Ladies and gentlemen, welcome to HCA Healthcare's first quarter 2026 earnings conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations, Mr. Frank Morgan.
Please go ahead, sir. Good morning, and welcome to everyone on today's call. With me this morning is our CEO, Sam Hazen, and CFO, Mike Marks, and then we'll take questions. Before I turn the call All over to Sam, let me remind everyone that should today's call contain any forward-looking statements, they're based on management's current expectations. Numerous risks, uncertainties, and other factors may cause actual results to differ materially from those that might be expressed today. More information on forward-looking statements in these factors are listed in today's press release and in our various SEC files. On this morning's call, we may reference measures of non-GAAP financial measure, a table providing supplemental information on adjusted EBITDA and reconciling net income attributable to HCA Healthcare, Inc. is included in today's release. This morning's call is being recorded in a replay of the call. With that, I'll now...
And thank you for to recognize our colleagues for continuing to demonstrate a remarkable ability to adapt to changing conditions and deliver positive results for our patients in HCA Healthcare. From a volume perspective, we did not experience the typical lift related to seasonal respiratory conditions. Compared to the first quarter, related admissions were down 42%, and our respiratory-related emergency room visits were down 32%. A storm that hit a few of our markets adversely impacted our volumes in the quarter. On the positive side, however, we experienced a greater net benefit than anticipated from state supplemental programs. As a reminder, these programs are complex and difficult to predict, mostly offset in volumes. The underlying shifts resulting from the changes in the health insurance exchanges were generally in line with our expectations. This area remains fluid in a range of potential scenarios as the effects continue to evolve. As mentioned, over the last several quarters, our teams have been focused on a broad resiliency plan designed to generate cost savings where appropriate, enhance network execution, and strengthen organizational capabilities. I'm pleased with our resiliency efforts to date, and we expect they will continue to help offset some of the expected impact. Additionally, we were pleased with the volume of the respiratory-related and winter storm impacts were mostly contained to volumes rebounding nicely. For the first quarter, revenue increased 4.3% compared to the first quarter last year. Adjusted EBITDA increased almost 2%, and diluted earnings per share, as adjusted, increased approximately 11% versus we continue to deliver for our patients in important metrics, including improved quality measures, increased patient satisfaction, and reductions in the average length of stay. We're excited about our digital transformation program and AI agenda. They progressed during some key initiatives to more facilities. Our clinical teams continue to advance efforts to enhance quality, safety, and services to our patients with progress on broad initiatives across nursing care, hospital-based physician services, and we continue to invest significantly in network development with our capital spending and with selective outpatient facility acquisitions. As compared to the first quarter last year, our networks expanded their overall sites of care by more than 4%, increased hospital beds through capital spending by 4% to emergency room capacity. We view the respiratory-related volume shortfall and the increase in supplemental payment net benefits as first quarter events. Assumptions for the remainder of the year related to volumes remain in line. Impressive capability to remain disciplined in dynamic environments. Resounding strength of our teams, patients, or details on the quarter. Good morning everyone. Let me start
by providing same facility volume comparisons for the first quarter of 2026 or 2025. Admissions increased 0.9 percent the equivalent additions increased 1.3 percent inpatient surgeries were down 0.3 percent and outpatient surgeries declined 1.7 percent er visits increased 0.3 percent as sam mentioned we had a much milder respiratory season in a quarter this produced a drag on our quarterly volume growth in admissions and er visits of 70 basis points and 140 basis points respectively in addition the winter storm in january impacted a wide swath of our markets including texas tennessee north carolina and virginia reducing admissions and er visits by an estimated 30 basis points and 50 basis points the impact of these two factors was consistent across all payer categories and in total adversely impacted adjusted ebit off by an estimated 180 million dollars equivalent emissions excluding exchanges increased point six percent medicare increased one point nine percent and medicaid increased point three percent we believe the variance in volume relative to our expectations was almost entirely driven by the respiratory season in winter storm we view these factors as being temporal and not structural all of this into consideration our volume growth in the quarter was generally in line with our two to three percent volume growth assumption for the year albeit at the lower end of the range adjusted EBITDA margin decreased 50 basis points versus prior year quarter salaries and benefits as a percentage of revenue improved 30 basis points and supplies improved 20 basis points other operating expenses as a percentage of revenue increased 90 basis points primarily due to an increase in cost related to the medicaid state supplemental payments professional fees, and technological investments. As Sam noted in his comments, volumes continued to improve throughout the quarter, and we noted a similar progression of operating leverage and cost trends. Regarding Medicaid's supplemental payment programs, while we expected an increase in net benefit of $80 million, we realized an increase in net benefits of approximately $200 million to adjusted EBITDA versus the prior quarter. this was primarily due to the grandfathered approval of georgia the reinstatement of the atlas program in texas and the year-over-year benefit of the tennessee program that was approved in the third quarter of 2025. we are adjusting our full year range to reflect a decline in supplemental payment program net benefit between 50 million to 250 million dollars versus prior year this updated guidance does not include any potential impacts from additional approvals of grandfathered applications we continue to monitor the ongoing developments related to these programs and particularly florida we continue to feel positive about the prospects for the approval of the florida program which covers the period of october 1 2024 to september 30th 2025. if approved we believe it should result in additional revenues which may be significant Now, let me provide additional information regarding the exchange environment. As we stated in our fourth quarter call, the complexity of the exchanges is significant, and we're tracking several areas within the company. For the quarter, we estimate our same facility exchange equivalent adjusted emissions to cause approximately 15% versus prior year quarter. This represents our comprehensive evaluation of patients that presented with exchange coverage, that ultimately will not be covered. Using the same analysis, we estimate same-facility uninsured equivalent emissions increased approximately 16% versus prior year quarter. Over half of this implied increase relates to the movement from exchanges and normal uninsured growth. The remaining portion reflects a slowdown of conversions to Medicaid from patients who are not willing to fill out applications. We estimate the adjusted EBITDA impact from the exchanges to be approximately $150 million in the first quarter of 2026 versus the prior year quarter. Given our experience to today, we still believe our full-year range of $600 million to $900 million on adjusted EBITDA is appropriate. The exchange environment remains dynamic and has not fully settled. We will continue to track the fluid nature of this reform and will provide further commentary on our moving to capital allocation. Capital expenditures totaled $1.1 billion in the quarter. Additionally, we purchased $1.57 billion of our outstanding, and we paid $183 million in dividends for the quarter. Cash flow from operations was $2 billion in the quarter, representing a 22% increase in the first quarter of 2026 versus the prior year quarters. our debt to adjusted EBITDA leverage remains in the lower half of our stated target range and we believe our balance sheet is strong and well positioned for the future as noted in our release we are reaffirming our estimated guidance raises for i will now hand the call back to frame
morgan for questions thank you mike as a reminder please limit yourself to one question so that he might give as many as possible in the queue an opportunity to ask a question abby you may now give instructions to those who would like to ask a question. 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. If you would like to wait for all your questions, simply press star one again. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, it is star one to join the queue. And our first question comes from the line of Ben Hendricks with RBC Capital Markets. Your line is open.
Thank you very much. I appreciate the color on the respiratory, SDP, and other components. Maybe you could just give us a rundown broadly of how your results compared to your internal expectations for the quarter.
Thanks, Ben. This is Mike. I mean, our results were a bit short in terms of adjusted EBITDA to our internal expectations. You know, I would size our internal expectations as being pretty consistent with the midpoint of our guidance in terms of growth, pretty consistent actually with consensus coming into the call. Really two main drivers in terms of the shortfall to internal expectations. The first one is this, you know, kind of shortfall in the seasonal volume uplift from respiratory in the winter storms, which was mostly offset by the net benefit from the supplemental payment program. A little detail here on the seasonal volume in the fall. You know, I've already kind of quantified the volume side of that. So let me talk about the expense side. But as we were coming into January, our respiratory season was actually strong at the beginning of the year. However, later in January, it became apparent that the respiratory season was actually ending abruptly. And we were then hit with a significant January winter storm across several of our respiratory volume, as well as the winter storm, delayed our ability to flex down our seasonal costs in a quarter. we were ultimately able to do so as we moved through the quarter but there was a delay so let me switch now to the supplemental payment program activity the as noted you know medicaid supplemental payments net benefits was better than expected as we came into the quarter we did anticipate an increase in the supplemental payment net benefit in q1 of 80 million dollars largely did the increase in the tennessee program that was approved in in q3 of 2025. So the $200 million in net benefit in the first quarter was about $120 million higher than our internal expectations in the quarter, and again, resulted from the approval of the Grandfather Georgia program as well as the reinstatement of it. So in summary, Ben, when I think about first quarter, you know, largely we were just a bit short in total, but when you take the seasonal volume uplift and the pickup in net benefit supplemental payments those are really the main drivers. Thanks appreciate that color and then
uh kind of as a quick follow-up can you just give us an update on the moving pieces that kind of get you back to the initial guide you know maybe walk us through the components of the EBITDA bridge as you uh see them today after such a dynamic first quarter thanks. Sure um you know if you go back
to the release you know the the really only change to our key assumptions uh for the 2026 guidance relates to the we estimate that the georgia approval and the reinstall will provide approximately 200 million dollars of incremental net benefit for the full year that was not originally included in our guidance i would note that uh you know the 120 million dollars related to Georgia and Texas that we talked about, you know, the component that applied to first quarter and for the full year of 26 really makes up that $200 million. And so, you know, that's why we're adjusting our assumption for full year net benefit to now be a decline of $50 million to $250 million. And just to note, that assumption does not include any additional approvals of grandfathered When I think about the rest of our assumptions, Ben, if you think about the impact of the exchanges. We still believe that that $600 to $900 million range is appropriate based on what we've learned in first quarter. Our resiliency assumptions that we're in guidance also, we believe, are still reasonable and appropriate. And so, you know, at the end of the day, we just felt like that it was appropriate not to change our total guidance, even with the $200 million improvement in first quarter. You know, a chunk of that really goes back to this temporal nature of the headwinds that we saw related to the seasonal volume impacts in the winter storm and the related cost impacts. And so, as we think about how we progress through the quarter, you know, Sam mentioned that, you know, as we exit the column, improving, you know, largely back to our original plan. We also saw the same thing in our cost structure. You know, as we got through March, our cost trends really reflected good performance in March and were largely on plan. And so that's the walkthrough. Thank you very much. And our next question comes from the line
of AJ Rice with UBS. Your line is open. Hi, everybody. Just to put a fine point on what
we're just going on numbers flying back and forth, is the right way, am I hearing you say You basically had $180 million of negative impact from flu and weather in the first quarter. You picked up $120 million of benefit from DPPs in the first quarter that was not expected. So the net was a $60 million drag net of the unusual items or weather and flu. and then on the 180 million versus the 200 million of DPP in the full year impact so you're ending up roughly 20 million if you maintain your guidance for Q2 Q3 Q4 better because of the incremental impact of DPP over the course of the year I just want to make sure that's the right take from what
you're saying? Yeah, I think that's, you know, you're generally in the zone. I mean, you know, we view the $180 million headwind in the quarter as being temporal and not structural, so we don't think that we're pleased. You know, the $200 million improvement for the full year 26 from, you know, supplemental payment benefits, you know, reflect Georgia and Texas, and then, you know, just broadly, we're not changing our full-year guidance on earnings, and I think, you know, that's the way to read that. You know, I think I would acknowledge there's a little bit of softness, you know, amidst of this consensus that may be not fully explained, but it's pretty close from the moving factors in the first quarter. And then, AJ, when we look at the rest of the year and we think about the demand that we're seeing in the marketplace, we believe, you know, that we will be able to run between two to three percent volume growth in the next three quarters. Our original assumption around the exchanges, around revenue, and our cost trends, you know, we think that the balance of the year is another way of saying it is largely
back on. Okay, maybe follow up. No, this is Sam. I mean, we do, I'll call it a business analysis of the company in the first, pretty much what we expected, save that we believe that we're trying to influence what we can on the edges uh and put ourselves in a position where we uh get to where we need to be by the end of the year happen here there's always puts and takes with the some years what we're trying to judge is the business functioning and okay could i just uh as a
follow-up uh your 400 million resiliency program i know you've got a lot of ai initiatives and but some of that's other stuff can you just sort of update us on where you're at with the ai initiatives and is that 400 million a pretty firm number is there a range around that as to what you
might ultimately realize this year in the quarter the sam aj in the quarter as mike indicated you know we get operating leverage when we get volume whether it's respiratory volume or lost a little bit of that in the first quarter but again when you see in the subsequent months and uh and so when you merge that with resiliency program over the course of the year, we think we can get where we need to be with our call opportunities, maybe more pockets getting implemented. We have productivity with our physicians, and the documentation associated with that. We're rolling out our nurse handoff program. As I mentioned, we've got new initiatives that are rolling out to more facilities. That's got more patient safety and nurse engagement. some productivity to it. We're really excited about what the artificial intelligence program can do to complement our caregivers in our company and run the business better. We're seeing it in case management. We had good management as we talked about. This is coming together. Does it have some upside in some areas? Yes. Could there be some pressures in other areas? Of course, I made it at the beginning.
Okay. Thanks so much.
And our next question comes from the line of Ann Hines with Mizuho Securities. Your line is open.
Good morning and thank you. I just have a quick follow-up from a comment you made in the prepare remarks, and then I have a question. Just on the Florida DPP, I do think there's some anxiety in the market because it's taking so long to approve. Do you have any color on maybe from a time and perspective when that could be approved? And then my real question is, just on ACA, you know, just with the increase in the uninsured and the bad debt, is that coming in line with your initial expectations? And can you remind us, does your guidance assume a deterioration in the collectibles of co-pays and deductibles of the insured, and what change is embedded in your guidance? Thank you.
That is a multi-part question, and it was impressive. Thank you. So, when I think about, let me start with Florida, and, you know, I do think that CMS is, as you noted, but, you know, based on our sense of things as we sit here today, we do feel positive, and if approved, as I noted in my prepared comments, we believe it would result not only in additional revenue, but that's significant. That's a quick update on Florida, and obviously we'll be watching this just like you will, and we'll keep you informed as that moves. As it relates to these changes and what we're seeing related to patient amounts due, I would say it like this. As we came into our modeling, models included some shift. And what we're seeing as we study our patients so far is that there has been a bit of the patient selection of metal tier. I wouldn't say, however, that that shift is significant. Also noting that even within silver, if you compare the benefit designs in 2025 to 2026, that the amount patients owe within silver are also increasing the 2026 activity. And so all this is leading us to conclude that we, you know, that we are seeing a growth. And, you know, as we've noted in the past, we additional managed care. And this shift, I do think, will have an impact on patient collections on uncompensated care. I don't think that the impact of this shift and the growth in a patient amount of dues is going to be overly material, given the relatively minor portion of our patient cash collections that relate to exchange patients. We did include in our original estimate of $600 to $900 million. It's within the range of our model. To your movement out of the exchanges to uninsured. And so if I think about the kind of the payer mix implications within the model, we would lose about 15% to 20% of people leaving the exchanges. We saw about a 15% decline in first quarter, so at the lower end of that range. You may recall that our assumption was about 15% to 20% of those who lost coverage on the exchanges would migrate to employee-sponsored insurance. You know, as we're studying the patients during the first quarter that previously had exchange coverage, we are noting that patients converting to employee-sponsored insurance are generally within the estimated range that we built into our guidance model. Interestingly, patients migrating to uninsured are just a little bit less than expected, as we are seeing some individuals converting to Medicare or Medicaid due to the age or to changes in life circumstances. But I would note that this is a slight improvement. It was not significant. And overall, the payer mix deterioration from the exchanges is generally in line with our expectations. We're going to continue to mature, so we'll have more mature insights. So I'll just end with this. I mean, if you think about the growth in the uninsured that I highlighted, you know, in my prepared comments, you know, a little more than half of that 16% growth was from the movement from exchanges. And that's in line generally with the other factor that did show up as growth in uninsured volume was this slowdown in Medicaid.
Broadly, those were the components that I would say that are in our uncompensated care results for the quarter.
The next question comes from the line of Brian Tenkelet with Jeffries. Your line is open.
Hey, good morning, guys. Hey, Mike, just a quick view. I mean, maybe to follow up on your comments on Ann's question too, right? How do you want us to think about the sequential move then from Q1 EBITDA to Q2, factoring in the recovery and volumes and then your expectations on Hicks and how that's all going to play out?
Yeah, you know, we don't generally give guidance by pointing back to normal season. You know, clearly, as you noted from our comments, and we do view the volume shortfall in first quarter as being temporal and not structural, so, I mean, that's an important note. You know, broadly on the exchanges, you know, you get a sense for what we saw in the first quarter, it is dynamic. I think about what we're going to learn on the changes, I mean, we're going to continue to learn more as we go along. You know, I think what that looks like is studying, you know, how much of the anticipated 2026 full-year volume decline came through during the first quarter, which is a bit difficult. You know, as we studied this, we know that certain individuals were in their grace period throughout their quarter, and they made drop coverage. We made an estimate for those patients in both our equivalent admission statistics and our financials. But I still think, you know, based on the data we've seen to date, we do believe that our assumption of a 15% to 20% volume decline, you know, continues to be reasonable. So those would be, you know, the thoughts that I can give you now related to the progression through the year.
The question comes from the line of Whitmail with Lyrinc Partners. Your line is open.
Hey, thanks. So the health plans are all on an organized campaign today on prior authorization. I just was wondering if you could talk about any payer behavior changes, particularly post-discharge denials, anything new that you saw emerge within the quarter or year to date. And I know you've been working with a number of plans to sort of streamline all this back and forth stuff, so just any color would be helpful.
Sure. Thanks, Whit. you know, we continue to experience, you know, increased activity levels with our payers on denials and underpayments pretty broadly across payers and across products. I mean, I might continue to call out Medicare ban within the product mix. As you know, we've been working really hard over the last several years to strengthen our revenue cycle. We've added resources, technologies, and a lot of capabilities around speed resolution to really go after the root causes of denials, let's continue to pay dividends. Given the results of the work of the company, I think as you look at first quarter, even with the pretty significant increase in activity we are seeing, you know, our recovery resolution, our work around the pills and getting these overturned are such that we were able to mitigate and not see a lot of year-over-year impact. The denials and underpayments are still really high, and so it's a key part for our industry to continue to work together on. As you noted, we have launched over the last really 18 months now a series of partnerships between us and our payers, eliminate faxes, eliminate paper, a lot of work around administrative simplifications for both us and our payers to deal with the really significant administrative cost burdens that are associated with, you know, kind of the health care in America. And then lastly, management of disputes. I would say that those are a long way to go. Question comes from the line of Andrew Mock with Barclays. Your line is open. Hi, good
morning. I wanted to follow up on the slower conversions to Medicaid. I'm curious which states you're seeing that slow down, whether you view that as a temporary or issue or durable trend. And when you take a step back on the broader uninsured and ACA population this year, did you make any changes to your dead debt accrual process? Thanks.
When I think about Medicaid and the slowdown in the conversion, and it's still, you know, we largely think about this as are less willing to fit that could be driven immigration and like. So we're studying that, and I'm not quite sure if that's the full reason why. But that is a piece of the story here in terms of the year-over-year growth in the slowdown in Medicaid conversion. Payor makes shifts in the patient amount due collection that we anticipated related to uninsured volume growth and the potential impacts in terms of patient dues built into generally our models.
This question comes from the line of Matthew Gilmore with KeyBank.
your line is open. Hey, thanks for the question. I wanted to ask about the hurricane impacted markets. I think guidance didn't assume any continued improvement from those markets. Can you just give us an update in terms of how things are playing out and if there's any signs that
those markets are improving, particularly North Carolina? North Carolina, here's the short story. Demand is above our expectation, seeing us more to significant nursing, that demand. So we've seen
in North Carolina. You know, the other thing, Sam, that we're seeing is the payment exchange in North Carolina. It clearly has been disrupted in terms of that workforce disruption, you know, is also impacted. When we think about the hurricane-related markets, you know, in our guidance, we indicated that we did not think that we would see any kind of material improvement in year-over-year earnings from the hurricane markets. I mean, our Tampa Facility Largo Medical Center is largely recovered and in flight, but we don't think we're going to see any net material increase in Europe you're earned to say I'm articulating.
Got it. Thank you.
And our next question comes from the line of Ryan Langston with TD Cowan. Your line is open.
Good morning. On the impact from winter weather, should we expect any lost procedures in January to come back through the year? I think you said February, March, volumes more in line. I'm just wondering if you picked those January volumes up already. I'm sorry if I missed this, but can you quantify the impact from weather to the inpatient and outpatient surgery growth?
You know, in my prepared comments, we indicated that that was 30 basis impact on year-over-year volume growth on admissions and a 50 basis impact on year-over-year ER visits. So just to keep that in mind. From a recovery standpoint, we do believe that from the winter storm that we largely recovered, not recovered, and what drove the net volume impact here was really the emergency admissions, where there was really not a second chance to. So I don't think that the winter storm was really an impact on our storm.
Yeah, it's not going to be notable over the end to...
All right, thank you.
And our next question comes from the line of Justin Lake with Wolf Research. Your line is open.
Thanks. Good morning. Wanted to follow up on your comments around exchange patients sitting in the grace period in February and March that you might not get paid for. My understanding is that managed care will let you know who these patients are in real time and that their coverage is suspended. Is that right? Just to be clear, how do you treat these patients within the exchange volume decline of 15% in the first quarter and maybe share a little more color on how you accounted for this utilization during the quarter from an accounting revenue recognition perspective. Thanks.
Thanks, Justin. So, if you think about the verification process that we have with our payers, we have some payers where we do receive some premium status information through our verification process. But the information that we are able to access is not consistent, and it's not standardized across exchange papers. As a result, we generally do not have reliable third-party visibility whether a premium has been paid. When the information is available, it certainly helps us inform further patient engagement to encourage these patients to maintain their coverage. Generally, though, I would not characterize the eligibility and verification information we receive at the time of service as comprehensive, largely accurate, as a verifiable data point. Let's talk a minute, Justin, about the grace period. Patients that receive premium assistance, whether they are auto re-enrollees, new exchange enrollees, or switching plans, generally have a three-month grace period. The payer is required for the remaining two months that the premium was caught. First, look at every patient that came in with exchange coverage and try our best to understand whether they had the nutrition during the quarter, at which point we recognize that revenue impact during the quarter, or to make an estimate, we believe we'll lose and come out of the grace period with attrition, where we will not get paid for that, and we'll know that in second quarter and beyond as they get past. We've made an accounting evaluation and a business evaluation that we've included in our analysis about equivalent admissions. And when we articulate that 15% drop in equivalent emissions, it contains both of those components. And same thing with the impact on our revenue and earnings.
And our next question comes from the line of Scott Fidel with Goldman Sachs. Your line is open.
All right, thanks. Good morning. It's interesting if you could talk about what you saw with acuity and case mix in the quarter, maybe putting aside the lighter respiratory, which we know would probably drive a lower case mix. And then in terms of, you know, maybe in terms of patients and then some of the types of procedures and service lines, how that impacted acuity and case mix as well.
So this is Sam. We saw increased acuity as reflected in our case mix. It was modestly up on a year-over-year basis. Inside of that, we did have the respiratory dynamic that we alluded to, driven that maybe we had seen in the past. activity, so our cardiac procedures grew significantly, trauma percent also driving acuity. We had rehab services grow at a very momentum the past few years, continued into the first quarter, again, influenced somewhat in total by these other factors that we alluded to. So we continue to find opportunities in the market to develop more comprehensive programs as our communities grow and service our communities more effectively closer to home. That will continue to be a part of our journey here. One other metric that I think is important with case mix is our receiving of patients through our patient logistics centers grew by 2.4%. That tends to have a higher acuity level as well as other community-based hospitals are using the deeper service offerings that we have in some of our tertiary and quaternary, we're generally...
And Sam, can I just ask for the follow-up, just around the payer buckets on acuity and case mix, were they relatively consistent, or would the exchange sort of disruption, did you see any sort of movement around the different payer...
No, it's pretty consistent. You know, what's interesting, the case mix was pretty consistent, so we had, you know, consistency across all aspects of our payer classes when it came to sort of the overall
story. Thank you. Question comes from the line of Kevin Fishbeck with Bank of America. Your line
is open. Okay, great. Thanks. Can you talk a little bit about the $150 million impact from the exchanges this quarter and how that compares to the $600 to $900 million annual number? Did you guys assume that that number would build as the year goes on? Or are you saying that, you know, you're kind of trending towards the lower end for the year on that dynamic? And then also on the Medicaid side, is this dynamic something that you just kind of started noticing in Q1 or has it been building for a while? And is it a dynamic that you think is peaking in Q1 or will get better or worse, you know, from here? Thanks. Yeah, on the, let's start with Hicks. If I think about
the $150 million for the quarter, and, you know, obviously that would put us a bit, but I think it's a bit early. I mean, it's dynamic. You can imagine as we've gone through the quarter and we're trying to understand and analyze all the moving parts around the exchanges. It's probably a little early to declare that the full year would be, you know, at the lower end of the range. So not quite ready to say that. But I would say that, you know, we were pleased that in the quarter, we think that this $150 million reflects, you know, not only what we saw in the quarter, but our estimates of the attrition rate and the like that we've built in, you know, to our accounting routine. So a little early to try to give you a broader sense for the full year yet. But I would say, like, we do think that this range of $600 to $900 million is sort of a reasonable estimate for the year. So let me leave that. On the Medicaid conversion slowdown issue, it's pretty nascent. You know, we maybe saw a smidge of it at the very end of last year as well, but given its nascency, it's, again, a little early to call something that just popped in first quarter, and we're watching it, as you can imagine, and we'll keep you up to date this week. So that would be...
Yeah, I would say, though, Mike, just adding that, I mean, our Parallon teams have patients who need supporters and other efforts, And so those continue. You know, we're just dealing with some, you know, dynamics here that, you know, suggest that it's peaked or not peaked. We just need a little bit more time.
This question comes from the line of Sarah James with Cantor Fitzgerald. Your line is open.
Thank you. And I'm sorry to circle back onto this, but the need that March volumes were recovering towards the range of 2% to 3%. Is that still a little bit of a deal? Is it possible for a full year to hit the existing guide of 2% to 3% volume?
We couldn't hear what you were saying on the front end, but we think we know what you said, and that is how are volumes exiting generally in line when you put the two together. That's the year we're judging what we think is going to happen in the last three quarters of the year, And we're around volume of 2% to 3% in the band in the market, what we see with trends coming out of the quarter, and what we see with capital projects and other initiatives to develop our networks, we feel that that's in this point.
And our next question comes from the line of Stephen Baxter with Wells Fargo. Your line is open.
Yeah, hi. Thank you for all the color on the moving parts in the quarter. we think about, I guess, the only sort of year-over-year number you haven't given us yet is on resiliency. And I guess I'm wondering, is there any reason to think that just kind of a quarter of the full-year impact that you talked about wouldn't be a reasonable placeholder for the first quarter? And then if we go through and kind of look at those moving parts, it does imply that the core growth in the quarter was probably closer to two and a half or three percent. And I think you have a bit higher of a full-year guide embedded here. Just wondering if you could help us understand what you think the shortfall was on the core kind of normalizing for all these moving
parts thank you about the resiliency plan you know 400 million dollars i think that core growth i mean you know we our eva dog growth was you know called 1.9 and the midpoint of our full 2026 year guidance is kind of called 2.8 2.5 that gives you a sense i think we we've articulated you know the drivers in first quarter and so we we largely think that you know that indicates that We believe we're going to be largely on plan for the next three quarters in terms of the overall makeup of volume and revenue and earnings back to our original plan here.
And our next question comes from the line of Jason Casorlo with Guggenheim. Your line is open.
Great. Thanks. Good morning. Maybe just to follow up on the outpatient side, you know, historically, you've talked about some of the pressures you saw on Medicaid, but you more than made up of that on the revenue side of the fence. It looks like revenue was up just shy of 3% in the quarter for outpatient compared to the 9% or so you did last year. Sorry if I missed this, but can you give any impact on the weather on the outpatient side? And then maybe how trends revenue and volume-wise trended in the quarter, I guess, with your ASCs compared to your remaining outpatient footprint would be helpful.
Sure. Let's start with the EV side of the outpatient business. And yes, between respiratory and the winter storms, there was an impact. And, you know, it's about 140 basis points impact on ER visits from respiratory, about 50 basis points of impact from the storm. If you think about that compared to the ER visits, it gives you a sense that, you know, you're back kind of at normal trends in the respiratory. I mentioned this, but we did have good growth in year-over-year things like EMR, EMS visits, and trauma. On the surgery side, our outpatient surgeries declined 1.7%, and that was 2.1% in hospital-based outpatient and 1% in our ambulatory surgery centers. On the hospital side, we saw a little bit of weakness in our ortho-related cases. It was really more of the lower, I would say, the payer mix for the two big drivers of weakness on the payer side was Medicaid.
Let me give a little back to patient revenue and the composition of the outpatient surgery. And the other third is imaging, primarily driven by cardiac and so forth. Obviously, the emergency room, respiratory in this composite view, and that's the outpatient business. So as we push into the rest of the year, we don't really have the implications of either of those for our outpatient platform, and we're confident that we'll be able to get expectations for the balance of the year.
This question comes from the line of Benjamin Rossi with J.P. Morgan. Your line is open.
Hey, good morning. Thanks for taking my question. Across your network development efforts, I guess, what's your current cadence of ramping new beds and OR capacity, and how much of your 2026 growth is dependent on projects already coming online versus future years? And then could you just give us an update on how you generally think about M&A as a potential growth lever this year and how inbound and outbound conversations with opportunities in your pipeline have developed to start the year?
So I mentioned in our prepared remarks, we did see a number of things close in the first. It's fairly related to opportunities in urgent care, in ambulatories, in our freestanding emergency room business unit. We had a number of acquisitions there. We continue to believe that's where most of our opportunities will be, is in the outpatient arena, and that complementing our hospital networks. It has a number of promising projects in it, And I'm hopeful that we'll get to close those as we push into the balance of the year. We do have a significant pipe 30 months throughout, you know, sort of different periods within that time. These are long-lived projects, and by that I mean they're adding, which is difficult to do because, you know, they're big in the markets. So there is a component in 26, and so we sort of blend that into our expectations every year. And we do have a slightly accelerated, for the previous two years, opportunities to invest in our occupancy levels continue to be at, you know, high. And that presents opportunities for investment and growth. And as we build out our networks with outpatient facilities, as communities grow, and as our overall hospital positioning, I think that gives us an opportunity to grow our share and deliver positive, I think, of producing positive. and we still continue to believe we can deliver on that.
Annie, let's take one last question.
Question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is open.
Oh, yes. Thank you. Just a question on kind of contracting just for this year, just kind of what you've seen in the rates backdrop as well as any visibility into 2027.
This is Sam. For 2026, we're pretty much fully contracted at our targeted levels, contracting psych on 27 and modestly into 28. And right now we're on target, too. We've got other issues we think can be additive to them, and there are customers in a way that makes the system confident that we'll get to the good answers on these contracts.
That's helpful. Thank you.
And that concludes our question and answer session. I will now turn the call back over to Mr. Frank Morgan for closing remarks.
Abby, thank you for your help today, and thanks to everyone for joining us on the call. We hope you have a great weekend. come around this afternoon if we can answer additional questions. And ladies and gentlemen,
this concludes today's call and we thank you for your participation. You may now disconnect.