HCA Healthcare (HCA) investor relations material

Demand and volume trends

• Year-to-date equivalent admission growth reached 2.3%, below the initial 3–4% guidance, mainly due to weaker Medicaid and self-pay volumes, which are the lowest reimbursing payers.

• Medicaid volumes declined 1.2% year-over-year, attributed to slower recovery from the Medicaid redetermination process.

• Exchange enrollment growth was robust last year, leading to a tougher comparison; current year exchange volume growth is healthy but lower than the prior year.

• Commercial book excluding exchanges grew just under 1%, in line with historical trends, while total commercial including exchanges was up 4–4.5%.

• Overall volume growth aligns with the long-term plan of 2–3%, considering prior year strength and leap year effects.

Financial performance and guidance

• Top-line growth reached 6.4% in the quarter, supported by payer mix and consistent acuity.

• Guidance was raised by $300 million at the midpoint, with $150 million from state supplemental payments and $100 million from improved hurricane market performance.

• State supplemental payments provided a $180 million net benefit in the first half, expected to decline by $130 million in the second half.

• Core operational performance, including cost control and market outperformance, contributed to a $150 million improvement in guidance.

• Implied growth rate for the second half is expected to be consistent with the first half, factoring in timing of payments and market recovery.

Labor and cost management

• Labor environment is stable, with wage inflation and premium labor usage near pre-pandemic levels; contract labor is down to 4.3% of total SWB.

• Staff retention has returned to pre-pandemic levels, aided by investments in workforce development and education.

• Physician professional fees, especially in anesthesia and radiology, remain elevated at 10% growth but have improved from prior years.

• Efforts to stabilize physician costs continue, with progress in emergency and hospital segments.

• Ongoing focus on cost structure, including variable and fixed costs, is part of a broader resiliency plan.