What HCA Healthcare (HCA) Said on Its Q3 Earnings Call

Key Points

• Q3 results modestly exceeded expectations: Same-facility adjusted admissions rose 3%, extending HCA’s volume-growth streak to 22 quarters, while adjusted diluted EPS increased nearly 4%. Strong emergency-room demand and cost discipline offset declines in inpatient and outpatient surgeries.
• Exchange coverage losses pressured payer mix: Exchange-equivalent admissions fell about 19% year over year, driving uninsured admissions to 10.5% of total volume and reducing adjusted EBITDA by approximately $400 million.
• HCA reaffirmed its 2026 outlook: Management expects results in the upper half of its guidance ranges and projects 2%–3% volume growth in 2027, though earnings are expected to remain generally consistent with 2026 amid ongoing payer-mix pressure. The company also repurchased roughly $3 billion of shares in Q3.

HCA Healthcare NYSE: HCA said third-quarter results modestly exceeded its expectations as admissions growth, improved insured revenue per admission and disciplined cost management helped offset pressure from patients losing health insurance exchange coverage.

Chief Executive Officer Sam Hazen said same-facility adjusted admissions rose 3% from a year earlier, accelerating from 2.3% growth year to date and extending the company’s volume-growth streak to 22 consecutive quarters. Adjusted diluted earnings per share increased nearly 4% during the quarter, he said.

Chief Financial Officer Mike Marks said same-facility admissions increased 2.7%, equivalent admissions rose 3%, and emergency-room visits grew 5.1% year over year. Inpatient surgeries declined 1.4%, while outpatient surgeries fell 3.7%, reflecting continued strength in emergent procedures but pressure on elective care.

Exchange Coverage Losses Weigh on Payer Mix

HCA said patients losing coverage through health insurance exchanges continued to shift almost one-for-one into the uninsured population. Exchange equivalent admissions declined about 19% from the prior-year quarter, though they improved about 8% sequentially from the second quarter. Marks noted that the third quarter of 2025 represented a high point for exchange volumes, contributing to a difficult comparison.

Uninsured patients represented about 10.5% of total equivalent admissions in the third quarter, up from 8.5% a year earlier. The company estimated that the exchange-to-uninsured payer mix shift reduced adjusted EBITDA by approximately $400 million during the quarter.

About 80% of uninsured-volume growth was tied to patients who lost exchange coverage, according to Marks. The other 20% was primarily related to fewer Medicaid conversions, largely in Texas.

Despite the mix pressure, equivalent admissions among insured patients excluding exchange coverage rose about 3%. Medicare, Medicaid and commercial equivalent admissions excluding exchanges increased 3.2%, 2.7% and 2.7%, respectively, on a same-facility basis.

Hazen said exchange coverage has been a significant factor behind weaker elective surgical demand, alongside broader affordability concerns. The company did not assume an unusual fourth-quarter benefit from patients seeking care before annual deductible resets, instead expecting normal seasonal patterns.

Medicaid Payments and Cost Performance

HCA recognized approximately $50 million of incremental net benefit in the third quarter from Medicaid supplemental payment programs, principally from a recently approved Virginia program. The company raised its expectation for full-year 2026 incremental net benefits from such programs to between $600 million and $800 million.

Marks said the higher range reflected the Virginia grandfathered application and one-time payments across other programs. HCA expects to receive approximately $550 million to $650 million less in Medicaid supplemental payment net benefits in 2027 than in 2026, largely because certain 2026 grandfathered approvals reimbursed the company for services provided in prior years. Florida accounted for the predominant share of those prior-period benefits, he said.

Same-facility cost per equivalent admission, excluding Medicaid supplemental payment programs, was essentially flat from the prior-year quarter and improved 40 basis points sequentially. Marks attributed the performance to operating discipline, the company’s resiliency efforts and operating leverage from volume growth.

Professional fees remained a pressure point, increasing about 12% from the prior-year quarter and representing roughly 24% of other operating expenses. Radiology and anesthesiology were the main contributors, Marks said.

2026 Outlook Reaffirmed; Early 2027 View

HCA reaffirmed its 2026 guidance ranges and said it now expects results to land in the upper half of those ranges. Marks said the outlook reflects higher supplemental-payment benefits, increased exchange-related headwinds and continued core operating growth.

For 2027, management expects service demand to remain strong, with volume growth projected at 2% to 3%. The company anticipates fewer exchange enrollees losing coverage than in 2026, but still expects a meaningful payer-mix impact. HCA said earnings in 2027 are currently expected to be generally consistent with 2026, before returning to performance more aligned with its long-term growth targets beyond that year.

The outlook assumes no material policy changes beyond HR 1, that the largest effects of exchange-related payer-mix changes subside, and that strategic initiatives deliver value. Marks said work requirements for able-bodied adults in Medicaid expansion states could have a modest full-year 2027 impact. Expansion states account for about 40% of HCA’s Medicaid volumes and revenue, while the work requirements could apply to an estimated 15% to 20% of Medicaid volume after excluding seniors, children, people with disabilities and medically frail patients.

Management also cited the proposed Medicare outpatient prospective payment system rule’s 340B-related budget-neutral reallocation as a potential positive for 2027, though the company did not publicly quantify the possible benefit.

Capital Allocation and Network Investment

Capital expenditures totaled approximately $1.36 billion in the third quarter. HCA also repurchased roughly $3 billion of its shares and paid $165 million in dividends. Operating cash flow was approximately $4.5 billion, while leverage remained in the lower half of the company’s stated target range.

Hazen said HCA expects to complete most of its existing repurchase authorization by year-end, subject to market conditions and other factors. He also said the company is continuing to invest in hospital capacity and outpatient networks, with nearly 3,000 ambulatory units spanning urgent care, ambulatory surgery centers and other outpatient facilities.

The company’s resiliency program remains a multiyear initiative focused on revenue integrity, asset optimization, variable costs and fixed costs. Marks said digital transformation, expanded shared services and Parallon’s additional administrative responsibilities are expected to support continued efficiency gains in 2027 and beyond.

About HCA Healthcare (NYSE:HCA)

HCA Healthcare, Inc is a healthcare services company that operates hospitals, ambulatory surgery centers, emergency care facilities, physician practices and other healthcare sites. Its facilities provide a broad range of services, including acute and emergency care, surgery, cardiology, oncology, women's and children's services, behavioral health and outpatient care.

The company serves patients primarily across the United States through a network of healthcare facilities in numerous states.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.