Though HCA lifted its 2025 outlook, softer volume and Medicaid growth brought more questions from investors.
HCA Healthcare’s bottom line continues to chug along, but investors remain interested in the health system giant’s ability to weather industry volatility stemming from policy changes.
Tempered demand for services and tepid volume growth showed up in what was otherwise a strong second quarter earnings report, allowing the hospital operator to raise its 2025 guidance.
HCA saw $18.61 billion in revenue for the quarter, a 6.4% year-over-year increase, and net income of $1.65 billion, representing a 13.1% increase.
As a result, revenue for 2025 is now expected to be between $74 billion and $76 billion, increasing from $72.8 billion to $75.8 billion, while net income for the year is set at $5.85 billion to $6.29 billion, a jump from $6.11 billion to $6.48 billion.
About half of the company's increased earnings outlook can be attributed to recently enacted state-directed Medicaid payment programs, CFO Mike Marks told investors on an earnings call. Tennessee’s new program, which had been pending approval for months, is expected to generate meaningful revenue in the back half of the year.
However, investors raised concerns over HCA’s revised guidance for patient volumes in the second half of the year. Equivalent admissions growth is now expected to be 2% to 3%, rather than the 3% to 4% HCA originally forecasted.
For the second quarter, same-facility admissions increased 1.8%, same-facility equivalent admissions improved 1.7%, and emergency room visits ticked up 1.3%. Meanwhile, same-facility inpatient surgeries declined 0.3% and outpatient surgeries fell 0.6%.
HCA CEO Sam Hazen downplayed worries over depressed volume growth to investors.
“We’ve had 16 consecutive quarters of volume growth,” Hazen said. “And so that consistency tells us that the network model that we’re investing in very heavily and we’re focused around execution on it allows us to compete effectively. It’s allowed us to sustain market share gains, and we think it adds value for our patients.”
Community Health Systems also suffered lower patient volumes than expected in the second quarter, which current president and CFO and soon-to-be interim CEO Kevin Hammons chalked up to a drop in “consumer confidence.”
When asked if that was the reason for HCA’s volume metrics, Hazen said: “I don’t think we can make any comments yet about consumer confidence. I think, again, the demand for healthcare largely, over time, appears to have been inelastic.”
Providers like HCA are also preparing for the impact of the One Big Beautiful Bill Act (OBBBA) and the potential expiration of current ACA subsidies, which are set to expire at the end of 2025 unless Congress acts. If they lapse, premiums could spike for millions of Americans, potentially reducing enrollment in ACA marketplaces and increasing uncompensated care burden for hospitals. HCA has approximately 60% of its Medicaid volumes and revenue in states that elected not to expand Medicaid under the ACA, leadership noted.
“With respect to the Medicaid component in [OBBBA], we believe the adverse impacts over the next few years are manageable,” Hazen said.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
HCA Healthcare posted $18.61 billion in revenue for the second quarter, up 6.4%, with net income rising 13.1% to $1.65 billion.
Slower-than-expected patient volume growth led to revised admissions forecasts of 2% to 3% for the second half of 2025.
HCA leadership tried to minimize concerns about potential policy and consumer impacts in an earnings call with investors.