Welcome to the HCA Second Quarter 2017 Earnings Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I'd like to turn the call over to the Senior Vice President, Mr. Vic Campbell. Please go ahead, sir.

All right, Shannon. Thank you very much. Good morning, everyone. Mark Kimbrough, our Chief Investor Relations Officer and I'd like to welcome everyone to the call today, also welcome all of you that are listening to the webcast. With me here this morning are Chairman and CEO, Milton Johnson; Sam Hazen, our President and Chief Operating Officer, and Bill Rutherford, Chief Financial Officer. Before I turn the call over to Milt, let me remind everyone that should today's call contain any forward looking statements, they're based on management's current expectations. Numerous risks, uncertainties, and other factors may cause actual results to differ materially from those that might be expressed today. Many of these factors are listed in today's press release and in our various SEC filings. Several of the factors that will determine the company's future results are beyond the ability of the company to control or predict. In light of the significant uncertainties inherent in any forward-looking statements, you should not place undue reliance on these statements. The company undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information or future events. On this morning's call, we may reference measures such as adjusted EBITDA and net income attributable to HCA Healthcare, Inc. excluding losses, gains on sales of facilities, losses on retirement of debt, and legal claims costs, which are non-GAAP financial measures. A table providing supplemental information on adjusted EBITDA and reconciling to net income attributable to HCA Healthcare, Inc. to adjusted EBITDA is included in the second quarter earnings release. This morning's call is being recorded. A replay will be available later today. And with that, I'll turn the call over to Milton.

Good morning. Thank you, Vic, and good morning to everyone joining us on the call or webcast today. I'll make a few comments on the quarter, and our updated guidance, and our recent M&A activity, and then I'll ask Bill and Sam to provide more detail on the second quarter results. Overall, I'm pleased with our performance in the second quarter and the first half of 2017. Although, we are on plan for the second quarter, it's slightly off from our internal plan for adjusted EBITDA at midyear. Our results in the first half have been challenged by, one, softer managed and exchange volumes, and, two, our London market results have been negatively impacted by currency conversion rates and lower admissions from Middle East embassies and private insurance. Sam will provide additional detail on the London market later on the call. Our operating and corporate teams have executed well in managing expenses in the first half of this year. We continue to invest in our key strategic initiatives that will contribute to improving future clinical, operational, and financial performance. As Bill will highlight in a moment, our balance sheet and cash flow gives us the financial flexibility to invest in our existing markets to acquire new hospitals and to continue to execute our share repurchase plan. I will provide an update on recent acquisition activities later in my comments, but we are pleased to be able to expand our networks across several markets. Now turning to the second quarter, revenues for the second quarter increased 4% to $10.7 billion. Net income attributable to HCA Healthcare totaled $657 million or $1.75 per diluted share and adjusted EBITDA of total $2.09 billion, in line with our expectations. As noted in our release, the tax benefit from equity award settlements was $9 million,…

Thank you, and good morning, everyone. I will add to Milton's comments and provide more detail on our performance and our health reform trends in the second quarter. As we reported in the second quarter, our same-facility admissions increased 0.8% over the prior year, and equivalent admissions increased 1.3%. Sam will provide more commentary on the drivers of the volume in a moment, and I'll give you some trends by payer class. During the second quarter, same-facility Medicare admissions and equivalent admissions increased 2% and 3%, respectively, compared to the prior year period. This includes both traditional and managed Medicare. Managed Medicare admissions increased 5.1% on a same-facility basis compared to the prior-year period and represent 34.5% of our total Medicare admissions. Same-facility Medicaid admissions and equivalent admissions increased 0.1% and 1.6%, respectively, in the quarter compared to the prior-year period, fairly consistent with the recent trends. Same-facility self-pay and charity admissions increased 4.9% in the quarter. This represents 7.8% of our total admissions compared to 7.5% in the second quarter of last year. Managed care and other, including exchange admissions, declined 1.3%, while equivalent admissions were flat on a same-facility basis in the second quarter compared to the prior year. Same-facility emergency room visits increased 0.4% in the quarter compared to the prior year, and same-facility self-pay and charity ER visits represent 19.5% of our total ER visits in the quarter, consistent with the second quarter of last year. Intensity of service or acuity increased in the quarter with our same-facility case mix increasing 3.2% compared to the prior year period. Same-facility inpatient surgeries were flat to prior year and outpatient surgeries declined 1.2% from the previous year. Same-facility revenue per equivalent admission increased 2% over the prior year for the quarter. And as Milton indicated, international operations adversely…

Good morning. Let me provide some more detail on our volume trends for the quarter. On a same-facility basis for our domestic operations as compared to the second quarter last year, 8 of 14 divisions had growth in admissions. Growth was particularly strong in our North Florida, Tennessee, and Continental divisions. And conversely, our Houston and South Florida divisions were weak. All other divisions were slightly up or slightly down. 10 of 14 divisions had growth in adjusted admissions. Six of 14 divisions had growth in emergency room visits. Freestanding emergency room visits grew 13%, while hospital-based emergency visits declined 0.9%. Once again, most of this decline was seen in lower acuity visits. Admissions through the emergency room grew by 1.2%. Trauma and EMS volumes grew by 13% and 1.4% respectively. Inpatient surgeries grew 0.6%. Surgical admissions were 30% of total admissions in the quarter, which is essentially flat with prior year. Surgical volumes were particularly strong in cardiovascular, orthopedic and neuroscience service lines. Nine of 14 divisions had growth in inpatient surgeries. Outpatient surgeries were down 0.9%. Volumes were down in both our hospital base and freestanding ambulatory surgery centers. Seven of 14 divisions were up in this service line. Behavioral health admissions grew 2.6%. Rehab admissions grew 7%. Cardiology volumes grew 7.4%. Births were down 3.1% and neonatal admissions were essentially flat. In summary, our volumes were generally consistent with the first quarter. As Bill referenced, we did see a slight improvement in our managed care and exchange volumes this quarter, with adjusted admissions in these payer classes flat year-over-year. As I stated in my comments last quarter, we believe commercial demand has been soft over the last four or five quarters, which we believe explains most of our softer volumes. On a positive note, we have seen…

All right, Sam, thank you. Shannon, if you could come back on and we'd like to start the question and answer process and I'd encourage each of you who ask question, limit it to one so we can give everyone an opportunity.

Yes, sir. Thank you. We first move to Whit Mayo with Robert Baird. Whit Mayo - Robert W. Baird & Co., Inc.: Hey, thanks. Good morning. Maybe just first on the guidance, perhaps this is an overly simplistic view, but historically HCA has earned around 25% of their full-year EBITDA in the second quarter, which implies a run rate that's slightly below $8.4 billion for the full year. So, what areas of improvement are you seeing that gives you confidence that the underlying trends improve in the second half of the year?

All right, Milton, Bill, how do you want to take that?

Yeah, I mean, I'll take a shot, and then Bill can come in. Whit, as you think about our projections for the rest of the year, so let's talk about the first half and how we think that relates to our expectations in the second half. So as I said in my comments, and Bill mentioned, we're on our plan for the second quarter, so the $2.09 billion that we reported in adjusted EBITDA is on plan with our second quarter. We were about, for the mid-year, about 1% off of where we thought our plan would be. And so as we look at the second half, our comps do get easier. As we think about the volume comps and some of the revenue comps, they do ease in the second half. We think that we can continue to see solid expectations around 4% or so on revenue growth. And that if we hit our targets, we think we can come in pretty much, I think, around the middle of the range that we stated, our revised range. So, we have confidence in that. Obviously, our expense management, we've taken some action there. We think those will continue to yield benefits in the second half of the year. Again, as I've said in my comments, I'm very pleased with our expense management in the first half, but we have made some adjustments going into the second half, and I think that will help us as well.

And Whit, this is Bill. The only thing I'd add, we did some change in the currency conversion of our London operations in the second half of the year versus the first half of the year as that begins to sunset itself. So that's an improving trend as well.

All right. Thank you, Whit.

We'll take our next question from Kevin Fischbeck with Bank of America Merrill Lynch.

Okay, great. Thanks. I guess if you could do a little more color on – because I guess the guidance, you're reaffirming the revenue target, but you're taking down the EBITDA target. Can you just give a little bit more color about what exactly the pressure is versus the original guidance as far as cost, or there's something around payer mix that's causing that to come down?

Bill, you?

Well, I kind of look at it – we lowered the – lowering of our EBITDA range by $50 million. It's a relatively smaller amount. The revenue range, we're on plan with our revenue, as Milton said here today. So, we feel comfortable to come still within that range. So there's nothing other specific that I would call out.

Yeah, so what we're doing with our guidance is obviously we tightened it on the high end. The implied growth rate that we would have to have to achieve the high end of range is probably close to 10% second half of the year. So we took that off the table and tried to – and as we usually do mid-year, we tightened our range. And so as Bill said, we did drop the low end by $50 million. We think that's reflective of our first half performance, where as I said, we're off our plan by about 1%. And so that's reflective, really, of that expectation. But if we can perform on our plan for the second half of the year like we have here in the second quarter, then we should be well within our guidance range for adjusted EBITDA that we stated this morning.

Thank you, Kevin.

Next question comes from Justin Lake with Wolfe Research.

Thanks. Just can I get a quick numbers question first? In your updated guidance, does it include the deals that have already closed, like Tenet, or it includes no deals whatsoever closed in it?

Justin, this is Bill. It doesn't include any acquisitions completed to date. We typically wouldn't include acquisitions that are not yet completed. The ones we've completed to date are relatively smaller revenue, roughly $150 million to $170 million. So we've got room within our revenue range for that, but just in case the guidance claims from how we originally presented it, it doesn't include any acquisitions, and there's really nominal, if any, EBITDA impact of acquisitions.

And we're looking, obviously, for some revenue contribution in the second half, but immaterial EBITDA.

Correct.

Got it. And then...

Justin, did you...

Sorry.

Go ahead.

Thanks, guys. The question was just around, Sam, you went through some of those market share numbers pretty quick. I heard you say that commercial actually is starting to stabilize/improve. But can you give us some more color there, especially around or including the $4 billion that you talked about of in-flight capital and how you see that trending for the back half of the year, in your mind? Thanks.

Sam, you?

So, let me give you an overview on our market share for 2016, which is the last period that we have. Overall, our market share is modestly down, like down 8 basis points. Last year it was roughly 25%. It's about 24.92% or so, thereabout. So it's modestly down. The market as a whole, all of HCA's markets grew by roughly 2% with a slight tilt down in the last half of the year, just slightly below the 2%. On the commercial side, the commercial demand in HCA's markets grew by 1% in 2016. Again, a little bit tilted more toward the first half of last year, but still growing even in the second half of last year, and that's where we started to see some rebound both really in overall share and commercial share. So if you look at our market share, and I like to look at it on a sequential basis because it tells me more timely what's happening in the marketplace, is we've started to see both our overall share rebound, to the point where we're 25.07% in the fourth quarter, so we're actually starting to see some recovery. And then we're up a little bit also on our commercial at 22.1%, so we're seeing a recovery sequentially in our market share. We do have a couple of pockets of markets where we have some pressures. I highlighted some of those in our comments. But overall, I think we're seeing a stabilization and a slight rebound in our market share positioning across the company.

All right. Thank you, Justin.

Next question comes from Sarah James with Piper Jaffray. Sarah E. James - Piper Jaffray & Co.: Thank you. Can you give us more color on the managed and exchange volumes? Was it more on the exchange side or the non-exchange market? And to what degree do you view these as short-term factors impacting admissions versus more of a thematic or a long-term pressure?

Yeah, I'll start with the exchange volumes. So as we mentioned, we're down about 4% on a year-over-year basis. And that tracks by all data that we have with the enrollments in our marketplace. And it's sequentially up 7%. And so that did have an impact in terms of the overall managed and other books. Over the past couple of years, as you know, we've been seeing exchange volume growth, especially in the first half of the year as it tends to ramp coming out of the first and second quarter, where we're seeing 15% to 20% growth in exchange. This year we're seeing a slight decline. Realize exchanges are less than 3% of our total, but that change in growth trends did impact the overall managed care book, but to a relatively smaller amount.

Yeah, and let me just add to that, Bill. This is Sam. I think last quarter we indicated that we were having to re-position some of our contracts in Texas because the lives wound up landing in certain payers where we did not have relationships. Over the last three or four months, we've been able to improve our position in that particular market, and I'm encouraged by the amount of contracting we've been able to do. So as we move forward, I think we should be in a better position, depending upon, obviously, the population of lives within the exchange. But nonetheless, our overall contracting position and participation in payer contracts in the exchange in Texas have improved.

Yeah, and this is Milt. Just on your question about short-term versus long-term, we're seeing some sequential improving trends in our managed care adjusted admissions. We reported we were down 1.9% in the first quarter of this year. Now that does include we're comping to leap year last year, and some impact of that would be leap year. But we're flat with managed care and other on the second quarter. So sequentially, the trends are improving, and we hope that we can continue to leverage off this. But – so it's hard to call right now into the long-term effect here, but when we look at the overall health insurance – employer health insurance marketplace, it continues to be in very good shape. And with respect to the number of covered lives, so that gives me some optimism about the future, and if we can execute our growth strategies, especially our strategies focused around the commercial book, including putting more capital in place that was referenced earlier in the call, I'm optimistic that we can continue and go back to a growth trend with respect to our commercial book.

All right, Sarah, thank you very much.

Next question comes from A.J. Rice with UBS.

Hello, everybody. Thanks. I'm going to try to – I don't know. I can't say it's a two-part even question, but just two areas. Can you just comment a little more on what's going on with the self-pay? The uncompensated care and bad debt are jumping around, but it sounds like the self-insured volumes you're seeing are pretty much in line with what you thought, if not even maybe a little better this quarter. And then I was just going to ask also when your capital – you've stepped up the acquisition pace, but you also stepped up the buybacks, so that was encouraging to see sequentially. Can you sustain the buyback pace with the enhanced acquisition activity?

All right, A.J., just because you've been around for long, we'll let you do two different questions at once.

Yeah, A.J.

Bill, you want to take that?

Yeah, A.J., let me take the bad debts, and I'll talk about the share repurchase, too, and let Milton add on. So we know our bad debts are reading in terms of year-over-year a little elevated. And obviously, we talked about before, we think if you look at our total uncompensated care, which includes our bad debts, charity and uninsured, in any given quarter you are subject to some classification trends among these categories, but generally speaking, over time, our uncompensated care trends track with our uninsured volume trends. And as we mentioned, we're seeing roughly a 4% to 5% growth in uninsured admissions, 4.9% in the second quarter. That's a little higher than we ran in the last half of 2016 and first quarter, but as you mentioned, pretty much in line with our expectations in that low-single digit. On a dollar basis, we ran about 5.4% more uncompensated care in Q2 than we did in Q4 of 2016. And on adjusted net revenue basis, that's looking at uncompensated care as a percent of revenue, year to date we're running at 34% versus 33% in full year 2016. So, we realize that did trend up, but overall, the uncompensated care trends are tracking right with our uninsured volume trends. We remain really pleased with our revenue cycle collection efforts. Our collection results around deductibles and co-pays remain consistent. We don't see any deterioration in the deduct and co-pay part of the receivables. Our collections continue to keep pace. As Milton mentioned, our net days is 49. Cash as a percentage of revenue over 100%. So, it's pretty much in line with what our expectations are in terms of year-over-year basis when you are subject to some fluctuation on that. Regarding the capital deployment, as you know today, we are able to continue to complete our share repurchase authorization. We plan on completing that by the end of this year. And we can continue to complete the acquisition pipelines that we see in front of us. Just given the strength of our cash flow and the strength of the position of the balance sheet, we're able to do both of those strategies without any interference on that.

Not much to add other than to say, I think that the strength of our balance sheet, our cash flow distinguishes HCA, gives the ability to continue to invest approximately $3 billion of capital this year back in our existing markets to complete our share repurchase plan and to make some strategic acquisitions. So this is really in line with now our financial approach in terms of capital allocation, and we're very pleased to be able to supplement the acquisitions through our strategy this year.

All right. Thank you, A.J.

Next question comes from Sheryl Skolnick with Mizuho Securities.

Thanks very much. I must confess, first of all, on the cash flow side, there's no question. It's copious. You're applying it brilliantly. I get that. But I have to come back to this managed care number because I'm actually quite confused. And it's really a big important factor in your leadership and your margins, and all the rest of that. So forgive me if I beat this dead horse. I thought you said that your managed care admissions same-store year-over-year were down 1.3%. And then, I thought I heard Milt say that it was flat. So...

No, Sheryl, it was adjusted admissions flat in the managed care and exchange book for the second quarter. Admissions only, down 1.3%. So that's the distinction between the two numbers.

Okay, good. So I get that. If we can focus on the inpatient for a minute and try to parse this number out, and I'll just ask the question very simply. Are the troubles you're having with managed care admissions, because they're down, directly and only related to what you're seeing in the exchanges, or is there non-exchange impact there as well?

Sam, do you want to...

I think it's a little of both. It's more pronounced inside of the exchanges than it is the commercial. I think one thing that's really relevant here is obstetrics on the commercial side is roughly, I don't know, 20% of overall commercial demand, give or take a few points. And with commercial obstetrics volume being down 2.5% to 3%, it weighs out to be 0.6%, so it explains half of our decline. And then, when you layer on some of the kicks, declines in enrollment, it gets us closer to what's happening in the market. So I think from that standpoint, that's how I would color it. Obviously, we've seen some softening in our low acuity emergency room business. Again, as I mentioned in our first quarter call last April that we are seeing some competition in that space with urgent care, some freestanding emergency rooms that have evolved in certain markets, and that puts some pressure on the lower acuity side of the business. But our upper level acuity is actually growing in our emergency room. And I think that's indicative of the kind of programs we've added through stroke programs, comprehensive stroke centers, trauma, and the like. And so we're seeing those dynamics, and that's having a little bit of an effect as well on our admission rates.

Can I just follow-up on that?

Okay, go ahead.

I appreciate that, because that's really interesting. So, the low acuity cases, which I'm sure you're not sorry to not have, not being there, is that what's driving the higher percentage admission of cases in the ER?

Well, yes, that's sort of mathematical in that. Obviously, we get more admission rate on the higher acuity patients. So as a percentage of our total ER business, if in fact that's the component that's growing, we're going to see a higher admission rate. And our ER admission rate, like I said, in total was up 1.2%. I don't have the exact commercial admission rate. It's slightly up, if I remember correctly, from like 12.6% to 12.8% on the commercial side, indicative, again, of the higher acuity components of our ER business. And let me say this, we clearly want the lower acuity business somewhere in our system. That's why we're investing heavily in urgent care, and we continue to invest in freestanding emergency rooms, because it allows us to develop a relationship with our patients and ultimately integrate them inside the HCA system. So we still have a very significant investment strategy and development strategy around urgent care, freestanding emergency rooms, other outpatient centers that start to introduce our systems to patients in commercial markets. So I'm encouraged by what we're doing there, and we have a lot of capital in the pipeline in those areas, and I think it's going to position us well in these markets as we move forward.

All right, Sheryl, thank you.

You're welcome.

Next question comes from Brian Tanquilut with Jefferies.

Hey, good morning guys. Milton, just a question on acquisitions. You alluded to a good pipeline there. So as we see organic volumes moderate, just like what Sam was discussing, I mean, is this a proactive strategy to bolster volumes, or is this more opportunistic as you have done nine acquisitions so far? And also, are you willing to go into new markets if that opportunity arises, or is it all in-market tuck-ins?

Brian, thanks for the question. First of all, it's a mix as far as tuck-in acquisitions. Some of the acquisitions we've announced have been smaller hospitals that complement our existing markets, and Houston is a great example, one in south Texas, it'll complement our San Antonio market. We have, of course, announced Savannah, which would be a new market for HCA. We were very pleased with that opportunity to acquire that facility. And that, again, is example of maybe – I think it's the first significant new market we've had a chance to enter into since probably 2003. So yeah, it's a combination of both. And we're seeing the strategy – number one, it's something that we have been pursuing. We're seeing more opportunities in the marketplace now. I think as many health systems, again, went through the positive environment from 2015 and early 2016, and now we're seeing some volume pressures. We're looking, I think, to be part of the bigger system. And so we are encouraged by that. We think we have a lot to offer as far as opportunity for many of these systems. So it is opportunistic, but it is also consistent with our strategy. So, we're pleased to see the pipeline more robust than it has been in recent years. These transactions, we'll see if we can continue to get these to closure, but we are excited about the acquisitions, and we think it can be complementary to our growth story. As you know, over the past decade plus, HCA has been primarily an organic growth company. It tells of the richness and the depth of our markets and the population growth of many of our markets. And we continue to see that opportunity, but certainly, these acquisitions can complement that. And we are encouraged and excited about the opportunity.

Brian, thank you.

Next question comes from Scott Fidel with Credit Suisse. Scott Fidel - Credit Suisse Securities (USA) LLC: Thanks. I'm wondering if you can touch on the decline in the operation surgery cases in the quarter year-over-year, and maybe touch on your view on whether that's more competitive related, or whether you're seeing just some general industry softness there.

All right, Scott, thank you. Sam, do you want that?

That's a good question. As far as outpatient surgery, we have had a few quarters now where we've been flat to slightly down or slightly up, but not anywhere where we want to be. That was a little more difficult for us to draw definitive conclusions around simply because we don't get as much good data. So it's more anecdotal than it is empirical. I would say, though, our instincts are and our intuition around the marketplace is there has been general softening, number one. Number two, there's a lot of competition in outpatient surgery space because it's lower capital, and in many markets, there's no certificate of need. So there have been a few competitive dynamics in the market here or there. But we're pretty opportunistic with our approach to our outpatient surgery. We have a multi-venue offering both in the hospital and outside of the hospitals in our ambulatory surgery center division. We continue to add units to our ambulatory surgery center division through acquisitions and new development, in addition to bringing more physicians into our partnerships inside of those ambulatory surgery centers. So I'm encouraged by what our teams are doing to try to recover and grow in this particular segment. I do think the softening in the emergency room has a trickle-down effect on outpatient surgeries. Typically, we will see outpatient surgery activity from emergency room traffic 90 days to 120 days out. And because our emergency room business has softened somewhat, we think that's having an influence over our outpatient surgery. But nonetheless, we have a very aggressive effort at working with our physicians, investing in equipment, investing in facilities when we need to improve our overall position and sustain growth in this area.

Scott, thank you.

Next question comes from Chris Rigg with Deutsche Bank.

Good morning. I was hoping I could get some more color as to what's going on in London. I mean a 30% to 35% decline in EBITDA seems pretty remarkable, and does seem like it could move the needle at least within the EBITDA guidance range. I mean, what's – particularly on the Middle Eastern side? I'm just having a – would love to get a better sense for what you guys think is driving that pressure and (42:31)

All right, Chris, thanks. Sam?

Yeah, this is Sam. I just actually got back from London a couple of weeks ago. I was visiting with our team for most of the week. And over the past few quarters, we have seen softening in our Middle East embassy business in London. I think a couple of drivers. One is we believe there's competition for the Middle East business because it's a productive payer for us and for others. So there's competition in Germany, Singapore, and even in the United States for Middle East business, and so there's that factor that probably intensified over the past few years having some impact. Our intuition, again, is that with some of the difficulties in the energy economy, that's slowing the trends down on out-migrations from in-country healthcare to other countries. That's a piece of it. So that's having an influence as well. But all in all, our London operations continue to operate around a 20% local currency margin. It did in fact impact our growth rate this past quarter by a decent amount for a small division, if you will, and that's why we called it out. As Bill alluded to, we anniversaried some of those issues in the second quarter, and we believe in the last half of the year some of those anniversaried issues will start to normalize and not produce the impact that it did in the quarter. The second quarter by itself was a very difficult quarter for us in London. I do think we're in the midst of repositioning our facilities, our network, our capabilities in London, and somewhat changing our business model to be less reliant on Middle East business and more reliant on local business, self-pay business, and some of the struggles that exist in the NHS system over there with waste and physician dissatisfaction and so forth. So we're investing in outpatient facilities, urgent care facilities, imaging facilities, working with our physicians on physician clinics and so forth to replicate aspects of what we're doing in the U.S. to build out a very user friendly, efficient facility complement in London. And I'm very encouraged by what our teams are doing and how they're working through this transition. We've made some significant cost structure adjustments. We're leveraging learnings in our cost structure over here more effectively over there. So I'm anticipating a recovery over the next 12 months to 18 months in our London operations that will put us on a different trajectory.

All right, thanks, Sam. Thanks, Chris.

Next question comes from Ralph Giacobbe with Citi.

Thanks, good morning. Just want to go to guidance; midpoint suggests EBITDA growth of 2.5%. And when I look back to last year, EBITDA grew a little bit under 4%. Just wanted to see if you can help with sort of the context of the 4% to 6% long-term EBITDA growth. Is that sort of still fair, particularly with the consensus kind of sitting in that 5% EBITDA growth for 2018? Thanks.

All right, Ralph. Bill, do you want...

Yeah, I mean, with the long term 4% to 6%, I mean, there's going to be years where that's going to be challenged. We're feeling that here at the midpoint of this year. But when I think about it, again, it is long-term guidance. When I look back over the last five years, I think our EBITDA, our growth CAGR is just under 6%. So I know we had to push there from health reform with that. But when we break that out, probably no more than a third of our growth in that period came from reform, and two-third came from the core business. So, we feel like on a long-term basis, that that's still a reasonable range for prior performance.

Okay. Thanks, Ralph.

Next question comes from Gary Taylor with JPMorgan.

Hi, good morning. A question for Bill. I just want to go back to the bad debt expense for a moment. Of that $1.73 billion this quarter, what percentage of that is co-pay deductible reserving? And I'm just trying to understand how that number can be up 41% year-over-year and sequentially if the collectability is unchanged, is all of that just reclassification?

All right, thanks, Gary.

Yeah, Gary, so historically of our own compensated care, two-thirds is coming from the uninsured population, a third coming from our insured through deductibles and Cos. And as I said, as we look at the deductibles and Cos, the trends that we're seeing there are remaining very consistent, and our cash collections are remaining very consistent. So we don't see any deterioration in that segment of the book that gives us a concern. Regarding the bad debts alone, you are subject from time-to-time, as we've seen in the past, with just some classifications between uninsured discounts, charity, and bad debts. Some of that's on time you know write offs versus the reserve for the provision. So that's why I think it's important you look at the total uncompensated care. To answer your overall question, we remain about a third of that's coming from deducts and Cos, and about two-thirds from the uninsured population.

All right, thanks, Gary.

Next question comes from Ana Gupte with Leerink Partners.

Hi. Thanks. Good morning. I had a question on the volumes that you talked about for managed Medicare or Medicare Advantage, which shows quite a positive in your reports today. Is that uniform across all markets? You also talked about some markets like San Francisco and Houston being down, and I was wondering if that's got to do with capitated contracts with primary care docs? And is that likely to intensify, or is it leveling off and is more competitive?

We didn't mention San Francisco. We said South Florida.

Sorry, South Florida, I meant. South Florida.

Yeah.

Sorry.

I was going to say, we've got some assets I didn't know about. I thought I knew just about everything in HCA. So I think in South Florida, as I mentioned in a couple of calls ago, we still are seeing some pressure from our managed care providers in how they're classifying certain patients between observation and inpatient. And when I add the two together, we're actually up in South Florida. But unfortunately, for admissions, it doesn't count as an admission. We continue to work with our physicians and these managed care payers to make the right decisions on those status-ing, and we're improving that a little bit, but that's the driver in that particular market. In Houston; Houston, I don't know if you've seen it or not, but there's a lot of carnage in Houston with respect to system changes, leadership changes, and so forth. Houston is a difficult market because the economy has really suffered with oil prices and so forth. We've actually stabilized in Houston from a financial standpoint, but we have continued to see significant volume pressures, but it's been localized at a couple of our hospitals and not nearly as broad based as it was maybe a year or so ago. So that's the two markets that had the most pronounced weakness. As far as Medicare Advantage and Medicare business, that's generally consistent across the company. That's a natural phenomenon that's going on in the marketplace this year, just like it was going on last year. Our pricing continues to be very consistent between Medicare Advantage and traditional Medicare. We do see some of these status-ing issues from one market to the other, but overall we are very positive about what's going on with our Medicare growth. Now, I'll tell you, our Medicare business growing at 2.5% to 3%, or whatever that number was, is part of why our margins are down. People are asserting that our costs are up. It's really because the composition of our business is lower profitability on Medicare than it is commercial. And so as it grows, it puts a little bit of pressure on our margins, and that's part of the challenge that we had so far this year. But as that starts to stabilize and we start to see some recovery hopefully in our commercial book, we can recover that and get our margins back to where we want them to be. But we have a lot of markets that are growing. As I mentioned, North Florida, Tennessee, and Continental had great quarters. A handful of our other divisions grew around 1% or so. And then, we had a few that were down around 0.5 point to 1 point. So still a solid performance across the portfolio, a solid performance across the different service lines, and just a continued pattern of incremental growth organically in a marketplace that's cooled down a little bit. And we think, again, that's somewhat cyclical.

All right.

Very helpful. Thank you.

You're welcome. We've got time for one last question.

Next question comes from John Ransom with Raymond James. John W. Ransom - Raymond James & Associates, Inc.: All right. I'm going to try to apply for the A.J. waiver, see if I can (51:43). We did a quick calc of the revenue that you're acquiring. It looks like around $2.5 billion. Do you think you can, over time, get those margins to your company average? I mean, that's where the big EBITDA number, obviously.

First of all, let me just clarify – this is Milton, John. Let me just clarify on the amount of revenue. Looking at the acquisitions that we have announced, including the hospitals that we've closed, and that would be Waycross and Tomball, and the South Texas facility from Community. And then, we've announced, of course, the three hospitals from Tenet in the Houston market, the recently announced Sebring, Weatherford, and Memorial Savannah. So if you look at the last 12 months' revenue on all those acquisitions, it would be about $1.5 billion – or probably $1.6 billion of incremental revenue annually, not $2.5 billion.

Yeah, and this is Sam. On the margin side, clearly, when we are acquiring facilities inside an existing market where we have infrastructure and capabilities to support those particular facilities with local infrastructure and then layer on the corporate infrastructure, we do see prospects for achieving end market margins. Now, our markets have different margins. Some margins are higher in one market or the other. So to say company average, I have to look at it more specifically around the individual markets. The Savannah operation, as Milton said, is a new market for us. It is a market-maker, as I mentioned on the last call, because of the certificate need offerings that it already has in the State of Georgia. We believe there's a lot of opportunity in that particular facility. It will take us longer to get it than it will hospitals that are in market, but we do believe over a four to five year period, we're going to be in a really good position financially with this particular investment and this particular hospital.

All right, John, I guess we'll give you the A.J. waiver. What's your second? John W. Ransom - Raymond James & Associates, Inc.: All right. Just more of a strategic question. Consumer elasticity grows every year with high co-pay plans and deductibles. And it looks to me where you've got some exposure to lower cost competitors, such as ASC, physician-owned on ASC and maybe some of the alternatives to ER, your volume trends have been a little off as the ACA effect is waived. Do you look at that and say, maybe we need to layer in some more lower cost options versus just kind of the hospital-based higher cost?

Well, this is Sam again. I think it's important for everyone to understand, HCA has over 1,700 facilities providing care to our patients. We have 170 plus hospitals, which clearly are the largest component of our revenue, and the destination within our networks and our network system. But we are adding significantly to the number of outpatient facilities, urgent care, freestanding emergency room, ambulatory surgery, as I mentioned previously, physician clinics, breast centers, all of these different components that make it easier for the patient to access, create geography dispersion for our network, and put us in a situation where we can gain a relationship with a patient and hopefully keep them in the HCA system. So we're clearly doing that right now and investing in more as we look at some of this capital that's in our pipeline. So that is a part of what we're doing. Strategically, though, we still want to downstream this business into our facilities whenever this more acute care is needed. And so that's a fundamental piece of our strategy. It's a fundamental piece of our investments. And it's how we market ourselves, if you will, to the consumer in these large markets.

Yeah, John, this is Milton, and I'll end with this. So, as Sam's saying, it's not that we're not investing. We're already investing in it. We see the strategy. I think what we're seeing in the marketplace is a lot of competition in that same space. I think that's what you may be referencing. It's a low capital entry point into healthcare and our market, so we're seeing more competition, but again, I think with HCA, with what Sam's describing and our overall network capability, that over time we'll see some of that rationalize. And so I think we're feeling some competitive pressure from these markets in those lower cost entry points, but I think over time our performance will continue to be very strong.

All right. John, thank you very much. And I thank everyone. Hope you all have a great day.

Thank you, ladies and gentlemen. That does conclude today's conference. We do thank you for your participation. You may now disconnect.