Q1 2025 HCA Healthcare Inc Earnings Call

<unk> and introductions I would like to turn the call over to Vice President of Investor Relations. Mr. Frank Morgan. Please go ahead Sir.

Speaker Change: Good morning, and welcome to everyone on today's call with me. This morning is our CEO, Sam Hazen and CFO, Mike Morris Salmon, Mike will provide some prepared remarks, and then we'll take questions.

Sam Hazen: I turn the call over to Sam Let me remind everyone that should today's call contains forward looking statements are based on management's current expectations numerous risks and 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.

Speaker Change: In our various SEC filings oldest.

Sam Hazen: All of this morning on this morning's call. We may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure.

Sam Hazen: A table, providing supplemental information on adjusted EBITDA and reconciling net income attributable to HCA Healthcare Inc. Is included in today's release. This mornings call is being recorded and a replay of the call will be available later today with that I'll now turn the call over to Sam.

Sam Hazen: Good morning, and thank you for joining the call the solid fundamentals, we have seen in our business over the past several quarters.

Sam Hazen: Continued into the first quarter of 2025.

Sam Hazen: This momentum generated strong financial results that were driven by broad based volume growth improved payer mix and better operating margin.

Sam Hazen: As we look to the rest of the year, we remain encouraged by our performance.

Sam Hazen: The overall backdrop of growing demand for health care services.

The increased investments we have made across the company to serve our communities better.

Sam Hazen: The people of HCA healthcare also continued to deliver for our patients and key nonfinancial metrics, including improved quality outcomes.

Sam Hazen: More efficient emergency room services, which have accelerated time to discharge and increased satisfaction and finally, better inpatient capacity management with reduced length of stay.

Speaker Change: Want to thank my colleagues for their professionalism and their dedication to our mission and the great outcomes. They produce for our company to start the year.

Speaker Change: As compared to the prior year diluted earnings per share as adjusted increased more than 20% in the first quarter to $6 45.

Speaker Change: Same facility volumes, even with the leap year effect were favorable and in line with our expectations.

Speaker Change: Inpatient admissions grew two 6% year over year.

Speaker Change: Equivalent admissions grew two 8%.

Speaker Change: An emergency room visits increased 4%.

Speaker Change: Most of our other volume categories, including cardiac procedures and rehab admissions also had solid growth in the quarter.

Speaker Change: Surgical volumes across the company were mixed.

Speaker Change: Inpatient surgeries were slightly up and outpatient cases were down.

Speaker Change: Same facility revenue grew almost 6%.

Speaker Change: The volume increases I just mentioned.

Speaker Change: Coupled with approximately 3% higher revenue per equivalent admission drove this growth.

Speaker Change: We continued to make progress on our cost agenda operating costs across most categories were in line with our expectations and the operating margin improved on a year over year basis.

Speaker Change: As part of our network development plan, we used our capital spending to increase the number of facilities or sites of care by three 3% to around 2750, and we added approximately 2% to our inpatient bed capacity.

Speaker Change: Inpatient occupancy in the quarter was 77% as compared to 75% last year.

Speaker Change: As we move through the remainder of the year, we will focus on maintaining our operational discipline, while continuing to invest appropriately in our strategic agenda.

Speaker Change: We believe this balanced approach should position the company favorably to meet our objectives.

Speaker Change: Before I finish my comments, let me address the current federal policy environment, which I know is top of mind.

Speaker Change: We are in a very fluid situation, while we have a general sense for the new administration's stated priorities, we do not have any specifics.

Speaker Change: It is unclear how these efforts might be carried out and what effects. They may have on our business.

Speaker Change: We are very engaged in advocacy as it relates to health policy.

Speaker Change: Our general approach is to support reasonable reforms.

Speaker Change: However, we do not support reforms that harm coverage for families or individuals nor.

Speaker Change: Nor do we support policies that compromise the ability for hospitals across the country to care for people in their times of utmost need.

Speaker Change: I know you would like us to size the potential impacts of health policy risk and now tariff risks, but we are not comfortable with providing estimates at this time.

Speaker Change: We just do not have enough insight into what might happen.

Speaker Change: When we gain a better understanding we will share more information as part of our quarterly earnings process.

Speaker Change: As you would expect we are developing plans in the event, we faced adverse impacts.

Speaker Change: Our planning draws from the experiences we had during the COVID-19 pandemic.

Speaker Change: And considers both adjustments to operations.

Speaker Change: And how we may utilize the flexibility our cash flow and balance sheet provide us.

Speaker Change: As part of this planning process, we will maintain a long term horizon and move forward with a sense of calm steadiness in confidence.

Speaker Change: We believe we can use our financial strength Mitch.

Speaker Change: Mission oriented culture.

Mike: Can do attitude of our people to navigate through this uncertain period and deliver the results our stakeholders deserve with that I will turn the call to Mike for more detail on the quarter.

Mike: Well, thank you Sam and good morning, everyone. We are pleased with the results of the quarter, which highlights the continued momentum of the company.

Mike: The strength of our operating performance.

Mike: <unk> covered our volume and revenue performance. So let me add a few notes on payroll.

Mike: Payer mix remains strong with same facility managed care equivalent admissions were up five 4% compared to the prior year quarter.

Mike: As expected Medicaid volumes began to flatten as the Redetermination process.

With a same facility equivalent admissions declined one 4% to prior year core.

Mike: And given the strong enrollment growth in the exchanges our same facility equivalent exchange admissions increased 22, 4% over prior year.

Mike: Adjusted EBITDA margin improved 110 basis points compared to the prior year quarter.

Driven by operating leverage from our volume growth and strong cost management performance in the quarter.

Mike: Salaries and benefits as a percent of revenue improved 80 basis points suppliers improved 30 basis points and other operating expenses were basically flat to prior year quarter.

Mike: Contract Labor improved nine 3% from prior year quarter and represented four 4% total labor force in the first quarter.

Mike: Compared to five 1% in the first quarter of 2024.

Mike: Same facility professional fee costs increased 11% from the prior year quarter and were approximately flat sequentially compared to the fourth quarter of 2024.

Mike: Adjusted EBITDA grew 11, 3% over the prior year quarter.

Mike: You will recall that our guidance assumes the impacts of the 2024 hurricanes with offset each other in 2025 and not produce a tailwind for us.

Mike: This is what played out in the first quarter earnings were flat year over year, and our hurricane impacted markets in the first quarter of 2025 compared to the prior year quarter.

Speaker Change: I want to remind everyone that after considering Medicaid state supplemental payments and related provider taxes.

Speaker Change: Total Medicaid reimbursement does not cover our cost of caring for Medicaid patients.

Speaker Change: Considering Medicaid state supplemental payments and related provider taxes in isolation.

Speaker Change: We saw an $80 million increase in net benefits in the first quarter of 2020 compared to the prior year quarter due primarily to a reconciliation payments and a program accrual.

Speaker Change: Moving to capital allocation, we continue to deploy a balanced strategy of allocating capital for long term value creation.

Considering Medicaid state supplemental payments and related provider caps.

Total Medicaid reimbursement does not cover our cost of caring for Medicaid patients.

Speaker Change: Cash flow from operations was 165 billion in the quarter.

Speaker Change: There are a few factors that drove our cash flow from operations down just over a year.

Considering Medicaid state supplemental payments and related provider taxes in isolation.

Speaker Change: All of which related to working capital changes that are tiny in nature.

We saw an $80 million increase in net benefits in the first quarter of 2020 compared to the prior year quarter.

Speaker Change: Capital allocation in the first quarter of 2025 included 991 million in capital expenditures.

Due primarily to a reconciliation payments and a program accrual.

Speaker Change: $2 5 billion in share repurchases and $180 million in dividends.

Moving to capital allocation, we continue to deploy a balanced strategy of allocating capital for long term value creation.

Speaker Change: We also paid 227 million for acquisitions with the close of the transactions for Catholic Medical Center in Manchester, New Hampshire, and Lehigh Medical Center in Fort Myers, Florida area.

Cash flow from operations was 165 billion in the quarter.

There are a few factors that drove our cash flow from operations down just over a year.

Speaker Change: Lastly, we received $161 million in proceeds from the sale of assets.

All of which relate to working capital changes that are tiny in nature.

Speaker Change: Similarly, driven by the sale of regional Medical Center in San Jose.

Capital allocation in the first quarter of 2025 included 991 million in capital expenditures.

Speaker Change: This divestiture was an important component of our portfolio optimization.

Speaker Change: It was good for the community and it will be accretive to us yet.

$2 5 billion in share repurchases and $180 million in dividend.

Speaker Change: Our debt to adjusted EBITDA leverage remains at the lower half of our stated target range and we believe our balance sheet is strong and well positioned for the future.

We also paid 227 million for acquisitions with the close of the transactions for Catholic Medical Center in Manchester, New Hampshire, and lead how medical center in the Fort Myers, Florida area.

Speaker Change: As noted in our release, we are reaffirming our guidance ranges for the full year 2025.

Lastly, we received 161 million in proceeds from the sale of assets, primarily driven by the sale of regional Medical Center in San Jose.

Frank: I will now hand, the call back to Frank working for questions. Thank.

Speaker Change: Thank you Mike as a reminder, please limit yourself to one question. So that we might give it any as possible in the case of an opportunity to ask the question. Andy you May now give instructions to those who like to ask the question.

This divestiture was an important component of our portfolio optimization.

It was good for the community.

Frank: Thank you.

And it will be accretive tastes yet.

Speaker Change: While Dan and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.

Our debt to adjusted EBITDA leverage remains at the lower half of our stated target range.

And we believe our balance sheet is strong and well positioned for the future.

Frank: I would like to withdraw your question Press Star one a second time.

As noted in our release, we are reaffirming our guidance ranges for the full year of 2025.

Frank: If you are called upon to ask your question in or listening via speakerphone on your device. Please pick up your handset and ensure that your phone is not on mute when asking your question.

Now I'll hand, the call back to Frank working for lunch.

Thank you Mike as a reminder, please limit yourself to one question. So that we might give it any as possible at the end of Q2 the opportunity to ask the question. Andy you May now give instructions to those who like to ask a question.

Frank: Again, it is star one if you would like to join the queue.

Speaker Change: And your first question comes from the line of Ann Hynes with Mizuho Securities. Your line is open.

Speaker Change: Thank you if you have dialed in and would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

Ann Hynes: Hi, good morning.

Speaker Change: I know you reiterated guidance, but are there any major changes and assumptions embedded in that reiteration of guidance and with and that I know you talked about Sam in your prepared remarks that surgery is when the Max did.

Speaker Change: I would like to withdraw your question Press Star one a second time.

Speaker Change: If you are called upon to ask your question in or listening via speakerphone on your device. Please pickup your handset and ensure that your phone is not on mute when asking your question.

Speaker Change: Did you expect them kind of flat to down because of the tough compare due to leap year or were they actually worse than your expectations. Thanks.

Speaker Change: Again, it is star one if you would like to join the queue.

Speaker Change: Yeah.

Speaker Change: Let's start with guidance first and we'll talk about outpatient surgery and so if I think about it.

Speaker Change: And your first question comes from the line of Ann Hynes with Mizuho Securities. Your line is open.

Sam Hazen: As Sam noted in his commentary, we're really pleased with first quarter performance of the company. We continue to see solid volume growth revenue was in line with our expectations and as I noted, we had strong expense management in the quarter.

Ann Hynes: Hi, good morning.

Speaker Change: I know you reiterated guidance, but are there any major changes and assumptions embedded in that reiteration of guidance and with and that I know you talked about Sam in your prepared remarks that surgeries were mixed them did you expect them kind of flat to down because of the tough compare due to leap year or were they actually worse than your expectations.

Sam Hazen: As noted in our release, we did reaffirm guidance for 2020.

Sam Hazen: It's first quarter and really at this point in the year, we believe our guidance ranges continue to be appropriate.

Ann Hynes: Yeah.

Yeah.

Sam Hazen: For where we are certainly as we progress through the year. We will continue to update you on our subsequent earnings calls.

Ann Hynes: Let's start with guidance first and then we'll talk about outpatient surgery and so if I think about it.

Sam Hazen: Specifically to outpatient surgery.

As Sam noted in his commentary, we're really pleased with our first quarter performance of the company. We continue to see solid volume growth revenue was in line with our expectations and as I noted, we had strong expense management in the quarter.

Sam Hazen: We're really pleased in the first quarter with our outpatient revenue growth.

Sam Hazen: Which you take it in total grew at a rate a bit higher than our inpatient revenue.

Sam Hazen: Just as a reminder, we really categorize our outpatient revenue due to four key categories.

Ann Hynes: As noted in our release, we did reaffirm guidance for 2020.

Sam Hazen: Emergency services outpatient surgery, which include both hospital based and our ambulatory surgery Center platform.

Ann Hynes: It's first quarter and really at this point in the year, we believe our guidance ranges continue to be appropriate.

Inventory things like our physician clinics in our urgent care clinics and other hospital based services by cardiology diagnostics and observations.

Ann Hynes: Or where are we all certainly as we progress through the year. We will continue to update you on our subsequent earnings calls.

Ann Hynes: Specifically to outpatient surgery, we're really pleased in the first quarter with our outpatient revenue growth.

Sam Hazen: All four of our outpatient categories had revenue growth over the prior year quarter.

Sam Hazen: On outpatient surgery, specifically, we continue to see a slight decline in case volumes driven by lower acuity cases, and by Medicaid and self pay.

Ann Hynes: Which you take it in total grew at a rate a bit higher than our inpatient revenue.

Ann Hynes: Just as a reminder, we really categorize our outpatient revenues into four key areas.

Sam Hazen: However, we had good growth in net revenue and earnings in our outpatient surgery business overall inclusive of both hospital and the ambulatory surgery center categories.

The emergency services outpatient surgery, which include both hospital base and our ambulatory surgery Center platform.

Ann Hynes: Ambulatory things like our physician clinics in our urgent care clinics and other hospital based services like cardiology diagnostics an observation.

Sam Hazen: I'll finish with just note that the leap year effect did impact the stated volume declines if you think about outpatient surgery at a two 1% same facility decline on a per business day basis, that's about a 1% decline.

Ann Hynes: All four of our outpatient categories had revenue growth over the prior year quarter.

Ann Hynes: On outpatient surgeries, specifically, we continue to see a slight decline in case volumes driven by lower acuity cases, and by Medicaid and self help.

Sam Hazen: And inpatient like would be up about 1% per business day. So.

Sam Hazen: To be a little softer and then we had expected but the first quarter is always a difficult to predict surgical period, because typically the fourth quarter is active and so you're dealing with respiratory implications in new deductibles and co pays and so forth, but overall we had.

Ann Hynes: However, we had good growth in net revenue and earnings in our outpatient surgery business overall inclusive of both hospital and the ambulatory surgery center categories.

Ann Hynes: Finishing just note that the leap year effect did impact the stated volume declines if you think about outpatient surgery at a two 1% same facility decline on a per business day basis, that's about a 1% decline.

Sam Hazen: Solid volume activity across the company and it was broad based across our service categories. As we mentioned our cardiac activity on both surgeries and procedures were strong inpatient and outpatient rehabilitation as I've mentioned in my prepared comments were strong up over 4% I think on a same store.

Ann Hynes: Inpatient like would be up about 1% per business day. So.

Ann Hynes: Maybe a little softer and then we had expected but the first quarter is always a difficult to predict surgical period, because typically the fourth quarter is active and so you're dealing with respiratory implications and new deductibles and co pays and so forth, but overall we had.

Sam Hazen: <unk>.

Sam Hazen: Behavioral health was down but behavioral health was down because we had re purpose quite a bit of the supply beds over the years and re purpose for med surge in many instances.

Sam Hazen: So that was intentional.

Ann Hynes: Solid volume and activity across the company and it was broad based across our service categories. As we mentioned our cardiac activity on both surgeries and procedures were strong inpatient and outpatient rehabilitation as I've mentioned in my prepared comments were strong up over 4% I think of the same store.

Sam Hazen: In some facilities.

Sam Hazen: Obstetrics volumes were up slightly even with the business day decline and one would think that has an influence but it does so overall, we're pleased with our volumes.

Sam Hazen: And we're encouraged by the market share gains that we're seeing across our company and we believe we are doing the right things within each of our networks to develop them to meet the needs of the patients in the community.

Ann Hynes: Basis.

Ann Hynes: Gabriel Health was down but behavioral health was down because we had re purpose quite a bit of a supply beds over the years and re purpose. So for med surge in many instances and so that was intentional in some facilities.

Sam Hazen: Great. Thanks for the detail.

Speaker Change: And your next question comes from the line of Peter Chickering with Deutsche Bank. Your line is open.

Ann Hynes: Obstetrics volumes were up slightly either with the business day decline and one would think that has an influence but it does so overall, we were pleased with our volumes.

Sam Hazen: Hey.

Peter Chickering: Good morning, guys and thanks for taking my questions and nice job on the quarter.

Sam Hazen: I guess.

Sam Hazen: Going to get some deleverage this quarter pretty pretty extraordinary.

Ann Hynes: And.

Ann Hynes: And we're encouraged by the market share gains that we're seeing across our company and we believe we are doing the right things within each of our networks to develop them to meet the needs of the patients in the community.

Sam Hazen: The <unk> growth.

Sam Hazen: The growth you saw.

Sam Hazen: Year over year I guess.

Speaker Change: How did you guys forget that much leverage this quarter.

Ann Hynes: Great. Thanks for the detail.

Sam Hazen: And going forward.

Ann Hynes: Okay.

Sam Hazen: That that productivity.

Speaker Change: And your next question comes from the line of Peter Chickering with Deutsche Bank. Your line is open.

Speaker Change: Are you seeing turnover increase as you're sort of getting that level of productivity are you sort of behind the hiring curve. How should we think about that level of productivity going forward after such a huge growth.

Ann Hynes: Hey.

Speaker Change: Good morning, guys and thanks for taking my questions and nice job on the quarter.

Ann Hynes: I guess, yes.

Ann Hynes: Going to get some deleverage this quarter pretty pretty extraordinary.

Sam Hazen: Thanks.

Sam Hazen: Okay. Peter This is Sam I'm not sure I understood the question completely.

Ann Hynes: The <unk> growth.

Ann Hynes: Growth you saw year over year I guess.

Speaker Change: Let me speak to the operating leverage.

Ann Hynes: How did you guys forget that much leverage this quarter.

Speaker Change: And I think thats, what youre, referring to I mean.

Ann Hynes: And going forward.

Ann Hynes: That that productivity.

Speaker Change: Fundamentally our business is a fixed cost business, we said that.

Ann Hynes: Are you seeing turnover increase as you're sort of getting that level of productivity are you sort of behind the hiring curve I mean, how should we think about that level of productivity going forward after such a huge growth.

Speaker Change: Over time and the more volume we can push through the organization the more operating leverage we create the more contribution margin that generates and it helps our overall profitability and margins and we have regained as we mentioned last year our ability.

Ann Hynes: Thanks.

Sam: Okay. Peter This is Sam I'm not sure I understood the question completely.

Speaker Change: Let me speak to the operating leverage.

Speaker Change: <unk> to create operating leverage that shows up in labor costs. It shows up in some of our other operating expense categories.

Sam: I think thats, what youre, referring to I mean.

Sam: Fundamentally our business is a fixed cost business, we said that.

Speaker Change: And we're able to do that again with a very mindful approach to our expenses and then at the same time.

Sam: Over time and the more volume we can push through the organization the more operating leverage we create the more contribution margin that generates and it helps our overall profitability and margins and we have regained as we mentioned last year our ability.

Speaker Change: Using more of our asset base to absorb the volumes with respect to our human resource agenda, we've continued to progress across.

Speaker Change: Across the company our turnover.

Speaker Change: Both nursing and non nursing is less than it was year over year, our contract labor utilization is down year over year overall engagement with our most recent engagement surveys with our employees was at a high watermark for us. So we're very encouraged about what our humans.

Sam: To create operating leverage that shows up.

Sam: And labor costs it shows up in some of our other operating expense categories.

Sam: We're able to do that again with a very mindful approach to our expenses and then at the same time, you're using more of our asset base to absorb the volumes with respect to our human resource agenda, we've continued to progress.

Speaker Change: Our resource and operating teams are doing to create an environment, where our people can succeed.

Speaker Change: And deliver the outcomes that our patients deserve.

Sam: Across the company our turnover.

Speaker Change: We believe we can continue that that the labor market in general is stable and we have initiatives inside the organization and then outside if you will with our Galen school of nursing and other workforce development initiatives to deliver the people that we need to see.

Sam: Both nursing and non nursing is less than it was year over year, our contract labor utilization is down year over year overall engagement with our most recent engagement surveys with our employees was at a high watermark for us. So we're very encouraged about what our human.

Speaker Change: The demand the facility side as I mentioned in my comments is being satisfied by our capital spending and we're adding to our networks.

Sam: Resource and operating teams are doing to create an environment, where our people can succeed.

Sam: And deliver the outcomes that our patients deserve.

Speaker Change: Very deliberately on that front and then we're using our workforce development.

Sam: We believe we can continue that that the labor market in general.

Speaker Change: Our engagement in other HR initiatives to deal with the people side of that so we're pretty encouraged BOP all aspects of our operations. Our teams are doing a wonderful job in dealing with the.

Sam: Is stable and we have initiatives inside the organization and outside if you will with our Galen school of nursing and other workforce development initiatives to deliver the people that we need to serve the demand the facility side as I mentioned in my comments as being.

Speaker Change: The volume and translating that as I mentioned to quality outcomes efficiency and a great place to work for our employees.

Speaker Change: So with the SBA at this level.

Sam: Satisfied by our capital spending and we're adding to our networks very deliberately on that front and then we're using our workforce development, our engagement and other HR initiatives to deal with the people side of that so we're pretty encouraged BOP all aspects of our operations. Our teams are doing a wonderful.

Speaker Change: $43 six I guess since you've IPO, we havent seen it could slow as your occupancy keeps on increasing is it fair to think that December can keep getting better to your point on the fixed cost leverage.

Speaker Change: Well.

Speaker Change: I think.

Speaker Change: Generally speaking, yes, it can improve as we deliver more volumes on the asset base that we have.

Sam: Job in dealing with the.

Sam: The volume and translating that as I mentioned to quality outcomes efficiency and a great place to work for our employees.

Speaker Change: And we will continue to use technology, we use our benchmarking and other tools to find ways to create efficiencies.

Sam: So with the SBA at this level.

Speaker Change: And we feel that we're in a pretty good spot in that we can leverage again the.

Sam: $43 six I guess since your IPO, we haven't seen that slow as your occupancy keeps on increasing is it fair to think that December can keep getting better to your point on the fixed cost leverage.

Speaker Change: Fixed costs that we have in our system to drive efficiencies, if we can grow the volumes.

Sam: Well.

Speaker Change: Thanks, so much.

Sam: I think.

Sam: Generally speaking, yes, it can improve as we deliver more volumes on the asset base that we have.

AJ Rice: And your next question comes from the line of AJ Rice with UBS. Your line is open.

Speaker Change: Hi, everybody.

Sam: And we will continue to use technology, we use our benchmarking and other tools to find ways to create efficiencies.

Speaker Change: The revenue per adjusted admission up two 9% I think.

Speaker Change: It was strong, especially with surgeries Dol can you parse out a little bit more whether that was year to year improvement.

Sam: And we feel.

Sam: That we're in a pretty good spot in that we can leverage again.

Speaker Change: DVD programs rate updates generally commercial mix or anything and then maybe just broadly commenting on what youre seeing in contracting with managed care.

Sam: The fixed costs that we have in our system to drive efficiencies, if we can grow the volumes.

Sam: Thanks, so much.

Sam: Yeah.

Speaker Change: And your next question comes from the line of a J rice with UBS. Your line is open.

Speaker Change: As the debate in Washington, having any impact on.

Speaker Change: The discussions with managed care.

Sam: Yeah.

Speaker Change: Hi, everybody.

Mike: Hey, a J. Thanks for the question this is Mike.

Sam: The revenue per adjusted admission up two 9% I think.

Speaker Change: When I think about our net revenue per equivalent admissions.

Sam: It was strong, especially with surgeries.

Mike: First thing I would call a spacex.

Speaker Change: Can you parse out a little bit more whether that was year over year improvement in <unk>.

Mike: We continue to have favorable payer mix trends as I noted in my opening comments.

Speaker Change: D V D programs rate updates generally commercial mix or anything and then maybe just broadly commenting on what youre seeing in contracting with managed care.

Mike: You know acuity continues to be good in that regard as well.

Mike: As I mentioned on the outpatient surgery comment.

We actually had a little more outpatient revenue growth than we did on the inpatient side and even on outpatient surgery.

Speaker Change: As the debate in Washington, having any impact on the.

Speaker Change: The the discussions with managed care.

Mike: The case decline that we saw was really driven by lower acuity cases.

Mike: Hey, a J. Thanks for the question this is Mike.

Mike: And when I think about our net revenue per equivalent admissions you know the first thing I would call out specifics, we continue to have favorable payer mix trends as I noted in my opening comments.

Mike: And from a payer mix perspective on the outpatient surgery side continues to be driven almost entirely by medicate yourself, so that payer mix influences on both the inpatient and outpatient side. So.

Mike: Acuity continues to be good in that regard as well.

Mike: So generally speaking I think we're in good shape on net revenue per equivalent admission in the quarter and we were pleased with the performance.

Mike: I think as I mentioned on the outpatient surgery comment.

Mike: We actually had a little more outpatient revenue growth than we did on the inpatient side and even on outpatient surgery.

Mike: In that way.

Speaker Change: On the payer side and I'll start Sam U.

Speaker Change: Please include but.

Mike: Our case decline that we saw was really driven by lower acuity cases.

Speaker Change: Over 90% contracted for 2025 as you would expect we're over 75% contracted for 2026 and call. It 25% contracted for 2027 at rates that are really similar to the last couple of years.

Mike: And from a payer mix perspective.

Mike: Surgery side continues to be driven almost entirely by medicate yourself, so that payer mix influences on both the inpatient and the outpatient side.

Speaker Change: And.

Mike: So generally speaking I think we're in good shape on net revenue per equivalent admission in the quarter and we were pleased with.

Speaker Change: In context of our targets.

Speaker Change: We're also pleased with our contracting cycle.

Our access to laws with Payors.

Mike: In that way.

Mike: On the payer side and then I'll start saying you are please.

Speaker Change: Really higher than that at almost ever been both on the commercial side and on the exchange that so.

Mike: These include but we're over 90% contracted for 2025 as you would expect we're over 75% contracted for 2026 and call it 25% contracted for 2027.

Speaker Change: Our work with our payer partners continues contracting.

Speaker Change: Cycles continue to be productive.

Speaker Change: And I think we're off to a good start this year in terms of our net revenue per equivalent admission and Mike.

Mike: Rates that are really similar to the last couple of years.

Sam: This is Sam a J I think a couple of points are relevant here.

Mike: And.

Mike: In context of our targets.

Sam: Our inpatient surgeries as a percent of overall admissions was down 50 basis points, that's not meaningful in the overall revenue equation I mean, obviously, we'd rather it would be higher than lower but it's only down 50 basis points or critical care admissions were at a really good position as it relates to tone.

Mike: We're also pleased with our contracting cycle and our access to lives with Payors.

Mike: Really higher than that at almost ever been both on the commercial side and on the exchange side. So.

Mike: Our work with our payer partners continues contract.

Mike: The cycles continue to be productive.

Sam: It'll admissions. So I think there are other aspects to acuity of their overall case mix I think.

Mike: And I think we're off to a good start this year in terms of our net revenue per equivalent admission and Mike. This.

Sam: Modestly up or so all of that suggests that we still have the acuity within the larger population of patients.

Sam: This is Sam a J I think a couple of points are relevant here.

Mike: Inpatient surgeries as a percent of overall admissions was down 50 basis points, that's not meaningful in the overall revenue equation I mean, obviously, we'd rather it would be higher than lower but it's only down 50 basis points or critical care admissions were at a really good position as it relates to total.

Sam: With respect to the managed care contracting.

Sam: Overall managed care positioning with respect to the contracts that we participate in has improved on a year over year basis.

Sam: This year, we have two markets, where we have added a very important contract to our overall portfolio or participation.

Mike: Admissions. So I think there are other aspects to acuity of their overall case mix I think.

Sam: In Denver, we are now a participating provider broadly with Kaiser health plan in the Denver, Colorado market. That's a very encouraging development and then in Chattanooga, Tennessee with Blue Cross of Tennessee, We have advanced our position with one of their products. So we've improved globally.

Mike: <unk> <unk> or.

Mike: So all of that suggests that we still have the acuity within the larger population of patients.

Mike: With respect to the managed care contracting.

Mike: Managed care positioning with respect to the contracts that we participate in has improved on a year over year basis.

Sam: Our overall positioning for.

Mike: This year, we have two markets, where we have added a very important contract to our overall portfolio or participation.

Sam: Access to live and that's played out at our Hix and exchange relationships as well and then obviously with Medicare advantage, we continue to build capabilities there to support the Medicare advantage payers.

Mike: In Denver, we are now a participating provider broadly with Kaiser health plan in the Denver, Colorado market. That's a very encouraging development and then in Chattanooga, Tennessee with Blue Cross of Tennessee, We have advanced our position with one of their products. So we need the improved globally.

Sam: As appropriate so those are two important points.

Sam: They don't want to bring up in addition to what Mike said.

Sam: Okay, great. Thanks, a lot.

Speaker Change: And your next question comes from the line of Whit Mayo with Leerink partners. Your line is open.

Mike: Our overall positioning for.

Speaker Change: Hey, Thanks. Good morning, just was wondering if you guys are detected any changes with them a plan behavior or denials any dispute resolution resolution changes and any changes on length of stay.

Mike: Access to live.

Mike: And that's played out in our hix and.

Mike: Exchange relationships as well and then obviously with Medicare advantage, we continue to build capabilities there to support the Medicare advantage payers as appropriate. So those are two important points.

Speaker Change: Hey, Whit let.

Speaker Change: Let me first kind of talk about the Medicare advantage in context to the.

Speaker Change: A J that I wanted to bring up in addition to what Mike said.

Speaker Change: Kind of the two midnight rule and as we noted really on the fourth quarter call, we really did not see.

Mike: Okay, great. Thanks, a lot.

Whit Mayo: And your next question comes from the line of Whit Mayo with Leerink partners. Your line is open.

Speaker Change: Any additional movement from observation to inpatient status related to the adoption of the two midnight rule as we move through first quarter of 2025 that was our expectation and that's really what we.

Whit Mayo: Hey, Thanks. Good morning, just was wondering if you guys are detected any changes with them a planned behavior or denials any dispute resolution resolution changes and any changes on length of stay.

Speaker Change: We saw Medicare advantage is now about 57% of our total Medicare admissions.

Whit Mayo: Hey, Whit.

Speaker Change: A couple of notes on the Medicare advantage compared to traditional to your question one would be that our Medicare advantage observation mix is still.

Whit Mayo: Let me first kind of talk about the Medicare advantage in context to it.

Whit Mayo: The two midnight rule.

Whit Mayo: As we noted really on the fourth quarter call, we really did not see.

Speaker Change: 15% higher than our traditional Medicare observation mix.

Whit Mayo: Any additional movement from observation to inpatient status related to the adoption of the two midnight rule as we move through first quarter of 2025 that was our expectation and that's really what.

Speaker Change: Thats pretty steady at this point.

Speaker Change: Medicare advantage continues to run a bit harder.

Speaker Change: Little higher length of stay in traditional Medicare as well.

Speaker Change: On on dispute resolution and I'll go broadly here and not just met.

Whit Mayo: We saw Medicare advantage is now about 57% of our total Medicare admissions.

Speaker Change: Medicare advantage, but there continues to be activity as you would expect in denials.

Whit Mayo: A couple of notes on the Medicare advantage compared to traditional to your question one would be that.

Speaker Change: Your payments broadly with our payer partners.

Whit Mayo: Our Medicare advantage observation mix is still about 15% higher than our traditional Medicare observation mix and.

Speaker Change: Our efforts that we have invested in over the last couple of years to strengthen our response to that are paying off and I would tell you that.

Whit Mayo: And Thats pretty steady at this point.

Speaker Change: First quarter that activities like denials and underpayments did not have a material impact on our financials.

Whit Mayo: And yes, Medicare advantage continues to run a bit harder a little higher on length of stay in traditional Medicare as well.

Speaker Change: Okay.

Whit Mayo: On on dispute resolution and I'll go broadly here and not just.

Speaker Change: My second question is I know, Mike you said, you're not prepared to share any views on tariffs at this point, but is there any way to perhaps frame the percentage of supplies that you were H P G or our sourcing from overseas just anything would be would be helpful things.

Whit Mayo: Medicare advantage, but there continues to be activity as you would expect in denials.

Whit Mayo: Your payments broadly with our payer partners.

Whit Mayo: Our efforts that we have invested in over the last couple of years to strengthen our response to that are paying off and I would tell you that.

Speaker Change: Sure.

Sam Hazen: As Sam said at the beginning we're in a really dynamic and fluid environment right now with tariffs.

Whit Mayo: First quarter that activities like denials and underpayments did not have a material impact on our financials.

Sam Hazen: So until we really have better clarity about the final status by country.

Whit Mayo: Okay.

Speaker Change: My second question is I know, Mike you said youre not prepared to share any views on tariffs at this point, but is there any way to perhaps frame the percentage of supplies that you were HPV or our sourcing from overseas just anything would be would be helpful. Thanks.

Sam Hazen: These goods are included or excluded what the final tariff rates would be.

Sam Hazen: Really difficult to size the impact HCA.

Sam Hazen: You know and as we've talked about on previous calls our Healthtrust organization has been working on this diligently and I'm really proud of our healthtrust team and.

Whit Mayo: Sure.

Speaker Change: As Sam said at the beginning we're in a really dynamic and fluid environment right now with tariffs.

Sam Hazen: And part of that work and I'll talk about 25, and then give you a couple of other numbers for context for for 2025 part of their work was the ability to secure significant fixed pricing.

Whit Mayo: So until we really have better clarity about the final status by country.

Sam Hazen: When you think about <unk>.

Speaker Change: Goods are included or excluded what the final tariff rates would be.

Sam Hazen: It is good so the purchases of supply of finished goods about 70% of our supply expenses contracted with firm pricing.

Whit Mayo: Really difficult to size.

Whit Mayo: Impact HCA.

Sam Hazen: For 2025.

Whit Mayo: You know and as we've talked about on previous calls our Healthtrust organization has been working on this diligently and I'm really proud of our healthtrust team and.

Sam Hazen: To give you a sense test upwards of 60% or some of all of 2026.

Sam Hazen: Another point of context, I think is helpful. 75% of our supply expense comes from either of the United States, Canada or Mexico.

Whit Mayo: And part of that work and I'll talk about 25, and then give you a couple of other numbers for context for for 2025 part of their work was the ability to secure significant fixed pricing.

Speaker Change: From a products that currently have broad exemption from tariffs such as pharmaceuticals.

Whit Mayo: When you think about finished goods so the purchases of supplies.

Speaker Change: As I noted healthtrust continues to work on this they are working on this to continue to secure fixed price contracting they're continuing their work around supply chain mapping and risk assessments and they are also deep in the middle of rationalizing suppliers products as needed to deal.

Whit Mayo: About 70% of our supply expenses contracted with firm pricing.

Whit Mayo: For 2020, and just to give you a sense, that's upwards of 60% or some or all of 2026.

Whit Mayo: Another point of context, I think is helpful. 75% of our supply expense comes from either of the United States, Canada or Mexico.

Speaker Change: With this.

Speaker Change: Tariff risk environment.

Speaker Change: Lastly, I would say that we're working hand in hand, with our partners and our supply chain are key suppliers.

Whit Mayo: From a products. They currently have broad exemption from tariffs such as pharmaceuticals.

Speaker Change: As they continue to work on Derisking and diversifying their supply chain and specifically away from China.

Whit Mayo: As I noted healthtrust continues to work on this they are working on this to continue to secure a fixed price contract and they are continuing their work around supply chain mapping and risk assessments and they are also deep in the middle of rationalizing suppliers and products as needed to deal.

Sam Hazen: So I do believe that our tariff rates for 2025 is manageable, but I'll reiterate with Sams opening comment that the environment is extremely fluid and we are continuing to closely monitor.

Speaker Change: As each day goes for.

Whit Mayo: With this.

Speaker Change: Okay. Thanks, a lot.

Whit Mayo: Risk environment.

Whit Mayo: Lastly, I would say that we're working hand in hand, with our partners and our supply chain are key suppliers.

Your next question comes from the line of Ben Hendrix with RBC capital markets. Your line is open.

Whit Mayo: As they continue to work on de risking and diversifying their supply chain and specifically away from China.

Ben Hendrix: Great. Thank you very much I just have a broader labor related question, we've heard from providers in the past.

Speaker Change: So I do believe that our tariff rates for 2025 is manageable, but I'll reiterate sams opening comment that the environment is extremely fluid and we are continuing to closely monitor.

Ben Hendrix: Ordinary environment generally loosen the nursing labor market. It still seems like there's a lot of competition just based on your observations from the past how reactive as the labor market to recession expectation and is there any change to your.

Whit Mayo: As each day goes for.

Ben Hendrix: Wage inflation forecast in this current environment.

Okay. Thanks, a lot.

Whit Mayo: Your next question comes from the line of Ben Hendrix with RBC capital markets. Your line is open.

Ben Hendrix: While our experiences are different through different recessions I think in general your comment than it is right and that is that the labor market tends to ease somewhat during a recessionary cycle and that can put some downward pressure.

Ben Hendrix: Okay. Thank you very much I just have a broader labor related question, we've heard from providers in the past recessionary environment generally loosen the nursing labor market still seems like there's a lot of competition.

Ben Hendrix: On wages now we went through the most intense labor market environment from 2021, and 2022 and the early part of 2023, so our wage trends have come down from that quite significantly.

Speaker Change: Based on your observations from the past how reactive as the labor market to recession.

Ben Hendrix: And is there any change to your.

Speaker Change: Wage inflation forecast in this current environment.

Speaker Change: While our experiences are different through different recessions I think in general your comment than it is right and that is that the labor market tends to ease somewhat during a recessionary cycle and that can put some downward pressure on <unk>.

Ben Hendrix: Will it come down further possibly.

Ben Hendrix: But it's way too early to provide any kind of forecast.

Ben Hendrix: With respect to what our potential.

Speaker Change: Sachin could do to the labor market.

As we sit at this particular point in the year, we believe our guidance around our wages for 2025, we will hold.

Speaker Change: Ages now we went through the most intense labor market environment from 2021, and 2022 and the early part of 2023, so our wage trends have come down from that quite significantly.

Speaker Change: Somewhere close to what we have indicated already.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Will it come down further.

Speaker Change: And your next question comes from the line of Sarah James with Cantor Fitzgerald. Your line is open.

Speaker Change: Assembly.

Speaker Change: But it's way too early to provide any kind of forecast.

Speaker Change: Yeah.

Speaker Change: With respect to what a potential recession could do to the labor market I think as we sit at this particular point in the year, we believe our guidance around our wages for 2025, we will hold indeed.

Speaker Change: Yeah.

Speaker Change: You guys had strong growth from both inpatient and outpatient cardiac surgery.

Speaker Change: How are you using.

Speaker Change: Pop back.

Speaker Change: To support our growth.

Speaker Change: Can you give us some insight into how youre thinking about dividing.

Speaker Change: It would be somewhere close to what we have indicated already.

Speaker Change: Bang into how acuity.

Speaker Change: Yeah.

Speaker Change: Our outpatient.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Well.

Speaker Change: And your next question comes from the line of Sarah James with Cantor Fitzgerald. Your line is open.

Speaker Change: This is Sam.

Speaker Change: Our capital.

Speaker Change: <unk> within our capital spending.

Speaker Change: Hasn't really changed and I don't anticipate that's going to change materially as we push forward here, we have a very significant.

Sarah James: You guys had strong growth in both inpatient and outpatient cardiac surgery.

Are you using.

Speaker Change: Pop back.

Speaker Change: To support all of that can you give us some insight into how youre thinking about dividing their spend into high acuity patients.

Speaker Change: Facility and ambulatory development strategy, Fortunately the capital requirements for most of those facilities.

Speaker Change: Our outpatient.

Speaker Change: Our small by comparison to what it takes to build out inpatient capacity today, we have about $6 2 billion of capital that has been approved and it's in a construction or development phase that will come online in 'twenty five 'twenty six.

Speaker Change: Okay.

Speaker Change: Well.

Speaker Change: This is Sam.

Speaker Change: Our capital.

Speaker Change: Allocation within our capital spending.

Speaker Change: Hasn't really changed and I don't anticipate that's going to change materially as we push forward here, we have a very significant.

Speaker Change: Or the first part of 2007 those are <unk>.

Speaker Change: Facility and ambulatory development strategy, Fortunately the capital requirements for most of those facilities.

Speaker Change: Capital dollars go toward inpatient capacity I think our inpatient capacity with respect to that pipeline is roughly 2.5% plus.

Speaker Change: Our small by comparison to what it takes to build out inpatient capacity today, we have about $6 2 billion of capital that has been approved and is in a construction or development phase that will come online in 'twenty five 'twenty six.

Speaker Change: Greater than what we have today, so a significant portion of that goes toward the inpatient capacity, we have outpatient capacity that includes outpatient facilities emergency room capacity.

Speaker Change: Cath lab capacity as you spoke to ambulatory capacity from a surgery standpoint, those are smaller dollars in the overall scheme of what it takes to build out those type of facilities and then obviously, we have a lot of clinical technology that we invest in so that our physicians and patients have the <unk>.

Speaker Change: Or the first part of 'twenty seven those are.

Speaker Change: Capital dollars go toward inpatient capacity I think our inpatient capacity with respect to that pipeline is roughly 2.5% plus.

Speaker Change: Greater than what we have today, so a significant portion of that goes toward the inpatient capacity, we have outpatient capacity that includes our outpatient facilities emergency room capacity.

Speaker Change: <unk> access to clinical technologies that can provide a more efficient.

Speaker Change: Or a better environment for patient care I don't have the exact equipment spend within all of our totals there, but that is a component as well so thats largely unchanged.

Speaker Change: Cath lab capacity as you spoke to ambulatory capacity from a surgery standpoint, those are smaller dollars in the overall scheme of what it takes to build out those type of facilities and then obviously, we have a lot of clinical technology that we invest in so that our physicians and patients have the <unk>.

Speaker Change: It's growing because we are running the company at high levels of occupancy. We continue to have a nice pipeline of new projects that we think will make sense beyond the ones that we've approved.

Speaker Change: Latest access to clinical technologies that can provide a more efficient.

Speaker Change: And it won't be any material change in sort of the allocation of the dollars within those categories.

Speaker Change: Or a better environment for patient care.

Speaker Change: Have the exact equipment spend within all of our totals there, but that is a component as well so that's largely unchanged.

Speaker Change: Yeah.

Speaker Change: And your next question comes from the line of Brian <unk> with Jefferies. Your line is open.

Brian: Hey, good morning, guys, maybe I'll follow up just in a comment that you made.

Speaker Change: It's growing because we are running the company at high levels of occupancy. We continue to have a nice pipeline of new projects that we think will make sense beyond the ones that we've approved.

So as we think about capex spend for the quarter. It was a little lower than typical range like the five 4% revenue. So just curious if theres anything that we need to be thinking about and maybe broader capital allocation buyback during the quarter, how should we be thinking about the pace of repurchases for the year.

Speaker Change: And it won't be any material change in sort of the allocation of the dollars within those categories.

Brian: Hey, Brian This is Mike let me cover the share repurchase person, who will talk about capex a bit.

Speaker Change: Okay.

Speaker Change: And your next question comes from the line of Brian <unk> with Jefferies. Your line is open.

Brian: So as you will note or you noted in our first quarter release, we completed $2 5 billion of share repurchase in the first quarter and we anticipate completing a significant portion of the $10 billion authorization in 2025.

Brian: Hey, good morning, guys, maybe I'll follow up just to the comment that you made.

Brian: So as we think about capex spend for the quarter. It was a little lower than typical range like the five 4% revenue. So just curious if theres anything there we need to be thinking about and maybe broader capital allocation good buyback during the quarter, how should we be thinking about the pace of repurchases for the year.

Brian: Subject to market conditions and other factors on Capex, you're right I mean, we spent $991 million in the quarter.

Brian: <unk> seemed a little light as to your question, we still believe we're on track.

Brian: Yeah.

Sam Hazen: Getting to the to our targeted level of capital spent and anticipate a bit of a step up here as we go through the remaining part of the year. So we still think we're in this $5 billion, maybe as high as $5 2 billion of Capex spend in the year as Sam indicated we continue to see a robust pipeline of really good.

Brian: Hey, Brian This is Mike let me cover the share repurchase first and we'll talk about Capex a bit.

Brian: So as you will note or you noted in our first quarter release, we completed $2 5 billion of share repurchase in the first quarter and we anticipate completing a significant portion of the $10 billion authorization in 2020.

Brian: Subject to market conditions and other factors on Capex, you're right I mean, we spent $991 million in the quarter.

Brian: <unk>.

From our markets and so believe that that level of capital spending program.

Brian: It seemed a little light as to your question, we still believe we're on track.

Speaker Change: Awesome. Thank you.

Brian: Yeah.

Speaker Change: And your next question comes from the line of Andrew Mok with Barclays. Your line is open.

Brian: Getting to the to our targeted level of capital spent and anticipate a bit of a step up here as we go through the remaining part of the year. So we still think we're in this $5 billion, maybe as high as $5 2 billion of Capex spending of the year as Sam indicated we continue to see a robust pipeline of really good.

Brian: Okay.

Andrew Mok: Hi, Good morning, hoping you can clarify your hurricane commentary I think first you noted that hurricane earnings were flat year over year, and you're impacted markets, but I'm not 100% I understand that because you have two markets that were hurricane impaired in Q1. This year that were not inherent at this time last year and if that's true what at that point to a year over year.

Brian: <unk>.

Brian: From our markets.

Brian: We.

Brian: I'll leave it at that level of capital spending program.

Andrew Mok: Tailwind for the full year as those markets continue to improve against a more negative impact in the back half of last year.

Speaker Change: Awesome. Thank you.

Brian: Yeah.

Speaker Change: And your next question comes from the line of Andrew Mok with Barclays. Your line is open.

Speaker Change: Yeah. Thanks, Andrew This is just how we think about it and Youll recall when we did our 2025.

Brian: Okay.

Andrew Mok: Hi, Good morning, hoping you can clarify your hurricane commentary I think first you noted that hurricane earnings were flat year over year in the impacted markets, but I'm not 100% I understand that because you have two markets that were hurricane impaired in Q1. This year that were not inherent at this time last year and if thats true what at that point to our year over.

Speaker Change: Our guidance assumes that the impacts of the Hurricanes would offset each other during the course of 2025 and would not produce a full year of tailwind for us as it relates to first quarter. This is largely what played out.

Speaker Change: You take the earnings growth year over year.

Speaker Change: From our two main impacted markets in North Carolina Division, and West, Florida, or specifically the ARVO Medical Center, our earnings were flat year over year in other words the year over year earnings change was about negative about neutral.

Andrew Mok: You are a tailwind for the full year as those markets continue to improve against a more negative impact in the back half of last year.

Andrew Mok: Yeah.

Speaker Change: Yeah. Thanks, Andrew. This is is how do we think about it and Youll recall when we did our 2020 guidance our guidance assumes that the impacts of the hurricanes would offset each other during the course of 2025 and would not produce a full year of tailwind for us as it relates to first quarter. This is largely what played out.

Speaker Change: And those two markets our year over year.

Speaker Change: And then I would just point you back to our original guidance for the year as it relates to the full year impact of the Hurricanes.

Speaker Change: If you take the earnings growth year over year.

Speaker Change: And your next question comes from the line of Matthew Gillmor with Keybanc. Your line is open.

Speaker Change: Our two main impacted markets in North Carolina Division, and West, Florida, or specifically the larva Medical center, our earnings were flat year over year in other words the.

Matthew Gillmor: Hey, Thanks for the question I wanted to ask about the competitive environment and your moat.

Matthew Gillmor: In your markets some of the ongoing policy of macro uncertainty you see also some competitors behaving any differently in terms of their capex priorities are investments maybe that creates an opportunity for HCA or is the competitive dynamic not really impacted by the macro at this point.

Speaker Change: Year over year earnings change was about negative about neutral.

Speaker Change: And those two markets a year over year.

Speaker Change: And then I would just point you back to our original guidance for the year as it relates to the full year impact of the Hurricanes.

Speaker Change: Okay.

Matthew Gillmor: This is Sam I would say at this particular point in time, we haven't seen any substantial changes in competitors and how they interact in the market now obviously, if NIH funding continues to be.

Speaker Change: And your next question comes from the line of Matthew Gillmor with Keybanc. Your line is open.

Speaker Change: Hey, Thanks for the question I wanted to ask about the competitive environment and your mobile and your markets.

Speaker Change: With the ongoing policy of macro uncertainty you see also some competitors behaving any differently in terms of their capex priorities are investments maybe that creates an opportunity for HCA.

Matthew Gillmor: Challenging for certain academic medical centers that may influence their behavior in spending.

Matthew Gillmor: There are other policy adjustments that take place that could play out we do think.

Speaker Change: The competitive dynamic not really impacted by the macro at this point.

Speaker Change: Yeah.

Matthew Gillmor: With our scale with.

Speaker Change: This is Sam I would say at this particular point in time, we haven't seen any substantial changes in competitors and how they interact in the market now obviously, if NIH funding continues to be.

Matthew Gillmor: With our diversification across the portfolio of markets.

Matthew Gillmor: That provides.

Hum.

Matthew Gillmor: A different level of capability than a lot of our local competitors, who tend to only be in one particular market.

Matthew Gillmor: Our competitors in many instances have solid balance sheets and we have to.

Speaker Change: <unk>.

Speaker Change: Challenging for certain academic medical centers that may influence their behavior in spending.

Matthew Gillmor: Be able to anticipate their behaviors and their spending and as I mentioned in my comments, we have in fact.

Speaker Change: There are other policy adjustments that take place that could play out we do think.

Matthew Gillmor: Regained growing market share in a large portion of our market. So we're very encouraged by the progress we're making.

Speaker Change: With our scale.

Speaker Change: With our diversification across the portfolio of markets.

Speaker Change: That provides.

Speaker Change: A different level of capability than a lot of our local competitors, who tend to only be in one particular market.

Matthew Gillmor: In light of the past spending and practices of our competitors. So they're compromised in any fashion going forward than maybe that presents an opportunity for us to pick up even more market share.

Speaker Change: But you know.

Speaker Change: Our competitors in many instances have solid balance sheets and we have to.

Speaker Change: Be able to anticipate their behaviors and their spending and as I mentioned in my comments, we have in fact.

Matthew Gillmor: Got it thank you.

Speaker Change: And your next question comes from the line of Justin Lake with Wolfe Research. Your line is open.

Speaker Change: Regained growing market share in a large portion of our markets. So we're very encouraged by the progress we're making.

Justin Lake: Thanks, Good morning.

Justin Lake: Just wanted to talk about the exchanges first.

Justin Lake: <unk>.

Justin Lake: Can you give us the percentage of volumes and revenue in the quarter that came from the changes.

In light of the past spending and practices of our competitors. So they are compromised.

Justin Lake: Apologize if I missed them and then.

Speaker Change: Any fashion going forward than maybe that presents an opportunity for us to pick up even more market share.

Justin Lake: Bigger bigger picture question just.

Justin Lake: Some of the academic work out their guide indicates that.

Speaker Change: Yeah.

Speaker Change: Got it thank you.

Justin Lake: It would be if the subsidies do go away.

Speaker Change: Yeah.

Speaker Change: And your next question comes from the line of Justin Lake with Wolfe Research. Your line is open.

Justin Lake: As a real potential that a lot of these folks will go back to commercial based insurance.

Justin Lake: Thanks, Good morning.

Justin Lake: I've seen numbers as high as almost half the people that lose coverage via the subsidies will go back with the commercial book.

Justin Lake: Just wanted to talk about the exchanges first.

Speaker Change: Can you give us the percentage of volumes and revenue in the quarter that came from the changes.

Speaker Change: Just curious if you have any view on that.

Justin Lake: In terms of what could happen there. Thanks.

Justin Lake: Yeah.

Justin Lake: I apologize if I missed them and then.

Yes. Good morning, this is Mike.

Speaker Change: Bigger bigger picture question just.

Speaker Change: Specifically on exchanges, let me give you a quick update here.

Speaker Change: Some of the academic work out their guide indicates that.

Speaker Change: I think you know this but 2025 was another year of strong enrollment growth in our states the growth was about 12% over prior year.

Speaker Change: It would be if the subsidy do go away.

Speaker Change: A real potential that a lot of these folks will go back to commercial based insurance.

Speaker Change: Across the United States now up to 24 million bus covered for.

Speaker Change: I've seen numbers as high as almost half the people that lose coverage via the subsidies will go back with the commercial book.

Speaker Change: For HCA in the quarter the exchange volume represented 8% of equivalent admissions and about 10% of our revenues. So that's the that's the update for the quarter.

Just curious if you have any view on that.

Speaker Change: In terms of what could happen there.

Speaker Change: Yeah.

Speaker Change: I think theres still a lot of unknowns here about what could happen.

Speaker Change: Yes. Good morning, this is Mike.

Speaker Change: Specifically on exchanges, let me give you a quick update here.

Speaker Change: If the <unk> is enhanced premium tax credits do sunset and its four are not extended in their current form or through some revised forum.

Speaker Change: I think you know this but 2025 was another year of strong enrollment growth in our states the growth was about 12% over prior year.

Speaker Change: So we're going to have to wait and see exactly how it plays out.

Speaker Change: Across United States, now up to $24 million loss coverage for.

Speaker Change: And we're really not in a position to comment on estimates related to how and when you go back to employer sponsored insurance although.

Speaker Change: For HCA in the quarter the exchange volume represented 8% of equivalent admissions and about 10% of our revenues. So that's the update for the quarter.

Speaker Change: I think we generally agree that there will be some that would go back to employer sponsored insurance I think there'll be some that would stay on the exchanges and maybe drop middle tier and then others that if these enhanced premium tax rates do sunset that would lose coverage and become uninsured. So we're.

Speaker Change: I think theres still a lot of unknowns here about what could happen.

Speaker Change: If the <unk> is enhanced premium tax credits do sunset or are not extending their current form or through some revised forum.

Speaker Change: We're not in a position yet until we have a little more clarity around what's going to happen in the legislative environment just.

Speaker Change: So we're going to have to wait and see exactly how it plays out.

Speaker Change: And we're really not in a position to comment on estimates related to how and when you go back to the employer sponsored insurance although.

Speaker Change: Specifically size it or comment on others' research in this space.

Speaker Change: <unk>.

Speaker Change: I think we generally agree that there will be some that would go back to employer sponsored insurance.

Speaker Change: Thanks.

Speaker Change: And your next question comes from the line of Joanna <unk> with Bank of America. Your line is open.

Speaker Change: There'll be some that would stay on the exchanges and maybe dropped middle tier and then others that yet.

Speaker Change: Hey, good morning. Thanks, so much for taking my question I guess.

Speaker Change: Enhanced premium tax rates do sunset that would lose coverage and become uninsured. So.

Speaker Change: Maybe first on just clarifying a comment around your DPP benefits, you said to increase year over year by $80 million. So can you confirm whether there was anything.

Speaker Change: Not in a position yet until we have a little more clarity around what's going to happen in the legislative environment Justin.

Speaker Change: Unusual in there.

Speaker Change: Expected what.

Speaker Change: What you had expected in the quarter and do you still expect the full year to be flat to down $250 million.

Speaker Change: Specifically size it or comment on others' research in this space.

Speaker Change: Thanks.

Speaker Change: Yeah.

Speaker Change: Hi, Joanne this is Mike so yes during the quarter we recognized.

Speaker Change: And your next question comes from the line of Joanna <unk> with Bank of America. Your line is open.

Speaker Change: Proximately $80 million increase in our net benefit year over year.

Hey, good morning. Thanks, so much for taking my question I guess.

Speaker Change: The largest driver of this was really the increase in one state where we received a reconciliation payment and began accruing for that program in Q4 of last year. So that was what drove it.

Speaker Change: First one just clarifying a comment around your DPP benefits, you said will increase year over year by $80 million. So can you confirm whether there was anything unusual.

Speaker Change: We've talked about on past calls.

Speaker Change: Unusual in there.

Speaker Change: <unk> or the guidance related to <unk>.

Speaker Change: That's what.

Speaker Change: What you had expected in the in the quarter and do you still expect the full year to be flat to down $250 million.

Speaker Change: It takes up little payment programs are really the most difficult thing that we.

Speaker Change: That we predict and so we keep those updated for you.

Speaker Change: Hey, Joanna this is Mike so yes during the quarter we recognized.

Speaker Change: When we meet quarterly obviously on the cost I would say now based on what we know now after our first quarter activity that we would be thinking about for a full year 25 versus 24, something like 50 million better to a $200 million decline now so that would be the general update we gave you on <unk>.

Speaker Change: $80 million increase in our net benefit year over year.

Speaker Change: The largest driver of this was really the increase in one state where we received a reconciliation payment and began accruing for that program in Q4 of last year. So that was what drove it.

Speaker Change: We talked about on past calls.

Speaker Change: Range.

Speaker Change: <unk> or the guidance related to <unk>.

Speaker Change: As it relates to just kind of a general update on state supplemental payment programs.

Speaker Change: State supplemental payment programs are really the most difficult thing that we do.

Speaker Change: We continue to generally get a flow.

Speaker Change: That we predict and so we keep those updated for you.

Speaker Change: Hello of funds on our legacy programs.

Speaker Change: When we meet quarterly obviously on the cost I would say now based on what we know now after our first quarter activity that we would be thinking about for a full year 25 versus 24, something like 50 million better to a $200 million decline now so that would be the general update we gave you on <unk>.

Speaker Change: I would say that we were encouraged over the last couple of weeks, we've seen a couple of approvals by CMS.

Speaker Change: One in Arizona, and one in Nevada that were hopeful.

Speaker Change: So largely that would be kind of where we are right now in state supplemental payment programs.

Speaker Change: I'm, sorry, So you said that Arizona, Nevada.

Speaker Change: Range.

Speaker Change: As it relates to just kind of a general update on state supplemental payment programs we.

Speaker Change: That the reason why you're thinking.

Speaker Change: BTB payments for the year higher.

Speaker Change: There was just something Thats happened in Q1.

Speaker Change: Continue to generally get a follow.

Speaker Change: Flow of funds on our legacy programs.

Speaker Change: This $80 million. It makes you feel better about the year.

Speaker Change: I would say that we were encouraged over the last couple of weeks, we've seen a couple of approvals by CMS.

Speaker Change: Yes, I think I think that this Q1 outcome was a bit better than we expected our.

Speaker Change: <unk> was really that the first half of the year would be flat.

Speaker Change: One in Arizona, and one in Nevada that were hopeful.

Speaker Change: With potential declines primarily coming in the back half of the year. So based on this first quarter net benefit.

Speaker Change: And so largely that would be kind of where we are right now in state supplemental payment.

Speaker Change: We are comfortable now kind of sizing are estimating supplemental payments would be something like 50 million better for the full year to a $200 million decline.

Speaker Change: I'm, sorry, So you said that Arizona, Nevada.

Speaker Change: The reason why Youre thinking.

Speaker Change: BTB payments for the year higher.

Speaker Change: There was just something that happened in Q1.

Speaker Change: Really that range is largely associated with Tennessee Joanna.

Speaker Change: This $80 million. It makes you feel better about the year.

Speaker Change: Yes, I think I think that this Q1 outcome was a bit better than we expected our expectation was really that the first half of the year would be flat.

Speaker Change: First of all let me just say, we did not recorded anything related to Tennessee in the quarter.

Speaker Change: And we have not received approval for Tennessee at this point.

Speaker Change: With potential declines primarily coming in the back half of the year. So based on this first quarter net benefit.

Because that was my question. So just to clarify is the assumed.

Speaker Change: Tennessee benefits in that full year number correct.

Speaker Change: We are comfortable now kind of sizing our estimated payments would be something like 50 million better for the full year to a $200 million decline.

Speaker Change: So let's take the quarter first we recorded nothing in Tennessee in the quarter and the first quarter. So the back half of 2024.

Speaker Change: Really that range is largely associated with Tennessee Joanna.

Speaker Change: Interim payment was not received we did not recorded and we have not received approval for the 2025 calendar year program from CMS.

Speaker Change: First of all let me just say, we did not recorded anything related to tenancy in the quarter.

Speaker Change: The guidance if you think about this range of guidance from a $50 million improvement to prior year for the full year to a $200 million decline largely that range is associated with whether or not Tennessee is approved.

Speaker Change: And we have not received approval for Tennessee at this point.

Speaker Change: Because that was my question. So just to clarify is the assumed Tennessee benefits in that full year number correct.

Speaker Change: So let's take the quarter first we recorded nothing in Tennessee in the quarter and the first quarter. So the back half of 2024.

Speaker Change: And so that's how I would context that for Ya joined.

Speaker Change: Okay.

Speaker Change: And your next question comes from the line of Brian Weinstein with TD Cowen Your line is open.

Speaker Change: Our own payment was not received we did not recorded and we have not received approval for the 2025.

Brian Weinstein: Hi, Thanks, I'm wondering just how the surgical schedules and block time utilization is kind of looking at progressing I'm not trying to get quarterly guidance, but just wondering if we can glean anything just given the potential for tariffs to recession and just consumer confidence declining wondering if there is.

Speaker Change: Calendar year program from CMS.

Speaker Change: The guidance if you think about this range of guidance from a $50 million improvement to prior year for the full year to a $200 million decline largely that range is associated with whether or not Tennessee gets approved.

Any impact on the elective procedure side and patient behavior. Thank you.

Speaker Change: And so that's how I would context that for Ya joined.

Sam: This is Sam I don't have that information in front of us as far as.

Speaker Change: Okay.

Speaker Change: And your next question comes from the line of Brian Weinstein with TD Cowen Your line is open.

Sam: Forward scheduling we have systems within each of our facilities, where that information is available we don't roll that up.

Brian Weinstein: Hi, Thanks, I'm wondering just how the surgical schedules and block time utilization is kind of looking at progressing I'm not trying to get quarterly guidance, but just wondering if we can glean anything just given the potential for tariffs recession, and just consumer confidence declining wondering if there is.

Sam: Well at the corporate level, so I'm not able to give you that answer at this point I think again in general we think demand for health care is going to be there are inpatient surgeries.

Sam: We're up on a per business day, so as we normalize calendar effects and we have sort.

Speaker Change: Any impact on the elective procedure side and patient behavior. Thank you.

Sam: Sort of comparable calendar dynamics, we expect our our surgical volumes to recover.

Sam: This is Sam I don't have that information in front of us as far as.

Sam: Two.

Sam: Forward scheduling we have systems within each of our facilities, where that information is available we don't roll that up.

Sam: Levels that we think are.

Sam: In line with market share trends for market share gains that we have.

Sam: Well at the corporate level, so I'm not able to give you that answer at this point I think again in general we think demand for health care is going to be there are inpatient surgeries.

Sam: Expected. So that's how we're thinking about it I mean, we continue to build our medical staff.

Sam: Critically important as I've mentioned, we're adding facilities, where we need to adding technology, we've got a robust workforce development agenda to support our surgical services and we continue to make inroads into better operations, which are beneficial to our physicians and surgeons and beneficial to our patients.

Sam: We're up on a per business day, so as we normalize calendar effects and we have sort.

Sam: Comparable calendar dynamics, we expect our our surgical volumes to recover.

Sam: Two.

Sam: Levels that we think are.

Sam: So all that sort of converging on our viewpoints that.

Sam: In line with market share trends for market share gains that we have.

Sam: Surgical demand.

Sam: Expected. So that's that's how we're thinking about it I mean, we continue to build our medical staff.

Sam: It is reasonable and we can execute underneath that.

Sam: Okay. Thanks.

Sam: Critically important as I've mentioned, we're adding facilities, where we need to adding technology, we've got a robust workforce development agenda to support our surgical services and we continue to make inroads into better operations, which are beneficial to our physicians and surgeons and beneficial to our patients.

Speaker Change: And your next question comes from the line of Joshua Raskin with Nephron Research. Your line is open.

Joshua Raskin: Hi, Thanks, Good morning, I was.

Joshua Raskin: Can you just speak to your technology agenda, and maybe specifically some investments that you think differentiate HCA on the clinical care side and I'm going to assume that AI is a part of that conversation.

Sam: So all that sort of converging on our our viewpoints that.

Joshua Raskin: We are investing heavily in our tech agenda.

Sam: Surgical demand.

Joshua Raskin: One of the key initiatives that we have within our strategic plan is advancing technology and applying it broadly to the organization, we've set up a new.

Sam: Is reasonable and we can execute underneath that.

Sam: Okay. Thanks.

Sam: Yeah.

Speaker Change: And your next question comes from the line of Joshua Raskin with Nephron Research. Your line is open.

Joshua Raskin: Akshay Department in our company called the digital transformation and innovation group and they are leading the charge for us as we push forward on this particular initiative. We have three areas that we think we can benefit our business using better digital tools using automation and you.

Joshua Raskin: Hi, Thanks. Good morning, I was wondering if you could speak to your technology agenda, maybe specifically some investments that you think differentiate HCA on the clinical care side and I'm going to assume that AI is a part of that conversation.

Speaker Change: We are investing heavily in our tech agenda.

Speaker Change: One of the key initiatives that we have within our strategic plan is advancing technology and applying it broadly to the organization.

Joshua Raskin: Using AI.

Joshua Raskin: Categories are administrative functioning when you think about our parallel on services or supply chain services human resource functioning.

Speaker Change: Set up a new.

Joshua Raskin: And so forth we have.

Speaker Change: Akshay Department in our company called the digital transformation and innovation group and they are leading the charge for us as we push forward on this particular initiative. We have three areas that we think we can benefit our business using better digital tools using automation and <unk>.

Joshua Raskin: Early tools that are being developed and implemented in those areas, which are incrementally adding value. The second category for us is operational and by that I mean, what goes on in our facilities, primarily our hospitals, where we can improve staffing and scheduling and create better tools for our management.

Speaker Change: Using AI.

Joshua Raskin: Teams.

Speaker Change: Categories are administrative functioning when you think about our parallel on services or supply chain services human resource functioning.

Joshua Raskin: Better.

Joshua Raskin: Tools and insights for our employees as they scheduled to meet their needs.

Joshua Raskin: Another area in our operational categories with case management functions as it relates to length of stay management as it relates to prior authorization. All of these things that go into the operations at a facility level. We are deploying tools in those areas and then the Holy Grail.

Speaker Change: And so forth we have.

Speaker Change: Early tools that are being developed and implemented in those areas, which are incrementally adding value. The second category for us is operational and by that I mean, what goes on in our facilities, primarily our hospitals, where we can improve staffing and scheduling and create better tools for our management team.

Joshua Raskin: For us its clinical as you mentioned, we do have some opportunities there.

Speaker Change: Teams.

Joshua Raskin: Slowly moving into that space, where we can use again some digital tools, we can use our data to to source best practices and we're working to create value for our physicians and our caregivers in a way that they have the advantages.

Speaker Change: Tools and insights for our employees as they schedule to meet their needs.

Speaker Change: Another area in our operational categories with case management functions as it relates to length of stay management.

Speaker Change: <unk> to prior authorization all of these things that go into the operations at a facility level. We are deploying tools in those areas and then the Holy Grail for US is clinical as you mentioned, we do have some opportunities there.

Joshua Raskin: That come from those insights were early in that space, because it's very important that we be accurate. It's very important that we'd be compliant and that the tools that we provide truly add value and we've got some areas of stat tricks, where we're working with one of our partners.

Slowly moving into that space, where we can use again some digital tools, we can use our data to to source best practices and we're working to create value for our physicians and our caregivers in a way that they have the advantages.

Joshua Raskin: We think we can improve the labor and delivery process with these tools and we've got early signs of success there, but it's really early in that particular category. So I.

Speaker Change: That come from those insights were early in that space, because it's very important that we be accurate. It's very important that we'd be compliant and that the tools that we provide truly add value and we've got some areas of.

Joshua Raskin: Im encouraged about where we are we continue to find ways to advance the use of digital tools and technology across the different spectrum of our business and that I believe is going to be something that we build upon in the years to come.

Speaker Change: Obstetrics, where we're working with one of our partners, where we think we can improve the labor and delivery process with these tools and we've got early signs of success there, but it's really early in that particular category.

Joshua Raskin: Great. Thanks.

Speaker Change: And your next question comes from the line of Stephen Baxter with Wells Fargo. Your line is open.

Speaker Change: Hi, Thanks, just another question.

Speaker Change: One of the managed care mix at five 4% you gave on the managed care volume just to make sure was that inclusive of the exchanges can you do that.

Speaker Change: So I.

Speaker Change: Im encouraged about where we are we continue to find ways to advance the use of digital tools and technology across the different spectrum of our business and that I believe it's going to be something that we build upon in the years to come.

Speaker Change: Including that need to be able to give the standalone managed care exchange.

Speaker Change: Thank you.

Mike: Yes, Hey, this is Mike so the five 4% equivalent admissions same facility growth in total managed care does include exchanges.

Speaker Change: Great. Thanks.

Speaker Change: And your next question comes from the line of Stephen Baxter with Wells Fargo. Your line is open.

Mike: If you could parse apart the exchanges were up 22% and the kind of core <unk>.

Speaker Change: Hi, Thanks, just another question.

Mike: Think of it as employer sponsored insurance was it.

Speaker Change: The managed care mix up five 4% you gave on the managed care volume just to make sure was that inclusive of the exchanges can you do that.

Mike: It was up about let's just.

Mike: Call. It just short of half a point over prior year.

Speaker Change: Including that would you be able it gives us a standalone managed care exchange I'm here for the quarter. Thank you.

Speaker Change: And your next question comes from the line of John Ransom with Raymond James Your line is open.

Speaker Change: Yes, Hi, this is Mike so the the five 4% equivalent admissions same facility growth in total managed care does include exchanges.

John Ransom: Hey, good morning, I'm going to be the slow child in class forgive me, but.

Speaker Change: If you just look at Astral and long ago.

Speaker Change: If you could parse apart the exchanges were up 22% and the kind of core <unk>.

Speaker Change: New guidance assume that the EBITDA is now flat in 25 basis points.

Speaker Change: Think of it as employer sponsored insurance.

Speaker Change: Yeah.

Speaker Change: So the guidance if you think about the full year guidance, we gave on our fourth quarter 24 earnings call.

Speaker Change: It was up about let's just call.

Speaker Change: Call It just sort of happened over prior year.

Speaker Change: What we indicated is that we saw with the lingering effects of the hurricane that the earnings year over year earnings impact of Hurricane affected markets.

Speaker Change: And your next question comes from the line of John Ransom with Raymond James Your line is open.

Speaker Change: Hey, good morning, I'm gonna be the slow child in class forgive me, but.

Speaker Change: Kind of be flat would be neutral and would not produce a tailwind for the company.

Speaker Change: If you just look at Astral and logo.

Speaker Change: <unk> is a report out here in our first quarter call is that's largely what played out.

Speaker Change: Your guidance assume that the EBITDA is now flat in 25 basis points.

Speaker Change: The year over year earnings change in West, Florida in the Largo area compared to the year over year earnings change in North Carolina that is flat were flat.

Speaker Change: Okay.

Speaker Change: So the guidance if you think about the full year guidance, we gave on our fourth quarter 24 earnings call.

Speaker Change: Offset each other.

Speaker Change: What we indicated that we thought with the lingering effects of the hurricane that the earnings year over year earnings impact of Hurricane affected markets.

Speaker Change: Two large degree.

Speaker Change: Our update for the first quarter.

Speaker Change: Awesome.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: It kind of be flat would be neutral and would not produce a tailwind for the company.

Speaker Change: And your next question comes from the line of Lance Wilkes with Bernstein. Your line is open.

Speaker Change: <unk> is a report out here in our first quarter call and that's largely what played out if you think about the year over year earnings change in West, Florida in the Largo area.

Speaker Change: Great. Thanks.

Speaker Change: You talk a little bit about how you're seeing the downstream impacts from the pressure on the managed care organizations, both in the quarter and the outlook.

Speaker Change: Going forward for the year and when I'm thinking about is it.

Speaker Change: <unk> to the year over year earnings change in North Carolina, the dishes flatware flat.

Speaker Change: Increased use or not increase use of value based care are you seeing any of the changes in deductibles or out of pocket for consumers and some of the products having impact on bad debt or utilization and then just a point of clarification would you see as far as flu impacts.

Speaker Change: Offset each other to large degree.

Speaker Change: For the first quarter.

Speaker Change: Oh boy.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: And your next question comes from the line of Lance Wilkes with Bernstein. Your line is open.

Speaker Change: Both to the positive and negative in the quarter. Thanks.

Lance Wilkes: Great. Thanks, Keith.

Lance Wilkes: Can you talk a little bit about how you're seeing the downstream impacts from the pressure on the managed care organizations, both in the quarter and the outlook.

Speaker Change: So let me cover respiratory one and then we'll get to.

Speaker Change: Your payer questions on respiratory volumes.

Lance Wilkes: Going forward for the year and when I'm thinking about is <unk>.

Speaker Change: I'll refer you back to fourth quarter, we're clearly in fourth quarter of 'twenty four.

Lance Wilkes: Use or not increase use of value based care are you seeing any of the changes in deductibles or out of pocket for consumers and some of the products having impact on bad debt or utilization and then just a point of clarification would you see as far as flu impacts.

Speaker Change: Our respiratory related volumes were behind prior year, and we indicated that the respiratory season had a bit of a late start.

Speaker Change: Compared to the previous year. So what we saw in first quarter 'twenty five was <unk> <unk>.

Lance Wilkes: Both to the positive and negative in the quarter. Thanks.

Speaker Change: <unk> significantly up over fourth quarter of 'twenty four.

Lance Wilkes: So let me cover our respiratory first and then we'll get to.

Speaker Change: When I look at first quarter of 2005 compared to first quarter of 'twenty for our respiratory volumes in total were pretty much in la they were.

Lance Wilkes: Your payer questions on respiratory volumes.

Lance Wilkes: I'll refer you back to fourth quarter, where it clearly in fourth quarter of 'twenty four.

Speaker Change: Just a tick to prior year, our first quarter 'twenty four pretty much in line with prior year levels.

Lance Wilkes: Our respiratory related volumes were were behind prior year, and we indicated that the respiratory season had a bit of a late start.

Speaker Change: You may recall, but if you go back to that prior year flu season. It started early so it started kind of at the beginning of fourth quarter of 'twenty, three and it persisted pretty much through the end of first quarter of 2004. So thats. The next of the year over year comp on the respiratory season.

Lance Wilkes: Compared to the previous year. So what we saw in first quarter 'twenty five was they were pretty significantly up over fourth quarter of 'twenty four.

Speaker Change: When I think about.

Speaker Change: The impact on <unk>.

Lance Wilkes: When I look at first quarter 'twenty compared to first quarter of 'twenty for our respiratory volumes in total were pretty much what they were.

Speaker Change: Patient receivables.

Speaker Change: And Youll remember from past conversations on this over the years, but we monitor this closely.

Lance Wilkes: Just a tick to prior year, our first quarter 'twenty four pretty much in line with prior year levels.

And what we're looking at is kind of what happens over time to the patient portion or the patient balance as.

Lance Wilkes: You may recall, but if you go back to that prior year flu season. It started early so it started kind of at the beginning of fourth quarter of 'twenty, three and it persisted pretty much through the end of first quarter of 2004. So thats. The next the year over year comp on the respiratory season.

Speaker Change: As employer benefit plan changes or design changes are made every year.

Speaker Change: Historically for our commercial payers, we experienced increases in average patient balances in the mid single digit range on an annual basis.

Lance Wilkes: When I think about.

Speaker Change: Our recent quarters, we have seen increases a little higher than that but not material.

Lance Wilkes: The impact on.

Lance Wilkes: Patient receivables.

Lance Wilkes: And Youll remember from past conversations on this over the years, but we monitor this closely.

The increases certainly have been influenced by growth in health.

Speaker Change: Exchange volumes, which tend to have a slightly higher patient responsibility compare to traditional commercial.

Lance Wilkes: And what we're looking at is kind of what happens over time to the patient portion or the patient balance.

Speaker Change: On Collectability.

Lance Wilkes: Employee benefit plan changes or design changes are made every year.

Speaker Change: We generally maintain our historical level of collections on patient balances across.

Lance Wilkes: Historically for our commercial payers, we experienced increases in average patient balances in the mid single digit range on an annual basis.

Speaker Change: Either kind of our population.

Speaker Change: As it relates to the exchanges the rate of collections on patient balances it is a bit slower than the traditional employer sponsored insurance population.

Lance Wilkes: In our recent quarters, we have seen increases a little higher than that but not material.

Speaker Change: While lower the exchanges had not had a material impact on the collectability of our patient receivables in the aggregate so thats a bit of an update there.

Lance Wilkes: The increases certainly have been influenced by growth in health.

Lance Wilkes: Exchange volumes, which tend to have a slightly higher patient responsibility compared to traditional commercial.

Speaker Change: You can see.

Speaker Change: Yeah.

Lance Wilkes: On collectibility.

Speaker Change: But I think that it's safe to say, Mike that value based care Copays and deductibles are in any fashion disrupting the demand curve in that.

Lance Wilkes: We generally maintain our historical level of collections on patient balances.

Lance Wilkes: <unk>.

Lance Wilkes: These are kind of our population.

Lance Wilkes: As it relates to the exchanges the rate of collections on patient balances it is a bit lower than.

Speaker Change: That's sort of our overarching view when we look across our markets and we look at what demand trends suggest we don't see those items influencing in any material way our thinking around overall demand.

Lance Wilkes: The traditional employer sponsored insurance population.

Lance Wilkes: While lower the exchanges have not had a material impact on the collectability of our patient receivables, Indiana. So that's a bit of an update there.

Lance Wilkes: I should proceed.

And your next question comes from the line of Ben Rossi with J P. Morgan Your line is open.

Lance Wilkes: Yeah.

Lance Wilkes: But I think that.

Lance Wilkes: It's safe to say, Mike that value based care Copays and deductibles are in any fashion disrupting the demand curve in that.

Hey, good morning, Thanks for taking my question.

Speaker Change: For the executive order from the other week there was a call out on hospital acquisition costs for Hubbard outpacing proud today to Pee Dee.

Lance Wilkes: That's sort of our overarching view when we look across our markets and we look at what demand trends suggest we don't see those items.

Speaker Change: It sounds like this would be more geared towards drug administration.

Speaker Change: Appreciate the uncertainty here with the broader discussion on Medicare site neutral and your opening comments, but just curious how youre thinking about the initial impact here with this income is more of a lower acuity set of procedures relative to your broader sense of outpatient services.

Lance Wilkes: Influencing in any material way, our thinking around overall demand.

Lance Wilkes: Yeah.

Lance Wilkes: Yeah.

Speaker Change: And your next question comes from the line of Ben Rossi with J P. Morgan Your line is open.

Speaker Change: So we're certainly aware of the executive order from the administration on potentially are directing agencies to lower drug prices.

Ben Rossi: Hey, good morning, Thanks for taking my question so for the executive order from the other week there was a call out on hospital acquisition costs for hovered outpatient drug today at two P D.

Speaker Change: We're going to have to see.

Speaker Change: The draft rules to come out of this we believe it will be part of a public comment and notice period.

Speaker Change: It sounds like this would be more geared towards drug administration.

Speaker Change: Appreciate the uncertainty here with the broader discussion on Medicare site neutral in your opening comments, but just curious how youre thinking about the initial impact here with this income is more of a lower acuity set of procedures relative to your broader set of outpatient services.

Speaker Change: And we're going to need that additional specificity to be able to kind of comment on what potential impact it could have on X yet.

Speaker Change: Got it.

Speaker Change: Thanks.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: And your final question comes from Craig <unk> with Morgan Stanley. Your line is open.

Speaker Change: Certainly aware of the executive order from the administration on look on potentially are directing agencies to lower drug prices.

Speaker Change: Alright, Thank you Sam.

Speaker Change: Sam going back to the demand backdrop can you just talk about that.

Speaker Change: We're going to have to see.

Speaker Change: The draft rules to come out of this we believe it will be part of a public comment and notice period.

Speaker Change: The durability of demand and in particular in light of that.

Speaker Change: Equivalent admissions growth target of 3% to 4% this year kind of how you see that playing out.

Speaker Change: And we're going to need that additional specificity to be able to kind of comment on what potential impact it could have on Acs.

Speaker Change: Yeah.

Speaker Change: Well.

Speaker Change: Just mentioned I don't think we are seeing anything.

Got it completely understand.

Speaker Change: Sure.

Speaker Change: Currently that suggests.

Speaker Change: And your final question comes from Craig Head Mark with Morgan Stanley. Your line is open.

Speaker Change: That's a demand assumptions that we have are wrong, we looked at the first quarter.

Speaker Change: Great. Thank you.

Sam going back to the demand backdrop can you just talk about the durability of demand and in particular in light of that.

Speaker Change: If you take the leap year effect in our adjusted admissions were almost three 8% up so that's a really good metric for us.

Speaker Change: Yes.

Speaker Change: Equivalent admissions growth target of 3% to 4% this year kind of how you see that playing out.

Speaker Change: And we're encouraged by that year over year growth.

Speaker Change: As we mentioned.

Speaker Change: Yeah.

Speaker Change: <unk>.

Speaker Change: From a competitive standpoint, we don't feel like there is anything happening that's compromising our ability to gain share.

Speaker Change: Well.

Speaker Change: I've just mentioned I don't think we are seeing anything.

Speaker Change: Currently that suggest.

Speaker Change: Sort of.

Speaker Change: That's a demand assumptions that we have are wrong.

Speaker Change: Our model standpoint, I, just mentioned that value based care and other efforts arent necessarily.

Speaker Change: Looked at the first quarter, if you take the leap year effect in our adjusted admissions were almost three 8%.

Speaker Change: Negative really influencing demand and so as we push through the rest of this year. We continue to believe that our range of assumptions around volumes hold and should materialize unless something.

Speaker Change: So that's a really good metric for us and we're encouraged by that year over year growth as we mentioned.

Speaker Change: So.

Speaker Change: Dramatic happens and at this point, we don't know what that would be.

Speaker Change: From a competitive standpoint, we don't feel like there is anything happening that's compromising our ability to gain share.

Speaker Change: Yeah.

Speaker Change: Understood. Thanks for the color.

Speaker Change: Thank you.

Speaker Change: From sort of a.

Speaker Change: And ladies and gentlemen that concludes our question and answer session I will now turn the conference back over to Mr. Frank Morgan for closing remarks.

Speaker Change: A model standpoint, I, just mentioned that value based care and other efforts arent necessarily.

Speaker Change: <unk> really influencing demand.

Speaker Change: Andy Thank you for your help today and thanks to everyone for joining our call. Okay have a good weekend I'm around this afternoon, if any additional questions.

Speaker Change: And so as we push through the rest of this year, we continue to believe that our range of assumptions around volumes hold and should materialize unless something.

Speaker Change: To answer any additional questions you might have.

Speaker Change: And this concludes today's call. We thank you for your participation you may now disconnect.

Speaker Change: Dramatic happens and at this point, we don't know what that would be.

Speaker Change: Yeah.

Speaker Change: Understood. Thanks for the color.

Speaker Change: <unk>.

Speaker Change: And ladies and gentlemen that concludes our question and answer session I will now turn the conference back over to Mr. Frank Morgan for closing remarks.

Speaker Change: Thank you for your help today and thanks to everyone for joining our call. Okay have a good.

Speaker Change: This weekend I'm around this afternoon, if any additional questions.

Speaker Change: To answer any additional questions you might have thank you.

Speaker Change: And this concludes today's call. We thank you for your participation you may now disconnect.

Speaker Change: Hum.

Speaker Change: [music] them.