Intrinsic value of HCA Healthcare, Inc. - HCA

Previous Close

$127.87

  Intrinsic Value

$36.82

stock screener

  Rating & Target

str. sell

-71%

Previous close

$127.87

 
Intrinsic value

$36.82

 
Up/down potential

-71%

 
Rating

str. sell

We calculate the intrinsic value of HCA stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 43.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.20
  6.08
  5.97
  5.87
  5.79
  5.71
  5.64
  5.57
  5.52
  5.46
  5.42
  5.38
  5.34
  5.31
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
Revenue, $m
  49,571
  52,585
  55,725
  58,999
  62,413
  65,976
  69,696
  73,581
  77,640
  81,883
  86,320
  90,961
  95,817
  100,900
  106,222
  111,796
  117,634
  123,751
  130,162
  136,881
  143,924
  151,310
  159,054
  167,176
  175,694
  184,631
  194,005
  203,841
  214,161
  224,990
Variable operating expenses, $m
  40,054
  42,441
  44,928
  47,520
  50,224
  53,046
  55,992
  59,068
  62,283
  65,643
  68,362
  72,037
  75,883
  79,909
  84,124
  88,538
  93,162
  98,006
  103,083
  108,404
  113,983
  119,831
  125,965
  132,397
  139,143
  146,220
  153,645
  161,434
  169,607
  178,183
Fixed operating expenses, $m
  2,374
  2,426
  2,480
  2,534
  2,590
  2,647
  2,705
  2,765
  2,826
  2,888
  2,951
  3,016
  3,083
  3,150
  3,220
  3,291
  3,363
  3,437
  3,512
  3,590
  3,669
  3,749
  3,832
  3,916
  4,002
  4,090
  4,180
  4,272
  4,366
  4,462
Total operating expenses, $m
  42,428
  44,867
  47,408
  50,054
  52,814
  55,693
  58,697
  61,833
  65,109
  68,531
  71,313
  75,053
  78,966
  83,059
  87,344
  91,829
  96,525
  101,443
  106,595
  111,994
  117,652
  123,580
  129,797
  136,313
  143,145
  150,310
  157,825
  165,706
  173,973
  182,645
Operating income, $m
  7,143
  7,718
  8,318
  8,944
  9,599
  10,283
  10,999
  11,748
  12,531
  13,352
  15,007
  15,907
  16,851
  17,841
  18,879
  19,967
  21,109
  22,308
  23,566
  24,887
  26,273
  27,729
  29,257
  30,863
  32,549
  34,320
  36,180
  38,134
  40,187
  42,344
EBITDA, $m
  10,015
  10,716
  11,448
  12,212
  13,009
  13,843
  14,714
  15,626
  16,579
  17,578
  18,623
  19,718
  20,865
  22,068
  23,329
  24,651
  26,038
  27,493
  29,019
  30,621
  32,303
  34,068
  35,921
  37,867
  39,910
  42,055
  44,308
  46,675
  49,160
  51,770
Interest expense (income), $m
  1,666
  1,772
  1,411
  1,534
  1,662
  1,795
  1,935
  2,080
  2,232
  2,390
  2,556
  2,729
  2,910
  3,100
  3,298
  3,505
  3,722
  3,950
  4,188
  4,438
  4,699
  4,973
  5,261
  5,562
  5,878
  6,210
  6,557
  6,922
  7,304
  7,706
  8,127
Earnings before tax, $m
  5,371
  6,307
  6,784
  7,283
  7,804
  8,349
  8,919
  9,516
  10,141
  10,796
  12,277
  12,997
  13,751
  14,543
  15,373
  16,245
  17,160
  18,120
  19,128
  20,187
  21,300
  22,468
  23,695
  24,984
  26,339
  27,763
  29,258
  30,830
  32,481
  34,217
Tax expense, $m
  1,450
  1,703
  1,832
  1,966
  2,107
  2,254
  2,408
  2,569
  2,738
  2,915
  3,315
  3,509
  3,713
  3,927
  4,151
  4,386
  4,633
  4,892
  5,165
  5,451
  5,751
  6,066
  6,398
  6,746
  7,112
  7,496
  7,900
  8,324
  8,770
  9,239
Net income, $m
  3,921
  4,604
  4,953
  5,316
  5,697
  6,094
  6,511
  6,946
  7,403
  7,881
  8,962
  9,488
  10,039
  10,616
  11,223
  11,859
  12,527
  13,228
  13,964
  14,737
  15,549
  16,402
  17,297
  18,239
  19,228
  20,267
  21,358
  22,506
  23,711
  24,979

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  41,621
  44,152
  46,789
  49,537
  52,404
  55,396
  58,519
  61,781
  65,189
  68,751
  72,477
  76,373
  80,451
  84,719
  89,187
  93,867
  98,769
  103,905
  109,288
  114,929
  120,843
  127,044
  133,546
  140,366
  147,518
  155,021
  162,893
  171,151
  179,816
  188,909
Adjusted assets (=assets-cash), $m
  41,621
  44,152
  46,789
  49,537
  52,404
  55,396
  58,519
  61,781
  65,189
  68,751
  72,477
  76,373
  80,451
  84,719
  89,187
  93,867
  98,769
  103,905
  109,288
  114,929
  120,843
  127,044
  133,546
  140,366
  147,518
  155,021
  162,893
  171,151
  179,816
  188,909
Revenue / Adjusted assets
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
  1.191
Average production assets, $m
  24,091
  25,556
  27,082
  28,674
  30,333
  32,065
  33,872
  35,760
  37,733
  39,795
  41,951
  44,207
  46,567
  49,037
  51,624
  54,333
  57,170
  60,143
  63,259
  66,524
  69,947
  73,536
  77,300
  81,247
  85,388
  89,730
  94,287
  99,067
  104,082
  109,345
Working capital, $m
  3,123
  3,313
  3,511
  3,717
  3,932
  4,157
  4,391
  4,636
  4,891
  5,159
  5,438
  5,731
  6,036
  6,357
  6,692
  7,043
  7,411
  7,796
  8,200
  8,623
  9,067
  9,533
  10,020
  10,532
  11,069
  11,632
  12,222
  12,842
  13,492
  14,174
Total debt, $m
  26,123
  28,401
  30,774
  33,248
  35,828
  38,520
  41,331
  44,267
  47,334
  50,540
  53,893
  57,400
  61,070
  64,911
  68,933
  73,144
  77,556
  82,179
  87,023
  92,100
  97,423
  103,004
  108,856
  114,993
  121,431
  128,183
  135,267
  142,700
  150,498
  158,682
Total liabilities, $m
  37,459
  39,737
  42,110
  44,584
  47,164
  49,856
  52,667
  55,603
  58,670
  61,876
  65,229
  68,736
  72,406
  76,247
  80,269
  84,480
  88,892
  93,515
  98,359
  103,436
  108,759
  114,340
  120,192
  126,329
  132,767
  139,519
  146,603
  154,036
  161,834
  170,018
Total equity, $m
  4,162
  4,415
  4,679
  4,954
  5,240
  5,540
  5,852
  6,178
  6,519
  6,875
  7,248
  7,637
  8,045
  8,472
  8,919
  9,387
  9,877
  10,391
  10,929
  11,493
  12,084
  12,704
  13,355
  14,037
  14,752
  15,502
  16,289
  17,115
  17,982
  18,891
Total liabilities and equity, $m
  41,621
  44,152
  46,789
  49,538
  52,404
  55,396
  58,519
  61,781
  65,189
  68,751
  72,477
  76,373
  80,451
  84,719
  89,188
  93,867
  98,769
  103,906
  109,288
  114,929
  120,843
  127,044
  133,547
  140,366
  147,519
  155,021
  162,892
  171,151
  179,816
  188,909
Debt-to-equity ratio
  6.280
  6.430
  6.580
  6.710
  6.840
  6.950
  7.060
  7.170
  7.260
  7.350
  7.440
  7.520
  7.590
  7.660
  7.730
  7.790
  7.850
  7.910
  7.960
  8.010
  8.060
  8.110
  8.150
  8.190
  8.230
  8.270
  8.300
  8.340
  8.370
  8.400
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,921
  4,604
  4,953
  5,316
  5,697
  6,094
  6,511
  6,946
  7,403
  7,881
  8,962
  9,488
  10,039
  10,616
  11,223
  11,859
  12,527
  13,228
  13,964
  14,737
  15,549
  16,402
  17,297
  18,239
  19,228
  20,267
  21,358
  22,506
  23,711
  24,979
Depreciation, amort., depletion, $m
  2,872
  2,998
  3,130
  3,267
  3,410
  3,559
  3,715
  3,878
  4,048
  4,226
  3,616
  3,811
  4,014
  4,227
  4,450
  4,684
  4,928
  5,185
  5,453
  5,735
  6,030
  6,339
  6,664
  7,004
  7,361
  7,735
  8,128
  8,540
  8,973
  9,426
Funds from operations, $m
  6,793
  7,603
  8,083
  8,584
  9,107
  9,654
  10,226
  10,825
  11,451
  12,107
  12,579
  13,299
  14,053
  14,844
  15,673
  16,543
  17,455
  18,412
  19,417
  20,472
  21,579
  22,741
  23,961
  25,243
  26,589
  28,002
  29,487
  31,046
  32,684
  34,405
Change in working capital, $m
  182
  190
  198
  206
  215
  224
  234
  245
  256
  267
  280
  292
  306
  320
  335
  351
  368
  385
  404
  423
  444
  465
  488
  512
  537
  563
  591
  620
  650
  682
Cash from operations, $m
  6,611
  7,413
  7,885
  8,377
  8,892
  9,430
  9,992
  10,580
  11,195
  11,839
  12,299
  13,006
  13,747
  14,523
  15,338
  16,192
  17,087
  18,027
  19,013
  20,048
  21,135
  22,276
  23,473
  24,731
  26,052
  27,439
  28,896
  30,426
  32,034
  33,723
Maintenance CAPEX, $m
  -1,954
  -2,077
  -2,203
  -2,335
  -2,472
  -2,615
  -2,764
  -2,920
  -3,083
  -3,253
  -3,431
  -3,616
  -3,811
  -4,014
  -4,227
  -4,450
  -4,684
  -4,928
  -5,185
  -5,453
  -5,735
  -6,030
  -6,339
  -6,664
  -7,004
  -7,361
  -7,735
  -8,128
  -8,540
  -8,973
New CAPEX, $m
  -1,429
  -1,465
  -1,526
  -1,591
  -1,659
  -1,732
  -1,808
  -1,888
  -1,973
  -2,062
  -2,156
  -2,256
  -2,360
  -2,470
  -2,586
  -2,709
  -2,837
  -2,973
  -3,115
  -3,265
  -3,423
  -3,589
  -3,764
  -3,947
  -4,140
  -4,343
  -4,556
  -4,780
  -5,016
  -5,263
Cash from investing activities, $m
  -3,383
  -3,542
  -3,729
  -3,926
  -4,131
  -4,347
  -4,572
  -4,808
  -5,056
  -5,315
  -5,587
  -5,872
  -6,171
  -6,484
  -6,813
  -7,159
  -7,521
  -7,901
  -8,300
  -8,718
  -9,158
  -9,619
  -10,103
  -10,611
  -11,144
  -11,704
  -12,291
  -12,908
  -13,556
  -14,236
Free cash flow, $m
  3,228
  3,871
  4,155
  4,452
  4,761
  5,083
  5,420
  5,772
  6,140
  6,525
  6,713
  7,134
  7,576
  8,039
  8,524
  9,032
  9,566
  10,126
  10,713
  11,330
  11,977
  12,657
  13,370
  14,120
  14,908
  15,735
  16,605
  17,518
  18,478
  19,487
Issuance/(repayment) of debt, $m
  -6,698
  2,278
  2,373
  2,474
  2,580
  2,692
  2,811
  2,936
  3,067
  3,206
  3,353
  3,507
  3,670
  3,841
  4,022
  4,212
  4,412
  4,623
  4,844
  5,077
  5,323
  5,581
  5,852
  6,137
  6,437
  6,753
  7,084
  7,432
  7,799
  8,183
Issuance/(repurchase) of shares, $m
  5,191
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,507
  2,278
  2,373
  2,474
  2,580
  2,692
  2,811
  2,936
  3,067
  3,206
  3,353
  3,507
  3,670
  3,841
  4,022
  4,212
  4,412
  4,623
  4,844
  5,077
  5,323
  5,581
  5,852
  6,137
  6,437
  6,753
  7,084
  7,432
  7,799
  8,183
Total cash flow (excl. dividends), $m
  1,722
  6,149
  6,528
  6,925
  7,341
  7,775
  8,231
  8,707
  9,207
  9,731
  10,065
  10,641
  11,246
  11,880
  12,545
  13,244
  13,978
  14,748
  15,557
  16,407
  17,300
  18,237
  19,222
  20,257
  21,345
  22,488
  23,689
  24,951
  26,277
  27,670
Retained Cash Flow (-), $m
  -9,112
  -253
  -264
  -275
  -287
  -299
  -312
  -326
  -341
  -356
  -373
  -390
  -408
  -427
  -447
  -468
  -490
  -514
  -538
  -564
  -591
  -620
  -650
  -682
  -715
  -750
  -787
  -826
  -867
  -909
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -7,390
  5,896
  6,265
  6,651
  7,054
  7,476
  7,918
  8,381
  8,866
  9,375
  9,693
  10,252
  10,838
  11,453
  12,099
  12,776
  13,488
  14,235
  15,019
  15,843
  16,708
  17,617
  18,572
  19,576
  20,630
  21,738
  22,902
  24,125
  25,410
  26,761
Discount rate, %
  12.90
  13.55
  14.22
  14.93
  15.68
  16.46
  17.29
  18.15
  19.06
  20.01
  21.01
  22.06
  23.17
  24.32
  25.54
  26.82
  28.16
  29.57
  31.05
  32.60
  34.23
  35.94
  37.74
  39.62
  41.60
  43.68
  45.87
  48.16
  50.57
  53.10
PV of cash for distribution, $m
  -6,546
  4,573
  4,204
  3,811
  3,405
  2,996
  2,593
  2,207
  1,844
  1,513
  1,189
  937
  722
  543
  399
  285
  199
  134
  88
  56
  35
  21
  12
  6
  3
  2
  1
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

HCA Healthcare, Inc., formerly HCA Holdings, Inc., is a holding company. The Company, through its subsidiaries, owns and operates hospitals and related healthcare entities. As of December 31, 2016, the Company operated in two geographically organized groups, including the National and American Groups. As of December 31, 2016, the National Group included 84 hospitals, which were located in Alaska, California, Florida, southern Georgia, Idaho, Indiana, northern Kentucky, Nevada, New Hampshire, South Carolina, Utah and Virginia. As of December 31, 2016, the American Group included 80 hospitals, which were located in Colorado, northern Georgia, Kansas, southern Kentucky, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee and Texas. As of December 31, 2016, the Company operated six hospitals in England. The Company owns, manages or operates hospitals, freestanding surgery centers and freestanding emergency care facilities, walk-in clinics, diagnostic and imaging centers, among others.

FINANCIAL RATIOS  of  HCA Healthcare, Inc. (HCA)

Valuation Ratios
P/E Ratio 16.4
Price to Sales 1.1
Price to Book -6.5
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow 16.4
Growth Rates
Sales Growth Rate 4.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.2%
Cap. Spend. - 3 Yr. Gr. Rate 7.3%
Financial Strength
Quick Ratio 3
Current Ratio 0.2
LT Debt to Equity -426.7%
Total Debt to Equity -429.7%
Interest Coverage 4
Management Effectiveness
Return On Assets 12.3%
Ret/ On Assets - 3 Yr. Avg. 10.9%
Return On Total Capital 12.3%
Ret/ On T. Cap. - 3 Yr. Avg. 10.3%
Return On Equity -38.8%
Return On Equity - 3 Yr. Avg. -29.8%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 83.3%
Gross Margin - 3 Yr. Avg. 83.2%
EBITDA Margin 20.3%
EBITDA Margin - 3 Yr. Avg. 19.5%
Operating Margin 15.5%
Oper. Margin - 3 Yr. Avg. 14.5%
Pre-Tax Margin 11.6%
Pre-Tax Margin - 3 Yr. Avg. 10.3%
Net Profit Margin 7%
Net Profit Margin - 3 Yr. Avg. 5.8%
Effective Tax Rate 28.6%
Eff/ Tax Rate - 3 Yr. Avg. 30.8%
Payout Ratio 0%

HCA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HCA stock intrinsic value calculation we used $46677 million for the last fiscal year's total revenue generated by HCA Healthcare, Inc.. The default revenue input number comes from 0001 income statement of HCA Healthcare, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our HCA stock valuation model: a) initial revenue growth rate of 6.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 12.9%, whose default value for HCA is calculated based on our internal credit rating of HCA Healthcare, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of HCA Healthcare, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of HCA stock the variable cost ratio is equal to 80.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2323 million in the base year in the intrinsic value calculation for HCA stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for HCA Healthcare, Inc..

Corporate tax rate of 27% is the nominal tax rate for HCA Healthcare, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the HCA stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for HCA are equal to 48.6%.

Life of production assets of 11.6 years is the average useful life of capital assets used in HCA Healthcare, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for HCA is equal to 6.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-4950 million for HCA Healthcare, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 342.652 million for HCA Healthcare, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of HCA Healthcare, Inc. at the current share price and the inputted number of shares is $43.8 billion.

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