Universal Health (UHS) AI Stock Analysis

• Market Cap: $11.43B
• Dividend Yield: 0.47%
• Average Volume (3M): 1.01M
• Price to Earnings (P/E): 10.4
• Beta (1Y): 0.76
• Revenue Growth: 10.82%
• EPS Growth: 65.64%
• Country: US
• Employees: 76,000
• Sector: Healthcare
• Sector Strength: 69
• Industry: Medical - Care Facilities
• EPS (TTM): 4.92
• Shares Outstanding: 57,951,940
• 10 Day Avg. Volume: 847,298
• 30 Day Avg. Volume: 1,011,738
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.72
• Price to Cash Flow (P/CF): 4.30
• P/FCF Ratio: 6.40
• Enterprise Value/Market Cap: 1.48
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 1.07
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $226.15
• Price Target Upside: 31.73% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13

Universal Health Services scores a 72.75, reflecting strong financial performance and a positive outlook from the recent earnings call. The stock is undervalued based on its P/E ratio, but technical indicators suggest a bearish trend with potential downside risk. Concerns around increased liability reserves and Medicaid reimbursement uncertainties pose additional risks. Overall, UHS demonstrates solid growth potential but faces some challenges that may impact future performance.

Positive Factors

Financial Position

UHS has a stronger balance sheet than its peers, with net leverage of 1.9X and steady free cash flow supporting share buybacks.

Leadership in Behavioral Health

UHS's leadership in inpatient behavioral health is a strong asset for the company.

Profitability

Profitability in the behavioral segment has rebounded sharply and is slightly above pre-pandemic levels.

Negative Factors

Acute Care Segment

The acute care segment is facing challenges, with operating margins still below pre-pandemic levels due to increased physician fees.

Government Spending

Uncertainty around potential government spending cuts poses a challenge for the company.

Medicaid Supplemental Changes

UHS has the highest exposure to Medicaid supplemental dollars, making it vulnerable to policy changes.

Universal Health Business Overview & Revenue Model

Company Description

Universal Health Services, Inc., through its subsidiaries, owns and operates acute care hospitals, and outpatient and behavioral health care facilities. The company operates through Acute Care Hospital Services and Behavioral Health Care Services segments. Its hospitals offer general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic and coronary care, pediatric services, pharmacy services, and/or behavioral health services. As of February 24, 2022, it owned and/or operated 363 inpatient facilities, and 40 outpatient and other facilities located in 39 states; Washington, D.C.; the United Kingdom; and Puerto Rico. The company also provides commercial health insurance services; and various management services, which include central purchasing, information, finance and control systems, facilities planning, physician recruitment, administrative personnel management, marketing, and public relations services. Universal Health Services, Inc. founded in 1978 and is headquartered in King of Prussia, Pennsylvania.

How the Company Makes Money

UHS generates revenue primarily through the operation of its acute care hospitals and behavioral health facilities. The company earns income from patient services, including inpatient and outpatient care, emergency room visits, and specialized medical services. Revenue is also generated through partnerships with insurance companies, government programs like Medicare and Medicaid, and direct patient payments. Additionally, UHS benefits from strategic acquisitions and expansions, which increase its service offerings and patient base, thereby enhancing profitability. Key factors contributing to earnings include efficient facility management, cost controls, and the ability to attract and retain skilled healthcare professionals.

Universal Health Financial Statement Overview

Summary

Universal Health exhibits strong financial performance with consistent revenue and profit growth, efficient operational management, and stable financial health. The company maintains a balanced capital structure with effective cash flow management, positioning it well within the healthcare services industry. Potential risks include maintaining profitability margins and managing leverage as the company continues to grow.

Income Statement

Universal Health shows strong revenue growth, with revenue increasing from $11.36 billion in 2019 to $15.83 billion in 2024. The gross profit margin remains robust as all reported gross profit is recorded as total revenue, although this indicates a potential reporting anomaly. The net profit margin improved significantly from 7.16% in 2019 to 7.21% in 2024. EBIT and EBITDA margins also strengthened over the years, reflecting operational efficiency improvements.

Balance Sheet

The company's balance sheet shows moderate leverage with a debt-to-equity ratio of 0.73 in 2024, reflecting a stable capital structure. The return on equity (ROE) improved from 12.96% in 2019 to 16.92% in 2024, indicating effective use of equity to generate profits. The equity ratio is stable, around 46.7% in 2024, suggesting a balanced approach between debt and equity financing.

Cash Flow

Operating cash flow has consistently grown, reaching $2.07 billion in 2024, indicating strong cash generation capabilities. Free cash flow also improved significantly, suggesting effective cash management. The operating cash flow to net income ratio of 1.81 in 2024 reflects a strong cash conversion cycle, while the free cash flow to net income ratio of 0.98 indicates efficient utilization of profits into cash.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
15.83B	14.28B	13.40B	12.64B	11.56B
	Gross Profit
15.83B	5.64B	11.93B	11.21B	10.27B
	EBIT
1.68B	1.18B	1.00B	1.36B	1.36B
	EBITDA
2.27B	1.72B	1.64B	1.93B	1.87B
	Net Income Common Stockholders
1.14B	717.79M	675.61M	991.59M	943.95M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
125.98M	119.44M	102.82M	115.30M	1.22B
	Total Assets
14.47B	13.97B	13.49B	13.09B	13.48B
	Total Debt
4.96B	5.37B	5.27B	4.56B	4.19B
	Net Debt
4.83B	5.25B	5.17B	4.44B	2.97B
	Total Liabilities
7.71B	7.77B	7.52B	6.90B	7.07B
	Stockholders Equity
6.75B	6.15B	5.92B	6.09B	6.32B
Cash Flow		Free Cash Flow
1.12B	524.74M	262.02M	28.04M	1.63B
	Operating Cash Flow
2.07B	1.27B	996.02M	883.70M	2.36B
	Investing Cash Flow
-911.11M	-763.27M	-647.30M	-914.47M	-802.56M
	Financing Cash Flow
-1.14B	-493.94M	-318.40M	-1.07B	-384.86M

Universal Health Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 171.68
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UHS, the sentiment is Neutral. The current price of 171.68 is below the 20-day moving average (MA) of 176.46, below the 50-day MA of 177.49, and below the 200-day MA of 198.81, indicating a bearish trend. The MACD of -3.06 indicates Positive momentum. The RSI at 47.12 is Neutral, neither overbought nor oversold. The STOCH value of 64.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for UHS.

Universal Health Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MOH	79 Outperform	$18.87B	16.89	26.72%	―	16.71%	12.23%
THC	77 Outperform	$11.78B	3.84	110.75%	―	0.57%	440.71%
UHS	73 Outperform	$11.43B	10.43	17.82%	0.47%	10.82%	65.64%
EHC	70 Outperform	$11.45B	23.42	25.35%	0.56%	11.21%	30.49%
MEDP	69 Neutral	$8.58B	22.78	65.82%	―	9.87%	32.81%
ACHC	60 Neutral	$2.04B	7.98	8.73%	―	7.69%	―
Sector *	51 Neutral	$5.31B	3.39	-40.42%	2.90%	18.11%	2.25%

Universal Health Corporate Events

Universal Health Sets 2025 Executive Compensation Goals

On March 19, 2025, Universal Health’s Compensation Committee approved the 2025 annual incentive bonus performance goals and long-term incentive stock-based compensation awards for its executive officers. The bonuses for executives like Marc D. Miller and Steve G. Filton will be based entirely on corporate performance criteria, while others like Edward H. Sim and Matthew J. Peterson will have their bonuses partially determined by divisional income targets. Additionally, the company has updated employment agreements for Marc D. Miller and Alan B. Miller, outlining salary increases and conditions for bonuses and stock-based incentives.