Can HCA Healthcare Revive the Market’s Weakest Sector?

Key Points

• The healthcare industry’s financial performance has weakened, with the sector showing the only YTD loss in 2025. 
• HCA Healthcare is the largest healthcare provider in terms of patient revenue and hospitals operated.
• The company’s serial acquisitions continue to expand top- and bottom-line success.

The healthcare sector has experienced a 0.79% decline year-to-date, making it the worst performer among the S&P 500’s 11 sectors and the only one in negative territory. But unlike other market-lagging sectors that have performed better of late (e.g., consumer discretionary), healthcare isn’t just the worst-performing sector in 2025; it’s the worst-performing sector over the past three months. 

The dramatic losses experienced by companies like UnitedHealth Group NYSE: UNH, which has lost more than 44% YTD, have been well-publicized. But one company operating in that sector hasn’t only avoided the pain; its 14% gain has outperformed the market. Based on its recent earnings call, Nashville-based HCA Healthcare NYSE: HCA is providing forward guidance that the rest of the industry hopes will be a rising tide that lifts all boats. 

Why Healthcare Is Struggling in 2025

Over the past several years, healthcare companies’ financials have stagnated or weakened. That’s been felt particularly by the healthcare services vertical. Despite national healthcare expenditures in the United States rising from $3.756 trillion in 2019 to 5.049 trillion in 2024—or 34.42%—EBITDA for the companies operating in the healthcare services space saw a compound annual growth rate (CAGR) of just 8.5% over the same period. 

An 8.5% compound annual growth rate (CAGR) isn’t alarming on its own—but in context, it reflects a shrinking share of overall U.S. healthcare spending. Several short-term headwinds are contributing to this, including persistent inflation, labor shortages, expensive tech infrastructure, and industry consolidation. Encouragingly, most healthcare leaders view these as temporary pressures. In fact, 25% of large healthcare service providers cite the current administration as their top concern, compared to 21% pointing to labor challenges and 19% citing inflation.

At the same time, the aforementioned issue of ongoing industry consolidation is concerning, but only to 2% of healthcare service providers with market caps above $2 billion. One large part of that is HCA Healthcare itself, which has acquired six companies in the past five years. 

Why HCA Is the Leader of the Pack

HCA Healthcare is the largest healthcare system in the United States, and it didn’t achieve that status by accident. The company, which boasts a market cap of $81.56 billion, is a serial acquirer. When it went public in 1969, it owned and operated 11 hospitals. Since then, its focus has expanded from patient care to provider consolidation.

Today, HCA Healthcare owns 222 hospitals and more than 2,000 outpatient sites, including surgery centers, freestanding emergency rooms, urgent care centers, and physician clinics. Those facilities span 21 states and the United Kingdom. It leads the field with 41,194 beds—nearly two-thirds more than the U.S. Department of Veterans Affairs, the second-largest provider with 25,260 beds.

Scrutinizing top healthcare services providers’ net patient revenue more easily puts this into perspective. Last year, HCA raked in $55.715 from its patients. Second on that list is Chicago-based CommonSpirit Health, whose $29.482 billion in net patient revenue is more than 47% less than HCA’s. 

From 2011 to 2024, HCA Healthcare acquired 23 companies, including six in 2017 alone. The company’s ability to scale via M&A while retaining an emphasis on provider services is unparalleled and has resulted in a stellar financial performance. That’s particularly evident when looking at HCA’s free cash flow over the past few years, which has increased 36.63% from $4.127 in 2022 to $5.639 in 2024.

Q2 Earnings and Forward Guidance Scream Buy 

When the company reported Q2 results on July 25, they announced EPS of $6.84 versus expectations of $6.20 and revenues of $18.61 billion versus expectations of $18.49 billion—good for gains of 24.4% and 6.4%, respectively, over the year-ago quarter. The end result? The healthcare giant’s sixth consecutive quarterly beat, alongside net income increasing 13.1% to $1.653 billion.

Shareholders have every reason to expect HCA to continue bucking the healthcare sector’s lackluster performance in 2025. The company’s trailing annualized EPS stands at $23.79, good for an attractive price-to-earnings (P/E) ratio of 14.23. Next year, HCA forecasts EPS to grow 12.21% to $28.03. 

All of that culminates in a consensus Moderate Buy rating. Nine of 18 analysts covering HCA assign it a Buy rating, and nine assign it a Hold. The stock’s average 12-month price target is $396.46, representing 16.56% potential upside from today’s share price. 

HCA Healthcare pays a modest dividend currently yielding 0.85%, or $2.88 annually per share. But the company has increased its payout for six consecutive years, and its incredibly low dividend payout ratio of 12.11% indicates that HCA is rewarding shareholders while reinvesting capital for future growth.