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The U.S.’s largest health care facility operator reported a decrease in profit and revenue growth in 2022 versus the year prior, partly due to the phasing out of government assistance that accompanied the pandemic. 
<ul> 
 	<li>HCA Healthcare, which operates in 20 states in the U.S., has in aggregate removed hospitals from its portfolio and added outpatient surgery centers since 2020, reflecting a broader shift to outpatient care among hospital conglomerates.</li> 
 	<li>The health care giant has struggled with staffing issues, like many in the industry, employing higher-cost temporary staffing during the pandemic’s onset. A survey conducted by union researchers found that HCA staffed its hospitals at 30% below the national average in 2020. Responding to the survey, HCA said that its staffing was “safe, appropriate," and “in line” with its industry.</li> 
 	<li>The company has repeatedly fought with the Federal Trade Commission over its acquisition of more hospitals, first in Utah in June 2022, and then in Louisiana in April 2023.</li> 
</ul>

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F500 2022-HCA Healthcare

Tennessee-based national health care facility operator HCA Healthcare retains its 2021 position after a year that saw profits rise to nearly $59 billion from $51.5 billion. The company was called into action multiple times throughout 2021 as COVID-19 waves swept the country and sent hospital visits ticking upward. HCA has faced criticism in some areas of the country from consumer advocates who contend that it has boosted profits at its hospitals during the pandemic by reducing staffing and services; HCA says that such changes haven’t affected the quality of care. In the first months of 2022, HCA has received 2.1% more same-facility admissions relative to 2021 and 14.6% more emergency room visits.

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G500-2021-207-HCA Healthcare

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;As with many other hospital companies, Nashville-based HCA Healthcare faced considerable financial pressure related to the pandemic, suspending its quarterly dividend last spring. Admissions to its hospitals dropped 4.7% for the year owing to fewer procedures and less emergency-room traffic. COVID-19 cases in 2020 made up about 8% of its hospitals’ overall admissions. But HCA finished the year strong: It brought in annual revenue of $51.5 billion, a hair above the previous year’s tally, as revenue per hospitalized patient increased 10.5%. Net income attributable to the company rose 7.1% to nearly $3.8 billion, compared with $3.5 billion in 2019.\n\n\n&quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">As with many other hospital companies, Nashville, Tenn.-based HCA Healthcare faced considerable financial pressure related to the pandemic, suspending its quarterly dividend last spring. Admissions to its hospitals dropped 4.7% for the year owing to fewer procedures and less emergency-room traffic. COVID-19 cases in 2020 made up about 8% of its hospitals’ overall admissions. But HCA finished the year strong: It brought in annual revenue of $51.5 billion, a hair above the previous year’s tally, as revenue per hospitalized patient increased 10.5%. Net income attributable to the company rose 7.1% to nearly $3.8 billion, compared with $3.5 billion in 2019.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-62-HCA Healthcare

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;As with many other hospital companies, Nashville-based HCA Healthcare faced considerable financial pressure related to the pandemic, suspending its quarterly dividend last spring. Admissions to its hospitals dropped 4.7% for the year owing to fewer procedures and less emergency-room traffic. COVID-19 cases in 2020 made up about 8% of its hospitals’ overall admissions. But HCA finished the year strong: It brought in annual revenue of $51.5 billion, a hair above the previous year’s tally, as revenue per hospitalized patient increased 10.5%. Net income attributable to the company rose 7.1% to nearly $3.8 billion, compared with $3.5 billion in 2019.\n\n\n&quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:11}">As with many other hospital companies, Nashville-based HCA Healthcare faced considerable financial pressure related to the pandemic, suspending its quarterly dividend last spring. Admissions to its hospitals dropped 4.7% for the year owing to fewer procedures and less emergency-room traffic. COVID-19 cases in 2020 made up about 8% of its hospitals’ overall admissions. But HCA finished the year strong: It brought in annual revenue of $51.5 billion, a hair above the previous year’s tally, as revenue per hospitalized patient increased 10.5%. Net income attributable to the company rose 7.1% to nearly $3.8 billion, compared with $3.5 billion in 2019.

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G500-2020-219-HCA-Healthcare

HCA Healthcare, a Nashville-based hospital operator, continued its steady growth in 2019 with annual revenue of $51.3 billion, an increase of nearly $5 billion from the previous year, even as net income dipped 5%. HCA's facility admissions have increased over the past year, and it now operates 184 hospitals, up from 179 the year before. Its hospitals treated 35 million patients in 2019, a new record. And the company's goal of expanding clinical capacity has been boosted by multimillion-dollar capital investments. Like many hospital operators, HCA is facing considerable financial pressure related to the coronavirus pandemic; this spring, it suspended its quarterly dividend.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-065-HCA-Healthcare

HCA Healthcare, a Nashville-based hospital operator, continued its steady growth in 2019 with annual revenue of $51.3 billion, an increase of nearly $5 billion from the previous year, even as net income dipped 5%. HCA's facility admissions have increased over the past year, and it now operates 184 hospitals, up from 179 the year prior. Its hospitals treated 35 million patients in 2019, a new record. And the company's goal of expanding clinical capacity has been boosted by multimillion-dollar capital investments. Like many hospital operators, HCA is facing considerable financial pressure related to the coronavirus pandemic; this spring, it suspended its quarterly dividend.

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Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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HCA Healthcare owns many of the largest chains of hospitals, clinics, surgery centers, medical labs, and freestanding emergency rooms in the U.S., in addition to operating locations in the U.K. The company was founded in 1968 as one of the first U.S. hospital conglomerates. Since then, along with its industry rivals, it has undergone tremendous growth, partly through acquisitions of smaller health care chains.

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

HCA Healthcare (HCA): Company Profile, Stock Price, News, Rankings

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HCA Healthcare

hca healthcare

Welcome to the HCA Healthcare Third Quarter 2026 Earnings Conference Call. Today's call is being recorded. After today's prepared remarks, we will host a question and answer session. We kindly ask that you please limit yourself to one question. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. At this time, for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations, Mr. Frank Morgan. Frank, please go ahead, sir.

Good morning, and welcome to everyone on today's call. With me this morning is our CEO, Sam Hazen, and our CFO, Mike Marks. Sam and Mike will provide some prepared remarks and then we'll take your questions. Before I turn the call over to Sam, 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. More information on forward-looking statements and these factors are listed in today's press release and in our various SEC filings. On this morning's call, we may reference measures such as Adjusted EBITDA, which is a non-GAAP financial measure. A table providing supplemental information on Adjusted EBITDA and reconciling net income attributable to HCA Healthcare, Inc. is included in today's release.

This morning's call is being recorded, and a replay of the call will be available later today. With that, I'll now turn the call over to Sam.

Good morning, and thank you for joining the call. The company's results in the third quarter reflected improvement in key areas of our business. First, demand for our services continued to grow at a solid rate. Adjusted admissions on a same-facility basis grew 3% compared to 2.3% year to date. Inside this growth, insured volumes grew faster in the quarter than in the first half of the year. The third quarter reflected the 22nd consecutive quarter of volume growth for the company. Second, revenue per adjusted admission for our insured business, excluding supplemental payments, increased at a higher rate than in the first half of the year. This increase partially offset the payer mix pressure from continued volume declines for patients who were formerly covered in health insurance exchanges and are now uninsured.

Additionally, we had a modest incremental net benefit of $50 million in the quarter from Medicaid supplemental payment programs, primarily related to a recently approved Virginia program. These factors, coupled with improved cost results, contributed to solid financial performance in the quarter that slightly exceeded our expectations. Diluted earnings per share, as adjusted, increased almost 4%. I have often mentioned that HCA has strong staying power because of our scale, the important role we play in providing critical services to communities, and our disciplined culture. Despite the challenges this year brought about by federal policy changes, we have continued to move the company forward and believe we are positioned to end the year positively. As we look ahead to 2027, let me share a few preliminary observations around certain aspects of our business before we provide our full year guidance in January.

I will remind everyone we are still early in our planning process and there are several important areas that remain fluid, including the policy environment. First, we expect demand for services to remain strong with volume growth forecasted to be 2%-3%. This range is consistent with our long-term thinking. Within the demand environment, we believe it is reasonable to assume for 2027 that fewer people will lose their coverage on the health insurance exchanges than we experienced in 2026. However, we do expect that there still will be a meaningful impact on payer mix. We need to get through the fourth quarter before we can provide more details. Next, we expect to receive approximately $550 million-$650 million less in Medicaid supplemental payment net benefits due to various state programs that received grandfather approvals in 2026 and reimbursed us for services we provided in prior years.

Last, we anticipate favorable cost performance, primarily due to our ongoing enterprise-wide resiliency program and the operating leverage from the expected volume growth. When we aggregate these preliminary observations, we anticipate our earnings in 2027 will be generally consistent with 2026. Beyond 2027, we anticipate performance more in line with our long-term growth targets. This view makes three important assumptions. First, we move past the most significant effects on payer mix from the exchanges. Second, we assume no material policy changes beyond HR 1. Finally, we have a set of strategic initiatives, including digital transformation, network development, and ongoing resiliency programs that generate significant value. I will reiterate, it is still early, but we believe these preliminary perspectives provide context for how we currently see the company's growth prospects. Let me close with this. Our colleagues continue to provide high-quality care to our patients and execute our strategic plans.

I appreciate their efforts in delivering on our mission, and I want to thank them for their good work. As we get further into the execution of our plan, we believe it will enhance access for our patients with our capital spending, create a better work environment for our caregivers with our AI transformation initiatives, and deliver value for our shareholders with our enterprise-wide resiliency program and balanced capital allocation. As we look to the future, I am confident that HCA Healthcare has the right people, the right process, and the financial position to achieve our long-term objectives. With that, I will turn the call over to Mike for more details on the quarter.

Thank you, Sam, and good morning, everyone. As Sam noted, demand for our services continued to grow at a solid rate. Compared to the prior year quarter on the same facility basis, admissions increased 2.7%, equivalent admissions increased 3%, and ER visits increased 5.1%. Inpatient surgeries were down 1.4%. Outpatient surgeries were down 3.7%. Regarding surgical volumes, consistent with the second quarter, we continued to see solid growth in our emergent surgical volumes and pressure in elective. Same facility equivalent admissions in our insured population, excluding exchanges, increased approximately 3% in the third quarter versus prior year. Exchange equivalent admissions declined approximately 19% versus prior year quarter. For context, the third quarter of 2025 was our high water mark for exchange volume, making for a difficult comparison. However, we did see sequential improvement in exchange volume from Q2 to Q3 of 2026 of approximately 8%.

Like the second quarter, we continue to see patients who have lost coverage on the exchanges migrate almost one-for-one to uninsured. This one-for-one migration makes up approximately 80% of our uninsured volume growth, with the remaining 20% primarily related to a decrease in Medicaid conversions, and mostly in Texas. Our uninsured volume in third quarter 2026 represented approximately 10.5% of total equivalent admissions versus 8.5% in the prior year quarter. We estimate the payer mix shift from exchanges to uninsured resulted in an unfavorable impact on Adjusted EBITDA of approximately $400 million in the quarter. We now expect the full year unfavorable impact on Adjusted EBITDA from payer mix shifts to be at or slightly above the upper end of the range of our previously updated estimates. For Medicaid supplemental payment programs, the company recognized approximately $50 million of incremental net benefit during the third quarter.

We now expect the incremental net benefit from Medicaid supplemental payment programs to be between $600 million and $800 million for the full year of 2026. This increase in our estimated range was driven equally by the grandfathered application from Virginia and one-time payments from across our other programs. We were pleased with our cost results in the quarter. Same facility cost per equivalent admission, when excluding Medicaid supplemental payment programs, was essentially flat versus prior year quarter, and it improved 40 basis points sequentially. As we typically see an increase sequentially from second quarter to third quarter, this outcome reflects strong operating discipline from our teams. Moving to capital allocation and cash flow. Capital expenditures totaled approximately $1.36 billion in the quarter. Additionally, we purchased approximately $3 billion of our outstanding shares, and we paid $165 million in dividends for the quarter.

Cash flow from operations was approximately $4.5 billion in the quarter. Our debt to adjusted EBITDA leverage remains in the lower half of our stated target range, and we believe our balance sheet remains strong and well-positioned for the future. We currently expect to complete most of the existing authorized share repurchase program by year-end, subject to market conditions and other factors. As noted in our release, we are reaffirming our estimated guidance ranges for 2026. Given our third quarter performance, we currently expect to be in the upper half of our guidance ranges for the year. I will now hand the call back to Frank Morgan for questions.

Thank you, Mike. As a reminder, please limit yourself to one question so we might give as many as possible in the queue an opportunity to ask a question. Christine, you may now give instruction to those who would like to ask a question.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of A.J. Rice with UBS. A.J., your line is now open.

Thanks. Hi, everybody. I know it's early to be giving a lot of comments about 2027, but in your thinking about consistent EBITDA versus this year, it sounds like you're thinking there is a fairly substantial incremental public exchange headwind that you've got to overcome, and you're also talking about incremental savings from ongoing resiliency programs. I wonder if there's any way to flesh out sort of an order of magnitude of what you think that incremental public exchange headwind might be next year, even if it's a wide range? Similarly so, should we look for cost savings similar to the $400 million resiliency program you announced this year, next year?

Well, A.J., I think what we tried to do in preparing our early look comments is give you the best information we have at this point. As Sam noted in his prepared comments, we still are in the early stages of our planning cycle. As we finish fourth quarter, we're really studying two key components. Number one is our results in fourth quarter and how the strength of our core performance continues to mature. I think it's clear in third quarter, we were pleased with our core growth, and we feel like we have momentum. We need to validate that in fourth quarter, and that'll give us a really good sense of our core growth as we step into 2027. The second thing that we've got to study is the exchange environment.

As we go through the fourth quarter, first, we will have better information about how our exchange volumes perform here in the last quarter of the year. We will also have better intelligence about enrollment. The enrollment period starts on November 1 and it goes through mid-January. With those two things, we will be in a much better position to give you our best sense of this on our January call, our fourth quarter call for 2027 guidance. I think as you think about core growth, you think about the headwinds that we have disclosed related to Medicaid state supplemental payment programs, and then what ends up happening with the exchanges in 2027. Those are the big moving parts, and we will give you further guidance as we get on our fourth quarter call.

On the cost side, A.J., let me add to the cost. We see our resiliency agenda broadly as an ongoing strategic program for the company. We now have new capabilities. We have new technology. We are expanding our shared service platform as a result of that, and we are able to move the cost agenda systematically as a company today. Heretofore, we did not have that ability because we did not have the capabilities nor the technology, and I think the mindset to accomplish it as a result of that. When we start thinking about costs in 2027, as I mentioned in my comments, we do anticipate more value coming from our resiliency program broadly within our networks, and from a cost standpoint overall for the company.

That is more of a strategic agenda item that will carry itself into the future and be a part of our programmatic efforts as we move beyond 2027. I think the other point, Mike, is the Medicaid supplemental payment programs related to some payments from prior year as we think about 2027 also.

Our next question comes from the line of Ann Hynes with Mizuho. Anne, your line is now open.

Great. Thank you so much. I just want to ask about 340B. I know there is a regulation out there that if it goes into effect as is, should benefit the for-profits that don't participate in that program. I know that it will probably be challenged at some point through the legal system, but does that PLAC guidance assume any change in that program or any potential benefit? If it does, have you sized that? Thanks.

Thanks, Ann. This is part of the Medicare OPPS rule as proposed at this point. We were pleased with the construct that is a part of the proposed rule as it relates to a budget neutral reallocation on 340B. It would benefit us. We're not sizing that publicly at this point. As we think about our early look statement, just keep in mind, the idea of being generally consistent is where we are standing here at third quarter. We will give you much more detailed information as we get on our fourth quarter call. I would say, we view the OPPS rule as proposed, and we're hoping that it gets finalized here soon as a positive factor for HCA as we head into 2027.

Our next question comes from the line of Ben Hendrix with RBC Capital Markets. Ben, your line is now open.

Great. Thank you very much, and appreciate the demand comments for next year and the expectation for 2% - 3% volume growth. I am wondering how the surgical backdrop is fitting into your thoughts there. I know you had said that you did not expect any recovery of the kind of weaker elective trend through the end of this year. But as we think about next year, is there demand getting pent up there that could unwind, and would that be upside to that 2% - 3% or would that be considered in there? Any thoughts on how you are thinking about surgical progression for next year? Thanks.

Ben, we have not landed on components of that growth just yet. We have some viewpoints. I think, again, we need to get through the fourth quarter, see how the seasonality on surgery plays out in the fourth quarter. I think our emergent business, as Mike spoke to, continues to be strong. We see some macro forces impacting the elective business, coverage being the primary macro force, and then just general affordability across the economy being a second one. So I think from that standpoint, we have not landed on any surgical viewpoints. But I think it is important for everyone to understand that our composition of volume is fairly diverse. We have cardiac, we have women's, we have NICU, we have transplant programs, we have surgery, yes, medicine, critical care.

All of these components are attributes of our company that we think give us an ability to navigate through a component not being as productive as we want. And that is what we are seeing. We are seeing more growth in other services that are compensating for some of the surgical declines that we are experiencing. For example, our neonatal activity in the quarter was very strong. Our cardiac business continues to be strong. Our trauma business, strong. EMS traffic to our hospitals, up significantly. So there are all of these elements that go into our volume assumption. We are not ready to sit there and call out surgery specifically for 2027 until we get a better viewpoint of it through the seasonality patterns that typically exist in the fourth quarter.

Your next question comes from the line of Brian Tanquilut with Jefferies. Brian, your line is now open.

Hey, good morning, guys. Mike, as I look at the SWB and the operating expense lines, SWB up sequentially, other OpEx down. Anything you can call out there, especially as we think through temp staffing, we're seeing indicators that it looks like temp nurse staff orders are picking up. Just curious what you can share with us on those two line items, especially given the resiliency efforts. Thanks.

Sure. Part of this answer is consistent with our sequential note that we had in my prepared comments, Brian. Typically, when we go from second quarter to third quarter, that is the timing of when we do a lot of our merit adjustments in labor. We typically see even a 100 basis point increase in our expense for AA overall. That's one of the factors. We were actually really pleased when we looked at our expenses per equivalent admissions, obviously excluding state supplemental payments. One, they were essentially flat to prior year, but two, they were 40 basis points sequentially down from second quarter to third quarter, which we think really reflects the strength of not only our resiliency plan, but also the operating leverage we're getting from state supplemental payments.

If you look at SWB on a margin basis to prior year, even with the softer overall revenue, we had a 40 basis point margin increase. So we were pleased with that. Same thing, we had good performance in supplies as well. In other operating expenses, if you just look at third quarter to prior year, you do have a bit of cost related to the state supplemental payments. Keep that in mind. Professional fees continue to be a pressure point for the company. We were up about 12% versus prior year quarter, and professional fees now represent about 24% of other operating expenses. I would note that those continue to be driven by radiology and anesthesiology. So Brian, that's a bit of a rundown on the cost side.

Your next question comes from the line of Pito Chickering with Deutsche Bank. Pito, your line is now open.

Hey, good morning, guys. Thanks for taking my question. I am going to ask AJ's question a little differently. You quantified the $600 million, or $550 million-$650 million of less Medicaid supplemental payments. You talked qualitatively about mix of Medicaid impact next year and the core admission growth of 2%-3%. Can you just confirm that 2027 adjusted core EBITDA growth is still in the 4%-6% range? The other piece is impacting that or is core running hotter or lower, and how much is resiliency driving that core growth? Thank you.

Well, Pito, resiliency is just part of our core operations, and that is the way we think about, resiliency is just part of the work we do every day in managing the company. When I think about core growth in third quarter, we were pleased with core growth in third quarter, and call it a 10% core growth increase. I think that reflects good volume growth. It reflected a good net revenue per unit improvement in the quarter and really good cost management as well. I think as you see how we set the guidance range in the upper half of range, that gives you an implication of how we are thinking about fourth quarter. Then, we will give you our thinking in more detail about 2027 when we get on our fourth quarter call.

That would be the way to think about core growth, and we will have to validate it for fourth quarter, but we were really pleased with third quarter, and you get a sense from the upper half of the range comment that we have confidence going into fourth.

Your next question comes from the line of Matthew Gillmor with KeyBanc. Matthew, your line is now open.

Hey, thanks for the question. On the pricing topic, you called out an acceleration in insured revenue per equivalent admissions. It sounded like that was better than expected. Can you talk about some of the drivers of that acceleration?

Sure. Matthew, if I look at net revenue per unit and I think about the insured book, obviously, excluding the exchanges, because the payer mix is still the big negative that we're dealing with in terms of net revenue per unit to prior year. Number one is really the strength of our commercial volume. Our commercial ex-exchange volume was up 2.7% over prior year quarter, and that's strong. That component of our payer mix is definitely a part of why our net revenue per unit was a bit stronger in the third quarter than the first half of the year. The second, we continue to see solid rate growth across our various payer categories. Then really third, Parallon, we see continued strengthening in their abilities to collect our net revenues and yield our contracts.

Their work to continue to strengthen our abilities to deal with denials and underpayments continues to improve. I think, overall, we had a good net revenue per unit performance in the third quarter, especially given the headwinds from our payer mix impact.

Your next question comes from the line of Sean Dodge with BMO Capital Markets. Sean, your line is now open.

Yeah, thanks. Good morning. Maybe just on the 2026 guidance. Mike, you said you're now pointing to the upper half of the range. I think that still implies core growth in Q4 will accelerate some from Q3. Maybe if you could just walk us through the visibility you have into what's going to drive that. Is that just incremental gains from resiliency you're expecting to come through? As Sam, you also mentioned volume growth in Q3 broadly improved from the first half of the year. Is that part of the assumption too, that volumes also continue to improve into Q4?

Well, at first I would say, I think if you look at the upper half of our guidance ranges, that largely implies our core growth fairly consistent in fourth quarter. Third quarter would be the first thing out of context. Then I think the drivers are similar. Number one is we did see strength in volume in third quarter. So that's encouraging for sure. We've already mentioned a little bit on the net revenue per unit side. There tends to be a step up from third quarter to fourth quarter in normal course, and so we expect that normal seasonal trend to apply broadly.

Then we do believe, as even Sam mentioned, not only in his opening, but as we were talking about in the first question, that our performance around our resiliency plan, our ability to manage costs, we continue to see strength across our resiliency plan in third quarter and fourth quarter and into 2027, 2028 and beyond. So I think those are the key components, Sean, that are making up our guidance comment for fourth quarter of 2026.

Your next question comes from the line of Whit Mayo with Leerink. Whit, your line is now open.

Yeah, thanks. Did the HIX headwind get larger in any particular market? Any comments around AR collectability, balance after collectability would be helpful. Any of the $400 million, is that related to prior quarters? Thanks.

Well, I would say, Whit, that our HIX results in third quarter were a little bit higher than we estimated. We would have estimated based on our guidance that we gave at the second quarter, that third quarter would be 15%, 16% decline. We ended up at about a 19% decline, which just reflects the sustained decline in our exchange volumes. I like to put that in context, though. That two or three points is about 2,000 adjusted admissions. We have about 1 million adjusted admissions in the quarter. So, these aren't perfect estimates, but it gives you a sense of the numbers we're looking at here. Our experience in third quarter, and I mentioned this in my prepared comments. Number one, third quarter of last year was our high watermark, so there was a bit of a prior year comparison difficulty.

We did see, however, a sequential improvement in exchange volume from second quarter to third quarter 2026 of about 8%. All of that, when you brought it together, it's what guided us to say that we think for full year 2026 now, we'll be at to maybe slightly above the top end of our previously updated ranges for the exchanges. That's how the numbers pulled through here in third quarter, Whit.

Your next question comes from the line of Ryan Langston with TD Cowen. Ryan, your line is now open.

Great, thanks. Appreciate the commentary on elective versus emergency surgical future trend growth. Can you maybe update us on what ASC versus HOPD surgical volume looked like in the third quarter? Thanks.

The ASC surgery volumes were down 5.4% on surgery. Overall case volumes were down about 3.7%. The primary pressure is related to the exchanges in our ASC book, very similar to the hospital side. I would note, however, that even in light of the volume softness there, that our overall net revenue and earnings did show some growth to prior year. The hospital-based outpatient surgeries were down 2.9%.

I think it is important to understand the construct of our ASC platform, and that informs at some level for us the macro forces that are out there with elective care at this particular juncture. When you sort through what is going on, yeah, there are certain issues in some centers that we have, but at sort of an aggregated level, it informs a little bit of our macro thinking around some of those forces that are influencing overall demand.

Your next question comes from the line of Sarah James with Cantor Fitzgerald. Sarah, your line is now open.

Thank you. I would like to keep going on that topic. Is there a way to unpack how much of the inpatient and outpatient surgical trend pressure so far this year is exchange related versus how much is affordability and things that may be continuing? Given your comment on affordability pressure, are you assuming any stronger than normal tailwind in 4Q out of the deductible reset?

We are not at this particular juncture assuming anything outside of normal seasonality, but your point is relevant. It could be that some folks are making decisions. We have seen that on the margins in other years, but at this particular point in time, we are not. When I look at our elective care, surgical care, the HIX is a very large percentage of the explanation, and it goes back to what we have been saying all of last year and all of this year. Coverage for people matters, and it creates access, affordability, and elective care. It is a very fundamental element to individuals' abilities to get the healthcare they need. It is a large piece of the elective equation is the coverage dynamic that has occurred in the HIX environment.

I do not have an exact percentage here in front of you, but it is a very significant piece of the variance, and we have called that out, and we think that has some incremental effects in other payer classifications as well as we talk about the affordability more broadly.

Your next question comes from the line of Justin Lake with Wolfe Research. Justin, your line is now open.

Thanks. Good morning. A couple quick number follow-ups. First on 2027 SDP, appreciate the $550 million to $650 million number. I was hoping you can isolate your estimate here of how much of that number comes from the Q4 SDP cut as HR 1 gets implemented versus the 2026 out of period that doesn't reoccur. On the exchange impact for Q4, can you tell us how much your guidance assumes that that sequential exchange volume growth occurs from Q3 to Q4 this year? I know you just gave us the Q2 to Q3 numbers, curious on Q3 to Q4. Thank you.

Well, let me start with the first part of your question. As Sam noted in his comment, we expect to receive approximately $550 million to $650 million less in Medicaid State Directed Payment net benefit in 2027 versus 2026. That's because of the grandfathered approvals that happened in 2026 that were really related to prior years. The predominance of that, Justin, was related to Florida, which we previously disclosed. The rest is really related to the other grandfathered states like Virginia, Georgia, et cetera. So, that's really the makeup of those, kind of the out of period State Directed Payment programs. If I think about what the guidance implies of fourth quarter, we are finishing September 2026 year to date with $650 million of incremental net benefit from State Directed Payments.

If you think about the full year guidance range that we just updated to $600 million to $800 million, that'll give you a sense for what we're thinking about fourth quarter. At midpoint, it would be another $50 million net incremental benefit, and then you can see the range. That's kind of how we're thinking about that for fourth quarter. On exchanges, not ready to quote a sequential move from Q3 to Q4 at this point. I would note, and we noted this on our second quarter call, I would point you back to fourth quarter of 2025 where we did see a slowdown occur in our exchange volumes from Q3 to Q4 last year. We do think there's a bit of a benefit comparison benefit in fourth quarter of 2026, given that factor.

Your next question comes from the line of Kevin Fischbeck with Bank of America. Kevin, your line is now open.

Great, thanks. A lot of moving pieces here, so I just want to make sure I understand the new guidance versus the old guidance. Is the right way to think about it that the new guidance includes about $300 million more of SDPs and $100 million plus more of headwinds from payer mix, and then that combination is largely the increase in guidance from

the prior? Is that the right way to think about it? Then just a clarification on the HIX headwind that you guys are talking about. Is it purely just an uninsured number, people coming in and not paying, or are you also kind of thinking about the implication of lost surgery from people losing HIX coverage in that number? Thanks.

Well, let's talk to guidance first, Kevin. Yes, I mean, from supplemental payments, we have raised our net benefit guidance by about $300 million. So that is certainly a piece of it. If you think about the exchanges, with this idea of kind of at or slightly above the top end of our previously released estimates, you are in the $100 million to $200 million increase in headwinds related to that. Then the third thing I would call out is just core growth. I think as we noted on today's call, we believe our fourth quarter core growth should be good.

The net of those three factors really led us to making the comment that we believe we will be in the upper end of our guidance ranges for the full year, which will give you a sense of how all that comes together. So that would be the walk down of guidance.

Your next question comes from the line of Scott Fidel with Goldman Sachs. Scott, your line is now open.

Hi. Thanks. Good morning. The question is just first on the, I know there's been some questions around on the third quarter and next year, but on the fourth quarter, just maybe the visibility and expectations that you have around elective procedures, and how scheduling seems to be playing out in terms of just normal seasonality.

Then I just wanted to also ask, in terms of the headwinds that you've laid out for next year relating to OBBB, whether there's anything specifically relating just to the CMS policy that now is requiring all the 1115 waivers to be budget neutral from a federal perspective, and just whether your intel from the states, are you seeing any change in approach or in terms of applications or anything that you think could play out relating to that policy that could impact fundamentals in 2027? Thanks.

On elective, Scott, I think Sam mentioned this when he was answering the previous question on surgery. At this point, we did not assume any pickup on elective demand related to co-pays and deductibles in the fourth quarter. I think we expect a normal seasonal move from Q3 to Q4, but we did not build into our guidance thinking some kind of improvement or pull forward of demand from an elective standpoint into fourth quarter. When I think about HR 1 for 2027, we continue to monitor all the rulemaking, we know that our states continue to file their applications and feel good about the processes that we see in flight. I would mention on HR 1 that the big change is really work requirements for able-bodied adults in our expansion states. I might mention just for context that expansion states are 40% of our Medicaid volumes and revenues.

When you think about work requirements targeting able-bodied adults in those expansion states, when you take out the seniors and the disabled and the kids and those that are medically frail, we think that work requirements would be kind of applicable to about 15%-20% of our Medicaid volume. The net of all of that, while we are not quite ready to size it in terms of earnings impact, we do think that work requirements specifically would have a bit of a modest impact in full year 2027. So that is the main things we are watching for HR 1 next year. I think that wraps both of your questions.

Your next question comes from the line of Stephen Baxter with Wells Fargo. Steven, your line is now open.

Hi. Thanks. Just a couple of follow-ups on the breakout of adjusted admissions. I think you gave us the commercial ex-exchange number already, but could we get the Medicare year-over-year AA growth, Medicaid, and then I guess you gave us the exchanges on a quarter-over-quarter basis. If you also had the year-over-year basis, that would be helpful too. Thanks.

Sure. So these are same-facility adjusted admissions compared to prior year for third quarter. Medicare is up 3.2%. Medicaid is up 2.7%. Commercial, excluding the exchanges, are up 2.7%. Then the exchanges are down 19% to the prior year quarter. As I noted in my commentary, though, that is an 8% sequential improvement from Q2 to Q3.

Our next question comes from the line of Jason Cassorla with Guggenheim Securities. Jason, your line is now open.

Great. Thanks. Good morning. I wanted to turn back to the volume discussion. You guys have seen pretty solid volume acceleration over the past couple of quarters. That clearly stands out. You are talking about 2%-3% volume growth next year. I was just hoping if you can give us a little more in terms of what you are attributing the volume strength to. You have talked to the solid demand environment, but can you help quantify maybe how much you are thinking is coming from the benefits of in-market initiatives, all the work you have done to expand capacity and the like, and how that kind of fits into that 2%-3% mold that you are looking for next year would be helpful. Thanks.

If you start at the top here, it is our belief that there is inherent demand growth in the markets that we serve, coming from population growth, aging baby boomers, chronic conditions, new technology even. All this sort of converges to create an upward movement in demand in the markets that we serve. That is a starting point. We do think across a lot of our markets. We are gaining market share incrementally. We do have some markets that we have to adjust to different dynamics and respond at that level. But when you look at it in the main, over time, we picked up market share. Our approach to our networks is continuing to advance with respect to our ambulatory platform.

We are up to almost 3,000 units through acquisition of urgent care, ambulatory surgery centers, and other outpatient facilities that complement our hospital's ecosystem and create for our patients a more convenient and accessible location and efficient service. That continues to evolve in our networks. As we mature on that platform and leverage the restructuring that we did with one of our group presidents, Charles Gressle, I anticipate that we are going to be able to move our ambulatory platform forward and create even more growth out of it, again, meeting our customers, our patients where they live so that we can create convenience and so forth for them. A second important initiative for us is creating patient coordination once they do hit one of our ambulatory facilities. Through patient coordination, we think we can create a better experience for the patient and ultimately integrate them into our system.

If in fact they need acute care services, we're helping them achieve that in an efficient and transparent way. So that's evolving also. Clearly, we're investing in our hospitals with capital. We are adding beds. We're adding other capacity within our facilities to manage the demand. We're running the company at an all-time high when it comes to occupancy levels, pushing 75% on our inpatient platform. We're benefiting, however, through patient flow initiatives, where we're able to improve the flow for our patients and get them to the care sites they need. That's creating capacity for us as we evolve also. All of these things combined are yielding growth for our company.

Then lastly, it's how we engage with our physicians and support our physicians with their practices, meet them where they are, and find ways to invest in clinical capabilities, be very effective and efficient in how we process their patients, and then ultimately give them a voice in what's going on. That's allowing us to respond largely to our physician requirements as well. All of those things, it's impossible to point to one thing. Each market's slightly different. We have to nuance our approach in each market to address those differences. That's why we're organized as we are with our divisions.

But I think with 22 consecutive quarters of growth in volume, which is quite impressive from my standpoint, and then with the return on capital, and then with the improvements in quality and service for our patients, we feel like our model works and gives us, again, the staying power that I mentioned in my comments and allows us to push into the future with confidence and a belief that we can achieve our objectives.

Your next question comes from the line of Raj Kumar with Stephens. Raj, your line is now open.

Yeah. Maybe on the pricing conversation, just curious on, I know you're mostly contracting on the commercial side for 2027, but just kind of thinking about 2028. Are payers starting to embed any explicit assumptions around coding and more accuracy on that front? Just curious across that node and in terms of how diffused it is across the platform, or is it still in early stages around the coding dynamics and on that front?

This is Sam. Let me lift up a little bit on this point. It's important for us to have solid relationships with the major payers in our community, and we do that. We're able to meet their objectives and meet our objectives in most circumstances. That's been, I think, part of our ability to execute our strategy and help them, excuse me, execute their strategy. Our contracting process is transparent with our major payers, and we are accomplishing contract cycling that naturally occurs over time. We're deep into 2027, and we're not as deep into 2028, but we are making progress on 2028 as contracts mature and move into the cycle that naturally occurs. We're able to achieve our objectives and then support the objectives of the major payers.

Our teams are working very earnestly to come up with solutions for. What I mean by that is the patient, the providers, and the beneficiaries that are all connected to what we do administratively, between the insurance companies and the hospitals. HCA and many of the major payers are working diligently to eliminate the friction, create a more cost-effective solution, and reduce the administrative complexity that exists within the system. I'm encouraged by the progress that we're making. I'm encouraged by the attitudes of many of the payers, and I think we're going to progress over the next year or so and really create value for our patients and for the beneficiaries in a manner that starts to change the paradigm a little bit between what's going on with payers and what's going on with HCA.

More to come on that, but we are, in fact, progressing on just about every front with respect to our major payers.

Your next question comes from the line of Benjamin Rossi with JPMorgan. Benjamin, your line is now open.

Hey, good morning. Thanks for the question. Following up on your market-specific commentary, with some of the broader operational pressures you are facing, I appreciate that you are still adding inpatient capacity and outpatient density, but as you assess your options, are you at all considering any market exits or potential changes to your footprint? Or with these pressures hitting everyone, do you consider yourself a potential buyer as competitors similarly face these headwinds? I guess, just curious where you stand on market positioning at this juncture. Thanks.

We compete in 43 markets, roughly, in the U.S. Some of them are smaller, and they get counted in that, and then some are mega markets. Over the last seven, eight years, we have been fairly intentional about looking at our individual markets and determining whether or not we can execute our model and be successful and meet the needs of our constituents. We have largely pruned the portfolio of HCA down to the markets that we think can go the distance. Today, the markets that we have are ones that we are investing in at different levels, as you would expect, because of the different circumstances from one market to the other, the different opportunities that exist.

I do not see any significant change to our market configuration, at this particular point, because we have been intentional over the past few years to optimize the portfolio, if you will, and put ourselves in a position where we can succeed and build out the model that we think adds value to our patients and adds value to the organization as a whole. That allows us to focus our capital spending, to focus our talent and our resources on a smaller footprint, but with a very significant growth, prospect, we believe, for the company. That is where we are. We always have one or two items here or there. With regard to new markets, you are right. We are built to be bigger. We know that, but we just have not seen a lot of opportunities yet.

If opportunities do develop, as usual, we will be opportunistic and take a look at whether or not it is affordable, whether or not we can execute our model, and make the right decision at that particular juncture. We do have a lot of outpatient activity, as I mentioned earlier, that is important to building out the network overall so that it is accessible for our patients, and we continue to invest in those opportunities as they develop as well.

Your next question comes from the line of Andrew Mok with Barclays. Andrew, your line is now open.

Hi, good morning. Can you talk about what you are seeing in the market as it relates to the removal of the inpatient-only list, both in terms of procedure migration today and actions taken now in anticipation of future migration? How should we think about the impact of the inpatient-only list and potential outpatient capacity additions against the backdrop of fixed surgeons? Thanks.

Andrew, if I think about the inpatient-only list, obviously, we are in year one of a three-year phase out. This first year is focused a bit more on ortho and musculoskeletal type procedures, so that is what we are seeing. I think if I look at our elective book, I would say, after the exchanges, which were the biggest driver of elective surgical volume weakness, the second driver would have been Medicare, and especially on the inpatient side. So we are seeing some impact of the inpatient-only list. I think it is fair to say that the outpatient market for surgery is a bit larger than the inpatient market for surgery.

There are more competitors, and so that is a factor. When I think broadly, though, we look at ambulatory surgery centers, as Sam just walked through, as part of our networks. In building out our ambulatory networks, they play an important role.

We are continuing to invest in our operating rooms and our surgical platforms in the inpatient side and the hospital side for outpatient surgery and in our ASC platforms, and believe that it is a long-term important component. I don't think that anything we are seeing would say that it would drive a material change in the way we are approaching building out our networks.

Again, Mike, I think the fact that we have probably 25 different service categories that we focus on across the company that are different gives us an ability at times to invest, just like I said, in different markets. We can invest in different services depending on demand, forecasts, population trends, competitive dynamics, and so forth. You see that in our volumes when it comes to some of the pressures we have seen on elective care. We have offset that with other services that give the networks a level of resiliency, give the demand equation inside of the markets support when it comes to our ability to provide patient care. I am not sure that is fully recognized in some of these isolated discussions about service A, service B. Clearly, there are always issues. We have had issues with stuff migrating from inpatient to outpatient.

Over the years, we have had new technologies evolve that change the procedure approach for physicians and better for the patients. Obviously, we embrace that. But we have been able to backfill with other services, expand our markets, get into new capabilities, and ultimately keep the company moving forward in the face of those incremental changes that occur. That is what I think is unique, in many respects, to our platform, the services we provide, and how we approach our business. It gives us the diversification, in some regards, that allows us to navigate through these incremental issues that surface from time to time.

HCA Healthcare (HCA) Q3 2026 Earnings Call Transcript

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