Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
HCA Healthcare Inc., solvency ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The solvency profile of the organization demonstrates a general trend of deleveraging and improved debt-servicing capacity between 2017 and 2021. There is a consistent reduction in the proportion of debt relative to total assets and capital through 2020, followed by a slight reversal in 2021. Simultaneously, the ability to cover fixed obligations and interest expenses strengthened considerably over the five-year period.
- Leverage Ratios
- The debt to capital ratio decreased steadily from 1.26 in 2017 to a low of 0.98 in 2020, before increasing slightly to 1.03 in 2021. A similar pattern is observed in the debt to assets ratio, which declined from 0.90 in 2017 to 0.65 in 2020, then rose to 0.68 in 2021. When incorporating operating lease liabilities, the debt to assets ratio remained higher than the standard debt to assets figure, moving from 0.90 in 2017 to a low of 0.70 in 2020, and ending at 0.72 in 2021. These trends suggest a concerted effort to reduce the company's reliance on borrowed funds relative to its asset base until 2021.
- Coverage Ratios
- Debt servicing capability showed marked improvement, particularly in the final year of the period. The interest coverage ratio rose from 3.59 in 2017 to 7.28 in 2021, indicating a significantly enhanced capacity to meet interest payments from operating earnings. The fixed charge coverage ratio followed a more volatile path, declining in 2019 and 2020 before surging to 5.81 in 2021. This suggests that while fixed obligations were more constrained in the mid-period, the company ended 2021 in a substantially stronger position to meet all fixed financial commitments.
- Supplementary Solvency Metrics
- For the 2020 fiscal year, a debt to equity ratio of 54.20 was recorded, which increased to 57.79 when including operating lease liabilities. The financial leverage ratio for the same period was 83.02. These figures provide a snapshot of high leverage during that specific period, despite the improving trends observed in the broader asset and capital ratios.
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Debt Ratios
Coverage Ratios
Debt to Equity
HCA Healthcare Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt due within one year | 237) | 209) | 145) | 788) | 200) | |
| Long-term debt due after one year, less debt issuance costs and discounts | 34,342) | 30,795) | 33,577) | 32,033) | 32,858) | |
| Total debt | 34,579) | 31,004) | 33,722) | 32,821) | 33,058) | |
| Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc. | (933) | 572) | (2,808) | (4,950) | (6,806) | |
| Solvency Ratio | ||||||
| Debt to equity1 | — | 54.20 | — | — | — | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Abbott Laboratories | 0.50 | — | — | — | — | |
| Elevance Health Inc. | 0.64 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.00 | — | — | — | — | |
| Medtronic PLC | 0.51 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.64 | — | — | — | — | |
| Debt to Equity, Sector | ||||||
| Health Care Equipment & Services | 0.55 | — | — | — | — | |
| Debt to Equity, Industry | ||||||
| Health Care | 0.80 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc.
= 34,579 ÷ -933 = —
2 Click competitor name to see calculations.
An analysis of the solvency metrics reveals a period of relative stability in total debt contrasted with significant volatility and recurring deficits in stockholders' equity. The company maintained a high level of leverage throughout the observed period, characterized by a consistent reliance on debt financing.
- Total Debt Trends
- Total debt exhibited minor fluctuations between 2017 and 2021, remaining within a range of US$ 31,004 million to US$ 34,579 million. A slight decrease was noted in 2020, followed by a peak in 2021, indicating a consistent capital structure based on substantial long-term liabilities.
- Stockholders' Equity Position
- The equity position was characterized by a prolonged deficit from 2017 to 2019, although the magnitude of the deficit improved from US$ 6,806 million to US$ 2,808 million over those three years. A transition to a positive equity balance of US$ 572 million occurred in 2020, but this trend reversed in 2021, resulting in a renewed deficit of US$ 933 million.
- Debt to Equity Ratio Analysis
- The debt to equity ratio was only reported for the 2020 fiscal year at 54.20. This value is the result of the temporary shift to positive stockholders' equity. In all other years analyzed, the existence of a stockholders' equity deficit prevents the application of a standard debt to equity ratio, as the negative denominator precludes a meaningful percentage-based solvency interpretation.
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Debt to Equity (including Operating Lease Liability)
HCA Healthcare Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt due within one year | 237) | 209) | 145) | 788) | 200) | |
| Long-term debt due after one year, less debt issuance costs and discounts | 34,342) | 30,795) | 33,577) | 32,033) | 32,858) | |
| Total debt | 34,579) | 31,004) | 33,722) | 32,821) | 33,058) | |
| Right-of-use current operating lease obligations | 392) | 379) | 350) | —) | —) | |
| Right-of-use noncurrent operating lease obligations | 1,755) | 1,673) | 1,499) | —) | —) | |
| Total debt (including operating lease liability) | 36,726) | 33,056) | 35,571) | 32,821) | 33,058) | |
| Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc. | (933) | 572) | (2,808) | (4,950) | (6,806) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | — | 57.79 | — | — | — | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Abbott Laboratories | 0.54 | — | — | — | — | |
| Elevance Health Inc. | 0.67 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.01 | — | — | — | — | |
| Medtronic PLC | 0.53 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.70 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | 0.58 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.83 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc.
= 36,726 ÷ -933 = —
2 Click competitor name to see calculations.
The analysis of solvency indicators from 2017 to 2021 reveals a capital structure characterized by consistently high total debt and significant volatility in stockholders' equity. Total debt, which includes operating lease liabilities, maintained a general upward trajectory, increasing from $33.06 billion in 2017 to $36.73 billion by the end of 2021.
- Total Debt Trends
- Total liabilities remained relatively stable between 2017 and 2020, with a slight peak in 2019 at $35.57 billion followed by a decrease to $33.06 billion in 2020. However, a notable increase occurred in 2021, where debt rose to $36.73 billion, representing the highest level of indebtedness within the five-year period.
- Stockholders' Equity Volatility
- The equity position exhibited substantial fluctuations, starting with a significant deficit of $6.81 billion in 2017. This deficit narrowed consistently through 2018 and 2019, eventually transitioning to a positive balance of $572 million in 2020. This improvement was short-lived, as equity returned to a deficit of $933 million in 2021.
- Debt to Equity Ratio Analysis
- The debt to equity ratio is heavily influenced by the instability of the equity base. Because stockholders' equity was negative for four of the five years analyzed, the ratio is mathematically skewed or unavailable for most of the period. The recorded ratio of 57.79 in 2020 corresponds with the only instance of positive equity, highlighting a period of temporary solvency improvement before the return to a negative equity position in 2021.
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Debt to Capital
HCA Healthcare Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt due within one year | 237) | 209) | 145) | 788) | 200) | |
| Long-term debt due after one year, less debt issuance costs and discounts | 34,342) | 30,795) | 33,577) | 32,033) | 32,858) | |
| Total debt | 34,579) | 31,004) | 33,722) | 32,821) | 33,058) | |
| Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc. | (933) | 572) | (2,808) | (4,950) | (6,806) | |
| Total capital | 33,646) | 31,576) | 30,914) | 27,871) | 26,252) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 1.03 | 0.98 | 1.09 | 1.18 | 1.26 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Abbott Laboratories | 0.34 | — | — | — | — | |
| Elevance Health Inc. | 0.39 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.00 | — | — | — | — | |
| Medtronic PLC | 0.34 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.39 | — | — | — | — | |
| Debt to Capital, Sector | ||||||
| Health Care Equipment & Services | 0.35 | — | — | — | — | |
| Debt to Capital, Industry | ||||||
| Health Care | 0.44 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital = Total debt ÷ Total capital
= 34,579 ÷ 33,646 = 1.03
2 Click competitor name to see calculations.
The solvency profile from 2017 to 2021 reflects a general trend toward a more balanced capital structure, characterized by a consistent expansion of total capital alongside fluctuating debt levels.
- Total Debt Trends
- Total debt remained relatively stable with minor fluctuations throughout the analyzed period. After a slight decrease between 2017 and 2018, debt levels rose in 2019 before reaching a period low of 31,004 million US dollars in 2020. A significant increase occurred in 2021, with debt rising to 34,579 million US dollars, the highest level recorded in the five-year span.
- Total Capital Growth
- A consistent upward trajectory is observed in total capital, which grew every year without exception. Total capital increased from 26,252 million US dollars in 2017 to 33,646 million US dollars by 2021. This steady growth in the capital base served as a primary driver in improving the overall solvency position during the majority of the period.
- Debt to Capital Ratio Analysis
- The debt to capital ratio experienced a sustained decline from 2017 to 2020, dropping from 1.26 to 0.98. This downward trend indicates a reduction in financial leverage and an increase in solvency. However, this trend reversed in 2021, as the ratio increased to 1.03. This uptick is attributable to the fact that the growth in total debt during 2021 outpaced the growth in total capital.
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Debt to Capital (including Operating Lease Liability)
HCA Healthcare Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt due within one year | 237) | 209) | 145) | 788) | 200) | |
| Long-term debt due after one year, less debt issuance costs and discounts | 34,342) | 30,795) | 33,577) | 32,033) | 32,858) | |
| Total debt | 34,579) | 31,004) | 33,722) | 32,821) | 33,058) | |
| Right-of-use current operating lease obligations | 392) | 379) | 350) | —) | —) | |
| Right-of-use noncurrent operating lease obligations | 1,755) | 1,673) | 1,499) | —) | —) | |
| Total debt (including operating lease liability) | 36,726) | 33,056) | 35,571) | 32,821) | 33,058) | |
| Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc. | (933) | 572) | (2,808) | (4,950) | (6,806) | |
| Total capital (including operating lease liability) | 35,793) | 33,628) | 32,763) | 27,871) | 26,252) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 1.03 | 0.98 | 1.09 | 1.18 | 1.26 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Abbott Laboratories | 0.35 | — | — | — | — | |
| Elevance Health Inc. | 0.40 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.01 | — | — | — | — | |
| Medtronic PLC | 0.35 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.41 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | 0.37 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.45 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 36,726 ÷ 35,793 = 1.03
2 Click competitor name to see calculations.
The solvency profile of the organization demonstrates a general trend toward an improved capital structure between 2017 and 2020, followed by a modest increase in leverage in 2021.
- Total Debt Evolution
- Total debt, including operating lease liabilities, exhibited volatility over the observed period. Following a marginal decrease in 2018 and a subsequent rise to 35,571 million USD in 2019, debt levels were reduced to 33,056 million USD in 2020. By December 31, 2021, total debt reached its period peak of 36,726 million USD.
- Total Capital Growth
- Total capital showed a consistent upward trajectory, increasing from 26,252 million USD in 2017 to 35,793 million USD in 2021. This steady expansion of the capital base occurred independently of the fluctuations in debt, indicating a strengthening of the overall financial foundation over the five-year duration.
- Debt to Capital Ratio Analysis
- The debt to capital ratio experienced a sustained decline from 1.26 in 2017 to a low of 0.98 in 2020. This trend reflects a reduction in the reliance on debt relative to total capital. However, this improvement was partially offset in 2021, as the ratio rose to 1.03, indicating that debt once again exceeded total capital at the end of the period.
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Debt to Assets
HCA Healthcare Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt due within one year | 237) | 209) | 145) | 788) | 200) | |
| Long-term debt due after one year, less debt issuance costs and discounts | 34,342) | 30,795) | 33,577) | 32,033) | 32,858) | |
| Total debt | 34,579) | 31,004) | 33,722) | 32,821) | 33,058) | |
| Total assets | 50,742) | 47,490) | 45,058) | 39,207) | 36,593) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.68 | 0.65 | 0.75 | 0.84 | 0.90 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Abbott Laboratories | 0.24 | — | — | — | — | |
| Elevance Health Inc. | 0.24 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.00 | — | — | — | — | |
| Medtronic PLC | 0.28 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.22 | — | — | — | — | |
| Debt to Assets, Sector | ||||||
| Health Care Equipment & Services | 0.23 | — | — | — | — | |
| Debt to Assets, Industry | ||||||
| Health Care | 0.30 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets = Total debt ÷ Total assets
= 34,579 ÷ 50,742 = 0.68
2 Click competitor name to see calculations.
An analysis of solvency metrics from 2017 to 2021 reveals a significant improvement in the overall financial structure, characterized by a substantial reduction in the proportion of assets financed by debt.
- Total Asset Expansion
- A sustained upward trajectory is observed in total assets, which increased from 36,593 million US dollars in 2017 to 50,742 million US dollars by the end of 2021. This represents a consistent growth in the resource base over the five-year period.
- Debt Stability and Fluctuations
- Total debt remained relatively stable, fluctuating within a narrow corridor between 31,004 million and 34,579 million US dollars. While there was a notable increase in debt during 2021, the growth in liabilities did not keep pace with the expansion of the asset base.
- Debt to Assets Ratio Trend
- The debt to assets ratio exhibited a strong downward trend for the majority of the analyzed period, falling from 0.90 in 2017 to a low of 0.65 in 2020. A slight increase to 0.68 was recorded in 2021, coinciding with the rise in total debt. Despite this final marginal increase, the overall trend indicates a strengthened solvency position and a reduced reliance on leveraged financing relative to total assets.
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Debt to Assets (including Operating Lease Liability)
HCA Healthcare Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt due within one year | 237) | 209) | 145) | 788) | 200) | |
| Long-term debt due after one year, less debt issuance costs and discounts | 34,342) | 30,795) | 33,577) | 32,033) | 32,858) | |
| Total debt | 34,579) | 31,004) | 33,722) | 32,821) | 33,058) | |
| Right-of-use current operating lease obligations | 392) | 379) | 350) | —) | —) | |
| Right-of-use noncurrent operating lease obligations | 1,755) | 1,673) | 1,499) | —) | —) | |
| Total debt (including operating lease liability) | 36,726) | 33,056) | 35,571) | 32,821) | 33,058) | |
| Total assets | 50,742) | 47,490) | 45,058) | 39,207) | 36,593) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.72 | 0.70 | 0.79 | 0.84 | 0.90 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Abbott Laboratories | 0.26 | — | — | — | — | |
| Elevance Health Inc. | 0.25 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.01 | — | — | — | — | |
| Medtronic PLC | 0.29 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.24 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | 0.25 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.31 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 36,726 ÷ 50,742 = 0.72
2 Click competitor name to see calculations.
A general improvement in the solvency profile is observed between 2017 and 2020, characterized by a consistent decline in the debt-to-assets ratio, followed by a marginal increase in 2021. The overall trend indicates a strategic expansion of the asset base that outpaced the growth of total liabilities, thereby reducing the proportion of assets financed through debt.
- Asset Growth Trends
- Total assets exhibited a steady and uninterrupted upward trajectory, rising from US$ 36,593 million in 2017 to US$ 50,742 million by the end of 2021. This consistent growth reflects a significant expansion of the balance sheet over the five-year period.
- Debt Level Stability
- Total debt, inclusive of operating lease liabilities, remained relatively stable, fluctuating within a range of approximately US$ 32.8 billion to US$ 36.7 billion. Despite a peak in 2021 at US$ 36,726 million, the debt levels did not increase proportionally with the growth in total assets.
- Solvency Ratio Analysis
- The debt-to-assets ratio declined from 0.90 in 2017 to a period low of 0.70 in 2020. This downward trend suggests a reduction in financial leverage and an improved capacity to cover total liabilities with existing assets. The slight uptick to 0.72 in 2021 aligns with the increase in total debt recorded during that fiscal year, although the ratio remains substantially lower than the 2017 baseline.
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Financial Leverage
HCA Healthcare Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 50,742) | 47,490) | 45,058) | 39,207) | 36,593) | |
| Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc. | (933) | 572) | (2,808) | (4,950) | (6,806) | |
| Solvency Ratio | ||||||
| Financial leverage1 | — | 83.02 | — | — | — | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Abbott Laboratories | 2.10 | — | — | — | — | |
| Elevance Health Inc. | 2.70 | — | — | — | — | |
| Intuitive Surgical Inc. | 1.14 | — | — | — | — | |
| Medtronic PLC | 1.81 | — | — | — | — | |
| UnitedHealth Group Inc. | 2.96 | — | — | — | — | |
| Financial Leverage, Sector | ||||||
| Health Care Equipment & Services | 2.37 | — | — | — | — | |
| Financial Leverage, Industry | ||||||
| Health Care | 2.69 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc.
= 50,742 ÷ -933 = —
2 Click competitor name to see calculations.
A consistent expansion of the asset base is observed between 2017 and 2021, while stockholders' equity exhibited significant volatility, characterized by prolonged deficits and a brief period of positive capitalization.
- Asset Growth Trend
- Total assets increased monotonically from US$ 36,593 million in 2017 to US$ 50,742 million in 2021. This steady upward trajectory indicates a continuous growth in the company's resource base over the five-year period.
- Equity Position and Capital Structure
- Stockholders' equity remained in a deficit position for the majority of the analyzed timeframe. A corrective trend is noted from 2017, where the deficit was US$ 6,806 million, narrowing progressively until reaching a positive balance of US$ 572 million by December 31, 2020. This recovery was short-lived, as equity returned to a deficit of US$ 933 million in 2021.
- Financial Leverage Analysis
- The financial leverage ratio was recorded at 83.02 in 2020. This elevated ratio is a mathematical consequence of the relatively small positive equity base compared to the total assets of US$ 47,490 million. The prevalence of negative equity in the surrounding years suggests a capital structure heavily reliant on debt or impacted by aggressive treasury stock acquisitions, which typically elevates solvency risk.
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Interest Coverage
HCA Healthcare Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to HCA Healthcare, Inc. | 6,956) | 3,754) | 3,505) | 3,787) | 2,216) | |
| Add: Net income attributable to noncontrolling interest | 765) | 633) | 640) | 602) | 527) | |
| Add: Income tax expense | 2,112) | 1,043) | 1,099) | 946) | 1,638) | |
| Add: Interest expense | 1,566) | 1,584) | 1,824) | 1,755) | 1,690) | |
| Earnings before interest and tax (EBIT) | 11,399) | 7,014) | 7,068) | 7,090) | 6,071) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 7.28 | 4.43 | 3.88 | 4.04 | 3.59 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Abbott Laboratories | 16.41 | — | — | — | — | |
| Elevance Health Inc. | 10.93 | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | 5.21 | — | — | — | — | |
| UnitedHealth Group Inc. | 14.44 | — | — | — | — | |
| Interest Coverage, Sector | ||||||
| Health Care Equipment & Services | 12.30 | — | — | — | — | |
| Interest Coverage, Industry | ||||||
| Health Care | 14.14 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Interest coverage = EBIT ÷ Interest expense
= 11,399 ÷ 1,566 = 7.28
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2017 to 2021 indicates a significant strengthening in the capacity to service interest obligations. The overall trend is characterized by a substantial increase in the interest coverage ratio, moving from 3.59 in 2017 to 7.28 by the end of 2021.
- Earnings Before Interest and Tax (EBIT) Performance
- EBIT exhibited steady growth from 2017 to 2018, rising from 6,071 million to 7,090 million. A period of relative stagnation followed between 2018 and 2020, with values remaining around the 7,000 million mark. However, a sharp increase occurred in 2021, with EBIT reaching 11,399 million, representing a growth of approximately 62% over the preceding year.
- Interest Expense Trends
- Interest expenses showed a slight upward trajectory between 2017 and 2019, peaking at 1,824 million. This trend reversed in 2020 and 2021, where expenses declined to 1,584 million and 1,566 million, respectively. This reduction in the cost of debt occurred concurrently with the surge in operational earnings.
- Interest Coverage Ratio Dynamics
- The interest coverage ratio improved gradually between 2017 and 2020, fluctuating between 3.59 and 4.43. The most notable shift occurred in 2021, where the ratio climbed to 7.28. This acceleration was driven by the dual impact of significantly higher EBIT and lower interest expenses, resulting in a vastly improved margin of safety for debt obligations.
The convergence of expanding operational profitability and declining interest costs has led to a marked improvement in the organization's solvency profile. The substantial rise in the coverage ratio by 2021 suggests a diminished risk of default and increased financial flexibility.
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Fixed Charge Coverage
HCA Healthcare Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to HCA Healthcare, Inc. | 6,956) | 3,754) | 3,505) | 3,787) | 2,216) | |
| Add: Net income attributable to noncontrolling interest | 765) | 633) | 640) | 602) | 527) | |
| Add: Income tax expense | 2,112) | 1,043) | 1,099) | 946) | 1,638) | |
| Add: Interest expense | 1,566) | 1,584) | 1,824) | 1,755) | 1,690) | |
| Earnings before interest and tax (EBIT) | 11,399) | 7,014) | 7,068) | 7,090) | 6,071) | |
| Add: Operating lease expense | 478) | 447) | 389) | —) | —) | |
| Earnings before fixed charges and tax | 11,877) | 7,461) | 7,457) | 7,090) | 6,071) | |
| Interest expense | 1,566) | 1,584) | 1,824) | 1,755) | 1,690) | |
| Operating lease expense | 478) | 447) | 389) | —) | —) | |
| Fixed charges | 2,044) | 2,031) | 2,213) | 1,755) | 1,690) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 5.81 | 3.67 | 3.37 | 4.04 | 3.59 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Abbott Laboratories | 10.21 | — | — | — | — | |
| Elevance Health Inc. | 8.48 | — | — | — | — | |
| Intuitive Surgical Inc. | 93.66 | — | — | — | — | |
| Medtronic PLC | 4.31 | — | — | — | — | |
| UnitedHealth Group Inc. | 8.80 | — | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Health Care Equipment & Services | 8.36 | — | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Health Care | 10.48 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 11,877 ÷ 2,044 = 5.81
2 Click competitor name to see calculations.
The solvency position of HCA Healthcare Inc. demonstrates a significant strengthening over the five-year period from 2017 to 2021, characterized by a substantial increase in the capacity to meet fixed financial obligations. While the fixed charge coverage ratio experienced some volatility between 2018 and 2020, the period concluded with a marked improvement in financial flexibility.
- Fixed Charge Coverage Ratio
- The coverage ratio fluctuated between 2017 and 2020, moving from 3.59 to 4.04 in 2018, before declining to a period low of 3.37 in 2019. A recovery began in 2020 at 3.67, culminating in a sharp increase to 5.81 by December 31, 2021. This upward trajectory indicates a strengthened margin of safety for creditors and a reduced risk of default on fixed obligations.
- Earnings Before Fixed Charges and Tax
- A consistent upward trend in earnings is observed, growing from US$ 6,071 million in 2017 to US$ 7,461 million in 2020. A significant acceleration occurred in 2021, with earnings rising to US$ 11,877 million, representing a substantial increase in the operational cash flow available to service debt and other fixed commitments.
- Fixed Charges
- Fixed charges remained relatively stable compared to earnings growth. After an initial increase from US$ 1,690 million in 2017 to a peak of US$ 2,213 million in 2019, charges moderated to US$ 2,031 million in 2020 and US$ 2,044 million in 2021. The stability of these costs amidst rising earnings is the primary driver behind the expansion of the coverage ratio.
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