AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 19/10/2026
Moat—
Insufficient evidence for every rubric criterion; no category score is inferred.
structural advantage · — · Centralized purchasing and regulatory protection support plausible mechanisms, but relative cost benefits and local competitive insulation are not established.
durability · — · The catalog cannot establish durable relative advantage; entry-rule changes and outpatient competition challenge the candidate mechanisms.
customer dependency · — · Same-facility growth demonstrates continuing demand, but does not establish dependence on HCA or meaningful switching friction. Payers can steer patients.
erosion resilience · — · Positive earnings and continuing demand coexist with payer-mix pressure. Without an established moat, these outcomes cannot establish resilience of a competitive advantage.
Pricing power44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · HCA reports generally receiving contracted annual managed-care payment increases, demonstrating some realized pricing ability. Magnitudes are missing, and Medicaid reimbursement remains generally below care costs.
retention · 2/4 · Same-facility admissions and equivalent admissions increased in both 2026 quarters, providing indirect evidence of sustained demand. Lower surgical volume and payer steering temper this evidence; no individual retention or contract renewal rate is inferred.
margin resilience · 2/4 · First-half pretax income rose slightly while revenue grew faster, demonstrating margin compression despite continued profitability. Management estimated approximately $400 million of adverse second-quarter payer-mix impact, alongside approximately $400 million of incremental supplemental Medicaid benefit. Resilience is mixed and partly policy-dependent.
contractual freedom · 1/4 · Transaction prices depend on government terms or negotiated payer contracts, limiting unilateral repricing. Received managed-care increases show some negotiating latitude within those constraints.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 2.38
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.24
Financial strength27
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 27.94
- netDebtEbitGrade
- 24.75
- interestCoverageGrade
- 39.76
- currentRatioGrade
- 17.23
- Debt / FCF (x)
- 6.04
- Net debt / operating income (x)
- 3.76
- Current ratio (x)
- 0.97
Capital allocation100
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 26.59
- 3-year average dilution (%)
- -6.61
- 3-year average SBC / revenue (%)
- 0.48
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Operating cash generation increased across 2023–2025, and first-half 2026 cash funded capital expenditure. However, operating cash declined to $4.349 billion while repurchases consumed $3.635 billion, borrowing increased and $8.6 billion of construction costs remained. Actual spending and financing support a mixed assessment; investment returns and repurchase value creation are unproven.
incentive alignment · 3/4 · Actual ownership-guideline compliance, vested three-year performance awards and an adopted recoupment policy demonstrate meaningful alignment. Financial measures carry 80% of annual incentive weighting, and adjusted EPS definitions limit the strength of that alignment. Future award vesting is not assumed.
execution · 2/4 · Multi-year cash generation, same-facility growth and issuer-reported infection performance support execution, partly through indirect operating evidence. First-half cash deterioration, payer-mix pressure and reduced earnings guidance temper the record. Mission allegations raise unresolved concerns without being accepted as verified findings.
governance · 2/4 · A majority-independent board, independent key committees, annual elections, separated chair and CEO roles and adopted recoupment rules provide concrete safeguards. Significant affiliated ownership and contractual nomination rights concentrate influence and qualify accountability.
Evidence
Mine Safety Disclosures
Certain of our affiliates provide a variety of management services to our health care facilities, including patient safety programs, ethics and compliance programs, national supply contracts, equipment purchasing and leasing contracts, accounting, financial and clinical systems, governmental reimbursement assistance, construction planning and coordination, information technology systems and solutions, legal counsel, human resources services and internal audit services.
Business — centralized management services and national purchasing contracts · Filed 10/02/2026
We strive to be the health care system of choice in the communities we serve by developing comprehensive networks locally and supporting these networks with enterprise expertise and economies of scale.
Business Strategy — local networks and enterprise economies of scale · Filed 10/02/2026
Our hospitals compete with specialty hospitals and with freestanding ASCs and other outpatient providers with regard to certain high margin services and for quality physicians and personnel.
Risk Factors — specialty hospital and outpatient competition · Filed 10/02/2026
Risks related to human capital: • Our results of operations may be adversely affected by competition for staffing, the shortage of experienced nurses and other health care professionals and labor union activity.
Risk Factors — staffing competition and shortages · Filed 10/02/2026
The Company estimates this payer mix shift had an unfavorable impact on income before income taxes of approximately $400 million during the second quarter.
Second Quarter Commentary — estimated adverse payer-mix impact · Filed 24/07/2026
State certificate of need (“CON”) laws, which place limitations on a health care facility’s ability to expand services and facilities, make capital expenditures and otherwise make changes in operations, may also have the effect of restricting competition.
Business — certificate-of-need restrictions on competition · Filed 10/02/2026
We currently operate health care facilities in a number of states with CON laws or that require other types of approvals for the establishment or expansion of certain facility types or services.
Business — HCA facilities subject to approval requirements · Filed 10/02/2026
Some states that have historically imposed CON or similar prior approval requirements have removed or are considering removing these requirements, which may reduce barriers to entry and increase competition in our service areas.
Risk Factors — removal of entry approval requirements · Filed 10/02/2026
Payers may utilize plan structures such as narrow networks and tiered networks that limit beneficiary provider choices, impose significantly higher cost-sharing obligations when care is obtained from providers in a disfavored tier or otherwise shift greater financial responsibility for care to individuals.
Risk Factors — narrow and tiered payer networks · Filed 10/02/2026
While we generally have received contracted annual increases to payment rates from managed care payers, there can be no assurance that we will continue to receive increases in the future.
Sources of Revenue — received annual managed-care payment increases · Filed 10/02/2026
SDP arrangements and other additional payments supplement Medicaid base rates, which combined are generally insufficient to cover the cost of care provided to Medicaid beneficiaries after accounting for the costs of financing the non-federal share of Medicaid payments, such as the state or local provider taxes levied.
Medicaid supplemental payments — reimbursement relative to care costs · Filed 10/02/2026
The contractual relationships with patients, in most cases, also involve a third-party payer (Medicare, Medicaid, managed care health plans and commercial insurance companies, including plans offered through the federal and state-based health insurance exchanges (the “Exchanges”)), and the transaction prices for the services provided are dependent upon the terms provided by (Medicare and Medicaid) or negotiated with (managed care health plans and commercial insurance companies) the third-party payers.
Note 1 — government-provided and negotiated transaction prices · Filed 28/07/2026
12
increased 2.8 percent to $1.699 billion
•
Diluted earnings per share increased 11.6 percent to $7.62 per diluted share, and diluted earnings per share, as adjusted, increased 11.0 percent to $7.59 per diluted share
•
Adjusted EBITDA increased 4.6 percent to $4.027 billion
•
Cash flows from operating activities totaled $2.335 billion, compared to $4.210 billion in the second quarter of 2025
•
Same facility admissions increased 2.5 percent and same facility equivalent admissions increased 2.7 percent
Second Quarter Commentary
During the second quarter, the Company experienced a payer mix shift driven by an increase in uninsured volume, primarily due to patients who lost coverage on the health insurance exchanges.
Second-quarter results — same-facility demand and uninsured payer-mix shift · Filed 24/07/2026
increased 0.6 percent to $1.620 billion
•
Diluted earnings per share and diluted earnings per share, as adjusted, increased 10.9 percent to $7.15 per diluted share
•
Adjusted EBITDA increased 1.9 percent to $3.802 billion
•
Cash flows from operating activities increased 22.0 percent to $2.014 billion
•
Same facility admissions increased 0.9 percent and same facility equivalent admissions increased 1.3 percent
First-quarter results — same-facility admissions growth · Filed 24/04/2026
In addition, to a lesser degree the Company experienced a service mix shift primarily related to a decline in surgical volume.
Second Quarter Commentary — decline in surgical volume · Filed 24/07/2026
CONDENSED CONSOLIDATED INCOME STATEMENTS FOR THE QUARTERS AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025 Unaudited (Dollars in millions, except per share amounts) Quarter Six Months 2026 2025 2026 2025 Revenues $ 20,230 $ 18,605 $ 39,339 $ 36,926 Salaries and benefits 8,290 8,138 16,573 16,135 Supplies 2,886 2,844 5,739 5,608 Other operating expenses 5,043 3,793 9,223 7,638 Equity in earnings of affiliates (16 ) (19 ) (25 ) (37 ) Depreciation and amortization 944 863 1,874 1,723 Interest expense 599 568 1,183 1,115 Losses (gains) on sales of facilities (10 ) 3 (9 ) 2 17,736 16,190 34,558 32,184 Income before income taxes 2,494 2,415 4,781 4,742 Provision for income taxes 564 524 994 1,026 Net income 1,930 1,891 3,787 3,716 Net income attributable to noncontrolling interests 231 238 468 453 Net income attributable to HCA Healthcare, Inc.
Condensed consolidated income statements — first-half revenue, expenses and pretax income · Filed 28/07/2026
During the second quarter, the Company recognized approximately $400 million of incremental net benefit from Medicaid Supplemental Payment Programs, primarily related to the state of Florida program, which is discussed further below.
Second Quarter Commentary — incremental supplemental Medicaid benefit · Filed 24/07/2026
Cash provided by operating activities totaled $12.636 billion in 2025 compared to $10.514 billion in 2024 and $9.431 billion in 2023.
Liquidity and Capital Resources — operating cash generation for 2023–2025 · Filed 10/02/2026
6 HCA HEALTHCARE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025 Unaudited (Dollars in millions) 2026 2025 Cash flows from operating activities: Net income $ 3,787 $ 3,716 Adjustments to reconcile net income to net cash provided by operating activities: Increase (decrease) in cash from operating assets and liabilities: Accounts receivable (1,417 ) 320 Inventories and other assets (26 ) (427 ) Accounts payable and accrued expenses (439 ) (676 ) Depreciation and amortization 1,874 1,723 Income taxes 269 880 Losses (gains) on sales of facilities (9 ) 2 Amortization of debt issuance costs and discounts 23 25 Share-based compensation 171 197 Other 116 101 Net cash provided by operating activities 4,349 5,861 Cash flows from investing activities: Purchase of property and equipment (2,350 ) (2,167 ) Acquisition of hospitals and health care entities (386 ) (326 ) Sales of hospitals and health care entities 21 167 Change in investments (120 ) 41 Other (4 ) 2 Net cash used in investing activities (2,839 ) (2,283 ) Cash flows from financing activities: Issuance of long-term debt 2,994 5,233 Net change in short-term borrowings and revolving credit facility 2,679 1,768 Repayment of long-term debt (2,608 ) (5,660 ) Distributions to noncontrolling interests (334 ) (394 ) Payment of debt issuance costs (17 ) (57 ) Payment of dividends (354 ) (351 ) Repurchase of common stock (3,635 ) (5,011 ) Other (259 ) (112 ) Net cash used in financing activities (1,534 ) (4,584 ) Effect of exchange rate changes on cash and cash equivalents (3 ) 12 Change in cash and cash equivalents (27 ) (994 ) Cash and cash equivalents at beginning of period 1,040 1,933 Cash and cash equivalents at end of period $ 1,013 $ 939 Interest payments $ 1,163 $ 1,074 Income tax payments, net $ 725 $ 146 The accompanying notes are an integral part of the condensed consolidated financial statements.
Condensed consolidated cash flows — first-half operating cash, investment and financing · Filed 28/07/2026
At June 30, 2026, there were projects under construction which had estimated additional costs to complete and equip over the next five years of approximately $8.6 billion.
Liquidity and Capital Resources — remaining construction costs · Filed 28/07/2026
As of December 31, 2025, each named executive officer’s equity holdings substantially exceeded the minimum ownership guidelines.
Executive compensation — actual ownership-guideline compliance · Filed 13/03/2026
The PSUs granted in 2023 (the “2023 PSUs”) vested based on achievement of a cumulative Target EPS for fiscal years 2023 – 2025, subject to the PSU vesting schedule set forth above.
Executive compensation — vesting of 2023 performance awards · Filed 13/03/2026
Step 2 Calculation of Financial (80%) and Quality and Care (20%) Performance The actual award amount is determined based upon Company performance on financial and quality and care performance measures.
2025 incentive program — financial and quality weighting · Filed 13/03/2026
Cumulative EPS is defined for purposes of the PSUs as the sum of the Company’s “diluted earnings per share” of each of the three fiscal years of the Company within the performance period as reported in the Company’s audited financial statements for each such year, adjusted to exclude the effects of: (a) gains or losses on sales of facilities, (b) gains or losses on extinguishment of debt, (c) asset or investment impairment charges, (d) legal claim costs or benefits (disclosed as separate line item in consolidated income statement), (e) expenses, or adjustments to expenses, for share-based compensation recognized under FASB ASC 718 related to the PSUs that result from EPS performance above or below the Target EPS during the performance period, (f) the impact of Accounting Standards Update (“ASU”) 2016-09: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) that results in EPS performance above or below the Target EPS during the performance period, (g) gains or losses on acquisition or disposition of controlling interests in equity investments or consolidated entities, and (h) any other gains, expenses or losses resulting from significant, unusual and/or nonrecurring events, as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report for the applicable fiscal year, as determined in good faith by the Board or the Committee.
Performance awards — cumulative EPS adjustments · Filed 13/03/2026
Recoupment of Compensation. In November 2023, the Committee adopted a Compensation Recoupment Policy applicable to incentive-based compensation awarded to the Company’s executive officers, in compliance with NYSE rules.
Executive compensation — adopted compensation recoupment policy · Filed 13/03/2026
HCA Healthcare hospitals in the aggregate perform better than the national average across all six publicly reported Healthcare-Associated Infections based on a Standardized Infection Ratio of actual infections/expected infections.
Quality and Patient Care — issuer-reported CMS infection comparison · Filed 13/03/2026
$6.495 to $7.035 billion
$6.300 to $6.700 billion
$15.550 to $16.450 billion
$15.400 to $16.100 billion
EPS (diluted)
$29.10 to $31.50 per diluted share
$28.70 to $30.50 per diluted share
The Company revised its 2026 key assumptions related to the unfavorable impact on income before income taxes from payer mix shifts due to the health insurance exchanges, as well as the incremental net benefit from Medicaid Supplemental Payment Programs, as follows:
Updated guidance — reduced earnings outlook · Filed 24/07/2026
In addition, almost immediately, HCA allegedly raised prices by 10%, started charging patients surprise fees4 and reduced the number of staff per occupied bed at the flagship Mission Hospital from 6 full time equivalents pre-sale to 3.7 (average across North Carolina is 5.1).5 Patient satisfaction ratings declined precipitously from 4’s and 5’s pre-sale to 1 in 2025,6 and there were significant staff reductions and/or departures in nursing staff and services such as chaplaincy, pharmacy, rehabilitation, sterile processing, laboratory, and environmental services.7 Since 2019, 1 https://www.advisory.com/daily-briefing/2024/04/29/hospital-mergers 2 https://d18rn0p25nwr6d.cloudfront.net/CIK-0000860730/b8ab85b0-3a86-4f3b-b91b-71dcb3124683.pdf 3 https://avlwatchdog.org/how-many-doctors-have-left-mission-hca-wont-say/ 4 https://www.economicliberties.us/our-work/the-harms-of-hospital-mergers-and-how-to-stop-them/#_ftnref3 5 https://hlp.law.wfu.edu/wp-content/uploads/sites/11/2024/08/HCA-Mission-Changes-in-Patient-Care-Following-HCAs-Purchase-working-draft-WFU.pdf; https://avlwatchdog.org/hca-arrived-with-plans-to-cut-800-staff-as-soon-as-it-bought-mission-new-court-filings-in-antitrust-case-show/ 6 https://www.medicare.gov/care-compare/details/hospital/340002/view-all?city=Candler&state=NC&zipcode=28715 7 https://hlp.law.wfu.edu/wp-content/uploads/sites/11/2024/08/HCA-Mission-Changes-in-Patient-Care-Following-HCAs-Purchase-working-draft-WFU.pdf; https://avlwatchdog.org/former-mission-chaplain-the-moral-injury-that-is-happening-there-daily-is-staggering/ 41 Table of Contents Mission has been cited five times for Immediate Jeopardy (IJ) due to multiple patient deaths and two Emergency Medical Treatment and Labor Act (EMTALA) violations and referred for a third EMTALA violation.8 Nursing shortages correlate with at least one IJ citation.9 Prior to HCA’s acquisition, Mission was the only health system designated as one of the nation’s Top 15 Health Systems in six of seven years by IBM/Watson Health (2012-2015; 2017-2018).
Stockholder proposal supporting statement — Mission allegations and cited quality concerns · Filed 13/03/2026
Key Practices and Policies
Majority of directors are independent
Corporate governance — majority-independent board · Filed 13/03/2026
All members of the Audit and Compliance Committee, Compensation Committee and Nominating and Corporate Governance Committee are independent
Annual election of all directors
Our current Board structure separates the positions of Chairman of the Board and Chief Executive Officer
Corporate governance — independent committees, annual elections and separate leadership roles · Filed 13/03/2026
Through their investment in Hercules Holding II, Frisco Holding II and other holdings, certain of the Frist-affiliated investors continue to hold a significant interest in our outstanding common stock (approximately 31% as of January 31, 2026).
Ownership risk — approximately 31% Frist-affiliated interest as of January 31, 2026 · Filed 10/02/2026
In addition, pursuant to a stockholders’ agreement we entered into with Hercules Holding II, Frisco Holding II and the Frist-affiliated investors, certain representatives of these investors have the continued right to nominate certain of the members of our Board of Directors.
Ownership risk — contractual director nomination rights · Filed 10/02/2026
These payments are generally authorized by CMS and subject to periodic extension or reapproval.
Medicaid payments — periodic authorization and reapproval · Filed 28/07/2026
