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HCA Healthcare
- Bond: HCA 5.25 30
- Indicative Yield-to-Maturity (YTM): 5.013%
- Credit Rating : BBB
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Fundamental View
AS OF 28 May 2025HCA’s volume metrics and EBITDA margins consistently best industry peers, primarily due to strong operational efficiency and an inpatient/outpatient focus within large, healthy markets.
HCA’s credit metrics have improved in recent years and leverage sits near the low end of management’s target net leverage range of 2.75-3.75x.
HCA benefits from substantial financial flexibility provided by strong FCF generation and easy access to the capital markets. The company also maintains sufficient liquidity with a well-laddered maturity schedule.
Business Description
AS OF 28 May 2025- HCA operates more than 190 hospitals with ~50k beds and 125 freestanding surgery units (as of 1Q25). The company operates in 20 states and England, but ~50% of its hospitals are located in Texas and Florida. HCA is the largest for-profit hospital operator in the US by revenue. HCA also purchased 41 urgent care centers in Texas from FastMed for an undisclosed amount.
- HCA has gone private twice since its initial public offering in 1969, most recently in 2006. During periods of private ownership the company has engaged in debt-financed special dividends. HCA returned to public ownership in 2011.
- HCA has been an active consolidator in the industry, acquiring General Health Services, Columbia Healthcare, Hospital Affiliates, and Healthcare Corp, among others. In rationalizing its offering of services and market focus, HCA has sold or spun-off hospital groups such as LifePoint, Triad, and HealthTrust.
Risk & Catalysts
AS OF 28 May 2025We see some risk of choppy operating performance tied to an unwind of acuity and payor mix benefits experienced through COVID.
HCA guides to FY25 revenue growth of ~5% and adjusted EBITDA growth of ~6%. Management reported an 9% YoY decline in 1Q25 contract labor costs and with expectations of this trend to continue through FY25.
HCA maintains the flexibility to manage to target leverage levels. Net leverage totaled 3.1x at 1Q25. Management updated its net leverage target to 2.75-3.75x (from 3-4x previously).
HCA’s board recently authorized an additional $10 bn share repurchase program (with a significant portion expected to be completed in FY25).
Key Metric
AS OF 28 May 2025| $ mn | Y20 | Y21 | Y22 | Y23 | Y24 | LTM 1Q25 |
|---|---|---|---|---|---|---|
| Revenue | 51,533 | 58,752 | 60,233 | 64,968 | 70,603 | 71,585 |
| SWB | 23,874 | 26,779 | 27,685 | 29,487 | 31,170 | 31,460 |
| Supplies | 8,369 | 9,481 | 9,371 | 9,902 | 10,755 | 10,848 |
| Adj. EBITDA | 10,037 | 12,644 | 12,067 | 12,726 | 13,882 | 14,262 |
| Total Debt | 31,004 | 34,579 | 38,084 | 39,593 | 43,031 | 44,576 |
| Gross Leverage | 3.1x | 2.7x | 3.2x | 3.1x | 3.1x | 3.1x |
| Interest Coverage | 6.2x | 8.4x | 7.3x | 6.7x | 7.2x | 7.4x |
CreditSight View Comment
AS OF 04 Jul 2025We maintain an Outperform recommendation on HCA. HCA remains the strongest hospital operator in the for-profit space, exhibiting operational stability and strong FCF generation. These strengths should help the company weather any tariff- or policy-related headwinds. We see HCA as a good alternative to some of the widest BBB-rated credits in our IG Pharma universe, namely Biogen and Viatris.
Recommendation Reviewed: July 04, 2025
Recommendation Changed: May 02, 2018
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