Group 1 - HCA Healthcare, Inc. operates a network of 190 hospitals and approximately 2,400 ambulatory care sites, with a significant reduction in share count by 44% since the end of 2015 [1] - The stock reached new all-time highs last month but has since pulled back nearly $50 without a specific reason, indicating a potential buying opportunity [1] - L1 Capital has reduced its investment in HCA Healthcare due to strong share price appreciation, although it remains a retained investment, no longer a top 10 holding [2] Group 2 - The market has previously reacted pessimistically to potential regulatory developments affecting HCA, creating opportunities for investment at attractive price levels [2] - Current expectations for operating conditions are more balanced, and the share price has increased significantly, leading to a less favorable risk-adjusted return potential from the current price [2] - There is a belief that certain AI stocks may offer greater upside potential and carry less downside risk compared to HCA [2]

Core Insights - HCA Healthcare UK has successfully implemented MEDITECH Expanse across its 11 acute facilities and numerous outpatient locations, which enhances patient safety and improves workflow efficiencies [1] Company Overview - HCA Healthcare UK is a leading private healthcare provider that focuses on delivering high-quality healthcare services [1] Technology Implementation - The MEDITECH Expanse is an innovative, cloud-based electronic health record (EHR) system that provides clinicians with a unified, multi-disciplinary health record [1] - This system allows for a seamless view of the patient's journey and health status, accessible whenever and wherever the patient receives care [1]

Market Overview - The U.S. stock markets ended the week mostly lower, with the Nasdaq Composite and S&P 500 slipping by 1.49% and 0.28% respectively due to a sharp selloff in tech stocks [1] - The Dow Jones Industrial Average gained 1.51% as investors rotated toward value and traditional sectors [1] Federal Reserve Actions - The Federal Reserve cut its key overnight borrowing rate by a quarter-percentage-point, now in the range of 3.5% to 3.75% [2] - This decision was influenced by signs of gradually cooling inflation, aimed at supporting the labor market and stimulating economic growth [2] - The number of Americans filing new applications for unemployment benefits surged to a 4.5-year high of 236,000, indicating a sharp deterioration in the jobs market [2] Stock Performance and Recommendations - Liquidia Corporation (LQDA) shares gained 43.9% since being upgraded to Zacks Rank 2 (Buy) on October 13, outperforming the S&P 500's 4.4% increase [3][6] - The Bank of N.T. Butterfield & Son Limited (NTB) returned 22.7% since its upgrade to Zacks Rank 1 (Strong Buy) on October 7, compared to the S&P 500's 1.5% increase [4] - Western Digital Corporation (WDC) shares advanced 52.8% since its upgrade to Outperform on October 13, significantly beating the S&P 500's 4.4% increase [7] Portfolio Performance - A hypothetical portfolio of Zacks Rank 1 stocks returned +14.3% in 2025, slightly underperforming the S&P 500 index's +14.9% [11] - The Zacks Model Portfolio has outperformed the S&P index by more than 12 percentage points since 1988, with an annualized average return of +23.9% compared to +11.5% for the S&P 500 index [14] Sector-Specific Stocks - Cencora, Inc. (COR) and Fair Isaac Corporation (FICO) returned 18.7% and 18.6% respectively over the past 12 weeks [15] - Johnson & Johnson (JNJ) returned 19.3% over the past 12 weeks, benefiting from investor demand for quality dividend stocks [19]

Core Insights - L1 Capital International Fund reported a return of 2.6% in Q3 2025, underperforming the benchmark MSCI World Net Total Return Index, which returned 6.1% [1] - The fund highlighted HCA Healthcare, Inc. as a significant investment, noting a one-month return of 2.05% and a 52-week gain of 53.65% [2] Company Analysis - HCA Healthcare, Inc. operates hospitals and related healthcare entities, with a market capitalization of $112.867 billion as of December 11, 2025 [2] - The fund has reduced its investment in HCA Healthcare due to strong share price appreciation, indicating that it is no longer a top 10 holding [3] - The fund has historically capitalized on market pessimism regarding regulatory risks affecting HCA, but current expectations for operating conditions are more balanced, leading to a less favorable risk-adjusted return assessment [3] Market Sentiment - HCA Healthcare is not among the 30 most popular stocks among hedge funds, with 73 hedge fund portfolios holding the stock at the end of Q3, unchanged from the previous quarter [4] - There is a belief that certain AI stocks may offer greater upside potential compared to HCA Healthcare, suggesting a shift in investment focus [4]

Legislative Impact - The failure to extend Affordable Care Act (ACA) subsidies is expected to lead to significantly higher monthly premiums for millions of enrollees starting in January [6][7] - The legislative deadlock occurred on a 51-48 vote, effectively ending Democratic efforts to prevent price hikes during the current session [5][6] Company Impact - Major health insurers, particularly those heavily exposed to ACA exchanges such as Centene Corp., Molina Healthcare Inc., and Oscar Health Inc., are expected to face headwinds due to the legislative impasse [7] - Hospital operators like HCA Healthcare Inc. and Tenet Healthcare Corp. may encounter increased risks, as a potential drop in coverage due to rising premiums could lead to a surge in uncompensated care and bad debt [8]

Core Insights - The article emphasizes the rarity of companies that provide benefits to both society and investors, highlighting the importance of screening the U.S. stock market for stocks that can generate alpha [1]. Group 1 - The ability to identify the best and worst stocks based on proven criteria is presented as a unique strength of the company [1].

Core Insights - HCA Healthcare, Inc. announced a donation of $4.8 million to Pepperdine University to establish a School of Nursing within the College of Health Science [1] - This initiative is part of HCA Healthcare's broader commitment to address the national nursing shortage [1] - The investment in nursing education is viewed as essential for the future of healthcare by HCA Healthcare [1]

Group 1: HCA Healthcare - HCA Healthcare has seen significant financial growth, with Q3 revenue increasing by 9.6% year over year to $19.2 billion and net income rising by 29.4% to $1.6 billion [3] - The company benefits from rising demand for medical services, with same-facility admissions up by 2.1% and same-facility revenue per equivalent admission increasing by 6.6% to $18,390 [3] - HCA Healthcare's market share has grown from 24% in 2012 to 27% in 2022, with a goal to reach 29% by 2030, supported by a diversified network and technology investments [6][7] Group 2: CVS Health - CVS Health is undergoing a multiyear plan to cut costs and is scaling back its Medicare Advantage offerings to focus on profitable growth [8][9] - The company has a strong ecosystem that includes pharmacy, insurance, and primary care services, and has expanded through acquisitions and new subsidiaries [11] - CVS Health is well-positioned to benefit from an aging population and increasing demand for prescription drugs, making its stock attractive for long-term holding [13]

Core Insights - HCA Healthcare has consistently grown profits for over a decade, outperforming the S&P 500 while remaining undervalued with strong upside potential [3][4] - The company is well-positioned to benefit from the aging U.S. population and increasing healthcare spending [5][6] Industry Trends - The U.S. population aged 65 and older increased by 3.1% year-over-year in 2024, while the population under 18 decreased by 0.2% [6] - The share of the population aged 65 and older has risen from 12% in 2004 to 18% in 2024, indicating a significant demographic shift [6][7] - Healthcare spending is strongly correlated with age, with per capita spending for those aged 85 or older being 8.5 times higher than for children under 18 [9] Company Positioning - HCA Healthcare operates the largest healthcare system in the U.S., with over 190 hospitals and 2,400 ambulatory sites, positioning it for continued profit growth [5][12] - The company has increased its hospital count from 166 in 2014 to 191 by the end of Q3 2025, and its licensed bed count from over 43,000 to over 50,500 [16] Financial Performance - HCA Healthcare has achieved a compounded annual growth rate (CAGR) of 6% in revenue and 7% in net operating profit after tax (NOPAT) since 2007 [18] - The company's Core Earnings grew 14% CAGR from $598 million in 2007 to $6.5 billion in the TTM ended Q3 2025 [19] - HCA Healthcare generated a cumulative $50.4 billion in free cash flow (FCF) from 2014 through Q3 2025, with $10.5 billion generated in the TTM alone [23] Shareholder Returns - HCA Healthcare has paid $4.3 billion in cumulative dividends since 2018 and has increased its quarterly dividends from $0.35 per share in Q1 2018 to $0.72 per share in Q4 2025 [25] - The company repurchased $35.6 billion of shares from 2018 through Q3 2025, with a new $10 billion share repurchase program authorized in January 2025 [26] Challenges - The healthcare industry faces ongoing labor shortages, with projections indicating a global healthcare worker shortage of 10 million by 2030 [29] - Despite rising labor costs, HCA Healthcare has managed to reduce salaries and benefits as a percentage of revenue from 46% in 2020 to 44% in the TTM ending Q3 2025 [31]

Core Insights - HCA Healthcare, Inc. is the largest non-governmental operator of acute care hospitals in the U.S. with a market cap of $117.5 billion, providing various medical and surgical services [1][2] Financial Performance - HCA's stock reached an all-time high of $520 recently, with a 28.1% increase over the past three months, outperforming the Health Care Select Sector SPDR Fund's (XLV) 15.6% returns [3] - Year-to-date, HCA's stock has surged 71.5%, and 56.5% over the past 52 weeks, significantly exceeding XLV's gains of 15.2% and 8.4% respectively [4] - Following the release of better-than-expected Q3 results on October 24, HCA's stock gained 1.6%. The company's revenue for the quarter increased by 9.6% year-over-year to $19.2 billion, surpassing expectations by 3.6%. Adjusted EPS rose 42% year-over-year to $6.96, exceeding consensus estimates by 23.2% [5] Market Position and Analyst Ratings - HCA has slightly underperformed compared to Tenet Healthcare Corporation's 72.2% surge in 2025 but has outpaced Tenet's 49.3% gains over the past 52 weeks [6] - Among 26 analysts covering HCA, the consensus rating is a "Moderate Buy," although the stock is currently trading above the mean price target of $480.61 [6]