Nashville, Tenn.-based HCA Healthcare expects flat earnings in 2027 as Medicaid supplemental payments decline and exchange coverage losses continue to weigh on its payer mix, despite steady volume growth.
CEO Sam Hazen previewed the outlook during the system’s Oct. 27 third-quarter earnings call, noting that full guidance will come in January.
“We anticipate our earnings in 2027 will be generally consistent with 2026,” he said. “Beyond 2027, we anticipate performance more in line with our long-term growth targets.”
Seven things to know
1. HCA expects to receive about $550 million to $650 million less in Medicaid supplemental payment net benefits in 2027. Several state programs received grandfathered approvals in 2026 that paid the system for services from prior years. HCA now expects $600 million to $800 million in incremental supplemental payment benefits for 2026.
2. The system expects fewer people to lose exchange coverage in 2027 than in 2026, but still a “meaningful impact on payer mix,” Mr. Hazen said. Executive Vice President and CFO Mike Marks said HCA will know more after the open enrollment period ends.
3. Patients who lose exchange coverage are becoming uninsured “almost one for one,” Mr. Marks said. Uninsured patients made up about 10.5% of HCA’s equivalent admissions in the third quarter, up from 8.5% a year earlier. HCA estimates the payer mix shift reduced its income before income taxes by about $400 million in the quarter. Exchange equivalent admissions fell 19% year over year but rose about 8% from the second quarter.
4. Medicaid work requirements under HR 1 could also weigh on 2027 results. Expansion states account for about 40% of HCA’s Medicaid volumes and revenues, and Mr. Marks said the requirements would apply to roughly 15% to 20% of the system’s total Medicaid volumes. He expects a “modest impact” in 2027 but did not give a dollar figure.
5. HCA expects volume to grow 2% to 3% in 2027 and anticipates better cost performance from its enterprisewide resiliency program. Mr. Hazen said the return to long-term growth after 2027 depends on three things: the system moving past the worst of the exchange-driven payer mix shift, no material policy changes beyond HR 1, and its strategic initiatives, including digital transformation, generating “significant value.”
6. Executives said cost savings from the resiliency program will extend beyond next year. Mr. Marks said HCA has “great line of sight now going into ‘27 and into ‘28 and beyond,” citing digital transformation and expanded shared services. On the payer side, Mr. Hazen said the system is deep into 2027 commercial contracting and making progress on 2028, and is working with major payers to reduce administrative friction in a way that “starts to change the paradigm a little bit.”
7. In the third quarter of 2026, HCA’s revenue rose to $19.8 billion from $19.2 billion a year earlier, while net income dipped to $1.58 billion from $1.64 billion. Operating income was $2.4 billion, roughly flat year over year, and operating margin narrowed to 11.9% from 12.6%. Through the first nine months of the year, revenue increased to $59.2 billion from $56.1 billion, and net income was roughly flat at $4.9 billion. Operating income was $7.2 billion, essentially unchanged from a year earlier, and operating margin narrowed to 12.1% from 12.8%.
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