管理層發言
Ladies and gentlemen, welcome to the HCA Healthcare Second Quarter 2026 Earnings Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations, Mr. Frank George Morgan. Please go ahead, sir.
Good morning, and welcome to everyone on today's call. With me this morning is our CEO, Samuel N. Hazen and CFO, Mike Marks. Samuel and Mike will provide some prepared remarks and then we will take questions. Before I turn the call over to Samuel, let me remind you that should today's call contain any forward looking statements, they 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. Over 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 will now turn the call over to Samuel.
Good morning. We believe that access to health care and affordability for Americans begins and ends with health insurance coverage. Most people need support to secure it, whether that is through an employer, the federal government, or some other means. Throughout 2025, our teams advocated for extending in some form the enhanced premium tax credits for those individuals who needed it. Unfortunately, the enhanced premium tax credits expired at the end of the year, and the effects as expected were that many people became uninsured and still needed emergency care from hospitals. As we look at the first half of the year, our expectations proved accurate, although the impact was greater than our estimates. Our colleagues, however, have continued to deliver high quality, compassionate care to an increased number of patients during the first half of the year while managing well through the various headwinds we faced. On behalf of our board and our senior team, I want to thank our colleagues for their great work. When I look at the company's mid year results, I focus on three factors. But before I get to those, I do want to indicate that the company had solid diluted earnings per share growth of 11% in the quarter, and 11% year to date. First, we experienced an unfavorable payer mix shift which created most of the financial pressure for the company. Overall, adjusted admissions for patients who were formerly covered by the health insurance exchanges declined by 15%. We expect that some of these patients would shift to other forms of coverage, but this did not happen. Instead, these patients migrated almost one-for-one to uninsured. We had three of our 15 domestic divisions that had outsized effects from this payer mix shift, and they accounted for around 50% of the company's overall impact. In the quarter, we had an incremental net benefit from Medicaid supplemental payment programs, primarily related to Florida. These programs are fundamental to our providing services to Medicaid patients and play an important role in supporting access to care. This support has been especially important for hospitals, as they are now providing more uncompensated care to uninsured patients. Our updated guidance for the year incorporates what we have learned through the first six months with respect to patients who have lost their coverage on the exchanges. We believe most of the attrition this year is attributable to the loss of the enhanced premium tax credits. The second factor was strength in demand. Despite the payer mix shift, we were pleased with our volume growth. Insured volumes, excluding exchanges, across many of our services were solid with improving trends over the course of the first six months. Emergency room visits, cardiac procedures, and rehab volumes helped drive these improvements. With respect to surgery volumes, the primary explanation for the decline was reduced demand in elective surgeries across both inpatient and outpatient settings. We believe there are several factors contributing to this dynamic, including declines from patients who were previously covered through the exchanges. Emergency inpatient surgery volumes, which account for approximately two-thirds of our total inpatient cases, were up as compared to last year. As stated, we continue to be encouraged by the overall backdrop in demand. We believe our longer-term assumptions for demand growth of 2% to 3% are supported by market factors and population growth rates that we see in the communities we serve. To meet this expected demand, we have continued to add capacity and facilities to our networks this year. Additionally, we have approved more than $7 billion in capital expenditures that should come online in the next three years. We believe these investments will increase offerings and quality for our patients, improve our competitive positioning, and help us grow. HCA Healthcare has produced strong returns on invested capital over the years, and we believe there will be opportunities to do more in the future. We expect to use our cash flow and balance sheet strength to invest further in our business while also returning capital to our shareholders through our capital allocation plans. The last factor I want to focus on is the advance of our financial resiliency program. We continue to see improvement in cost metrics as we move through the first two quarters. For years, HCA Healthcare has found ways to create economies of scale, increase operational efficiency, and enhance margins. We believe the resiliency program we are advancing now has more capacity through digital transformation, global capabilities, and enhanced workforce development programs. We believe our program will continue to add value this year and into subsequent years. I close with this. HCA Healthcare has a strong track record of effectively responding to challenges, regardless of the event. From these experiences, we have built a culture of discipline. This culture has helped us stay true to our core mission to care for and improve human life. Next, it has allowed us to allocate resources productively to generate solid returns for our shareholders. And lastly, it keeps us focused on execution to deliver the outcomes necessary to make the company stronger. With that, I will turn the call over to Mike for more details on the quarter.
Thank you, Samuel, and good morning, everyone. Let me start by providing commentary on second quarter same facility volume compared to prior year. Admissions increased 2.5% and equivalent admissions increased 2.7%. Inpatient surgeries were down 2.3%. Outpatient surgeries were down 3.4%. ER visits increased 3.6%. Regarding payer mix, same facility equivalent admissions in our insured population excluding exchanges increased 3.2% in the second quarter and 2.2% year to date versus prior year. Exchanges declined 15%. As Sam noted, these patients losing coverage on the exchanges migrated almost one-to-one to uninsured. This one-for-one migration makes up approximately 80% of our uninsured volume growth, with the remaining 20% related to a decrease in Medicaid conversions, mostly in Texas, which has had a modest financial impact. Our second quarter net revenue per equivalent admission growth of 6.4% was primarily driven by payment benefits during the quarter. In addition, our contracted rate increases and governmental payment updates offset the negative rate impacts from payer exchanges and, to a lesser extent, service mix. Now I will transition to the impact of the exchanges and Medicaid supplemental payment programs in the quarter. The significant payer mix shift related to the exchanges has had an unfavorable impact on adjusted EBITDA of approximately $400 million in the quarter. This amount includes an increase of $75 million related to our previous estimate of the first quarter exchange impact. During the second quarter, the company recognized $400 million of incremental net benefit from Medicaid supplemental payment programs. This included a $540 million incremental net benefit related to the recently approved Florida program from October 1, 2024 to June 30, 2026. This benefit was partially offset by retro payments received in the second quarter of 2025. Samuel touched on the advancement of our financial resiliency program. Resiliency is core to how we operate the business. Our resiliency program is a long-term, multifaceted, enterprise-wide set of initiatives designed to generate efficiencies across the organization. We were pleased with our cost results in the second quarter. Same facility cost per equivalent admission, when considering Medicaid supplemental payment programs, was essentially flat versus the prior year quarter and it improved 1.4% sequentially. Let me add a note on our year to date performance. Given the challenging policy and reform backdrop, we are pleased with our operating performance at the halfway mark of the year. When we consider the impacts of the exchanges, Medicaid supplemental payment programs, and the impact from the respiratory sickness and winter storm in the first quarter, our year to date operational performance has moderated from our 2025 growth and our initial guidance assumptions. Our revised guidance in 2026 is more in line with our long-term adjusted EBITDA growth rate target of 4% to 6%. Moving to capital allocation and cash flow. Capital expenditures totaled $1.2 billion in the quarter. Additionally, we purchased $2.1 billion of our outstanding shares, and we paid $171 million in dividends for the quarter. Cash flow from operations was $2.3 billion in the quarter, which is a 45% decline from prior year. This decline was primarily due to timing differences in cash flows related to Florida's Medicaid supplemental payment program, as well as the prior year deferral of federal income tax payments to the fourth quarter of 2025. Our debt to adjusted EBITDA leverage remains in the lower half of our stated target range, and we believe our balance sheet is strong and well positioned for the future. So with that, let me speak to our revised 2026 guidance range. Revenue between $77 billion and $79.5 billion. Adjusted EBITDA between $15.4 billion and $16.1 billion. Net income attributable to HCA Healthcare between $6.3 billion and $6.7 billion. Diluted earnings per share between $28.70 and $30.50. We also included revised key assumptions related to the expected unfavorable impact on adjusted EBITDA from payer mix shifts due to the health insurance exchanges, as well as anticipated incremental net benefit from Medicaid supplemental payment programs as follows: health insurance exchanges between negative $1.0 billion and $1.2 billion, Medicaid supplemental payment program net benefit between $300 million and $500 million. The variables on the exchanges are difficult to predict and require significant judgment. We have now revised our estimated impact to adjusted EBITDA based on the updated information through the first half of the year. Specifically, the key change in our updated estimate is driven by our evaluation that almost all of the individuals losing coverage on the exchanges are becoming uninsured, versus our original assumption of 80% to 85%. In addition, our original assumption around declining utilization for patients that become uninsured due to the loss of insurance coverage did not materialize. Regarding Medicaid supplemental payment programs, our updated guidance implies a $100 million to $300 million hit in the back half of the year. This second half headwind reflects program approvals and retro payments received in 2025 which are projected to exceed the incremental benefit of the Florida program. As we think about the quarterly progression for the remainder of 2026, we believe the fourth quarter adjusted EBITDA growth rate compared to the prior year may be higher than for the third quarter. This is based on our assumptions around the timing effects of exchanges, Medicaid supplemental payment programs, and our resiliency program. We are maintaining our stated CapEx range of $5.0 billion to $5.5 billion and currently plan to complete most of the existing authorized share repurchase program, subject to market conditions and other factors. I will now hand the call back to Frank for questions.
Thank you, Mike. As a reminder, please limit yourself to one question so we might give as many as possible in the queue an opportunity to ask a question. Abby, you may now give instruction to those who would like to ask a question.
分析師問答
Thank you. If you have dialed in and would like to ask a question, please press 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your questions, simply press 1 again. If you are called upon to ask your question and are listening via speaker phone on your device, please pick up your handset and ensure that your phone is not on mute. When asking your question, again, it is 1 to join the queue. Our first question comes from the line of Benjamin Hendrix with RBC Capital Markets. Your line is open.
Thank you very much. Hoping you can give us a little more color on your increased estimate for exchange headwinds. What were those key variables that were informing the $1.0 billion to $1.2 billion estimate, and what is giving you confidence in the magnitude of that increase? And then also by extension, how should we think about that directionally as it paces through the back half of the year? Thanks.
Thanks, Ben. It is Mike. If you think about the first half of the year, we have gained a lot of experience, especially in the second quarter. Given that experience and understanding of the exchanges better, we have adjusted our estimates. If you go back to our original set of assumptions, the volume declines that we are seeing in the first and second quarter on the exchanges are 15% in both quarters, which are in line with our original guidance estimates in terms of exchange volume decline. What's different as we have gone through the second quarter is that we originally assumed that about 80% to 85% of the patients who lose exchange coverage would become uninsured. Our data is telling us now that it is closer to one-for-one, and so that is really the biggest driver of the updated estimate of the impact. In thinking about the first half versus the second half, we are providing a range. The $1.0 billion to $1.2 billion range that we are calculating for the full year of 2026 considers a variety of scenarios. To come up with that estimate for the second half, we are using what we have learned through the first six months of the year. We have also reviewed our past attrition rates over the last several years and pulled external data updates as we have gone through the year. Based on that, that is the driver of our full year guidance update. I would note that when we look back to last year, we began to see some slowing in exchange volume in the fourth quarter of 2025. Historically, over many years, our exchange volume would typically peak in the fourth quarter, but that was not the case last year. In hindsight, we now believe that the exchange reforms started late last year and started having an impact. As one example, the pausing of the low-income special enrollment period during late 2025, we now think in hindsight had an impact. Our fourth quarter 2025 exchange volume growth versus prior year was only 2.5%. The full year 2025 versus 2024 was over 10%. So that gives you a sense of it. We do think the fourth quarter comparison is a bit easier as you contemplate 2026 versus prior year. That wraps up our HIX assumptions and our second half guidance. Thank you.
Our next question comes from the line of A. J. Rice with UBS. Your line is open.
Hi, everybody. Maybe just drill down a little bit on surgeries. That has been a topic of conversation this quarter across the board with companies. Your inpatient and outpatient surgeries were down. I wondered if you could talk a little bit more about the types of surgeries that were impacted relative to service lines. Do you see this as being more elective procedures that are being deferred and are you attributing this mainly to the exchange disenrollment? And finally, on surgeries, are you giving any allowance for people hitting deductibles as the year progresses and maybe doing those surgeries that have been postponed from the first half later this year?
AJ, this is Samuel. There are a lot of questions in there. Let me try to provide a condensed answer. I think it is important to understand our surgical business. On the inpatient side, we have two channels for surgery. We have the emergency side, which represents about two-thirds of our inpatient surgeries—trauma programs, cardiac events, general surgery, etc.—and that continues to grow. We saw in 2025 over 2024 our emergent inpatient cases were up approximately 2% year over year, and thus far through the first six months of this year that component of our surgical business is also up about 2% year over year. So that is a stable component and we continue to invest in our emergency room capacity and network offerings to enhance access. The other piece of our inpatient surgery is elective, which represents about a third, and we are down this year more than we were last year. Last year, we were down on elective about 2%; this year we are down about 6%. We do believe that exchange-related demand is a big piece of our elective declines on both inpatient and outpatient. This discussion around exchanges is cutting across all aspects of our business. We are seeing it in the ER with payer mix, in outpatient surgery, and on the inpatient elective side. On the outpatient side it is predominantly electives. There are some cases that migrate through the emergency room, but roughly nine out of ten outpatient cases are elective. Exchange demand was a big piece of the decline, though not the sole piece. We hear from our physicians that their activity flow is off a little this year. They attribute it to general affordability pressures that patients are experiencing. It is difficult to fully tease that apart, but that is the best feedback loop we have. A handful of other factors are connected as well. The Medicare inpatient rule change has had an impact and we have seen some cases move from inpatient to outpatient. We capture some of those cases and we lose some, as you would expect, because the outpatient surgery market is larger than the inpatient surgery market. Our response includes investing in our ORs to ensure they have the equipment needed, optimizing operations for patient and physician flow and efficiency, and aligning with our physicians to ensure they remain connected to our network. Our ASC (ambulatory surgery center) division actually had earnings growth over the first six months of this year. We have roughly the same number of facilities in that division and for both surgical and nonsurgical procedures like endoscopies and colonoscopies, our overall volume in our surgery centers due to more units is up slightly year over year, and the acuity of those cases is growing. We continue to add to that network so we have multiple offerings for patients and physicians, making our network more resilient with additional capacity. We are obviously monitoring this, and we believe we are in a good competitive position. We will have to see as we move through the balance of the year whether or not we see a recovery from some of the early indicators in the first six months. Thanks.
Our next question comes from the line of Ann Hynes with Mizuho Securities. Your line is open.
Great. Thank you. Just a follow-up to that question. In your prepared remarks you said you will be investing $7 billion over three years. Is that more defensive, almost as a response to a shift from inpatient to outpatient because of CMS regulatory changes? Can you talk about the competitive environment? Do you think you are still gaining market share? And where do you see the biggest opportunities to gain market share over the next couple of years? Given some of the markets are under pressure, I am assuming not-for-profit peers are also under pressure. Are you seeing any change in their investment behavior competitively?
Ann, thank you. If you look at our company over the past five or six years with our capital spending, we have added to our inpatient chassis. For example, we had roughly 37,000 beds at the end of 2018 in operations; we have 42,000 today. Our occupancy level since that time has grown from 71% to 75%. So in addition to adding roughly 15% inpatient capacity to the company, our utilization of that capacity has grown by about five percentage points. Within the $7 billion that I referenced, we do have another 1,000 to 1,200 inpatient beds that we are adding. In addition, we are adding to our outpatient network. In the second quarter of 2026 as compared to the second quarter of 2025, we had about 5% more sites of care than we did last year, roughly 250 or so. In our pipeline we have another 250 to 300 outpatient facilities either in our capital plan or in our acquisition plans that will come online later this year and early next year. So that will add roughly 10% to our overall outpatient network capacity. The $7 billion includes components for all of that: new beds, new hospitals in some cases, outpatient facilities, and initiatives to help us compete. We are losing no competitive positioning. Through our midyear reviews and market share analytics, we believe our competitive positioning is stable to growing. There may be a market or two where a competitor does something we need to respond to, but that is fluid and dynamic and we make adjustments accordingly. Overall, we feel good about our programs to extend our networks, create convenience and more offerings for patients, and invest in hospital-centric capabilities to increase capacity and technology offerings for physicians and patients. One final point on markets: the demographic trends we see in HCA markets are as positive or more positive than the COVID-era migration trends to the Southeast and Southwest. Through our studies and others' studies, we believe those demographic trends will support growth in HCA's markets—Florida, Texas, Utah, Nevada, South Carolina, Georgia, Tennessee—which are targeted for growth and should support these investments and demand that will create opportunities for HCA to grow.
Our next question comes from the line of Brian Tanquilut with Jefferies. Your line is open.
Hey. Good morning, guys. Maybe, Mike, as I look at the P&L, shifting gears here to the cost side a little bit, the other OpEx line was up a decent bit, and I am guessing some of that is provider tax. Can you walk us through other moving pieces there and give a broader view? I'm curious how you are thinking about the resiliency programs. Obviously, exchanges were a surprise. Any other incremental offsets that we can be thinking about as we think through 2027 and beyond? Thank you.
Brian, thank you. Yes, our other operating expenses are inflated by the provider tax associated with the new provider tax. If I look at total cash cost per adjusted admission—supply, labor, and other operating expenses combined—compared to prior year, in the second quarter we are flat to slightly up versus prior year. That really reflects good work in the second quarter related to our resiliency plan. As Sam noted, resiliency is core to the business and something we've been working on for a long time. We highlighted this in our investor day in 2023 and it's been in the company's results going back to the pandemic. Given the gaining maturity of these programs, we are confident we can bend the cost curve and improve cost trends in the second half of the year and into 2027. The next generation of that work—digital transformation, building global capability, and expanding shared services—will produce multiyear benefits as we go forward. The other piece to note in your question is professional fees, which are in other operating expenses. They are up about 8.5% on a same facility basis versus prior year, and are moderated and pretty flat sequentially to the first quarter. We've made progress there, and while still a bit elevated, we are pleased with the trajectory.
Let me add for a minute. I have been with the company for 43 years and have seen our approach evolve as services offered have become more complex, whether that's trauma, bone marrow transplant, solid organ transplant, or other advanced services. Our resiliency program is similarly becoming more sophisticated. We now have the tools to get after opportunities in cost and operations: technology, digital, global capabilities, and corporate support. That is why we think this program has durability and the capacity to add value as we move forward.
Our next question comes from the line of Pito Chickering with Deutsche Bank. Your line is open.
Looking at second quarter core EBITDA excluding DPP and HIX impacts, can you help bridge us to how you get to your guidance in the back half of the year? Can you call out any changes to assumptions on the top line, like surgeries or paramedics? And on the bottom line, could you call out any savings or initiatives that are coming online and details around those initiatives?
Sure. Hi, Pito. First, we have a range, so our updated full year guidance contemplates a variety of scenarios. Inherent in your question, we considered assumptions related to exchange changes and the incremental net benefit from Medicaid supplemental payment programs. For the rest of the business, three drivers give us confidence for the back half of the year. First is volume. Our second quarter results profile solid volume growth, particularly in our insured population excluding exchanges, and we believe demand momentum will continue through year end. Second is cost. We had very good cost performance in the second quarter. Based on what we are seeing in our resiliency plan and the visibility into its execution, and considering operating leverage from volume growth, we are confident we can improve cost trends in the back half of the year and into 2027. Third, we have an experienced management team in the field and corporate who have demonstrated the ability to handle challenging cycles and perform well in these environments. That combination gives us confidence in our guidance for the remainder of the year.
Our next question comes from the line of Matthew Gillmor with KeyBanc. Your line is open.
Just circling back on the exchange headwind discussion. You had mentioned that three divisions represented 50% of the impact. Can you give some context in terms of the geographies or commonalities in those divisions and why they are seeing a bigger impact?
We have three divisions—Gulf Coast, North Florida, and South Atlantic—that had high exchange exposure going into the year and have experienced dramatic impacts from the exchange volume shift. Their composite adjusted admission decline in exchange-covered patients is substantial for the first half of the year and has created a lot of pressure. We did not expect it to be that much in those markets. The teams have tried to adapt as best they can, but the effect has been fairly sizable, and it has had an outsized effect on the company. In two of the three divisions, we actually have more volume than the previous year in total, but the payer mix in those divisions was compromised by the expiration of the enhanced premium tax credits, producing a significant move from exchange coverage to uninsured in those markets.
Our next question comes from the line of Whit Mayo with Leerink Partners. Your line is open.
Hey. Good morning. I just wanted to get an update on internal views on Medicaid work requirements for 2027. Any thoughts on potential coverage leakage or headwinds or general thoughts would be helpful. Thanks.
Sure. There is a proposed rule on Medicaid work requirements. We believe work requirements will have an impact in expansion states more than non-expansion states because of the focus on working adults. As a reminder, about 40% of our Medicaid revenues are in expansion states and 60% are not. We are monitoring the proposed rule, potential litigation, and how states implement any changes. Many of these expansion states tend to be more politically diverse, and we are working with those states to support a thoughtful approach to implementation. We are also preparing operationally. Our Parallon teams and our coverage benefit support teams embedded in facilities are organized to help patients through the Medicaid application process and, if applicable, work requirements. We have strengthened those teams to be prepared. Given the distribution of our assets between expansion and non-expansion states and the steps we are taking, while we expect an impact from work requirements, we believe we will manage through those impacts in a reasonable way.
Our next question comes from the line of Justin Lake with Wolfe Research. Your line is open.
Thanks. Good morning. Samuel, you gave six-month numbers for the inpatient cases—emergent up 2% and elective down 6%—maybe you could give us first quarter versus second quarter and how things are running through the second quarter. Also, can you run the volume growth by payer and hopefully give us commercial employers separately from exchanges? Thanks a lot.
I do not have a different explanation for the second quarter versus the year to date. Short cycles can make demand judgments difficult, and 90 days is a short cycle. A midyear view is more relevant, and I do not have anything additional to add beyond the year-to-date commentary on surgeries.
Justin, if I look at same facility equivalent admissions, second quarter of 2026 compared to prior year: Medicare is up 3.6%, Medicaid is up 2.7%, commercial excluding the exchanges is up 2.4%, exchanges are down 15%, and total uninsured is up 15%. I would note total uninsured equivalent admissions now represent a little over 10% of our total equivalent admissions and exchanges represent about 6.8% of total equivalent admissions.
If you look at the payer mix on the inpatient side, this year versus last year it is almost identical by payer class. When you put exchanges and uninsured together, the combined share is essentially the same as last year, reinforcing the one-for-one migration we referenced. For us, that is not a good thing financially, but we have taken care of these patients and our teams have done a wonderful job. It does put pressure on the P&L.
To add to that, year-to-date same facility compared to prior year, our exchange equivalent admissions are down about 22,000 and our uninsured equivalent admissions are up about 26,500. That supports the one-for-one migration observation, and then on top of that we have a little Medicaid conversion slowdown, particularly in Texas, which has added to the dynamics.
To put that into context: those 20-some thousand patients were part of roughly 1.1 million adjusted admissions. So this movement represents a small percent of total admissions but has a disproportionate financial effect. We understand that and are responding as best we can.
Our next question comes from the line of Stephen Baxter with Wells Fargo. Your line is open.
Thanks. In the past you discussed that moderation of exchange coverage and volumes could take place over a couple of years rather than all of it occurring in 2026. Based on what you observed this year and the larger headwind you faced, do you still think that is a reasonable planning assumption? Do you think there is any change to the way dynamics around coverage transitions and volume could look versus this year? Thank you.
As we think about attrition rates for the exchanges in 2027, we believe it is reasonable at this point to estimate that the loss of coverage will be less than 2026, even with premium increases we are starting to see. This estimation assumes that core premium tax credits remain central to the Affordable Care Act with no new enhanced premium support. Clearly, other policy or market changes could alter this view, but at this time we expect attrition to normalize and be less in 2027 than in 2026.
Our next question comes from the line of Andrew Mok with Barclays. Your line is open.
Hi. Good morning. Can you clarify how many quarters' worth of Florida DPP were recognized in the quarter itself? Also clarify whether the retroactive payment that offset the benefit in Q2 was included in the initial guidance? And relatedly, can you share what line of sight you have into the approval of Florida for fiscal year 2026 given the decision to recognize it in Q2 results?
Sure. To set context, we recognized $400 million in incremental net benefit from state supplemental payments in the second quarter. That included $540 million incremental net benefit related to the recently approved Florida program covering October 1, 2024 to June 30, 2026—which is 21 months of benefit—booked into the second quarter. The Florida benefit was partially netted down in the quarter because there were some retro payments in the second quarter of 2025. Specifically on Florida, we accrued benefit for the 10/01/2025 through 06/30/2026 period. Given that the Florida program is long standing and this approval was an enhancement to that program, and because the state submitted the fiscal year 2026 program for pre-approval, we felt comfortable making that accrual. As we moved through July we began receiving cash against that approval and feel good about its status. Our guidance also implies an accrual for the fourth quarter of 2026 as part of our overall guidance for the year.
Our next question comes from the line of Ryan Langston with TD Cowen. Your line is open.
Great. Sorry if I missed it. Hoping you could give us the monthly cadence of surgical and nonsurgical volumes in the second quarter. Also, the proposed OPPS rule for 2027 appears to be a nice tailwind for HCA and for-profits in general if it holds in final form. How do you view the proposal? Thank you.
We do not comment on month-by-month progression within a quarter, so I will pause on that one.
On the proposed rules, both inpatient and outpatient proposed updates, we are generally pleased with the proposed payment updates and view them as positive in aggregate, particularly the outpatient rule. Of course, they are proposed and need to become final, so we are monitoring that process.
Again, short-term month-to-month changes can be hard to interpret and you need longer runs to gauge trends. That is why we don't provide month-by-month commentary.
Our next question comes from the line of Scott Fidel with Goldman Sachs. Your line is open.
Samuel, I'd be interested in HCA's perspective on the hyperscaling dynamic around IDR claims from the No Surprises Act. Payers are discussing this as a significant impact on overall medical cost trend, and CMS has released data. From HCA's perspective, how are you seeing this play out, given potential reimbursement pressure from payers who might try to offset costs by pressuring hospitals who may not be involved in the IDR process? What's the overall effect on US healthcare costs?
Thanks for the question. I'll give some context on our philosophy with payers. Largely, we are an in-network participating provider across our facilities. There are a few one-off situations with provider-owned health plans where we do not participate, and a few other commercial contracts outside of the exchanges that we do not participate in. Within the exchanges, roughly 80% to 85% of available payer contracts we participate in, and that's important to our strategy. With our acquisition of Valesco, we've integrated many hospital-based services into our contracts with reimbursement aligned to operate those services. As a company, very few accounts go through the IDR process. It happens at times with some exchange contracts where we don't participate or with a few commercial contracts that we don't participate in. We don't use the same methodology that has been widely debated across the industry. We have internal resources that work the process within Parallon with the payers following the protocols. I don't have a full view on the broader industry impact. Early-stage regulatory solutions often take time to settle and may require refinements to balance the process. We are hopeful in many cases we can secure contracts so we do not have to use IDR. But we are not as active in that process as some others, and our experience has been limited; we monitor developments and continue to manage relationships with payers accordingly.
Our next question comes from the line of Benjamin Rossi with JPMorgan. Your line is open.
Great. Good morning. Thanks for taking the question. I heard you are making some progress on professional fees. One of your peers called out elevated growth there, particularly for anesthesia and radiology. How did those trends move in Q2 across those two areas specifically? And how sensitive are subsidies to the current slowdown among elective surgical procedures? Thanks.
As I mentioned earlier, professional fees are about up 8.5% on a same facility basis for the prior-year quarter and about 10% year to date. We've come off of two prior years where pro fees were inflated as we dealt with hospital-based physician group pressures. With the Valesco acquisition and related integration, we've stabilized emergency room and hospital medicine physician components and are in better shape there. The components still elevated are anesthesia and radiology, and those are primarily driving the 8.5% growth in the prior-year quarter. We continue to work on both lines using our playbook—people, process, and technology. Field management teams and our clinical services group are working diligently. We have stabilized trends somewhat but anesthesia and radiology remain above inflationary levels.
Our next question comes from the line of Sarah James with Cantor Fitzgerald. Your line is open.
Thank you. On the uninsured growth versus Medicaid conversions, can you talk a bit about what your conversion assumption was versus where it landed, and what's specifically weakening in Texas?
The right way to profile this is that about 80% of uninsured growth is coming from the one-for-one migration out of the exchanges, and about 20% of the uninsured growth versus prior year is coming from a slowdown in Medicaid conversions. The slowdown in conversions is driven by a couple of components. First, applications for emergency Medicaid—often from undocumented individuals—are down, which reduces that source of Medicaid conversions. Second, among people who are eligible, we are seeing fewer qualifying conversions overall as part of the self-pay dynamic. Texas has felt the brunt of these dynamics more than other states, so the conversion slowdown there is more pronounced. Those are the main drivers.
I think we have time for one more question.
Thank you. Our final question comes from the line of Kevin Fischbeck with Bank of America. Your line is open.
Thanks. I wanted more color on the building blocks to the volume and guidance change. You lowered overall EBITDA by about $250 million and raised the supplemental payments number by $550 million, so it looks like the exchange impact was increased by about $800 million and 50% was due to the exchanges. It isn't clear to me what the other $450 million of guidance reduction is for. Can you elaborate?
Kevin, I tried to address this in my prepared remarks. As we've gone through the first six months and updated our guide, if you take into account the change in assumptions related to the exchange impacts and the change related to supplemental payments, you're left with roughly $500 million of reduction to guidance beyond those adjustments. That reflects moderation in our growth rates this year compared to 2024 and 2025 and compared to where we started the year with initial guidance. When you build it up from the bottom and consider operating performance, the updated guidance is more in line with our long-term adjusted EBITDA growth target of 4% to 6%, potentially near the top end for the full year. In short, initial guidance was a bit above our long-term growth trajectory and current guidance is closer to that long-term algorithm based on what we've learned in the first half of the year.
Thanks. Bye.
That concludes our question-and-answer session.
I will now turn the conference back over to Mr. Frank George Morgan for closing remarks. Abby, thank you for your help today, and thanks, everyone, for joining us on the call. Hope you have a great weekend and a good afternoon. If you have questions, please reach out. Have a great weekend. Thank you.
Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.