HCA(HCA) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a 42% growth in diluted earnings per share as adjusted compared to the previous year [4] - Revenue increased by 9.6%, driven by broad-based volume growth, improved payer mix, and additional revenue from Medicaid supplemental programs [4][10] - Adjusted EBITDA increased significantly, with a net benefit of approximately $240 million from Medicaid supplemental payment programs [11][14] Business Line Data and Key Metrics Changes - Same-facility equivalent admissions increased by 2.4% year-over-year [9] - Surgical volume growth improved, with same-facility inpatient surgical volume up 1.4% and outpatient surgical volume up 1.1% [9] - Same-facility visits increased by 1.3%, with commercial and Medicare visits combined increasing by 4.1% [9][10] Market Data and Key Metrics Changes - The payer mix showed a 3.7% increase in same-facility total commercial equivalent admissions, with exchanges growing by 8% [10] - Medicare admissions increased by 3.4%, while Medicaid admissions grew by 1.4% [10][66] - Self-pay visits declined by 6%, indicating a shift in the payer mix towards more commercial and Medicare patients [9][67] Company Strategy and Development Direction - The company is focused on enhancing care through increased access, investment in digital tools, and staff training [5][7] - There is an emphasis on improving operational efficiency and service offerings, with a strong belief in sustaining high performance levels in the future [7][8] - The company is preparing for potential changes in federal policies and is advocating for the extension of premium tax credits [6][5] Management's Comments on Operating Environment and Future Outlook - Management expects solid demand for healthcare services to continue, with volumes projected to grow within a long-term range of 2 to 3% [6] - Operating costs are anticipated to remain stable, with some pressures in certain areas, but the resiliency plan is expected to provide relief [6][12] - The company is well-positioned to sustain performance levels, supported by a strong balance sheet and increased cash flow [8][13] Other Important Information - The company updated its full-year guidance, expecting revenues between $75 billion and $76.5 billion and net income between $6.50 billion and $6.72 billion [14] - Capital expenditures are projected to be approximately $5 billion, with a focus on long-term value creation [13][14] Q&A Session Summary Question: Can you remind us what states are still pending for grandfathered programs? - Management mentioned several states, including Florida, Georgia, and Virginia, are under review, but no approvals are expected during the shutdown [20][21] Question: Are you seeing early scheduling for elective surgeries? - Management noted that it is difficult to size the potential impact of upcoming enrollment periods and special enrollment provisions until closer to the fourth quarter call [25] Question: Can you provide color on the guidance range for the fourth quarter? - Management indicated that the implied growth rate for the fourth quarter is expected to be in the high single-digits range, around 7% [30] Question: How much in supplemental payments is included in guidance for Tennessee and Texas? - Tennessee was the largest driver of net benefit in the third quarter, while Texas had a minor impact due to its late approval [33][34] Question: How are you managing professional fees and their impact on EBITDA? - Professional fees increased by 11% year-over-year, primarily related to anesthesia and radiology, but management expects continued financial improvement moving into 2026 [74][77]