The Importance of HCA Healthcare
HCA Healthcare (ticker: HCA) is the largest hospital chain in the United States and a key component of the American healthcare network.
HCA Healthcare’s role in the American hospital system is similar to the importance of UnitedHealth Group to the U.S. healthcare system (see my post of “UnitedHealthcare, the world’s largest health insurer, role model of Dow Jones“). Or to the importance of Intuitive Surgical to surgical robots in the medical device industry (see my posts of “How does dominated Intuitive Surgical make money?” and “Intuitive Surgical, a company that essentially monopolizes surgical robots“).
Company Introduction
Founding
The company was originally established at Park View Hospital in Nashville, which Thomas F. Frist Sr. co-founded with other physicians in 1960 and served as CEO.
Hospital Corporation of America (HCA) was founded in 1968 in Nashville, Tennessee, by Thomas F. Frist Sr., Thomas F. Frist Jr., and Jack C. Massey.
Vision
The founders’ vision was to integrate hospitals to provide patient-centered care, leveraging the organization’s combined resources to strengthen hospitals and improve healthcare in the United States.
HCA Healthcare’s Public History
1969
HCA (formerly known as Hospital Corporation of America) first listed on the New York Stock Exchange (NYSE) in 1969.
The company was taken private in a leveraged buyout in 1988.
1992
The company returned to public ownership in 1992 through a merger with Columbia/HCA.
2011
The company, under the name HCA Holdings, Inc., issued 126.2 million shares at $30 per share and began trading on the New York Stock Exchange on March 10, 2011, under the symbol HCA. This was the largest private equity-backed IPO in U.S. history at the time.
The 2011 IPO effectively marked the transition from the previous HCA Holdings structure to the current HCA Healthcare structure.
Company Size
Hospitals and Nursing Homes Worldwide
HCA Healthcare, Inc. currently operates approximately 190 hospitals in 20 U.S. states and the United Kingdom. Hospitals and approximately 2,400 sites of care (including surgery centers, freestanding emergency rooms, urgent care clinics, physician offices, home health/hospice agencies, etc.), data as of December 31, 2024.
Primarily in Texas and Florida
A significant portion of these hospitals are located in Florida and Texas. As of 2022, HCA has 47 hospitals and 31 surgery centers in Florida, and 45 hospitals and 632 affiliated facilities in Texas.
United Kingdom
HCA International, the UK arm of Hospital Corporation of America, serves approximately half of London’s private patient population. The company plans to open a new private hospital, Harborne Hospital, near Queen Elizabeth Hospital in Birmingham, in January 2024.
Medical Education
In recent years, HCA has HCA Healthcare has become a significant provider of clinical and medical education. It is the largest sponsor of graduate medical education programs in the United States, with 56 teaching hospitals in 14 states, primarily in areas where physician training programs are underserved. The company operates the School of Nursing Research and Mercy College of Nursing, along with several advanced nursing simulation training centers. In early 2020, HCA Healthcare completed its acquisition of a majority stake in Galen College of Nursing, which offers Bachelor of Science and Associate of Science degrees in Nursing at 21 campuses in 12 states.
Company Growth and Mergers
Early Developments
At the time of its initial public offering on the New York Stock Exchange in 1969, HCA Healthcare owned 11 hospitals. The 1970s saw rapid growth for both the healthcare industry and HCA Healthcare. In the early 1980s, HCA Healthcare shifted its focus to consolidation, acquiring General Care Corporation, General Health Services, Hospital Affiliates International, and Health Care Corporation. By the end of 1981, HCA HCA Healthcare now operates 349 hospitals with over 49,000 beds.
In 1987, the company spun off HealthTrust, a privately held company with 104 hospitals. In 1988, it completed a leveraged management buyout led by Chairman Thomas F. Frist Jr. HCA Healthcare returned to the public market in 1992.
Columbia/HCA Merger
The company first acquired 73 hospitals from Galen Health Care from Humana. Then, in 1994, HCA Healthcare merged with Columbia Hospital Corporation to form Columbia/HCA Healthcare. During this period, the company continued to acquire, restructure, or close many underperforming hospitals.
Recent History
On November 17, 2006, HCA became a private company for the third time when it was acquired by an investment group led by KKR, Bain Capital, Merrill Lynch, and HCA Healthcare founder Thomas F. Frist Jr. The total transaction value was approximately $33 billion, making it the largest leveraged buyout in history at the time, surpassing the 1989 acquisition of RJR Healthcare. Nabisco acquisition.
Controversy
A Sordid Past
In the 1990s, the company was implicated in illegal accounting and other criminal practices, resulting in the company paying more than $2 billion in federal fines and other penalties, and CEO Rick Scott was fired by the board.
Health Insurance Practices Litigation
In 1993, a group of former HCA employees filed a lawsuit against the company, alleging suspected health insurance manipulation practices. In 1997, seventeen years into the FBI, IRS, and Department of Health and Human Services investigation, Anthony Rick Scott, chairman of the Columbia/HCA board, resigned from his position as chairman.
Insider Trading Litigation
In July 2005, U.S. Senator Bill Frist sold all of his HCA shares (held in a blind trust) two weeks after disappointing earnings sent the stock plummeting 9 percent. Frist, who was considering a presidential run at the time, cited the sale as a way to avoid conflicts of interest.
Operating Performance
Q3 2025 report
Here are the key takeaways from HCA’s performance: Healthcare Q3 2025 Earnings Highlights:
- Revenue Growth: 9.6% growth driven by volume growth, payer mix optimization, and Medicaid supplemental programs.
- Diluted EPS Growth: 42% growth on an adjusted basis.
- Same-Facility Equivalent Admissions: 2.4% year-over-year increase.
- Inpatient Surgery Volume: 1.4% year-over-year increase.
- Outpatient Surgery Volume: 1.1% year-over-year increase.
- Same-Facility Visits: 1.3% year-over-year increase.
- Commercial and Medicare Visits: Combined growth of 4.1% in the third quarter.
- Net Revenue Per Equivalent Admission: Growth driven by a strong payer mix and Medicaid state supplemental payment revenue.
- Adjusted EBITDA Growth: Revenue from the Medicaid supplemental payment program increased by approximately 2.4% year-over-year. $4.4 billion.
- Operating Cash Flow: $4.4 billion this quarter.
- Capital Expenditures: $1.3 billion this quarter.
2025 Guidance
- 2025 Revenue Guidance: Expected to be between $75 billion and $76.5 billion.
- 2025 Net Profit Guidance: Expected to be between $6.5 billion and $6.72 billion.
- 2025 Adjusted EBITDA Guidance: Expected to be between $15.25 billion and $15.65 billion.
- 2025 Diluted EPS Guidance: Expected to be between $27 and $28.
- 2025 Capital Expenditures Guidance: Approximately $5 billion.
Positive and Negative from the Financial Report
Positive Highlights
Positive Highlights from the third quarter 2025 financial report include: 42% year-over-year adjusted EPS growth and 9.6% revenue growth, demonstrating the company’s strong performance from broad-based volume growth, improved payer mix, and Medicaid expansion. Additional revenue from supplemental programs.
The company raised its annual guidance, reflecting strong performance and a positive outlook for the fourth quarter. This reflects strong demand for HCA Healthcare’s healthcare services, with same-facility equivalent admissions increasing 2.4% year-over-year.
Regarding financial health, the company maintained strong operating cash flow of $4.4 billion in the quarter, supporting strategic capital allocation to create long-term value.
Negative Highlights
Medicaid and self-pay visits declined compared to the prior year, highlighting potential challenges in these areas. A slow start to the peak respiratory season in 2025 impacted the annual growth rate of admissions and patient visits. Supplemental payment plans are complex and have uncertain timelines, and they do not fully cover the costs of treatment for Medicaid patients.
While the company has implemented resiliency plans to provide some relief, it faces ongoing pressure in certain operating cost areas. Hurricanes continue to impact certain markets, with impacts on North Carolina’s payer structure and labor costs persisting.
Capital Market Performance
Market Capitalization
As of October 24, 2025, the company’s market capitalization is $104.6 billion, making it a large public company.
Valuation
As of October 24, 2025, the company’s price-to-earnings ratio is 19, which is relatively low during a bull market.
Stock Price Performance
As of October 24, 2025:
- Up 50.14% in 2025
- Up 227.19% in 5 years
- Up 1,336.50% in the 14 years since its relisting in March 2011.
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