Updating Hospital Models and EBITDA Bridges Post Q1'26

Research evidence excerpt

Updating Hospital Models and EBITDA Bridges Post Q1'26

Healthcare Facilities & Managed Care

Healthcare Facilities - Market Weight

Updating Hospital Models and EBITDA Bridges Post May 11, 2026

Q1'26

The Wolfe Byte

We refresh our hospital #s and PTs post 1Q26 results & update EBITDA bridges for HCA/THC/UHS. Q1'26 core

growth was below expectations with key focus on bounce-back into Q2 as weather/flu impacts abate and Exchange

impacts crystalize. Remain peer perform on Hospital Sector.

We Refresh our Hospital Estimates Following Q1 Results – We update our 2026 #s for providers post Q1 results

which were mixed across the group. Q1 volumes were dragged down by winter storm and weaker respiratory seasons

with our coverage estimating a 100bps (70bps/30bps flu / weather) / 200bps / 90bps impact to acute adj. admissions

for HCA / UHS / THC respectively. In addition, Q1 volumes were knowingly pressured by declining exchange volumes

with HCA seeing a -15% decline in HIX adj. admissions, THC noting a -10% decline in volumes/revs from exchanges

and UHS with the smallest decline of -5% lower HIX AA in Q1. We expect volumes will recover somewhat in 2Q and

anticipate the trajectory of improvement will be a key area of investor focus along with tracking progress in exchange

volume declines. Please see our updated EBITDA bridges for all 3 hospitals in Exhibit 2 below and we remain Peer

Perform on the group and update our fair value ranges in Exhibit 3 below.

HCA Outlook to 2026 – Our 2026 adj. EBITDA moves to $15.86B (vs. $15.94B Cons. Est) or 1.9% growth y/y which

includes a ($150M) decline in DPP $ y/y in-line with co’s updated range of ($50M) – ($250M) and a ($678M) impact from

the exchange subsidy expiration vs. co. range of ($600M) - ($900M).