HCA Healthcare's third-quarter 2026 report, filed October 29, shows revenue of $19.85 billion, up about 3.6% from $19.16 billion a year earlier. Net income attributable to HCA fell about 3.9%, to $1.58 billion from $1.64 billion. Diluted earnings per share still rose, from $6.96 to $7.27. The distance between those three numbers is the real subject of this quarter, and it says more about how the per-share figure was produced than about the health of the underlying business.
The top line slowed sharply
Revenue growth decelerated through the year. Third-quarter 2025 revenue had grown roughly 9.6% over the prior-year quarter. The second quarter of 2026 grew about 8.7%, to $20.23 billion. The third quarter came in at roughly 3.6% growth and sat below the second quarter sequentially.
HCA's 2025 annual report anticipated headwinds for 2026. Management expected supplemental Medicaid payment (SDP) revenues to decline and cited adverse effects from the expiration of enhanced premium tax credits and Exchange reforms, partly offset by resiliency efforts. The quarterly figures do not split revenue into admissions and pricing, so the share of this slowdown attributable to each cannot be isolated from the numbers alone.
| Quarter | Revenue | Net income to HCA | Diluted EPS | Diluted shares | Interest expense |
|---|---|---|---|---|---|
| Q1 2025 | $18.32B | $1.61B | $6.45 | 249.4M | $547M |
| Q2 2025 | $18.61B | $1.65B | $6.83 | 241.9M | $568M |
| Q3 2025 | $19.16B | $1.64B | $6.96 | 236.2M | $561M |
| Q1 2026 | $19.11B | $1.62B | $7.15 | 226.7M | $584M |
| Q2 2026 | $20.23B | $1.70B | $7.62 | 222.8M | $599M |
| Q3 2026 | $19.85B | $1.58B | $7.27 | 217.2M | $607M |
Where the per-share gain comes from
Diluted share count fell from 236.2 million to 217.2 million, a reduction of roughly 8%. Run the reported numbers both ways. At the prior-year share count, third-quarter 2026 net income of $1.58 billion would produce about $6.69 per share, below the $6.96 reported a year earlier. The lower share count therefore added roughly $0.58 to per-share earnings, while the decline in net income subtracted roughly $0.27. The net result, a $0.31 increase, is entirely a function of repurchases.
A Munger-style question follows naturally: how were the repurchases funded? In fiscal 2025, operating cash flow was $12.64 billion and capital expenditures were $4.94 billion, leaving roughly $7.7 billion. Share repurchases of $10.07 billion and dividends of $679 million totaled about $10.75 billion, which exceeded that free cash flow by roughly $3 billion. Total debt rose to $46.49 billion over the same period, and $2.21 billion of commercial paper was outstanding at year-end. Buybacks that are financed by borrowing lift per-share figures in the near term, but they convert a stable earnings base into a more leveraged one.
Interest expense is now a visible drag
Interest expense was $607 million in the third quarter of 2026, against $561 million a year earlier, an increase of about $46 million or roughly 8%. The 2026 quarterly path has risen every quarter, from $584 million to $599 million to $607 million. For full-year 2025, interest expense reached $2.25 billion, up $187 million, on higher average debt.
Pre-tax income fell from $2.42 billion to $2.37 billion, a decline of about $48 million. The increase in interest expense alone is roughly the same size as that decline, so financing costs absorbed the entire revenue gain and then some. The effective tax rate also edged up, to about 22.0% from about 21.3%. Noncontrolling interests took $270 million of earnings, up from $260 million, which is why net income attributable to HCA fell faster than consolidated net income. The summary figures do not break out operating costs in enough detail to explain the full bridge from revenue to pre-tax income, so the interest figure is the clearest identified contributor rather than a complete explanation.
The 2026 sequence
Across 2026, revenue moved from $19.11 billion in the first quarter to $20.23 billion in the second and $19.85 billion in the third. Net income moved from $1.62 billion to $1.70 billion and then to $1.58 billion. Third-quarter net income sat below the first quarter even though revenue was about 3.9% higher than in the first quarter. Diluted EPS ran $7.15, $7.62 and $7.27, while the diluted share count fell each quarter, from 226.7 million to 222.8 million to 217.2 million. The steady buyback is what kept per-share results rising through a quarter in which the earnings line weakened.
Valuation context
On the computed metrics, HCA trades at about 16 times earnings and about 16 times free cash flow, with a free cash flow yield near 6%. Those figures describe the price relative to reported earnings and cash flow. They do not settle whether the business is worth more or less than that price. Book value per share is negative, which reflects how little equity remains after years of repurchases and distributions, so book-value multiples carry little information for this company.
What to watch
Three questions will determine whether the next several quarters look like this one. First, does revenue growth stabilize as the expected 2026 declines in supplemental payments and exchange-related pressures work through the numbers? Second, can net income grow again, or will per-share growth depend on continued share reduction? Third, does interest expense keep rising with total debt, and do repurchases continue to exceed free cash flow? The answers to those questions will matter more to the long-term owner than any single quarter's EPS print.