HCA Healthcare, Inc. (HCA): A Bull Case Theory

We came across a bullish thesis on HCA Healthcare, Inc. on Arya’s Substack by Arya. In this article, we will summarize the bulls’ thesis on HCA. HCA Healthcare, Inc.'s share was trading at $488.27 as of Janaury 30th. HCA’s trailing and forward P/E were 17.03 and 15.97 respectively according to Yahoo Finance.

HCA Healthcare, Inc., through its subsidiaries, owns and operates hospitals and related healthcare entities in the United States. HCA enters 2026 as a leading hospital operator positioned to transform a multi-year labor headwind into a productivity-driven tailwind. With 191 hospitals and ~2,400 ambulatory sites across 20 U.S. states and the UK, HCA benefits from scale advantages that enable centralized purchasing, unified technology platforms, and strong negotiating leverage with commercial payers.

The company’s 2025 performance reflected improving demand and cost trends, with same-facility admissions up 2.1%, net revenue per adjusted admission rising ~6%, and EBITDA margin near 20%. Labor costs, historically a significant headwind, have moderated: contract labor fell to 4.2% of total labor spend in late 2025, while salaries and benefits grew below revenue, setting the stage for margin expansion in 2026. HCA is aggressively deploying AI across revenue cycle, operational logistics, and clinician workflow, targeting faster cash conversion, fewer billing denials, optimized staffing, improved patient throughput, and reduced administrative burdens.

These initiatives are expected to generate $600–$800 million in ongoing performance gains, reinforcing a reflexive loop where cost efficiencies drive strong free cash flow, which in turn funds share buybacks, supporting EPS and equity valuation. Key catalysts include quarterly results demonstrating labor normalization and AI-driven efficiency, updates on ACA subsidy policy, Medicare payment rules, and ongoing share repurchases.

Risks include a deterioration in payer mix, reimbursement cuts, labor market reversals, or AI rollout underperformance, any of which could materially erode margins. HCA’s strategy emphasizes controlling unit costs, leveraging scale, and using AI to enhance productivity rather than cut clinical quality. With a strong defensive growth profile, underappreciated margin expansion catalysts, and robust cash generation, HCA offers a compelling risk/reward, and execution in 2026 is expected to be the primary driver of further valuation upside.

Previously, we covered a bullish thesis on Tenet Healthcare Corporation (THC) by BlackSwanInvestor in December 2024, which highlighted the company’s focus on growing its higher-margin Ambulatory Care segment, improving cash flow, and reducing debt to enhance operational efficiency. THC’s stock price has appreciated by 50.58% since our coverage due to execution on margin expansion and debt reduction. Arya shares a similar thesis for HCA Healthcare (HCA) but emphasizes AI-driven efficiency and productivity gains as the primary margin expansion driver.

HCA Healthcare, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 73 hedge fund portfolios held HCA at the end of the third quarter which was 73 in the previous quarter. While we acknowledge the potential of HCA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.