Learnings from 2Q Earnings: Read-Throughs from Bellwethers

Research evidence excerpt

Learnings from 2Q Earnings: Read-Throughs from Bellwethers

Barclays | U.S. Healthcare Facilities & Managed Care

Summary of our Ratings, Price Targets and Earnings Changes in this Report (all changes are shown in bold)

Rating Price Price Target EPS FY1 (E) EPS FY2 (E)

16-Company Old New Old New %Chg Old New %Chg Old New %Chg Jul-26

U.S. Healthcare Facilities & Managed Neu Neu Care

Elevance Health, Inc. (ELV) OW OW 372.85 457.00 457.00 - 27.04 27.01 - 29.70 29.66 -

UnitedHealth Group (UNH) OW OW 423.38 429.00 441.00 3 18.38 19.92 8 22.53 22.73 1

Source: Barclays Research. Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the reporting currency. FY1(E): Current

fiscal year estimates by Barclays Research. FY2(E): Next fiscal year estimates by Barclays Research. Stock Rating: OW: Overweight; EW: Equal Weight; UW: Underweight; RS:

Rating Suspended Industry View: Pos: Positive; Neu: Neutral; Neg: Negative.

HCA Read-Throughs

Surgery Volumes

After accounting for discrete revisions to the company's ACA headwind (-) and Medicaid SDPs

assumptions, HCA's revised guidance implies a -$450 mn cut to core EBITDA, which outpaced

our prior core revision of -$370 mn. Management primarily pointed to worse surgical mix as a

driver of pressure, which suggests a broader deterioration in commercial mix - potentially

linked to growing pressure on the consumer wallet in 2Q.

On a two-year stacked basis, HCA's same-store inpatient and outpatient surgical volume growth

decelerated by 200-300 bps in 1Q. At the time, management indicated that severe winter

weather did not have a material impact on surgical volumes, instead citing weakness in HOPD

orthopedic procedures and ASC ophthalmology/ENT cases. In 2Q, the outpatient surgical stack