HCA Healthcare EPS Jumps 28.8% to $8.01, Launches $10B Buyback
HCA Healthcare’s Q4 adjusted EPS of $8.01 (+28.8% yoy) topped the $7.45 estimate on 6.7% revenue growth to $19.51B and 21.1% margin. The company launched a $10B buyback, forecast 2026 EPS of $29.10-31.50 and $76.5-80B revenue, but at ~16x earnings valuation and Medicaid and ACA policy shifts, margin gains stall.
1. Strong Q4 Financial Performance
In the fourth quarter of 2025, HCA Healthcare reported adjusted earnings per share of $8.01, marking a 28.8% increase compared with the prior year. Revenue rose 6.7% year over year to $19.51 billion, driven by a 2.5% increase in equivalent admissions and a 2.9% uptick in revenue per equivalent admission. Adjusted EBITDA climbed 10.8% to $4.11 billion, while the adjusted EBITDA margin expanded to 21.1% from 20.3% a year earlier. Same-facility admissions grew 2.4%, reflecting sustained demand across both inpatient and outpatient services.
2. Outlook for Fiscal Year 2026
HCA issued guidance for fiscal 2026 projecting adjusted earnings in a range of $29.10 to $31.50 per share, comfortably above the consensus forecast of $27.70. Revenue is expected to reach between $76.5 billion and $80.0 billion, compared with Wall Street’s projection of $75.74 billion. Management highlighted anticipated benefits from operating cost efficiencies, volume growth in ambulatory care centers and emergency services, and modest pricing gains, while noting continuing investment in technology and facility expansions.
3. Capital Allocation and Share Repurchase Program
During the quarter, HCA deployed $2.5 billion toward its ongoing share repurchase program, bringing total buybacks for the full year to approximately $10 billion. The company has reduced its total share count by more than 5% over the past twelve months. HCA also increased its quarterly dividend by 12%, underscoring management’s commitment to returning excess cash to shareholders. Free cash flow conversion remained robust at nearly 100% of net income.
4. Valuation Considerations and Policy Risks
Despite strong earnings growth and margin expansion, HCA’s valuation now stands at roughly 16 times consensus earnings, with a free cash flow yield of about 6%. Analysts warn that peak margin benefits could be behind the company, as labor cost inflation and supply-cost pressures remain elevated. Potential changes to Medicaid reimbursement and Affordable Care Act subsidies pose downside risk to profitability. Investors will be watching for evidence that HCA can sustain operating leverage while navigating regulatory headwinds.