Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
HCA Healthcare Inc., profitability 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 profitability metrics for the period between 2017 and 2021 demonstrate a general upward trajectory, characterized by stable gross margins and a significant acceleration in operational and net efficiency by the end of the period.
- Gross Profit Margin
- A consistent and stable trend is observed in the gross profit margin, which remained high throughout the five-year period. The margin increased marginally from 83.23% in 2017 to 83.86% in 2021, indicating a strong and steady ability to manage direct costs relative to revenue.
- Operating and Net Profit Margins
- Operating profit margins exhibited slight fluctuations between 2017 and 2020, moving from 13.91% to 14.08%. However, a substantial increase occurred in 2021, where the margin rose to 19.23%. This trend is mirrored in the net profit margin, which climbed from 5.08% in 2017 to a peak of 11.84% in 2021, suggesting improved operational leverage and bottom-line performance.
- Return on Assets (ROA)
- The return on assets followed a pattern similar to the net profit margin. After an initial rise to 9.66% in 2018 and a subsequent slight decline to 7.90% in 2020, the ROA experienced a sharp increase to 13.71% in 2021. This indicates a marked improvement in the efficiency of asset utilization to generate earnings.
- Return on Equity (ROE)
- Data for return on equity is limited, with a single recorded value of 656.29% in 2020. This exceptionally high figure is atypical compared to other profitability ratios and suggests a significant impact from leverage or changes in the equity base during that specific fiscal year.
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Gross Profit Margin
HCA Healthcare Inc., gross profit margin 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) | ||||||
| Gross profit | 49,271) | 43,164) | 42,855) | 38,953) | 36,298) | |
| Revenues | 58,752) | 51,533) | 51,336) | 46,677) | 43,614) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 83.86% | 83.76% | 83.48% | 83.45% | 83.23% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 52.21% | — | — | — | — | |
| Elevance Health Inc. | 17.09% | — | — | — | — | |
| Intuitive Surgical Inc. | 69.32% | — | — | — | — | |
| Medtronic PLC | 65.19% | — | — | — | — | |
| UnitedHealth Group Inc. | 23.60% | — | — | — | — | |
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
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × 49,271 ÷ 58,752 = 83.86%
2 Click competitor name to see calculations.
A consistent upward trajectory is observed in both total revenues and gross profit over the five-year period from 2017 to 2021. The simultaneous growth of these metrics indicates a scalable operational model where revenue expansion is matched by proportional increases in gross profit, maintaining a high level of profitability.
- Revenue and Gross Profit Expansion
- Total revenues increased from 43,614 million USD in 2017 to 58,752 million USD in 2021. In tandem, gross profit rose from 36,298 million USD to 49,271 million USD. This sustained growth demonstrates a strong capacity for increasing volume and capturing value over the analyzed period.
- Gross Profit Margin Trend
- The gross profit margin exhibited a steady and incremental increase, starting at 83.23% in 2017 and reaching 83.86% by 2021. The narrow range of fluctuation suggests a highly stable cost of sales relative to total revenue.
- Operational Efficiency and Cost Control
- The slight but continuous improvement in the gross profit margin indicates that the company successfully managed its direct costs during a period of significant scaling. The ability to expand the margin while increasing total revenue suggests an optimization of operational efficiencies or an improvement in the pricing power of services provided.
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Operating Profit Margin
HCA Healthcare Inc., operating profit margin 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) | ||||||
| Operating income | 11,298) | 7,255) | 7,236) | 7,070) | 6,065) | |
| Revenues | 58,752) | 51,533) | 51,336) | 46,677) | 43,614) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 19.23% | 14.08% | 14.10% | 15.15% | 13.91% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 19.56% | — | — | — | — | |
| Elevance Health Inc. | 5.15% | — | — | — | — | |
| Intuitive Surgical Inc. | 31.89% | — | — | — | — | |
| Medtronic PLC | 14.89% | — | — | — | — | |
| UnitedHealth Group Inc. | 8.40% | — | — | — | — | |
| Operating Profit Margin, Sector | ||||||
| Health Care Equipment & Services | 9.13% | — | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Health Care | 18.04% | — | — | — | — | |
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
Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × 11,298 ÷ 58,752 = 19.23%
2 Click competitor name to see calculations.
Between 2017 and 2021, a consistent upward trajectory in both total revenues and operating income is observed, culminating in a significant expansion of operational efficiency in the final year.
- Revenue and Operating Income Growth
- Total revenues grew steadily from 43,614 million US$ in 2017 to 58,752 million US$ in 2021. Operating income followed a similar growth pattern, increasing from 6,065 million US$ in 2017 to 11,298 million US$ by the end of 2021. The most pronounced growth in operating income occurred between 2020 and 2021, where it rose by approximately 55%.
- Operating Profit Margin Analysis
- The operating profit margin exhibited relative stability from 2017 through 2020, fluctuating within a tight range between 13.91% and 15.15%. A slight compression is noted between 2018 and 2020, where the margin declined from 15.15% to 14.08%. However, this trend reversed sharply in 2021, with the margin expanding to 19.23%, indicating a substantial improvement in the conversion of revenue to operating profit.
- Efficiency and Scalability
- The data suggests that while revenue growth was linear and consistent, the operating income experienced an accelerated increase in 2021. This divergence indicates that operating expenses grew at a slower rate than revenues during the final period, resulting in a significant spike in overall profitability and operational leverage.
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Net Profit Margin
HCA Healthcare Inc., net profit margin 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) | |
| Revenues | 58,752) | 51,533) | 51,336) | 46,677) | 43,614) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 11.84% | 7.28% | 6.83% | 8.11% | 5.08% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Abbott Laboratories | 16.42% | — | — | — | — | |
| Elevance Health Inc. | 4.46% | — | — | — | — | |
| Intuitive Surgical Inc. | 29.85% | — | — | — | — | |
| Medtronic PLC | 11.97% | — | — | — | — | |
| UnitedHealth Group Inc. | 6.06% | — | — | — | — | |
| Net Profit Margin, Sector | ||||||
| Health Care Equipment & Services | 7.14% | — | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Health Care | 15.24% | — | — | — | — | |
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
Net profit margin = 100 × Net income attributable to HCA Healthcare, Inc. ÷ Revenues
= 100 × 6,956 ÷ 58,752 = 11.84%
2 Click competitor name to see calculations.
The financial performance from 2017 through 2021 is characterized by consistent growth in top-line revenue and a substantial expansion in bottom-line profitability.
- Revenue Expansion
- Total revenues grew steadily from US$ 43,614 million in 2017 to US$ 58,752 million by the end of 2021. A consistent upward trajectory is observed, with the most pronounced increase occurring between 2020 and 2021.
- Net Income Performance
- Net income attributable to the entity increased from US$ 2,216 million in 2017 to US$ 6,956 million in 2021. While a marginal contraction occurred in 2019, where income dipped to US$ 3,505 million from US$ 3,787 million the previous year, the subsequent recovery and the sharp surge in 2021 indicate significant earnings acceleration.
- Net Profit Margin Evolution
- The net profit margin expanded from 5.08% in 2017 to 11.84% in 2021. The margin exhibited some volatility between 2018 and 2020, fluctuating between 6.83% and 8.11%. However, the jump to 11.84% in the final year of the period suggests a marked improvement in operational efficiency and a stronger conversion of revenue into net profit.
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Return on Equity (ROE)
HCA Healthcare Inc., ROE 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) | |
| Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc. | (933) | 572) | (2,808) | (4,950) | (6,806) | |
| Profitability Ratio | ||||||
| ROE1 | — | 656.29% | — | — | — | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Abbott Laboratories | 19.75% | — | — | — | — | |
| Elevance Health Inc. | 16.93% | — | — | — | — | |
| Intuitive Surgical Inc. | 14.32% | — | — | — | — | |
| Medtronic PLC | 7.01% | — | — | — | — | |
| UnitedHealth Group Inc. | 24.09% | — | — | — | — | |
| ROE, Sector | ||||||
| Health Care Equipment & Services | 17.28% | — | — | — | — | |
| ROE, Industry | ||||||
| Health Care | 25.44% | — | — | — | — | |
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
ROE = 100 × Net income attributable to HCA Healthcare, Inc. ÷ Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc.
= 100 × 6,956 ÷ -933 = —
2 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by strong and growing net income contrasted with a highly volatile and frequently negative stockholders' equity position. This divergence indicates a capital structure where liabilities exceed assets for most of the period, often a result of aggressive share repurchase programs or significant debt utilization.
- Net Income Trends
- A consistent upward trajectory in profitability is observed. Net income increased from 2,216 million US dollars in 2017 to 6,956 million US dollars by 2021. A particularly significant surge in earnings occurred in 2021, where net income nearly doubled compared to the 2020 figure of 3,754 million US dollars.
- Stockholders' Equity Analysis
- The equity position remained in a deficit for the majority of the analyzed period. A gradual reduction of the deficit was noted from 2017 (-6,806 million US dollars) through 2019 (-2,808 million US dollars). A brief transition to a positive equity position occurred in 2020 at 572 million US dollars, before reverting to a deficit of 933 million US dollars in 2021.
- Return on Equity (ROE) Interpretation
- The ROE exhibits extreme volatility due to the fluctuating and low base of stockholders' equity. The reported ROE of 656.29% in 2020 is an anomaly resulting from the intersection of strong net income and a relatively small positive equity balance. In years where equity was negative despite positive net income, the ROE is mathematically distorted, rendering it an unreliable metric for assessing operational efficiency during those specific periods.
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Return on Assets (ROA)
HCA Healthcare Inc., ROA 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) | |
| Total assets | 50,742) | 47,490) | 45,058) | 39,207) | 36,593) | |
| Profitability Ratio | ||||||
| ROA1 | 13.71% | 7.90% | 7.78% | 9.66% | 6.06% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Abbott Laboratories | 9.40% | — | — | — | — | |
| Elevance Health Inc. | 6.26% | — | — | — | — | |
| Intuitive Surgical Inc. | 12.58% | — | — | — | — | |
| Medtronic PLC | 3.87% | — | — | — | — | |
| UnitedHealth Group Inc. | 8.15% | — | — | — | — | |
| ROA, Sector | ||||||
| Health Care Equipment & Services | 7.28% | — | — | — | — | |
| ROA, Industry | ||||||
| Health Care | 9.46% | — | — | — | — | |
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
ROA = 100 × Net income attributable to HCA Healthcare, Inc. ÷ Total assets
= 100 × 6,956 ÷ 50,742 = 13.71%
2 Click competitor name to see calculations.
The analysis of profitability ratios from 2017 to 2021 reveals a general increase in asset utilization efficiency, characterized by a significant expansion in the Return on Assets (ROA) over the five-year period.
- Asset Expansion and Net Income Trends
- Total assets demonstrated a consistent upward trajectory, increasing from 36,593 million US dollars in 2017 to 50,742 million US dollars in 2021. During the same interval, net income attributable to the company grew from 2,216 million US dollars to 6,956 million US dollars. While asset growth was linear, net income experienced more volatility, with a slight decline in 2019 before a substantial surge in 2021.
- Return on Assets (ROA) Volatility and Growth
- The ROA shifted from 6.06% in 2017 to 13.71% in 2021. A peak of 9.66% was reached in 2018, followed by a contraction to 7.78% in 2019. This decline in 2019 is attributable to a simultaneous decrease in net income and a significant increase in the total asset base. However, the ratio stabilized at 7.90% in 2020 before increasing sharply in 2021.
- Operational Efficiency Insights
- The most notable improvement in efficiency occurred between 2020 and 2021, where the ROA increased by 5.81 percentage points. This spike indicates that the growth in net income during this period far outpaced the expansion of the asset base, suggesting a heightened ability to convert invested capital into profit.
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