Oct 27, 2026 earnings call — Payer mix shift and Medicaid payment changes
Company expects to receive approximately $550 million to $650 million less in Medicaid supplemental payment net benefits for 2027.
Revenue $19.8B (est $19.3B) · EPS $7.22 (est $6.65)
Key quotes
"We estimate the payer mix shift from exchanges to uninsured resulted in an unfavorable impact on adjusted EBITDA of approximately $400 million in the quarter."
"we expect to receive approximately $550 million to $650 million less in Medicaid supplemental payment net benefits due to various state programs that received grandfather approvals in 2026 and reimbursed us for services we provided in prior years."
"We anticipate favorable cost performance primarily due to our ongoing enterprise wide resiliency program and the operating leverage from the expected volume growth."
Analyst Q&A 19
2027 outlook drivers
Q (Albert Rice · UBS): Analyst asked how large the incremental public exchange headwind for 2027 might be and whether cost savings like the $400 million resiliency program should be expected next year.
A: Management said they are still early in planning and must finish fourth quarter and watch enrollment from November 1 to mid January before sizing 2027 impacts. They also said resiliency is an ongoing strategic program and they expect more value from it into 2027 and beyond.
"As we kind of finish fourth quarter, we are really studying 2 key components." — Michael A. Marks (CFO)
340B regulation impact
Q (Ann Hynes · Mizuho): Analyst asked whether the slack guidance assumes any change from the proposed 340B reallocation and if HCA sized any benefit.
A: Management said the 340B change is part of the proposed Medicare OPPS rule and they view the proposed construct as positive for HCA. They said they are not publicly sizing any benefit now and will give more detail on the fourth quarter call.
"We were pleased with the construct that is a part of the proposed rule as a relates to a budget neutral reallocation of 340B." — Michael A. Marks (CFO)
surgical demand outlook
Q (Ben Hendrix · RBC): Analyst asked whether pent-up demand in elective surgery could drive upside to the 2%–3% volume growth assumption for next year.
A: Management said they have not finalized the components of next year’s growth and need to see fourth quarter seasonality in surgery. They noted emergent services remain strong, elective surgery is impacted by coverage and affordability, and other service growth is offsetting surgical weakness.
"I think it is important for everyone to understand that our composition of volume is fairly diverse." — Samuel N. Hazen (CEO)
labor and other OpEx moves
Q (Brian Tanquilut · Jefferies): Analyst asked why salaries & wages rose sequentially while other operating expenses fell, and about temp staffing trends given resiliency efforts.
A: Management said merit increases from Q2 to Q3 typically lift labor costs and that expense per equivalent admissions actually fell 40 basis points sequentially, reflecting resiliency and operating leverage. They also said professional fees remain a pressure point, up about 12% year-over-year driven by radiology and anesthesiology.
"Typically, when we go from second quarter to third quarter, that is the timing of when we do a lot of our merit adjustments in labor." — Michael A. Marks (CFO)
core growth and resiliency
Q (Pito Chickering · Deutsche Bank): Analyst asked to confirm whether adjusted core EBITDA growth for 2027 is still in the 4%–6% range and how much resiliency is driving that growth.
A: Management said resiliency is embedded in core operations and that third quarter showed a strong core growth rate, which they called about 10% for the quarter. They said they will validate fourth quarter and give more detail on the January call.
"When I think about core growth in third quarter, we were pleased with core growth in third quarter and call it a 10% core growth increase." — Michael A. Marks (CFO)
drivers of insured pricing
Q (Matthew Gillmor · KeyBanc): Analyst asked what caused the acceleration in insured revenue per equivalent admission in the third quarter.
A: Management said three drivers: strength in commercial volume (excluding exchanges), solid rate growth across payers, and better revenue collection through Paralon. They said these helped net revenue per unit despite negative payer mix from exchanges.
"Number 1 is really the strength of our commercial volume." — Michael A. Marks (CFO)
Q4 guidance drivers
Q (Sean · BMO): Analyst asked why management is pointing to the upper half of 2026 guidance and what visibility supports that view, including whether resiliency gains and volume improvements drive it.
A: Management said the upper half of the range implies core growth fairly consistent with third quarter and pointed to third-quarter volume strength, normal seasonal net revenue per unit step-up from Q3 to Q4, and continued resiliency cost management as the main drivers. They said these factors inform their fourth-quarter guidance.
"There tends to be a step up from third quarter to fourth quarter." — Michael A. Marks (CFO)
HICS exchange declines
Q (Whit Mayo · Leerink): Analyst asked if the HICS headwind was concentrated in any markets and about AR collectability and whether part of the $400 million relates to prior quarters.
A: Management said HICS results in third quarter were worse than they estimated, with a larger decline than expected, and that the exchange weakness contributed meaningfully but they also saw sequential improvement from Q2 to Q3. They noted third quarter last year was a high-water mark, complicating comparisons.
"I would say, with, that our HICS results in third quarter were a little bit higher than we estimated." — Michael A. Marks (CFO)
ASC vs hospital outpatient surgery
Q (Ryan Langston · TD Cowen): Analyst asked for ASC versus HOPD surgical volume detail in third quarter and how elective vs emergency trends look.
A: Management reported ASC surgery volumes down 5.4% and overall surgery case volumes down about 3.7%, with hospital-based outpatient surgeries down 2.9%. They said the primary pressure is exchange-related in the ASC book, though net revenue and earnings still showed some growth.
"So the ASC surgery volumes were down 5.4% on the surgery Overall case volumes were down about 3.7%." — Michael A. Marks (CFO)
exchange vs affordability effects on surgery
Q (Sarah James · Cantor Fitzgerald): Analyst asked how much of surgical weakness is exchange related versus affordability and whether management assumes any deductible-driven pull-forward in Q4.
A: Management said they did not assume any abnormal Q4 tailwind outside normal seasonality and that HICS coverage dynamics are a large percentage of the elective care weakness. They noted affordability also has incremental effects and they could not quantify an exact percentage in the call.
"When I look at our elective care surgical care, I mean, the HICS is a large percentage of the explanation." — Samuel N. Hazen (CEO)
details on DSH and Q4 exchanges
Q (Justin Lake · Wolfe): Analyst asked to isolate how much of the $550M–$650M DSH estimate comes from Q4 DPP cuts versus nonrecurring 2026 out-of-period items, and how much Q3 to Q4 exchange volume growth guidance assumes.
A: No management answer appears in the transcript for this specific question.
new guidance changes
Q (Kevin Fischbeck · BofA): Analyst asked whether the new guidance reflects about $300 million more in supplemental payments and $100+ million more payer-mix headwinds, and whether the HICS headwind is only uninsured or includes lost surgery.
A: Management said they raised net benefit guidance from supplemental payments by about $300 million and that the changes to being at or slightly above prior ranges imply $100 million to $200 million more in headwinds. They also emphasized core growth as a third factor; on HICS they discussed mix and volume effects elsewhere on the call.
"From supplemental payments, we have raised our net benefit guidance by about $300 million." — Michael A. Marks (CFO)
Q4 elective scheduling and HR1 impact
Q (Scott Fidel · Goldman Sachs): Analyst asked about Q4 visibility on elective scheduling and whether HR1 Medicaid work requirements or CMS budget-neutral waiver policy changes could affect 2027 fundamentals.
A: Management said they did not assume any deductible-driven elective pickup in Q4 beyond normal seasonality. On HR1 they are monitoring changes and noted work requirements target able-bodied adults in expansion states, which they estimate could apply to about 15% to 20% of their Medicaid-like population and have a modest impact in 2027.
"When you think about work requirements targeting able-bodied adults in those expansion states, You take out the seniors and the disabled and the kids and those that are medically frail, we think that work requirements would be kind of applicable to about 15% to 20% of our Medicaid-like." — Michael A. Marks (CFO)
adjusted admissions breakout
Q (Stephen Baxter · Wells Fargo): Analyst asked for third-quarter year-over-year adjusted admissions growth by Medicare, Medicaid, commercial, and exchanges (also Q2–Q3 exchange change).
A: Management provided same-facility adjusted admissions versus prior year: Medicare up 3.2%, Medicaid up 2.7%, commercial excluding exchanges up 2.7%, and exchanges down 19% year-over-year, noting exchanges improved 8% sequentially from Q2 to Q3.
"Medicare is up 3.2% Medicaid is up 2.7%." — Michael A. Marks (CFO)
drivers of volume strength
Q (Jason Cassorla · Guggenheim): Analyst asked what is driving recent volume acceleration and how much comes from network initiatives, ambulatory expansion, capacity adds, and physician engagement.
A: Management said volume growth reflects inherent market demand from demographics and technology, plus market share gains, ambulatory expansion (nearly 3,000 outpatient units), patient coordination efforts, capital investment adding beds and capacity, and stronger physician engagement. They said it is a mix and varies by market.
"If you start at the top here, I mean, it is our belief that there is a lot of inherent demand growth in the markets that we serve." — Samuel N. Hazen (CEO)
payer contracting and coding progress
Q (Raj Kumar · Stephens): Analyst asked about progress on payer contracting, coding accuracy, acuity capture, and how widespread improvements are across the platform.
A: Management said they maintain solid, transparent relationships with major payers, are deep into 2027 contracting and progressing on 2028 as contracts mature, and are working to reduce administrative friction and create cost-effective solutions jointly with payers. They said they are encouraged by payer attitudes and expect further progress.
"We are deep into 2027, and we are not as deep into 2028, but we are making progress on 2028 as contracts mature and move into the cycle that naturally occurs." — Samuel N. Hazen (CEO)
market footprint and M&A stance
Q (Benjamin Rossi · JPMorgan): Analyst asked whether HCA is considering market exits or changes to footprint, or if it could be an acquirer given competitors facing headwinds.
A: Management said they compete in about 43 markets and over past years they pruned the portfolio to markets they think can succeed; they are investing where they operate and do not expect significant footprint changes now. They said they remain opportunistic if attractive, affordable opportunities arise.
"Over the last 7, 8 years, we have been fairly intentional about looking at our individual markets and determining whether or not we can execute our model and be successful and meet the needs of our constituents." — Samuel N. Hazen (CEO)
inpatient-only list and procedure migration
Q (Andrew Mok · Barclays): Analyst asked about effects of removing the inpatient-only list, observed procedure migration, and how outpatient capacity plans sit against fewer surgeons.
A: Management said year 1 of the 3-year inpatient-only phaseout focused on ortho and musculoskeletal procedures and that changes have been a driver of elective weakness along with Medicare on the inpatient side. They view outpatient/ASC markets as larger and more competitive but remain committed to investing in both hospital-based outpatient surgery and ASC platforms and do not plan material changes to network construction.
"This first year is focused a bit more on ortho and musculoskeletal type procedures, so that is what we are seeing." — Michael A. Marks (CFO)
resiliency applications and opportunities
Q (Craig Hettenbach · Morgan Stanley): Analyst asked which resiliency initiatives accelerated this year and what longer-term untapped opportunities remain.
A: Management outlined four resiliency focus areas: revenue integrity, asset optimization (patient flow), variable cost (labor, supplies), and fixed cost reduction, and said digital transformation and expanding shared services (Parallon) are key enablers. They said they see multiyear opportunities and have good line of sight into 2027 and beyond.
"When we think about resiliency, we largely think about 4 key focus areas that really make up this multifaceted effort across the enterprise." — Michael A. Marks (CFO)