HCA Healthcare, Inc. Q3 FY2025 earnings call

• The company produced strong Q3 results with 42% growth in diluted earnings per share as adjusted. Revenue growth was driven by broad-based volume, improved payer mix, etc.
• Raised full-year guidance for 2025 to reflect performance and Q4 outlook.
• Teams executed on quality and stakeholder satisfaction with better year-over-year outcomes.
• Advocated for extension of enhanced premium tax credits.
• Resiliency program efforts to improve efficiencies across revenue and cost.
• Cash flow from operations was $4.4 billion in Q3, with $1.3 billion in capital expenditures, $2.5 billion in share repurchases, and $166 million in dividends.

Revenue increased by 9.6% driven by broad-based volume growth, improved payer mix, utilization of complex services, and Medicaid supplemental programs. Same-facility equivalent admissions rose 2.4% over the prior year. Surgical volume growth included inpatient surgical volume up 1.4% and outpatient surgical volume up 1.1%. Same-facility ER visits increased 1.3%. Payer mix: same-facility total commercial equivalent admissions grew 3.7% (exchanges up 8%, commercial excluding exchanges up 2.4%), Medicare up 3.4%, Medicaid up 1.4%, and self-pay declined 6%. Medicaid supplemental payment programs contributed about half of the increase in net revenue per equivalent admission in Q3 2025, with an approximate $240 million increase in net benefit to adjusted EBITDA compared to the prior year.

• Full-year 2025 revenue expected to range between $75 billion and $76.5 billion.
• Net income attributable to HCA Healthcare expected to range between $6.50 billion and $6.72 billion.
• Adjusted EBITDA expected to range between $15.25 billion and $15.65 billion.
• Diluted earnings per share expected to range between $27 and $28.
• Supplemental payment full-year net benefit is expected to be $250 million to $350 million favorable comparing full-year 2025 versus 2024.
• Hurricane-impacted markets are expected to produce approximately $100 million in adjusted EBITDA growth in full-year 2025, all occurring in the fourth quarter.
• Guidance update does not include any potential impact in 2025 from additional approvals of grandfathered applications under review with CMS.

• Uncertainty regarding the extension of the enhanced premium tax credits and its impact on families, small businesses, and individuals.
• Fluctuations in payer mix, including potential changes in Medicaid and self-pay trends.
• Complexity and variability of Medicaid supplemental programs.
• Fluid nature of public exchange enrollment and potential effects on volumes and patient coverage.

Q: Remind us what states are still pending for grandfather programs and any quantification of potential incremental?

A: States like Florida, Georgia, and Virginia are pending; reviews continue during shutdown, and guidance does not include pending approvals.

Q: On public exchanges and early scheduling of elective surgeries?

A: Fluid, more info in Q4 call; resiliency efforts in helping patients navigate coverage.

Q: Fourth quarter growth and hurricane impact?

A: Fourth quarter growth in high single digits, hurricane-impacted markets expected $100M adjusted EBITDA growth in Q4.

Q: SDP guidance and states?

A: Tennessee, Texas, Kansas contributed to Q3 net benefit; programs are complex and variable.

Q: Supplies cost and resiliency?

A: Ongoing efforts in contract renewals, technology mix, utilization; resiliency across financial, organizational, network dimensions.

Q: Medicare volumes and case mix?

A: Medicare Advantage up 4.8%, traditional up 90 bps; case mix index consistent.

Q: AI in revenue cycle?

A: Focus on denial/underpayment, ambient AI for documentation; coding practices consistent.

Q: Pro fees and Valesco?

A: Pro fees up 11%, Valesco integration ongoing with financial and clinical improvements.

Q: Capacity for incremental volumes?

A: No significant constraints, improved workforce, capital coming online in 2026.

Q: Hurricane-impacted facilities?

A: Payer mix deterioration and premium labor use; Q4 expected $100M EBITDA improvement.

Q: Confidence in 2026 volume range?

A: 18 consecutive quarters of volume growth, capital and outpatient growth, population trends.

Q: Cash flow conversion?

A: Strong adjusted EBITDA, revenue cycle operations, working capital management, tax deferral; sustainable.