Oct 29, 2026 earnings call — Updated outlook; payer mix and deferrals
Company updated full-year net revenue to $11.3 billion-$11.5 billion and adjusted EBITDA to $1.225 billion-$1.275 billion.
Revenue $2.8B (est $2.8B) · EPS $-0.48 (est $-0.29)
Key quotes
"Building on the quality momentum we shared last quarter, including strong Leapfrog safety grades across our network, our facilities continue to deliver outstanding clinical outcomes."
"As Kevin previously noted, almost half the growth in adjusted admissions came from uninsured patients."
"Specifically, already this year, we have taken actions to generate over $100 million in projected annual savings, and we expect to implement further structural cost reductions in the future."
Analyst Q&A 7
orthopedic surgery volumes and payer mix
Q (Brian Tanquilut · Jefferies): He asked why higher-acuity orthopedic cases (ortho) are not converting into surgeries and how worse payer mix can be mitigated and affect the company’s ability to grow.
A: Management said rising copays and deductibles are causing patients to defer surgery, even though clinic visits and orthopedic MRIs are up. They expect pent-up demand to return and have adjusted guidance. They also outlined 2027 building blocks, including a $15 million-$20 million out-of-period benefit that won't repeat and potential tailwinds and headwinds such as investments in outpatient/ASC, Rural Health funds, HIX impacts, and Medicaid work requirements.
"So those office visits, those tests, are not translating into the higher acuity procedure at the same rate as we have seen in the past." — Kevin Hammons (CEO)
cash flow and capital spending plans
Q (A.J. Rice · UBS): He asked how confident management is in reaching positive $100 million-$300 million cash flow for the year and whether capital spending targets were revised. He also asked how the Rural Health Transformation fund actually played out versus expectations.
A: Jason said adjusted cash flow from operations, excluding taxes on divestiture gains, is a +$15 million and they expect $85 million-$185 million of cash flow from operations in the fourth quarter. They did not change capital expenditure guidance and still expect $350 million-$400 million for the year. On the Rural Health program, Jason said year one ended up at $25 million-$30 million with about a 30% success rate and that states are preparing for year two, while Kevin noted some of the funds flow to local social programs that may indirectly help their communities.
"Our adjusted cash flow from operations, when you exclude the taxes that we paid on divestiture gains, is a +$15 million." — Jason Johnson (CFO)
cost control and ambulatory expansion
Q (Drew Sterrett · RBC): He asked what drove operating expense per adjusted admission to be well below inflation and whether that is sustainable. He also asked how quickly they can deploy capital into urgent care, freestanding EDs, and surgery centers and what valuation trends look like.
A: Jason said ERP investments, improved processes, and better retention are major drivers of lower labor and supply costs and that this level is sustainable, though medical specialties remain a headwind. Kevin said they are already deploying capital: they announced acquisitions and opened de novo surgery centers, but physician alignment is the main barrier to faster deployment; they expect continued progress into next year.
"In the second quarter, we announced the acquisition of two surgery centers, one of them being the largest multi-specialty surgery center in the state of Alabama." — Kevin Hammons (CEO)
which surgeries grew and targets reassessment
Q (Stephen Baxter · Wells Fargo): He asked which types of surgeries improved to drive the 2% growth and whether the company expected more growth or if it was the wrong mix. He also asked if the medium-term targets are being reassessed.
A: Kevin said they bent the surgical trend to +2% but it was a mix issue: outpatient surgeries were up while inpatient surgeries were down, with more cardiac and GI procedures but fewer elective orthopedic and general surgeries. He said the company is reassessing medium-term targets given unresolved macro issues like gas prices and geopolitical disruption.
"What we were short on were the elective orthopedic and elective general surgery type procedures that are our higher margin business." — Kevin Hammons (CEO)
uninsured use and cost-savings program
Q (Jason Cassorla · Guggenheim): He asked whether utilization per uninsured person changed, whether newly uninsured patients are using ERs for lower-acuity care, and how management is thinking about bad debt and reserves. He also asked for detail on the $100 million projected savings: what has been captured, visibility for 2027, and main savings buckets.
A: Kevin said the rise in uninsured essentially offsets the decline in former HIX business and that substantially all growth in ER visits has come from uninsured patients. Jason said they update uncollectible revenue estimates each quarter and have seen collections on self-pay continue to decline, without expecting a one-time adjustment. On savings, Kevin said actions taken so far should produce at least $100 million of future benefit, from restructuring, ERP and technology use, supply contracting, and other organized programs, with additional opportunities as contracts roll.
"Substantially all of the growth in ER visits have come from uninsured patients across our system, and that's pretty even across all locations." — Kevin Hammons (CEO)
converting clinic visits to surgeries and payer payments
Q (Sean Dodge · BMO): He asked what tools the company can use to improve conversion from clinic visits/imaging to elective surgeries (payment plans, outreach) and for an update on the payer payment slowdown and whether it has changed.
A: Kevin said they are doing more patient outreach and offer payment terms on patient responsibilities but are limited in their ability to waive co-pays and deductibles because payer contracts do not allow it; some delays also come from pre-authorization and additional physical therapy requirements. Jason said the slowdown in payer payments has continued but has not worsened and that days in AR stayed consistent from 6/30 to 9/30.
"We are limited in our ability to waive co-pays and deductibles because the payer contracts do not allow us to do that." — Kevin Hammons (CEO)
who is deferring care and ACA/HIX impact
Q (Andrew Mok · Barclays): He asked which commercial patients are deferring elective procedures (by income or demographics) and whether recovery next year will be even or back-end weighted. He also asked why the revised ACA/HIX headwind looks smaller in 4Q.
A: Kevin said much of the deferred care is coming from commercially insured patients with the highest co-pays and deductibles and that they are not seeing similar deferral among government-insured patients. Jason clarified HIX impacts: the third quarter impact was $30 million-$35 million, they now expect the full year to be $80 million-$90 million, and they expect fourth quarter to be down to maybe $25 million-$30 million; Kevin said they do not have full demographic detail because many physicians are independent and the pace of recovery is hard to estimate.
"A lot of this deferred care is coming from your commercially insured patients who have the highest co-pays and deductibles." — Kevin Hammons (CEO)