Welcome to the HCA Healthcare Q2 2022 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, Bill Rutherford. Sam and Bill will provide some prepared remarks, and then we'll take questions. Before I turn the call over to Sam, let me remind everyone that should today's call contain any forward-looking statements, they are 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 and these factors are listed in today's press release and in our various SEC filings. On this morning's call, we may refer, we may reference measures such as adjusted EBITDA, which is a 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, and a replay of the call will be available later today. With that, I'll now turn the call over to Sam. All right. Thank you, Frank, and good morning to everybody. Thank you for joining today's call. We are pleased with our financial results for the Q2. The solid results were driven by a good mix of volume with respect to payer mix and acuity, coupled with progress in managing our operating costs. Although overall demand for our services was not as strong as anticipated when compared to the Q2 of last year, same-facility revenue grew 4%. As indicated in our earnings release, same-facility inpatient admissions declined 1.2%, and adjusted admissions grew 0.5%. COVID admissions declined 18% and represented approximately 3% of total admissions, which is generally consistent with the mix in the prior year. COVID admissions dropped 70% from the Q1. Emergency room visits on a same-facilities basis grew 7.3%, reflecting strong demand for this service. Volumes across most categories exceeded pre-pandemic levels as compared to the Q2 of 2019. Many aspects of our business were positive, considering the challenges we faced with the labor market and other inflationary pressures on costs. Our teams executed well, as they have in the past through other difficult environments. I want to thank them for their dedication and excellent work. Labor metrics improved in the quarter as compared to the Q1. Recruitment was up, turnover was down, and throughout the quarter, we lowered contract labor expenses in each successive month, with June down 22% as compared to April. Overall, operating costs per adjusted admission improved on a sequential basis as compared to the Q1. Because of these positive developments, we operated with more available capacity than we did in the Q1 and had solid volume growth sequentially. Additionally, we continued to expand our network offerings with new ambulatory centers and clinics. We opened three Galen College of Nursing in the quarter, and two more are scheduled to open later this year. Lastly, we increased hospital capacity with targeted capital investments. As we look to the balance of the year, we see volumes returning to pre-pandemic seasonal trends, but we expect growth in inpatient admissions at a more modest level than previously indicated in our guidance and in line with guidance for outpatient categories. We believe our labor and resiliency plans are appropriately responsive to market dynamics and the needs of our business, and they should continue to generate improvements in our operations. Let me close with this, as I've mentioned this in the past, HCA Healthcare has an outstanding track record of responding to our realities by adjusting our operations in an appropriate manner. That is a manner aligned with our mission to provide high-quality care to our patients while also being prudent with our financial management. With that, I'll turn the call over to Bill for more details on the quarter. Okay, great. Thank you, Sam, and good morning, everyone. Let me provide some additional comments on the quarter. First, as Sam mentioned, we are pleased with the overall results of the quarter. Our diluted earnings per share was $4.21 in the quarter after excluding the $0.11 from the loss on sale of facilities and $0.20 from the retirement of debt. Adjusted EBITDA was $3.04 billion, and adjusted EBITDA margin was 20.5%. Non-COVID admissions were down 0.6% in the quarter. However, non-COVID managed care admissions were up 0.7%, reflecting favorable payer mix. Non-COVID case mix was up slightly from the prior year, maintaining the acuity gains we have made. Overall, our same-facility inpatient revenue per admission increased 3.3% from the Q2 of last year. In addition, as Sam mentioned, we saw improvement in most all key operating indicators compared to the Q1, including our labor, supply, and other operating costs on both an adjusted admission and an adjusted patient day basis. We remain focused on our resiliency programs that I've highlighted in last quarter's Including our staffing and capacity efforts, executing on our next generation of shared services, and identifying best practices across HCA Healthcare through the advancement of our benchmarking and analytic processes. These efforts continue to be an important focus for us as we respond to the current operating environment, and we are pleased with the progress in these areas. Let me transition to discuss some cash flow and balance sheet metrics. Our cash flow from operations was $1.63 billion in the quarter. Capital spending was $1.08 billion as compared to $842 million in the prior year period, and we completed just under $2.7 billion of share repurchases during the quarter. Our debt to adjusted EBITDA ratio was just above the low end of our stated leverage range, and we had just over $2.7 billion of available liquidity at the end of the quarter. Lastly, I will mention that our full year 2022 guidance remains unchanged from what we highlighted last quarter. With that, I'll turn the call over to Frank, and we'll open it up for Q&A. Thank you, Bill. As a reminder, please limit yourself to one question so that we might give as many as possible a chance to ask a question. Chantelle, you may now give instructions to those who would like to ask a question. At this time, I would like to remind everyone, in order to ask a question, press star one. Your first question comes from A.J. Rice with Credit Suisse. Your line is open. Hi, everybody. Congratulations on managing very well through a tough quarter, tough environment. I just wonder maybe near term and long, so it does seem to be some confusion out there about what's happening with volumes, and I know you guys mentioned inpatient, you're a little more cautious about the back half. It doesn't sound like much, but saying it's about the same. Are we sort of, in your mind, in a new normal? There's some speculation about how the incidence of COVID positivity may be affecting people's will to go to the doctor. Are you seeing any of that having downstream effects on your business? I guess, do you sense that there's still a fair amount of deferral out there that needs to be worked through the system? Any comments on that? Then more broadly on the coming out of all of this, I know the company said from time to time that you don't see anything that changes your view that you can grow mid-single digits EBITDA long term, with often being toward the high end of a, you know, 4%-6% target. I wonder if that's still your thinking. A.J. Rice, thank you. This is Sam. I believe when it comes to healthcare demand, our overarching belief is that it's pretty durable and somewhat responsive to normal trends over time. Obviously, we're still trying to sort out the implications of COVID and the pandemic on overall demand and make some judgments. Here again, it's only been really five months since the last surge, when you consider February, March, and then through the Q2. We're making some early judgments that we believe there will be normal seasonality trends with respect to how volumes behave over the balance of the year. As it relates to long-term, intermediate-term demand, again, we're not seeing anything structural that would suggest that overall demand is reduced or necessarily increased beyond what its normal trends were. We think on the inpatient side, healthcare demand, at least in our markets, is somewhere between 1% and 2% and a little bit more than that on the outpatient side. That lines up with our pre-pandemic sort of thoughts around overall demand. That's how we're seeing it. Again, we've seen incredible resiliency in our emergency room, which we were thinking that maybe it had been disrupted. Our emergency room activity is actually up over 2019. Many categories of our business, as I mentioned on the call, compared to 2019 have shown a nice stable response. We're still trying to sort out a few things with the pandemic and don't necessarily have great insights yet around some of those. We do feel confident that healthcare demand in general will revert back to normal patterns as we move through the next few years. All right. Thanks a lot. Our next question comes from Pito Chickering with Deutsche Bank. Your line is open. Hey, good morning, guys. Thanks for taking my questions. I'll start on the labor question, sort of two-part question. The first one is, you know, how you think about your contract labor rates? You know, how much visibility do you have on what the rates you're paying in the Q3 and views as it goes in the Q4? And can you sort of quantify sort of what contract labor you paid in 2Q and what you assume within guidance and then in 3Q? And then on the full-time labor, can you guys give us any color on sort of what is your average hourly, you know, nursing wages in Q1 and how that went sort of in the Q2? Are we seeing a downtick as you guys bring on new nurses at nursing school? Thanks so much. Yeah, Pito Chickering, this is Bill Rutherford. Let me start first with the contract labor. I think as we discussed last quarter, it was at a peak high in the Q1, really due to the COVID surges, and we anticipated to be able to see sequential improvement. Indeed, that's what we saw. We thought it would first start with being able to modify the rates that we were seeing in the market in terms of the average hourly rate. Indeed, we saw that, and we were able to execute on that as the quarter went through. We finished with June at rates we were anticipating when we reset our guidance after the Q1. I think over the course of the year, we'll continue to see hopefully reduction in the utilization of that contract labor. Again, we were encouraged by the sequential improvement we saw. We're encouraged by kind of how we ended the quarter in the month of June. It's pretty much in line with what we anticipated. Yeah. I think, and Peter, this is Sam. The contract labor rate itself, we do believe there's still some room to go when we look at where we ended the quarter. I don't have a specific number that I think it makes sense to give you at this point, but we do anticipate some continued improvement on the rate, and as Bill mentioned, the utilization. As it relates to our nurses and our full-time nurses, we last year about this time did a fairly sizable market adjustment across the organization. Since then, we've continued to do very targeted adjustments for our nurses as well as our non-nurses because we need lab techs, radiology techs, and other people to support the care delivery process. Again, we are making another market adjustment this year. I will tell you that our nurse wage increase is in the mid-single digits. It's manageable for us, we believe. We've been able to maintain productivity levels in certain instances, and we've been able to arbitrage, if you will, the very expensive contract labor, and that's allowed us to position our workforce better in the Q2 than we did in the previous three quarters. We continue to believe that there is opportunity on that front. We see the market for labor moderating some and normalizing. Our turnover, as I mentioned, is down over 20% in the Q2 as compared to the Q1. Our hiring and our recruitment function, which has done a wonderful job, is up 18% in the Q2 as compared to the Q1. These metrics, early successes if you will, give us some confidence that the combination of our compensation strategies, our retention strategies, and then the mix of our labor and workforce should improve as we move through the balance of the year. Our next question comes from Ann Hynes with Mizuho Securities. Your line is open. Hi. Good morning. I know it might be early, but how do you think we should think about key inflationary pressures for 2023 versus historical trends, especially with wages, supplies? On the managed care side, I know that you will eventually be able to pass some of these inflationary pressures through pricing. Can you just give us some timing on how we should think about that? Thanks. This is Sam. Let me speak to inflation generally. Obviously, we are seeing inflation, as we've mentioned, inside of our labor costs. Again, I just gave you an overview of how we think we're managing our way through that. Bill can speak to some of the specifics on the supply side. Fortunately, in many areas, we have contracts that have terms to them today, so it gives us some protection in the short run. We think that protection allows us to reposition some of our pricing as we move through the next few years to reflect more accurately the inflationary pressures that we're seeing and others are seeing in the provider system. We are seeing some early successes in recognition by the payers, and we expect the payers to appreciate the overall inflationary environment that the providers are in. We're seeing some early recognition of that and some renegotiated contracts have reflected more escalation in pricing than what we had seen in our past trends. As I mentioned on the last call, we're pretty much contracted for 2022, obviously. As we look to 2023, we'll start to see some uplift in our contracting pricing reflecting the new contracts. On into 2024, we fully anticipate having a different trend on our pricing as a result of these renegotiations. On our capital costs, we obviously experienced some inflationary pressures there. I don't know that we have visibility at this point to give you any number on any of those as we think about 2023, so we will try to hone in on that a little bit more as we get ready for our guidance in the next year. Our next question comes from Whitman Mayo with SVB Securities. Your line is open. Hey, thanks. Bill, the AR days jumped up again this quarter. I'm just trying to understand, like, what's driving that. Is that higher payer claim edits? Is there any underlying deterioration in collection rates? Just anything to put that into context, and if you could sort of describe how that tracked relative to your expectations. If I could also just get the cost per FTE number in the quarter. I don't know if I got the cost per FTE number in the quarter. Maybe you shared it, but I missed it, but that'd be helpful. Thanks. Yeah. Whit, we have seen some increase in AR days as we've gone through the year. Part of that is in the prior period during COVID. I think the payers had kinda turned off many of their bill edits. We've seen some of those come back into play. Pretty much in line with what we anticipated. We're kind of at a high mark right now, and we'll continue to see improvement as we go through the year. We are seeing a little bit more. Kind of delays in the payment processing cycle, and we're working through that with our payers. In terms of the cost per FTE, you know, we saw, again, sequential improvement in the quarter compared to the Q1. If you recall, in the Q1, it ran pretty high. I think it was almost a 7% year-over-year number. We're more now in the 4.5% for the Q2. It was tracking about what we anticipated as we ended the Q1. Thanks. Our next question comes from Gary Taylor with, I'm sorry, Whit Mayo. Gary Taylor. Your next question comes from Gary Taylor with Cowen. Your line is open. Hi, can you hear me? Yep. Okay. Just a two-parter, both of which you've just touched on a little bit. I just wanted to make sure I understood if you'd provide a little more color. I think we sort of triangulated in the Q1 somewhere north of $600 million of contract labor spend, and I know that's down, and you said it was down. You said where it was in June, but just wondering kind of where that ran for the quarter just to help us sort of modeling the rest of the year. The second parter is, you know, with the AR growth and also payables down, you've done $3 billion cash from ops in the H1, and the annual guide is, you know, $9 billion-$9.5 billion. Despite the payer edits and so forth, do you still feel good about the cash from ops number for the year? Yeah. Gary, let me start with the cash flow for ops. This is Bill. You know, we're continuing to look at that. I think it's probably gonna be hovering around the $8-$8.5 level, somewhere in between those. We'll continue to track that as the year goes on, but I still think that's a very strong number for us and allows us to kinda execute on all aspects of our capital allocation philosophy. When you look at the contract labor piece, we did see sequential improvement. The actual dollar amount was down from where we were in the Q1. When we look at contract labor as a percent of SWB, we finished at the end of the quarter, the month of June, down just above 8%, where in the Q1 we were running 9.2. Again, we saw, I think, nice improvement in the absolute contract labor number. Our next question comes from Kevin Fischbeck with Bank of America. Your line is open. Good morning. Actually, this is Joanna Gajuk filling in for Kevin today, so thanks for taking the question here. I guess, you know, I guess, the first question, and then I have a follow-up, too, but in terms of looking out, I know you maybe it's early to talk about next year, but you obviously kept your guidance, which is positive given the expectation here. You know, this year has some benefits, right, from sequestration, PHE being extended and whatnot. How should we think about, you know, roughly speaking, from growing from here, is this year a good base to grow off of at your long-term kind of targeted growth rate? My follow-up question in terms of the commercial pricing discussion that you highlighted in terms of the improvement over time. Is it fair to assume when you look at the history, right, of the company, should we be expecting commercial pricing that would be accelerating to, say, you know, 4% or 5% at some point, like we saw in the past during the period of high cost inflation? Thank you. Well, let me make sure I got that intro relative to the trends in 2023 and kind of the pluses and minuses as we go through the year. Yeah. You know, we're anticipating as we go through the balance of this year, kind of the normal course of business has stabilized. As Sam mentioned in his comments, we think we're gonna see patterns return to kind of their normal seasonal trend. That should give us a good base to grow off of in 2023. It's a little early to be talking about all the variables in 2023. We're gonna be approaching our planning process right now, but most of them are known. I think as Sam mentioned in his earlier comments, we think fundamentally there continues to be growing demand for healthcare in our markets, and we're well positioned to serve that. I think that becomes a nice base to think about, 2023 and as we go forward. Relative to commercial pricing, as you said, and as we mentioned before, we are having those discussions with the payers. We've had some early success. There's a recognition of the inflationary pressures that providers are seeing. We'll continue to progress those discussions as we go forward, and hopefully we'll continue to roll those and get the benefit in 2023. Our next question comes from Justin Lake with Wolfe Research. Your line is open. Thanks. Good morning. Just wanted to follow up on a couple number questions. First on COVID. I know you had expected the PHE earlier to expire, like, almost in the H1. I think your number was about $150 million of that, you know, extra CARES benefit. Can you give us an updated number there in terms of what's in guidance? On that commercial pricing, you know, I know it's early and you're, you know, you've got some wins there, hopefully. Can you give us an idea of, you know, pricing, I think, was in the 4%-5% range historically. Where do you think those contracts shake out in terms of, you know, as we do get through them, do you think they shake out in the, you know, high single digits or, you know, something a little bit lower than that? That's it for me. Yeah. Justin, let me start with your first one relative to the various COVID support. You know, honestly, very little did we recognize in the Q1, probably $20-$25 million. If you look at last year, you guys probably hovering around $130 million in a quarter. Pretty much in line with what our expectations were. Most of those programs have pretty much concluded. And so we'll run this out. I think it's probably $200 million year to date, so that's pretty close to what we anticipated when we turned the calendar and expectations. Relative to pricing? Yeah, I think it's reasonable to assume that we were in a 3.5%-4% zone previously with our commercial pricing, that we are going to be in the mid single digits as it relates to our expectations. How all those land, we don't know yet. We believe, again, with transparency and such, that we're in a competitive positioning as a company globally, and that allows us to negotiate based upon the inflationary pressures on a reasonable escalator, as I mentioned. So that's sort of our targets. We're still early as our contracts come up for renewal, and we need to understand where the payers think we are and where they are in their planning as well. I believe our relationships will allow us to get to a number that makes sense for both organizations. I do anticipate it being somewhere around the mid-single digits. Our next question comes from Ben Hendrix with RBC Capital Markets. Your line is open. Hey, thank you very much. Just wanted to ask a capital deployment question now on these Utah hospital acquisitions. Given the FTC challenge, does this change at all your strategy or impede the strategy of accessing patient access points, you know, in market? Could this potentially mean that we might look at some larger health system acquisitions in new markets? Just any thoughts on that? Thanks. I don't think the decision in Utah necessarily changes our overall outlook. We will continue to look for opportunities that are appropriate in market. Most of those tend to be ambulatory-oriented, where we're able to add to our networks. Just this past quarter, we acquired another urgent care company in our Virginia division, and it solidified our network capabilities offerings in that particular state, just like we've done previously in Florida. We'll continue to look for outpatient network development opportunities. A lot of that will be our own greenfield projects, but it may be some acquisition opportunities here and there. As it relates to new markets, clearly we're interested in new markets. We think we have the organizational capability and the financial capability to create a lot of value in the communities, across the country. Hopefully, we will see some opportunities on that front. We're fortunate to be in a position where we have solid organic growth opportunities, given the markets that we serve. We will continue to invest in those. I think in general, our capital allocation strategies will remain consistent. We have a very diversified approach to capital allocation, and we will continue to use that model for delivering shareholder value as well as making sure our networks are sufficiently, developed, with capacity and different offerings. Our next question comes from Brian Tanquilut with Jefferies. Your line is open. Hey, good morning, guys. Sam, you mentioned in your prepared remarks how you opened three new Galen nursing schools this past quarter. There's a lot of chatter about how difficult it is to add nursing school capacity here in the U.S. Just curious in terms of how you're thinking about the ability to add more locations based on availability of professors and licenses to add to the nursing capacity at HCA. Thank you. I think the acquisition of Galen has yielded since we closed on the transaction. We've added eight new schools. In most circumstances, those schools have started with enrollment that was ahead of our model. Part of our ability to expand and open a new college as efficiently and effectively as Galen has so far is really reflective of the unique model they have, where they standardize the facility, they standardize the curriculum and the delivery. What's unique about HCA and Galen together is that we can use some of our own staff to support faculty needs in some cases, and then obviously create very efficient and effective clinical rotations. We are up to thirteen schools. We will open, like I said, a couple more this year, and I think our pipeline has six-eight over the following 12-18 months. Our vision is that all of our major communities will have at least one Galen College of Nursing as part of the overall network offering. Some communities, because of their size, will probably have more than one. We're extremely encouraged. I've visited myself three of our new schools. There's tremendous enthusiasm with the students, there's tremendous enthusiasm with the faculty, and there's tremendous enthusiasm with our nursing leadership across the company about the unique possibilities that the integration of nursing education with clinical operations in facilities as sort of an integrated model is something that is differentiated and is gonna create better nurses, better value for the patient, and we think it supplies for HCA facilities, that's unique in most circumstances. Our next question comes from Joshua Raskin with Nephron Research. Your line is open. Thanks. Good morning. Are there certain parts of the healthcare delivery ecosystem that you think are more attractive now that you're talking about this sort of new stabilization, that just haven't been as attractive in the past? Are there areas of growth for HCA in the future that you just haven't looked at in the past? I don't think there's anything that's completely changed. Obviously, you know, outpatient facilities pre-pandemic were very important aspects to our network. We have roughly 2,500 outpatient facilities that are part of our hospital network ecosystem. It's about, what, 12-to-one in our company. We were very intentional over the last decade in building out our outpatient network to support our hospitals, which is sort of the core of who we are. That integrated network model, we think, was very effective and very supportive in our ability to go from 23% market share in 2011 to 28% market share today. As we push forward into the future, I do anticipate more velocity, if you will, in the network development we've had previously. That really is across all aspects of outpatient development. Our philosophy is to create convenience for the patient, efficiency for the patient with different price points, and then integration with a full system approach, so that the patient can get whatever services they need inside of our overall provider system. I don't know that anything is uniquely differentiated in that, though, and I think it takes a comprehensive and complementary approach to be most effective and most responsive to our patients and our physicians. Our next question comes from Lance Wilkes with Bernstein. Your line is open. Yeah. Thanks a lot. Just wanted to understand a little bit about kind of volume constraints that have been in place during COVID and including labor supply constraints, and maybe how you track those metrics to see if those are starting to kind of loosen up a little bit that could be aiding volume in addition to just normal resumption of volume trends out there. How are you looking at it, and what are some of the steps you're taking to kind of improve labor supply there? Well, let me speak to our occupancy. This is Sam again. We ran about 72% occupancy in the Q2. As I mentioned in my prepared comments, we did open up more capacity than we had in the Q1. We were a bit constrained with staffing. We had surges we were dealing with, so our overall availability of capacity was not as much as it was in the Q2. In the Q2, however, we did have periods of time where our staffing constrained our capacity, and we weren't able to take transfers in through our transfer centers, which are a very important element of our network that I just talked about with our network model. We saw situations where we couldn't take patients in certain facilities at certain times. It wasn't structural, but it was episodic in how much activity we had at a particular facility at a particular point in time, as well as the staffing. Our overall staffing supply agenda, I've spoken to that already around recruitment, retention, different care models that we're trying to use, and managing our case management capabilities at a totally different level. We've seen improvement in every one of those categories, and that's helped us stretch our capacity, if you will, in appropriate ways that deliver outcomes for patients that are appropriate. We'll continue to move on all of those initiatives, and we think it will allow us over time to continue to open up more and more capacity. We've seen a lot of pressure in our behavioral health services, where we have a reasonable number of facilities that are operating less than at full capacity. We've had the same thing in our rehab services, and we've had the same thing in other aspects of our business. Again, it's improved sequentially, and we think it will continue to improve as we move through the year. Does that significantly compromise our volume? No. It does create some opportunities for more volume as we manage through those initiatives. Our next question comes from Scott Fidel with Stephens. Your line is open. Hi. Thanks. I was interested if you can give us your perspectives on the evolving primary care environment, just with all the focus on value-based care and then, and with the emergence of some new players in the space, I guess including yesterday. For HCA, how you think that could impact physician recruitment or network development longer term. Thanks. Thank you. This is, you know, an interesting point in, you know, healthcare generally speaking. I mean, primary care is a multifaceted offering. It has urgent care, it has Women's services, pediatric services, telemedicine, internal medicine, even the emergency room, in some cases, serves as a primary care platform for many people. Our approach is to have as many components of the primary care offering set as we possibly can. In some cases, that's employed. We have employed physicians in our physician model. We have our urgent care offerings. We have telemedicine offerings. We have pediatric offerings and so forth. In many instances, it's a combination of employee and affiliate physicians or affiliate providers. It could be providers of other urgent care centers or other physicians and so forth. What's developed with One Medical is it could be just another component of a possible affiliated network offering. I don't know that it completely changes the paradigm that exists across the multi-faceted aspects of primary care and how people access care through those different dimensions. We will continue to have a pluralistic approach to primary care, and we think that's the model that works for us, as we push through our system approach to healthcare in these communities. Our next question comes from John Ransom with Raymond James. Your line is open. Hey, good morning. Bill, you said on the Q1, you thought the kind of short term margin was in the 19%-20% range, with the new realities. Has your thinking changed on that? No, John, not really. I mean, you look. I think we did 19.7% in the first and 20.5% in the second. Obviously, there's pluses and minuses. As you know, there's a lot of variables that go into the actual margin number, and we continue to focus on operating the company as efficiently as possible. I think that 19%-20% range is a good planning horizon for us. I think there'll be periods we're north of that, some periods we're within that. No, I still think that thinking holds today. Thank you. Yeah. Your next question comes from Stephen Baxter with Wells Fargo. Your line is open. Yeah. Hi. With the commentary you gave on the non-COVID admission metrics, you know, seems like you're seeing growth in managed care, but I guess that implies, you know, declines on the government side of the business or the uninsured side of the business. Was hoping you could provide some insight into, you know, what you think is driving that differential. Then as a follow-up, just wondering how we should be thinking about the growth of surgical volumes for the balance of the year. Thank you. Well, this is Bill. Let me start with the non-COVID piece. You know, I think there's a couple things at play there. One, we did see growth in the non-COVID managed care, and that continued, I think, a favorable payer mix trend that we were seeing. Again, as I said in my remarks, we also saw the acuity levels maintained. Those are two areas that, you know, were a focus for us, and we were pleased with that. Relative to the governmental activity in the non-COVID, you know, it fluctuates. We are seeing some growth in the Medicare, which is still a good thing for us. Our total Medicare admissions, I think, were up 0.6% for the quarter, but we also saw growth in the managed care side. You know, I think ultimately what we expect to see is a return to historical growth patterns and pretty consistent among those payer classes. As I've talked about in various settings, it may see a return of both the governmental payer classes as well as the commercial. Net, those are still positive and productive for us. Your next question comes from Andrew Mok with UBS. Your line is open. Hi. Good morning. Given the footprint of your hospitals, it seems like you are well positioned to benefit from stronger ACA enrollment helped by enhanced premium tax credits. Can you help size the benefit in terms of revenue or volumes from those programs? How are you thinking about the impact to your business should those enhanced subsidies expire? Thanks. Yeah, that's a great question. Obviously, we're paying attention to that, and we have some hope that we'll see those enhanced subsidies have some continuation, and we'll pay attention to that as the year goes on. We'll try to, you know, assess any impact of that in 2023. There's no doubt we talked about that through 2021. We saw growth in the health insurance exchange activity across HCA, primarily due to the enrollment increases that we saw on there. If the subsidies, you know, end up, you know, being reduced, it would have impact on enrollment. It could have an impact on our volume. We haven't fully sized all of that. We're gonna wait to see how the various proposals work through Congress and the Houses and again, hopefully get some extension on there. As we go into 2023, that's obviously a key area that we're going to have to focus on I would assume. We saw, I think through the course of 2021, our health insurance exchange growth probably 20%-25% in any given period. And again, I do think that was primarily attributable to the increase in enrollment that I think is attributable to the enhanced subsidies. We'll just have to see how that plays out. We're hopeful that they find ways to continue those and that you know you won't see a drop of people gaining coverage through the health insurance exchange as we go through the balance of the year. Great. Thank you. Yep. Your next question comes from Jason Cassorla with Citi. Your line is open. Great. Thanks. Good morning. Just with year-to-date CapEx spending at close to $2 billion, you're seemingly tracking towards your 2022 guidance of $4.2 billion. I was wondering if your expectations on areas for CapEx allocation for service lines specifically has changed given trends so far, perhaps different service line build-outs, just given the volume and labor backdrop. Any help there would be great. Thanks. This is Sam. I don't think we're gonna see any material change in how we allocate capital. We believe we have a sufficient allocation around our technology agenda, our outpatient development agenda, and then as I mentioned in my comments, targeted hospital investments to support a growth opportunity or relieve a capacity constraint or really even create a better environment for our patients in some instances. I don't anticipate significant shifting of categories. We will obviously judge the overall market demand picture and such from one community to the other. We'll weave into that inside of those categories primarily. Your next question comes from Sarah James with Barclays. Your line is open. Hey, thank you. As I think about the 10,000 nursing students a year that could be graduating from Galen, how much of those are actually taking full-time positions at HCA? I guess, what's your capture rate? Is there anything that you can be doing with tuition reimbursement to try to improve your capture rate? Well, that's a great question. We are evolving our integration model, as I mentioned, with nurse students and externs and rotations and so forth. It's a little early to give an indication as to what the capture rate will be, if you will. Partly due to the fact that the schools are new, and we aren't seeing graduates just yet. We only have two schools today in HCA markets where they're graduating students. We're improving sequentially our capture rate, to use your term, in those two schools, and that's in Tampa and San Antonio, where we're seeing more Galen students land in HCA facilities. We have a very robust academic partnership strategy. It's not just Galen. Galen can't solve all of the nursing needs for the organization. They can complement it in a very significant way, as we've mentioned. Our broader academic partnership agenda is working with other great schools out there that provide nursing care. We think what we can do is learn from our Galen experience, integrate with other academic centers more effectively, and create a better experience for their students and maybe a better pathway forward into HCA facilities in the future. We do have numerous programs that support HCA colleagues in getting nursing degrees. We have tuition support. We have other programs that create opportunities for our people inside of Galen, and we're continuing to evolve those. I'm encouraged by some of the early indications of how many HCA colleagues are actually participating in Galen schools now. We will hopefully see some benefit from that in the future. Thank you. Your next question comes from Jamie Perse with Goldman Sachs. Your line is open. Hey, good morning, guys. You commented earlier just on your ability to flex and adapt, and you showed that this quarter and really the last couple of years. I'm curious how you think about a recessionary scenario or just lower growth overall, you know, constrained consumers, weaker job growth. How should we be thinking about that type of environment and what types of things are in your playbook to adapt to a more challenging macro? Well, we have gone through numerous recessionary cycles, just as other companies have gone through, and we're preparing ourselves for what that could be in this cycle. Bill alluded to a number of the programs that we have in trying to make sure our efficiencies and other resiliency items are pushing forward regardless of the circumstance because we see value there and opportunities. I think what is potentially different in a very significant and structural way now is how the Affordable Care Act and exchanges and Medicaid expansion play in a recessionary cycle. We have never had that safety net during that type of cycle. In those past cycles, if a person lost their job, they went into an uninsured ranks. I think what we have today is a unique safety net for those people in the Affordable Care Act programs that should provide some support by comparison to past cycles. Typically, we lag, as many of you know, in how demand behaves in a recessionary cycle, but it provides labor relief also for us. There's a balance between the two. HCA Healthcare has performed well in past recessionary cycles, and I'm confident that we can perform reasonably well in future recessionary cycles as we get more adaptability in our business and then again, as the Affordable Care Act provides some level of support that we hadn't seen in the past. We have reached the end of the question and answer session. I'll turn the call back over to Frank Morgan for closing remarks. Chantelle, thank you for your help today, and thanks everyone for joining our call. I hope you have a wonderful weekend. I'll be around today if I can answer any additional questions you might have. Have a great day. This concludes today's conference call. You may dis-