HCA Healthcare, Inc.

Other factors may cause actual results to differ materially from those that might be expressed today. More information on forward-looking statements and these factors are listed in today's press release and in our various SEC filings. On this morning's call, we may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure. A table providing supplemental information on adjusted EBITDA and reconciling net income attributable to HCA Healthcare, Inc. is included in today's release. This morning's call is being recorded, and a replay of the call will be available later today. With that, I'll now turn the call over to Sam.

All right. Thank you, Frank, and good morning to everybody, and thank you for joining the call. The company's financial results for the second quarter were strong, with a 24% increase in diluted earnings per share, as adjusted to $6.84. The results reflected solid revenue growth of 6.4%, which was driven by greater demand for our services, improved payer mix, and consistent patient acuity levels. In the quarter, we also experienced a stable operating environment, which allowed us to produce better margins. Because of the team's great start to the year, we increased our guidance for 2025 as reflected in our earnings release this morning. This updated outlook also reflects the positive demand environment we expect in our markets, the effectiveness of our strategic initiatives, and the momentum we see in our business. During the quarter, we also improved quality outcomes, throughput measures in our emergency rooms, and patient satisfaction. We believe the HCA way of combining our high-quality local health networks with the capabilities of a national system will continue to reinforce our competitive position, help us respond effectively to evolving market dynamics, and meet the needs of our patients. As a team, we remain relentless in our pursuits to innovate using technology find new ways to increase efficiencies, and hold ourselves accountable for delivering results for our stakeholders. I want to thank our colleagues again for their outstanding work and their ongoing pursuits to deliver on our mission. Now let me transition to the federal policy environment and the recent passage of the One Big Beautiful Bill Act. With respect to the Medicaid component in this Act, we believe the adverse impacts over the next few years are manageable. This belief is based on the grandfathering provisions for supplemental programs, which include a number of previously submitted applications for state-directed payments and the timelines for phasing in work requirements and supplemental payment program changes. I will also note that the bifurcation of the policy between expansion and non-expansion states lessens the expected impact to HCA healthcare. Approximately 60% of our Medicaid volumes and revenue are in non-expansion states. With respect to the exchange provisions in the Act, we do anticipate that some people will lose insurance coverage over the next few years. but we believe our financial resiliency program should offset these effects. We are also mindful of the scheduled expiration of the enhanced premium tax credits at the end of this year. We continue to advocate strongly for their extension, but at this point, we do not know what the outcome will be. Recent polling indicates that many Americans want them extended Many believe they need them for their families, and many say their voting patterns could hinge on their ultimate fate. We are working to develop and execute resiliency programs to offset as much as possible any adverse impact should they expire. Let me close with this. Regardless of the outcome with these federal policies, we are optimistic about the future of HCA healthcare. Our balance sheet is strong. We have an experienced, capable, and disciplined team. And where appropriate, we will adjust as we can and continue delivering on our mission. With that, I'll turn the call to Mike for more details.

Thank you, Sam, and good morning, everyone. We are pleased with our second quarter earnings. Equivalent admissions increased 1.7% for the quarter and 2.3% for the year. Year-to-date managed care equivalent additions, including the exchanges, grew 4%, which is in line with our expectations. Medicare grew 3%, which is slightly below our expectations. Medicaid was down slightly, and self-pay was up slightly. Both were below our expectations and represent our lowest reimbursing payers. However, given the payer mix and acuity of our patients, We had revenue growth of 6.4%, slightly above the top end of our long-term 4-6% guidance. Adjusted EBITDA margin improved 30 basis points compared to the prior year quarter. Salary and benefits, along with other operating expenses, both improved as a percentage of revenue when compared to the prior year. Same facility contract labor improved 1% from the prior year quarter and represented 4.3% of total labor costs in the second quarter of 2025 versus 4.6% in second quarter of 2024. Supply expense increased slightly as a percentage of revenue due primarily to increased spending on cardiac-related devices. Adjusted EBITDA in the second quarter grew 8.4% over the prior year quarter, And we were pleased that a substantial portion came from core operations. Regarding Medicaid supplemental payment programs, as we've said in the past, these programs are complex, variable in time, and do not fully cover our calls to treat Medicaid patients. Considering Medicaid state supplemental payments and related provider taxes in isolation, We saw an approximate $100 million increase in net benefit in the second quarter of 2025 compared to the prior year quarter due to prior period reconciliation payments and programs accrual time. The new Tennessee directed payment program was approved in late June. As this is a newly approved program, we did not accrue any benefit from this program in second quarter of 2025 and will record as we receive cash. Moving to capital allocation, we continue to deploy a balanced strategy of allocating capital for long-term value creation. Cash flow from operations was $4.2 billion in the quarter. Capital allocation in the second quarter of 2025 was $1.2 billion in capital expenditures, $2.5 billion in share repurchases, and $171 million in dividends. We were able to defer approximately $850 million in tax payments to the fourth quarter due to the IRS providing relief to Tennessee taxpayers in the aftermath of severe weather in early April. Our debt to adjusted EBITDA leverage remains in the lower half of our stated guidance range, and we believe our balance sheet is strong and well positioned for the future. Sam discussed the health policy implications of the One Big Beautiful Bill Act. I will provide a few more detailed notes. As it relates to tax policy, this act was positive for ACA, making 100% bonus depreciation permanent and effective back to inauguration day, which is helpful given our capital investment program. The act did not include policies that would have materially increased our tax liabilities. We continue our work to develop and execute resiliency plans to offset as much of any adverse impact as possible from the Act, the potential expiration of the EPTCs, and other administrative actions such as tariffs. We will provide more information on our resiliency efforts during our fourth quarter 2025 earnings call when we issue our 2026 guidance. So with that, let me speak to our 2025 guidance. As noted in our release this morning, we are updating the full year 2025 guidance as follows. We expect revenues to range between $74 and $76 billion. We expect net income attributable to HCA Healthcare to range between $6.11 billion and $6.48 billion. We expect adjusted EBITDA to range between $14.7 billion and $15.3 billion. We expect diluted earnings per share to range between $25.50 and $27. We expect capital spending to be approximately $5 billion. We are updating our guidance to project growth and equivalent admissions to be between 2% and 3% for the full year 2025. With the approval of the Tennessee program and with updated information from across our programs, We now anticipate our supplemental payments full year net benefit to be between flat and $100 million favorable year over year. This projection does not include any potential impact in 2025 from the grandfathering of applications under the Act. We believe one of the underlying strengths of HCA is our diversified portfolio of markets. The recovery in our facilities impacted by Hurricane Celine and Milton in third and fourth quarter of 2024 is going better than anticipated. However, we have a couple of markets below our expectations that are offsetting some of the better performance in the hurricane affected markets. We understand the challenges in these markets and have confidence in the plans in place to address them. Ultimately, The increase in our earnings guidance is equally weighted between the updated net benefit from the state supplemental payment programs and the improvement in our overall portfolio operational performance, including the hurricane impacted markets. With that, I will turn the call over to Frank for questions.