HCA Healthcare Q3 2026: EPS up 4.5% to $7.27 only on buybacks; profit fell 3.9% on a ~$400M uninsured hit

HCA Healthcare, the largest for-profit hospital operator in the US (189 hospitals and about 2,600 outpatient sites in 19 states and the UK), grew third-quarter 2026 revenue 3.6% to $19.85 billion. Net income attributable to HCA fell 3.9% to $1.579 billion, yet diluted earnings per share (EPS) rose 4.5% to $7.27, because HCA had 8.0% fewer shares outstanding after heavy buybacks. The main drag was the same one as last quarter: more patients arriving without insurance after losing their Affordable Care Act exchange coverage, which HCA estimates cost about $400 million of pre-tax income in the quarter. Even so, management now expects full-year results in the upper half of the guidance it cut in July.

This analysis is based on HCA's October 27 earnings release (Form 8-K, Exhibit 99.1). The full Form 10-Q, with the payer-by-payer revenue split, uncompensated-care figures and management's detailed explanation of cost lines, has not been filed yet.

Key figures

HCA does not report an operating income line. The operating margin above is our calculation: income before taxes plus interest expense, divided by revenue (the same method as our Q2 report). Adjusted EBITDA is HCA's own non-GAAP profit measure: earnings before interest, taxes, depreciation and amortization, excluding gains or losses on selling facilities.

Takeaway: HCA's patients kept coming (equivalent admissions +3.0%, ER visits +5.1%), but they paid less per visit than the volume growth would suggest: revenue per unit of volume rose only 0.6% as uninsured patients replaced exchange-insured ones and surgeries kept shrinking. Total profit fell; EPS rose only because HCA spent $2.97 billion retiring about 3% of its shares in a single quarter.

Volumes: busier ERs, fewer surgeries

Equivalent admissions is the hospital industry's way of counting total patient volume: inpatient admissions scaled up to include outpatient work. "Same-facility" counts only hospitals HCA owned in both periods, so purchases and sales don't distort the comparison.

• Same-facility admissions rose 2.7% and equivalent admissions 3.0%, a little faster than Q2's 2.5% and 2.7%. HCA says equivalent-admission growth "accelerated".
• Same-facility emergency room visits rose 5.1%, up from 3.6% in Q2.
• Surgeries, among a hospital's most profitable services, fell again: same-facility inpatient surgeries −1.4% (Q2: −2.3%) and outpatient surgeries −3.7% (Q2: −3.4%). On a reported basis outpatient surgeries fell 4.2%, partly because HCA ran 117 freestanding surgery centers versus 123 a year earlier.
• Occupancy (how full the beds were) rose to 73.2% from 71.7%, and the average stay shortened to 4.62 days from 4.66.

More ER visits and fewer elective surgeries is the pattern you would expect when more patients are uninsured: the ER has to treat everyone, while people without coverage tend to put off scheduled procedures. The release doesn't break volumes down by payer, so that link is our reading, not HCA's statement.

Payer mix: the exchange hit is still growing

Payer mix is the split of patients by who pays: Medicare, Medicaid, commercial insurers, or nobody. Commercial insurers pay hospitals far more than government programs, and uninsured patients often pay little or nothing.

HCA says the quarter saw "a payer mix shift driven by an increase in uninsured volume, primarily due to patients who lost coverage on the health insurance exchanges." The enhanced federal premium subsidies for exchange plans expired at the end of 2025. HCA puts the cost at about $400 million of pre-tax income. In Q2 the estimate was also about $400 million, but that included about $75 million correcting Q1, so the Q3 hit is the largest single-quarter figure so far.

That shows up in pricing. Same-facility revenue per equivalent admission rose only 0.6%. (Q2's 6.4% was inflated by a back-dated Florida Medicaid payment, so it isn't a fair comparison.) HCA says that, excluding Medicaid supplemental payment programs, revenue per equivalent admission from insured patients grew faster than before, but it gives no figure. The 10-Q should show the uninsured admission growth rate (23.4% in Q2) and the size of uncompensated care (charity care, uninsured discounts and expected bad debt).

Costs

Two of the three big cost lines fell as a share of revenue: salaries and benefits were 43.2% of revenue (43.6% a year earlier) and supplies 14.2% (14.5%). HCA says "cost results improved."

Other operating expenses went the other way, rising 9.3% to $4,548 million, or 23.0% of revenue versus 21.8%. The release doesn't explain why. In Q2 the 10-Q attributed a similar rise mainly to Medicaid state directed and supplemental payment program expenses (the costs, such as provider taxes, that hospitals pay to take part in those programs) and professional fees. HCA says the net benefit from those Medicaid programs "modestly increased" this quarter, without a figure.

Below the operating lines, depreciation rose 7.3% to $954 million and interest expense 8.2% to $607 million, as HCA carries more debt to fund buybacks and acquisitions.

What the headline numbers hide

• Buybacks did all the EPS work. Net income fell 3.9%, but diluted shares fell 8.0% (from 236.2 million to 217.2 million), turning a profit decline into 4.5% EPS growth. In the quarter HCA repurchased 7.23 million shares for $2.970 billion and paid $165 million of dividends (our figure: $519 million for nine months less $354 million in the first half, from the Q2 10-Q).
• The business made less before tax. Income before taxes fell 2.0% to $2,370 million. The tax rate didn't help: tax was 22.0% of pre-tax income, against 21.3% a year earlier.
• GAAP vs adjusted is a small gap. The only adjustment is a $13 million gain on selling facilities ($0.05 a share), which is why adjusted EPS ($7.22) is slightly below GAAP EPS ($7.27).
• Cash conversion was strong this quarter. Operating cash flow of $4.461 billion was well above net income including minority partners' share ($1.849 billion), helped by depreciation and by collecting receivables: accounts receivable fell from $12.28 billion at June 30 to $11.51 billion. Over nine months, operating cash flow is still down 14.3% ($8.810 billion vs $10.277 billion), largely because HCA paid $1.417 billion in income taxes versus $227 million a year earlier, when a 2025 IRS deferral for Tennessee taxpayers delayed payments.
• Buybacks are now funded partly with debt. After $1.357 billion of capital spending, the quarter's free cash flow (operating cash flow minus capital spending, our calc) was about $3.10 billion, slightly less than the $3.14 billion returned through buybacks and dividends. Total debt reached $50.49 billion, up from $49.72 billion at June 30, and debt due within a year rose to $8.09 billion from $6.26 billion. HCA's shareholders' equity is negative (−$8.08 billion) because past buybacks exceed retained earnings.
• Guidance went up, not down. Results are now expected in the upper half of the July ranges.

On balance the quarter is flattered: EPS rose 4.5% only because the share count fell 8.0%, while net income fell 3.9% and pre-tax income 2.0%.

Did last time's read hold up?

Our Q2 report named three things to watch in Q3:

• Uninsured growth: the release gives no growth rate, but the payer-mix hit grew to about $400 million from about $325 million of Q2's own-quarter impact, so the problem did not ease.
• Surgical recovery: no. Inpatient surgeries fell less (−1.4% vs −2.3%), but outpatient surgeries fell more (−3.7% vs −3.4%).
• Receivables turning into cash: yes. Receivables dropped $772 million and operating cash flow was back above last year's level ($4.461 billion vs $4.416 billion), after Q2's 44.5% drop.

We also noted that the July guidance implied roughly $3.0–3.4 billion of second-half net income. Q3 delivered $1.579 billion, a little under half the midpoint, and management now points to the upper half of its range.

Guidance and outlook

HCA did not change its numeric ranges, set on July 14, but now expects to land in the upper half of them:

The guidance excludes facility sale gains or losses, debt retirement losses, legal claims, impairments and any future state Medicaid directed-payment approvals.

Our read: Nine-month net income is $4.898 billion, so the upper half of the range implies $1.60–1.80 billion in Q4, more than Q3's $1.579 billion. Nine-month adjusted EBITDA is $11.747 billion, implying $4.00–4.35 billion in Q4 against $3.918 billion in Q3. Management is therefore betting on a stronger fourth quarter despite an uninsured drag that is still rising. Things to watch in Q4:

• whether the quarterly payer-mix hit stays near $400 million or keeps growing
• whether outpatient surgeries stop falling
• whether HCA keeps buying back about $3 billion of stock a quarter while short-term debt rises, and how much of Q4's EPS growth again comes from the share count

Source: HCA's Q3 2026 earnings release (Form 8-K, Exhibit 99.1, filed October 27, 2026). The quarterly dividend paid is derived using HCA's Q2 2026 Form 10-Q. The Q3 Form 10-Q had not been filed when this was written.