12,828 |  |  | $ | 12,803 |  |  | $ | 38,096 |  |  | $ | 36,396 |
Cost-to-charges ratio (patient care costs as percentage of gross patient charges) |  |  | 11.2 | % |  |  | 11.8 | % |  |  | 11.2 | % |  |  | 11.4 | %
Total uncompensated care |  | $ | 8,050 |  |  | $ | 7,782 |  |  | $ | 23,512 |  |  | $ | 22,299 |
Multiply by the cost-to-charges ratio |  |  | 11.2 | % |  |  | 11.8 | % |  |  | 11.2 | % |  |  | 11.4 | %
Estimated cost of total uncompensated care |  | $ | 901 |  |  | $ | 916 |  |  | $ | 2,633 |  |  | $ | 2,542 |

Same facility uninsured admissions in 2022, compared to 2021, declined 4.5% in the third quarter, declined 5.1% in the second quarter and declined 3.0% in the first quarter. Same facility uninsured admissions in 2021, compared to 2020, declined 6.3% in the fourth quarter, increased 1.2% in the third quarter, increased 6.6% in the second quarter of 2021, and declined 15.7% in the first quarter.

The approximate percentages of our admissions related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers and the uninsured for the quarters and nine months ended September 30, 2022 and 2021 are set forth in the following table.

|  | Quarter |  |  | Nine Months |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Medicare |  |  | 22 | % |  |  | 21 | % |  |  | 22 | % |  |  | 23 | %
Managed Medicare |  |  | 23 |  |  |  | 21 |  |  |  | 23 |  |  |  | 21 |
Medicaid |  |  | 4 |  |  |  | 4 |  |  |  | 4 |  |  |  | 5 |
Managed Medicaid |  |  | 14 |  |  |  | 14 |  |  |  | 14 |  |  |  | 13 |
Managed care and insurers |  |  | 30 |  |  |  | 32 |  |  |  | 30 |  |  |  | 31 |
Uninsured |  |  | 7 |  |  |  | 8 |  |  |  | 7 |  |  |  | 7 |
|  |  | 100 | % |  |  | 100 | % |  |  | 100 | % |  |  | 100 | %

The approximate percentages of our inpatient revenues related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers for the quarters and nine months ended September 30, 2022 and 2021 are set forth in the following table.

|  | Quarter |  |  | Nine Months |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Medicare |  |  | 23 | % |  |  | 22 | % |  |  | 23 | % |  |  | 24 | %
Managed Medicare |  |  | 16 |  |  |  | 16 |  |  |  | 17 |  |  |  | 16 |
Medicaid |  |  | 8 |  |  |  | 7 |  |  |  | 7 |  |  |  | 6 |
Managed Medicaid |  |  | 7 |  |  |  | 5 |  |  |  | 8 |  |  |  | 6 |
Managed care and insurers |  |  | 46 |  |  |  | 50 |  |  |  | 45 |  |  |  | 48 |
|  |  | 100 | % |  |  | 100 | % |  |  | 100 | % |  |  | 100 | %

20

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Revenue/Volume Trends (continued)

At September 30, 2022, we had 91 hospitals in the states of Texas and Florida. During the quarter ended September 30, 2022, 58% of our admissions and 51% of our revenues were generated by these hospitals. Uninsured admissions in Texas and Florida represented 74% of our uninsured admissions during the quarter ended September 30, 2022.

We receive a significant portion of our revenues from government health programs, principally Medicare and Medicaid, which are highly regulated and subject to frequent and substantial changes. Some state Medicaid programs use, or have applied to use, waivers granted by CMS to implement Medicaid expansion, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards. We receive supplemental payments in several states. We are aware these supplemental payment programs are currently being reviewed by certain state agencies and some states have made requests to CMS to replace their existing supplemental payment programs. It is possible these reviews and requests will result in the restructuring of such supplemental payment programs and could result in the payment programs being reduced or eliminated. Because deliberations about these programs are ongoing, we are unable to estimate the financial impact the program structure modifications, if any, may have on our results of operations.

Key Performance Indicators

We present certain metrics and statistical information that management uses when assessing our results of operations. We believe this information is useful to investors as it provides insight to how management evaluates operational performance and trends between reporting periods. Information on how these metrics and statistical information are defined is provided in the following tables summarizing operating results and operating data.

Operating Results Summary

The following is a comparative summary of results of operations for the quarters and nine months ended September 30, 2022 and 2021 (dollars in millions):

|  | Quarter |
|  | 2022 |  |  | 2021 |
|  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |
Revenues |  | $ | 14,971 |  |  |  | 100.0 |  |  | $ | 15,276 |  |  |  | 100.0 |
Salaries and benefits |  |  | 6,899 |  |  |  | 46.1 |  |  |  | 7,094 |  |  |  | 46.4 |
Supplies |  |  | 2,320 |  |  |  | 15.5 |  |  |  | 2,463 |  |  |  | 16.1 |
Other operating expenses |  |  | 2,860 |  |  |  | 19.1 |  |  |  | 2,530 |  |  |  | 16.6 |
Equity in earnings of affiliates |  |  | (10 | ) |  |  | (0.1 | ) |  |  | (35 | ) |  |  | (0.2 | )
Depreciation and amortization |  |  | 749 |  |  |  | 5.0 |  |  |  | 716 |  |  |  | 4.7 |
Interest expense |  |  | 446 |  |  |  | 3.0 |  |  |  | 398 |  |  |  | 2.6 |
Losses (gains) on sales of facilities |  |  | 3 |  |  |  | — |  |  |  | (1,047 | ) |  |  | (6.9 | )
|  |  | 13,267 |  |  |  | 88.6 |  |  |  | 12,119 |  |  |  | 79.3 |
Income before income taxes |  |  | 1,704 |  |  |  | 11.4 |  |  |  | 3,157 |  |  |  | 20.7 |
Provision for income taxes |  |  | 360 |  |  |  | 2.4 |  |  |  | 685 |  |  |  | 4.5 |
Net income |  |  | 1,344 |  |  |  | 9.0 |  |  |  | 2,472 |  |  |  | 16.2 |
Net income attributable to noncontrolling interests |  |  | 210 |  |  |  | 1.4 |  |  |  | 203 |  |  |  | 1.3 |
Net income attributable to HCA Healthcare, Inc. |  | $ | 1,134 |  |  |  | 7.6 |  |  | $ | 2,269 |  |  |  | 14.9 |
% changes from prior year: |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  |  | (2.0 | )% |  |  |  |  |  | 14.8 | % |  |  |
Income before income taxes |  |  | (46.0 | ) |  |  |  |  |  | 219.6 |  |  |  |
Net income attributable to HCA Healthcare, Inc. |  |  | (50.0 | ) |  |  |  |  |  | 239.7 |  |  |  |
Admissions(a) |  |  | (2.6 | ) |  |  |  |  |  | 5.9 |  |  |  |
Equivalent admissions(b) |  |  | 1.3 |  |  |  |  |  |  | 8.4 |  |  |  |
Revenue per equivalent admission |  |  | (3.2 | ) |  |  |  |  |  | 5.9 |  |  |  |
Same facility % changes from prior year(c): |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  |  | (1.3 | ) |  |  |  |  |  | 15.0 |  |  |  |
Admissions(a) |  |  | (1.5 | ) |  |  |  |  |  | 6.8 |  |  |  |
Equivalent admissions(b) |  |  | 2.3 |  |  |  |  |  |  | 9.3 |  |  |  |
Revenue per equivalent admission |  |  | (3.5 | ) |  |  |  |  |  | 5.2 |  |  |  |

21

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Operating Results Summary (continued)

|  | Nine Months |
|  | 2022 |  |  | 2021 |
|  | Amount |  |  | Ratio |  |  | Amount |  |  | Ratio |
Revenues |  | $ | 44,736 |  |  |  | 100.0 |  |  | $ | 43,688 |  |  |  | 100.0 |
Salaries and benefits |  |  | 20,630 |  |  |  | 46.1 |  |  |  | 19,780 |  |  |  | 45.3 |
Supplies |  |  | 6,942 |  |  |  | 15.5 |  |  |  | 7,067 |  |  |  | 16.2 |
Other operating expenses |  |  | 8,305 |  |  |  | 18.6 |  |  |  | 7,424 |  |  |  | 17.0 |
Equity in earnings of affiliates |  |  | (29 | ) |  |  | (0.1 | ) |  |  | (78 | ) |  |  | (0.2 | )
Depreciation and amortization |  |  | 2,219 |  |  |  | 4.9 |  |  |  | 2,125 |  |  |  | 4.8 |
Interest expense |  |  | 1,288 |  |  |  | 2.9 |  |  |  | 1,168 |  |  |  | 2.7 |
Losses (gains) on sales of facilities |  |  | 25 |  |  |  | 0.1 |  |  |  | (1,057 | ) |  |  | (2.4 | )
Losses on retirement of debt |  |  | 78 |  |  |  | 0.2 |  |  |  | 12 |  |  |  | — |
|  |  | 39,458 |  |  |  | 88.2 |  |  |  | 36,441 |  |  |  | 83.4 |
Income before income taxes |  |  | 5,278 |  |  |  | 11.8 |  |  |  | 7,247 |  |  |  | 16.6 |
Provision for income taxes |  |  | 1,090 |  |  |  | 2.4 |  |  |  | 1,531 |  |  |  | 3.5 |
Net income |  |  | 4,188 |  |  |  | 9.4 |  |  |  | 5,716 |  |  |  | 13.1 |
Net income attributable to noncontrolling interests |  |  | 626 |  |  |  | 1.4 |  |  |  | 574 |  |  |  | 1.3 |
Net income attributable to HCA Healthcare, Inc. |  | $ | 3,562 |  |  |  | 8.0 |  |  | $ | 5,142 |  |  |  | 11.8 |
% changes from prior year: |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  |  | 2.4 | % |  |  |  |  |  | 17.3 | % |  |  |
Income before income taxes |  |  | (27.2 | ) |  |  |  |  |  | 115.8 |  |  |  |
Net income attributable to HCA Healthcare, Inc. |  |  | (30.7 | ) |  |  |  |  |  | 120.8 |  |  |  |
Admissions(a) |  |  | (1.9 | ) |  |  |  |  |  | 5.9 |  |  |  |
Equivalent admissions(b) |  |  | 0.9 |  |  |  |  |  |  | 8.4 |  |  |  |
Revenue per equivalent admission |  |  | 1.4 |  |  |  |  |  |  | 8.2 |  |  |  |
Same facility % changes from prior year(c): |  |  |  |  |  |  |  |  |  |  |  |
Revenues |  |  | 3.4 |  |  |  |  |  |  | 17.5 |  |  |  |
Admissions(a) |  |  | (0.2 | ) |  |  |  |  |  | 6.2 |  |  |  |
Equivalent admissions(b) |  |  | 2.5 |  |  |  |  |  |  | 8.8 |  |  |  |
Revenue per equivalent admission |  |  | 0.8 |  |  |  |  |  |  | 7.9 |  |  |  |

(a)
Represents the total number of patients admitted to our hospitals and is used by management and certain investors as a general measure of inpatient volume.
(b)
Equivalent admissions are used by management and certain investors as a general measure of combined inpatient and outpatient volume. Equivalent admissions are computed by multiplying admissions (inpatient volume) by the sum of gross inpatient revenues and gross outpatient revenues and then dividing the resulting amount by gross inpatient revenues. The equivalent admissions computation “equates” outpatient revenues to the volume measure (admissions) used to measure inpatient volume, resulting in a general measure of combined inpatient and outpatient volume.
(c)
Same facility information excludes the operations of hospitals and their related facilities which were either acquired or divested during the current and prior period.

22

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Quarters Ended September 30, 2022 and 2021

Revenues declined to $14.971 billion in the third quarter of 2022 from $15.276 billion in the third quarter of 2021. Net income attributable to HCA Healthcare, Inc. totaled $1.134 billion, or $3.91 per diluted share, for the quarter ended September 30, 2022, compared to $2.269 billion, or $7.00 per diluted share, for the quarter ended September 30, 2021. Third quarter results for 2022 and 2021 include losses on sales of facilities of $3 million, or $0.02 per diluted share, and gains on sales of facilities of $1.047 billion, or $2.43 per diluted share, respectively. All “per diluted share” disclosures are based upon amounts net of the applicable income taxes. Shares used for diluted earnings per share were 289.852 million shares for the quarter ended September 30, 2022 and 324.029 million shares for the quarter ended September 30, 2021. During 2021 and the first nine months of 2022, we repurchased 37.812 million shares and 23.966 million shares, respectively, of our common stock.

Revenues declined 2.0% on a consolidated basis and 1.3% on a same facility basis for the quarter ended September 30, 2022, compared to the quarter ended September 30, 2021. The decline in consolidated revenues can be primarily attributed to the net impact of a 3.2% decline in revenue per equivalent admission and a 1.3% increase in equivalent admissions. The decline in same facility revenues primarily resulted from the net impact of a 3.5% decline in same facility revenue per equivalent admission and a 2.3% increase in same facility equivalent admissions. The decline in revenue and revenue per equivalent admission was impacted by significantly higher COVID-19 volumes in the prior year, when COVID-19 represented 12.7% of same facility admissions for the quarter ended September 30, 2021, compared to 5.2% in the quarter ended September 30, 2022.

Salaries and benefits, as a percentage of revenues, were 46.1% in the third quarter of 2022 and 46.4% in the third quarter of 2021. Salaries and benefits per equivalent admission declined 4.0% in the third quarter of 2022, compared to the third quarter of 2021. We expect inflationary pressures will continue to impact our labor costs in the future. We intend to continue reducing our utilization of and rates paid for premium rate labor, but the pace and amount of any expected future declines may be affected by labor market conditions and other factors. Same facility salaries and benefits per full time equivalent increased 0.1% for the third quarter of 2022, compared to the third quarter of 2021.

Supplies, as a percentage of revenues, were 15.5% in the third quarter of 2022 and 16.1% in the third quarter of 2021. Supply costs per equivalent admission declined 7.0% in the third quarter of 2022, compared to the third quarter of 2021. Supply costs per equivalent admission increased 7.1% for medical devices and declined 33.8% for pharmacy supplies and 4.6% for general medical and surgical items in the third quarter of 2022, compared to the third quarter of 2021. The decline in pharmacy supplies is primarily related to higher utilization of certain COVID-19 therapies during the third quarter of 2021.

Other operating expenses, as a percentage of revenues, were 19.1% in the third quarter of 2022 and 16.6% in the third quarter of 2021. Other operating expenses is primarily comprised of contract services, professional fees, repairs and maintenance, rents and leases, utilities, insurance (including professional liability insurance) and nonincome taxes. The 2.5% increase in other operating expenses as a percentage of revenues for the third quarter of 2022, compared to the third quarter of 2021, was primarily related to increased costs for directed payment programs in certain states, as well as increased professional fees and utilities. We have seen inflation have a negative impact on certain of these expenses and expect inflationary pressures will continue to impact operating expenses in the future. Provisions for losses related to professional liability risks were $89 million and $49 million for the third quarters of 2022 and 2021, respectively. During the third quarters of 2022 and 2021, we recorded reductions of $55 million, or $0.15 per diluted share, and $87 million, or $0.21 per diluted share, respectively, to our provision for professional liability risks related to the receipt of updated actuarial information.

Equity in earnings of affiliates was $10 million and $35 million in the third quarters of 2022 and 2021, respectively. The decline is primarily related to the sale of an equity investment during the third quarter of 2021.

Depreciation and amortization increased $33 million, from $716 million in the third quarter of 2021 to $749 million in the third quarter of 2022. The increase in depreciation relates primarily to capital expenditures at our existing facilities.

Interest expense was $446 million in the third quarter of 2022 and $398 million in the third quarter of 2021. Our average debt balance was $38.196 billion for the third quarter of 2022, compared to $32.450 billion for the third quarter of 2021. The average effective interest rate for our debt was 4.6% and 4.9%, respectively, for the quarters ended September 30, 2022 and 2021.

During the third quarters of 2022 and 2021, we recorded losses on sales of facilities of $3 million and gains on sales of facilities of $1.047 billion, respectively. The gains on sales of facilities for the third quarter of 2021 were primarily related to the sale of four hospital facilities in Georgia and other health care entity investments.

23

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Quarters Ended September 30, 2022 and 2021 (continued)

The effective tax rates were 24.1% and 23.2% for the third quarters of 2022 and 2021, respectively. The effective tax rate computations exclude net income attributable to noncontrolling interests as it relates to consolidated partnerships.

Net income attributable to noncontrolling interests increased from $203 million for the third quarter of 2021 to $210 million for the third quarter of 2022. The increase in net income attributable to noncontrolling interests related primarily to the operations of one of our Texas markets and one of our Louisiana markets.

Nine Months Ended September 30, 2022 and 2021

Revenues increased to $44.736 billion in the first nine months of 2022 from $43.688 billion in the first nine months of 2021. Net income attributable to HCA Healthcare, Inc. totaled $3.562 billion, or $11.97 per diluted share, for the nine months ended September 30, 2022, compared to $5.142 billion, or $15.43 per diluted share, for the nine months ended September 30, 2021. Results for the first nine months of 2022 and 2021 include losses on sales of facilities of $25 million, or $0.09 per diluted share, and gains on sales of facilities of $1.057 billion, or $2.39 per diluted share, respectively. Results for the first nine months of 2022 and 2021 also include losses on retirement of debt of $78 million, or $0.20 per diluted share, and $12 million, or $0.03 per diluted share, respectively. Our provision for income taxes for the first nine months of 2022 and 2021 included tax benefits of $70 million, or $0.24 per diluted share, and $96 million, or $0.29 per diluted share, respectively, related to employee equity award settlements. All “per diluted share” disclosures are based upon amounts net of the applicable income taxes. Shares used for diluted earnings per share were 297.702 million shares for the nine months ended September 30, 2022 and 333.248 million shares for the nine months ended September 30, 2021. During 2021 and the first nine months of 2022, we repurchased 37.812 million shares and 23.966 million shares, respectively, of our common stock.

Revenues increased 2.4% on a consolidated basis and 3.4% on a same facility basis for the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021. The increase in consolidated revenues can be primarily attributed to the combined impact of a 1.4% increase in revenue per equivalent admission and a 0.9% increase in equivalent admissions. The same facility revenues increase primarily resulted from the combined impact of a 0.8% increase in same facility revenue per equivalent admission and a 2.5% increase in same facility equivalent admissions.

Salaries and benefits, as a percentage of revenues, were 46.1% in the first nine months of 2022 and 45.3% in the first nine months of 2021. Salaries and benefits per equivalent admission increased 3.3% in the first nine months of 2022, compared to the first nine months of 2021. Same facility salaries and benefits per full time equivalent increased 4.4% for the first nine months of 2022, compared to the first nine months of 2021 as inflation has impacted our labor costs and as we continue to utilize certain contract, overtime and other premium rate labor costs to support our clinical staff and patients. We expect inflationary pressures will continue to impact our labor costs in the future. We intend to continue reducing our utilization of and rates paid for premium rate labor, but the pace and amount of any expected future declines may be affected by labor market conditions and other factors.

Supplies, as a percentage of revenues, were 15.5% in the first nine months of 2022 and 16.2% in the first nine months of 2021. Supply costs per equivalent admission declined 2.7% in the first nine months of 2022, compared to the first nine months of 2021. Supply costs per equivalent admission increased 4.0% for medical devices and declined 19.9% for pharmacy supplies and 0.9% for general medical and surgical items in the first nine months of 2022, compared to the first nine months of 2021. The decline in pharmacy supplies is primarily related to higher utilization of certain COVID-19 therapies during the first nine months of 2021.

Other operating expenses, as a percentage of revenues, were 18.6% in the first nine months of 2022 and 17.0% in the first nine months of 2021. Other operating expenses is primarily comprised of contract services, professional fees, repairs and maintenance, rents and leases, utilities, insurance (including professional liability insurance) and nonincome taxes. The 1.6% increase in other operating expenses as a percentage of revenues for the first nine months of 2022, compared to the first nine months of 2021, was primarily related to increased costs for directed payment programs in certain states, as well as increased professional fees and utilities. We have seen inflation have a negative impact on certain of these expenses and expect inflationary pressures will continue to impact operating expenses in the future. Provisions for losses related to professional liability risks were $374 million and $318 million for the first nine months of 2022 and 2021, respectively. During the first nine months of 2022 and 2021, we recorded reductions of $55 million, or $0.14 per diluted share, and $87 million, or $0.20 per diluted share, respectively, to our provision for professional liability risks related to the receipt of updated actuarial information.

24

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Results of Operations (continued)

Nine Months Ended September 30, 2022 and 2021 (continued)

Equity in earnings of affiliates was $29 million and $78 million in the first nine months of 2022 and 2021, respectively. The decline is primarily related to the sale of an equity investment during the third quarter of 2021.

Depreciation and amortization increased $94 million, from $2.125 billion in the first nine months of 2021 to $2.219 billion in the first nine months of 2022. The increase in depreciation relates primarily to capital expenditures at our existing facilities.

Interest expense was $1.288 billion in the first nine months of 2022 and $1.168 billion in the first nine months of 2021. Our average debt balance was $37.243 billion for the first nine months of 2022 compared to $31.780 billion for the first nine months of 2021. The average effective interest rate for our debt was 4.6% and 4.9%, respectively, for the nine months ended September 30, 2022 and 2021.

During the first nine months of 2022 and 2021, we recorded losses on sales of facilities of $25 million and gains on sales of facilities $1.057 billion, respectively. The gains on sales of facilities for the first nine months of 2021 were primarily related to the sale of four hospital facilities in Georgia and other health care entity investments.

During March 2022, we issued $6.000 billion aggregate principal amount of senior secured notes comprised of (i) $1.000 billion aggregate principal amount of 3 1/8% senior secured notes due 2027, (ii) $500 million aggregate principal amount of 3 3/8% senior secured notes due 2029, (iii) $2.000 billion aggregate principal amount of 3 5/8% senior secured notes due 2032, (iv) $500 million aggregate principal amount of 4 3/8% senior secured notes due 2042 and (v) $2.000 billion aggregate principal amount of 4 5/8% senior secured notes due 2052. During March 2022, we used a portion of the net proceeds to pay down our revolving credit facilities. During the second quarter of 2022, we redeemed all $1.250 billion outstanding aggregate principal amount of our 4.75% senior secured notes due 2023 and all $1.250 billion outstanding aggregate principal amount of our 5.875% senior notes due 2023. The pretax loss on retirement of debt for these two redemptions was $78 million. During June 2021, we issued $2.350 billion aggregate principal amount of senior secured notes comprised of $850 million aggregate principal amount of 2 3/8% notes due 2031 and $1.500 billion aggregate principal amount of 3 1/2% notes due 2051 (the “June 2021 Notes”). We also amended and restated our senior secured revolving credit facility and our senior secured asset-based revolving credit facility, including increasing availability under the asset-based revolving credit facility to $4.500 billion, extending the maturity date on both facilities to June 30, 2026 and entering into a new $1.500 billion term loan A facility and a new $500 million term loan B facility (the “Credit Agreement Transactions”). We used the net proceeds from the June 2021 Notes and the Credit Agreement Transactions to retire $3.657 billion of term loan facilities. The pretax loss on retirement of debt was $12 million.

The effective tax rates were 23.4% and 22.9% for the first nine months of 2022 and 2021, respectively. The effective tax rate computations exclude net income attributable to noncontrolling interests as it relates to consolidated partnerships. Our provisions for income taxes for the first nine months of 2022 and 2021 included tax benefits of $70 million and $96 million, respectively, related to employee equity award settlements.

Net income attributable to noncontrolling interests increased from $574 million for the first nine months of 2021 to $626 million for the first nine months 2022. The increase in net income attributable to noncontrolling interests related primarily to the operations of one of our Texas markets, our group purchasing organization and our surgery centers.

Liquidity and Capital Resources

Cash provided by operating activities totaled $5.995 billion for the first nine months of 2022 compared to $6.516 billion for the first nine months of 2021. The $521 million decline in cash provided by operating activities, for the first nine months of 2022 compared to the first nine months of 2021, related primarily to the $654 million decline in net income, excluding losses and gains on sales of facilities and losses on retirement of debt. The combination of interest payments and net income tax payments in the first nine months of 2022 and 2021 totaled $2.260 billion and $2.473 billion, respectively. Working capital totaled $3.697 billion at September 30, 2022 and $3.960 billion at December 31, 2021.

25

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (continued)

Cash used in investing activities was $2.596 billion in the first nine months of 2022 compared to $929 million in the first nine months of 2021. Excluding acquisitions, capital expenditures were $3.072 billion in the first nine months of 2022 and $2.385 billion in the first nine months of 2021. Planned capital expenditures are expected to approximate $4.2 billion in 2022. At September 30, 2022, there were projects under construction which had estimated additional costs to complete and equip over the next five years of approximately $4.5 billion. We expect to finance capital expenditures with internally generated and borrowed funds. Cash flows from sales of hospitals and health care entities declined from $1.980 billion for the first nine months of 2021 (primarily related to the proceeds from our sales of five hospitals in Georgia and other health care entity investments) to $652 million of net proceeds for the first nine months of 2022.

Cash used in financing activities totaled $3.818 billion in the first nine months of 2022, compared to $6.349 billion in the first nine months of 2021. During the first nine months of 2022, net cash flows used in financing activities included a net increase of $2.972 billion in our indebtedness, payment of dividends of $497 million, repurchase of common stock of $5.481 billion and distributions to noncontrolling interests of $550 million. During the first nine months of 2021, net cash flows used in financing activities included a net increase of $1.050 billion in our indebtedness, payment of dividends of $476 million, repurchase of common stock of $6.143 billion and distributions to noncontrolling interests of $501 million.

We are a highly leveraged company with significant debt service requirements. Our debt totaled $37.710 billion at September 30, 2022. Our interest expense was $1.288 billion for the first nine months of 2022 and $1.168 billion for the first nine months of 2021.

In addition to cash flows from operations, available sources of capital include amounts available under our senior secured credit facilities ($3.885 billion and $3.995 billion available as of September 30, 2022 and October 31, 2022, respectively) and anticipated access to public and private debt markets.

Investments of our insurance subsidiaries, held to maintain statutory equity levels and to provide liquidity to pay claims, totaled $493 million and $541 million at September 30, 2022 and December 31, 2021, respectively. An insurance subsidiary maintained net reserves for professional liability risks of $141 million and $154 million at September 30, 2022 and December 31, 2021, respectively. Our facilities are insured by our insurance subsidiary for losses up to $75 million per occurrence; however, this coverage is generally subject, in most cases, to a $15 million per occurrence self-insured retention. Additionally, the insurance subsidiary has entered into reinsurance contracts providing reimbursement for a certain portion of losses in excess of self-insured retentions. Net reserves for the self-insured professional liability risks retained were $1.813 billion at both September 30, 2022 and December 31, 2021. Claims payments, net of reinsurance recoveries, during the next 12 months are expected to approximate $488 million. We estimate that approximately $446 million of the expected net claim payments during the next 12 months will relate to claims subject to the self-insured retention.

During March 2022, we issued $6.000 billion aggregate principal amount of senior secured notes comprised of (i) $1.000 billion aggregate principal amount of 3 1/8% senior secured notes due 2027, (ii) $500 million aggregate principal amount of 3 3/8% senior secured notes due 2029, (iii) $2.000 billion aggregate principal amount of 3 5/8% senior secured notes due 2032, (iv) $500 million aggregate principal amount of 4 3/8% senior secured notes due 2042 and (v) $2.000 billion aggregate principal amount of 4 5/8% senior secured notes due 2052. During March 2022, we used a portion of the net proceeds to pay down our revolving credit facilities. During the second quarter of 2022, we redeemed all $1.250 billion outstanding aggregate principal amount of our 4.75% senior secured notes due 2023 and all $1.250 billion outstanding aggregate principal amount of our 5.875% senior notes due 2023.

Management believes that cash flows from operations, amounts available under our senior secured credit facilities and our anticipated access to public and private debt markets will be sufficient to meet expected liquidity needs for at least the next 12 months.

26

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (continued)

HCA Inc., a direct wholly-owned subsidiary of HCA Healthcare, Inc., is the primary obligor under a substantial portion of our indebtedness, including our senior secured credit facilities and senior notes. The senior secured credit facilities are fully and unconditionally guaranteed on a senior secured basis by substantially all existing and future, direct and indirect, 100% owned material domestic subsidiaries that are "Unrestricted Subsidiaries" under our Indenture dated December 16, 1993 (except for certain special purpose subsidiaries that only guarantee and pledge their assets under our senior secured asset-based revolving credit facility). For further information regarding the senior secured credit facilities and the related subsidiary guarantees, refer to the discussion under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in Part II, Item 7 of our annual report on Form 10-K for the year ended December 31, 2021. On May 25, 2022, Standard & Poor’s Rating Services (“S&P”) announced it had issued an investment grade rating with respect to the issuer credit rating of HCA Healthcare, Inc. and its subsidiaries. S&P’s announcement, in conjunction with previously disclosed events, constituted an “Investment Grade Rating Event” or a “Ratings Event,” as applicable, under the terms of the indentures governing HCA Inc.’s outstanding senior secured notes and, as a result, the conditions in the senior secured indentures to permit the permanent release of the subsidiary guarantees and all collateral securing the senior secured notes were met. The subsidiary guarantees and collateral securing our senior secured credit facilities are not affected. Following this release of the subsidiary guarantees and collateral securing the senior secured notes, the subsidiary guarantors deregistered with the Securities and Exchange Commission. As a result, summarized financial information for HCA Healthcare, Inc., HCA Inc. and the subsidiary guarantors, and information about the subsidiary guarantees and affiliates whose securities were pledged as collateral will no longer be presented.

All of the senior notes issued by HCA Inc. in 2014 or later continue to be fully and unconditionally guaranteed on an unsecured basis by HCA Healthcare, Inc. The combined assets, liabilities, and results of operations of HCA Healthcare, Inc. and HCA Inc. are not materially different than the corresponding amounts presented in the consolidated financial statements of HCA Healthcare, Inc. As a result, summarized financial information of HCA Healthcare, Inc. and HCA Inc. is not required to be presented under Rule 13-01 of Regulation S-X.

Market Risk

We are exposed to market risk related to changes in market values of securities. The investment securities held by our insurance subsidiaries were recorded at $493 million at September 30, 2022. These investments are carried at fair value, with changes in unrealized gains and losses that are not credit-related being recorded as adjustments to other comprehensive income. At September 30, 2022 and December 31, 2021, we had net unrealized losses of $41 million and net unrealized gains of $16 million, respectively, on the insurance subsidiaries’ investments. This decline in market value is due to holding fixed-rate investment securities, while market interest rates have increased during 2022.

We are exposed to market risk related to market illiquidity. Investment securities held by our insurance subsidiaries could be impaired by the inability to access the capital markets. Should the insurance subsidiaries require significant amounts of cash in excess of normal cash requirements to pay claims and other expenses on short notice, we may have difficulty selling these investments in a timely manner or be forced to sell them at a price less than what we might otherwise have been able to in a normal market environment. We may be required to recognize credit-related impairments on our investment securities in future periods should issuers default on interest payments or should the fair market valuations of the securities deteriorate due to ratings downgrades or other issue-specific factors.

We are also exposed to market risk related to changes in interest rates. With respect to our interest-bearing liabilities, approximately $3.950 billion of our debt at September 30, 2022 was subject to variable rates of interest, while the remaining debt balance of $33.760 billion at September 30, 2022 was subject to fixed rates of interest. Both the general level of interest rates and our leverage affect our variable interest rates. Our variable debt is comprised primarily of amounts outstanding under the senior secured credit facilities. Borrowings under the senior secured credit facilities bear interest at a rate equal to an applicable margin plus, at our option, either (a) a base rate determined by reference to the higher of (1) the federal funds rate plus 0.50% or (2) the prime rate of Bank of America or (b) a LIBOR rate for the currency of such borrowing for the relevant interest period. The applicable margin for borrowings under the senior secured credit facilities may fluctuate according to a leverage ratio. The average effective interest rate for our debt was 4.6% and 4.9% for the nine months ended September 30, 2022 and 2021, respectively.

The estimated fair value of our debt was $34.293 billion at September 30, 2022. The estimates of fair value are based upon the quoted market prices for the same or similar issues of debt with the same maturities. Based on a hypothetical 1% increase in interest rates, the potential annualized reduction to future pretax earnings would be approximately $40 million. To mitigate the impact of fluctuations in interest rates, we generally target a portion of our debt portfolio to be maintained at fixed rates.

27

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Liquidity and Capital Resources (continued)

Market Risk (continued)

We are exposed to currency translation risk related to our foreign operations. We currently do not consider the market risk related to foreign currency translation to be material to our consolidated financial statements or our liquidity.

Tax Examinations

At September 30, 2022, the Internal Revenue Service was conducting examinations of the Company’s 2016, 2017 and 2018 federal income tax returns and the 2019 return for one affiliated partnership. We are also subject to examination by state and foreign taxing authorities. Management believes HCA Healthcare, Inc. and its predecessors, subsidiaries and affiliates properly reported taxable income and paid taxes in accordance with applicable laws and agreements established with IRS, state and foreign taxing authorities and final resolution of any disputes will not have a material, adverse effect on our results of operations or financial position. However, if payments due upon final resolution of any issues exceed our recorded estimates, such resolutions could have a material, adverse effect on our results of operations or financial position.

28

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

Operating Data

|  | 2022 |  |  | 2021 |
Number of hospitals in operation at: |  |  |  |  |  |
March 31 |  |  | 182 |  |  |  | 186 |
June 30 |  |  | 182 |  |  |  | 187 |
September 30 |  |  | 182 |  |  |  | 183 |
December 31 |  |  |  |  |  | 182 |
Number of freestanding outpatient surgical centers in operation at: |  |  |  |  |  |
March 31 |  |  | 124 |  |  |  | 121 |
June 30 |  |  | 126 |  |  |  | 122 |
September 30 |  |  | 125 |  |  |  | 123 |
December 31 |  |  |  |  |  | 125 |
Licensed hospital beds at(a): |  |  |  |  |  |
March 31 |  |  | 48,892 |  |  |  | 49,561 |
June 30 |  |  | 48,979 |  |  |  | 49,693 |
September 30 |  |  | 49,179 |  |  |  | 48,950 |
December 31 |  |  |  |  |  | 48,803 |
Weighted average beds in service(b): |  |  |  |  |  |
Quarter: |  |  |  |  |  |
First |  |  | 41,818 |  |  |  | 42,363 |
Second |  |  | 41,930 |  |  |  | 42,464 |
Third |  |  | 42,056 |  |  |  | 42,088 |
Fourth |  |  |  |  |  | 41,685 |
Year |  |  |  |  |  | 42,148 |
Average daily census(c): |  |  |  |  |  |
Quarter: |  |  |  |  |  |
First |  |  | 29,797 |  |  |  | 29,678 |
Second |  |  | 28,256 |  |  |  | 28,901 |
Third |  |  | 28,287 |  |  |  | 31,144 |
Fourth |  |  |  |  |  | 29,273 |
Year |  |  |  |  |  | 29,752 |
Admissions(d): |  |  |  |  |  |
Quarter: |  |  |  |  |  |
First |  |  | 506,956 |  |  |  | 506,380 |
Second |  |  | 515,113 |  |  |  | 532,041 |
Third |  |  | 523,092 |  |  |  | 536,848 |
Fourth |  |  |  |  |  | 514,706 |
Year |  |  |  |  |  | 2,089,975 |
Equivalent admissions(e): |  |  |  |  |  |
Quarter: |  |  |  |  |  |
First |  |  | 859,290 |  |  |  | 832,489 |
Second |  |  | 902,757 |  |  |  | 916,212 |
Third |  |  | 917,262 |  |  |  | 905,627 |
Fourth |  |  |  |  |  | 881,910 |
Year |  |  |  |  |  | 3,536,238 |
Average length of stay (days)(f): |  |  |  |  |  |
Quarter: |  |  |  |  |  |
First |  |  | 5.3 |  |  |  | 5.3 |
Second |  |  | 5.0 |  |  |  | 4.9 |
Third |  |  | 5.0 |  |  |  | 5.3 |
Fourth |  |  |  |  |  | 5.2 |
Year |  |  |  |  |  | 5.2 |

29

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

|  | 2022 |  |  | 2021 |
Emergency room visits(g): |  |  |  |  |  |
Quarter: |  |  |  |  |  |
First |  |  | 2,056,389 |  |  |  | 1,841,778 |
Second |  |  | 2,223,999 |  |  |  | 2,128,428 |
Third |  |  | 2,278,782 |  |  |  | 2,338,180 |
Fourth |  |  |  |  |  | 2,166,959 |
Year |  |  |  |  |  | 8,475,345 |
Outpatient surgeries(h): |  |  |  |  |  |
Quarter: |  |  |  |  |  |
First |  |  | 247,421 |  |  |  | 231,228 |
Second |  |  | 258,182 |  |  |  | 262,107 |
Third |  |  | 252,026 |  |  |  | 249,192 |
Fourth |  |  |  |  |  | 265,709 |
Year |  |  |  |  |  | 1,008,236 |
Inpatient surgeries(i): |  |  |  |  |  |
Quarter: |  |  |  |  |  |
First |  |  | 126,880 |  |  |  | 127,590 |
Second |  |  | 130,961 |  |  |  | 136,460 |
Third |  |  | 132,470 |  |  |  | 126,436 |
Fourth |  |  |  |  |  | 131,583 |
Year |  |  |  |  |  | 522,069 |
Days revenues in accounts receivable(j): |  |  |  |  |  |
Quarter: |  |  |  |  |  |
First |  |  | 51 |  |  |  | 48 |
Second |  |  | 53 |  |  |  | 48 |
Third |  |  | 53 |  |  |  | 51 |
Fourth |  |  |  |  |  | 49 |
Outpatient revenues as a % of patient revenues(k): |  |  |  |  |  |
Quarter: |  |  |  |  |  |
First |  |  | 37 | % |  |  | 36 | %
Second |  |  | 39 | % |  |  | 38 | %
Third |  |  | 37 | % |  |  | 34 | %
Fourth |  |  |  |  |  | 38 | %
Year |  |  |  |  |  | 37 | %

(a)
Licensed beds are those beds for which a facility has been granted approval to operate from the applicable state licensing agency.
(b)
Represents the average number of beds in service, weighted based on periods owned.
(c)
Represents the average number of admitted patients in our hospital beds each day.
(d)
Represents the total number of patients admitted to our hospitals and is used by management and certain investors as a general measure of inpatient volume.
(e)
Equivalent admissions are used by management and certain investors as a general measure of combined inpatient and outpatient volume. Equivalent admissions are computed by multiplying admissions (inpatient volume) by the sum of gross inpatient revenues and gross outpatient revenues and then dividing the resulting amount by gross inpatient revenues. The equivalent admissions computation “equates” outpatient revenues to the volume measure (admissions) used to measure inpatient volume resulting in a general measure of combined inpatient and outpatient volume.
(f)
Represents the average number of days admitted patients stay in our hospitals.
(g)
Represents the number of patients treated in our emergency rooms.
(h)
Represents the number of surgeries performed on patients who were not admitted to our hospitals. Pain management and endoscopy procedures are not included in outpatient surgeries.
(i)
Represents the number of surgeries performed on patients who have been admitted to our hospitals. Pain management and endoscopy procedures are not included in inpatient surgeries.
(j)
Revenues per day is calculated by dividing revenues for the quarter by the days in the quarter. Days revenues in accounts receivable is then calculated as accounts receivable at the end of the quarter divided by revenues per day.
(k)
Represents the percentage of patient revenues related to patients who are not admitted to our hospitals.

30

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by this item is provided under the caption “Market Risk” under Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

HCA’s management, with the participation of HCA’s chief executive officer and chief financial officer, has evaluated the effectiveness of HCA’s disclosure controls and procedures as of September 30, 2022. Based on that evaluation, HCA’s chief executive officer and chief financial officer concluded that HCA’s disclosure controls and procedures were effective as of September 30, 2022.

Changes in Internal Control Over Financial Reporting

During the period covered by this report, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 8 – Contingencies in the notes to the condensed consolidated financial statements is incorporated herein by reference.

ITEM 1A. RISK FACTORS

Reference is made to the factors set forth under the caption “Forward-Looking Statements” in Part I, Item 2 of this quarterly report on Form 10-Q and other risk factors described in our annual report on Form 10-K for the year ended December 31, 2021, which are incorporated herein by reference. There have not been any material changes to the risk factors previously disclosed in our annual report on Form 10-K for the year ended December 31, 2021.

31

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During January 2022, our Board of Directors authorized a share repurchase program for up to $8 billion of our outstanding common stock. During the quarter ended September 30, 2022, we repurchased 3,361,740 shares of our common stock at an average price of $207.49 per share through market purchases pursuant to the January 2022 authorization. At September 30, 2022, we had $3.106 billion of repurchase authorization available under the January 2022 authorization.

The following table provides certain information with respect to our repurchases of common stock from July 1, 2022 through September 30, 2022 (dollars in millions, except per share amounts).

Period |  | Total Number of Shares Purchased |  |  | Average Price Paid per Share |  |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  |  | Approximate Dollar Value of Shares That May Yet Be Purchased Under Publicly Announced Plans or Programs |
July 2022 |  |  | 178,185 |  |  | $ | 202.05 |  |  |  | 178,185 |  |  | $ | 3,767 |
August 2022 |  |  | 1,629,897 |  |  | $ | 212.60 |  |  |  | 1,629,897 |  |  | $ | 3,421 |
September 2022 |  |  | 1,553,658 |  |  | $ | 202.75 |  |  |  | 1,553,658 |  |  | $ | 3,106 |
Total for third quarter 2022 |  |  | 3,361,740 |  |  | $ | 207.49 |  |  |  | 3,361,740 |  |  | $ | 3,106 |

On October 20, 2022, our Board of Directors declared a quarterly dividend of $0.56 per share on our common stock, payable on December 28, 2022 to stockholders of record at the close of business on December 14, 2022. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to the final determination of our Board of Directors. Our ability to declare future dividends may also from time to time be limited by the terms of our debt agreements.

32

ITEM 6. EXHIBITS

(a) List of Exhibits:

22 | — | List of Subsidiary Guarantors and Pledged Securities.
31.1 | — | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 | — | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 | — | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 | — | The following financial information from our quarterly report on Form 10-Q for the quarter ended September 30, 2022 filed with the SEC on November 1, 2022, formatted in Inline Extensible Business Reporting Language: (i) the condensed consolidated balance sheets at September 30, 2022 and December 31, 2021, (ii) the condensed consolidated income statements for the quarters and nine months ended September 30, 2022 and 2021, (iii) the condensed consolidated comprehensive income statements for the quarters and nine months ended September 30, 2022 and 2021, (iv) the condensed consolidated statements of stockholders’ equity (deficit) for the quarters and nine months ended September 30, 2022 and 2021, (v) the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 and (vi) the notes to condensed consolidated financial statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
104 | — | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL (included in Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HCA Healthcare, Inc.
By: | /S/ W ILLIAM B. R UTHERFORD
| William B. Rutherford
| Executive Vice President and Chief Financial Officer

Date: November 1, 2022

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