HCA Healthcare (HCA) Q4 2025 Earnings Transcript

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Date

Tuesday, Jan. 27, 2026 at 10 a.m. ET

Call participants

• Chief Executive Officer — Samuel Hazen
• Chief Financial Officer — Mike Hart
• Vice President of Investor Relations — Frank Morgan

Takeaways

• Revenue — Increased 6.7% compared to the prior year quarter, reflecting sustained demand and network expansion.
• Net income attributable to HCA Healthcare — Grew nearly 31% for the quarter, driven by margin improvement and disciplined expense management.
• Diluted earnings per share (as adjusted) — Rose 29% versus the prior year period.
• Adjusted EBITDA — Increased approximately 11% compared to the prior year quarter, with hurricane markets contributing about $150 million.
• Adjusted EBITDA margin — Improved sequentially and year over year, with an 80 basis point increase for the quarter versus the prior year quarter.
• Same facility admissions — Increased 2.4% and equivalent admissions up 2.5% for the year.
• Same facility inpatient surgeries — Flat year over year.
• Same facility outpatient surgical volume — Down slightly; ambulatory surgery centers (ASCs) declined by approximately 1.5% in the quarter.
• Emergency room visits — Increased 50 basis points compared to the prior year quarter.
• Payer mix changes — Same facility commercial equivalent admissions up 1.1%, exchanges rose 2.5%, commercial excluding exchanges increased around 1%, Medicare up 3.5%, and Medicaid increased 2.2% for the quarter.
• Same facility net revenue per equivalent admission — Increased 2.9% compared to the prior year quarter.
• Full-year revenue growth — Rose 6.6% on a same facility basis; full-year net revenue per equivalent admission up 4.1%.
• Full-year consolidated adjusted EBITDA — Increased 12.1% over the prior year, with a 90 basis point margin improvement.
• Supplemental payments net benefit — Increased $420 million for the full year, with a retroactive payment from Virginia positively impacting the fourth quarter.
• Full-year diluted EPS (as adjusted) — Increased 28.5% over the prior year period.
• Capital expenditures — Totaled $1.5 billion for the quarter and $4.9 billion for the year.
• Share repurchases — $2.6 billion in the quarter and $10 billion for the year; Board authorized a new $10 billion share repurchase program.
• Dividends paid — $162 million in the quarter and $679 million for the year; quarterly dividend increased from $0.72 to $0.78 per share.
• Cash flow from operations — $2.4 billion in the quarter and $12.6 billion for the year, representing a 20% increase over the prior year.
• Debt to adjusted EBITDA leverage — Maintained at the low end of the target range.
• 2026 revenue guidance — Projected between $76.5 billion and $80 billion.
• 2026 adjusted EBITDA guidance — Expected to be between $15.55 billion and $16.45 billion.
• 2026 net income guidance — Projected between $6.5 billion and $7 billion.
• 2026 diluted EPS guidance — Forecast to range from $29.01 to $31.50.
• 2026 capital spending outlook — Increased to a range of $5 billion to $5.5 billion based on expanded strategic investments.
• 2026 guidance key assumptions — Equivalent admission growth of 2%-3%; negative adjusted EBITDA impact of $600 million-$900 million from health insurance exchange; $400 million EBITDA offset targeted from resiliency initiatives.
• Medicaid supplemental programs — Anticipated net benefit decline of $250 million-$450 million in 2026 due to program changes in Tennessee, a Texas program pause, and the Virginia payment timing.
• 2026 margins — Full-year margin expected slightly above 20%, consistent with the prior year.
• 2026 cash flow from operations guidance — Projected between $12 billion and $13 billion.
• Health insurance exchange volumes — Represented about eight percent of admissions and 10% of revenue in 2025; company models a 15%-20% volume decline in 2026, with most lost volume transitioning to either employer-sponsored insurance or uninsured categories.
• Resiliency program — $400 million in 2026 savings guided, focused on revenue integrity, cost efficiencies, and capacity management, leveraging digital transformation and analytics.
• Digital integration initiatives — Digital payor engagement produced reduced days in accounts receivable and administrative simplification, supporting operating cash flow improvements in the quarter.

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Risks

• Mike Hart said, “an adverse impact on adjusted EBITDA between $600 million and $900 million related to the health insurance exchange,” reflecting headwinds from administrative reforms, subsidy expirations, and the One Big Beautiful Bill Act.
• Anticipated decline in net benefit from supplemental payment programs by $250 million-$450 million due to Tennessee program changes, Texas program pause, and a one-time Virginia payment.
• “watching the enrollment figures carefully.” on exchanges as increased uninsured volumes and utilization declines are expected due to the expiration of the enhanced premium tax credits.
• Mike Hart stated that physician cost pressures “could even be maybe in the high single digits of growth in ’26 versus ’25.”

Summary

HCA Healthcare (HCA +11.21%) reported strong year-end results with significant revenue and net income growth, underscored by record patient encounters and enhanced operating efficiency. Management provided detailed 2026 guidance reflecting ongoing volume strength and disciplined capital allocation, but cited clear headwinds from healthcare policy changes affecting health insurance exchange revenues and supplemental Medicaid payments. Shareholder returns remain a priority, demonstrated by an authorized $10 billion share repurchase program and an increased quarterly dividend. The company continues to scale digital and AI-driven initiatives for resiliency, cost management, and revenue cycle advancements.

• Company leadership acknowledged a projected 15%-20% decline in health insurance exchange volumes for 2026, with downstream impacts on payer mix and uncompensated care.
• Samuel Hazen highlighted $7 billion of capital approved for development projects through 2028, with a balance between organic investment and targeted outpatient acquisitions.
• Ongoing digital integration with major payers resulted in improved accounts receivable metrics and more timely reimbursement.
• Leadership described the resiliency program as “multiyear” and integral to offsetting policy-related headwinds, focusing on data-driven efficiencies and leveraging scale.
• Rural health opportunities are not included in 2026 guidance due to the timing and state-driven nature of emerging federal programs.
• The company’s 73%-74% hospital occupancy rate supports continued expansion and capital deployment beyond the current fiscal outlook.

Industry glossary

• ASCs: Ambulatory Surgery Centers—freestanding facilities where outpatient surgical procedures are performed, separate from hospital inpatient settings.
• Health insurance exchange: A government-organized marketplace where individuals purchase private health insurance, notably impacted by changes to Affordable Care Act subsidies.
• Supplemental payment programs: State and federal initiatives that provide additional funding to hospitals for Medicaid patients, often subject to variability and regulatory changes.
• One Big Beautiful Bill Act: Recent healthcare legislation mentioned as affecting administrative reforms and insurance exchange reimbursement.
• Equivalent admissions: A company-specific metric combining inpatient and outpatient activity to represent total patient care volume on a normalized basis.
• Revenue integrity: Internal efforts to ensure accurate billing and optimal realization of revenues for services delivered.

Full Conference Call Transcript

Samuel Hazen: Good morning. Thank you for joining the call. We closed out the year with strong results that were mostly consistent with the previous quarters in 2025. We delivered our nineteenth straight quarter of volume growth reflecting continued solid demand across our markets. The benefit of network investments and improved results in capacity management, quality patient outcomes, and stakeholder engagement. Revenue increased 6.7% compared to the prior year quarter. And with disciplined expense management, margins improved both sequentially and year over year. For the quarter, net income attributable to HCA Healthcare increased almost 31%. Diluted earnings per share as adjusted increased 29% and adjusted EBITDA increased around 11% versus the prior year period.

Reflecting on 2025, this was another successful year for HCA Healthcare. Throughout the year, our teams executed at a high level, we gained ground with our strategic agenda, and we stayed focused on the fundamentals. Additionally, we invested significantly in network expansion, workforce development, and clinical capabilities. These investments help deliver positive outcomes across the HCA Healthcare System. As a result, our networks had approximately 47 million patient encounters during the year, representing a record level of patient care activity for the company. I want to thank my colleagues for their outstanding work, their dedication to our patients, and their unyielding commitment to our mission. Now let me transition to the policy environment.

We continue to monitor several policy matters including the expired enhanced premium tax credits, the ongoing developments related to Medicaid supplemental payment programs, and the Rural Health Transformation Program. These matters continue to evolve. As we learn more, we will provide updates at the appropriate times. That said, we believe our core business remains strong with forecasted volumes in our long-term 2% to 3% growth range. This past year, we strengthened the company’s resiliency program in three important areas. And this gives us confidence that we can navigate effectively through these policy dynamics. The first was organizational. In this area, we added new capabilities that were aligned around the company’s operating imperatives.

Next, we strengthened the management systems to enhance execution. And lastly, we ramped up leadership development. The second area relates to competitive positioning. We increased hospital capacity, clinical service offerings, and outpatient facilities across our networks to create greater patient access and address the needs of our communities. The third was financial. Here, we advanced our cost management agenda and improved our balance sheet with strong cash flow and disciplined capital allocation. These results allowed us to invest significantly in our networks, our people, and our AI and tech agenda. In closing, we are well positioned to move forward as we begin 2026.

We continue to believe the HCA way of combining high-quality local provider networks with the distinct capabilities, talent, and scale of a national healthcare system creates sustained value for our stakeholders. It allows us to deliver more effectively on our mission. With that, I will turn over the call to Mike for more details on the quarter and our outlook for 2026.

Mike Hart: Thank you, Sam, and good morning, everyone. We were pleased with the results of 2025, which reflected strong operational performance combined with disciplined capital allocation. Let me note some same facility volume comparison to 2025 versus 2024. Admissions increased 2.4%, and equivalent admissions increased 2.5%, in line with our expectations of 2% to 3%. Inpatient surgeries were flat, outpatient surgical volume was down slightly. ER visits increased 50 basis points. Overall respiratory volumes had no material impact on year-over-year volume. Regarding payer mix for the quarter, same facility total commercial equivalent admissions increased 1.1% over the prior year, with exchanges growing 2.5%, and commercial excluding exchanges increasing approximately 1%. Medicare increased 3.5%, and Medicaid increased 2.2%.

Same facility net revenue per equivalent admission increased 2.9% versus prior year quarter. The 80 basis point improvement in adjusted EBITDA margin in the quarter was driven primarily by solid revenue growth, good results in labor management, and improvements in other operating expenses. Adjusted EBITDA grew approximately 11% compared to the prior year quarter, primarily due to strong operating performance and an approximate $150 million increase in our hurricane markets. As we’ve said in the past, Medicaid supplemental payment programs are complex, variable in timing, and do not fully cover our cost to treat Medicaid patients. Due to a retro payment from Virginia in the fourth quarter, the net impact of supplemental payments was approximately flat versus prior year quarter.

Now let me discuss full year results for 2025, which reflected good demand growth in our markets. On a same facility basis, we posted growth in revenue of 6.6%, equivalent admissions of 2.4%, and net revenue per equivalent admission of 4.1% versus prior year. Consolidated adjusted EBITDA increased 12.1% over prior year, and we delivered a 90 basis point improvement in adjusted EBITDA margin. The net benefit from supplemental payments increased by $420 million. Hurricane impacted markets contributed approximately $125 million in adjusted EBITDA growth. Diluted earnings per share as adjusted increased 28.5%. Moving to capital allocation. Capital expenditures totaled $1.5 billion in the quarter, and $4.9 billion for the year.

Additionally, we purchased $2.6 billion of our outstanding shares during the quarter and $10 billion in the year. We paid $162 million in dividends for the quarter and $679 million for the year. Cash flow from operations was $2.4 billion in the quarter, and $12.6 billion for the year. This represents a 20% increase in operating cash flow in 2025 over full year 2024. Our debt to adjusted EBITDA leverage remained at the low end of our target range. Given our strong balance sheet, we are well positioned for the future. So with that, let me speak to our 2026 guidance. Expect revenues to range between $76.5 billion and $80 billion.

We expect adjusted EBITDA to range between $15.55 billion and $16.45 billion. We expect net income attributable to HCA Healthcare to range between $6.5 billion and $7 billion. We expect diluted earnings per share to range between $29.01 and $31.50. Further, we continued to see opportunities to deploy capital and drive organic growth in our markets through investing in high acuity programs, increasing our network through new access points, and building new inpatient capacity. As a result of these opportunities, we have increased our capital spending range from $5 billion to $5.5 billion. Our 2026 guidance includes the following assumptions.

Growth in equivalent admissions between 2% to 3%, an adverse impact on adjusted EBITDA between $600 million and $900 million related to the health insurance exchange. This includes impact from administrative reforms enacted in 2025, the One Big Beautiful Bill Act, and the expiration of the enhanced premium tax credits. We expect an offset to this exchange headwind of approximately $400 million through resiliency initiatives, designed to generate efficiencies throughout the organization. We anticipate a decline in supplemental payment programs net benefit between $250 million and $450 million. The expected decline in net benefit is driven primarily by Tennessee’s program reverting back to four quarters of net benefit versus six quarters in 2025.

A pause on one specific program in Texas and a one-time retro payment from Virginia. This guidance does not include any potential impact in 2026 from additional approvals of grandfathered applications. We do not anticipate any significant growth to adjusted EBITDA from our hurricane impacted markets over prior year. We expect full year margins to be slightly above 20% consistent with 2025 and cash flow from operations to range between $12 billion and $13 billion. Lastly, we plan to continue investing in our technology and digital innovation strategy, which we expect will deliver long-term value and help position the company for future. Considering these factors, our overall 2026 adjusted EBITDA guidance reflects strength and momentum in operations.

Increased investment in strategic initiatives, consistent business fundamentals, and a disciplined approach to capital allocation. Given what we see today, including the demand in our markets, our resiliency program, and our digital transformation initiatives, we remain comfortable that we will perform within our long-term plan over time. As noted in our release this morning, our board of directors have authorized a new $10 billion share repurchase program. We currently anticipate completing a majority of the existing authorization in 2026, subject to market conditions and other factors. In addition, our board declared an increase in our quarterly dividend from 72¢ to 78¢ per share.

In conclusion, 2025 marked another year of solid operational performance for HCA, and we believe that we are well positioned for continued progress and success in 2026. With that, I will turn the call over to Frank for questions.

Frank Morgan: Thank you, Mike.

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