Intrinsic value of HCA Healthcare - HCA

Previous Close

$131.57

  Intrinsic Value

$28.12

stock screener

  Rating & Target

str. sell

-79%

Previous close

$131.57

 
Intrinsic value

$28.12

 
Up/down potential

-79%

 
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 2017), $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 47.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.00
Revenue, $m
  45,838
  48,171
  50,619
  53,187
  55,881
  58,708
  61,675
  64,788
  68,055
  71,485
  75,084
  78,861
  82,827
  86,989
  91,358
  95,945
  100,760
  105,815
  111,122
  116,693
  122,542
  128,682
  135,129
  141,897
  149,004
  156,464
  164,298
  172,522
  181,157
  190,224
Variable operating expenses, $m
  38,696
  40,628
  42,654
  44,781
  47,012
  49,353
  51,809
  54,387
  57,092
  59,932
  62,173
  65,301
  68,584
  72,031
  75,649
  79,447
  83,434
  87,620
  92,014
  96,627
  101,470
  106,555
  111,893
  117,498
  123,382
  129,560
  136,046
  142,856
  150,007
  157,514
Fixed operating expenses, $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 operating expenses, $m
  38,696
  40,628
  42,654
  44,781
  47,012
  49,353
  51,809
  54,387
  57,092
  59,932
  62,173
  65,301
  68,584
  72,031
  75,649
  79,447
  83,434
  87,620
  92,014
  96,627
  101,470
  106,555
  111,893
  117,498
  123,382
  129,560
  136,046
  142,856
  150,007
  157,514
Operating income, $m
  7,143
  7,544
  7,965
  8,406
  8,870
  9,356
  9,866
  10,401
  10,963
  11,553
  12,911
  13,560
  14,242
  14,958
  15,709
  16,498
  17,326
  18,195
  19,108
  20,066
  21,071
  22,127
  23,236
  24,400
  25,622
  26,905
  28,252
  29,666
  31,151
  32,710
EBITDA, $m
  10,421
  10,952
  11,508
  12,092
  12,705
  13,348
  14,022
  14,730
  15,473
  16,252
  17,071
  17,929
  18,831
  19,777
  20,771
  21,813
  22,908
  24,057
  25,264
  26,530
  27,860
  29,256
  30,722
  32,261
  33,876
  35,573
  37,354
  39,223
  41,187
  43,248
Interest expense (income), $m
  1,666
  1,785
  1,310
  1,406
  1,505
  1,610
  1,720
  1,835
  1,956
  2,083
  2,216
  2,356
  2,503
  2,657
  2,819
  2,988
  3,166
  3,353
  3,550
  3,756
  3,972
  4,199
  4,438
  4,688
  4,951
  5,227
  5,517
  5,821
  6,140
  6,476
  6,828
Earnings before tax, $m
  5,358
  6,233
  6,559
  6,901
  7,259
  7,636
  8,031
  8,445
  8,880
  9,336
  10,555
  11,058
  11,585
  12,139
  12,721
  13,332
  13,973
  14,645
  15,352
  16,093
  16,872
  17,689
  18,548
  19,449
  20,395
  21,388
  22,431
  23,525
  24,675
  25,882
Tax expense, $m
  1,447
  1,683
  1,771
  1,863
  1,960
  2,062
  2,168
  2,280
  2,398
  2,521
  2,850
  2,986
  3,128
  3,278
  3,435
  3,600
  3,773
  3,954
  4,145
  4,345
  4,555
  4,776
  5,008
  5,251
  5,507
  5,775
  6,056
  6,352
  6,662
  6,988
Net income, $m
  3,911
  4,550
  4,788
  5,038
  5,299
  5,574
  5,862
  6,165
  6,482
  6,815
  7,705
  8,072
  8,457
  8,862
  9,286
  9,732
  10,200
  10,691
  11,207
  11,748
  12,317
  12,913
  13,540
  14,198
  14,888
  15,613
  16,374
  17,174
  18,013
  18,894

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
  38,455
  40,412
  42,466
  44,620
  46,880
  49,252
  51,741
  54,352
  57,093
  59,970
  62,990
  66,159
  69,486
  72,977
  76,643
  80,491
  84,530
  88,771
  93,223
  97,897
  102,803
  107,955
  113,363
  119,041
  125,003
  131,262
  137,834
  144,733
  151,978
  159,584
Adjusted assets (=assets-cash), $m
  38,455
  40,412
  42,466
  44,620
  46,880
  49,252
  51,741
  54,352
  57,093
  59,970
  62,990
  66,159
  69,486
  72,977
  76,643
  80,491
  84,530
  88,771
  93,223
  97,897
  102,803
  107,955
  113,363
  119,041
  125,003
  131,262
  137,834
  144,733
  151,978
  159,584
Revenue / Adjusted assets
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
  1.192
Average production assets, $m
  25,394
  26,687
  28,043
  29,466
  30,958
  32,524
  34,168
  35,893
  37,703
  39,602
  41,596
  43,689
  45,886
  48,192
  50,613
  53,154
  55,821
  58,622
  61,561
  64,648
  67,888
  71,290
  74,861
  78,611
  82,548
  86,681
  91,021
  95,577
  100,361
  105,384
Working capital, $m
  -1,100
  -1,156
  -1,215
  -1,276
  -1,341
  -1,409
  -1,480
  -1,555
  -1,633
  -1,716
  -1,802
  -1,893
  -1,988
  -2,088
  -2,193
  -2,303
  -2,418
  -2,540
  -2,667
  -2,801
  -2,941
  -3,088
  -3,243
  -3,406
  -3,576
  -3,755
  -3,943
  -4,141
  -4,348
  -4,565
Total debt, $m
  24,268
  26,030
  27,878
  29,817
  31,851
  33,986
  36,226
  38,576
  41,043
  43,632
  46,350
  49,202
  52,196
  55,339
  58,638
  62,101
  65,736
  69,553
  73,560
  77,766
  82,182
  86,818
  91,686
  96,796
  102,162
  107,795
  113,709
  119,919
  126,439
  133,284
Total liabilities, $m
  34,609
  36,371
  38,219
  40,158
  42,192
  44,327
  46,567
  48,917
  51,384
  53,973
  56,691
  59,543
  62,537
  65,680
  68,979
  72,442
  76,077
  79,894
  83,901
  88,107
  92,523
  97,159
  102,027
  107,137
  112,503
  118,136
  124,050
  130,260
  136,780
  143,625
Total equity, $m
  3,845
  4,041
  4,247
  4,462
  4,688
  4,925
  5,174
  5,435
  5,709
  5,997
  6,299
  6,616
  6,949
  7,298
  7,664
  8,049
  8,453
  8,877
  9,322
  9,790
  10,280
  10,795
  11,336
  11,904
  12,500
  13,126
  13,783
  14,473
  15,198
  15,958
Total liabilities and equity, $m
  38,454
  40,412
  42,466
  44,620
  46,880
  49,252
  51,741
  54,352
  57,093
  59,970
  62,990
  66,159
  69,486
  72,978
  76,643
  80,491
  84,530
  88,771
  93,223
  97,897
  102,803
  107,954
  113,363
  119,041
  125,003
  131,262
  137,833
  144,733
  151,978
  159,583
Debt-to-equity ratio
  6.310
  6.440
  6.560
  6.680
  6.790
  6.900
  7.000
  7.100
  7.190
  7.280
  7.360
  7.440
  7.510
  7.580
  7.650
  7.720
  7.780
  7.840
  7.890
  7.940
  7.990
  8.040
  8.090
  8.130
  8.170
  8.210
  8.250
  8.290
  8.320
  8.350
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
  3,911
  4,550
  4,788
  5,038
  5,299
  5,574
  5,862
  6,165
  6,482
  6,815
  7,705
  8,072
  8,457
  8,862
  9,286
  9,732
  10,200
  10,691
  11,207
  11,748
  12,317
  12,913
  13,540
  14,198
  14,888
  15,613
  16,374
  17,174
  18,013
  18,894
Depreciation, amort., depletion, $m
  3,279
  3,408
  3,544
  3,686
  3,835
  3,992
  4,156
  4,329
  4,510
  4,700
  4,160
  4,369
  4,589
  4,819
  5,061
  5,315
  5,582
  5,862
  6,156
  6,465
  6,789
  7,129
  7,486
  7,861
  8,255
  8,668
  9,102
  9,558
  10,036
  10,538
Funds from operations, $m
  7,190
  7,958
  8,332
  8,724
  9,135
  9,566
  10,018
  10,493
  10,992
  11,515
  11,865
  12,441
  13,046
  13,681
  14,348
  15,047
  15,782
  16,553
  17,363
  18,213
  19,105
  20,042
  21,026
  22,059
  23,143
  24,281
  25,476
  26,731
  28,049
  29,432
Change in working capital, $m
  -53
  -56
  -59
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -91
  -95
  -100
  -105
  -110
  -116
  -121
  -127
  -134
  -140
  -147
  -155
  -162
  -171
  -179
  -188
  -197
  -207
  -218
Cash from operations, $m
  7,243
  8,014
  8,391
  8,785
  9,199
  9,634
  10,090
  10,568
  11,070
  11,597
  11,951
  12,532
  13,141
  13,781
  14,453
  15,158
  15,898
  16,675
  17,490
  18,347
  19,246
  20,190
  21,181
  22,221
  23,313
  24,460
  25,664
  26,929
  28,256
  29,650
Maintenance CAPEX, $m
  -2,417
  -2,539
  -2,669
  -2,804
  -2,947
  -3,096
  -3,252
  -3,417
  -3,589
  -3,770
  -3,960
  -4,160
  -4,369
  -4,589
  -4,819
  -5,061
  -5,315
  -5,582
  -5,862
  -6,156
  -6,465
  -6,789
  -7,129
  -7,486
  -7,861
  -8,255
  -8,668
  -9,102
  -9,558
  -10,036
New CAPEX, $m
  -1,222
  -1,293
  -1,356
  -1,423
  -1,493
  -1,566
  -1,644
  -1,725
  -1,810
  -1,900
  -1,994
  -2,093
  -2,197
  -2,306
  -2,421
  -2,541
  -2,668
  -2,800
  -2,940
  -3,086
  -3,240
  -3,402
  -3,572
  -3,750
  -3,937
  -4,133
  -4,340
  -4,556
  -4,784
  -5,023
Cash from investing activities, $m
  -3,639
  -3,832
  -4,025
  -4,227
  -4,440
  -4,662
  -4,896
  -5,142
  -5,399
  -5,670
  -5,954
  -6,253
  -6,566
  -6,895
  -7,240
  -7,602
  -7,983
  -8,382
  -8,802
  -9,242
  -9,705
  -10,191
  -10,701
  -11,236
  -11,798
  -12,388
  -13,008
  -13,658
  -14,342
  -15,059
Free cash flow, $m
  3,604
  4,182
  4,366
  4,558
  4,760
  4,972
  5,194
  5,427
  5,671
  5,927
  5,997
  6,279
  6,575
  6,886
  7,213
  7,555
  7,915
  8,292
  8,688
  9,104
  9,541
  9,999
  10,480
  10,985
  11,515
  12,072
  12,657
  13,270
  13,914
  14,591
Issuance/(repayment) of debt, $m
  -8,790
  1,762
  1,848
  1,939
  2,034
  2,135
  2,240
  2,351
  2,467
  2,589
  2,717
  2,852
  2,994
  3,143
  3,299
  3,463
  3,636
  3,817
  4,007
  4,206
  4,416
  4,636
  4,868
  5,110
  5,365
  5,633
  5,914
  6,210
  6,520
  6,845
Issuance/(repurchase) of shares, $m
  6,741
  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  
  -2,049
  1,762
  1,848
  1,939
  2,034
  2,135
  2,240
  2,351
  2,467
  2,589
  2,717
  2,852
  2,994
  3,143
  3,299
  3,463
  3,636
  3,817
  4,007
  4,206
  4,416
  4,636
  4,868
  5,110
  5,365
  5,633
  5,914
  6,210
  6,520
  6,845
Total cash flow (excl. dividends), $m
  1,555
  5,944
  6,214
  6,497
  6,794
  7,106
  7,434
  7,777
  8,138
  8,517
  8,714
  9,131
  9,569
  10,029
  10,512
  11,018
  11,550
  12,109
  12,695
  13,311
  13,957
  14,635
  15,348
  16,096
  16,881
  17,705
  18,571
  19,480
  20,434
  21,436
Retained Cash Flow (-), $m
  -10,651
  -196
  -205
  -215
  -226
  -237
  -249
  -261
  -274
  -288
  -302
  -317
  -333
  -349
  -367
  -385
  -404
  -424
  -445
  -467
  -491
  -515
  -541
  -568
  -596
  -626
  -657
  -690
  -724
  -761
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
  262
  275
  289
  304
  319
  335
  352
  370
  389
  408
  429
  451
  473
  497
  522
  548
  576
  605
  635
  667
  700
  735
  772
  811
  851
  894
  939
  986
  1,035
  1,087
Cash available for distribution, $m
  -9,096
  5,748
  6,009
  6,282
  6,568
  6,869
  7,185
  7,516
  7,864
  8,229
  8,412
  8,815
  9,237
  9,680
  10,145
  10,634
  11,146
  11,685
  12,250
  12,843
  13,466
  14,120
  14,807
  15,528
  16,285
  17,079
  17,914
  18,790
  19,710
  20,676
Discount rate, %
  13.30
  13.97
  14.66
  15.40
  16.17
  16.97
  17.82
  18.71
  19.65
  20.63
  21.66
  22.75
  23.88
  25.08
  26.33
  27.65
  29.03
  30.48
  32.01
  33.61
  35.29
  37.05
  38.91
  40.85
  42.89
  45.04
  47.29
  49.65
  52.14
  54.74
PV of cash for distribution, $m
  -8,029
  4,426
  3,986
  3,542
  3,105
  2,681
  2,279
  1,905
  1,565
  1,261
  973
  753
  571
  422
  304
  214
  146
  97
  63
  39
  24
  14
  8
  4
  2
  1
  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 (HCA)

Valuation Ratios
P/E Ratio 16.9
Price to Sales 1.2
Price to Book -6.7
Price to Tangible Book
Price to Cash Flow 8.6
Price to Free Cash Flow 16.9
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 $43614 million for the last fiscal year's total revenue generated by HCA Healthcare. The default revenue input number comes from 2017 income statement of HCA Healthcare. 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 5.1% 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 13.3%, whose default value for HCA is calculated based on our internal credit rating of HCA Healthcare, 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.
    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 84.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 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.

Corporate tax rate of 27% is the nominal tax rate for HCA Healthcare. 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 0.6%.

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 55.4%.

Life of production assets of 10 years is the average useful life of capital assets used in HCA Healthcare 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 -2.4%. 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 - $-6806 million for HCA Healthcare - 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 362 million for HCA Healthcare 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 at the current share price and the inputted number of shares is $47.6 billion.

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COMPANY NEWS

▶ HCA to Present at September Healthcare Conferences   [Aug-17-18 04:30PM  Business Wire]
▶ BBQ and Bill Frist highlight Nashville's latest Inc. 5000 honorees   [Aug-15-18 02:24PM  American City Business Journals]
▶ Luxe cinema rolls into Lake Nona Town Center   [01:38PM  American City Business Journals]
▶ Today's Bell Ringer, August 14, 2018   [09:15AM  CNBC Videos]
▶ Philips now eyes 1,000-plus downtown jobs, juicing an already wild hiring spree   [Aug-09-18 03:04PM  American City Business Journals]
▶ HCA Healthcare Is Likely to Head Higher After a Shallow Dip   [Aug-08-18 10:22AM  TheStreet.com]
▶ One of America's oldest family-medicine residency programs closes at Denver hospital   [Aug-07-18 04:30PM  American City Business Journals]
▶ 5 Value Stocks Hotter than Apple in 2018   [Aug-06-18 12:18PM  InvestorPlace]
▶ Can Apple Save Us From this Tech Wreck?   [Jul-31-18 09:15AM  Zacks]
▶ HCA Healthcare Reports Positive Earnings   [Jul-27-18 10:21AM  Motley Fool]
▶ Why HCA Healthcare, Inc. Stock Jumped Today   [Jul-25-18 05:02PM  Motley Fool]
▶ HCA's Milton Johnson: 'I dont feel compelled' to make a big acquisition   [03:33PM  American City Business Journals]
▶ TriStar set to open $96 million joint-replacement center   [02:54PM  American City Business Journals]
▶ HCA: 2Q Earnings Snapshot   [08:43AM  Associated Press]
▶ HCA Reports Second Quarter 2018 Results   [08:30AM  Business Wire]
▶ Health Care Council names 18 board members, appoints HCA's Milton Johnson chairman   [Jul-23-18 01:47PM  American City Business Journals]
▶ The next 50 years: How HCA will shape its future   [12:29PM  American City Business Journals]
▶ Milton Johnson reveals HCA's competitive advantage   [12:28PM  American City Business Journals]
▶ Giving back: HCA's Dr. Frist Jr. driven by 'a love of the community'   [12:26PM  American City Business Journals]
▶ The HCA effect: How the hospital giant helped Nashville grow with it   [Jul-20-18 12:44PM  American City Business Journals]
▶ HCA donates more than $5 million as part of 50th anniversary   [03:02PM  American City Business Journals]
▶ HCA at 50: Building a hospital giant   [12:45PM  American City Business Journals]
▶ From the Editor: HCA changed health care, and redefined a city   [12:44PM  American City Business Journals]
▶ The businessman: Jack Massey made his own luck at HCA   [12:41PM  American City Business Journals]
▶ Jack Bovender recounts his rescue missions at HCA   [12:39PM  American City Business Journals]
▶ HCA breaks ground on freestanding Millenia ER   [Jul-11-18 02:51PM  American City Business Journals]
▶ HCA to open 24/7 ER in east Houston as Harvey-shuttered hospital preps for demolition   [Jul-05-18 05:41PM  American City Business Journals]
▶ HCA 2nd Quarter 2018 Earnings Conference Call   [Jun-27-18 04:15PM  Business Wire]
▶ UCF-HCA joint venture to secure more land for Lake Nona teaching hospital   [Jun-21-18 11:15AM  American City Business Journals]
▶ Health:Further lands partnership with HCA   [Jun-14-18 09:00AM  American City Business Journals]
▶ Wesley CEO details early phases of $100M capital improvement plan   [Jun-12-18 03:35PM  American City Business Journals]
▶ Envision Healthcare sold for $9.9 billion   [Jun-11-18 08:45AM  American City Business Journals]
▶ Oviedo Medical Center to break ground on freestanding ER near Baldwin Park   [Jun-06-18 05:15PM  American City Business Journals]
▶ HCA eyes purchase of Houston hospital   [Jun-04-18 11:48AM  American City Business Journals]
▶ HCA Gulf Coast reportedly could buy another northwest Houston hospital   [Jun-01-18 09:02AM  American City Business Journals]
▶ Developers: Ikea deal is dead, but our $1.7B project is not   [May-30-18 01:39PM  American City Business Journals]
▶ Publix cements deal for downtown Nashville grocery   [May-29-18 12:12PM  American City Business Journals]
▶ Why a deal between HCA and Envision makes sense   [May-24-18 09:00AM  American City Business Journals]
▶ At $103.86, Is It Time To Buy HCA Healthcare Inc (NYSE:HCA)?   [May-22-18 02:27PM  Simply Wall St.]
▶ Why health care will cost you more next year   [01:22PM  Yahoo Finance Video]
▶ Yahoo Finance Live: Midday Movers - May 22nd, 2018   [09:40AM  Yahoo Finance Video]
▶ Report: HCA makes offer to buy Envision   [May-21-18 09:05AM  American City Business Journals]
▶ TriStar announces more than $500 million in Middle Tennessee investments   [May-14-18 02:53PM  American City Business Journals]
▶ One of Nashville's biggest companies lands grant for new downtown HQ   [May-11-18 03:31PM  American City Business Journals]
▶ A Look At The Fair Value Of HCA Healthcare Inc (NYSE:HCA)   [May-07-18 07:07PM  Simply Wall St.]
▶ "Fast Money" final trades: PYPL, HD and more   [May-03-18 05:59PM  CNBC Videos]
▶ HCA Healthcare's Profits Jump   [12:28PM  Motley Fool]
▶ HCA: 1Q Earnings Snapshot   [09:01AM  Associated Press]
▶ HCA Reports First Quarter 2018 Results   [08:30AM  Business Wire]
▶ HCA to Present at May Healthcare Conference   [08:20AM  Business Wire]
▶ "Fast Money" final trades: GE, HCA and more   [Apr-24-18 05:59PM  CNBC Videos]
▶ HCA 1st Quarter 2018 Earnings Conference Call   [Apr-16-18 04:30PM  Business Wire]
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