HCA Expects Supplemental Medicaid Benefits to Fall $550–650 Million in 2027
Key Facts
HCA Healthcare expects its 2027 earnings to be “broadly consistent” with 2026, according to preliminary comments by CEO Sam Hazen on the third-quarter earnings call. Hazen said the company expects to receive about $550–650 million less in net benefits from supplemental Medicaid payment programs in 2027 than in 2026. Management linked the decline to programs in states that received exceptional approvals during 2026, compensating them for services provided in earlier periods. Hazen described these expectations as an initial assessment, not full-year guidance. He said the company was still in the early stages of planning and would issue full guidance in January.
HCA does not expect a broad decline in all Medicaid payments; the specific pressure relates to supplemental benefits tied to those programs. Meanwhile, management expects service volume to grow between 2% and 3% in 2027, with payer mix continuing to have a material effect. It said volume growth and the company’s enterprise-wide flexibility program should support better cost performance, offsetting some of the decline in supplemental benefits. Hazen put it this way: “We expect favorable cost performance, primarily due to the ongoing enterprise-wide flexibility program and operating leverage from expected volume growth.” Further details are expected after the fourth-quarter results, ahead of full guidance in January.
Third-quarter results show a divergence between revenue growth and pressure on some profitability measures and patient mix. Revenue rose 3.6% to $19.849 billion from the same period a year earlier, while net income fell 3.9% to $1.579 billion. At the same time, adjusted diluted earnings per share rose 3.7% to $7.22, and adjusted EBITDA increased 1.2% to $3.918 billion, compared with $3.870 billion a year earlier. The company estimated that the adverse effect of payer-mix shifts on pretax income was about $400 million in the third quarter. The differing measures indicate that revenue growth and higher adjusted earnings coincided with a significant financial impact from changes in some patients’ insurance coverage.
The shift of patients who lost health insurance marketplace coverage into the uninsured category was one of the main factors management cited to explain the change in payer mix. HCA said the shift occurred at roughly a one-for-one rate and accounted for about 80% of the growth in uninsured volume in the third quarter. Uninsured patients accounted for about 10.5% of equivalent admissions, up from 8.5% in the same period of 2025. Equivalent admissions among marketplace patients also fell about 19% year over year, despite rising about 8% from the second quarter of 2026. By contrast, equivalent admissions among insured patients outside those marketplaces rose about 3% year over year.
At the clinical activity level, equivalent admissions at same-facility locations rose 3.0% year over year, and emergency department visits increased 5.1%. But inpatient surgeries fell 1.4%, and outpatient surgeries declined 3.7%. Revenue per equivalent admission at same-facility locations rose 0.6% from the third quarter of 2025, while costs per equivalent admission, excluding supplemental Medicaid programs, were nearly unchanged. These figures reflect continued growth in some demand measures alongside declines in specific types of procedures. In July, HCA had cut its 2026 diluted earnings-per-share forecast range to $28.70–30.50, from $29.10–31.50 in its January forecast.
In its latest annual update, HCA raised its 2026 operating results forecast to the upper half of the ranges it published on July 14. In trading, shares fell 3.94% to $446.93 in premarket trading on October 27, despite third-quarter adjusted earnings per share of $7.22 topping Wall Street’s estimate of $6.65. Revenue came to $19.85 billion, ahead of analysts’ estimates of $19.33 billion. The stock had closed at $469.03 on October 23 and $465.26 on October 26, before results were announced the following day. Hazen said the company’s performance after 2027 could move closer to its long-term growth targets, assuming it moves past the most severe effects of payer-mix shifts and there are no further material policy changes beyond HR1.