HCA beat forecasts but said uninsured patients who lost exchange coverage cut about $400 million from pretax results; its stock swung from up 3% to down 4%. Insurer Centene raised its earnings floor by 40 cents.
When people lose health insurance bought through the public exchanges, two kinds of companies feel it. The insurer loses members. The hospital still treats many of them, often without being paid in full. On Tuesday the two reported on the same morning.
HCA: a beat with a cost
HCA Healthcare reported adjusted earnings of $7.22 a share for the third quarter, above the $6.66 analysts expected, according to LSEG. Revenue rose 3.6% to $19.85 billion, against an estimate of $19.33 billion. Same-facility admissions rose 2.7%, and equivalent admissions, which include outpatient care, rose 3.0%. Net income attributable to HCA fell 3.9% to $1.58 billion.
The company said a shift in its payer mix, driven by uninsured patients who lost coverage through the exchanges, reduced pretax results by about $400 million. HCA said it expects full-year results in the upper half of the ranges it issued in July. State-directed Medicaid supplemental payments helped cushion the quarter, Reuters reported. HCA "is positioned to end the year positively," its chief executive said.
The stock opened 3.3% higher at $480.55 and reached $488. By about 1:46 p.m. Eastern, it was down 4.0% at $446.50, a swing of more than 7 percentage points from the opening gain.
Centene: fewer members, better margins
Centene, whose business spans Medicaid, Medicare and exchange plans, reported adjusted earnings of 58 cents a share and a GAAP loss of 14 cents. Revenue was $50.65 billion. Its health benefits ratio, the share of premiums paid out in medical costs, was 92.7%, slightly better than the 92.84% analysts expected. Centene said the result was "better than expectations, driven by the Medicare segment, with Medicaid and Marketplace on track."
Centene raised its full-year adjusted earnings floor to more than $5.20 a share, from more than $4.80. Its exchange membership has shrunk sharply over the past year, to roughly 3.4 million from about 5.8 million.
"Solid underlying fundamentals within our core businesses have powered a faster recovery to our earnings trajectory than previously anticipated," Centene's chief executive said. Centene shares rose 1.9% to $69.30.
The same shift, two ledgers
For an insurer, shedding members who were costly to cover can improve margins even as revenue stalls. For a hospital, the same people may still arrive at the emergency room, but now as uninsured patients. HCA put a number on that: about $400 million in one quarter.
That does not mean one company's gain is the other's loss dollar for dollar. But it may help explain why a hospital operator that beat forecasts lost ground on Tuesday while the insurer rose.
Two readings
One reading is that HCA's business is strong enough to absorb the hit. Admissions are growing, earnings beat by a wide margin, and the full-year outlook points to the upper half of the range.
The other is that the payer-mix drag is the number that matters for 2027. If more people lose exchange coverage, the cost to hospitals grows, and the market's reversal on Tuesday suggests investors are weighing that trend more than the quarter's beat.
What to watch
HCA's comments on uninsured volumes for the fourth quarter and 2027, Centene's exchange membership and Medicaid rates for 2027, and results from other hospital operators and managed-care companies in the coming weeks.