Core Viewpoint - HCA Healthcare's shares have shown moderate performance over the past year, with a gain of approximately 4% despite initial struggles following President Trump's election due to concerns over healthcare policy changes [1] Company Performance - After President Trump's victory, HCA shares faced challenges but have since recovered, attributed to strong underlying fundamentals [1] Market Context - The recovery of HCA shares occurred despite ongoing changes in healthcare policy, indicating resilience in the company's performance [1]

Core Points - HCA Healthcare, Inc. held its annual HCA Healthcare Awards of Distinction ceremony in Nashville, Tennessee [1] - The awards include the Frist Humanitarian Award and the Excellence in Nursing Award, which are the highest honors given by HCA Healthcare [1] - The awards recognize extraordinary individuals among employees, physicians, and volunteers who exemplify the organization's values [1]

Core Viewpoint - HCA Healthcare, Inc. is trading at a premium compared to historical and industry benchmarks, with a forward 12-month P/E ratio of 14.67X, exceeding its five-year median of 13.91X and the industry average of 13.31X [1][2]. Financial Position - As of the end of Q2 2025, HCA had $939 million in cash and equivalents, a 51.4% decline from year-end 2024. Long-term debt rose to $39.4 billion, leading to a 9.5% increase in interest expenses year over year in the first half of 2025 [4]. - HCA generated free cash flow of $7.3 billion over the trailing 12 months, reflecting a 29.3% growth from the prior year, which provides flexibility for acquisitions, debt reduction, and shareholder returns [5]. - The company has been aggressive in capital deployment, repurchasing $3.8 billion in shares in 2023, $6 billion in 2024, and another $5 billion in the first half of 2025, with dividend payouts totaling $351 million [6]. Price Performance - HCA shares have increased by 34.3% year-to-date, outperforming the industry average of 27.3% and the S&P 500 Index's gain of 13.5% [7]. - Earnings are projected to grow by 18.9% in 2025 and 7.1% in 2026, with the consensus estimate for 2025 earnings at $26.11 per share [9][12]. Growth Drivers - HCA benefits from rising admissions, with same-facility equivalent admissions increasing by 2.2% year over year and revenue per equivalent admission climbing by 3.5% in the first half of 2025 [10]. - The company is investing in infrastructure, clinical systems, digital upgrades, and modernized care models to support higher patient volumes and improve efficiency [11]. Headwinds - HCA faces challenges from regulatory shifts and reimbursement pressures, as well as a growing trend towards home-based services that may dilute patient volumes in traditional facilities [14]. - Operational metrics show strain, with outpatient surgery cases declining by 1.9% in 2024 and another 1.3% in the first half of 2025, alongside a steady contraction in average length of stay [15]. Bottom Line - HCA's strong earnings outlook, consistent cash flow generation, and shareholder-friendly capital deployment highlight its strength as a leading hospital operator. However, elevated valuation, mounting debt, and regulatory challenges temper the bullish case [18].

Demand Environment - The demand environment has shown some natural variability, which has become an expected aspect of the business over time [2] - There was a noticeable slowdown in volume growth during the second quarter compared to previous periods [2] - Medicare and Medicaid volumes were specifically highlighted as being weaker than anticipated at the beginning of the year [3] Volume Trends - The transition from Q1 to Q2 revealed key moving parts affecting volume trends, particularly in the Medicare and Medicaid sectors [3]

Financial Data and Key Metrics Changes - The company reported a 6.4% top-line growth in the quarter, which is considered strong despite lower volume growth [14][18] - Volume growth for the first six months was 2.3%, which is below the original guidance of 3% to 4% [7][24] - Medicaid volume decreased by 1.2% year-to-date compared to the prior year, which was unexpected [8][12] - Self-pay volume increased by only 1.5% year-to-date, significantly lower than the anticipated 3% to 4% range [10][12] - Medicare volume growth was at 3%, slightly below the initial estimates of 3.5% to 4% [16][18] Business Line Data and Key Metrics Changes - The commercial book excluding exchanges saw a growth of just under 1% in the first half of the year, compared to a normal growth of 1% to 2% [40][46] - Total commercial book growth, including exchanges, was around 4% to 4.5% [42][46] - Exchange volume growth was 13% year-to-date, down from a 40% increase in the previous year [32][34] Market Data and Key Metrics Changes - The healthcare exchanges accounted for about 8% of the company's volume and 10% of revenue, with utilization patterns being between commercial and Medicaid [120][127] - The company noted that exchange patients utilize more emergency care and fewer elective procedures compared to the average employer-based population [119][122] Company Strategy and Development Direction - The company remains focused on organic growth within its 43 markets, with a robust pipeline of investment opportunities [195][196] - M&A activity is ongoing, particularly in the outpatient sector, with recent acquisitions of urgent care systems and freestanding emergency rooms [197][200] - The company emphasizes a disciplined approach to capital allocation, balancing investments, dividends, and share repurchases [200][212] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the demand environment despite some volume softness, indicating a stable operating environment for labor costs [87][89] - The company is closely monitoring the potential impacts of enhanced exchange subsidies and Medicaid supplemental payments, with plans to provide more guidance in the fourth quarter [114][118] - Management highlighted the importance of revenue integrity and operational efficiency as key components of their resiliency plan [144][150] Other Important Information - The company raised its guidance by $300 million at the midpoint, with $150 million attributed to state supplemental payments [54][56] - There is an expected decline of about $130 million in state supplemental payments in the second half of the year [58][60] - Labor costs are stabilizing, with a notable decrease in the use of contract labor [87][89] Q&A Session Summary Question: Can you expand on the volume trends from Q1 to Q2? - Management noted that volume growth was lower than expected, particularly in Medicaid and self-pay categories, contributing to the overall shortfall [7][12] Question: How do you view the impact of exchange growth on comparisons? - Management acknowledged that last year's strong exchange enrollment growth made this year's comparisons more challenging [24][28] Question: What are the expectations for the second half of the year? - Management indicated that the implied growth rate in the second half is consistent with the first half, considering various moving parts [72][76] Question: How is the company addressing labor cost pressures? - Management reported stable labor costs and improvements in staff retention, with a focus on reducing premium labor usage [87][89] Question: What is the company's stance on enhanced exchange subsidies? - Management is optimistic about the potential extension of subsidies but is awaiting further developments [111][118] Question: How does the company view its M&A strategy moving forward? - Management emphasized a disciplined approach to M&A, focusing on organic growth while remaining active in outpatient acquisitions [197][200]

Financial Data and Key Metrics Changes - The company reported a 6.4% top-line growth in the quarter, despite a volume growth of only 2.3% equivalent admissions year-to-date, which was below the original guidance of 3% to 4% [15][7][5] - Medicaid volume decreased by 1.2% year-to-date, which was expected to be flat or slightly up, impacting approximately 17% of total volume [8][7] - Self-pay volume increased by only 1.5% year-to-date, significantly lower than the anticipated 3% to 4% range [11][13] - Medicare volume growth was at 3%, slightly below the initial estimate of 3.5% to 4% [17][19] Business Line Data and Key Metrics Changes - The commercial book, excluding exchanges, saw growth of just under 1% in the first half of the year, compared to a normal range of 1% to 2% growth [39][41] - Total commercial book growth, including exchanges, was around 4% to 4.5% year-to-date [43][45] - Exchange volume growth was 3% from Q1 to Q2, compared to a 15% increase in the previous year [31][29] Market Data and Key Metrics Changes - The healthcare exchanges accounted for about 8% of total volume and 10% of revenue, with utilization patterns falling between commercial and Medicaid populations [121][127] - The company noted that exchange patients utilize emergency care more than average employer-based patients and have lower utilization of elective procedures [123][121] Company Strategy and Development Direction - The company remains focused on organic growth within its 43 markets, investing 45% to 55% of capital back into these markets [193][196] - M&A activity is ongoing, with two acute care hospitals acquired this year and continued interest in outpatient acquisitions [198][200] - The company is committed to maintaining a balanced approach to capital allocation, including dividends and share repurchase programs [201][210] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stability of the labor market, noting improvements in wage inflation and retention rates [88][90] - The company is actively monitoring the potential impacts of enhanced exchange subsidies and Medicaid supplemental payments, with plans to provide more guidance in the fourth quarter [115][120] - Management highlighted the importance of revenue integrity and asset utilization as key components of their resiliency plan [145][146] Other Important Information - The company is leveraging advanced technologies, including AI, to improve claims processing and reduce denials [156][162] - Management indicated that the proposed OPPS rule was disappointing, while the inpatient IPPS rule was more favorable than expected [189][191] Q&A Session Summary Question: Can you elaborate on the volume trends from Q1 to Q2? - Management noted a decrease in Medicaid and self-pay volumes, contributing to lower overall volume growth than anticipated [7][11] Question: How do you view the impact of exchange growth on comparisons? - Management acknowledged that last year's exchange enrollment growth created a tougher comparison for this year [25][27] Question: What are the expectations for the second half of the year? - Management indicated that the implied growth rate for the second half is consistent with the first half, considering various moving parts [74][78] Question: How is the company addressing labor costs? - Management reported stable labor costs and improvements in retention rates, with a focus on reducing reliance on contract labor [88][90] Question: What is the company's stance on enhanced exchange subsidies? - Management is optimistic about the potential extension of subsidies but emphasized the need for clarity before making specific estimates [112][115] Question: How does the company view its M&A strategy moving forward? - Management confirmed ongoing M&A activity, particularly in outpatient services, while maintaining a disciplined approach to capital allocation [198][200]

Part I. Financial Information [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) HCA Healthcare's unaudited consolidated financial statements detail performance and position for Q2 and 6M 2025 and 2024. [Condensed Consolidated Income Statements](index=3&type=section&id=Condensed%20Consolidated%20Income%20Statements) HCA Healthcare's income statements detail Q2 and 6M 2025 financial performance, highlighting revenue, net income, and EPS growth. | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | 6M 2025 (Millions) | 6M 2024 (Millions) | | :----------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Revenues | $18,605 | $17,492 | $36,926 | $34,831 | | Net income attributable to HCA Healthcare, Inc. | $1,653 | $1,461 | $3,263 | $3,052 | | Diluted earnings per share | $6.83 | $5.53 | $13.28 | $11.47 | | Shares used in diluted EPS (millions) | 241.911 | 264.071 | 245.654 | 266.044 | - Revenues increased by **$1.113 billion (6.4%)** for Q2 2025 and **$2.095 billion (6.0%)** for the six months ended June 30, 2025, compared to the respective prior-year periods[9](index=9&type=chunk) - Net income attributable to HCA Healthcare, Inc. grew by **$192 million (13.1%)** in Q2 2025 and **$211 million (6.9%)** for the six months ended June 30, 2025, year-over-year[9](index=9&type=chunk) [Condensed Consolidated Comprehensive Income Statements](index=4&type=section&id=Condensed%20Consolidated%20Comprehensive%20Income%20Statements) Comprehensive income statements detail total comprehensive income, including net income and other income/loss items. | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | 6M 2025 (Millions) | 6M 2024 (Millions) | | :----------------------------------- | :------------------ | :------------------ | :------------------ | :------------------ | | Net income | $1,891 | $1,687 | $3,716 | $3,489 | | Other comprehensive income (loss) | $48 | $0 | $78 | $(8) | | Comprehensive income | $1,939 | $1,687 | $3,794 | $3,481 | | Comprehensive income attributable to HCA Healthcare, Inc. | $1,701 | $1,461 | $3,341 | $3,044 | - Other comprehensive income (loss) before taxes for Q2 2025 was **$58 million**, primarily driven by foreign currency translation gains of **$55 million**[11](index=11&type=chunk) - Comprehensive income attributable to HCA Healthcare, Inc. increased by **$240 million (16.4%)** in Q2 2025 and **$297 million (9.8%)** for the six months ended June 30, 2025, year-over-year[11](index=11&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance sheets show stable total assets, decreased current assets, increased current liabilities, and negative working capital. | Item | June 30, 2025 (Millions) | December 31, 2024 (Millions) | | :----------------------------------- | :------------------------ | :-------------------------- | | Total Assets | $59,536 | $59,513 | | Current Assets | $15,563 | $16,414 | | Property and equipment, net | $30,123 | $29,414 | | Goodwill and other intangible assets | $10,273 | $10,093 | | Total Liabilities | $55,775 | $53,958 | | Current Liabilities | $15,939 | $15,177 | | Long-term debt, net | $39,379 | $38,333 | | Stockholders' deficit attributable to HCA Healthcare, Inc. | $(4,394) | $(2,499) | | Noncontrolling interests | $3,156 | $3,054 | - Cash and cash equivalents decreased significantly from **$1,933 million** at December 31, 2024, to **$939 million** at June 30, 2025[14](index=14&type=chunk) - The company moved from a **positive working capital of $1,237 million** at December 31, 2024, to a **negative working capital of $376 million** at June 30, 2025, primarily due to increased short-term borrowings and other accrued expenses, and a decline in cash[14](index=14&type=chunk)[115](index=115&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) Stockholders' equity statements detail changes for Q2 and 6M 2025 and 2024, highlighting comprehensive income, share repurchases, and dividends. | Item | Balances, Dec 31, 2024 (Millions) | Balances, June 30, 2025 (Millions) | | :----------------------------------- | :------------------------------- | :------------------------------ | | Common Stock Par Value | $3 | $2 | | Accumulated Other Comprehensive Loss | $(387) | $(309) | | Retained Deficit | $(2,115) | $(4,087) | | Stockholders' Deficit Attributable to HCA Healthcare, Inc. | $(2,499) | $(4,394) | | Noncontrolling Interests | $3,054 | $3,156 | | Total Equity (Deficit) | $555 | $(1,238) | - During the six months ended June 30, 2025, the company repurchased **14.793 million shares** of common stock for **$5.011 billion**[16](index=16&type=chunk)[104](index=104&type=chunk)[117](index=117&type=chunk) - Cash dividends declared were **$0.72 per share** for both quarters in 2025, totaling **$351 million** for the six months ended June 30, 2025[16](index=16&type=chunk)[117](index=117&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow statements highlight cash sources and uses for 6M 2025 and 2024, showing increased operating cash and higher financing outflows. | Cash Flow Category | 6M 2025 (Millions) | 6M 2024 (Millions) | | :----------------------------------- | :------------------ | :------------------ | | Net cash provided by operating activities | $5,861 | $4,440 | | Net cash used in investing activities | $(2,283) | $(2,235) | | Net cash used in financing activities | $(4,584) | $(2,309) | | Change in cash and cash equivalents | $(994) | $(104) | | Cash and cash equivalents at end of period | $939 | $831 | - Net cash provided by operating activities increased by **$1.421 billion**, primarily due to a **$392 million** increase in net income (excluding non-cash impacts of facility sales) and an **$853 million** decline in income taxes paid due to an IRS deferral[18](index=18&type=chunk)[115](index=115&type=chunk) - Net cash used in financing activities increased by **$2.275 billion**, driven by **$5.011 billion** in common stock repurchases and **$5.660 billion** in long-term debt repayments[18](index=18&type=chunk)[117](index=117&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential disclosures for understanding the financial statements, covering accounting policies, acquisitions, debt, contingencies, and segment information. [NOTE 1 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=NOTE%201%20%E2%80%94%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's reporting entity, interim financial statement preparation, and revenue recognition policies, including uncompensated care costs. - HCA Healthcare, Inc. operates **191 hospitals**, **124 freestanding surgery centers**, and **29 freestanding endoscopy centers** across 20 states and England as of June 30, 2025[19](index=19&type=chunk) Revenues by Primary Third-Party Payer Classification (Q2 2025 vs Q2 2024) | Payer Classification | Q2 2025 Revenue (Millions) | Q2 2025 Ratio | Q2 2024 Revenue (Millions) | Q2 2024 Ratio | | :----------------------------------- | :------------------------ | :------------- | :------------------------ | :------------- | | Managed care and insurers | $9,124 | 49.1% | $8,

Industry Overview - The healthcare sector has seen 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 [1] - Over the past three months, healthcare remains the worst-performing sector [1] - National healthcare expenditures in the U.S. rose from $3.756 trillion in 2019 to $5.049 trillion in 2024, a 34.42% increase, while EBITDA for healthcare services has only seen a compound annual growth rate (CAGR) of 8.5% during the same period [3][4] Company Performance - HCA Healthcare has gained 14% year-to-date, contrasting sharply with the 44% loss experienced by UnitedHealth Group [2] - HCA Healthcare reported Q2 results with EPS of $6.84, exceeding expectations of $6.20, and revenues of $18.61 billion, surpassing expectations of $18.49 billion, marking a 24.4% and 6.4% year-over-year increase, respectively [11] - HCA's net income increased by 13.1% to $1.653 billion [11] Company Growth and Strategy - HCA Healthcare is the largest healthcare system in the U.S., with a market cap of $81.56 billion, owning 222 hospitals and over 2,000 outpatient sites [7][8] - The company has acquired 23 companies from 2011 to 2024, including six in 2017, demonstrating a strong focus on mergers and acquisitions [10] - HCA's free cash flow increased by 36.63% from $4.127 billion in 2022 to $5.639 billion in 2024 [10] Analyst Ratings and Forecasts - HCA Healthcare has a consensus Moderate Buy rating, with nine out of 18 analysts assigning it a Buy rating and the average 12-month price target set at $396.46, indicating a potential upside of 16.56% [13] - The company forecasts EPS growth of 12.21% to $28.03 for the next year [12] - HCA Healthcare currently pays a modest dividend yielding 0.85%, with a low dividend payout ratio of 12.11%, indicating a balance between rewarding shareholders and reinvesting for growth [14]

Group 1 - The article discusses the uncertainty faced by investors during the onset of COVID-19, highlighting the dilemma of whether to sell stocks amid falling prices or to buy in anticipation of a recovery if the virus is contained [1] - It mentions a long/short partnership strategy as a potential approach for investors with 25 years of experience in business and finance [1] Group 2 - The article does not provide specific company or industry insights, focusing instead on general investment strategies and the author's background [2][3]

Core Insights - HCA Healthcare, Inc. reported second-quarter 2025 adjusted earnings per share (EPS) of $6.84, exceeding the Zacks Consensus Estimate by 10.5% and showing a year-over-year improvement of 24.4% [1][9] - Revenues reached $18.6 billion, reflecting a 6.4% year-over-year increase and surpassing the consensus mark by 0.7% [1][9] Financial Performance - The quarterly results were supported by increased patient volumes, higher same-facility revenue per equivalent admission, and a rise in emergency room visits [2] - Same-facility equivalent admissions grew by 1.7% year over year, while same-facility admissions increased by 1.8%, both below growth estimates of 3.8% and 4% respectively [3] - Same-facility revenue per equivalent admission rose by 4% year over year, exceeding the growth estimate of 3.2% [3] - Adjusted EBITDA improved by 8.4% year over year to $3.8 billion, beating the estimate of $3.6 billion [5] Cost and Expenses - Salaries and benefits, supplies, and other operating expenses totaled $14.78 billion, increasing by 6% year over year but lower than the estimate of $14.84 billion [4] - Same-facility inpatient surgeries decreased by 0.3% year over year, missing the growth estimate of 1.5%, while same-facility outpatient surgeries fell by 0.6% [4] Cash Flow and Capital Management - HCA generated $5.9 billion in cash from operations in the first half of 2025, a 32% increase from the prior-year period [8] - The company repurchased $2.5 billion in shares during the quarter and had a remaining capacity of $5.8 billion under its buyback authorization [10] Guidance and Outlook - HCA revised its 2025 revenue guidance to between $74 billion and $76 billion, up from the previous range of $72.8 billion to $75.8 billion, indicating a 6.2% rise from 2024 [11] - Adjusted EBITDA is now expected to be in the range of $14.7 billion to $15.3 billion, higher than the earlier forecast [12] - EPS is projected to be in the $25.5 to $27 range for 2025, an increase from the previous estimate [13]