HCA Healthcare Q1 Earnings Call Highlights

Key Points

• Q1 results: Revenue rose 4.3%, adjusted EBITDA was up nearly 2% and adjusted EPS increased ~11%, but an unusually mild respiratory season (respiratory admissions -42%, ER visits -32%) and a January storm cut volumes and reduced adjusted EBITDA by about $180 million — management called these impacts temporal and reaffirmed 2026 guidance.
• Exchange and payer trends: Same-facility exchange equivalent admissions fell ~15% while uninsured admissions rose ~16%, with an estimated Q1 adjusted EBITDA hit of ~$150 million and management maintaining a full-year exchange impact range of $600–$900 million as it studies slowing Medicaid conversions.
• Supplemental payments & capital deployment: Stronger-than-expected Medicaid supplemental payments boosted adjusted EBITDA by roughly $200 million versus the prior quarter (full-year net benefit now modeled to decline $50–$250 million year-over-year), while the company repurchased $1.57 billion of shares, spent $1.1 billion in capex and generated $2.0 billion of operating cash flow.

HCA Healthcare NYSE: HCA executives said the company’s first quarter of 2026 was shaped by an unusually mild respiratory season and a broad winter storm that reduced volumes early in the quarter, while higher-than-expected net benefits from Medicaid supplemental payment programs helped offset some of the financial impact.

CEO Sam Hazen said HCA did not see the “typical lift related to seasonal respiratory conditions,” noting respiratory-related admissions fell 42% year over year and respiratory-related emergency room visits declined 32%. Hazen added that a storm affecting several markets also weighed on volumes, though he said February and March “rebounding nicely” suggested the pressure was largely contained to January.

Quarterly performance and volume trends

Hazen reported first-quarter revenue increased 4.3% versus the prior-year quarter, while adjusted EBITDA rose “almost 2%.” Diluted earnings per share, as adjusted, increased approximately 11% year over year, he said.

CFO Mike Marks provided same-facility volume comparisons for the first quarter of 2026 versus the first quarter of 2025:

• Admissions increased 0.9% and equivalent admissions rose 1.3%.
• Inpatient surgeries decreased 0.3% and outpatient surgeries fell 1.7%.
• Emergency room visits increased 0.3%.

Marks quantified the drag from the mild respiratory season, saying it reduced quarterly growth in admissions and ER visits by 70 basis points and 140 basis points, respectively. He also said the January winter storm spanning markets including Texas, Tennessee, North Carolina, and Virginia reduced admissions and ER visits by an estimated 30 basis points and 50 basis points, respectively. In total, Marks said the respiratory and storm impacts reduced adjusted EBITDA by an estimated $180 million and were “temporal and not structural.”

When asked how results compared with internal expectations, Marks said adjusted EBITDA came in “a bit short” relative to the company’s midpoint-oriented internal plan. He said the rapid end to the respiratory season and the storm “delayed our ability to flex down our seasonal cost in the quarter,” though he said the company was ultimately able to adjust as the quarter progressed.

Payer mix, exchanges, and uninsured trends

On payer mix, Marks said commercial equivalent admissions excluding exchanges increased 26%, while Medicare increased 1.9% and Medicaid rose 0.3%.

Marks also discussed continued volatility in the health insurance exchange environment. He estimated same-facility exchange equivalent adjusted admissions declined about 15% year over year in the quarter, while same-facility uninsured equivalent admissions increased approximately 16%. Marks said “over half” of the implied uninsured increase related to movement from exchanges and normal uninsured growth, and the remainder reflected “a slowdown of conversions to Medicaid from patients who are not willing to fill out applications.”

Marks said the estimated adjusted EBITDA impact from exchanges was approximately $150 million in the first quarter of 2026 versus the prior-year quarter. He said the company continues to view its full-year expected exchange impact range of $600 million to $900 million as “appropriate,” while emphasizing the exchange environment “remains dynamic and has not fully settled.”

In response to questions about why Medicaid conversions may be slowing, Marks said the issue is “pretty nascent” and the company suspects some patients may be less willing to fill out Medicaid applications, potentially due to “concerns around immigration and the like,” though he emphasized HCA is still studying the drivers.

Marks also described how exchange grace periods can affect revenue recognition. He said HCA does not have consistent premium-status visibility at the time of service across exchange payers, and the company makes estimates for patients who may ultimately lose coverage after the grace period. Marks said the company’s reported 15% decline in exchange equivalent admissions includes both patients confirmed to have attrited during the quarter and estimates for those expected to lose coverage after the grace period.

Supplemental payment programs and Florida outlook

HCA pointed to stronger-than-expected results from Medicaid supplemental payment programs during the quarter. Marks said that while HCA expected an $80 million increase in net benefit, it realized an increase of roughly $200 million to adjusted EBITDA versus the prior quarter, driven primarily by the “grandfathered approval of Georgia,” reinstatement of the ATLAS program in Texas, and the year-over-year benefit of a Tennessee program approved in the third quarter of 2025.

Marks said the company updated its full-year assumptions to reflect a decline in supplemental payment program net benefit of $50 million to $250 million versus the prior year, and noted the updated guidance does not include any additional approvals of grandfathered applications.

On Florida, Marks said HCA continues to monitor developments and remains “positive about the prospects for the approval of the Florida program,” which covers October 1, 2024 to September 30, 2025. If approved, he said it could result in “additional revenues, which may be significant,” while acknowledging that CMS is conducting a thorough review given the size of the enhanced program.

Costs, margins, and operating initiatives

Marks said adjusted EBITDA margin decreased 50 basis points from the prior-year quarter. He said salaries and benefits as a percentage of revenue improved 30 basis points and supplies improved 20 basis points, while other operating expenses as a percentage of revenue increased 90 basis points, primarily due to higher costs tied to Medicaid supplemental payment programs, professional fees, and technology investments.

Hazen said HCA’s “resiliency plan” is designed to generate cost savings, enhance network execution, and strengthen organizational capabilities. In response to a question about the company’s $400 million resiliency target for 2026, Marks said HCA remains “still confident” in the full-year figure.

Hazen also highlighted progress on HCA’s digital transformation and artificial intelligence efforts, describing initiatives including “ambient listening capabilities” to support physician documentation and a nurse handoff program being rolled out more broadly. He also said the company is seeing benefits in case management and average length of stay, which he previously cited as improving.

On payer behavior, Marks said HCA continues to see increased denials and underpayments across payers and products, with Medicare Advantage cited as a “specific driver.” He said HCA’s investments in revenue cycle capabilities, dispute resolution, and appeals have helped the company mitigate year-over-year earnings impact despite the higher activity levels. Marks also described partnerships with strategic payer partners aimed at digital integration, administrative simplification, and dispute management.

Capital deployment, network expansion, and contracting

Marks said HCA spent $1.1 billion on capital expenditures in the quarter, repurchased $1.57 billion of shares, and paid $183 million in dividends. Cash flow from operations was $2 billion, up 22% from the prior-year quarter. He added that leverage remains in the lower half of HCA’s target range and said the company believes its balance sheet is “strong and well-positioned for the future.”

Hazen said HCA continues to invest in network development through capital spending and selective outpatient acquisitions. In the first quarter, he said HCA closed multiple outpatient acquisitions, primarily in urgent care, ambulatory surgery, and freestanding emergency rooms. He also said the company has roughly $5.5 billion to $6 billion of approved capital projects expected to come online over the next 24 to 30 months, including hospital-capacity projects that take longer to complete.

Discussing contracting, Hazen said HCA is “pretty much fully contracted” for 2026 at targeted levels. Looking ahead, he said the company is about a third of the way through contracting for 2027 and “modestly into 2028,” adding that negotiations are “on target.”

Management reaffirmed its estimated guidance ranges for 2026. Hazen said the company views the first-quarter respiratory volume shortfall and the increase in supplemental payment net benefits as “first quarter events,” and said assumptions for the remainder of the year related to volumes, payer mix, and costs remain consistent with original guidance.

About HCA Healthcare NYSE: HCA

HCA Healthcare is a for‑profit operator of healthcare facilities headquartered in Nashville, Tennessee. Founded in 1968, the company owns and operates a network of hospitals and related healthcare facilities and has grown through organic expansion and acquisitions to become a large provider of inpatient and outpatient services.

The company's core activities include the operation of acute care hospitals, freestanding surgical and emergency centers, and outpatient clinics. HCA's services encompass inpatient care, surgical services, emergency medicine, diagnostic imaging and laboratory testing, and various outpatient and ambulatory care offerings.

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