HCA's EBITDA growth this year rests on state payments it expects to shrink next year

HCA Healthcare's adjusted EBITDA, its measure of earnings before interest, tax, depreciation and amortisation, rose 1.2% in the September 2026 quarter. Management put the underlying, or "core", growth at about 10%. Both figures hold up, and the distance between them explains the company's year: why it now expects to finish this year in the upper half of its guidance, and why its first look at next year is a flat one.

The distance is a change in who pays. People who lost subsidised plans on the health insurance exchanges still come to HCA's hospitals, but more of them now arrive uninsured, and the company estimates that shift cost about $400 million of adjusted EBITDA in the quarter. Pulling the other way, state Medicaid supplemental payments, which states pay hospitals on top of ordinary Medicaid rates, added about $50 million more than a year earlier. Adding back the first and taking out the second, calculated from the reported figures, gives growth of 10.3%, in line with management's description. The exchange loss on its own was worth about the same share of last year's quarterly EBITDA, so it took back the whole underlying gain.

The exchange estimate has grown through the year. HCA raised it in July from the range it gave in January, and now expects the cost to land at or slightly above the top of the July range. The supplemental line moved the other way. In January HCA planned for these payments to shrink from the year before; it now expects a gain of $600 million to $800 million. Adjusted EBITDA guidance was lowered in July and the company now expects results in the upper half of that reduced range. Management said the extra state money, about $300 million more than its July estimate, more than covered a $100 million to $200 million rise in the exchange estimate, and that with core growth this put the year in the upper half of its range.

The nine-month figures show how much rests on it. Adjusted EBITDA for the first nine months rose 2.6%. HCA said it had recognised $650 million of incremental supplemental benefit by the end of September; without it, calculated from the reported figures, nine-month adjusted EBITDA would have been 3.1% lower than a year earlier. Much of that money was not a payment for this year's work. Chief executive Samuel Hazen said the programmes approved this year reimbursed HCA for care delivered in earlier years.

That is why the preliminary view of 2027 is flat. Hazen said HCA expects $550 million to $650 million less in supplemental net benefit next year, because the 2026 approvals covered earlier periods, and that "we anticipate our earnings in 2027 will be generally consistent with 2026." He also said fewer people should lose exchange coverage next year than this year, so the drag that cancelled the third quarter's underlying growth is expected to ease rather than end. When analysts asked how large the remaining exchange drag and next year's cost savings would be, chief financial officer Mike Marks said the company would give further guidance on its fourth-quarter call in January.

There is a fair case on the other side. The supplemental payments reimburse care HCA did provide, and the company's guidance leaves out any further state approvals, which could add more. The underlying business kept growing in the quarter even as the exchange shift worked against it, and that drag is expected to be smaller next year. What the third quarter settles is narrower: this year's reported growth came from money that the company itself expects to be largely absent next year. The January guidance will put numbers on the pieces it held back this week.