Welcome to HCA Healthcare's First Quarter 2025 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. Sam and Mike 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're based on management's current expectations. Numerous risks and 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 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 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. Very good morning, and thank you for joining the call. The solid fundamentals we have seen in our business over the past several quarters continued into the first quarter of 2025. This momentum generated strong financial results that were driven by broad-based volume growth, improved payer mix, and better operating margin. As we look to the rest of the year, we remain encouraged by our performance, the overall backdrop of growing demand for healthcare services, and the increased investments we have made across the company to serve our communities better. The people of HCA Healthcare also continue to deliver for our patients in key non-financial metrics, including improved quality outcomes, more efficient emergency room services, which have accelerated time to discharge, and increased satisfaction, and finally, better inpatient capacity management with reduced length of stay. I want to thank my colleagues for their professionalism, their dedication to our mission, and the great outcomes they produced for our company to start the year. As compared to the prior year, diluted earnings per share, as adjusted, increased more than 20% in the first quarter to $6.45. Same facility volumes, even with the leap year effect, were favorable and in line with our expectations. Inpatient admissions grew 2.6% year over year, equivalent admissions grew 2.8%, and emergency room visits increased 4%. Most of our other volume categories, including cardiac procedures and rehab admissions, also had solid growth in the quarter. Surgical volumes across the company were mixed. Inpatient surgeries were slightly up, and outpatient cases were down. Same facilities' revenue grew almost 6%. The volume increases I just mentioned, coupled with approximately 3% higher revenue per equivalent admission, drove this growth. We continued to make progress on our cost agenda. Operating costs across most categories were in line with our expectations, and the operating margin improved on a year-over-year basis. As part of our network development plan, we used our capital spending to increase the number of facilities or sites of care by 3.3% to around 2,750, and we added approximately 2% to our inpatient bed capacity. Inpatient occupancy in the quarter was 77% as compared to 75% last year. As we move through the remainder of the year, we will focus on maintaining our operational discipline while continuing to invest appropriately in our strategic agenda. We believe this balanced approach should position the company favorably to meet our objectives. Before I finish my comments, let me address the current federal policy environment, which I know is top of mind. We are in a very fluid situation. While we have a general sense for the new administration's stated priorities, we do not have any specifics. It is unclear how these efforts might be carried out and what effects they may have on our business. We are very engaged in advocacy as it relates to health policy. Our general approach is to support reasonable reforms. However, we do not support reforms that harm coverage for families or individuals, nor do we support policies that compromise the ability for hospitals across the country to care for people in their times of utmost need. I know you would like us to size the potential impacts of health policy risks and now tariff risks, but we are not comfortable with providing estimates at this time. We just do not have enough insight into what might happen. When we gain a better understanding, we will share more information as part of our quarterly earnings process. As you would expect, we are developing plans in the event we face adverse impacts. Our planning draws from the experiences we had during the COVID-19 pandemic and considers both adjustments to operations and how we may utilize the flexibility our cash flow and balance sheet provide us. As part of this planning process, we will maintain a long-term horizon and move forward with a sense of calm, steadiness, and confidence. We believe we can use our financial strength, mission-oriented culture, and can-do attitude of our people to navigate through this uncertain period and deliver the results our stakeholders deserve. With that, I will turn the call to Mike for more detail on the quarter. Thank you, Sam, and good morning, everyone. We are pleased with the results of the quarter, which highlighted continued momentum of the company and the strength of our operating performance. Sam covered our volume and revenue performance, so let me add a few notes on payer mix. Payer mix remains strong, with same-facility managed care equivalent admissions up 5.4% compared to the prior year quarter. As expected, Medicaid volumes began to flatten as the redetermination process sunset, with a same-facility equivalent admission decline of only 1.4% to prior year quarter. Given the strong enrollment growth in the exchanges, our same-facility equivalent exchange admissions increased 22.4% over prior year quarter. Adjusted EBITDA margin improved 110 basis points compared to the prior year quarter, driven by operating leverage from our volume growth and strong cost management performance in the quarter. Salaries and benefits as a percent of revenue improved 80 basis points. Supplies improved 30 basis points, and other operating expenses were basically flat to prior year quarter. Contract labor improved 9.3% from prior year quarter and represented 4.4% of total labor costs in the first quarter of 2025, compared to 5.1% in the first quarter of 2024. Same-facility professional fee costs increased 11% from the prior year quarter and were approximately flat sequentially compared to the fourth quarter of 2024. Adjusted EBITDA grew 11.3% over the prior year quarter. You will recall that our guidance assumed the impacts of the 2024 hurricanes would offset each other in 2025 and not produce a tailwind for us. This is what played out in the first quarter. Earnings were flat year over year in our hurricane-impacted market in the first quarter of 2025 compared to the prior year quarter. I want to remind everyone that after considering Medicaid state supplemental payments and related provider taxes, total Medicaid reimbursement does not cover our cost of caring for Medicaid patients. Considering Medicaid state supplemental payments and related provider taxes in isolation, we saw an $80 million increase in net benefits in the first quarter of 2025 compared to the prior year quarter, due primarily to a reconciliation payment and a program accrual. Moving to capital allocation, we continue to deploy a balanced strategy of allocating capital for long-term value creation. Cash flow from operations was $1.65 billion in the quarter. There are a few factors that drove our cash flow from operations down year over year, all of which relate to working capital changes that are timing in nature. Capital allocation in the first quarter of 2025 included $991 million in capital expenditures, $2.5 billion in share repurchases, and $180 million in dividends. We also paid $227 million for acquisitions with the close of the transactions for Catholic Medical Center in Manchester, New Hampshire, and Lehigh Medical Center in the Fort Myers, Florida area. Lastly, we received $161 million in proceeds from the sale of assets, primarily driven by the sale of Regional Medical Center of Santa Fe. This divestiture was an important component of our portfolio optimization. It was good for the community, and it will be accretive to HCA. Our debt to adjusted EBITDA leverage remains at 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 guidance ranges for the full year 2025. I will now hand the call back to Frank Morgan for questions. Thank you, Mike. As a reminder, please limit yourself to one question so we might give as many as possible in the queue an opportunity to ask a question. Abby, you may now give instruction 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 withdraw your question, press star one a second time. If you are 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 if you would like to join the queue. Your first question comes from the line of Ann Hynes with Mizuho Securities. Your line is open. Hi, good morning. I know you reiterated guidance, but are there any major changes in assumptions embedded in that reiteration of guidance? Within that, I know you talked about, Sam, in your prepared remarks that surgeries were mixed. Did you expect them kind of flat to down because of the tough compare due to leap year, or were they actually worse than your expectations? Thanks. Let's deal with guidance first, and we'll talk about outpatient surgery end. So, if I think about, as Sam noted in the initial commentary, we're really pleased with the first quarter performance of the company. We continue to see solid volume growth. Revenue was in line with our expectations. And as I noted, we had strong expense management in the quarter. As noted in our release, we did reaffirm guidance for 2025, you know its first quarter. At this point in the year, we believe our guidance ranges continue to be appropriate for where we are. Certainly, as we progress through the year, we will continue to update you on our subsequent earnings calls. Specifically to outpatient surgery, we're really pleased in the first quarter with our outpatient revenue growth, which, I mean, you take it in total, grew at a rate a bit higher than our inpatient revenue. Just as a reminder, we really categorize our outpatient revenue into four key categories: emergency services, outpatient surgery, which includes both hospital-based and our ambulatory surgery center platform; ambulatory, things like our physician clinics and our urgent care clinics; and other hospital-based services like cardiology, diagnostics, and observation. All four of our outpatient categories had revenue growth over the prior year quarter. On outpatient surgery specifically, we continue to see a slight decline in case volumes driven by lower acuity cases and by Medicaid and self-pay. However, we had good growth in net revenue and earnings in our outpatient surgery business overall, inclusive of both hospital and the ambulatory surgery center categories. I'll finish and just note that the leap year effect did impact the stated volume declines. If you think about outpatient surgery at a 2.1% same-facility decline, on a per-business day basis, that's about a 1% decline. Inpatient, Mike, would be up about 1% per business day. Maybe a little softer end than we had expected, but the first quarter is always a difficult-to-predict surgical period because typically the fourth quarter is active, and you are dealing with respiratory implications and new deductibles and copays and so forth. But overall, we had solid volume activity across the company, and it was broad-based across our service categories, as we mentioned. Our cardiac activity on both surgeries and procedures were strong, inpatient and outpatient. Our rehabilitation, as I mentioned in my prepared comments, was strong, up over 4%, I think, on a same-stores basis. Behavioral health was down, but behavioral health was down because we had repurposed quite a bit of the supply beds over the years and repurposed those for med-surg in many instances. That was intentional in some facilities. Obstetrics volumes were up slightly, even with the business day decline, and one wouldn't think that has an influence, but it does. Overall, we're pleased with our volumes, and we're encouraged by the market share gains that we're seeing across our company. And we believe we are doing the right things within each of our networks to develop them to meet the needs of the patients and the communities. Great. Thanks for the detail. Your next question comes from the line of Pito Chickering with Deutsche Bank. Your line is open. Hey, good morning, guys, and thanks for taking my questions and a nice job in the quarter. I guess going to, I guess, the leverage this quarter, pretty extraordinary. The growth you saw year over year, I guess, how did you guys sort of get that much leverage this quarter you know? Going forward, how do you get that productivity? Are you seeing turnover increase as you're sort of getting that level of productivity? Are you sort of behind the hiring curve? I mean, how should we think about that level of productivity going forward after such a huge growth? Thanks. Okay Pito, this is Sam. I'm not sure I understood that question completely. Let me speak to the operating leverage, and I think that's what you're referring to. I mean, fundamentally, our business is a fixed-cost business. We said that over time, and the more volume we can push through the organization, the more operating leverage we create, the more contribution margin that generates, and it helps our overall profitability and margins. We have regained, as we mentioned last year, our ability to create operating leverage. That shows up in labor costs. It shows up in some of our other operating expense categories. We're able to uhm do that, again, with a very mindful approach to our expenses, and then at the same time, using more of our asset base to absorb the volumes. With respect to our human resource agenda, we've continued to progress across the company. Our turnover on both nursing and non-nursing is less than it was year over year. Our contract labor utilization is down year- over- year. Overall engagement with our most recent engagement surveys with our employees was at a high watermark for us. We are very encouraged by what our human resource and operating teams are doing to create an environment where our people can succeed and deliver the outcomes that our patients deserve. We believe we can continue that, that the labor market in general is stable, and we have initiatives inside the organization and then outside, if you will, with our Galen School of Nursing and other workforce development initiatives to deliver the people that we need to serve the demand. The facility side, as I mentioned in my comments, is being satisfied by our capital spending, and we are adding to our networks very deliberately on that front. And then we' re using our workforce development, our engagement, and other HR initiatives to deal with the people side of that. So we're pretty encouraged by all aspects of our operations. Our teams are doing a wonderful job in dealing with the volume and translating that, as I mentioned, to quality outcomes, efficiency, and a great place to work for our employees. So you know with the SWB at this level, I guess, 43.6, I guess, since you've IPO, we haven't seen it this low. As your occupancy keeps on increasing, is it fair to think that this number can keep getting better to your point on the fixed-cost leverage? Well I think, generally speaking, yes, it can improve as we deliver more volumes on the asset base that we have. We will continue to use technology. We use our benchmarking and other tools to find ways to create efficiencies. We feel that we're in a pretty good spot and that we can leverage, again, the fixed costs that we have in our system to drive efficiencies if we can grow the volumes. Thanks so much. Your next question comes from the line of AJ Rice with UBS. Your line is open. Hi, everybody. The revenue per adjusted admission of 2.9% I think was strong, especially with surgeries off. Can you parse out a little bit more whether that was year-to-year improvement in DPP programs, rate updates generally, commercial mix, or anything? Maybe just broadly commenting on what you're seeing in contracting with managed care. Is the debate in Washington having any impact on the discussions with managed care? Hey, AJ. Thank you for the question. This is Mike. When I think about our net revenue per equivalent admissions, the first thing I would call out is payer mix. We continue to have favorable payer mix trends, as I noted in my opening comments. The acuity continues to be good in that regard as well. I think, as I mentioned on the outpatient surgery comment, we actually had a little more outpatient revenue growth than we did on the inpatient side. Even on outpatient surgery, the case decline that we saw was really driven by lower acuity cases. From a payer mix perspective, on the outpatient surgery side, it continues to be driven almost entirely by Medicaid and self-pay. That payer mix influences on both the inpatient and the outpatient side. Generally speaking, I think we're in good shape on net revenue per equivalent admission in the quarter, and we were pleased with the performance in that way. On the payer side, and I'll start, Sam, you please include, but we're over 90% contracted for 2025, as you would expect. We're over 75% contracted for 2026 and call it 25% contracted for 2027 at rates that are really similar to the last couple of years and in context of our targets. We're also pleased with our contracting cycle, and our access to lives with payers are really higher than they've almost ever been, both on the commercial side and on the exchange side. So you know, o ur work with our payer partners continues. Our contracting cycles continue to be productive, and I think we're off to a good start this year in terms of our net revenue per equivalent admission. Yeah. Mike, this is Sam, AJ. I think a couple of points are relevant here. You know our inpatient surgeries, as a percent of overall admissions, was down 50 basis points. That's not meaningful in the overall revenue equation. I mean, obviously, we'd rather it be higher than lower, but it's only down 50 basis points. Our critical care admissions were at a really good position as it relates to total admissions. I think there are other aspects to acuity, and their overall case mix, I think, was modestly up. So all of that suggests that we still have the acuity within the larger population of our patients. With respect to the managed care contracting, our overall managed care positioning with respect to the contracts that we participate in has improved on a year-over-year basis. This year, we have two markets where we have added a very important contract to our overall portfolio of participation. In Denver, we are now a participating provider broadly with Kaiser Health Plan in the Denver, Colorado market. That is a very encouraging development. And then in Chattanooga, Tennessee, with Blue Cross of Tennessee, we have advanced our position with one of their products. We have improved globally our overall positioning for access to lives. And that' s played out in our HCCs and exchange relationships as well. Obviously, with Medicare Advantage, we continue to build capabilities there to support the Medicare Advantage payers as appropriate. So those are two important points, AJ, that I want to bring up in addition to what Mike said. Okay. Great. Thanks a lot. And your next question comes from the line of Whit Mayo with Leerink Partners. Your line is open. Hey, thanks. Good morning. Just was wondering if you guys have detected any changes with MA plan behavior or denials, any dispute resolution changes, and any changes on length of stay. Thanks. Hey, Whit. Let me first kind of talk about the Medicare Advantage in context of kind of the Two-Midnight Rule. And as we noted really on the fourth quarter call, we really did not see any additional movement from observation to inpatient status related to the adoption of the Two-Midnight Rule as we move through first quarter of 2025. That was our expectation, and that's really what we saw. Medicare Advantage is now about 57% of our total Medicare admissions. A couple of notes on the Medicare Advantage compared to traditional, to your question, one would be that our Medicare Advantage observation mix is still about 15% higher than our traditional Medicare observation mix, and that's pretty steady at this point. And yes, Medicare Advantage continues to run a bit hotter, a little higher on length of stay than traditional Medicare as well. On dispute resolution, and I'll go broadly here, not just Medicare Advantage, but there continues to be activity, as you would expect, in denials and underpayments broadly with our payer partners. Our efforts that we have invested in over the last couple of years to strengthen our response to that are paying off. I would tell you that in first quarter, that activities like denials and underpayments did not have a material impact on our financial results. Okay. My second question is, I know, Mike, you said you're not prepared to share any views on tariffs at this point, but is there any way to perhaps frame the percentage of supplies that you or HPG are sourcing from overseas? Just anything would be helpful. Thanks. Sure. You know as Sam said at the beginning, we're in a really dynamic and fluid environment right now with tariffs. Until we really have better clarity about the final status by country, which goods are included or excluded, what the final tariff rates will be, it's really difficult to size the impact to HCA. As you know, and as we've talked about on previous calls, our HealthTrust organization has been working on this diligently, and I'm really proud of our HealthTrust team. Part of that work, and I'll talk about 2025 and then give you a couple of other numbers for context, for 2025, part of their work was the ability to secure significant fixed pricing. You know when you think about finished goods, so the purchases of supplies of finished goods, about 70% of our supply expense is contracted with firm pricing for 2025. And j ust to give you a sense, that's upwards of 60% for some of all of 2026. Another point of context that I think is helpful, 75% of our supply expense comes from either the United States, Canada, or Mexico, or from products that currently have broad exemption from tariffs, such as pharmaceuticals. Um as I noted, HealthTrust continues to work on this. They're working on this to continue to secure fixed-price contracting. They're continuing their work around supply chain mapping and risk assessments. And they are also deep in the middle of rationalizing suppliers and products as needed to deal with this tariff risk environment. Lastly, I would say that we're working hand in hand with our partners in our supply chain, our key suppliers, as they continue to work on de-risking and diversifying their supply chains and specifically away from China. So I do believe that our tariff risk for 2025 is manageable, but I'll reiterate to Sam's opening comment that the environment is extremely fluid, and we are continuing to closely monitor as each day goes forward. Okay. Thanks a lot. Your next question comes from the line of Ben Hendrix with RBC Capital Markets. Your line is open. Hey, thank you very much. I just have a broader labor-related question. We've heard from providers in the past that recessionary environments generally loosen the nursing labor market. Still seems like there's a lot of competition. Just based on your observations from the past, how reactive is the labor market to recession expectations? Is there any change to your wage inflation forecast in this current environment? Thanks. Our experiences are different through different recessions. I think, in general, your comment, Ben, is right, and that is that the labor market tends to ease somewhat during a recessionary cycle, and that can put some downward pressure on wages. Now, we went through the most intense labor market environment from 2021, 2022, and the early part of 2023, so our wage trends have come down from that quite significantly. Ah will it come down further? Possibly, but it's way too early to provide any kind of forecast with respect to what a potential recession could do to the labor market. I think as we sit at this particular point in the year, we believe our guidance around our wages for 2025 will hold uhm and be somewhere close to what we have indicated already. Thank you. And your next question comes from the line of Sarah James with Cantor Fitzgerald. Your line is open. You guys had strong growth in both inpatient and outpatient cardiac surgeries. How are you using your CapEx to support forward growth of that? Can you give us some insight into how you're thinking about dividing your spend into high acuity versus low acuity or outpatient? This is Sam. Our capital allocation within our capital spending hasn' t really changed, and I do not anticipate it is going to change materially as we push forward here. We have a very significant facility and ambulatory development strategy. Fortunately, the capital requirements for most of those facilities are small by comparison to what it takes to build out inpatient capacity. Today, we have about $6.2 billion of capital that has been approved and is in a construction or development phase that will come online in 2025, 2026, or the first part of 2027. Those capital dollars go toward inpatient capacity. I think our inpatient capacity with respect to that pipeline is roughly 2.5% plus greater than what we have today. A significant portion of that goes toward the inpatient capacity. We have outpatient capacity that includes outpatient facilities, emergency room capacity, cath lab capacity, as you spoke to, ambulatory capacity from a surgery standpoint. Those are smaller dollars in the overall scheme of what it takes to build out those types of facilities. Obviously, we have a lot of clinical technology that we invest in so that our physicians and patients have the latest access to clinical technologies that can provide a more efficient or a better environment for patient care. I do not have the exact equipment spend within all of our totals there, but that is a component as well. That is largely unchanged. It is growing because we are running the company at high levels of occupancy. Ah w e continue to have a nice pipeline of new projects that we think will make sense beyond the ones that we've approved, and it won't be any material change in sort of the allocation of the dollars within those categories. Your next question comes from the line of Brian Tanquilut with Jefferies. Your line is open. Hey, good morning, guys. Maybe Sam will follow up just to that comment that you made in a different light. As we think about CapEx spent for the quarter, it was a little lower than typical range, like 5.4% revenue. So just curious if there's anything there we need to be thinking about and maybe broader capital allocation, you know good buyback during the quarter. How should we be thinking about the pace of repurchases for the year? Thanks. Hey, Brian, this is Mike. Let me cover the share repurchase first, and then we'll talk about CapEx a bit. So as you will note, or you noted in our first quarter release, we completed $2.5 billion of share repurchase in the first quarter, and we anticipate completing a significant portion of the $10 billion authorization in 2025, you know obviously subject to market conditions and other factors. On CapEx, you're right, I mean, we spent $991 million in the quarter, uhm which seemed a little light to your question. We still believe we're on track of getting to those to our targeted level of capital spend and anticipate a bit of a step up here as we go through the remaining part of the year. So we still think we're in this $5 billion, maybe as high as $5.2 billion of CapEx spend in the year. As Sam indicated, we continue to see a robust pipeline of really good projects from our markets. And so we believe that that level of capital spend is appropriate. Awesome. Thank you. Your next question comes from the line of Andrew Mok with Barclays. Your line is open. Hi, good morning. Hoping you can clarify your hurricane commentary. I think first you noted that hurricane earnings were flat year over year in your impacted markets, but I'm not 100%. I understand that because you have two markets that were hurricane impaired in Q1 this year that were not impaired at this time last year. And if that's true, wouldn't that point to a year-over-year tailwind for the full year as those markets continue to improve against a more negative impact in the back half of last year? Thanks. Yeah, thanks, Andrew. This is how we think about it. And you'll recall when we did our 2025 guidance that our guidance assumed that the impacts of the hurricanes would offset each other during the course of 2025 and would not produce a full-year tailwind for us. As it relates to first quarter, this is largely what played out. If you take the earnings growth year over year from our two main impacted markets in North Carolina Division and West Florida, specifically the Largo Medical Center, our earnings were flat year over year. In other words, the year-over-year earnings change was about negative, about neutral in those two markets year over year. And then I would just point you back to our original guidance for the year as it relates to the full-year impact of the hurricanes. And your next 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 competitive environment in your markets. Uhm with the ongoing policy and macro uncertainty, do you see health system competitors behaving any differently in terms of their CapEx priorities or investments? Maybe that creates an opportunity for HCA, or is the competitive dynamic not really impacted by the macro at this point? This is Sam. I would say at this particular point in time, we haven't seen any substantial changes in competitors and how they interact in the markets. Obviously, if NIH funding continues to be challenging for certain academic medical centers, that may influence their behaviors and spending. If there are other policy adjustments that take place, that could play out. We do think with our scale and with our diversification across the portfolio of markets, that provides a different level of capability than a lot of our local competitors who tend to only be in one particular market. But you know our competitors in many instances have solid balance sheets, and we have to be able to anticipate their behaviors and their spending. As I mentioned in my comments, we have, in fact, regained growing market share in a large portion of our market. We are very encouraged by the progress we are making in light of the past spending and practices of our competitors. If they are compromised in any fashion going forward, then maybe that presents an opportunity for us to pick up even more market share. Got it. Thank you. Your next question comes from the line of Justin Lake with Wolfe Research. Your line is open. Thanks. Good morning. Just wanted to talk about the exchanges. First, can you give us the percentage of volumes and revenue in the quarter that came from the exchanges? I apologize if I missed them. Bigger picture question, just you know some of the academic work out there, guys, indicates that if the subsidies do go away, there's a real potential that a lot of these folks will go back to commercial-based insurance. I've seen numbers as high as almost half the people that lose coverage via the subsidies would go back to the commercial pool. Just curious if you have any view on that in terms of what could happen there. Thanks. Yeah, good morning. This is Mike. Specifically on exchanges, let me give you a quick update here. I think you know this, but 2025 was another year of strong enrollment growth. In our states, the growth was about 12% over prior year. We're up across the U.S. now up to 24 million lives covered. For HCA in the quarter, the exchange volume represented about 8% of equivalent admissions and about 10% of our revenues. That is the update for the quarter. I think there is still a lot of unknowns here about what could happen if the EPTCs, the enhanced premium tax credits, do sunset and are not extended in their current form or through some revised form. And so we' re gonna have to wait and see exactly how it plays out. And we' re really not in a position to comment on estimates related to how many go back to employer-sponsored insurance, although, you know I think we generally agree that there will be some that would go back to employer-sponsored insurance. I think there'll be some that would stay on the exchanges and maybe drop a medal tier. And then others that if these enhanced premium tax credits do sunset, that would lose coverage and become uninsured. So we're not in a position yet until we have a little more clarity around what's going to happen in the legislative environment just to specifically size it or comment on others' research in this space. Thanks. And your next question comes from the line of Joanna Gajuk with Bank of America. Your line is open. Hey, good morning. Thanks so much for taking that question. I guess maybe first I'll just clarify the comment around your DPP benefits. You said it increased year over year by $80 million. So can you confirm whether there was anything unusual in there? Is it as expected, you know what you had expected in the quarter? Do you still expect the full-year DPPs to be flat down to $150 million? Hey, Joanne. This is Mike. So yes, during the quarter, we recognized the approximately $80 million increase in our net benefit year- over- year. The largest driver of this was really the increase in one state where we received a reconciliation payment and began accruing for that program in Q4 of last year. That was what drove it. You know as we've talked about on past calls, the projecting or the guidance related to state supplemental payment programs are really the most difficult thing that we predict. So we keep those updated for you when we meet quarterly, obviously, on the calls. I would say now, based on what we know now after our first quarter activity, that we would be thinking about for a full-year 2025 versus 2024, something like $50 million better to a $200 million decline now. That would be the general update that we would give you on range. As it relates to just kind of a general update on state supplemental payment programs, we continue to generally get a flow of funds on our legacy programs. Ahm I would say that we were encouraged over the last couple of weeks that we've seen a couple of approvals by CMS, one in Arizona and one in Nevada, that we're hopeful. And so largely, that would be kind of where we are right now on state supplemental payment programs. I'm sorry. So you said that Arizona and Nevada approved. Is that the reason why you're thinking DPP payments for the year higher, or there was just something that happened in Q1 that this $80 million makes you feel better about the year? Yeah, I think the Q1 outcome was a bit better than we expected. You know our expectation was really that the first half of the year would be flat with potential declines primarily coming in the back half of the year. Based on this first quarter net benefit, we' re comfortable now kind of sizing or estimating that the supplemental payments would be something like $50 million better for the full year to a $200 million decline. You know really, that range is largely associated with Tennessee, Joanna. First of all, let me just say we did not record anything related to Tennessee in the quarter and that we have not received approval for Tennessee at this point. Because that was my question, so just to clarify, you still assume Tennessee benefits in that full-year number, correct? Let's take the quarter first. We recorded nothing in Tennessee in the quarter, in the first quarter. The back half of 2024, the interim payment was not received. We did not record it. And we have not received approval for the 2025 calendar year program from CMS. The guidance, if you think about this range of guidance from a $50 million improvement to prior year for the full year to a $200 million decline, largely that range is associated with whether or not Tennessee gets approved. So that's how I would context that for you, Joanne. Your next question comes from the line of Ryan Langston with TD Cowen. Your line is open. Hi, thanks. I'm wondering just how the surgical schedules and block time utilization is kind of looking and progressing. I'm not trying to get quarterly guidance, but just wondering if we can glean anything just given potentials for tariffs, recession, and just consumer confidence declining. Wondering if there's having any impact on the elective procedural side and patient behavior. Thank you. This is Sam. I don't have that information in front of us as far as forward scheduling. We have systems within each of our facilities where that information is available. We don't roll that up at the corporate level. So I'm not able to give you that answer at this point. I think, again, in general, we think a demand for healthcare is going to be there. Our inpatient surgeries were up on a per-business day. As we normalize calendar effects and we have sort of comparable calendar dynamics, we expect our surgical volumes to recover to levels that we think are in line with market share trends or market share gains that we have expected. So that's how we're thinking about it. I mean, we continue to build our medical staff, which are critically important. As I mentioned, we're adding facilities where we need to, adding technology. We've got a robust workforce development agenda to support our surgical services. We continue to make inroads into better operations, which are beneficial to our physicians and surgeons and beneficial to our patients. All that's sort of converging on our viewpoints that surgical demand is reasonable and we can execute underneath that. Okay. Thanks. Your next question comes from the line of Joshua Raskin with Nephron Research. Your line is open. Hi, thanks. Good morning. I was wondering if you could speak to your technology agenda and maybe specifically some investments that you think differentiate HCA on the clinical care side. And I'm gonna assume that AI is a part of that conversation. We are investing heavily in our tech agenda. One of the key initiatives that we have within our strategic plan is advancing technology and applying it broadly to the organization. We've set up a new function department in our company called the Digital Transformation and Innovation Group, and they are leading the charge for us as we push forward on this particular initiative. We have three areas that we think we can benefit our business using better digital tools, using automation, and using AI. The first categories are administrative functioning. When you think about our Parallon S ervices, our supply chain services, human resource functioning, and so forth, we have early tools that are being developed and implemented in those areas, which are incrementally adding value. The second category for us is operational. And by that, I mean what goes on in our facilities, primarily our hospitals, where we can improve staffing and scheduling and create better tools for our management teams, better tools and insights for our employees as they schedule to meet their needs. Another area in our operational categories is with case management functions as it relates to length of stay management, as it relates to prior authorizations. All of these things that go into the operations at a facility level, we are deploying tools in those areas. And then the holy grail for us is clinical, as you mentioned. We do have some opportunities there. We're slowly moving into that space where we can use, again, some digital tools. We can use our data to source best practices. We are working to create value for our physicians and our caregivers in a way that they have the advantages that come from those insights. We are early in that space because it is very important that we be accurate. It is very important that we be compliant and that the tools that we provide truly add value. We have some areas of obstetrics where we are working with one of our partners where we think we can improve the labor and delivery process with these tools. We have early signs of success there, but it is really early in that particular category. So I am encouraged by where we are. We continue to find ways to advance the use of digital tools and technology across the different spectrum of our business. And that, I believe, is going to be something that we build upon in the years to come. Great. Thanks. And your next question comes from the line of Stephen Baxter with Wells Fargo. Your line is open. Hi. Thanks. Just another question. Kind of the managed care mix. The 5.4% you gave on the managed care volumes, just to make sure, was that inclusive of the exchanges or excluding it? And if it's including it, would you be able to give just a standalone managed care exchange number for the quarter? Thank you. Yes. Hey, this is Mike. So the 5.4% equivalent admission same facility growth in total managed care does include exchanges. If you parse those apart, the exchanges were up 22%. The kind of core, the same thing I would have with employer-sponsored insurance, was up about, just call it just short of half a point over prior year. And your next question comes from the line of John Ransom with Raymond James. Your line is open. Hey, good morning. I'm going to be the slow child in class, so forgive me. But um if we're just to look at Asheville and Largo, uhm is your new guidance assumed that the EBITDA is now flat in 2025 versus 2024? The guidance, if you think about the full-year guidance we gave on our fourth quarter 2024 earnings call, what we indicated is that we thought with the lingering effects of the hurricane that the earnings, year-over-year earnings impact of the hurricane-affected markets would kind of be flat, would be neutral, and would not produce a tailwind for the company. As our report out here in our first quarter call, that's largely what played out. If you think about the year-over-year earnings change in West Florida in the Largo area compared to the year-over-year earnings change in North Carolina, the divisions were flat. In other words, they offset each other to a large degree. That's our update for the first quarter. Oh, okay. I see. Thank you. Sure. Your next question comes from the line of Lance Wilkes with Bernstein. Your line is open. Great. Thanks. Can you talk a little bit about how you're seeing the downstream impacts from the pressure on the managed care organizations, both in the quarter and the outlook going forward for the year? What I'm thinking about is increased use or not increased use of value-based care. Are you seeing any of the changes in deductibles or out-of-pocket for consumers in some of the products having impacts on bad debt or utilization? And then just a point of clarification, what do you see as far as flu impacts, uhm both to the positive and negative in the quarter? Thanks. Let me cover respiratory first, and then we'll get to your payer questions. On respiratory volumes, I'll refer you back to fourth quarter where clearly in fourth quarter 2024, our respiratory-related volumes were behind prior year. And we indicated that the respiratory season had a bit of a late start compared to the previous year. What we saw in first quarter of 2025 was they were pretty significantly up over fourth quarter of 2024. But when I look at first quarter of 2025 compared to first quarter of 2024, our respiratory volumes in total were pretty much in line. They were up just a tick to prior year or first quarter of 2024, pretty much in line with prior year levels. You may recall, but if you go back to that prior year flu season, it started early. It started kind of at the beginning of fourth quarter of 2023, and it persisted pretty much through the end of first quarter of 2024. So that' s the year over year comp on the respiratory season. When I think about the impact on patient receivables, uhm you know you'll remember from past conversations on this over the years, but we have monitored this closely. And what we are looking at is kind of what happens over time to the patient portion or the patient balance as employer benefit plans changes or design changes are made every year. Historically, for our commercial payers, we experienced increases in average patient balances in the mid-single-digit range on an annual basis. In our recent quarters, we have seen increases a little higher than that, but not material. The increases certainly have been influenced by growth in health exchange volumes, which tend to have a slightly higher patient responsibility compared to traditional commercial. On collectibility, uhm we generally maintain our historical level of collections on patient balances across kind of our population. It's related to exchanges, the rate of collections on patient balances is a bit lower than the traditional employee-sponsored insurance population. While lower, the exchanges have not had a material impact on the collectibility of our patient receivables in the aggregate. So that' s a bit of an update there on patient receivables. I think it is safe to say, Mike, that value-based care, copays, and deductibles are not in any fashion disrupting the demand curve. That's sort of our overarching view when we look across our markets and we look at what demand trends suggest. We don't see those items influencing in any material way our thinking around overall demand. And Yyour next question comes from the line of Ben Rossi with JP Morgan. Your line is open. Hey, good morning. Thanks for taking my question. For the executive order from the other week, there was a call out on hospital acquisition costs for covered outpatient drugs at HOPDs. It sounds like this would be more geared towards drug administration. I can appreciate the uncertainty here with the broader discussion on Medicare site neutral in your opening comments. Just curious how you're thinking about the initial impact here. Would this encompass more of a lower acuity set of procedures relative to your broader set of outpatient services? Yeah. We are certainly aware of the executive order from the administration on potentially directing agencies to lower drug prices. We are going to have to see you know the draft rules that come out of this. We believe it will be part of a public comment and notice period. We are going to need that additional specificity to be able to kind of comment on what potential impact it could have on HCA. Got it. Completely understand. Thanks. Your final question comes from Craig Hettenbach with Morgan Stanley. Your line is open. Great. Thank you. Just, Sam, going back to the demand backdrop, can you just talk about the durability of demand in particular in light of the equivalent admissions growth target of 3-4% this year, kind of how you see that playing out? Well as I've just mentioned, I don't think we are seeing anything currently that suggests that the demand assumptions that we have are wrong. We looked at the first quarter. Ah i f you take the leap year effect in, our adjusted admissions were almost 3.8% up. That's a really good metric for us. And we're encouraged by that year-over-year growth, as we mentioned. So from a competitive standpoint, we don't feel like there's anything happening that's compromising our ability to gain share. From sort of a model standpoint, I just mentioned that value-based care and other efforts aren't necessarily negatively influencing demand. As we push through the rest of this year, we continue to believe that our range of assumptions around volumes hold and should materialize unless something dramatic happens. And at this point, we don't know what that would be. Understood. Thanks for the call. Thank you. And ladies and gentlemen, that concludes our question and answer session. I will now turn the conference back over to Mr. Frank Morgan for closing remarks. Abby, thank you for your help today and t hank you to everyone for joining our call. Hope you have a good weekend. I will be around this afternoon if you have any additional questions to answer any additional questions you might have. Thank you. And this concludes today's call. We thank you for your participation. You may now disconnect.