HCA Healthcare, Inc.

Welcome to the HCA Healthcare Third Quarter 2026 Earnings Conference Call. Today's call is being recorded. After today's prepared remarks, we will host a question and answer session. We kindly ask that you please limit yourself to one question. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. At this time, for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations, Mr. Frank Morgan. Frank, please go ahead, sir.

Good morning and welcome to everyone on today's call. With me this morning is our CEO, Sam Hazen, and our CFO, Mike Marks. Sam and Mike will provide some prepared remarks, and then we'll take your questions. Before I turn the call over to Sam, let me remind everyone that should today's call contain any forward-looking statements that are based on management's current expectations, numerous risks, uncertainties, and 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.

Good morning, and thank you for joining the call. The company's results in the third quarter reflected improvement in key areas of our business. First, demand for our services continued to grow at a solid rate. Adjusted admissions on the same facility basis grew 3% compared to 2.3% year-to-date. Inside this growth, insured volumes grew faster in the quarter than in the first half of the year. The third quarter reflected the 22nd consecutive quarter of volume growth for the company. Second, revenue per adjusted admission for our insured business, excluding supplemental payments, increased at a higher rate than in the first half of the year. This increase partially offset the payer mix pressure from continued volume declines for patients who were formerly covered in health insurance exchanges and are now uninsured. Additionally, we had a modest incremental net benefit of $50 million in the quarter from Medicaid supplemental payment programs, primarily related to a recently approved Virginia program. These factors, coupled with improved cost results, contributed to solid financial performance in the quarter that slightly exceeded our expectations. Diluted earnings per share, as adjusted, increased almost 4%. I've often mentioned that HDA has strong staying power because of our scale, the important role we play in providing critical services to communities, and our disciplined culture. Despite the challenges this year brought about by federal policy changes, we have continued to move the company forward and believe we are positioned to end the year positively. As we look ahead to 2027, let me share a few preliminary observations around certain aspects of our business before we provide our full year guidance in January. I'll remind everyone we are still early in our planning process and there are several important areas that remain fluid, including the policy environment. First, we expect demand for services to remain strong with volume growth forecasted to be 2-3%. This range is consistent with our long-term thinking. Within the demand environment, we believe it's reasonable to assume for 2027 that fewer people will lose their coverage on the health insurance exchanges than we experienced in 2026. However, we do expect that there still will be a meaningful impact on payer mix. We need to get through the fourth quarter before we can provide more details. 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. Last, we anticipate favorable cost performance primarily due to our ongoing enterprise-wide resiliency program and the operating leverage from the expected volume growth. When we aggregate these preliminary observations, we anticipate our earnings in 2027 will be generally consistent with 2026. Beyond 2027, we anticipate performance more in line with our long-term growth targets. This view makes three important assumptions. First, we move past the most significant effects on payer mix from the exchanges Second, we assume no material policy changes beyond H.R. 1. And finally, we have a set of strategic initiatives, including digital transformation, network development, and ongoing resiliency programs that generate significant value. I'll reiterate, it is still early, but we believe these preliminary perspectives provide context for how we currently see the company's growth prospects. Let me close with this. Our colleagues continue to provide high quality care to our patients and execute our strategic plans. I appreciate their efforts in delivering on our mission and I want to thank them for their good work. As we get further into the execution of our plan, we believe it will enhance access for our patients with our capital spending, create a better work environment for our caregivers with our AI transformation initiatives, and deliver value for our shareholders with our enterprise-wide resiliency program and balanced capital allocation. As we look to the future, I'm confident that HCA Healthcare has the right people, The right process and the financial position to achieve our long-term objectives. With that, I'll turn the call over to Mike for more details on the quarter.