HCA Healthcare Inc

Previous wording

This quarterly report on Form 10-Q includes certain disclosures that contain “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include statements regarding expected capital expenditures, expected dividends, expected share repurchases, expected net claim payments, expected inflationary pressures, expected labor costs and all other statements that do not relate solely to historical or current facts, and can be identified by the use of words like “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “initiative” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond our control, which could significantly affect current plans and expectations and our future financial position and results of operations. These factors include, but are not limited to,(1) changes in or related to general economic conditions nationally and regionally in our markets, including inflation and economic and business conditions (and the impact thereof on the economy, financial markets and banking industry); changes in revenues due to declining patient volumes; changes in payer mix (including increases in uninsured and underinsured patients); potential increased expenses related to labor, supply chain or other expenditures; workforce disruptions; supply shortages and disruptions (including as a result of geopolitical disruptions); and the impact of potential federal government shutdowns, (2) the impact of our significant indebtedness and the ability to refinance such indebtedness on acceptable terms, (3) the impact of current and future federal and state health reform initiatives and possible changes to other federal, state or local laws and regulations affecting the health care industry, including, but not limited to, proposals to expand coverage of federally-funded insurance programs as an alternative to private insurance or establish a single-payer system (such reforms often referred to as “Medicare for All”), (4) the effects related to the implementation of sequestration spending reductions required under the Budget Control Act of 2011, related legislation extending these reductions and those required under the Pay-As-You-Go Act of 2010 as a result of the federal budget deficit impact of the American Rescue Plan Act of 2021, and the potential for future deficit reduction legislation that may alter these spending reductions, which include cuts to Medicare payments, or create additional spending reductions, (5) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (6) the ability to achieve operating and financial targets, attain expected levels of patient volumes and revenues, and control the costs of providing services, (7) possible change…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This quarterly report on Form 10-Q includes certain disclosures that contain “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include statements regarding expected capital expenditures, expected dividends, expected share repurchases, expected net claim payments, expected inflationary pressures, expected labor costs and all other statements that do not relate solely to historical or current facts, and can be identified by the use of words like “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “initiative” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of known and unknown uncertainties and risks, many of which are beyond our control, which could significantly affect current plans and expectations and our future financial position and results of operations. These factors include, but are not limited to, (1) changes in or related to general economic conditions nationally and regionally in our markets, including inflation and economic and business conditions (and the impact thereof on the economy, financial markets and banking industry); changes in revenues due to declining patient volumes; changes in payer mix (including increases in uninsured and underinsured patients); potential increased expenses related to labor, supply chain or other expenditures; workforce disruptions; supply shortages and disruptions (including as a result of geopolitical disruptions); and the impact of potential federal government shutdowns, (2) the impact of our significant indebtedness and the ability to refinance such indebtedness on acceptable terms, (3) the impact of current and future federal and state health reform initiatives and possible changes to other federal, state or local laws and regulations affecting the health care industry, including, but not limited to, proposals to expand coverage of federally-funded insurance programs as an alternative to private insurance or establish a single-payer system (such reforms often referred to as “Medicare for All”), (4) the effects related to the implementation of sequestration spending reductions required under the Budget Control Act of 2011, related legislation extending these reductions and those required under the Pay-As-You-Go Act of 2010 as a result of the federal budget deficit impact of the American Rescue Plan Act of 2021, and the potential for future deficit reduction legislation that may alter these spending reductions, which include cuts to Medicare payments, or create additional spending reductions, (5) increases in the amount and risk of collectability of uninsured accounts and deductibles and copayment amounts for insured accounts, (6) the ability to achieve operating and financial targets, attain expected levels of patient volumes and revenues, and control the costs of providing services, (7) possible chang…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Revenues increased 11.2% on a consolidated basis and 8.8% on a same facility basis for the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023. The increase in consolidated revenues can be primarily attributed to the combined impact of a 7.1% increase in equivalent admissions and a 3.9% increase in revenue per equivalent admission. The same facility revenues increase primarily resulted from the combined impact of a 5.2% increase in same facility equivalent admissions and a 3.5% increase in same facility revenue per equivalent admission.

Current wording

Revenues increased 10.3% on a consolidated basis and 9.9% on a same facility basis for the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023. The increase in consolidated revenues can be primarily attributed to the combined impact of a 4.1% increase in revenue per equivalent admission and a 6.0% increase in equivalent admissions. The same facility revenues increase primarily resulted from the combined impact of a 4.4% increase in same facility revenue per equivalent admission and a 5.2% increase in same facility equivalent admissions.

Previous wording

During the quarter ended March 31, 2024, consolidated admissions increased 6.8% and same facility admissions increased 6.2% compared to the quarter ended March 31, 2023. Surgeries declined 0.1% on a consolidated basis and 0.8% on a same facility basis during the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023. Emergency department visits increased 7.8% on a consolidated basis and 7.2% on a same facility basis during the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023. Consolidated and same facility uninsured admissions increased 3.1% and 2.4%, respectively, for the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023.

Current wording

During the quarter ended June 30, 2024, consolidated admissions increased 6.0% and same facility admissions increased 5.8% compared to the quarter ended June 30, 2023. Surgeries declined 0.3% on a consolidated basis and 0.5% on a same facility basis during the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023. Emergency department visits increased 5.3% on a consolidated basis and 5.5% on a same facility basis during the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023. Consolidated and same facility uninsured admissions increased 4.0% and 3.5%, respectively, for the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023.

Previous wording

Cash flows from operating activities increased $666 million, from $1.803 billion for the first quarter of 2023 to $2.469 billion for the first quarter of 2024. The increase in cash provided by operating activities was primarily related to the combined impact of changes in working capital items of $512 million (primarily related to accounts payable and accrued expenses) and an $83 million increase in net income, excluding losses and gains on sales of facilities.

Current wording

Cash flows from operating activities declined $504 million, from $2.475 billion for the second quarter of 2023 to $1.971 billion for the second quarter of 2024. The decline in cash provided by operating activities was primarily related to negative changes in working capital items of $824 million, mainly from an increase in accounts receivable and a decrease in accounts payable, and an increase of $232 million in income tax payments, partially offset by an increase in net income of $265 million, excluding gain on sales of facilities.

Previous wording

Revenues increased 11.2% from $15.591 billion in the first quarter of 2023 to $17.339 billion in the first quarter of 2024. Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual adjustments under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured and other discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenues at the estimated amounts we expect to collect. Patients treated at our hospitals for non-elective care, who have income at or below 400% of the federal poverty level, are eligible for charity care. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues. Our revenues by primary third-party payer classification and other (including uninsured patients) for the quarters ended March 31, 2024 and 2023 are summarized in the following table (dollars in millions):

Current wording

Revenues increased 10.3% from $15.861 billion in the second quarter of 2023 to $17.492 billion in the second quarter of 2024. Our revenues are based upon the estimated amounts we expect to be entitled to receive from patients and third-party payers. Estimates of contractual adjustments under managed care and commercial insurance plans are based upon the payment terms specified in the related contractual agreements. Revenues related to uninsured patients and uninsured copayment and deductible amounts for patients who have health care coverage may have discounts applied (uninsured and other discounts). We also record estimated implicit price concessions (based primarily on historical collection experience) related to uninsured accounts to record self-pay revenues at the estimated amounts we expect to collect. Patients treated at our hospitals for non-elective care, who have income at or below 400% of the federal poverty level, are eligible for charity care. Because we do not pursue collection of amounts determined to qualify as charity care, they are not reported in revenues. Our revenues by primary third-party payer classification and other (including uninsured patients) for the quarters and six months ended June 30, 2024 and 2023 are summarized in the following table (dollars in millions):

Previous wording

Consolidated and same facility revenue per equivalent admission increased 3.9% and 3.5%, respectively, in the first quarter of 2024, compared to the first quarter of 2023. Consolidated and same facility equivalent admissions increased 7.1% and 5.2%, respectively, in the first quarter of 2024, compared to the first quarter of 2023. Consolidated and same facility outpatient surgeries declined 1.2% and 2.1%, respectively, in the first quarter of 2024, compared to the first quarter of 2023. Consolidated and same facility inpatient surgeries increased 2.3% and 1.7%, respectively, in the first quarter of 2024, compared to the first quarter of 2023. Consolidated and same facility emergency department visits increased 7.8% and 7.2%, respectively, in the first quarter of 2024, compared to the first quarter of 2023.

Current wording

Consolidated and same facility revenue per equivalent admission increased 4.1% and 4.4%, respectively, in the second quarter of 2024, compared to the second quarter of 2023. Consolidated and same facility equivalent admissions increased 6.0% and 5.2%, respectively, in the second quarter of 2024, compared to the second quarter of 2023. Consolidated and same facility outpatient surgeries declined 1.8% and 2.1%, respectively, in the second quarter of 2024, compared to the second quarter of 2023. Consolidated and same facility inpatient surgeries both increased 2.6% in the second quarter of 2024, compared to the second quarter of 2023. Consolidated and same facility emergency department visits increased 5.3% and 5.5%, respectively, in the second quarter of 2024, compared to the second quarter of 2023.

Previous wording

To quantify the total impact of the trends related to uninsured patient accounts, we believe it is beneficial to view total uncompensated care, which is comprised of charity care, uninsured discounts and implicit price concessions. A summary of the estimated cost of total uncompensated care for the quarters ended March 31, 2024 and 2023 follows (dollars in millions):

Current wording

To quantify the total impact of the trends related to uninsured patient accounts, we believe it is beneficial to view total uncompensated care, which is comprised of charity care, uninsured discounts and implicit price concessions. A summary of the estimated cost of total uncompensated care for the quarters and six months ended June 30, 2024 and 2023 follows (dollars in millions):

Previous wording

Same facility uninsured admissions increased 2.4%, in the first quarter of 2024 compared to the first quarter of 2023. Same facility uninsured admissions in 2023, compared to 2022, increased 3.2% in the fourth quarter, increased 3.3% in the third quarter, declined 6.6% in the second quarter and declined 1.1% in the first quarter.

Current wording

Same facility uninsured admissions increased 3.5% in the second quarter of 2024 compared to the second quarter of 2023. Same facility uninsured admissions increased 2.4% in the first quarter of 2024 compared to the first quarter of 2023. Same facility uninsured admissions in 2023, compared to 2022, increased 3.2% in the fourth quarter, increased 3.3% in the third quarter, declined 6.6% in the second quarter and declined 1.1% in the first quarter.

Previous wording

The approximate percentages of our admissions related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers and the uninsured for the quarters ended March 31, 2024 and 2023 are set forth in the following table.

Current wording

The approximate percentages of our admissions related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers and the uninsured for the quarters and six months ended June 30, 2024 and 2023 are set forth in the following table.

Previous wording

The approximate percentages of our inpatient revenues related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers for the quarters ended March 31, 2024 and 2023 are set forth in the following table.

Current wording

The approximate percentages of our inpatient revenues related to Medicare, managed Medicare, Medicaid, managed Medicaid, managed care and insurers for the quarters and six months ended June 30, 2024 and 2023 are set forth in the following table.

Previous wording

At March 31, 2024, we had 98 hospitals in the states of Texas and Florida. During the quarter ended March 31, 2024, 59% of our admissions and 51% of our revenues were generated by these hospitals. Uninsured admissions in Texas and Florida represented 74% of our uninsured admissions during the quarter ended March 31, 2024.

Current wording

At June 30, 2024, we had 98 hospitals in the states of Texas and Florida. During the quarter ended June 30, 2024, 59% of our admissions and 51% of our revenues were generated by these hospitals. Uninsured admissions in Texas and Florida represented 73% of our uninsured admissions during the quarter ended June 30, 2024.

Previous wording

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

Current wording

We receive a significant portion of our revenues from government health programs, principally Medicare and Medicaid, which are highly regulated and subject to frequent and substantial changes. Some state Medicaid programs use, or have applied to use, waivers granted by the Centers for Medicare & Medicaid Services (“CMS”) to implement Medicaid expansion, impose different eligibility or enrollment restrictions, or otherwise implement programs that vary from federal standards. We receive supplemental payments in several states. We are aware these supplemental payment programs are regularly reviewed by certain government agencies and some states have made requests to CMS to modify their existing supplemental payment programs. In May 2024, CMS issued a final rule related to Medicaid managed care programs that addresses access, financing and quality within these programs. This final rule addresses aspects of state directed program arrangements with new and updated requirements to ensure a more consistent and transparent approach for participating states. The various elements of the rule take effect between issuance and early 2028. It is possible that these developments, reviews and requests will result in the restructuring of or other significant changes to supplemental payment programs. We are unable to estimate the financial impact that program structure modifications and other program changes, if any, may have on our results of operations.

Previous wording

The following is a comparative summary of results of operations for the quarters ended March 31, 2024 and 2023 (dollars in millions):

Current wording

The following is a comparative summary of results of operations for the quarters and six months ended June 30, 2024 and 2023 (dollars in millions):

Previous wording

Revenues increased 11.2% on a consolidated basis and 8.8% on a same facility basis for the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023. The increase in consolidated revenues can be primarily attributed to the combined impact of a 7.1% increase in equivalent admissions and a 3.9% increase in revenue per equivalent admission. The same facility revenues increase primarily resulted from the combined impact of a 5.2% increase in same facility equivalent admissions and a 3.5% increase in same facility revenue per equivalent admission.

Current wording

Revenues increased 10.3% on a consolidated basis and 9.9% on a same facility basis for the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023. The increase in consolidated revenues can be primarily attributed to the combined impact of a 4.1% increase in revenue per equivalent admission and a 6.0% increase in equivalent admissions. The same facility revenues increase primarily resulted from the combined impact of a 4.4% increase in same facility revenue per equivalent admission and a 5.2% increase in same facility equivalent admissions.

Previous wording

Salaries and benefits, as a percentage of revenues, were 44.4% in the first quarter of 2024 and 45.4% in the first quarter of 2023. Salaries and benefits per equivalent admission increased 1.6% in the first quarter of 2024 compared to the first quarter of 2023. Same facility salaries and benefits per full time equivalent increased 1.5% for the first quarter of 2024 compared to the first quarter of 2023. We continue to utilize certain contract, overtime and other premium rate labor costs to support our clinical staff and patients. While these costs have declined compared to the prior year period, future costs may be affected by labor market conditions and other factors.

Current wording

Salaries and benefits, as a percentage of revenues, were 43.9% in the second quarter of 2024 and 45.9% in the second quarter of 2023. Salaries and benefits were favorably impacted by a 25.7% decline in contract labor during the second quarter of 2024, compared to the second quarter of 2023. Salaries and benefits per equivalent admission declined 0.3% in the second quarter of 2024, compared to the second quarter of 2023. Same facility salaries and benefits per full time equivalent increased 2.2% for the second quarter of 2024, compared to the second quarter of 2023. We continue to utilize certain contract, overtime and other premium rate labor costs to support our clinical staff and patients. While these costs have declined compared to the prior year period, future costs may be affected by labor market conditions and other factors.

Previous wording

Supplies, as a percentage of revenues, were 15.4% in the first quarter of 2024 and 15.5% in the first quarter of 2023. Supply costs per equivalent admission increased 3.0% in the first quarter of 2024 compared to the first quarter of 2023. Supply costs per equivalent admission increased 2.7% for medical devices and increased 3.6% for general medical and surgical items and declined 1.0% for pharmacy supplies in the first quarter of 2024 compared to the first quarter of 2023.

Current wording

Supplies, as a percentage of revenues, were 15.1% in the second quarter of 2024 and 15.6% in the second quarter of 2023. Supply costs per equivalent admission increased 0.3% in the second quarter of 2024, compared to the second quarter of 2023. Supply costs per equivalent admission increased 3.4% for medical devices and 0.9% for general medical and surgical items and declined 6.8% for pharmacy supplies in the second quarter of 2024, compared to the second quarter of 2023.

Previous wording

Other operating expenses, as a percentage of revenues, were 20.9% in the first quarter of 2024 and 18.7% in the first quarter of 2023. Other operating expenses is primarily comprised of contract services, professional fees, repairs and maintenance, rents and leases, utilities, insurance (including professional liability insurance) and nonincome taxes. The 2.2% increase in other operating expenses, as a percentage of revenues, for the first quarter of 2024, compared to the first quarter of 2023, was primarily related to increased costs for professional fees and state provider fees in certain states. We have seen inflation have a negative impact on certain of these expenses and expect inflationary pressures will continue to impact operating expenses in the future. Provisions for losses related to professional liability risks were $156 million and $144 million for the first quarters of 2024 and 2023, respectively.

Current wording

Other operating expenses, as a percentage of revenues, were 20.7% in the second quarter of 2024 and 19.2% in the second quarter of 2023. Other operating expenses is primarily comprised of contract services, professional fees, repairs and maintenance, rents and leases, utilities, insurance (including professional liability insurance) and nonincome taxes. The 1.5% increase in other operating expenses, as a percentage of revenues, for the second quarter of 2024, compared to the second quarter of 2023, was primarily related to increased costs for professional fees and state provider fees in certain states. We have seen inflation have a negative impact on certain of these expenses and expect inflationary pressures will continue to impact operating expenses in the future. Provisions for losses related to professional liability risks were $156 million and $144 million for the second quarters of 2024 and 2023, respectively.

Previous wording

Depreciation and amortization increased $39 million, from $756 million in the first quarter of 2023 to $795 million in the first quarter of 2024. The increase in depreciation relates primarily to capital expenditures at our existing facilities.

Current wording

Depreciation and amortization increased $56 million, from $763 million in the second quarter of 2023 to $819 million in the second quarter of 2024. The increase in depreciation relates primarily to capital expenditures at our existing facilities.

Previous wording

Interest expense was $512 million in the first quarter of 2024 and $479 million in the first quarter of 2023. Our average debt balance was $40.383 billion for the first quarter of 2024 compared to $38.513 billion for the first quarter of 2023. The average effective interest rate for our long-term debt was 5.1% and 5.0%, respectively, for the quarters ended March 31, 2024 and 2023.

Current wording

Interest expense was $506 million in the second quarter of 2024 and $485 million in the second quarter of 2023. Our average debt balance was $40.292 billion for the second quarter of 2024, compared to $38.790 billion for the second quarter of 2023. The average effective interest rate for our debt was 5.1% and 5.0%, respectively, for the quarters ended June 30, 2024 and 2023.

Previous wording

Equity in losses of affiliates was $2 million and $18 million in the first quarters of 2024 and 2023, respectively. The loss for 2023 was primarily related to a physician group entity investment.

Current wording

Equity in losses of affiliates was $2 million and $25 million in the first six months of 2024 and 2023, respectively.

Previous wording

During the first quarters of 2024 and 2023, we recorded gains on sales of facilities of $201 million and losses on sales of facilities of $15 million, respectively. The gain for 2024 was primarily related to the sale of a hospital facility in California.

Current wording

During the first six months of 2024 and 2023, we recorded gains on sales of facilities of $213 million and losses on sales of facilities of $14 million, respectively. The gain for 2024 was primarily related to the sale of a hospital facility in California.

Previous wording

The effective tax rate was 21.8% for both the first quarters of 2024 and 2023. The effective tax rate computations exclude net income attributable to noncontrolling interests as it relates to consolidated partnerships. Our provisions for income taxes for the first quarters of 2024 and 2023 included tax benefits of $69 million and $74 million, respectively, related to employee equity award settlements.

Current wording

The effective tax rates were 24.6% and 23.3% for the first six months of 2024 and 2023, respectively. The effective tax rate computations exclude net income attributable to noncontrolling interests as it relates to consolidated partnerships. Our provisions for income taxes for the first six months of 2024 and 2023 included tax benefits of $79 million and $85 million, respectively, related to employee equity award settlements.

Previous wording

Quarters Ended March 31, 2024 and 2023 (continued)

Current wording

Six Months Ended June 30, 2024 and 2023 (continued)

Previous wording

Net income attributable to noncontrolling interests increased from $180 million for the first quarter of 2023 to $211 million for the first quarter of 2024. The increase in net income attributable to noncontrolling interests related primarily to the operations of two of our Texas markets.

Current wording

Net income attributable to noncontrolling interests increased from $399 million for the first six months of 2023 to $437 million for the first six months 2024. The increase in net income attributable to noncontrolling interests related primarily to the operations of one of our Texas markets.

Previous wording

Cash provided by operating activities totaled $2.469 billion in the first quarter of 2024 compared to $1.803 billion in the first quarter of 2023. The $666 million increase in cash provided by operating activities, in the first quarter of 2024 compared to the first quarter of 2023, related primarily to the combined impact of changes in working capital items of $512 million (primarily related to accounts payable and accrued expenses) and an $83 million increase in net income, excluding losses and gains on sales of facilities. The combination of interest payments and net income tax payments in the first quarters of 2024 and 2023 totaled $539 million and $581 million, respectively. Working capital totaled $2.141 billion at March 31, 2024 and $2.272 billion at December 31, 2023.

Current wording

Cash provided by operating activities totaled $4.440 billion for the first six months of 2024 compared to $4.278 billion for the first six months of 2023. The $162 million increase in cash provided by operating activities, for the first six months of 2024 compared to the first six months of 2023, related primarily to an increase in net income of $443 million, excluding the non-cash impact of losses and gains on sale of facilities and depreciation and amortization, offset by negative changes in working capital items of $312 million, mainly from an increase in accounts receivable, and an increase in income tax payments. The combination of interest payments and net income tax payments in the first six months of 2024 and 2023 totaled $1.942 billion and $1.698 billion, respectively. Working capital totaled $872 million at June 30, 2024 and $2.272 billion at December 31, 2023 (decline was primarily due to the $2.150 billion increase in long-term debt due within one year).

Previous wording

Cash used in investing activities was $903 million in the first quarter of 2024 compared to $1.151 billion in the first quarter of 2023. Excluding acquisitions, capital expenditures were $1.118 billion in the first quarter of 2024 and $1.197 billion in the first quarter of 2023. Planned capital expenditures are expected to approximate between $5.1 billion and $5.3 billion in 2024. At March 31, 2024, there were projects under construction which had estimated additional costs to complete and equip over the next five years of approximately $4.6 billion. We expect to finance capital expenditures with internally generated and borrowed funds.

Current wording

Cash used in investing activities was $2.235 billion in the first six months of 2024 compared to $2.408 billion in the first six months of 2023. Excluding acquisitions, capital expenditures were $2.399 billion in the first six months of 2024 and $2.438 billion in the first six months of 2023. Planned capital expenditures are expected to approximate between $5.1 billion and $5.3 billion in 2024. At June 30, 2024, there were projects under construction which had estimated additional costs to complete and equip over the next five years of approximately $4.6 billion. We expect to finance capital expenditures with internally generated and borrowed funds.

Previous wording

Cash used in financing activities totaled $1.216 billion in the first quarter of 2024, compared to $725 million in the first quarter of 2023. During the first quarter of 2024, net cash flows used in financing activities included a net increase of $537 million in our indebtedness, payment of dividends of $185 million, repurchase of common stock of $1.180 billion and distributions to noncontrolling interests of $152 million. During the first quarter of 2023, net cash flows used in financing activities included a net increase of $690 million in our indebtedness, payment of dividends of $175 million, repurchase of common stock of $846 million and distributions to noncontrolling interests of $187 million.

Current wording

Cash used in financing activities totaled $2.309 billion in the first six months of 2024, compared to $1.923 billion in the first six months of 2023. During the first six months of 2024, net cash flows used in financing activities included a net increase of $1.184 billion in our indebtedness, payment of dividends of $356 million, repurchase of common stock of $2.547 billion and distributions to noncontrolling interests of $338 million. During the first six months of 2023, net cash flows used in financing activities included a net increase of $770 million in our indebtedness, payment of dividends of $339 million, repurchase of common stock of $1.761 billion and distributions to noncontrolling interests of $342 million.

Previous wording

We have significant debt service requirements. Our debt totaled $40.191 billion at March 31, 2024. Our interest expense was $512 million for the first quarter of 2024 and $479 million for the first quarter of 2023.

Current wording

We have significant debt service requirements. Our debt totaled $40.880 billion at June 30, 2024. Our interest expense was $1.018 billion for the first six months of 2024 and $964 million for the first six months of 2023.

Previous wording

In addition to cash flows from operations, available sources of capital include amounts available under our senior secured credit facilities ($7.987 billion available as of both March 31, 2024 and April 30, 2024) and anticipated access to public and private debt markets.

Current wording

In addition to cash flows from operations, available sources of capital include amounts available under our senior secured credit facilities ($7.137 billion and $7.267 billion available as of June 30, 2024 and July 22, 2024, respectively) and anticipated access to public and private debt markets.

Previous wording

Investments of our insurance subsidiaries, held to maintain statutory equity levels and to provide liquidity to pay claims, totaled $566 million and $564 million at March 31, 2024 and December 31, 2023, respectively. An insurance subsidiary maintained net reserves for professional liability risks of $96 million and $121 million at March 31, 2024 and December 31, 2023, respectively. Our facilities are insured by our insurance subsidiary for losses up to $80 million per occurrence; however, this coverage is subject, in most cases, to a $15 million per occurrence self-insured retention. Additionally, the insurance subsidiary has entered into reinsurance contracts providing reimbursement for a certain portion of losses in excess of self-insured retentions. Net reserves for the self-insured professional liability risks retained were $1.956 billion and $1.926 billion at March 31, 2024 and December 31, 2023, respectively. Claims payments, net of reinsurance recoveries, during the next 12 months are expected to approximate $534 million. We estimate that approximately $499 million of the expected net claim payments during the next 12 months will relate to claims subject to the self-insured retention.

Current wording

Investments of our insurance subsidiaries, held to maintain statutory equity levels and to provide liquidity to pay claims, totaled $587 million and $564 million at June 30, 2024 and December 31, 2023, respectively. An insurance subsidiary maintained net reserves for professional liability risks of $105 million and $121 million at June 30, 2024 and December 31, 2023, respectively. Our facilities are insured by our insurance subsidiary for losses up to $80 million per occurrence; however, this coverage is generally subject, in most cases, to a $15 million per occurrence self-insured retention. Additionally, the insurance subsidiary has entered into reinsurance contracts providing reimbursement for a certain portion of losses in excess of self-insured retentions. Net reserves for the self-insured professional liability risks retained were $1.959 billion and $1.926 billion at June 30, 2024 and December 31, 2023, respectively. Claims payments, net of reinsurance recoveries, during the next 12 months are expected to approximate $543 million. We estimate that approximately $508 million of the expected net claim payments during the next 12 months will relate to claims subject to the self-insured retention.

Previous wording

We are exposed to market risk related to changes in market values of securities. The investment securities held by our insurance subsidiaries were recorded at $566 million at March 31, 2024. These investments are carried at fair value, with changes in unrealized gains and losses that are not credit-related being recorded as adjustments to other comprehensive income. At March 31, 2024, we had unrealized losses of $30 million on the insurance subsidiaries’ investments.

Current wording

We are exposed to market risk related to changes in market values of securities. The investment securities held by our insurance subsidiaries were recorded at $587 million at June 30, 2024. These investments are carried at fair value, with changes in unrealized gains and losses that are not credit-related being recorded as adjustments to other comprehensive income. At June 30, 2024, we had unrealized losses of $31 million on the insurance subsidiaries’ investments.

Previous wording

We are also exposed to market risk related to changes in interest rates. With respect to our interest-bearing liabilities, approximately $1.294 billion of long-term debt at March 31, 2024 was subject to variable rates of interest, while the remaining balance of long-term debt of $38.897 billion at March 31, 2024 was subject to fixed rates of interest. Both the general level of interest rates and, for the senior secured credit facilities, our leverage affect our variable interest rates. Our variable debt is comprised primarily of amounts outstanding under the senior secured credit facilities. The average effective interest rate for our long-term debt was 5.1% and 5.0% for the quarters ended March 31, 2024 and 2023, respectively.

Current wording

We are also exposed to market risk related to changes in interest rates. With respect to our interest-bearing liabilities, approximately $2.125 billion of our debt at June 30, 2024 was subject to variable rates of interest, while the remaining debt balance of $38.755 billion at June 30, 2024 was subject to fixed rates of interest. Both the general level of interest rates and our leverage affect our variable interest rates. Our variable debt is comprised primarily of amounts outstanding under the senior secured credit facilities. The average effective interest rate for our debt was 5.1% and 5.0% for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

The estimated fair value of our total long-term debt was $38.626 billion at March 31, 2024. The estimates of fair value are based upon the quoted market prices for the same or similar issues of long-term debt with the same maturities. Based on a hypothetical 1% increase in interest rates, the potential annualized reduction to future pretax earnings would be approximately $13 million. To mitigate the impact of fluctuations in interest rates, we generally target a majority of our debt portfolio to be maintained at fixed rates.

Current wording

The estimated fair value of our long-term debt was $39.086 billion at June 30, 2024. The estimates of fair value are based upon the quoted market prices for the same or similar issues of long-term debt with the same maturities. Based on a hypothetical 1% increase in interest rates, the potential annualized reduction to future pretax earnings would be approximately $21 million. To mitigate the impact of fluctuations in interest rates, we generally target a majority of our debt portfolio to be maintained at fixed rates.