HCA Healthcare executives worked to reassure investors that lower-than-expected patient volumes during the first quarter are in the past and not expected to diminish the company’s full-year growth targets.
In quarterly numbers released Friday morning and discussed during an earnings call, the executives focused on two curveballs—a sharp end to the flu season and disruptive winter storms—which said were almost entirely offset by unexpected receipt of Medicaid state supplemental payments.
Specifically, the quarter’s respiratory-related admissions declined 42% year-over-year while respiratory-related emergency room visits were down 32%, translating to a 70 basis point drag for the former and a 140 basis point dip for the latter. In Texas, Tennessee, North Carolina and Virginia, the inclement weather reduced admissions and ER visits by 30 basis points and 50 basis points, respectively.
The two factors hit volumes across payer categories and resulted in an estimated $180 million hit to HCA’s adjusted EBITDA, they said.
On the other hand, an expected $80 million net benefit increase to adjusted EBITDA compared to Q1 2025 related to the supplemental payments was, in reality, about $200 million, thanks to program approvals and reinstatements in Georgia and Texas.
CEO Sam Hazen said the company was “pleased” with a volume rebound seen across February and March, and that HCA doesn’t expect a more sweeping downturn to affect the remainder of the year. As such, the company largely reaffirmed its full-year guidance, including a 2% to 3% target volume growth, while adding an upward adjustment related to the supplemental payment program funds.
“We view the respiratory-related volume shortfall and the increase in supplemental payment net benefits as first quarter events,” Hazen said during the earnings call. “As such, we believe our assumptions for the remainder of the year related to volumes, payer mix and costs continue to remain in line with our original guidance. HCA Healthcare has an impressive capability to remain disciplined in dynamic environments.”
Analysts on the call noted that the quarters’ surprises ultimately leaned toward the negative, to the tune of a net adverse impact of $60 million adjusted EBITDA. The company’s stock was trading about 9% below its open as of Friday afternoon.
Overall, HCA reported a 4.3% year-over-year increase in quarterly revenues, which reached $19.11 billion, and a 0.6% increase in net income attributable to the company, to $1.62 billion. Adjusted EBITDA rose 1.9% to $3.80 billion.
Across volumes, and all on a same-facility basis, admissions rose 0.9% year-over-year and equivalent admissions increased 1.3%. Emergency room visits rose 0.3%, inpatient surgeries declined 0.3% and outpatient surgeries dropped 1.7%.
Though revenue per equivalent admission increased 3.1%, Chief Financial Officer Mike Marks noted that the company is still contending with an increase in denials and underpayments from payers.
Beyond the quarter’s surprises (probing for hints of additional activity among other states’ supplemental payment programs), analysts were most curious to hear more about how federal policy changes affecting the Affordable Care Act exchanges were playing out on the ground.
Marks said same-facility equivalent adjusted admissions among patients covered under an exchange plan declined about 15% year-over-year, a portion of which includes the company’s “comprehensive evaluation of patients that presented with exchange coverage but ultimately will not be covered for their episodes of care.”
Meanwhile, same-facility equivalent admissions among the uninsured rose about 16% from the prior year’s first quarter. “Over half of this implied increase relates to the movement from exchanges and normal uninsured growth,” he said. “The remaining portion reflects a slowdown of conversions to Medicaid from patients who were not willing to fill out applications.”
Executives later noted a general shift among exchange patients from silver to bronze tier plans, as well as increasing amounts of patient cost-sharing even within the silver plans, though these trends aren’t expected to be material to the company.
These trends together translated into an approximately $150 million hit to adjusted EBITDA, which Marks noted was, so far, in line with the company’s prediction of a $600 million to $900 million impact across the full year.
Hazen said they were pleased with HCA’s ongoing technology initiatives that saw rollouts during the quarter, which include AI-powered ambient listening and documentation. And a promised $400 million in savings across 2026 due to internal resiliency and efficiency work is also so far developing as expected, executives said.
HCA is the country’s largest for-profit health system, with 190 hospitals and around 2,500 ambulatory care sites. Across 2025, it grew revenues 7.1% to $75.6 billion and reported $6.8 billion of net income.
For-profit health systems are now zero-for-two on their volume goals during the first quarter. Earlier this week, Community Health Systems reported its own stumble, which it blamed on payers' prior authorization activity and consumers' anxiety over macroeconomic issues like increased cost of living and conflict in the Middle East.