Universal Health Services Reports Strong Q1 2025 Earnings

Universal Health Services ((UHS)) has held its Q1 earnings call. Read on for the main highlights of the call.

Universal Health Services (UHS) recently held its earnings call, painting a generally positive picture with strong revenue growth and effective expense management across its acute care and behavioral health segments. However, the call also highlighted some challenges, including decreased cash flow and uncertainties regarding Medicaid supplemental payments.

Increase in Acute Care Hospital Metrics

In the first quarter of 2025, Universal Health Services reported a 2.4% increase in adjusted admissions to its acute care hospitals, alongside a 5.0% rise in same-facility net revenues compared to the previous year. This growth underscores the company’s robust performance in the acute care segment.

Behavioral Health Revenue Growth

The behavioral health hospitals of UHS saw a 5.5% increase in same-facility net revenues, driven by a 5.8% rise in revenue per adjusted day. This indicates a strong demand and effective pricing strategies in the behavioral health sector.

Strong Operating Expense Management

UHS demonstrated strong operating expense management, with expenses rising only 2.6% on a same-facility basis. This efficiency contributed to a significant 21% increase in EBITDA, excluding Medicaid supplemental payments, highlighting the company’s operational strength.

Positive EBITDA from New Hospital

West Henderson Hospital in Las Vegas, which opened in late 2024, reported a modestly positive EBITDA in its first full quarter of operation. This early success suggests promising future contributions to UHS’s financial performance.

Significant Share Repurchase

Continuing its trend of share buybacks, UHS repurchased 1 million shares at a cost of approximately $181 million in Q1 2025. This move reflects the company’s confidence in its financial health and commitment to returning value to shareholders.

Decrease in Operating Cash Flow

Operating cash flow decreased from $396 million in Q1 2024 to $360 million in Q1 2025. This decline was partly due to delays in receiving Medicaid supplemental payments, presenting a challenge for the company’s cash management.

Behavioral Health Volume Challenges

UHS faced volume challenges in its behavioral health hospitals, with adjusted patient days remaining relatively flat. This was attributed to the leap year comparison and adverse weather conditions, impacting patient volumes.

Uncertainty in Medicaid Supplementals

The company expressed concerns over pending CMS approvals for Medicaid supplemental revenues in Tennessee and the District of Columbia, adding uncertainty to its revenue projections and financial planning.

Supply Chain and Tariff Concerns

Potential tariffs could impact 25% of UHS’s supply chain purchases. While no significant pressure is currently reported, this remains a potential risk factor for the company.

Forward-Looking Guidance

During the earnings call, UHS reiterated its full-year earnings guidance, expressing confidence in its underlying business performance despite external uncertainties. The company reported a net income attributable to UHS per diluted share of $4.80, with an adjusted figure of $4.84. UHS also highlighted its strong borrowing capacity, with $1.02 billion available on its revolving credit facility, positioning it well for future investments and growth.

In summary, Universal Health Services’ earnings call reflected a positive sentiment with strong financial performance across key segments, despite facing some challenges. The company’s effective expense management and strategic initiatives, such as share repurchases and new hospital openings, underscore its resilience and commitment to growth.