Profitable With Negative Equity: Reading HCA Healthcare's 2025 Financial Statements
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Health Care Administration Program, Aspen University
HCA 125: Healthcare Finance
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Month Day, Year
Profitable With Negative Equity: Reading HCA Healthcare's 2025 Financial Statements
Financial statements tell a story about how an organization earns money, spends it, and funds itself, but only if they are read together. This paper reads the 2025 financial statements of HCA Healthcare, Inc., one of the largest investor-owned hospital operators in the United States, with 190 hospitals at the end of 2025, from its annual report on Form 10-K (HCA Healthcare, 2026). It converts the income statement to common-size form, follows the cash flows, and explains a feature of the balance sheet that surprises most first-time readers: a highly profitable company reporting negative shareholders' equity.
The Income Statement in Common-Size Form
Common-size analysis expresses each line as a percentage of revenue so that a company's cost structure can be compared across years and with other organizations (Reiter & Song, 2021). Table 1 shows HCA's 2025 income statement in that form, with 2024 for comparison.
| Line | 2025 ($ billions) | Percent of revenue, 2025 | Percent of revenue, 2024 |
|---|---|---|---|
| Revenues | 75.600 | 100.0 | 100.0 |
| Salaries, wages, and benefits | 32.859 | 43.5 | 44.1 |
| Supplies | 11.367 | 15.0 | 15.2 |
| Other operating expenses | 15.886 | 21.0 | 21.0 |
| Depreciation and amortization | 3.523 | 4.7 | 4.7 |
| Interest expense | 2.248 | 3.0 | 2.9 |
| Income before taxes | 9.832 | 13.0 | 12.1 |
| Net income attributable to HCA | 6.784 | 9.0 | 8.2 |
What the Income Statement Shows
Revenue grew 7.1 percent, from $70.603 billion in 2024 to $75.600 billion in 2025. Labor is by far the largest cost, at 43.5 percent of revenue, which is typical of hospitals, where care is delivered by people. Its share fell by about six-tenths of a point, meaning revenue grew faster than labor costs, and supplies also fell slightly as a share. Those small percentage changes on a $75.6 billion base are large in dollars: each tenth of a point of revenue is about $76 million. Net income attributable to HCA rose 17.8 percent to $6.784 billion, and diluted earnings per share rose from $22.00 to $28.33, faster than net income because the company had fewer shares outstanding, a point that connects to the balance sheet.
The income statement also separates net income attributable to HCA from the $998 million attributable to noncontrolling interests, the partners, often physicians or other health systems, who own minority stakes in some HCA facilities. A reader who used total net income of $7.782 billion would overstate what belongs to HCA's shareholders.
Following the Cash
Net income is an accounting measure; cash flow shows what the business actually generated and did with it. HCA's operations produced $12.636 billion in cash in 2025, more than its net income, largely because depreciation of $3.523 billion reduces income without using cash. The company spent $4.944 billion on property and equipment, leaving about $7.692 billion in free cash flow. It then returned more than that to shareholders: $10.067 billion in share repurchases and $679 million in dividends, a total of $10.746 billion. The gap was covered by borrowing, as long-term debt rose by about $1.254 billion, and by drawing down cash, which fell from $1.933 billion to $1.040 billion. In 2025, HCA gave its shareholders about $3 billion more than its operations produced after capital spending.
Why Equity Is Negative
At the end of 2025, HCA reported total assets of $60.720 billion and stockholders' equity attributable to HCA of negative $6.027 billion. Negative equity usually signals distress, but here it reflects financial policy. When a company buys back its own shares, it reduces equity by the amount paid. Years of large repurchases, like the $10.067 billion in 2025 and $6.042 billion in 2024, have reduced HCA's equity below zero even while the company earned billions each year. Its assets are funded instead by liabilities, including $44.285 billion in long-term debt.
This matters for analysis. Ratios that use equity, such as return on equity, become meaningless when equity is negative. Analysts instead compare debt with EBITDA, a profit figure taken before interest, taxes, depreciation, and amortization are subtracted, and ask how many times earnings cover interest. It also illustrates the capital structure choice described earlier in the course: an investor-owned company can deliberately use more debt and return cash to owners, a path not available in the same way to a not-for-profit hospital.
Collecting What It Bills
The balance sheet also shows how quickly HCA turns services into cash. Net patient accounts receivable were $10.867 billion at the end of 2025, compared with $10.751 billion a year earlier. Dividing receivables by average daily revenue gives days in accounts receivable: about 52.5 days in 2025, down from about 55.6 days in 2024. Revenue grew by about $5 billion while receivables barely rose, which means the company collected faster. For a hospital, fewer days in receivables means less cash tied up waiting for payers, and the improvement helps explain why operating cash flow grew faster than net income. It is a useful reminder that profit and cash are related but not the same: a hospital can report strong income and still run short of cash if it collects slowly.
Context: HCA and the Hospital Sector
HCA's growth is consistent with the sector it operates in. National spending on hospital care grew 8.9 percent in 2024 to $1,634.7 billion (Centers for Medicare & Medicaid Services, 2025), and HCA's revenue grew about 8.7 percent that year, from $64.968 billion to $70.603 billion. HCA's scale gives it bargaining power with suppliers and payers that a single community hospital lacks, which is part of why its margins are higher than many not-for-profit hospitals report.
Limitations of This Reading
This analysis uses consolidated figures for a company with 190 hospitals, so it cannot show which markets or facilities drive results. It relies on reported accounting figures, which involve estimates, particularly for revenue after contractual adjustments with payers. And it covers two years, too short to judge long-term trends. A fuller analysis would add ratio analysis over several years and comparison with other hospital companies, which is the next step in this course.
Conclusion
HCA Healthcare's 2025 statements show a company with growing revenue, a slightly improving cost structure led by labor, and net income attributable to shareholders of $6.784 billion, or 9.0 percent of revenue. Its cash flows show a deliberate choice to return more to shareholders than free cash flow provided, financed partly by debt, which explains its negative equity. Reading the three statements together turns separate numbers into a coherent account of how the company earns, spends, and finances itself.
References
Centers for Medicare & Medicaid Services. (2025). NHE fact sheet. https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet
HCA Healthcare, Inc. (2026). Form 10-K for the fiscal year ended December 31, 2025. U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/860730/000119312526044769/hca-20251231.htm
Reiter, K. L., & Song, P. H. (2021). Gapenski's healthcare finance: An introduction to accounting and financial management (7th ed.). Health Administration Press.
How this HCA 125 Module 3 example is structured
Aspen's catalog describes HCA 125 as covering financial reporting and evaluation, and the course page lists financial analyses of a real company. Aspen does not publish module deliverables, so check your classroom for the exact prompt. This example uses the company's own 10-K, converts the income statement to common size, follows the cash flows, explains the balance sheet and states limitations.
HCA 125 Module 3 questions, answered
What does HCA 125 Module 3 usually ask for?
Work in this part of HCA 125 often asks you to read and interpret a healthcare organization's financial statements, frequently a real company's. Aspen does not publish module deliverables, so your classroom's instructions govern.
What is a common-size income statement?
An income statement with every line expressed as a percentage of revenue, which makes cost structure comparable across years and across organizations of different sizes.
Why does HCA Healthcare have negative shareholders' equity?
Large share repurchases over many years have reduced equity below zero even though the company is profitable, with its assets funded largely by debt and other liabilities.
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